Animal Spirits Podcast - Mountains of Debt (EP.138)

Episode Date: April 15, 2020

On this week's show we discuss the pandemic's impact on Disney, when people will be willing to go to large events in the future, private equity companies getting bailed out, anger coming from Main Street, counterintuitive markets, professional sports with no fans and much more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by our friends at Y Charts. I've had a number of advisors reach out to me in recent weeks, actually, and ask me for my thoughts on why charts because they said they are displaced. They don't have access to their Bloomberg terminal because a lot of places actually have maybe one Bloomberg license, and you can only use it there together in the office. I think you can transport those these days, but it's harder than ever. So people are looking for things to use at home. why charts has been easy for us because you can use it anywhere. You can log in from any type of

device. It's easy to use. We're going to use some of the charts today to talk about Michael's favorite company, Disney. But if you haven't checked them out yet, give them a call, tell them Animal Spirit sent you and get 20% off your initial subscription. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holt's Wealth Management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment

decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. So estimates are that Disney is losing $30 million a day. They just furloughed 30,000 workers in the theme park in California, 43,000 in Florida. And there was some talk that Bob Iger left. It was perfect timing that he saw the writing on the wall, saw that there was, China was shutting down and he got out of Dodge. I don't think we're so cynical to think that that was actually what was happening, but he is back at the helm. I don't think officially, but for all intents of purposes, he's steering the ship again.

He stayed on as chairman, I guess, and I wouldn't be surprised if he's still more or less acting CEO. And the fact that he put out that book is one of the reasons I'm sure he was planning his exit already. I wouldn't doubt if he stays on for a while now after this. So $30 million a day, Disney Plus, do the math. If Disney is losing $30 million a day, that means they're going to lose $60 million in a year, right? So about 75 listeners were kind enough to email us and let us know that I mess up the math. Wasn't the first time. Won't be the last time.

But what I did was... You've taken an L on Disney like 12 shows in a row. Maybe you should just stop commenting on how much you hate Disney. Did I tell you I'm short? You must be. So what I did obviously was $7 times $50 million, but I forgot that $7 was a monthly charge, not the annual charge. So, whoops, sorry about that. Whatever.

So Disney is down. So the S&P as of this taping, which is like 1 p.m. Eastern on Monday, S&P is 19% off its highs. Disney is 31. It's had a little bit of bounce, but it was down 42, 43%. And it has been punished in this. It had a huge run-up in the end of 2019 and early 2020. It was almost a $280 billion market cap company.

Now it's down to $180 billion. So $100 billion in market cap is gone from this company like that. pretty quick. So the fact that they're losing so much money, the market has repriced. And it's pretty much just lost all the gain that they made through 2019. But it's a pretty quick repricing. And this is one of those companies where I trust them potentially to get this right. I think a lot of is going to depend on how comfortable people are because Iger was saying in an interview last week with Barron's that they're probably going to have to tempt check people when they come into the park because they already check people's bags and that process can be slow and cumbersome. But this

is just going to have to be the way of life for people, right? I personally wouldn't feel comfortable bringing my family to Disney when they open the doors. Probably not for a long time. I don't know about you. When does the theme part get back to pre-corona levels in terms of attendance? I, a while. I don't know what the sense is in terms of people who are going to be falling to the camp of, I just don't care. I mean, obviously a lot of the people who go there are families and you wonder if they're a bit more cautious than most. It's not like it's just young single people that go to Disney. It's mostly families and probably some older people too. So I really don't know what the psyche is going to be for people to trust them. Again, I would trust them more than most. I trust a company like

Disney to handle this honestly better than our federal government at this point. But that's going to be one of those weird things where I don't know what the first big venue to open up is going to be where people all of a sudden are going to feel comfortable being shoulder to shoulder with people. I think it's going to be like something like concerts where it tends to be a younger crowd who are a more healthy and be more likely to not really listen. or care about potential consequences. I wonder who's going to feel comfortable enough with the liability, though, whether it's an artist who's putting on the show or the ticket company who's selling it or the venue? Like, who's going to take the liability of if someone shows up

