Animal Spirits Podcast - I Will Say This (EP.71)

Episode Date: March 6, 2019

The massive rally in stocks, did the Fed turn millennials into socialists, why real estate prices haven't done as well as you think, why have U.S. stocks dominated the last century, how to run a Ponzi Scheme in a post-2008 world, free ETFs, social media trauma, the 80/20 rule in online content, how much is enough for retirement 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

Today's Animal Spirits is brought to by Y Charts. Why Charts is something like a Swiss Army knife to Michael and I. We use it all the time. We're going to talk about it a little bit on today's show. If you are a new subscriber to Y Charts, reach out to them and mention Animal Spirits. You can get 20% off of your new subscription. We use them for everything from macro data to individual company analysis to ETS and mutual funds. So again, check it out at whitecharts.com.

Welcome to Animal Spirits, the podcast that takes a completely different look at markets and investing. hosted by Michael Batnik 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 Rithold'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, you put out a piece last week called The Killer Vs, which is also a name I'd like to reserve for our T-shirt company. We start someday for Animal Spirits-related products. And it was kind of surprising to me. So you looked at it's kind of a random number, but that's just the way it worked. It was I think it was 44 days that it took the S&P 500 to rally 18% or so.

I think this falls into the odd stat category. Yeah. But it's a good odd. But you found nine other instances where this had happened before, where it had happened in that quick of a time, which surprised me. And you went back to the early 1970s. And tell me what you found here. So this was not, I had no hypothesis going into it. I was just sort of messing around. And so it turns out that over, I think, the eight previous times that the stock market rallied 18% in 44 days, all of those rallies began at pretty major bottoms, 19.

1975, 1988, and down the line. So that surprised me. I did not necessarily anticipate that. On the other hand, maybe we shouldn't be surprised because we speak about this a lot

that bull markets are not defined by these huge moves in a quick period of time. So the one example of where this was not at all near a bottom, actually it was exactly at the short-term bottom was 2001. So in 2001,

there was a monster bounce and then a really, really, really ugly rollover. The funny thing is a lot of times when you get these huge snapback rallies, everyone at the beginning says this is a sucker's bounce or it's a dead cat's bounce. It's a sucker's rally. This is just short covering. But historically, these quick snapback rallies, it looks like have actually been meaningful. I think since 2009, we are in one big dead cat bounce. More like since 1900. And obviously history would say that because we're talking about this now, that means this time it won't hold and stocks will just crash immediately. But we'll include the chart in this and a link to, your piece. I got to say, I was very, I was very pleased with this visual. It doesn't happen often that I make someone like, huh. Yeah, sometimes, it's funny. Sometimes the data surprises you. Okay. You know, hold on, before you go on to the next thing, you know how, like, once in a while,

I feel like you've done this before. When you log in late and all the good jokes are taking. Yes. I feel like that's pretty much how it is with stock charts. And once in a while, you find something. Yes. There's a lot of data out there and a lot of data miners. So, okay, so. Guilty. with the dead money. So the Financial Times had a piece this past week, and it was titled Quantitative Easing was the Father of Millennial Socialism. And I wrote a piece on this too, and this was just too good to pass up. So the author of this is basically saying Ben Bernacki and Janet Yellen in the Fed.

Hold on. Hold on. Stop it right there. Okay. It's Bernanke. Bernanke? What did I say? Bernacki.

You say Bernacki. It's a silent act. Let's show the father of this. 300% rally. A little of respect. It's a silent end. So he's basically saying the Fed propped up financial assets and because baby boomers are the majority holders of financial assets, young people have gotten screwed and ipso facto housing prices are much higher than they would have been. Young people can't afford a house. Therefore, young people are turning towards big government and they want to become socialist now, which I got to give them credit because I hadn't heard this

one before. And obviously it made some political connections here. Well, it's pretty easy to to draw the dots, right? I guess. Or connect the dots, I should say. Not that I necessarily agree with it, but it's kudos to this person for uncovering this angle. But the other side of this is that you actually shared a piece from the latest J.P. Morgan Monthly Update. And it shows that since 2015, young people have been, actually have been buying homes.

