Animal Spirits Podcast - It's What It Is (EP.115)

Episode Date: December 4, 2019

On this week's show we discuss the coming generational wealth transfer, some good economic news, The Irishman, too many contrarians, hedge fund money, investment banking as a career, 529 investing, one of the best things about parenting and much more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnick and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holt's Wealth Management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions and the securities discussed in this podcast. Welcome to Animal Spurts with Michael and Ben. So I guess we've got to talk about the Irishman in the room. That was your big intro you were so

excited about. All right. So I feel like you probably weren't a big Seinfeld watcher. Is that correct? Is that fair to say? It is fair to say because I've told you that. Okay. So anyway, there's a Seinfeld episode where there's a doctor and Jerry and Elaine and George go up to their friend's Beach House and the doctor is this dashing young guy that Elaine is interested in. And he calls her breathtaking. And Elaine gets all a flutter because she's excited because this handsome doctor calls her breathtaking. And then he looks at the friend's baby. And George and Elaine and Jerry have already said, this is the ugliest baby they've ever seen. And he looks at the baby and he says the baby is breathtaking. So Elaine realizes, okay, there's no way that this guy is using

breathtaking in the right way. He's just throwing it out to everyone. And that's the way. And that's the way I feel about you using the word masterpiece with the Irishman. I feel like if you use the word masterpiece for this movie, then you can't use it again at all because it's lost all meaning. I'm just going to throw it out there. Wow, I feel attacked. That's where I want to start. So I feel a little vindicated. Look at my Google here that I found what people were Googling about the Irishmen. The first five that come up. I typed in the Irishman was. And the first ones that come up or boring, bad, terrible, not good, awful. Only idiots Google that.

That's true. I don't think it was a terrible, awful movie. My review is that it was pretty good. I kind of liked it. It took me like three settings to watch it. And if you want to skip over this, if you are a listener who doesn't care or want spoiler stuff,

skip ahead because I might give some spoilers here. I thought it was pretty good. My first sitting, I told you, this is pretty great, the first hour, and it took me three sittings to watch it. And I just thought it never got better, and it was just too, I'm going to start off saying some good stuff. I got a lot of notes here. I'm going to go through my notes and then I want you to give me some feedback.

While you're looking for your notes, can I just say one quick thing? Yeah. I don't think you and I disagree all that much. Okay. I said masterpiece and a slide to you. I was being hyperbolic. I did like it very much, but here's the thing. And I think that this is very important. I saw this movie in a packed theater. Yeah, you probably got caught up in the moment a little bit. I saw it in a packed theater opening day, Danny DeVito, literally Danny DeVito. was in the movie theater. There was not an empty seat. There was applause after the lights went on. By the way, if Scorsese cast Danny DeVito in this movie, he would have played like a

college kid. So my point is, I think that I had the steak in the restaurant, and if you watch it on Netflix, you brought the steak home, and I think it had a very different experience. So that's true. If I watch it on Netflix by myself, I might very well have had the same exact reaction that a lot of people did, which is that it was far too long. You don't get like the energy. Here's my prose for the movie, but I thought was good. First of all, I thought Pesci was amazing. Like, I haven't seen him in a movie in forever.

And he nailed that sort of low-key gangster, as he was described in the movie. Perfectly, I thought he just, I was really surprised how well he did that. He was just not seeing him in so long. It felt good to have Joe Pesci back in my life a little bit. He, to me, had the number one line of the movie. So I am not at all a fan of the phrase, it is what it is. It doesn't resonate with it. I don't care for it. But he had a line that is pretty much exactly the same, but changed all of its meaning. He said to Jimmy Hoffa, it's what it is. And I thought that was awesome. I thought that interaction was the best part of the movie. That scene where those two talked, I thought that was the best back and forth of the whole movie.

The one with Pacino and Pesche? Yes. Towards the end. I thought that was the best back and forth of the whole movie where they kind of had it out and laid it on the table. I actually thought that I got more excited about this because I read the book. I thought this was one of those deals where the book actually made the movie better because I thought that as long as the movie was, there were still a lot of holes in the details. So I thought that reading the book, actually, if you liked the movie, I think you should definitely read the book because it worked as a good companion piece. Sometimes if you read the book, the movie can kind of ruin it for you and you say,

oh, the book was better. But I thought actually reading the book ahead of time, I kept pausing it and telling my wife, hey, this is what actually, and then they talked about this. And so I think the book actually made it a little better. Was that Peschi Pacino really your favorite scene? or was there something else? Yes. I actually thought the part with Sebastian Manascalco as...

Didn't work for you? No, I thought that was one of the better parts of the movie. Oh, that was great. Did you catch Jim Norton as Don Rickles? Yes, very good. Here's what the movie needed. And the Sebastian part kind of tipping off to this. It needed more youth and energy.

