Animal Spirits Podcast - Paycheck to Paycheck (EP.98)

Episode Date: August 21, 2019

On this week's show we discuss yield curve inversions, why everyone is always predicting recessions, RV indicators, bonds are expensive, who buys negative rate bonds, our new noobwhale t-shirts, VC pump & dumps, how many people live paycheck-to-paycheck, fly swatters, social media cultures, money advice for people in their 20s 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 YCharts. Go to YCharts.com to check out their plans. Call them up, tell them Animal Spirits sent you, and get 20% off of your initial subscription to the plan. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holtz Wealth Management. All opinions expressed by Michael and Ben or 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 Rit-Holt's wealth management may maintain positions in the securities discussed in this podcast. So why it sets us over a table showing S&P 500 performance with the day of the yield curve inversion? One month, three month, six month, et cetera, afterwards. And some read. but there's a lot of green.

So they show the average of the past four times that has happened going back to 1978. On average, two years later, stocks are up 7%. 18 months later, they're up 12%. One year later, they're up 10%. It looks like the only really bad one was the extended bear market in the early 2000s. So two years after it inverted in the February of 2000, stocks are down 20%. That's probably because that bear market lasted almost three years. But wait a minute.

One thought. What they don't show here is max drawdown. So we know that stocks tend to go. up. So you could see 18 months after a 32% return, but they could have fallen 30% before that. You know what I mean? Yes. So how badly are you freaking out about the inversion? Because you're Mr. headline risk guy lately. And yield curves have been in the headline. So tell me what your level of anxiety is about the yield curve. That's a cheap shot right there. I told you that my wife sent me, my wife is in a Facebook group. So she works for.

She's a guidance counselor. She works for the New York City Department of Education. And I wrote about this, that people are absolutely losing their shit because the stock market is warning for a recession, I think, was the headline. And some of the responses in this thread were just totally hysterical, a lot of politics, a lot of scared people. And it's a shame that the public reacts this way. I think, I honestly think that the great financial crisis broke a lot of people's brains in terms of the markets in the economy. I mean, if you think about it, we've been basically planning for the next recession since the last one ended. And so I'm, I just finished up a piece for fortune that I wrote. I just hit send right before we started recording this. So I got some stats for you.

By the way, let me ask you question. Is an official publication, does that mean it's a piece as opposed to a post? Oh, did I call it a post? No, you called it a piece. Okay, maybe I should start calling it a column. Can I consider myself a columnist? Oh, man. Yes. Let's do the verbal meme with the Windy the Pooh thing. So it goes, blogger, writer, columnist. Yeah, perfect. Okay. So, okay, going back, I talked about you about this a little bit yesterday.

There's been 895 months since 1945 through the end of July. 130 of those months has been in recession. So let's call it 14 or 15% of the time we're in a recession. That means 85% of the time we are in an expansion. But it seems like the opposite is true where people spend 85% of their time worrying about the 15%. And I understand why that is because guess what recession? are not fun. With good reason.

Yeah, but here's the thing. The stock market is terrible at predicting recessions. And I've gone over this data before. In the six months leading up to a recession, going back to 1945, the S&P is up an average of 1%. Three months leading up to it, it's up an average of like 1%. And like 60% of the time, three months before a recession starts, stocks are positive. So the stock market is not good at predicting recession. Pretty much the only time it happened was in the early 2000s.

You know it is good at predicting recessions. The yield curve. No, recreational vehicles. We got this again, didn't we? But wait, hold on. Before we get to that, I have a question for you. It's funny you mention that because people, like, I'm using air quotes. Everyone knows a recession is coming.

Right. But if the market is forward looking, how do you square those circles because we're 3% off all-time highs? Because the market, that's why that old quote is the market is predicted nine out of the last five recessions because it's not as forward-looking as people think it is. So you had this other piece that I wanted to talk about where you showed the yield curve inversion mentions in the New York Times and you went back to the 70s and this is kind of your, I feel like you've sort of planted the flag on this one using

the New York Times archives. You gave me a heads up on that one and it's actually really cool to use. But tell me what you did on this one and how you put this together. So I wanted to plot the number, every time the New York Times mentioned the word either yield curve inversion or yield curve inverted. And so I did that, going back to, I guess, 19776 or something. But what that missed was the number of mentions. And so I then counted the actual number of mentions and did a 30-day rolling like some of the mentions. And it has just grown exponentially over time.

