Animal Spirits Podcast - Interest Rates Are Never Going Up Again (EP.221)

Episode Date: September 8, 2021

On today's show we discuss the early days of this podcast, Ray Dalio's performance issues, how wealth and demographics are impacting interest rates, why bitcoin matters, Ben's week with Covid 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

On a recent interview on Howard Linson's Panic with Friends, John Street Capital had this killer quote. He said, quantitative easing turned your savings account into a checking account, the bond market into your savings account, the equity market into the bond market, the venture capital markets into equity markets, and gave rise to crypto. Basically, things are weird. Portfolio construction is a totally different game today than it's ever been before, which is why Ben and I have both invested into blue chip art as a way to not only fill in the gaps of our portfolios in this low interest rate environment, but also to hopefully generate steady returns. Contemporary art prices rose 14% per year from 1995 through 2020, not so bad at

all. So that means you don't need to YOLO into Solana or go head first into NFTs. Not that there's anything wrong with that. But if you're looking for something else, head to Masterworks.io slash animal to invest in art like Ben and I did. Again, that's masterworks. dot I.o slash animal. 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 Holtz wealth management. All opinions expressed by Michael and Ben or Ben. Many 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. Ben, update. How you doing? It's about a week in and today is the first day actually feel

like a normal human being. I had a rough week. I first want to say thank you to everyone who reached out. I had a ton of, so if I didn't get back to email or DMs, I'm sorry. I was basically a worthless human being there for a while. All I could do was nap and watch movies more or less. But I'm on the road to recovery and feeling better. It was basically, let's call it like one of the worst flus I've ever had. That was pretty much shit. So obviously it could have been worse. I want to say thank you even to the people who gave me crazy internet medication prescriptions. Like, hey, have you tried, like I got a lot of funny, hey, you should try this. It's sure to cure you even faster. And I want to say thank you even to those people because their

heart was in the right place. Have you tried eating mushrooms, a Snickers bar, and a tube of toothpaste? I basically subsided on chocolate milkshakes for about a week. That's pretty much, I didn't have much of an appetite in my throat hurt and everything. So anyway, I think I'm on the road to recovery. Ben, this thing is so dangerous. I thought that I caught it from Zoom last week because on Thursday, I'm walking to the office, and all of a sudden I get a little, tiny little sniffle, like imperceptible normal times, you know, just want to, and also I'm like, what the hell was that? Yeah, you think you have it.

And then I'm like, wait, do I have a headache? I think I might have that. And I'm not a hypochondriac normally, but it was top of mind. I walked past the corner. On the corner, there's like a testing center, like just like a pop-up tent, and thinking, maybe I should get tested. So I think I get tested. And right after I took the test, I was like sure that I had it.

Like the test was going to cause COVID or something. Anyway, negative, but, yeah. The crazy thing to me is that I kind of assumed, okay, I'm vaccinated. If I get it, it's going to be pretty mild. And I'm a healthy person. I don't have any preexisting conditions. And it knocked me on my ass for like a week. And so I think if there are people out there who say, like, I'm young and healthy, like, why would I even need to get the vaccine? Like, if I didn't have it, the vaccine, it's possible I would have ended up in the hospital. Now, you could do the other counterfactual and say, who knows, it's hard to say. And there was a few people who said, well, you had the vaccine

and this still happens, see, but I look at it the other way that I think the vaccine. seen protected me from potentially going in the hospital. I never had any crazy lung issues or breathing issues. So my wife and youngest daughter never got it. We've been testing them as much as we can. And of course, now all the tests all around the city are basically sold out. But we've been testing them. They haven't got it. They even had my daughter do an antibody test to make sure like, why is she not getting this? The other two kids had it. How is she not getting it? She took that. She hasn't had it before because she didn't have the antibodies. It's very random. My wife obviously still hasn't gotten it and not going to but they're not going to get it,

but it's the whole thing is just, it's kind of fascinating to me like how it affects certain people and it doesn't and it's a very bizarre virus, obviously. Ben, we passed 10 million downloads. I saw that. Which I shared. Yeah, pretty cool. And you were right. I was wrong. Do you know where you were on January 24th, 2018? I know exactly where I was. I was at Disney World. That's why we didn't do an episode. Oh, okay. So that was the episode. that we missed. I thought that we didn't miss one. Ben, you were right. That was the only episode we missed. Someone let us know that. Somebody emailed us and said, yeah, why not do a double episode of Christmas special this year to close the gap? Well, if we did enough double episodes

at the beginning of the pandemic to make up for it. That's true. I went back and I listened to, I was just like checking our show notes because as far as I remember, we always pretty much did it this way. We had a Google Doc. The format of the show is pretty much unchanged. I think I don't remember when we started adding, like, movie recommendations and stuff that we're watching. I think we did that right away. It was pretty early. Yeah, I think we did too. I had that idea from the get-go that I wanted to give recommendations.