And so there's a chart in here showing that people under the age of 35 have had the largest change in terms of home ownership since 2015. And then the second biggest group is 35 to 44. Wait, did you say asset price inflation? Or was I just thinking it? I think you were just thinking it because you must be reading some gold forums lately or something. I don't know. I hope I didn't say it. The other day, you and I were talking about something that is like just absolutely the hallmark of all charlatans.

What was that word? Shoot. I can't remember it now. There's a lot of them, though. Fiat currency is a good one. What's a fiat? Fiat currency. All right. Anyway, moving on. So what's your take on this? I mean, well, you would have followed a piece to this.

Okay. Yeah, I did write a piece. And I said basically the alternative was the worst. Obviously, bailing out, I think the worst part about this, I think the thing that young people are really upset about is not bailing out financial assets. It's billing out the banks. And none of the bankers went to jail. And so the fact of that, I mean, my point was the alternative was worse. If they would have left it, it's like some people wanted us to go into a depression. Yeah, but people, some people think that that was, that should have been the right. route we took to take, like, take our medicine now instead of. I think, but, but do you think that the average young person knows that nobody went to jail? I don't think that's what they're necessarily mad at. I think they're mad that everything costs a shit ton of money and they're not making a lot of it. True. And so, we reached out to Y charts and I said, hey, we're talking about real estate this week. What do you got for us? They shared a couple charts with us. And it's kind of interesting. This is from 2006. So take it with a grain of salt because, or what do you say, grain of sand. I say sand. I know it's not right, but... We're going to make that one work.

Take it with a grain of sand. So, 2006 was basically the height of the bubble. Actually, housing prices since 2006 have underperformed both inflation and weekly average earnings in the U.S., which is pretty shocking to me. Obviously, we're taking, you know, from the peak, and they had a big trough. And so if you take it from the bottom, which was 2012-ish, it looks much better. But the other piece that Whitechart sent us, and again, I mentioned at the beginning of the show, mentioned Annal Spheres to them get 20% off your subscription. They've been a good research partner for us. If you look at this, this data of the downturn in U.S. building permits, residential construction and housing starts, they're all down like anywhere from 20 to 50% still. So one of the big overhangs from

the real estate bubble and then the deflating of that bubble is the fact that they stopped building houses because they built so many in the run-up. Who's they, the Fed? Yeah, right, Bernanke. Did I say it right that time? Like a Wisconsin person? So, unfortunately, when you have a real estate crisis like that, there's a lot of problems that come on the other side of it. And I think that's one of the biggest problems is that there haven't been as many new houses built in the last few years.

And so it's just more of a supply thing than anything. And so young people have kind of gotten the short end of the stick there, which is tough. But I don't think that means young people aren't going to be buying houses. I think they're going to figure out a way to make it work because that's what happens when you grow up. You have responsibilities and you get in, you know, have families and settle down and you move to the suburbs like you're doing. You know, we weren't going to talk about this, but you know what? Let's talk about it.

Let's do it. So you wrote a post the other week about how prepaying your mortgage is not necessarily great. I don't want to say investment, but I think the point that you were making was that if you have a four and a half percent mortgage rate that prepaying your mortgage is not the equivalent of, say, avoiding like a 4.5% hurdle. That's actually less than that. So I was, I am so ignorant on how the housing market works that I actually thought that if you prepay your mortgage, that your monthly payments go down. But that's not in all the case. What really happens is that you could take your 30 year mortgage payments down from 30 years, down to say 27 years

or maybe even 22 years if you prepay aggressively. But your monthly payments are fixed, assuming me you don't refinance. Yeah, if you're using a fixed rate mortgage, they're fixed. So you're taking years off the end of your loan, more or less because you're paying down principal. So at the end of the day, you are paying lower interest rates, but. No, you're paying less in total interest. Yeah, sorry, total interest.

So, yeah, you're paying the same rate. But a lot of people actually be on this, and I got a million different numbers from people that told me, a lot of people told me I was into it yet. But I think the point, that's so weird. I know. It is funny the things people have strong opinions about, which we're going to get into later in the show, but. Wait, we are?

With what? Well, we can do it now if you want, but... Let's stay with it because I have something to add. Well, people have a lot of strong opinions about backing into parking spots. People were sending us research, and I honestly didn't know people had strong opinions about that because I really don't care. It was just kind of a little one-off thing, but people send us a lot of... My point was, guess what, you're backing in one way or the other, so either way, anyway. All right, did you see the story?