So obviously people have talked about the fact that the anti-aging stuff just didn't work for De Niro. De Niro in the fight scene or when he was beating up the guy at the grocery store, that was painful. Here's my big fix. of the movie, like, as much as I love De Niro, and if we're doing, like, Pacino versus De Niro thing, I'm taking De Niro 10 times out of 10 for his career. If he would have done this movie 25 years ago, he freaking knocks it out of the park and just slays. He was just too old, and so they needed, like, a Tom Hardy to play him, and then have De Niro play the old guy in the old folks home at the end and just narrate the movie. Don't have him play the part,

have him narrate it, and have someone like Tom Hardy play the younger, up-and-coming enforcer. That's what I thought it needed just some more youth. Him being almost the same age as Pesci didn't make it seem like he was this understudy. It made him seem like he was the same as him. So that's the part that kind of threw me just, and obviously the editing stuff, what I think happened is Scorsese went to Netflix and said, listen, I will give this to you

if you let me do exactly what I want to do. I'm going to do a three or four hour movie and you're not going to give me any notes and this is what it's going to be and they said, all right, here's a blank check. because if this would have gone through a movie production company, his, I looked at some of the other ones. Gangs of New York was like two hours and 45 minutes. What about Wolf of Wall Street? That was long.

The long, honestly, the length wouldn't have mattered to me if it wasn't for just, I thought a lot of scenes were just unnecessary. Like, they showed a scene where they go to, like, pick up the wives at the hotel to, like, tell them to go to dinner. Like, hey, it's time for dinner. And they just show them walking out. And I'm like, well, that didn't do anything for me. That didn't move along the story.

There was a lot of stuff that they left in there that I was like, huh. There was definitely a lot of fat. If this was 45 minutes shorter, I think it could have been an all-timer. I really liked it. I totally hear all the complaints. I think they're very valid. Is there anything else you want to say on this matter? Because I want to transition to something related.

Well, I think the big thing is that this movie got like a nostalgia premium. I feel like if you didn't know who Scorsese, Pacino, De Niro, and Pesci were going into this, you would have said, huh, that didn't work for me as much. It's just because you had all those people in one place. I feel like there was like this familiarity bias where you knew them. So I'm not going to be one of those people that said, oh, this was awful and it was terrible. Like, I thought it was a good movie. There was just parts of it.

There was too many flaws where I kind of went, man, I can't believe they did that or they left that in or they left it this long. I was just surprised. You ever notice how when people have different opinions, I guess the internet does this, but just everything in general. Like people got mad at you. You like the Irishman. That was fucking garbage. What is wrong with you? You idiot.

Worst take ever. This is my theory about the internet. Like, no one's going to give a lukewarm take of this. Everyone's going to say it's either awful and boring and I turned it off or this is the greatest thing ever. The point is, I think it's obvious or it's easy to see why people enjoyed it. And it's also easy to see why people don't like it. People have different tastes in movies and that's fine. And that actually got me thinking about three of the biggest movies this year, this one included, had a lot of pretty strong opinions on both sides.

So this, The Joker, and Once Upon a Time in Hollywood. I think maybe I was dead wrong on once upon time in Hollywood. I got to watch it again. Maybe it just, I had an off night. Or maybe I just won't like it the second time. But that seems to be a consensus everybody liked, I guess, except for me. It's very subjective. Wait, did you see that movie?

I didn't see it. I think it just came out on rental, so I'll get it. But I think this is like the pros and cons of the Netflix world as Netflix was super ambitious with this. And I think that's great that they just said, Scorsese, do whatever you want here. But I think hopefully they learn they might need some checks and balances in place if they're going to be ambitious and still, like I said, Gangs of New York, I would watch that over this one any day. Like, I don't know if I'd ever go watch this again. I didn't think it was

very rewatchable. Gangs of New York have probably seen three or four times, which is another Scorsese movie. And that was 2.45. And I'm sure that one started out to be three and a half or four hours, and he cut it down. And I feel like for this one, he just didn't do it. And I wouldn't mind sitting through a long movie if it kept my attention the whole time. I feel like there's just a lot of it that just kind of fizzed. And again, I think it's because these guys are just past their prime in terms of their acting chops like godfather two was not three and a half hours and that i had no problem with that because that's when they were in their prime anyway i'm not one of these people that says it's awful i just came out away a little disappointed i was like waiting for it and

waiting for it and it it never happened for me fair enough anyway moving on i saw a movie this weekend that i think will be universally loved and i think similar to like have you ever met anybody that thought get out wasn't amazing no that's true so it's in that's same vein. So in that same vein, Knives Out. Knives Out was incredible. It's a murder mystery, very similar to Clue, the format of Clue. It's got a bunch of actors in it, right? It's got a great cast. Daniel Craig played Joe Namath. He was so good. Joe Namath? Yeah. Really? He had a Joe Namath accent. It was incredible. The whole movie rocked. It really kicked ass. Did they fast forward to when he was drunk on the sideline talking to Susie Culber? It was just really good. So somebody email

me, last week I fell sucker to hindsight by saying that it was obvious that the joke was going to be obvious, but maybe it was obvious. And here's why. You're doing this one again? Somebody emailed me and said, actually, the Warner Brothers was not dictating the terms of the agreement. Todd Phillips came to them and said, I'm going to make this movie and I'm going to get a piece at the back end because Todd Phillips knew it was going to be a huge success. And speculation as to why they agreed was because he was the one, he came with,