It might have been more books early on. Okay. Yeah, yeah, probably. So I was just going through one of our old show notes, like from the very beginning, November 2017 was when we started. And obviously a humongous thank you to the audience for sticking with us because in the beginning it was pretty dry. I only listened to one part of one episode, but I kind of remember that being the tenor of

the conversation. And I was looking through the show notes of an early episode. This just caught my eye from November 2017. Charlie Bellello tweeted a poll. At $2,200 today, Bitcoin is undervalue, fairly valued, overvalued in a bubble. And 51% of people called it a bubble, 25% of people called it overvalued. I probably would have fallen in one of those two camps at the time and full disclosure. So 76% of the people thought it was either a bubble or overvalued at $2,200. So there you go. What did they hit this weekend? 52,000? 50,000. Unbelievable. All right, we got an interesting email this week from a listener. I wonder what advice advisors would give if our stock market had just begun trading in 2010. Because it's been so easy,

basically. Is that the idea? Yeah. I look to look at this from like the other way. Imagine yourself as an investor in like the late 40s and you had just in the previous cycle witnessed the stock market crash 85% in the Great Depression and not come back right away. And you're looking back at the history of the stock market and it's like, this is not a great thing. It had this one huge run-up and then it crashed and now it's still been treading water ever since. The point is that like recency always does it, I guess. But you know what's interesting? At what point does a recency just turn into history? You know what I mean? It's been like a decade plus bull market. It's been a long time. Running into this decade, you had a lost decade before

where the S&P lost 10% in total. That is 100% true. So this chart from The Economist blew my mind. There was a chart showing it's titled Master Chef's. Cool title for a chart, I guess. And it's talking about the increase in market capitalization from different CEOs. And we've got the top six, the CEOs of Apple, Microsoft, Amazon, Google, Facebook, and Tesla. This is during their tenure, okay?

so Tim Cook Wait is this right $2 trillion dollars That makes sense Or is that percentage No it's saying But 2.1 trillion So

How big was Apple when he took over? Holy shit Apple's $2.5 trillion dollars Yeah Right Unbelievable That broke my brain Okay

Saudi and Adela 1.9 trillion JetBenzus 1.7 trillion Sandar Pekai Mark Zuckerberg 940 And then Elon Musk 699 billion

Again, this is the Cudigra, Warren Buffett, Ben, $648 billion. Warren Buffett has been at the helm of Berkshire Hathaway, depending on when you start his tenure, for 50 years. Yeah, it took him this longer. Imagine if he would have just put his money into an NFT. He'd have way more money. But seriously, Elon Musk has created more market cap value for his shareholders, kicking and screaming, by the way, not the lungs, I guess, than Warren Buffett. This whole cycle, it hurts your brain to find.

think about, which is kind of where I've been the last week. Today's like the first time my brain actually functions. It felt like I just had like a butter knife jammed in the back of my brain for a week. I'll talk about it recommendations, but I couldn't do anything besides watch movies basically. So hopefully this stock is mostly filled with Michael stuff. Our communication last week was in a bare market, probably 80% crash. Big time. I missed you. You kept me up like what was going on OpenC in the NFT world on Slack. I mean, I hope I didn't overdo it. No, no, no, it was fine. I needed like a little, sometimes it helped to have a break. Because I was cognizant not just to keep dumping stuff in there.

Only the most important NFTs made it through. So the question of like, what advice would you give someone if they'd just be on trading in 2010? So if you would have started like this new cycle dump that we're going to talk about with Bridgewater in 2010, hedge fund managers were like market gods back then. The 90s and the 2000s, hedge fund managers were like they were it. And they've been knocked down a few pegs in this cycle because they just haven't kept up. So there was the story about Ray Dalio and Bridgewater, how a pension fund is going to dump them on weak returns for Orange County, California. They said since 2005, they've returned four and a half percent annually. And I looked it up.

A 60-40 Vanguard balanced fund has done eight and a half percent or so since 2005. And this is their pure alpha fund, I guess. We spoke about this. I feel like something might have been up. I've been getting more and more emails from fund sponsors, fund managers that have like SPVs to get you access to pure alpha or maybe it's all one. I can't remember. Either way, I've seen those more and more in the past year or maybe I've noticed it more than I have. I don't think I used to ever get those, these emails.

Do you know what I'm talking about? Yeah, but I mean, this is at one point, one of the greatest head funds there was. And I think that's just telling of this cycle more than anything is just how so many of these legendary investors have just been on the wrong side of this thing. or navigated it wrong, or whatever the case may be, they've had a hard time. By the time something like this, like Bridgewater, gets to advisors and retail, you know something might be amiss.

Yes, in my endowment days, that was always like a big red flag is when a huge hedge fund got to be like $20 billion, and they said, all right, we're gonna open it up to the brokerage channel and give them their own access. And that's like, okay, they're selling out and they're ensuring their revenue stream is set for a long time,

they don't have to worry about performance anymore. So over three year, five year, and seven year, it's been tough to say the least. So this Orange County's got a hundred... Hey, could you say that they would have been better off with pure beta instead of pure alpha? Listen, I don't want to like throw a stone. It's been a tough decade for... I know. That was a bad joke.

For a lot of investors. But, you know, certainly, listen, they haven't done well. Just in terms of like decision making and stuff. So Orange County employee retirement system has $175 million with Bridgewater. they've got $105 billion in hedge funds. It's like a basis point. I mean, whatever the numbers, it's tiny, tiny, tiny. So the underperformance in nominal dollars, it's significant, hasn't hurt the overall portfolio.

But so what do they do from here? Do they leave because of bad performance up to this point in time? Do they leave because they think the poor performance will continue? What do they do? Well, it says what they're going to do is put them on their watch list. Watch list. And I understand that they have to have a system in place to figure this out. And basically the watch list means, okay, your performance has been bad.

If it gets any worse, we're going to dump you. If it gets better, maybe we'll think about keeping you. But the whole thing should be, listen, if we have a manager that has performed poorly, are we willing to double down and rebalance into the pain and give them more money since they're doing bad? because you'd hope that you'd have some comeback in place that they would do better. If you truly believe in them. If not, then you have to get out of them right away. So that's why the whole watch list thing never really made sense to me.

A lot of them even do color-coded. So on their quarterly performance, they'd have a green and a yellow and a red. Red would mean, all right, we're firing this manager. Yellow would mean, okay, they're on the watch list, and green means they're okay. It's purely performance-based, of course. But that's just shows how hard this whole manager or manager's approach really is, though. Here's another reason why it's so difficult. Ben, to your point, let's say that you do like, okay, going into this, we believe so much that we're going to double down if they're underperforming, or this is more of a flyer, let's see how it goes.