I'm not sure if I put it in the doc, maybe I did. Did you see the story on Facebook? No, but you did put it in here, yes. So there was a story. by the verge on this company called Cognizant that employs Facebook moderators. And at this point, Facebook has 30,000 employees working on safety and security, about half of whom are content moderators. And so it just took the reader through the day and the life of these people. So there are 2.3 billion monthly users on Facebook, which is pretty wild. And these content

people will spend 30 seconds on each item, and they do this up to 400 times a day. And basically what they were saying was that a lot of these people are getting, you know, some sort of PTSD because some of the shit that they're seeing is so foul. And I have a hard, like, this is why I never signed up for Facebook in the first place because I would have a hard enough time reading the post from my old high school classmates. I can't imagine some of the psychotic people out there on this platform and having to see that every day. Well, these people are literally like watching murder videos and seeing the most vile conspiracy theories. And so Zuckerberg, this from the article, Zerkerberg warned investors that Facebook's investment and security would reduce the company's profitability

and profits were up 61% year over year. So anyway, the point was that people have strong opinions and especially on the internet and exposing yourself too much of this can make you sort of, I don't know what the right word is. Jaded, callous, soft, snowflakey, but it's tough, you know, it's not fun. And there's two ways people can take it.

ways is be outraged by everything, and one of the ways at the other extreme is just nothing phases you anymore, right? Because you've seen it all probably. Hopefully, most people are somewhere in the middle. So back to our mortgage thing, did you decide whether you're going to pay after mortgage early, or are you going to hold off on that? Oh, now am I going to. Okay. So back to the sort of millennials becoming socialist angle. The other side of this was I posted. Isn't that a forever story? Sorry, before you get into this, isn't that a forever sort thing, that younger people tend to have that mentality. And then as they develop wealth and as it become their parents' age, you know, it's a sort of get off my lawn type thing.

Yeah, the baby boomers, they did Woodstock. They were hippies. Of course, they were the total anti-establishment. This happens to everyone. Yeah, I don't think this is a new thing by any means. So, but the idea that socialism is coming up a lot in the news, there was a cool chart from that Credit Suisse year book. And it's in every year. And I posted it on Twitter and it kind of blew up a little bit, but I see this chart every year, and it shows the relative size of stock markets from the end of 1899 to the start of 2019. And the U.S. goes from 15% to 53, and it looks kind of like it's Pac-Man eating the rest of the world. And it's, it is really mind-blowing. And a few people wrote to say that maybe some of the numbers were a little off. I don't know how

exactly they. Oh, my God. I know. There's a lot of actually. Like this is your work. Right. But I mean, we should, we should hire moderators for our comment section. Seriously. That's called the mute button. But it is amazing. But the question is... Oh, by the way, hold on. Hold on. Stick with that real quick. So, actually, I stole a joke from one of your moronic commenters. Okay. Remember a few weeks ago you said to me, somebody tweeted to you what happens when there's no shares left to buy back and he wasn't kidding? Yes. So I used that joke yesterday as in a tweet.

Oh, I did see that. Thank you, moron. Yeah, very nicely done. I'm sure people thought you were being serious, too. So the question is, if you had to come up with a list of reasons and bullet points, why has the U.S. gone from 15% of world market cap to over 53% now? Jeff Bezos. Next. So, I mean, obviously, I think there are a lot of like really built-in advantages that we have as a country. So I think like our political system, our economic system, the capitalistic nature, I think it's I think it's also sort of. Maybe I'm reaching here, and I'm just thinking out loud, maybe it's like just the American mentality of coming here as a new nation

and just the drive to, I don't know, just do better. The UK was 25% in 1890 and now they're down to 5.5%. And so obviously the U.S. has taken a lot of that. Even Japan, as it's struggled for less 30 years, went from being non-existent in the first chart in 1890 to almost 10% in now. No, no, it would be helpful is that you don't see the change over time. You just see 1900 versus today. True.

I would like to see 1900, 1939, 1950, and then today. Because I wonder how disruptive World War II was to the rest of the world. That was the answer a lot of people said is the two world wars really killed a lot of the European momentum. And the rest of the world and the U.S. came out relatively unscathed from that. I think there's a lot of. Europe was the center of capitalism and certainly the banking system before World War I. But we absolutely stole the baton after that. And the U.S. has a lot of built-in advantages.