Walking Phoenix to the role. So he had the upper hand, not Warner Brothers. Lastly... But don't you think all these people with clout these days are going to bet on themselves and take the back end? Like, I feel like every big successful movie these days, they go, oh, they knew something no one else knew,

so they took a cut in the back end. Don't you think anyone with leverage these days, like the Rock or Johnny Depp when he had his big run with Pirates of the Caribbean? They're all going to take the back end because they're betting on themselves. So why wouldn't you take that, knowing that your upside is way bigger.

Well, that's a good point. Are we sponsored by Rotten Tomatoes yet with this movie segment here? Last one, and I promise we'll move on. So last night, I was flipping through and Little Fockers was on. And by the way, aren't we overdue it for Big Fockers? It's been, what, like 10 years? Yeah, I'm surprised they haven't milked that one yet. So listen to the extras that are in that movie.

And when I say extras, I mean under a minute. Kevin Hart, Nick Kroll, and Jordan Peel. Not bad, as far as cameos. But there wasn't cameos, because this was before they were like superstars. So anyway, you think Gennero could still pull off Jack Burns in a big Fokker's movie? Yeah, but again, if Scorsese cast it, he'd cast him in Ben Stiller's character. Anyway, that was surprising to me how much stuff they miss on that. Anyway, so someone sent us this generational wealth stuff, which is a fraction of all U.S. wealth owned by each generation.

So they show the silent early one and the baby boomer one. this is going from 1990, I guess, and Baby Boomers now make up, he looks like 60% of it, probably. The younger Gen X and Millennial make up much less than 25%. So I feel like every financial advisor conference that people have been to for the past 10 or 15 years has talked about this huge generational wealth transfer of money from the baby boomers coming to the next generation. I don't know how many, what is it, $30 trillion or something ridiculous. and that's like the obvious thing you get away from this, but don't you think that that is not as big of a deal as people make it out to be? Like, don't you think with the fact that people are living longer, that transfer is not going to come until the next generation is like 50

or 60 years of age anyway, past the point where it really makes a difference in their lives? I understand why this tweet took off, but it's a striking visual. But I don't think that this is controversial. I mean, obviously older people have had more time to accumulate assets. So this was hijacked by people saying boomers ruined everything and we're all completely screwed. I guess the thing in this chart that lends a little bit of credence to that argument is it showed the fraction of assets for each generation at age 35. And it looks like Gen X and the boomers had more a bigger piece of the pie than millennials currently do. So I don't know. I understand that millennials are in, I just, I'm going down this road, but I think. If you look at this chart,

the silent generation and earlier had 75% of the wealth in 1990, and now the boomers have taken it up. So guess what? Eventually, the younger generations are going to take over that wealth. That's just how this happens. So we caught a bit of backlash. I think this was a reverse OK boomer situation where people were very angry with us in our inbox. This is probably the first time that people were like angry, angry, that we mentioned just floated the idea of government-sponsored child care. And I don't think that you and I were necessarily complaining because we're fortunate that we can afford to pay for child care. I think we're just saying, like, in general, it's hard. It's expensive. And things have changed. People are getting really nasty in our

inbox saying, like, how dare you? You don't want to raise your kids because you want more, quote, stuff. And it's like, I don't think that putting a two-year-old in daycare is not raising your children. That's the worst argument I've ever heard my life. It really ticks me off when and people judge other parents for these decisions because it's not easy. And my response to that is always, so when they go away to preschool kindergarten at age four or five, do you consider that having teachers raise your children? I don't really get that. But people are saying that we're socialists now because we want a little bit of government help.

And people were saying, well, I'm childless, so I don't want to be paying for your kids. It's like, guess what? You're paying for their K through 12 already. We're just saying, extend it down a couple of years. We're not calling for a big overhaul. I didn't really think that was that enlightened of an idea of us. to say. I was surprised at some of the backlash on that. That was aggressive. So we got reverse OK boomered.