And if we don't like what we're seeing performance wise, we're going to bail, like we like what they said, but let's see the proofs and the pudding type of thing. But what if they've had money with Bridgewater for a decade? And the people that initially made the decision to buy are probably or possibly no longer even there. So now it's a new set of people who are like, wait, why did we buy this thing? and what has a performance been, and oh, it's not, I didn't pick it, you know what I mean? So all of that sort of stuff becomes incredibly important in making decisions. That's probably a lot of it, is that there's so much politics involved in all this, and it's tough. By the way, totally random here.

I should have mentioned this earlier. First episode for us, Ben, I think, where I can't see you. So I'm not going to lie, this is a bit difficult for me. Yeah, I can only see. I'm having some technical difficulties because I'm still in quarantine here for two or three more days, and I can finally go back to the office. I'm staring at a gray screen. Credit to me. I got a new computer and my camera's not working, so I need my T support.

Were you able to read this Matt Klein piece on demographics and interest rates? Yes, very good. So Matt Klein is out with a piece, a free piece in a substack, which I am a paying member, talking about how the secular decline in global interest rates is caused by changes in population structure and by shifts in the distribution of income. In other words, the income inequality or the income concentration, I should say, is pulling down interest rates because if you've got a net worth of $150 billion, there's only so much money that you could spend. So your demand for borrowing and consuming, there's a ceiling there. There's a cap. So obviously, the whole idea here is that

the world is getting wealthier, that's pushing interest rates down. I think that's probably the best argument that you can make. I really think that is like the Occam's Razor thing. Well, so William Bernstein has his book, Birth of Plenty, that basically answered the question, how did we ever go from living in tribes to all of a sudden a few hundred years ago? We have this explosion in economic growth. He looked at a lot of these civilizations of the past, and he said they have this U shape in their interest rates. And they start out really high, and that's happened the U.S. too. And then as countries get more wealthy, their interest rates decline because there's more trust and faith in the system. People have more wealth. And it makes sense that, of course,

the end of the U is civilization is destroyed and rates go back up again. Here's where I was going. So why can't the central bank of Japan have been trying for decades to get inflation off the ground? We're trying and we're getting it unintentionally from various reasons, but it is because, and inflation is a difficult thing, like what even causes it, but it's, I guess the classic definition is too much money chasing two few goods, and there's too much money in the hands of two few people, such that the dynamism of the economy, it can't get going to the degree that once could because so few people have so much money. Am I overstating that?

This was a crazy stat to me. He said the 2007-2010 downturn was obviously shallower than the Great Depression. by magnitude in terms of the fall in economic growth. But the subsequent recovery was weaker from 2007 to 2019 and from 1929 to 1940. So that's taking peak to peak and then going out 12 or 13 years. That is crazy to me. Even though it fell way further in the Great Depression, you had a much faster recovery. And that's the weird thing to me about people who are constantly trying to pump the brakes

on this current, whatever you call it, boom, economic recovery, whatever. it was so slow coming out of the last recession. I can't believe that people are already worried about overheating this time around when we haven't even let it go for more than 12 months. But I don't know, back to the interest rate thing. I think probability it has to be way greater than 50% that rates are going to be low. And when I say low, I don't know, 10 year under 3% or 4% for a long, long time. Even 4% from here would be relatively surprising to me.

Totally with you there. Balchun has had this really nice eye candy of a chart showing annual ETF flows by issuer. And I don't know where the hell is this money coming from. With four months to go, Vanguard already set a record. Like in other words, I mean, where's this money coming from? Where I'm going to going to that is if you were going to leave the shift from active to passive, there's still juice left to squeeze, clearly?

I thought for sure that we would see a big rotation. out of Vanguard index funds into NFTs, and it just hasn't happened yet. Doesn't it have to slow down at some point? The active index fund, mutual fund space is still so huge, though. There's so much money that could still come over, don't you think? I understand that. I'm just saying you would have thought that the pace at which this is happening would slow down. That's all.

I'm not saying that's going to reverse, but... This is another reason why we live at extremes, though, because you're talking about all this speculation going on, and there's still billions and billions of dollars. going into Vanguard. Yeah, hundreds. It's hard to process those differences of all the crazy speculation we're seeing on fake internet rocks and this stuff. But then, oh, by the way, Vanguard is still bringing in tons and tons of money.

That's true. What do we say OpenC did like $2 billion in volume last month, which was an absolute explosion. And this is apples and oranges, but that's like one hour of one of Vanguard's ETFs in terms of inflows. But someone did send us a survey today saying that 18% of all Americans, Americans have purchased an NFT, which is just, I don't know, one of the worst surveys I've seen in that was kind of like crypto back in 2017 when it was like 30% of the population now owns at least a Bitcoin. It's like, no, they don't. I think I've been desensitized. I don't have the ability to be shocked by a survey anymore. This is true. Yes. It's just bunk. It's just complete

bunk. We haven't spoken about the stock market like in depth. I guess it's just so boring and I'm totally cool with that. Liz Anzondos shared this green chart. 19% per year since 2009 and It's boring. Think about how weird of a cycle we have to be in for that to be the case. What was the year of like straight up and slow? I think that was 2017 was one of the best risk-adjusted returns ever. I think 2021 is going to beat it. It's close. So we've been up every single month this year, correct? We're going on a month nine in a row. Is that right? Yeah. Did we have it down months? It compounds. I don't think we've even had a plus 2% day in a long, long time, but it's just a slow grind every day. So there's this chart showing the number of

consecutive days with 75% of the S&P 500 stocks trading above the 200-day moving average, which is basically saying a streak of how long the majority of stocks have done well for. And we are at over 200 days, which is about near a record high for the last 30 years. It looks like we're about to pass it. This is what happens in bull markets, though, and this is why you get crazy speculation because you talked about the stock market being boring, even though we're up 20% again. in a very easy year because eventually people, they move on from Apple and Amazon.