We have two oceans on our borders. I think that helps. We have sort of dynamic economy, and it's much more diverse than a lot of other countries. And obviously, the U.S. is multiple times bigger than the U.K. So the fact that it outpaced the U.K. shouldn't be that big of much of a surprise. The question is, in 100 years, is the Chinese stock market bigger than the U.S.? Are these advantages that will persist?

I think to a certain degree, yes. So are you a trend follower with this chart, or are you a value investor? Trend follower. You know what chart I prefer to the, I mean, the country one is great, but I even like a little bit better, the industry weightings. So in 1900, the biggest component of, is this market cap? Is that what they're doing here? Yes. is by far the rails. And it was literally, let's say, it looks like 60%.

That's a good point. The fact that back in 1900, the markets were not by any means mature and they didn't really have much to go on in terms of corporations anyway. So this pie is multiple times bigger now than it was back then as well. Right. So technology right now is, yeah, that's a good point. Technology is, let's say, 22% of the market cap in the U.S. In 1900, there was no technology. I guess you know, the equivalent would have been the telegraph, which was a tiny slice of the market. So things change. This is a dynamic economy.

And this is, I think, one of the reasons maybe, eh, I'm going to not say what I thought I was going to say. What else do you got? Okay. Well, so you posted this next story here about a guy who he wrote a book about fraud, but then he was taken for a fraud. Is that what happened? So this guy, I think he wrote for Money Magazine, but it could be wrong. We'll put this in the show notes. So Ron Lieber wrote this article, and this guy wrote several books.

He had a huge radio show, and he was steering, I don't know if it was delivered or not. He obviously, he settled without denying or admitted wrongdoing. But it's just hilarious that this guy wrote a book, basically how to detect fraud. And then he was on a radio show, he was talking about something that turned out to be a pond. scheme. Again, I don't know how involved he was, how much he knew about what was going on, but it seemed, if I had to guess, I would say that he knew something was up. One thing that was sort of intelligent and especially disgusting about this Ponzi scheme was that they were only offering 6% annual returns. The funny thing is, it almost seems easier to get people to buy into that these

days because after 2008, they almost want stability. So that seems like it's almost the way to go if you were going to do something like this, offer something with very little value, which is kind what Madoff did. And this one reminded me of the example a lot of people have used. There was this guy who wrote the book. It's called the Annals of Gollability and it came out the exact same month that made off his in his Ponzi scheme got found out in December of 2008. And this guy who wrote the book, literally wrote a book on Gollability was an investor in one of Madoff's feeder funds. Oh yeah. I have that book. I haven't read it yet. I'm reading it right now actually. The book is not not great. Okay. I'll skip that. But yeah, it's kind of the same thing. Speaking of

skipping it. So I did skip the seventh episode of True Detective, but I watched the 8th. And? It sucked. It wasn't great, right? It really sucked. I was, yeah, it was one of those things where if it wasn't True Detective from me liking the very first season, I probably would have given up on it sooner. Yeah, terrible. So somebody sent this article to me, this is sort of wild.

Basically, oh, let's not basically, let's just quote this. in this decision in the case of Dell, the Supreme Court ruling said that efficient markets hypothesis, quote, is generally a more reliable assessment of fair value than the view of a single analyst, especially an expert witness who caters her valuation to the litigation imperatives of a well-heeled client. So there was a case where Hewlett-Packard bought a ruba at $24.67 a share, but the judge ruled that it was worth just $17 a share, and the way that they came to their conclusion, instead of using sort of traditional discounted cash flow or whatever, anything like that, they used, they said that fair value was simply it's 30-day moving average before

the deal being announced. Wow. So the Supreme Court is going all in on EMH. How's that? Wow. Eugene Fama wins again. Let me ask you something. Do you think in five years there will be an article.

saying that the Supreme Court caused young people to be technical analysts? Wow, that's perfect. So they just took the average price the month before and said that was fair value. It's just that simple. Wait, isn't that what Buffett does?

Yes. Okay. SoFi, who, from what I understand is a lender is coming out with zero fee ETFs. And it was kind of interesting because this stuff in the past has been greeted with a lot of fan in the fact that people aren't paying funds fees anymore.