Yes. And a lot of it came from the boomers themselves. We're going to be, our generation is going to be paying for their Medicare and Social Security. So boom. But I thought that you made a really good point. And Derek Thompson wrote a great article about this coincidentally the same week that we spoke about it. But you said, college is so expensive, whatever, $16,000 a year. But we have 18 years to say for it. You made the point. that no one starts saving for child care at each 12 to be ready by age 30. That's my point is that a lot of people are just really shocked by how expensive it is once they get there.

And there's this sticker price shock that you don't realize. College costs are pretty much how everyone knows that now. It's expensive. That's out there. Everyone knows the loans are huge and that it's been going up way faster than the rate of inflation. I don't think people just understand it as much in the daycare side. That was the whole point we were trying to make that new parents have to understand what they're getting themselves into here.

Okay. So this is pretty good from Bill McBride at Calculated Risk. He wanted to look at five things he's thankful for on the economic front. And I think too often we look at the downside of these things and what happens when this peaks or this gets too out of control and here comes the other side and looking for the bad stuff. I like that he looked at this from a good perspective. And I'd never realize this one before. He said this cycle is the largest decline in the unemployment rate from peak to trough since they began tracking the unemployment rate in 1948. So it's gone from 10% to 3.5%.

So that's 6.5% percentage points from peak to trough. Trough is the biggest decline we've ever had in the unemployment rate. Obviously, the government is making up those unemployment rate numbers. So he said, for the 19th consecutive month, there were more job openings than people unemployed. And the number of job openings has exceeded the number of hires since January 2015, almost five years. Finally, the household debt service ratio was at 13.2% in 2007. It's fallen to a series low of lower than 10% in the second quarter of 2019. So yes, the comeuppance is going to be terrible and there's going to be a crash eventually. Things are pretty good still right now. And we've come a long way. So I think it's okay

to look at good economic news every once in a while and just say, yeah, that's good. It's okay to admit that. Can I quote tweet that with a controversial opinion? Sure. By the way, what happened? I feel like quote tweets went from zero to 100 really quick. I was just glad that we had a holiday weekend to kind of snuff those out. They kind of went away over the holiday weekend because they just got out of control. How many, how many controversial opinions do you think there are that are just consensus, though? 90% of them, I'm going to put out a controversial opinion. Most controversial opinions are consensus. Okay, what are you going to quote tweet me with here? What do you mean when I'm I'm going to quote tweet you with? You just said, I want to quote to you. Oh, you were just joking.

Okay. Never mind. I think we do have to mention real quick here, my attire for this podcast. Yeah. Well, by the way, I have a hood on because it's freezing in this conference room. Well, maybe this is a good plug for, so we have a YouTube channel called The Compound, and every week we put up a video from this podcast, and we put a three to five minute clip. So go to the compound and search the compound on YouTube and subscribe to our playlist for animal spirits. And you can see this, but last week we talked about the fact that I had a little back and forth with Dollar Shave Club. Not to brag. I can't believe they don't sponsor this podcast yet, but I made fun of the Roblocho, which is

a robe slash poncho slash blanket, I guess. And they came back at me and said, oh, it's real, because I said, there's no way this can be real. And they said they'd send me one. And I kind of thought, there's no way they're going to send me one. Well, I'm here to tell you, I'm wearing the robancho. It is, you look good. My favorite comment on Twitter was someone said it looks like a blanket that I used to move

my stuff in a U-Haul. I thought that was pretty good. You know what I almost tweeted to you, but it was too latex I already had responded? A model, idiot. it. I'm not sure what I would ever wear this for. I mean, it is kind of a warm blank. So in these Michigan winters, maybe I'll be wearing the roblancho on the couch. I don't know. I can't really see a social function I'd be wearing this at. Hey, Dollar Shave Club, send me a roblancho. It's fashionable and warm. Yeah, well, I feel like it needs a hood for you. It does. There's no hood. You could put

it over your head. Maybe I could be one of the three wise men in the Christmas pageant or something coming up. I don't know. So, okay, so this was straight out of the, the maybe we shouldn't pay too much attention to stuff file sometimes we talk about this a lot so Robin Hood pulled their bank charter applications says this is a CNBC article just said that it was too hard and too much regulation too much to go through they withdrew voluntarily remember we talked about this for a while that Robin Hood was going to become the bank for millennials what did we say they were going to try to get into remember they're going to checking and savings accounts and I think they just realized it's much harder to do I think the move from

fintech to banking is harder than some of these places anticipated. Now, you know what it was, actually? They saw my tweet and they realized, oh, millennials have no money. Boom. Out of it. Did you see this chart? I don't know where this came from. Celebrities and corporate CEOs make a lot of money. And I didn't realize that Taylor Swift is sort of off the charts. Yeah, so she made $170 million last year. Wait, one direction. All right. This was from MarketWatch, and they looked at the amount of money that celebrities and corporate CEOs make each year, and they showed that celebrities, and they put some athletes in here, too, like Cristiano Ronaldo. It's not really from MarketWatch. They took her for some place

those. Sorry, Market Watch found it somewhere. They found Taylor Swift made the most of any entertained, like $170 million. Like, Dr. Phil. The biggest paycheck for us. What? Isn't that crazy? Yeah. James Patterson, too, the author made over $100 million. His books now are almost unreadable for me. But he... Wait, I was about to say, is he a detective author? Yes. And they were very good back in the day with Alex Cross. Then he figured out how to mass publish them and he has ghost writers that work for him. He just churns out like 10 books a month. He just prints money. Can I expose my new whalerie? I mean, I've heard of them, but one direction? It's like a boy band. I think they're based in England. But yeah, that's fair.