I think even Google's up 60 some percent this year. And it's too boring. Yes, and it's too boring. So that's why people continually move out in the risk curve because they need that bigger dopamine hit or whatever it is to get the juices flowing. They have to go. That's like when you get bored at Blackjack after a while

and you start eventually, you can't just keep making the minimum bet. You have to increase your bet every once in a while because you have to like get the juices going. 100%. So my juices were going last week when I got an email from Collectible that a Wilts Chamberlain rookie uniform, which I'm a partial owner of, got a $2 million buyout offer. The IPO was like 1.2. So the net numbers, I think, to investors were around 50%. In four or five months, annualized that, not so bad. I voted yes, of course. We had collectible on the show before, and this is the idea where they ask you, they ask all the shareholders, what do you want to do?

Take the offer or turn it down? Whatever it was, it was a 50% return, okay? There was a 50% return in four months. The shareholders vote, I smashed that yes button as quickly as I could, and I was in the deep minority. 82% of people said no. That's because I think that 82%, what they really want is for someone to dump lighter fluid all over the uniform, light it on fire, and then turn that into an NFT, and that will actually supercharge the return even more. You have to be patient for that kind of thing. What are people

hoping for? So, Michael Antonelli, friend of the show, had a great tweet last week, not being rich enough in fake money to be able to participate in a mania is a humbling experience. And what he was talking about was, at one point last week, the Ethereum gas fees to buy these JPEGs and whatever else was $300. So are you going to buy something for $20 and pay $300 a fee? Probably not. So how is your NFT collection looking these days? What do you mean?

I'm dabbling in a very, very, very light way. I didn't buy anything of substance. All right. Here's an interesting one from Bloomberg. Robin Hood is working on a new feature that lets its users receive their paychecks via direct deposit up to two days early, stepping up competition with companies like PayPal and Wealthfront, which I didn't realize PayPal and Wealthfront were doing this. So this is basically Robinette turning into a payday lender.

I hate this. This seems bizarre to me. I mean, maybe in a world where we move to daily pay at a lot of places, this won't matter as much anymore. Obviously, that could take a long, long time. I love daily pay, but the idea of Robin Hood stepping in to give you your money before you get it so that you can gamble on their platform, I'm sorry, long-term invest. That stinks.

Don't need that. I don't know that you need that either. There's a lot of other financial services they could do before they get to that one making a difference for a lot of people, I would think. All right. I was thinking about technology and how seemingly quick and slow it moves, because Dave Natig had a great piece about NFTs, what's going on. And he said, big, big global change happens much slower than the technology itself because people don't adapt as quickly as the tech moves.

So I was digging around. I stumbled upon this Mark Entries and article from 2014. And I remember reading it at the time, I wish I took it more seriously, why Bitcoin matters. He wrote, 2014, Mark Andreessen, a mysterious new technology emerges seemingly out of nowhere, but actually the result of two decades of intense research and development by nearly anonymous researchers. Political idealists project visions of a liberation and revolution onto it. Establishment elites heap contempt and scorn on it. On the other hand, technologists, nerds are transfixed by it.

They see within an enormous potential and spend their nights and weekends tinkering with it. Eventually, mainstream products, companies, and industries emerged to commercialize it. Its effects become profound, and later, many people wonder why its powerful promise was more obvious from the start. What technology am I talking about? Personal computers in 1975, the internet in 1993, and I believe Bitcoin in 2014. I don't care what the next one says. When Mark Andreessen writes an op-ed, I'm buying whatever he writes.

The hero, why software is eating the world in August of 2011, right before all the huge tech companies took off. He wrote why Bitcoin matters in January. of 2014, whatever he says, I don't care, I'm buying. Whatever his next op that is, I'm in. Yeah, I want to talk a little bit about the use cases. And so we'll link to this in the notes, as we always do. And I suggest, before we get to the use case, I just, it's comical to me how quickly the narratives shift in this, because already we've gone from like six months ago, nine months ago, no new to an NFT was. So now NFTs are the greatest thing in the world. And if

you're a corporation who doesn't have an NFT strategy, you're going to be left behind. It does remind me a lot of, like, I'm not totally poo-pooing these things, but remember in 2017 when ICOs were going to change how companies are funded, and then it just kind of went away, that's the interesting thing to be about crypto. And I think this is actually a positive for the space, is that no matter what it is, anytime a new thing comes along, everyone is rowing in the same direction and has to jump on board and say, like, oh, this is the greatest thing ever. And if it's not the greatest thing ever, then they move on to the next thing, whatever it is. And I think that's actually one of the reasons that it continues to progress and move forward, even

in the face of like maybe it not making a lot of sense in terms of like the narrative constantly shifting does that make sense no totally but actually no you're right and at the same time there's also a lot of fractioning and infighting between different tribes so the ethereum people the bitcoin people the nfti people like there are tribes are forming or have formed quickly yes honestly like i just don't see the need to like try to plant your flag and one over the other and not just let them all fight and see who comes out on top. I don't know how you could just say this is the one for sure. I don't know how you could be that certain about anything in this space. I went to Stubhub to see what the fees were.