And so I think that the reason why people, the civilians are potentially freaking out, I don't think, I really don't think it's because of 2008. I don't think like 25. Do you think civilians is more or less, is worse than mom and pop? What do you think is worse to call? Mom and pop. Mom and pop is way more, is way more, I don't know if condescending is the right word, but yeah. Yeah, condescending.

That sounds like, so you think mom and pop is worse than civilians? Yeah, because it's like, oh, yes, absolutely. In my mind, that's way more pejorative. Okay. I use civilians just people that are not market professionals. Yes. Speaking, so you said your wife had the Facebook group. I have a non-markets friend who texts me every once in my old.

about the markets, and he's my contrary indicator, and he gave me a yield curve text with a lot of exclamation points. But to your point of everyone knows everything, guess what? The next recession that hits, 95% of the population is going to raise their hand and say, I called this one. I've been warning people for years. Like, if everyone does know everything, it's, it doesn't work anymore. Well, maybe I'll go the other way on this. Okay. Maybe everyone feels like a recession is coming, and so they get ahead of it, and maybe it becomes self-fulfilling, where small business owners will stop hiring because they see stuff in the headlines. I genuinely think that's a possibility.

But so why does the yield curve even predict recessions? Well, there's a lot of different explanations. Actually, AQR had a very, very good podcast about this. And a lot of it has to do with the expectations, but more of like the actual why does this, not necessarily predict, but actually cause recessions, is because theoretically, it restricts the amount of money in the system because if the yield curve is flat, meaning there's no difference between maturities at 30 days or 10 years and banks borrow short and they lend long and there's no spread for them, then they're not going to lend money. I think that's more

or less total bullshit. Yeah. Do you think they really cause a recession or do you think it's just a coincidence indicator that it just happens? I think that is the explanation for why they do cause recessions, but why I think that might be bunk or a little bit of bunk is because, no, the yield curve is for government securities. These are for treasury bonds, right? So banks are not obligated to lend at the same rates as the government borrowsy at. They're going to put a premium for lousy credit. So I don't necessarily think that that's entirely accurate. My credit union checking account currently yields more than the 30-year treasury by 1%. Right. So it's a completely different. So, I mean, I do think it's nuts that the 30 years below 2%. And anyhow, let's move out this topic. Well, it is,

it is interesting. So the Financial Times had a piece and they said, they interviewed this guy who's the head of global rates at some investment shop. And he said, there's a risk that you will never get a positive yield on a safe asset again. So buy them now while stocks last. I mean, I agree with your piece from last week about, like, do people really deserve to have a risk-free rate? But the fact that people say, like, these long-term assets are never going to have a positive yield again, I mean, that's getting to ridiculous territory, right? I think so. So AQR had a piece about how they showed how expensive bonds are in terms of, and it's hard,

I think it's really hard to show expensiveness and bonds because a lot of that is path dependent on the future and do rates actually rise? Because if rates don't rise, then guess what, it doesn't matter what it looks like. So someone did send us. So I don't know. This stuff is crazy, but anyway, the yield stuff kind of hurts my brain to think about. So we did have someone who tweeted us, and it looks like he's from Europe. And he said, we asked the question, who's buying these negative yielding bonds? And he said, he gave us three groups. One of those European pension funds because they basically have to. They have to match assets with liabilities, which still seems bananas to me that makes sense. He said the other one is European banks and insurance companies because they have to manage their balance sheet. The other one, he said it's the CB. And so he sent us a chart that shows Germany, France, Italy, Spain, and they're buying something in the order of 20 to 30 percent of bonds over the last three years. And the other point he made was U.S. people could still buy these bonds and because of the foreign exchange rates make money on them because the yield curve over there is much steeper. So anyway, that's who's buying the

negative rated bonds. I still don't think it makes sense, but that's who it is. So RVs were in the Walsh Journal again. I think we spoke about this a few months here, sort of as a tongue-in-cheek, but they showed that the last two recessions, RV sales fell. And now they're saying that as many as 523 items could be hit by tariffs, and maybe there was just an oversupply. Maybe it's changing preferences. Like, do people really use RVs anymore? I don't know.

We have RV parks all around Michigan that I see when we go places and they're always full. Rick Ferry did an RV. Okay. So what happens, give me a back test here. What happens when the RV indicator hits and a yield curve hit? Do they cancel each other out? I've never seen that before. Is it a double recession?