You don't know them. The biggest CEO payday was like 95 million for Expedia's CEO. And then they took these numbers and compared them to hedge fund managers. And the hedge fund manager money payouts make these entertainer and CEO paydays look just, you can barely even see them on the chart anymore. So Ken Griffin made almost $2 billion last year. Dallio made over a billion. Before taxes. Simon's made over a billion. And obviously, some people will say, well, that's not exactly their payday. That's how much they made on their investments in these funds. I think that's kind of splitting hairs because either way, they're sucking that money out of the fund and putting it into their investments and it's growing. How ridiculous is this?

What would you do if you made $800 million in a year? I'd probably write a blog post on LinkedIn about how capitalism is broken. Oof. I don't know. I mean, isn't it kind of funny, though, that these billionaires are the ones writing pieces about how capitalism is broken? Don't you get the sense that they're just trying to pull the ladder up behind them? I've made a few billion. It's time for me to, like, totally change the system. Capitalism is broken. It's time to fix things.

Did you see Mark Ruffalo, you might know him as in The Incredible Hulk yesterday, tweeted, it's time for an economic revolution. Capitalism today is failing us, killing us, and robbing from our children's future. This blew up, 18,000 replies. Okay, so he got ratioed. And people said, yeah, here's what socialism does. Probably. I just get the sense that it's not going to be the rich people who are going to fix this for us.

That's my take. The wealthiest of the wealthy are not going to be the ones that come up with a better system. They're going to come up with their own plan someday to live on away from all the peasants. That's my thing. Can I quote tweet that with a controversial opinion? Yes. So I thought Meb Faber had a great series of tweets. Does the tweet thread have to be over five?

I don't know what the rules are. I'll get this on a tweet thread, yes. Okay. He wrote, Nearly every investor I speak to says they base fund allocation decisions on process, not performance. And I think that's at least partially true in buying. But it is almost universally not true in selling.

It's all performance. Imagine someone saying, your performance is extraordinary, but I'm not comfortable with the process. So we're selling. They don't. I thought that was simple yet quite profound and obvious. So, yeah, there's the idea that there's like the four P's of performance when you're performing due diligence. It's performance, portfolio, process, people.

And then the idea is that when you fire someone, it's performance, performance, performance, performance. It does make sense. I would say a lot of the times even the process stuff when you're buying a fund or picking a manager is still based a lot of performance as well. I don't know many people that look at the say, oh, you have a great process, but your performance track record is awful. Well, yeah. I'm putting a lot of money with you. That rarely happens either. True.

Performance has to be reasonable. But yes, this is very true. And but I don't, I think it probably gets down to the fact that a lot of investors just don't understand the timeline of a process and what it takes for it to play out because there are no like guiding answers for these things. Like, how long do you need to understand this stuff? Can I share a controversial opinion? It's not a quote tweet, but I've got one. I don't know why I thought about this. I guess it came up on a podcast I was listening to.

I'm almost afraid to say it. I liked the newsroom. Okay. That sort of came out of left field, but... Did you... Yeah, I mean, the first season was not bad. Then I gave up because it got a little over the top. Okay, it got pretty lousy towards the end, but I just wanted to...

I just had to get that off my chest. I liked it. Okay. That sure's been off the air for how long? It's been a few years. Anyway, so there was a piece in New York Times. What makes a narrative violation? This was something. So they said venture capitalists have a new favorite term. So this says, and this was a piece by Aaron Griffith, who's their tech writer there. And she says there's an easy way to sound smart and edgy in the tech world, first identify a broad idea that people seem to agree on, then cherry pick a single piece of data that refutes it, call it a narrative violation and tweet it bumpuously. I've never heard of that word before. So they said, they asked a few VCs what this means. And he said it's kind of like being a contrarian, but more contrarian and complex. And it's a contrarian way to say contrarian. This isn't it funny that every person in tech, and this is a lot of places in and in the investing world, how many of them think they're contrarian. That's just the narrative that they want people to believe when most of the time it's the fact that they just have access to these deals that no one else on earth has. Like everyone,