I know the fees are egregious. I've used it a million times. And so if you go to the website, here's what it actually says for Stubhub. It's free to list tickets on Stubhub. When they sell, we collect a sell fee. This may change over time depending on ticket supply and ticket marketing costs. Stubhub's fees help us create a safe global ticket marketplace. As long as you deliver your tickets as promised and on time, this is the only step up for you'll ever pay. Ben, did you hear how much they charged you? No, you didn't because it wasn't there. It's unbelievable. So buyer fees are 10%, seller fees are 15%. And then they fluctuate based on time, location, event, demand, whatever, whatever. The fees are massive. But you know what this sounds like? Gas fees on Ethereum. It

sounds like the same thing, right? Why does that need to exist? I don't know, because it can't. I understand why it exists and why it's a service. But unironically, completely earnestly, sincerely, doesn't blockchain fix us? The ability to transfer tickets? But that's what I'm asking you. There could be some coin that they can create that fixes this that is way cheaper to do this stuff with. But I don't know if it's a coin. I'm saying it's a blockchain technology. Obviously, I don't know enough to explain how this would work, but wouldn't you think that somebody's building that, a ticket exchange on the blockchain where fees are not 30 percent? I don't know, but I feel like we heard that in 2017, too, and it still doesn't happen.

Why has it not happened? You heard somebody in 2017 say that Stubhubhub should be under attack? Those are the first things they talked about when the blockchain, remember when people initially said, I'm bullish on blockchain but not Bitcoin? That was like the cool, smart thing to do to sound like a contrarian. What if it takes time to build these things? It could. I mean, clearly it does.

You're right. Here's another one. This is from Andreessen. Another potential use of Bitcoin micro-payments is to fight spam. Future email systems and social networks could refuse to accept incoming messages unless they were accompanied with tiny amounts of Bitcoin, tiny enough not to matter to the sender, but large enough to deter spammers who today can send uncounted billions of spam messages for free with the punity.

As long as this counts for people who, do you get these two? I want to write a guest post for your blog. I must get five of those a day. So that's spam, exactly. So there is a new web browser. I don't know how I know it is called Brave. I think they have like 20 million monthly users. And it is a free browser.

It is untrackable. Like if you go use Google Chrome and you go to Incognito. I don't think that's actually does anything, but on this web browser, it does something. It allows you to look at sites that you've already had your article limit on. I thought you were going in a different direction with that, but sure. When I run out of the Atlantic articles for the month, then I go to Incanuantosa. So this brave web browser, which they claim it's faster. I don't know. I've been using it. It comes with something called basic attention token.

Wait, wait. You're using this browser? I am using this browser. Crypto guy. It's just a web browser. Okay. So it says with Brave, your behavior across websites never leaves your browser. That means no profile of your activity or identity is shared with any third party. And what this Brave does aside from just acting as a regular web browser is it allows you to tip

with something called the basic attention token, which I bought a little bit of just to see how it works. So you can directly, not in theory and reality, you can tip people on their websites. If you said, oh, that was a great article, I want to give you a token, whatever, whatever. Again, I'm not saying that brave or bad is going to be the next one, but here's another example of a real world application. Okay. Can I say this is a cool idea, but the world runs on advertising. I don't know how we're ever going to change. So do you remember like a year ago or two years ago, Tim Ferriss decided I'm going to go ad free on my podcast.

I'm just going to go to a tips only. And like a week later, he was like, whoa, whoa, whoa, wait, I'm going to go back to ads. The tip thing did not work. I think that this sounds awesome in theory. Tip, you're right. I think changing our mindset in our society from an advertising to, hey, pay as you go, pay as you use, that sounds awesome in theory. I don't think that works in practice. Maybe for a small community of people like you who are crypto bros who wanted to use this.

Are you talking to me? I'm just kidding. I'm an S&P 500, bro. I just think it's funny that you're using this crypto browser. I don't know. I'm kind of like, it's kind of like changing the dentist for me. It's not a crypto browser. It's a web browser.

So Twitter announced this week that they're going to allow Bitcoin tipping. Again, I'm with you. I am bearish on tipping as an idea. I'm just saying that there are things that are being built. Dude, venture capital just funded $2.6 billion in the first quarter. Do you think these are idiots? Are these dumb people that are giving money to other dumb people? No, they're building real businesses. Do I know exactly what they're building today? No, but am I bullish on the fact that this is going to be beneficial for consumers and the crypto community, which Ben, I guess you have now inducted me into? Yeah, I do. I guess my biggest surprise is that And I've said this before, is that there was so much money that flowed in 2017, too. Obviously, it looks like a drop in the bucket compared to this. I'm surprised there hasn't been more real-world use cases from that first initial. Maybe they just had to set up the infrastructure first and get things going. It was so young back then. I guess maybe because everything is moving so much faster, I would have assumed we'd have a use case now for blockchain that would be like, oh, okay, yes, let's do that.

That makes so much sense besides just financial transactions and speculating, basically. But you're right. There's so much money and brain power going into this. You'd have to be an idiot to go against this wave. All right. So we haven't even mentioned anything about price. Let's just talk about it for a second. Because everything that I just said has no bearing on whether Bitcoin can get cut an half again, which undoubtedly it will multiple times. That I'm pretty confident about. Chris Berninski tweeted, Bitcoin has lost its cultural hold on the crypto market. Unchartered territory next. Big of true. That's probably for crypto people. But as far as non-crypto people, if you want more adoption, that Bitcoin is still the one that people point. to and understand if you're coming in. Correct. Here's John Street Capital blogging for FTX for the bullet case for Bitcoin. He said, while we don't have a precise estimate of the market cap for gold, let's call

up between 9 and 13 trillion, which would correspond to a Bitcoin range of 428 to 620,000 per Bitcoin, 770 to 1100% from current levels. There are very few macro bets where an investor could deploy billions of dollars and have eight to 12 times upside with 60 to 70% downside. So I thought that was a very, very fair point. And then the other part that he said that was interesting, I think we spoke about this. Bitcoin bears will often point to MySpace or Facebook or Black Bear or Nokia to say that the first technology doesn't always win.