and they're sick and they get everyone sick? Are we going to see lawsuits from this stuff? Because people aren't being- How could you know? How could you know? How could you prove that where you got it from? Well, Google and Apple are doing the contact tracing thing. So Google and Apple have teamed up. They have three billion people worldwide who use either Android or iPhone phones. And I think this is pretty cool. They're teaming up and it says they've already developed an app together that is going to run and they're going to do contact tracing on people. And it's going to open in May that it's going to be these Android and iOS devices and it's going to be apps from public health authorities. And in the coming months, the second wave is going to be Bluetooth-based

contact tracing that Apple and Google are going to be using. And I know a lot of people are worried about the privacy issues from this. That doesn't even really come into my mind at this point, but I think it's pretty cool that we have big tech companies like this working together. And even if a small percentage of the population uses this, I think it could be helpful in whatever normal means anymore, getting back to a normal life where you can go out because that's what it sounds like they're doing in places like Taiwan and Singapore and South Korea and these places that have opened up normal life and have restaurants and these sort of things open now. So you get an alert on your phone saying that you are in.

contact, you were at a place where somebody else came in contact with and they had the virus, is the idea that you now should self-quarantine just in case you have it. So let me ask you this. You get that message on your app. Do you stay home for 14 days? I guess that's going to be the or hopefully by then. I'm asking you, Ben, do you stay home? Yes. Yeah, I probably would. Or hopefully by then we have testing. If you're one of the people in those places, you go get a test right now and you figure out if you had it or not. That's the issue is we need to do a lot better on the testing front. Yes.

For these things to work together, no one's going to want to wait 14 days. And then if you realize you didn't have you, go, that was terrible. I'm not going to do that again because they didn't have it. I'm guessing a very small process of the population will actually self-quarantine on the off chance or the chance that they might have it. Yeah. And some of these countries, too, are setting up these quarantine hotels where they don't even want you to quarantine with your family because someone's going to leave the house

eventually and you're getting them done. And this is, again, another reason that it's probably just going to be worse here, we wouldn't do that. That's probably a bridge too far and might be too hard to set up. So I think unfortunately it's, I think the social distancing stuff we've been doing has been helpful. But my biggest worry is just like the second wave stuff. Yeah. Disney tapped the debt market. They raised $4 billion. And there was an article in the Wall Street Journal, Corona Crisis, a legacy of debt. I actually think that this was John Hilsenrath. Let me just open this up. Yeah, it was. Do you remember him? He used to be like the Fed Whisperer.

Yes. Whatever happened to that. I don't know. He wrote this. for the Walshut Journal. Okay, issuance of investment-grade corporate bonds reached $194 billion in March, $130 billion more than the month before. And he wrote, the boom and bond issues contrast with the 0709 crisis when credit dried up. In the month after Lehman collapsed, for example, investment-grade bond issuance fell 72 percent, according to Moody. So is this just directly a direct result of what we're seeing from the Fed? Well, I think also what happened is a lot of companies had these credit lines and they were there for an emergency and they tapped them. And what better time to use it than right now, correct? Like, this is the time you tap

that credit line for an emergency because this is an emergency. The Fed stuff hasn't even really happened yet. So this is pre-fed borrowing, I think. These companies are just going to take on more and more debt. So I guess the worry here is that after all this, we're just going to have a bunch of debt rental companies who are paying nothing on their interest in many cases. So what's the trade-up there? What other option do they have, I suppose? So my favorite article from this weekend was Bethany McLean wrote a big piece on private equity. And we spoke about this a few weeks back in terms of private equity petitioning Congress to allow their companies that have collectively more than 500 employees to have access to the relief

funds. And they were sort of holding Congress hostage and saying, okay, you don't have to give this money, but A, think about who our investors are. And B, we're going to have to lay off employees. So Bethany wrote, at Blackstone, roughly one third of the firm's money comes from retirement plans set up to provide for over 30 million working class Americans. Businesses backed by private equity employ more than 8.8 million Americans at over 35,000 companies, which is 5% of United States GDP. So a ton of pension money has been pouring into private equity.