wanted to believe they're a contrarian for investing in Airbnb and Uber. And there can't be 10,000 contrarians that invested in all the early series rounds of these companies, right? Yeah, consensus has become like a pejorative term. Listen, nothing wrong with being consensus. Guess what? Guilty. Most of the time, the consensus is right. It's only on the tails like the 5% or so that you want to bet against the consensus. The consensus has been pretty darn tough to beat over the long haul. If you just went with the consensus over the past 10 years, you've done pretty well. So being contrarian at all times, it's not about being contrarian. Isn't that the Mark's quote, you have to be contrarian and right. So it kind of defends on the timing. It's not just

always looking for things that are out of favor because guess what? That means that you're going to be wrong most of the time. So this is an actual quote, in a mere 30 seconds of sunlight on your butthole, you will receive more energy from this electric node that you would in an entire day being outside with your clothes on, says an influencer who goes by Ra of Earth. things can't be real, right? That's a good band name. Ra of Earth? I can't tell what's real or fake anymore. So this was a viral video that someone lies naked in the sun and points their backside there and... But you have to do it with your friends. This is a new influencer thing. Don't you think the next big Ponzi scheme is going to come from something in the wellness area?

Wellness is the new sort of big thing these days that people are going to get hoodwinked on? Could be. All right. The problem is, if you get up at 2.45 a.m., you still have to wait a few hours until the sun come off before you can get that sweet sunshine on your nether regions. By the way, the S&P 500 is up 25% this year. I think it's closer to 20, yeah, 27 maybe. Not bad, huh? Not bad. So Paul Rudd, look at us. Look at us. There is a blogger called Brooklyn Investor. You ever read his stuff? Yeah, it's very good. I feel like, is he not on Twitter?

I feel like he's not on Twitter. Nope, he's not a FinTwit guy. So he was talking about, yeah, one-year returns are great, but two-year annualized returns are 8.4%. Three-year annualized are 12%. And five-year annualized returns are 8.8%. So five-year annualized 8.8%. That's good.

But he compared it to me... Yeah, I'm writing my decade in review right now. I'm going to go upon Fortune First and on my website eventually. If we stopped now, we've got whatever, three weeks left in the year, four weeks left in the year, we're like 13% for the decade of 2010s. Can we call it the tens yet? It's the tens. Which was 17% in 1980s and 18% in 1990s. So nowhere near, it's been a good decade, but it's nowhere near as big as those periods. So as Brooklyn investor said, the five-year annualized return. Five years going to December 99 was 26%. Again, five years today is 8.8. Five years to 99

is 26.2. So not even close. Hey, how about this? We just got an email as we're sitting here from the person who I was rude to last week and he thanked us. He's never been quote on a podcast before. Thank you for the quick response and I'll try to be less of a new well listener. Well, thank you. And I apologize if I got snippy last week. I appreciate you coming back. Oh, that's for the show notes. Yes. Somebody in our inbox asked if I was going to be a curmudgeon when I got older. You're already like 40% of the way there?

I said to him too late. But I gave a smiley face. I gave a smiley face. Okay. So what we're really trying to say is that, so our colleague, Nick Majuli, his consensus, non-consensus opinion was we're really more in 1989 to 1999. That's a tough argument to make. but think about that like I said in the 1980s we had 17% annual returns through 1989 and then the next 10 years we had an additional 18% a year obviously much different scenario but that's the kind of thinking like we've had 13% what if we did 15% over the next 10 years like how crazy would that seem and that's what happened in the 80s and 90s obviously to get that same we're talking about two completely different environments and scenarios and that sort of things but I can't imagine people by the end of the 80s I'm sure we're saying

okay, too far, too fast. There's no way this can last. This is out of hand. And then it went in another 10 years. It's just kind of hard to believe sometimes. You know, if financial Twitter started in the 80s, people would lose their mind. Because by 1986, you would be like, up too far too fast. 1987 told you 1990.

I mean, it would just be crazy. Actually, are we going to be on Twitter in the financial community in our 60s? When does it end? Why are we too old? Is financial Twitter a young man's game? Well, I feel like by then we're going to be in that ready player one thing where we're all sitting in the same room in a hologram of each other, talking to each other or something. Is that what social media is going to be like in the future? So are you saying, when do we retire from social media? I don't know. All I know is that stock buybacks will still be the topic de jure when we're in our 60s that will never go away. You're going to have to tell me, I don't know. By then, I'll probably be using the Robert DeNiro de aging technology. techniques to make myself look younger still.

By the way, you look pretty good, pushing 40. Thanks. You're welcome. Are you looking for like a reverse, was that like a reverse psychology to get me to compliment you as well? I know it can't be reciprocated. I know what I look like. Okay.