And he said that shows a fundamental misunderstanding of Bitcoin's purposes and store of value. You can't replicate Bitcoin's origin story with an anonymous founder who would be amongst the richest people in the world and 12 years in still hasn't sold any Bitcoin, whatever. So anyway, I obviously don't agree with a lot of the macro thinking that a lot of the Bitcoin people talk about. But I believe that enough people believe. That's all that matters at a certain point, right? This is the reason why it's so hard, since we have so much knowledge now, because you're constantly looking for a historical analogy either to use in your favor or to disprove whatever you're thinking. It's never going to line up perfectly like, okay, this is going to happen exactly

like the internet did. Like, that's almost too easy. I think historical comparisons like have cost investors a lot of money. Yes, probably. How long as Dali? I've been saying this is 1937. For 2012, probably, so we're really 1943 right now? I don't know. I agree. It's tough. Ben, we don't need to spend a ton of time here, but do you remember, I know you because we spoke about it for a few weeks when growth stocks got whacked because of inflation? In rising rates, right? It was a rising rate environment.

I mean, in fairness, rates were rising. I'm not saying that the narrative was bunk. I'm just saying it just went the other way. I think there's something to the fact that after really big gains, a lot of times investors are looking for a reason to sell. There wasn't really a reason for Bitcoin to get chopped in half. Was there people blamed Elon Musk and regulations and China and all this stuff, but a lot of it had to do with the fact that it went up a lot in price. Everyone went to one side of the boat, and then when you had a little hiccup,

they had a quick run to the other side of the boat. And that's what happens in these things, especially when you see huge gains and stuff. Right, you're saying crypto got caught in half for no reason. Who's a crypto bro now, huh? I'm just saying, sometimes the reason this stuff gets, knacked down a peg is because it went up too far. That's like the simplest explanation most of the time is that the game got out of control. I never want to hear that. If I ever write, well, I've definitely written a dozen times. Who am I kidding? Sometimes things go down because I went up too fast.

That's very unsatisfying. And sometimes that's the most of the time, especially in today's marketplace. That's the best explanation. That's a target date fund guy answer. That's not a stock picking guy answer. Oh, sorry. At heart. It's a market of stocks, not a stock market. You have to look underneath and see which stocks are trading over the three-day moving average. All right, here's something that blockchain might fix for you. God, you're boring. Feel bad saying that when you're suffering from COVID, but you are a bore. Okay, thanks.

Here's something that blockchain might fix, Mr. Tech guy. They did this study at Harvard Business School that says that this is why you have to write really good cover letters, like you've been telling us about in recent weeks. Ten million workers are being excluded from hiring discussions because of automation in resumes. So millions of resumes come into these companies. They look for certain keywords or certain jobs that you've held in the past or designations or whatever it is. And everyone else they just throw by the wayside.

And they said companies for sure say they are eliminating candidates that they want to hire. 90% believe high skilled prospects are being weeded out because they didn't meet all the criteria, even though they could easily do the job. So they talked about how you're looking for computer programming in something or floor buffing experience and jobs that maybe aren't that highly skilled and they're still letting people go, because of this automation somehow. You've seen stories like this in the past where you get the job description

and it says send in your resume or cover letter. You copy the whole job description and then you paste it onto the bottom of your resume in really small font and you put it in white. So you can't see it on a resume, but it gets picked up with all the keywords on the search. Stuff like that. That's how dumb this whole process is,

like where they're just looking for certain keywords or something. The companies are saying, like, listen, there's a labor shortage, but we're not helping ourselves at all by this. And this is why you need to tell people about what you change your mind about sports, because that helps you stand out. Tell me how the blockchain fixes this. It has to, right? All right, listen, you don't want to be that guy, Ben, who plants their flag anti-blockchain. No, I just think it's funny because you are doing a good zag right now because no one is talking

to the blockchain anymore. They're just talking about all the tokens and prices and NFTs stuff going up. That's true. You're turning into a true crypto believer, like you're a Bitcoin maximalist almost because you're saying, no, no, no. What are you saying? It's a blockchain. Bitcoin maximalists don't care, but honestly, I'm not even talking about the price. I am bullish on this technology. I guess it does make me sound a certain sort of way. That's okay.

That was my favorite thing in 2017 is people would say, I'm bullish on the blockchain, not Bitcoin. Fine. Dude, you're 100% right. But if you ever would like tug on that thread, be like, all right, give me an example, what technology are you bullish on? At least I'm trying to like find out what the there there is. Yes.

I agree. I'm not just skimming the articles. Yes. That's a playboy analogy. Okay. Yeah. Sorry. For the young listeners, that's a magazine that never mind. All right. Real estate gains continue to be otherworldly. So the Case Schiller National Home Price Index had a gain of 18.6% through the end of June over the year. That's the highest on record. They have data going back 30 years. Ben, when did I go on record saying that home price appreciation would slow down? Because we haven't seen the data come out yet. I'm pretty sure I said that around August, or did I say that in July?

It might have been July. But there's a difference between slow down and go negative. That was my point. I never said go negative. Did I? No, that's what I'm saying. Maybe I did. But so, yeah, 90% annual gain.

They do this 20-city composite that is all the biggest metropolitan areas in the country, and 19 of the 20 are at all-time highs. I guess the only one that's not is still Chicago. I think the craziest one is Las Vegas, and Bespoke actually pointed this out. You look at this chart of Las Vegas real estate, and it looks like a roller coaster. Home prices in Las Vegas are down 62% after the crisis, bottoming in, like, 2012, and have now recently just surpassed the high from the mid-2000s. This chart is insane.