You probably remember CalPERS, there was a headline a few years. years ago. Maybe this was in 2018. One of the people on the board said, we need private equity. We need more of it and we need it now. That was as a CIO in 2019. So Bethany said the taxpayer handouts will also help private equity continue its relentless march through the global economy. Snapping up troubled companies at bargain prices or extending high price credit as other investors, including hedge funds, are forced to sell their holdings in the post-corona landscape. Do you really think getting back to this stuff we talked about a few weeks ago that private equity firms are going to be just able to gobble up companies left and right. Because again, I think

they're going to have a hard time getting commitments from their investors these days who don't want to let go of cash. Because that doesn't really happen. That didn't happen in 080. There were private equity stepped in and bought. They were too busy shoring up their companies that were in trouble. So even if they get some loans from the government or the Fed or whoever, I don't see private equity stepping in and being huge buyers here. Again, unless we're seeing tons of forced selling, Don't you think this is a situation where there's just these fire sale prices just might not happen in a lot of areas? What do you think? I don't know.

I was thinking about how we spoke when Bernstein was talking about the JP Morgan quote, like maybe private equity or the rightful owners. Yeah, it could be where they have the money. But again, I just wonder if there's going to be a revolt from their LPs going, listen, we have a little bit of liquidity now. We're not giving it to you. No way unless you can assure us that because, again, you're tying up your money from that. And if this thing sticks around for longer than people think, if I was running an endowment, I would not feel good about him. handing over my liquidity to private equity right now and tying up my capital. Now, is that better for your long-term returns? Potentially. But if you're worried about your spending and your cash,

again, this comes back down to buying when there's blood in the streets, but can you? And so it's the same thing for individuals who are having to shore up their own personal finances with cash. I think a lot of it depends on who your investor base is, I guess. So maybe a lot of the big ones, like Blackstone and some of these huge ones, Apollo and KKR, maybe they'll all be fine. but I don't think it's going to be as easy as private equity is just picking off people left and right as makes it seem. So the big talk last week was the Chmoth interview with Scott Wapner on CNBC. Basically, Wapner said, are you saying the airline should fail?

And Chimot said yes. And Wapner said why. And that was the video that just blew up this week. It has like 10 million views. So he said on Main Street today, people are getting wiped out. Right now, rich CEOs are not. boards that have horrible governance or not. People are. And he said, what we've done is disproportionately prop up poor performing CEOs and boards, and you have to watch these people

out. And this thing, just people are sharing it left and right. Obviously, he tapped into something here. I don't know this guy. Personally, I've seen him a few times. Here's my thought on this. He obviously tapped into something that people are really angry about. And I think a lot of that anger still stems from 08. This guy is a billionaire as well. He made a bunch of money in tech. He's part owner of the Warriors. I think there's some billionaire virtual signaling going on here, where billionaires don't mind seeing other rich people lose their money. That's just a human urge, I think. Regardless, you could point to some of those stuff, he said, he's basically saying, let all these companies go bankrupt. I found a story someone shared

on Twitter. He said, the employees will be fine. It'll just be the equity owners and the debt holders who lose money here. But this report found, they looked at a bunch of companies that have been gone to. By the way, Tramath is on behind you. You can't see, but he's on CNBC right now. I'm talking about this. Of course they are. It tapped into a huge groundswell of anger, But they found this study said that in employees' annual earnings of the company who was in bankruptcy, compared to their pre-earnings, by the first year, their earnings falls 10%. By seven years, it falls by a present value of 67% from their pre-bankruptcy earnings. So letting all these companies fail, yes, it sounds good. Let's punish the rich people. You're still punishing the employees, too. But I get why people are mad. I think a lot of the solutions people are saying are not there. And I think there's old quote words like, let's not let a good go to waste. So now that we're in a crisis, people are putting out all over their thoughts on the way the world works and their political views. And so people are getting mad about stock buybacks and executive compensation and all this other stuff. And I totally get that. I just don't know

if this is the time to be airing that stuff out because things are so bad. But I get why people are mad. And I think a lot of it stems from the fact that we really bungled the 2008 response. And homeowners didn't get bailed out. And none of the bankers went to jail. And that was more or this corporate bailout of the banking system, and now they're all fine, and a lot of people were severely hurt from that. So I get why people are mad. I just don't know if his prescription for this is the right approach. There's no good solutions here because there's no good choices, and I'm just happy that, like, I don't want to be in the position to make these decisions because they're not easy. No. Chamath said when a company fails, it does not fire its employees. And I

sort of raise my eyebrows at that because I don't know exactly what he's talking about there, but isn't that exactly what happens when a company fails? Yes. I didn't get that one. But people tend to, like you just said it was virtue signaling. It's hard to know what somebody's true intentions are. So a lot of the times people say things and then it gets personal and you get a tax. And Twitter has gotten a lot, lot nastier lately. And I mute in a bull market if somebody says something that is rude or whatever. Like I only really block if it's just really, really personal and aggressive. Muting a bowl, block and a bear. That's pretty good rule of thumb. So I block in a bear. And I got an email from someone.