Someone did today said you had really small ears, so you got that going for you. Oh, yeah. So we were talking about on Twitter, this came up, like the AirPods, AirPod Pro thing. So the original AirPods fit my ear perfectly. it's the pros that are too big. It's like the rubber little buds. A matter of fact, I downshifted because there's three sizes and I used the smallest size. And it's still, it just hurt my ear. What are you going to do? Okay, listener questions. I'm finishing college and wanted to know your thoughts on investment. Banking is sacrificing two to three years of work doing 80 to 100 hour weeks worth it.

Oh, that's. I mean, this is a very personal thing. There's no right answer. Some people, some people, value money more than others? I think this is the kind of thing where if you put the work in, you can probably, if you do the eye banking thing and you want to get into private equity or something like that or work for a hedge fund and you want to skip over the entire MBA thing, I think this is probably the way to do it. I think you just have to make sure you have the right type of personality because I would never have the type of personality that could do the 2 a.m. fixing a PowerPoint slide because my managing director wanted to prove a point or something. I could never do that. I know there's certain people that can. Because the monetary stakes are so high,

there is extreme competition in terms of stepping on people's necks and being cut through it and trying to get ahead. Like, if you're going to make that kind of money, you're going to earn it. So I don't know. I probably, I guess we haven't done it, so we're not really the right people you should be asking. I would definitely read the book Young Money by Kevin Roos, which he followed seven or eight people who went through this at some of the larger firms. That is a really good book. It doesn't paint that industry in the best light, but I think that'll give you an eye-opening, in-depth experience of what this is like for young people and what it can do to their health and their relationships and their pocketbooks too, because some people thought the money was worth it. Other

people thought they ruined their lives and they got out of it. So I think that's definitely the book you want to read because like you said, we've never gone through that. If I had to guess, I would say that a very small percentage of people bust their ass, live a certain lifestyle and are like, you know what, the money was worth it. It was worth it for this Rolex. Like most people have the realization that, oh, I was chasing something that really wasn't that meaningful after all. And it's also, if you get into that lifestyle and you're living around other people who have that same drive, is the money ever going to be enough? That's the problem is you think that once you get there, you're just going to coast and you'll be fine. But it seems like for people who get

to that place in life, there's always another place to move up to. So that's what makes it really tough. It really depends what you want to do with your career. But I've known people who've done it. Rest in peace and piece to the Gartman letter. Oh, he shut it down. That's the market peak. How many people made that joke? Well, it's too easy. And honestly, if there ever was a sign. Yes, that's the one. Okay. another question. I have assets with Fidelity, Vanguard, and four or five other places. Am I screwing myself by carrying balances at all these different financial firms or is the only benefit of moving them all to my own and subsequent convenience after going through the BS of moving

them? So basically the idea is this person has a 401k in an IRA and a brokerage account and all these different places and wants to know, does it make sense to put them all in one place. Thoughts. Yeah. I mean, if you can, why not get your financial house in order? Yeah, I think it's kind of a pain in the butt to do it because there's a lot of paperwork involved and some of these places still want you to like fax them stuff to get it through and it takes a couple weeks. But to have all of your things in one place so you can understand your asset allocation and your performance and just make your life easier, I think it makes a ton of sense to simplify. Anytime you can simplify your financial life, I'm all for it.

I think it definitely makes sense. Here's a case where I would say that this is, that this is fine and maybe the hassle isn't worth it today. Eventually, it'll be worth it. But let's just say that you have the same exact allocation in all of these portfolios. Or let's just say that you own one, one all country world stock index fund. That's it. That's the only thing you own.

If that's the case, then okay, you can afford to have them at separate places. But if there is any sort of overlap or you're doing one thing here or another thing there, it makes sense probably to see them all under one umbrella. so you can really get a better picture of what's going on with your assets. That's the case where having so many accounts, it can be easy to get into that mutual fund salad game where you have different competing ideas and funds that you're just sort of over-diversifying yourself and it doesn't make any sense.

Okay, my wife and I recently had a baby. I'm in the process of choosing a 529 plan. Should I be nervous about going with an age-based allocation that starts out with 90 to 100% equity allocation for the next five years? Would be curious to know what you guys did for your kids. Basically wants to know, It doesn't make sense to start out with a more conservative allocation and have a plan in place to move to a more aggressive option in the future should we have a decline in the market. I don't think you should get too cute with this.