I don't know. But AQR, they quoted somebody who had a great line, said something along the lines of like, I'd never predict what I've never seen before. So a lot of people say we're an uncharted territory, so it has to end badly. And he took the opposite. But you know what's not flashing a recession? The St. Louis Fed showed a chart of U.S. retail sales, $523 billion in July, an increase of 0.7% from June and 3.4% from a year earlier. Consumer spending is obviously a huge part of the economy

and that is not flashing anything yet. And we can back that up because we are now in the t-shirt, the merchandise industry. Yes, we have revenue numbers. So we put out, we got some feedback from people that they wanted a t-shirt. We went through 99 designs, which should be a sponsor with a podcast after you use them, I think. That's only fair. Great business, by the way. That's a great business. Yeah. So anything you want designed, and I've done it before for, we actually did it for the Animal Spirits podcast logo.

So we said we're going to make a T-shirt. We put it on 99 designs, paid a few hundred bucks for it. What did it cost? 300 bucks, maybe? It's not that bad. Well, initially, initially, the asking price is 400. And I think we, you know, we don't know how much this cost. So I think we put in like that we were looking to spend like 250 or something like that.

So we just asked if they could do a little bit better. And then they told us that 99 designs takes about. a quarter. And I was like, wow, that's not a bad business. Is 99 designs a business in a box? I guess so. It is pretty cool. And you have access to people around the world and they can show you their portfolio of designs they've done in the past. And so we wanted some sort of new whale design. And this person actually gave us the idea. We didn't really know what we wanted. We just wanted it to say somewhere. And they used some of the phrases that we use on the show. And they made it into an actual whale, which we used. And we went through, we actually got a recommendation from our

producer, Matthew Pasey, who said use T. Public for these. And that has worked great, too. So this was actually not a lot of work on our end. This was pretty easy, right? Yeah, it was pretty easy. So the idea was we wanted to donate $1,000 at least to Fisher House, which provides lodging for family members of veterans that are in the hospital. Yeah. So this is a good cause. We're not taking any money off of this. And we definitely learned that you probably don't become wealthy selling T-shirts. Oh, yeah. This is, so in terms of margins, holy cow. So we've sold, and by the way, Ben and I are paying for the design. It's not coming out of the proceeds. And also, we're going to make up the difference. And it looks like there might be a small difference, which is totally fine. So we've sold 327 items, which let's just assume that the orders are, well, whatever. So we've done $682 in what we're going to receive. So it's $2.10 in order. And let's assume that every order is $20, I guess. Well, some of them are, so it's not only T-shirts, you can do coffee mugs, stickers, hoodies, tank tops. It's actually pretty easy. And I think that's part of it because they

do all the work for you. It's basically a swag on demand. And so you upload what you want on this stuff and then they take care of it. Yes, but so for influencers out there, this is not a good way to make money. No, it would be tough. If you want to do it, you'd probably go to somewhere else, but we wanted ease of access and we'd heard that this is high quality, which also helps. So if you want to find this stuff, Bill Sweet, our colleague actually created a, you go to T-Publican search for like Newb Whale shirt, but if you just go to newbwhale.com, we are totally sitting on this brand. It'll take you, it'll give you a link right to where you can find all this stuff. And it's not that expensive. The only thing is that you actually have to pay for shipping, which seems kind of weird these days. Don't you think the sort of head, like the mind trick these days is instead of making you pay for shipping, just put it in the price? Like would you rather pay $20 for a shirt and then $5? for shipping or just $25 for the shirt. $25 for the shirt, no question. It seems like that's the way they should do it.

Although no one is weird. We paid $12 for shipping and then the next day I went down to $6. I thought that that was some real shittery right there. Well, it could have been the size of the order actually. Ah, true. Yeah, that's a good point. All right, we work. So I did not read the S1.

I'm assuming you're not an S1 guy. No, I just read the S1 reactions on Twitter and then based on an IPO expert. Okay, same. So their mission is to elevate the world's consciousness. Huh. So what do you think? So did you listen to the latest pivot with Scott Galloway and Karas Swisher? I did.

What do you think about his idea? I think maybe this is going a little too far. But he's basically saying a lot of these venture capital firms now because there's so much money in there have turned into pumpers and dumpers. Well, I think that was specific to like Tumblr. And maybe this is a little bit. And we work. But doesn't it make sense that there's so much.

much money sloshing on in VCs these days, that it makes sense for them to mark up these valuations as high as they can, get out, and then leave the public holding the bag. That's what SoftBank did. So the Tumblr thing is even crazier that they got Yahoo to buy it for a billion dollars and they stole it for $3 million. Can we tell your Tumblr story real quick? Sure. So Galloway kept calling on a porn site.