somebody that I blocked, and you said you did too. And I only blocked because it was a nasty comment. And he said something like, hey, man, I'm sorry. I was being sarcastic. I didn't think anything of it. I didn't even think that you would see it. And I think that Twitter, the people behave on Twitter the way that they do in their car. It just changes the chemicals in your brain where curse, you'll scream. And you would never just behave that way in real life. You would never in normal conversations say this to somebody. So getting back to the bankruptcy stuff, I get it. I think like there are some real issues. Executive compensation is totally out of control. But are you really bailing out the hedge funds? Because for instance, airlines are down 70%?

Aren't they already wiped out? At this point, you're protecting the workers. You're protecting the economy. Are all of the airlines going to go bankrupt? Of course not. I mean, are they going to go bankrupt to disappear? No, they'll do some rears and stuff. But people are going to get really, really hurt. And it's not the hedge funds. It's the investors and it's the employees. So, yeah, guess what? Those hedge funds that they've already collected on all those fees, they're going to be fine, no matter what happens to their investments. Yeah, so I'm sympathetic to the anger, but I just think it's misplaced this time. But there are definitely going to be some people that benefit that don't deserve it. And that's just the way it goes. Yeah, that is unfortunate, but I think that there's going to be companies that went into this and they would have run into trouble in a few years because of their debt profile and they're going to be billed out and it stinks. And because I do think we talked about this before, I think the wealth inequality stuff is going to get worse from this. And I think people are going to come out of this even more angry than they did in a way. Because even though Congress has pushed through these fiscal stimulus checks and people are being helped out like they've never been helped out before. This is just a bridge for them. This isn't going to help people who lost their job. They're going to be affected for a long time. So, I mean, the stock market will come back eventually.

The bond markets will be fine. That stuff will continue to function and it will recover. But guess what? Someone's life may not recover quite as fast as the stock market does when this comes back and this recession is over. They don't just get to hit green light and get a job back on day one. I'm hopeful that companies are still going to hire, but it's going to be a long time. And people who have had their lives disrupted from this, they probably deserve to be angry

and say, where's my bailout? So they're doing the small business loans at 50 basis points or 1%. Why couldn't they make those loans available to individual? You can borrow up to $10,000 and we'll charge you 50 basis points of interest. Why not? Because they have to do credit quality checks on millions of America. They're not doing that on small businesses, and they're going to forgive the loans. Why not give anyone who wants a $10 million loan?

And guess what? In five years, write half of them off. I mean, if you want to really help people get through this and you worry about moral hazard and not just giving people money, anyone who wants to borrow some money and needs it, why not? If you're going to do it for businesses... I don't see the problem. Maybe they need some more rules on this stuff, and I did read through the Federal Reserve press release, and they said firm seeking Main Street loans must commit to make reasonable efforts to maintain payroll and retain workers, which seems to leave a lot of wiggle room. But they said borrowers must also follow compensation, stock repurchase, and dividend restrictions that apply to direct loan programs under the CARES Act. They have some of these rules in here. It sounds like they're pretty vague. I'm sure the companies will find work rounds. I wish they were going to be a little harsher on that stuff in terms of putting in place a CEO to average. pay cap or some of these things to make things a little easier because you talked about the cruise

ships and the airlines they've gotten hammered like he talked about the fact that listen you bought into these investments and they're risky but some of those companies are you know energy companies are down 80 90 percent some of these cruise ships and airlines are down 60 70 80 percent so the risk has been seen in those companies it's just I do think why can't we take some equity in these companies that's like the mark Cuban idea which makes a lot of sense they could be a little more stringent on how they're doling out this money and giving a few more just to make sure that when this thing recovers and you do make it through, that you're not taking advantage of the government because they helped you out. Well, here's an example of how this can go wrong.