But it seems like this one, people were like throwing the cold water on it pretty quickly, right? Jason Zweig wrote a piece about why you should think twice about free funds. And in his article, he put a crazy stat. At the end of December, almost 20% of all dollars in ETFs were in funds charging a maximum of five basis points. That's a great stat. Sorry, I thought you had more. So this SOFI ETF, it says in the filing that the funds will be free until at least March 27, 2020, at which point, I'm sorry. So the management fee is listed at 0.19 percent, but it's being waived until at least March 2020.

So I think that I would say I'm, I don't think this thing gets to a billion dollars in 30 days. That's where I'm at. What do you think? You're cautiously optimistic. It's interesting because. I'm actually, what's the opposite of cautiously optimistic? Recklessly pessimistic? There it is.

So David Snowball over at Mutual Fund Observer looked at Fidelity's latest annual report, which Fidelity is a private company. But he was talking about how they're push into zero fund fees and they're lowering, like their sector funds charge like eight basis points. And Fidelity has really made a push into this. It's kind of crazy how even though they're lowering their fees on a lot of this stuff, they're still making record piles of cash. So he said revenue was up 12% last year.

income was up 18.6% and expenses were up almost 9%. And yet the number of customers was up just 6% or 7%. And asset, asset center manager were actually down. So assets went down yet revenue and revenue went up much higher than expenses. So they're using these sort of gateway drugs in terms of free funds to get people to spend money elsewhere, obviously. And wait, if free ETFs are the gateway drugs, what's the meth? Triple levered ETFs that use to trade.

Is that right? Yeah. Yeah, that's about right. Anything else on this topic? All right, let's move on. All right. So there was a study done on content and might not be interesting to our listeners, but this is interesting to us. 94% of the world's content gets zero external links.

I think my favorite part about this whole thing is that this website that produced a study is called Backlinko. Like, do you think they wanted to use Backlink.com, but they're like, backlink.com's taken. Yeah. So the 80-20 rule is existing in content. 1.3% of articles generates 75% of all social shares. Again, it's the 1%ers. So we're all a bunch of lemmings. Is that what it's saying?

Maybe content is creating socialist and it's not QA. They said, quote, building links through content marketing is more challenging than ever. Yeah, that makes sense. The surprising stat here was that long form content. gets an average of almost 80% more links than short articles, which is kind of surprising, correct? Yeah, I'm not a long-form guy. I mean, obviously there are exceptions, but it's sort of, here, how's this? I feel the same way about long-form as I do about threads.

Some of them are really good, but most of crap. Okay. Can I do a sameless shelf promotion here? So I wrote a really long piece last week on why people are miserable at work. And true to form for what this shows, it got shared. way more widely than any of the short pieces. And I think part of it is because if you write a long form piece, you're putting a lot of thought and effort into it, I think, right? You're really showing that you kind of care about the subject and maybe it's, whereas if you're just doing a short little

one-off piece, it's something you put out there relatively quickly. Now, I will say this. I think it's hard to figure this out for people who blog because a lot of times the stuff that you just sort of throw out there quickly, you know, takes root and gets shot. share it very widely, whereas the stuff you put a lot of time and effort into can kind of just, you know, hit the, you know, just give you a thud and not work at all. Can I make an observation? Mm-hmm. You never say, I will say this when we're on the phone, but you say it a lot of the podcast.

Did I say I will say this? Yes. Okay. It's a podcast thing to say. It's a crutch. It's a podcast crutch. Thanks for calling me out. I really appreciate that.

No problem. Okay. So you wrote a piece this week about. called just a little bit more, and you showed some cool graphs about how basically every time you get to a certain level of wealth or income, the next step is just a bit more. What was the Rockefeller quote? Some, yeah, a reporter allegedly asked him how much was enough and he said just a little bit more. So I read a piece about Bill Simmons actually interviewed Adam Silver, who's the commissioner of the NBA now and at the Sloan Analytics Conference last week. And it was interesting