Confirmed. It's like everything else where if you just wait, everything seems to come back these days. This is like the whole 2010 market thing where, you're just conditioned. I don't care what happens. If it crashes, I'm going in hand over fist and I'm buying. I mean, this has worked for a decade. This gets back to the thing that we don't need to rehatch us,

but like that people aren't selling, that they're just holding on it because I was talking to my friend about this. He bought something and was up a lot. I was like, well, why would you sell? He looked at me like I had two heads. He's like, why would I? And so I guess the thing is, in a bull market, risk management looks ridiculous.

Anytime you took gains off the table on the pullback, you were beaten over the head because prices kept going higher And I know this sounds like boy, you cried wolf, but I'm definitely not predicting anything other than this doesn't last forever. No. Does it? It feels like it does. I'm working on a piece.

I'll come back with some data next week. I'm comparing U.S. home prices to prices against other countries around the world, Australia, Canada, France, UK. And if you think that we're in a bubble, those places, they've already gone above and beyond. And I think on a relative basis, you could say the U.S. is still cheap, relative to the rest of the world. Based on what? Real estate?

Based on real estate prices. Things have gotten way more out of hand in other countries than in the U.S. The U.S. looks calm by comparison. I'll come back with the numbers next week, working on a piece about this. Diddy you show me that's a price held on me. And let me just clarify that one point that this thing can't left forever. All I'm talking about is that the idea that you buy a dip and you're immediately rewarded because that's what it is.

It's not like, yeah, listen, if you have a long enough time horizon, like that's what good investing is and I'm a total proponent of that. I'm just saying like the idea that you're going to buy a dip and be rewarded like 36 hours later, it's not always that easy. And it has been that way for a long time and that can continue for who knows. Here's why this kind of hurts our brains when you think about the market's the way that you and I do. I think we're very similar here. We constantly have to put caveats on it because I think we're pretty bullish on the future. You and I are having conversations with young people all the time that are doing startups or skidding into the financial advising world that these people are really smart people, especially for how young they are,

like, on a relative basis. I'm permab bullish. I am always super, super bullish about the future, but I'm also sort of almost always, like, scared about the next, like, four to six weeks. That's the thing. Like, we're optimistic, but we also realize that, like, some of this stuff, like, it just can't go on forever. That's where we, like, have to temper our optimism a little bit, where we are glasses, half full people and, like, we're seeing some amazing things, but that doesn't mean that you can just continue to have performance like we've had that goes unabated forever. I'm Jeremy Siegel in the long term, but in the medium term, I'm like Muhammad Illarian. I'm like always slowly walking away from rest, but simultaneously super bullish about the next 20 years.

Oh, I got a few emails about this. I was wondering, like, why are so many smart people wear glasses? And it's basically, I guess, is what a lot of people said. A lot of reading as a child can make you nearsighted. So a lot of nerds who like reading as kids wear glasses because they read so much early in their life. Okay. So this is why you and I don't have glasses because we never read when we were younger. We waited a lot longer.

Although my eyesight is starting to go a little bit. You? No, I have like perfect eyesight. I was driving yesterday and my wife noticed a license plate and I was like, you could read that? She said actually get glasses. Why do I need long distance reading glasses? Is that even a thing? My vision's not blurry.

I just can't read small letters. Isn't that your Twitter profile? Far away. Long distance reader? Well, I started reading later in life. Maybe that's true. I don't know. Yeah, does it really matter if you can see things far away?

I don't know. Probably not. This is a good question. First, with the love, I was laid off in 2020, and your show was a bright spot during some tough times. I take my dog for long walks and listen to your great taste on the market. I've learned so much. Thank you. Oh, thank you.

And I'm sorry to hear about that. I'm employed again and I have a CD coming to an end at the beginning of the year. It's been a nice, steady 3% return, 3% from a CD. This person must have connections. It's a great return for a CD. There's about $55,000 in there, and I'm not sure what to do with it. Background, I'm 37, no debt, fully funded emergency savings account, no kids, max out 401k with a 4% match.

He has an IRA that he doesn't contribute to because income is too high for them to be tax-deferred. I'm not on the market to buy a house. I've owned homes before, but I'm hesitant to buy back at these prices. Time arising over five years. Okay, so here's the meet. Valuations are so high everywhere and yields are so low. I'm thinking of keeping the money on the sidelines and wait for a fat pitch.

Would that be a dumb mistake? Should I get that money in the game now? Ben, you have anything? I'm surprised you didn't call this person boring with a 3% CD that they had. This person is right up my alley, I think. This person is financially responsible. Well, you can get 55 basis points

on a two-year CD right now. It's about as good as you're going to do. Here's this. How about this? People don't swing at the fat pitch. I feel like we learned that in 2020. The fat pitch is effing scary. We talk about the fat pitch like you're going to be greedy when others are fearful.

Me and myself, I was pretty fearful in 2020. I'm not going to lie. I wasn't acting on that fear, thank God. But the idea that you're going to rush head first into a burning fire is, especially if you're nervous now, I would temper your self-expectations that you're going to be hero when the time comes. It doesn't mean that you need to put $55,000 into the market today. No. But I think dipping a toe helps ease some of those fears. I understand you think that you're going to put the money in and it's going to get cut in half. I totally get that. So maybe if you just dip a toe and you get acclimated to the water and then you could lag in overtime. So whether that's dollar cost averaging or whatever it is, but listen, I get it. This is a tough time.