And there's people that are mad, people on Main Street that deserve to be mad that feel like they got a raw deal that the system is rigged. And then there's people, there's investors who think that free market capitalism is being destroyed and manipulated. Here's how it can go bad. So let's say that somebody steps in. Let's say that Buffett just takes a position, a new position at a company in an airline or whatever. And then they get bailed out. And then the equity recovers goes up 50%. And it's like, oh, did Buffett really need that lifeline? So this only exacerbates wealth inequality. And it's not good. It is not good. I guess the thing is like, nobody asked for this. There's no good choices here. It's just, it's not good. Right. So Tim Die at University

Oregon, who writes for Bloomberg and writes a blog every week about the Fed. I thought he had the best point in this. He said, on the last two cycles, the shock did not originate in the financial sector and spill over to the real economy. It originated in the real economy and spilled over to the financial sector. Neither is it built to accept this level of damage. Just like I can't blame my iPhone for shattering if I drop it from the roof of a 10th story building. I can't blame anyone for what is happening in the economy. The phone isn't made for that just as the economy isn't made not to be put to work. He's saying this is not the time to put the moral imperative and moral hazard. He said the only moral imperative is holding together the economy so that those

150 million can resume their lives as quickly impossible. The only moral imperative is working to prevent other 15 million people from losing their job. So we're just, we're in a sinking ship. Again, unfortunately, there's going to be companies and individuals who get a quote-unquote bailout for this that shouldn't have been saved in the first place. But this is not the time to put your views on the world to work because you're mad about stock buybacks. Save that for another time, not this time when the government is shut down the economy because we're going through a pandemic. I think now is not the time to end. These people who are searching for price discovery, free market capitalism is dead. When exactly did that exist in the first place? That the free

market had complete rain. I did my piece about how the markets are rigged and talked about how going back to the Civil War, they were printing money and putting it out in there. This has always been the case. I think now you just have to get used to the fact that when we see a downturn like this, listen, the Fed is a variable in the markets now. It's going to be for the foreseeable future and it's probably only going to get worse, I would imagine. Trying to have them pull their tentacles out of all this after 08 and after this is going to be harder. So just stop complaining about the Fed. It's part of the markets now. It's a variable. You can't control it. It's going to be there. And if you want this world without the Fed, I don't know, go invest in emerging market somewhere. It's not going to happen here, right? This is just part of the game now. Yes. So it's going to get worse in terms of the back and forth and the hate. And like I said, people behave on Twitter like they do in a car. So it's going to get ugly. And I think there's going to be people who are going to be taken advantage of by their anger. That happened a lot in 2008 where people had this negativity this took with them and there was people that preyed on that. I think it's probably going to be worse this time.

where that bunker mentality and us against them and we hate the Fed, I think there's going to be a lot of people who are going to be easy pickings for being taken advantage of financially because of this. In terms of what exactly? I don't know. Buy my newsletter, buy my fund, all this stuff. It's going to make for a good sales pitch now. Unfortunately, that's why that Chimov interview resonated with so many people because no one cares about data. People care about stories. And he told a really good story. And it's an effective way to sell yourself, is telling a good story and getting people upset. Outrage is a really good way to market these days. So Scentimate Trader, who we've mentioned, pumped out a really good chart showing that

investors fled equity funds at the fastest pace in decades, which has historically been very, very bullish. Isn't it just crazy how stories like this come out and it's almost like really bad stuff, it's bullish because Ned Davis had one that said high unemployment claims have been bullish for stocks historically. Investing can be so counterintuitive. And there's a lot of people, too, one of the reasons people were mad last week is because just the stock market was going up again in the face of bad news. And people can't wrap their heads around. It's almost like we all want to be in this together. Misery loves company. And why isn't the stock market falling further because of this? So the market tends to be forward looking, obviously. But these charts are

backwards looking, I think, because you can't really act on them. You know what I mean? I think the point still remains that markets bottom at high unemployment. But isn't that sort of kind of obvious or not really? Am I saying it's obvious something because I'm looking at this? No, I think it's obvious if you understand the markets. It's not obvious if you only understand the headlines in the economy. Like a lot of markets are just not investing is counterintuitive in a lot of ways. And high unemployment making sense for a bottom in the stock market, it seems ridiculous. But that's just the way it is, right? Well, I guess you could also say high unemployment is bullish for stocks because high unemployment is bearish for stocks and that stocks get killed, stocks get killed before unemployment