because Silver said one of the big things that surprises him becoming NBA Commissioner is that so many of the NBA players are truly unhappy. And he said the reality is most players don't want to play together. There's an enormous jealousy amongst our players. A lot of these young men are generally unhappy. And he said if you're around the teams on a day-to-day, there are always headphones on, the players are isolated and they're heads down. And it's kind of interesting. So they talked about how Isaiah Thomas said championships are one of the bus. And a lot of times these players just like a lot of other young people go to their phones or their music or their headphones or podcasts and don't really interact with each other, which is kind of crazy because

there's obviously this dichotomy of the NBA has never been as successful as it is right now, right? It's arguably on a track to be probably the most well-liked league for sure in terms of professional sporting leagues, but all the players are really unhappy. Yeah, it's sort of hard to figure out. I mean, I do understand a little bit because I am of the mentality that once you are past that, I'm a firm believer in the hedonic treadmill, that once you get that $5 million signing bonus, the rest is gravy. And maybe it's even worse than gravy. There was not really related, but just a plug for a new podcast that I heard that I really liked. Darius Miles and Quentin Richardson have a podcast called Knuckleheads because of the thing that they used to do when they

on the clip was when they would hit their heads with their hands. And they had J.R. Smith on the show. And J.R. was talking about his life in the league and stuff. So that was just really good. It doesn't really relate exactly to what you're talking about, the happiness stuff. Just want to say that. What are your thoughts on this? I just think it's one of those other things that shows even getting exactly what you want in life. You're a professional basketball player. You're young. You're a multi-millionaire. It seems like there's always, the grass is always greener. So a lot of these, even the players that are successful, like Kevin Durant, who for some reason is considering going to your hometown New York Knicks, which I think he's nuts for thinking about even doing that. He seems like he's in a perfect situation to me. They've won two championships in a row with him, and he seems like to have the easiest spot to be in as a superstar. He's still not happy. And so I think a lot of these guys, it is interesting. Like there's always that wanting for more. And you and I talked about this a couple weeks ago in Chicago that that's kind of a double-edged sword because maybe if he's People never get to that content that they need.

But it's the other thing of that, you know, why the U.S. has done so well. I think maybe the fact that people don't get content over time is actually a good thing and that that pushes us forward to continue to want to get up in the morning and better ourselves. It's good for the group, even if it's not necessarily great for the individual. But I think what's tough about this is that you can intellectually process the fact that more money won't make you happier. But you still want more. And, like, I think we're, I don't want to say we're guilty of this because it's guilty as a wrong word, but this just sort of exists within almost all of us.

And I think even beyond money, it's success. And the research does show a lot of time that it's that anticipation of success actually makes you happier than actually getting it. So a lot of these people, these NBA players have reached the peak of their anything, you know, they can't go any higher. And they're still unhappy once they got there. Maybe once they got there, they realized it didn't, it wasn't all it was cracked up to be. I think, and I definitely am not, I definitely heard this from someone else, but this is perhaps

why so many musicians take their own life because they have everything that they could have ever dreamed of and it's still not enough. Right. And if that's not enough, like what, you know, where do you go from there? Yeah, crazy human condition. All right, let's do some listener questions. My issue with retirement planning is that when do you know that enough savings is enough? I make plans for retirement spending, ignoring that I will make any money at all.

I hope that in practice when I get to retirement years, that I'll have a reduced income. But how do you know when you get to a point that you have enough to make it through? You don't because I think that you can control the savings part. And we've spoken about many times that the savings part is in our control. Not only is it in our control, but you have more bang for your buck if you could save more versus getting a higher 1% return. But I think the best you can do is just save as much as you can. And I don't know that you necessarily ever know that enough is enough. I mean, if you have 40 times your salary saved, that's probably more than enough.

Are we going to do the math on this again for you? I'm not doing that. I think unfortunately, a lot of people don't realize that financial planning in a lot of ways is just guessing. And it's guessing and then updating as actual results come into play. So you don't really know. It's educated to guessing. Yeah.

And so the transition from saving to retirement is, like you said, save as much as you can. but then at retirement, you have to have a really good handle on what your expenses are going to be and how much your spending is. And obviously you can't plan for everything, but then you update as sort of reality hits. What if you have 40 times your salary saved, which is unrealistic? Let's say that you have five times your salary saved and you think that you're probably okay, but you're underinsured and something, you know, you get into a really bad accident and you don't have umbrella insurance and, you know, you kill somebody or something like that. And then your retirement plan, you know, is out the window. That's just, that was dark.