I mean, for me personally, I have 100% of my kids' portfolios and stocks. So I did the aggressive age-based. Michigan has the thing where they do the glide path. It's almost like a Target Day retirement fund. I chose the aggressive option and then it slowly gets more conservative as the child ages. That's when I did. I never try to get too cute with these things, especially with. college money, I think I just don't see the point. And if you try to do it for five years

and you get five years down the line and stocks are still higher, then what do you do? Do you try to do that again for another five years? I think it's just, that's a tough game to play. What I plan on doing as my kids get a little bit older, I don't know what the age is when I'll start maybe 10, 12. I will probably switch to a glide path at that point so that I don't have to think about, oh, it's time to downshift in terms of the stock to bond mix. So I'll shift to a glide path eventually. And honestly, the biggest thing you can do, if you're starting a 529 now and your baby was just born and you're starting to save on a regular basis, that's the best thing you can do. There's so many people that can't or don't do that. So the fact that you can do that

and get ahead, like the saving piece is more important than investing piece, I think, for that kind of window. All right, recommendations. What do you got? All right. Long holiday weekend. We had a good five or so days with the kids. Can I give up some deep parenting thoughts here real quick? By all means. I feel like when you have a child these days, you hear from a lot of people about how... Wait, you're raising your own child? Because I thought your child was in daycare, so I don't understand. No, that's true.

I should ask my daycare provider how they think about this. So people always tell you, like, oh, your life is going to change. You're not going to be able to do any of the things you used to be able to do, and you're not going to get any sleep ever. And people, like, want to warn you about how your life is going to change. Here's the thing they don't tell you. Little kids are freaking hilarious. Don't your kids do stuff all the time that just make you laugh because they're so weird.

and they say whatever they want and sometimes they do whatever they want. My kids just make me laugh all the time and I feel like that's the thing they don't tell you about when you're not kids like, yeah, all this other stuff changes but then these kids are going to make you laugh every day your life. I spent a night upstate, we have a cabin in upstate New York, and it was cold.

It was probably like 25 degrees. And Kobe loves riding the quad. He goes, want to ride the tractor, want to ride the tractor. And it's so cute, but he doesn't want to come off. So we were hanging out and we've got a leaf blow up there. And we have one at home. So he turned the leaf blower on and he's blowing the leaves. And I'm like, Kobe, come inside and he's got his hat, his winter hat, like over his eyes. He's got snot running down his nose. He looks up at me as he's holding this giant leaf blower, pushes his

hat up so he could see me. And he goes, I'm still working, Daddy. And he just, every time I tried to help to come in, he said, I'm still working. So yeah, kids are the best. Okay, so we are a big card family when we get together. So we like play card games. I got a new one that has a little bit of financial angle to it. It's called cover your assets. And it's kind of almost like a gin rummy game, but you play it like a bank. And the idea is you have the most money at the end of the game. And check it out on Amazon or wherever you find it. It's called cover your assets. It's kind of like a financial. You hoard all these assets. So you have stocks and cash under the mattress and homes and all these things. It's kind of a fun game. It's kind of a little bit like gin rummy, but it's got a

financial. By the way, the just way people. Oh, and we get this all time. How do you guys have time for X, Y, and Z with kids. So on Saturday night, I saw Knives Out. I saw it at 10 o'clock, which is... Right, when everyone is in bed. Might as well have been 3 a.m. for me. That's quite a late night.

But that's what I did. And I can't stand that just... Yes, you have to make time when they're asleep. That's when you get self-run. I can't stand to just wait people. Oh, just wait until you have a second kid. Oh, just wait until you have a third kid. Oh, just wait until you're bumments.

It's like, shut up. Nobody cares. Yes. Right. We get it. Kids get older. Yeah. Like nobody.

Oh, when I was, oh, nobody cares. Yes. Okay. The new Richard book, Blue Moon by Lee Child, another great one. I think this says is 23rd. All right. Hold on. I got to ask. How do you, he's amazing? How do you find the time for all these detective books? I don't know. We rewatch the Adjustment Bureau with Matt Damon and Emily Blunt. Never seen it. I think it was 2011. Pretty good. I mean, interesting story. I don't want to like give it away, but just give it a watch. It's on one of the movie channels right now. And finally, Russ Roberts had this guy, Keith Smith on his podcast. So he has the Econ Talk podcast. And it's this health center in Oklahoma City. And they put all their prices online. They don't use any insurance carriers. And it was a really interesting discussion about all that is wrong with the current health care system. I'm not saying this guy has the right way to do things necessarily. But if you want to learn what's wrong with the health care system, that is a really good podcast for that. One of the better ones I've heard in a while. What do you got? I'm going to recommend two podcasts, both by the ringer. The Daryl Morey Book of Basketball was one of my favorite podcast of the year.

You heard it? Yeah, it was great. Mori's the man. It was excellent. And I also listened to a podcast that I've recommended before called The Big Picture, where they spoke about their favorite films of the decade and just good, clean fun. Yes. Well, we're going to do, we usually do a year in review on this podcast.

We'll have to do something of a decade review as well, I guess, some of their favorite entertainment options. Are we going to watch Boil Room this week? all right let's do it okay we'll do boiler room and then we'll have the rewatch we'll come out in the next couple weeks okay i'm in all right animal spirits pod at gmail dot com send us your thoughts on the irishman and why michael was wrong to call it a masterpiece and we'll talk to you next week