spikes, and then eventually they find the bottom. It's easier to say buy when there's blood in the streets and when there's bad news, that's a good thing to the stock market. But it's harder to wrap your head around it in real time when you see the bad news just coming in waves like it is. Yeah. So one thing that can be, you said this is going to affect how people behave. So there's bearish ETFs, inverse levered ETFs, VIX, VIX, I guess VIX ETFs. I guess VIX aren't bearish, but there are ETS that specifically bet against the market. And they had a record week. They pulled in $6 billion, which was about four times higher than the previous record. Wow. Yeah, this is people buy insurance after they have a flood. This is what happens. And it makes

sense. And obviously, this is why it's so hard to invest when stocks are going down because you say, okay, they went down, but they're going to go down further. So I'm going to get in on that now. And I'll get out of these funds in time. No worry. I'm sure everyone's telling themselves that, don't you think? Yeah, of course. Well, hedge funds, a few weeks ago, I said, well, hedge funds had a great week. And you said, well, it's self-reported and let's wait to see what happens. Well, numbers came out. Hedge funds lost 6.8%, the most in data going back to January 2014. And this breaks it down by macro, relative value, credit. I mean, obviously there's a whole different, there's a million different types of hedge funds. But March, no, not surprised it was not a great month.

And I don't know, do they deserve a pass? I feel like last month was just, that was tough for everybody. Yeah, I think now is not the time to hate on hedge funds because, again, we had this extreme event. I'm fine giving hedge funds a pass for this. See, Common Ground. Yes, we found it. Survey of the week? Oh, wait, wait. No, we're supposed to be mad at hedge funds this week, right? Why? Oh, right. Of course. This is Darren Ravel. 72% of Americans say that they would not attend the game before a coronavirus vaccine was available, according to a new poll just released. Among sports fans, the poll found that 61% of them said they would not attend. It's going to be weird when we have games without fans there. I can't see how, I mean,

the fans are such a big part of it and the players feed off of it. It sounds like all of these professional sporting leagues are going to try to do something. Maybe it works and it gives people something to take their mind off of it. But don't you think the first league that comes back in one of its players tests positive and start spreading it around? Everyone else is going to have to go, oh, all right, pull it back in. We can't do this now. Abort, abort. Isn't it going to be bad if there's one bad case in something like this, or do you think that they can have enough testing available where it won't be a problem? I just think it's going to be weird to watch sports without fans. Yeah. Having said that, I'll probably still watch, but I think it's going to be

bizarre. I agree. There's a good tweet from Peter Malook. March set a record for monthly outflows from the active mutual funds at $356 billion. The estimated $10 billion in lost revenue from March alone is more than the annual revenue of the entire ETF industry. So, I would imagine that people in this space, employees are going to be affected as well, obviously. That's a lot of money. Okay, so maybe this is a space. We see some consolidation, right, in the asset management industry. It is interesting to think about what trends are being pushed forward because of this crisis.

It's always so hard to get ahead of this. But what stuff has been on the precipice but has been, things have been going good and hasn't had to worry about it. Now we're going to push forward. And maybe some of these things happen a little quicker than we thought. Again, I said, didn't we say last week, Vanguard had a record amount of ET? CF inflows, it's possible that this index fund stuff only accelerates now, don't you think? Food delivery?

Yeah, a lot of that stuff. I think there's a lot of trends that are going to accelerate. And it's a weird experiment we're living in where the outcomes of this are going to be really sped up in a lot of ways. Let's move on to listener questions. Okay, most of your listener questions are geared towards people who are in the accumulation phase. For those of us who have already retired and are in the distribution phase, do you have any advice on the timing of the withdrawal? Should you have a rigorous schedule like you did to the accumulation?

phase or more of a market timer, even though no one can time to market. So basically, should you have a set approach taking your money out or should you be more flexible in terms of taking money out of your economy when you're retired? I think, of course, I think you have to be flexible and understand the type of environment we're in. And it's got to be attuned with your spending and your tax situation. So yeah, so I think, I don't think you can blindly follow a rule of thumb just because you set it out at the outset of retirement. I don't think you can just blindly follow like a 4% rule because that's what you set out to do. I think you have to take into account what the markets are doing, what your spending levels are doing. I think it definitely pays to have a more