I hope. Yeah. Well, anytime I plan for retirement, I bank on manslaughter. The person that you hypothetically killed was a really bad person. Okay. Okay. Let's say there's a train on the track and it can either hit five people or one people. All right, moving on. I'm in my late 20s. I've been working at a large S&P 500 corporation for a little over three years now. It was based in the Bay Area, but then took an expat assignment in Malaysia. That's kind of cool. The stock of my company is down more than 40% in the last year or so. And I personally feel is undervalued, and I have a large chunk of cash to invest in this company. What do you think I should do with it? Average in or wait. Don't. Of course you think the company's undervalued,

right? Like, you see all the potential, oh, maybe that's not, of course, because you could be at a trash company and know it. But I'm not surprised that you think. So, you know what, I'm going to punt, because I don't want to tell you not to invest and that this turns out to be a great entry and I'm an asshole. Do what you think is right. But the thing is, like, this person's already so exposed to the risk of that company through the fact that it signs his paycheck. So maybe just buy, but be careful. Don't put too much into it. I think averaging down in a investment that's down sounds great, but I think the fact

that it's the company you work for would give me a little bit pause, more pause than another investment. So I think I would first define how much you want in that company stock and then sort of buy and use that marker as a way to rebalance. So if it's under that mark, yeah, feel free to buy. And when it gets over, feel free to sell. So you're not just guessing how much you need to have in it. And at least wait for the 10-day, 20-day crossover for God's sakes.

Yes, 30-day moving average. J.P. Morgan did a study showing that it's called the triumph and tragedy or something like that. The tragedy and ecstasy. I think that's right. And one of the stats that they gave was 40% of all companies have a 70% decline that they never recover from. So just be careful. Right. Especially, yeah.

in terms of concentration. Before we get to recommendations, can you allow me to do a quick rant on beer, please? By all means. I was out the other night at a local brewery in Grand Rapids. And I think one of the best parts about like the brewery bubble or bull market we've had in the past decade or so is the fact that there are so many of them. So we have like 40 breweries in our county alone. Where is the state of the brewery bubble? Is it resting once higher or did it? Well, here's where we are. I was at a brewer the other day and I just wanted a regular normal beer and everything there is infused with tangerines or it's barrel aged or it's got grapefruit in it

and so i asked do you guys have just an amber beer i like to have a good amber in the winter well we have an amber with chili in it and i'm like well what does that mean they're like well it's infused with jalapinos i'm like all right let me try it and it tastes like an amber beer with like 30 jalapinos in it and i'm just saying like can we just have regular beer again and not have everything be infused with like quadruple hopped grapefruit you know nitrogen, whatever, that's all I'm saying. I feel like everything, like the downside of the bubble is that everything is like a CDO squared now. Like, I feel like every beer out there is a CDO squared. So I just want a regular beer every once in a while and I can't find it anymore,

I feel like. And that's the downside of having a bull market in beer. This beer thing is like your morning routine thing. That's possible. It's really like the gum on your show. I mean, not to brag. Grand Rapids was named Beer City USA a few years ago. So not to brag. I'm saying, but apparently I can't find just a regular beer in the city anymore. All right. So you know what tweets I hate? And I feel like Barry does this a lot, but it's not just him. But he did do it this week.

Where people are like, whenever the stock market goes down, there's always somebody traveling who's like, oh. Every time I travel. Every time I go away. I should have warned you guys. I'm stepping away from the office for the afternoon. Don't break anything without me. All right.

What do you got for recommendations? I finished Jack Bogle's book enough, and I can confidently say that at this point, it's probably the last Bogle book I'll ever read, because I think I've covered most of them. And the only reason why I wet it was because Morgan said that it was the best Bogle book that he's read. And I'm almost there. I really liked it a lot. One of the reasons why I enjoyed it so much was because unlike Clash of the Cultures or Stay the Course, it wasn't so, so heavy on Vanguard funds and the evolution. of the index fund, to the value and growth, to the IFA, whatever, whatever. It was a lot of personal stuff.

And I was surprised to learn more in this book, even though it's probably the sixth or seven, the Bogle book I've read. Two things that stood out were he saved 15 percent, actually three things. He saved 15 percent of his paycheck forever, starting in 1951, where he invested in the Wellington Fund. And I think he said he did that up until the 80s or 90s. And so a while back, Meb asked the question, is there any valuation? And I guess he was sort of directing this loosely at like Bogle and Fama.