So if you decide to set up a dollar cost averaging, say I'm going to put this money in over the next year, year and a half. However, whatever period you choose, you could say, I'm going to break that dollar cost averaging rule if the markets are down with 30%. And I'm going to put it all in because that's my fat pitch. Like, you could put some rules on it like that that, that give you an hour for dollar cost averaging. But you're right. Ben, you did a lot of watching this week. So why don't you hit me with that? What did you do? Okay, so pretty much all I could do is watch TV and movies. A lot of people are asking how I was doing in Obviously, I wasn't feeling great. I was feeling like crap, and all I could do is watch movies because my brain was dull. But this whole thing was probably harder on my wife than it was for me, because she had to keep three kids entertained and they couldn't go anywhere. They were quarantined, too. So honestly, like for me, this was probably easier than it was for her, even though I just sat there and felt like crap.

So I watched a ton of movies. And I told you, I slacked you at one point, I said, remind me to say that my judgment for movies goes out the window when I'm sick. So I'm more willing to watch like a dumb movie that I can just take my mind off of something. So here's what I watched. New one on Hulu called Vacation Friends with John Sina and the guy who plays security I can get out. Very dumb movie.

Fun? But fun. And honestly, a great party montage at the beginning. Really dumb plot. But I laughed a few times. That's all I needed for that. John Sina kind of reminds, you know, Mark Wahlberg in comedies? Like, he's not meant to be a comedian as an actor, but he has a lot of enthusiasm as an

actor in comedies. That's John Sina. That's a great analogy. I loved Mark Wahlberg and the other guys. The other guys. Yes. I like that one, too. It kind of reminds you of it.

Just like very enthusiastic, and that's how he's funny by showing enthusiasm. I watched Oblivion with Tom Cruise. That's a good futuristic one. This is the end with Seth Rogan and James Franco and Michael Sarah and Jonah Hill and all the guys from the Apatown movies. Actually aged okay, even though that's another dumb one. It's about the apocalypse, and they're all at James Franco sounds having a party. Really dumb plot, but had a few parts that I laughed. That's a movie that's not made today because it would be canceled.

Elysium is another futuristic one with Matt Damon. That was just okay. that one? I don't think I heard of that one. It's a movie on wealth inequality, basically. Put it this way. If there's a futuristic movie with Matt Damon that I've never heard of, it's probably crap. It's not bad, actually. So all the rich people decide to leave the planet behind after they've destroyed it, and they

move to... Oh, I remember this one. Like a big satellite world that all the poor people left on the Earth want to go to. Another apocalyptic one, seeking a friend for the end of the world with Steve Krell and Kier Knightley. That was on HBO. Not that great. Seeking a friend for the end of the world? Never heard of it. It's kind of like a comedy, but it's also

they tried to be kind of touching with it and it didn't work in those two. It was okay. You just named like four end of the world movies. Yeah, I watched a lot of End of the World ones. I watched Knives Out again, which have you re-watched it since the first time? I did. And not as good the second time. See, I thought, so the first time you watch it,

you're spending the whole time trying to guess what's going to happen and who did it and how did they do it. But I think the second time actually was good because then you could just enjoy all the dialogue and I like that. Apparently there's going to be Knives Out 2 where it's a whole different cast of people but then it's just Daniel Craig also plays the detective again. And then finally... His character worked.

Yeah, I love this character. And then Little Miss Sunshine was okay in a rewatch. I watched a lot of movies, so that's what I got. I was thinking this week, as I watched Collateral, I haven't seen that one in a while. Do you remember Mark Ruffalo was in that movie? No, I don't. I've only seen that one once. So it's a Michael Mann movie, Dark, Action, Tom Cruise, plays a serial assassin.

Jamie Fox is the cab driver that must drive him around. And I was thinking about this, Ben, I'm coming around. Tom Cruise, is he the greatest actor of all time? And I don't just mean best actor, because I don't think he's the best actor. His IMDB. His library is hilarious in terms of how many good movies he's been in it. It's unbelievable. Join the club, Michael.

T.C., yes. He's the greatest movie star of all time. That's a better way to put it. I was watching Mission Impossible goes protocol. So you see this chart I put on the dock, Ben? I don't know if you knew this, but Mission Impossible is like the only, I did. I'm looking at a chart of all the Mission Impossible movies by their critic score and audience score on Rotten Tomatoes.

I applaud your spreadsheet ability to do stuff like this. Thank you. You just decided, like, I'm going to put together a bar chart of Mission Impossible movie scores. There was a reason. I don't know what the reason is, but unlike pretty much any franchise I could think of, this one has gotten better with age.

The movies keep getting better and better and better. Yeah, honestly, the very first one, I didn't think that was even that good. I remember not loving Mission Impossible, too. Yeah, one and two were both just okay. And yeah, the last three have probably been the best ones. So I was watching Ghost Protocol last night. I fell asleep, but I'm almost done.

There was tons of fun. And you know what else? I realized something about myself. When I'm watching these type of movies, I have no idea what's happening. I don't even try to follow the storyline. If I had to explain to you what Ghost Protocol was about, I couldn't do it. The great thing is you don't need to, though. Right.

It was about Mission Impossible. That's what it was about. All right, that's it for me. I just want to say one thing. One thing. I'm not going to go so heavy on the crypto every episode, but I was deep in the hole this week. I went back through the archives, read what Mark Andrews were run in 2014, and I wanted to share some of my thoughts. It's an exciting marketplace.

I understand, and people always say, how do you better understand this world? And they say, just do it and learn. And that's what you're doing. Good for you. Good for you, Michael. Thank you. And listen, next time that we speak, I hope you are 100% back from your drawdown, which is pretty steep. And that's all that said.

I'm at like 78% right now, so I'm getting there. All right. Animal Spiritspod at gmail.com. We will see you next time.