flexible approach when you're taking money out of your accounts. Agreed. I don't really have much to add there. Thanks, Munger. What would you recommend students in this situation do as they plan to start their careers during a recession? Do you think there will be demand for analysts by or sell side in one year when we are graduating? If not, what's the next best alternative to remain in the financial services, a job in a different industry? A man. do whatever is necessary to stay in finance. This is tough. It's going to be hard. I just, don't you think we're going to be seeing a lot of kids take like a year off or like a year to just like figure it out like who's going to be hiring A and B, how hard is it going to be to find

a job if you don't have any experience? That's going to be tough situation, don't you think? This is really rough because there's going to be a lot of people with really solid experience that are going to be looking for work. So you're going to be competing with them. I don't really have great advice. So this is just really rough. it's going to be a tough, tough job market. And as tough as it wasn't 08, if people can't, I mean, maybe it makes it easier so you can doing a bunch of virtual interviews so you don't have to go to a bunch of places. But I think the job market is going to be really tough for young people.

Unfortunately, it's going to be tough. And I don't know, maybe we'll talk about this in the next episode, what's going to happen to college enrollment in the fall. If I'm a young kid, I'm not paying 30, 40 grand to go to college online at this point. No way. I would rather take a half a year or a year off. I think you have a better chance getting into the finance. industry on the advice side. But that's not really good advice because if you're trying to be an

analyst, you're not trying to be a financial planner because those are two very different personality types. So I don't know. This is not easy. One topic that doesn't get discussed is the difference between individual bonds and bond ETFs. I'm a newb to bonds, but it seems like the difference between these two is significant. To be specific, it seems the latter act much more like stocks. Do you guys see it the same way? If so, how do you advise people in the middle of their investing careers? Well, we've been actually discussing bonds and individual bonds and fund funds quite a bit lately, I think. This is honestly one of the most weirdly polarizing topics I've ever written about, the difference

between bond funds and individual bonds. There's not that much of a difference except for a bond can mature and a bond fund rolls over funds into different holdings of maturities and such. It's really not as different as people make it out to be. You're basically trading one risk for another. I'll post a link to the piece I wrote about it, but there's a lot of people who have very strong opinions on this. It's really not that different.

You're just holding a fund full of individual bonds. And so it just depends how you view risk. This is an interesting one. I recently met someone who told me that this pandemic was basically going to end the world. Society. As we know, he told me to buy physical silver as soon as possible, very specifically silver. He said he'd been buying it for years and was fully prepared. What type of conspiracy theory bent does this guy have to hold most of his net worth in physical silver?

Okay. Is he worried that vampires are going to take over the world? I'm not sure. I didn't know. there's this guy talking to Peter Schiff lately. If the world does come to an end, gold and silver aren't going to help you buy ammunition and canned goods. That's my recommendation.

All right. Speaking of, what do you have for this weekend recommendation-wise? Okay. I got a lot. I caught the last like 20 minutes of war dogs. I like that movie. I feel like it was highly underrated. That was good.

Plus, it's a true story. It's pretty bizarre. All right. So there is, I think I was a little bit early to this trend accidentally in terms of trying to trying to catch up a movies that I either haven't seen or I saw so longer than I forget. I think once the entertainment runs out, once like the new movies just come to halt because there's only a finite amount, production is being halted. We're going to start revisiting old stuff.

So I watched Groundhog Day. And I saw Groundhog Day when I was little, but I had no recollection of it. And I went into it thinking it was going to be like a comedy. And so 30 minutes in, I'm like, when do I start laughing? And then I realized that it's just a good movie. And Bill Murray's just a good actor. He's... It's a great movie. Yeah, I thought it was going to be a comedy, and it's not a comedy. It's just a good movie. It's just one of the more unique movies ever made. I love that movie. I probably

rewatch it once every couple years. I absolutely love that movie. Okay, yeah, good movie. I watched The Gentleman. Have you seen that? No, but someone just recommended it. Isn't it a Guy Ritchie movie? Yeah, so, I never saw Snatch. Have you seen Snatch? I love Snatch, yes. Lockstock and two smoking barrels as well? I haven't seen that either. That's his first one. It's a little underrated, but it's a lot. actually better than snatch. Okay. So this is weird because the gentleman, it takes you a little while