Is there any valuation? I wish you would say no mas. You know, the risk is not commensurate with the reward. And the answer is, yes, in 1999, Jack Bogle reduced his equity allocation, I think to, I tweeted this, but I forget what it was, to 35% maybe. And that was the only time that he ever did anything. And you wrote a post last week that that was actually the single worst entry point for U.S. stocks ever. For a guy who is known as a long-term buy and hold person, Bogle has had some great market calls over the years that he probably doesn't get enough credit for. And this is the only one that he actually personally acted on.

Yeah. Okay. Anything else? Yeah. Lastly, from the time he was 60 until the time that he died, he gave away half of his income every year. Wow. I did not know that. Which is pretty...

Yeah, I'm surprised that wasn't public. size more. Pretty awesome. I watched Jim Gaffigan's special on Amazon. What do you think? Do you like him? I've never watched his stuff before. Okay, he's funny.

I like him. He had some good stuff. He's got like seven kids, doesn't he? Yeah, it's worth watching. I give it like a 7.2. It's worth watching. Okay. What else do I got?

I think that's it. Okay. I'm going to double down to my friends from college recommendation on Netflix. Okay. My wife and I finished both seasons of that. And it's always hard to kind of make a recommendation for comedy because I feel like sometimes personal or subjective. People's sense of humor doesn't, like, the biggest show in the world for the last 10 or 15

years has been the Big Bang Theory on CBS, which I think is borderline unwatchable. But millions of people love that show. So I think it's kind of like recommending food in a lot of ways. Or how to park. Yes, or how to park. It's one of my favorite shows I've seen in a while. And there's like four or five really good characters in it. And I really enjoyed it.

We watched Lars and The Real Girl on Amazon Prime last weekend. Have you seen that before? No, why you were watching stuff? I watched it before and I just decide It's one of those things I turned it on when I'm writing in the It's kind of in the background Yeah it's Ryan Gosling

And it's something that came on 2007 What? You're rewatching a Ryan Gosling movie When you write? Is he your inspiration? I don't know I just like to have something on in the background And it's actually a very like out there movie

It's I'm not giving too much away But he buys a doll on the internet And pretends that it's his girlfriend And it sounds really bizarre But actually is kind of a good like heartfelt movie because he went through some trauma in his life. And this is the way that he's trying to like get over it. It's very unique and out there, but I actually really liked it. All right. Matthew, delete that.

All right. What else? Just because it was a Ryan Gosling one. Just busting chops. Okay. Tribe by Sebastian Younger is one of the better books I've read in a while. I actually heard him on the Econ Talk podcast. And that's kind of where I think you can probably get the gist of it from that, but it's a relatively short book. Yes, I like that one. He talks a lot about how society's changed in a lot of ways it's for the better, but it's kind of two steps forward, one step back in a lot of ways. And I like this quote. He said, humans don't mind hardship. In fact, they thrive on it. What they mind is not feeling necessary. Modern society has perfected the art of making people not feel necessary. And so it's a really good book to make you think

about sort of a lot of the ways technology has changed our lives, sometimes for the better, sometimes for the worst. And finally, I know you didn't like the Sebastian Manuscalco stand-up routine on Netflix. Again, wasn't some of his best work, but he has a podcast called The Pete and Sebastian Show. And he was like the fourth lead in the book, Green Book, or the movie Green Book, that just won Best Oscar. And on his latest podcast, he talks about going to the Oscars. And as the fourth lead, he got literally like the last seat in the house for the Oscars.

And he talks about how, and he didn't get to go on stage. And he talks about how bad it was being like the fourth person on, you know, on the low man on the totem pole in a movie, even though it won the Oscars and how he had a horrible experience of the Oscars. And it's one of the funniest podcasts I've heard in a long time. so give that a listen. Who is Pete? Pete Correalee.

Have you seen him before? He's another stand-up. I know the name. Yeah, he's pretty funny, too. It's just two stand-ups that get together and kind of talk about stuff. I mean, who would ever thought of a podcast format like that before? Anyway, okay, send us an email, Animal Spiritspot at gmail.com, and we'll talk to you next week.