to get your footing because you're not really sure where it's going. But I thought it was really good. Hugh Grant was awesome. And this is a weird thing where it reminded me, I don't even know what to make of this. Ben, help me out here. It reminded me of a movie that I don't even remember. So it reminded me of lucky number sloven. You ever see that one? Yeah, Bruce Willis. Yeah. Josh Hartnett. What happen to Josh Hartnett? That's a good question. But here's the rub, Ben. I don't even remember Lucky Number Slevin. It just reminded me of it. And all I remember about Lucky Number Slevin is that there's a bunch of different storylines going on at once. That's Guy Ritchie's thing. That's how he makes his movies. So that makes sense. Okay. So in that way, thematically, lastly, I listened to,

so I listened to the Big Picture podcast. I haven't listened to it a few weeks. And it's with Amanda Dobbins and Sean Fantasy. Did Barry sue them for trademark infringement yet? So it's with Amanda Dobbins and Sean Fantasy. Do you ever listen to this? No. Okay. And they're just great podcast hosts because I haven't listened to them in a few weeks. I was like, oh, my friends, here they are.

I miss listening to them. It's just like hanging out with friends. So they did this thing where they swapped movies. One of them told them to watch another movie. The other said, you watch this movie. And so it was like, you don't normally watch these type of movies, but watch it and tell me what you think. So Sean had Amanda watch aliens, which is one of my favorite movies ever. And they spoke about it for 45 minutes.

and then she had him watch four weddings and a funeral, which I've never seen, Hugh Grant and Andy McDowell. I actually love that movie. Okay. 1990s Hugh Grant Romcom is like, he's amazing. I love Notting Hill, so I'm definitely going to watch this. Better than Notting Hill. Oh, really?

I love Notting Hill. So I just want to give a shout to that. That was great. So then the last thing, I was scrolling through Netflix and like, oh, what am I going to watch next week? Here's what I'm going to catch up on. Three movies on my cue. Saving Mr. Banks. You ever see that one?

Speaking of Disney. Okay. Have you seen that? That's okay. Not great? Just all right. Maybe I'll skip it. Road to Perdition.

I love Road to Perdition. It actually takes place in Michigan. They filmed it in Michigan. Not too far from me. So I'll bump that up. And then I never saw the talented Mr. Ripley. It's really weird, but it's a good movie. Okay.

I've been doing some rewatching too. But I haven't given a book recommendation in forever because I can't bring myself to read nonfiction right now. It doesn't feel like we're living through a nonfiction book and nothing, I can't read anything besides what's going on right now because it doesn't seem to matter. Are you in that same boat? I started or I restarted the FDR political life book, which I gave up years ago and I came back to it. But it's hard. I feel like all of our attention is focused on current events. Maybe that'll wane a little bit, but it's not. We did the video

in demand thing where you pay 20 bucks for a movie that's just coming out and that was the new trolls movie. My kids love the trolls. So it was this troll's world tour. The movie was awful. My kids liked it because there was music. But this is another trend I could see sped up a little bit where we have, we just go to see Top Gun 2 or those huge movies at the theater. And all these other ones, I'm fine paying 20 bucks and you have 48 hours to watch it just to rent it, especially with little kids. I am fine with that. That's a good deal. I love it. I like going to the theater, but watching the gentleman, I had a drink. I was on my couch. It was fantastic. Yeah, so we did that. I kind of like that. I reached perks of being

a wallflower, which Paul Rudd is in it, but he plays a minor role. It's just a coming of age story in high school. I think it's based on a book. It's one of the better coming of age stories in high school, and I'm a sucker for those movies. But the ending, it's got a crazy twist at the end that I never saw coming. And I've seen this movie before and I forgot about it. It's a really good, if you like those high school type of movies, I really liked that one. Sorry, one more thing. I forgot. Speaking of coming of age, I rewatched Good Boys. I saw that in the theater. And overall, the movie's pretty good, but like there's three or four scenes where I was just belly laughing, even though I knew it was coming. I tried to get into it. I

couldn't do it. Okay. Good Boys is like super bad with sixth graders. Yeah, I think they were too young for my taste. I need it to be in high school or something. But yeah, I could see it. This is Seth Rogen humor. So, okay, we'll be back on Thursday or Friday with another show. We just did a talkie book today. No? I don't know. I mean, there was so much we already didn't get into from this from today. The stuff is still coming hard and fast. I'm ready to pull back. Too bad. We'll be here again on Friday. Animal Fearspot at GMO.com. Thank you.