Yes, this is what reminded you of it. So good friend Phil Perlman, who was the reason that I started writing and probably a lot of other people as well. He introduced me to you because of this Tumblr thing. Oh, really? Yes, that's when we first met. Apparently, you don't remember. Thanks a lot, Michael. Apparently, so this is 2013. Sounds about right. So I started a Tumblr and it was getting pulled into Yahoo Finance with a lot of other people that were writing at the site. The fact that Yahoo Finance let that thing go is just ridiculous to me. They had free content from basically every one of the biggest bloggers, financial bloggers out there, and they gave up on it.

It was free to them. So I came back to my desk one day, and I saw a gazillion direct messages from people that I do not have a direct message relationship with. And my Tumblr account was hacked by an Indian porn bot. And it was where Yahoo Finance was pulling it through. So I think I got an email from like the editor of Yahoo Finance telling me to delete my account immediately. it was just, it was pretty up. You sent it to me, and it was the most vile porn. I mean, it was just infected your, and you lost all those Tumblr posts, right?

Those are a lot of your posts that you did are gone forever. So what Galloway said that we worked in is they basically said, how do we get the highest multiple and let's just pollute our S1 with buzzwords that fill that, which is basically, so now they're a service company, their space as a service, they don't have renters, they have members. They're just trying to get the highest valuation possible, which is fine. I guess that's what companies are supposed to do. Don't you think it's almost reached contrarian territory now where if you want to be a true contrarian, you're buying the WeWork IPO? Is there one person who says like, this is, this makes a lot of sense? I even heard one one case of someone saying it makes

sense. I saw one person who zigged, but I've never seen consensus so on one side of an argument here. Right. Like, if this is the late 90s, like people are Henry Blodgett. is pumping this thing as much as he can, right? Today, everyone is, is tampering, you know, like this shouldn't, this doesn't make any sense to anyone. And we love we work. It's a great, that's the thing. It's a great organization, but is it worth 50 billion or is it worth 10?

I don't know. So Galloway said it's a great company and it's worth maybe five to 10. So 45 billion, which is what the latest, I guess valuation was from Vision Fund, people don't realize, and I didn't really realize this, that SoftBank has. ridiculous terms, like they are the first money out where obviously retail investors have no protection whatsoever. So people are questioning whether this is actually even going to, whether the SEC is going to like put the kibbutch on this. See if they're going to allow it. Does that mean we're not going to see community adjusted

EBITDA on Y charts as a metric? So it's basically earnings before every single cost imaginable. Right. Everything is an investment. Which is revenue. I mean, it's another thing of, I guess, what's been going on in this cycle that there's just a lot of money sloshing around and it's allowed these companies. But his other point of soft bank competing against each other and setting their own price. So they set the $10 billion valuation. And then they themselves bought in at a higher one and moved the price up to $20 or whatever it is. So they're competing against themselves because they have so much money. And they're literally setting prices. And now they're lending money to their employees maybe for the second fund. So this IPO is

very important to them. If this is, this could be the canary in the coal mine. Like, if this- Hey, by the way, that's on the T-shirt. Yes, of course. Obviously. If this IPO is a flop, there can be a massive reset in private markets and probably public market won't be immune. No.

No? Uber didn't do anything. Lyft hasn't done anything? I'm saying if this thing falls 40% in the first two weeks. But hasn't everyone already pegged that in? That is saying this is not going to do well? Let's take the opposite. Let's say this thing goes bonkers in the first month and does well.

That would be awesome. Doesn't that, does everyone say, all right, let's put our foot on the gas and green light and melt up. Here we come. Melt up. All right. I'm the one contrarian. You know what?

I don't really believe this, but I'm sitting on this take. We work is going to go up a lot. I don't believe it. No, not allowed. Not allowed. All right. You can't put out a take that you don't believe. So.

That's type one charlatanism. That's true. There was an article in the Walsh Journal. that Amazon has, I think, 15 employees that tweet about the working conditions in the Amazon fulfillment centers actually being not so bad. So if this is the case where everything is manipulated, we don't know the truth. So these are like the opposite of trolls. Yeah.

So they're like. Reverse trolling. Yeah. Okay. So this reminded me of the video that was going around Twitter this week of Bill Hader turning into Tom Cruise and Seth Rogen, which is one of the most terrible. I think it's cool. No, it's terrifying.

I remember Kahneman talked about this a couple years ago, and he said it's one of his biggest worries. Here's the thing. Once this stuff gets out, I mean, obviously you're going to be able to fool the easy people, but don't we eventually get to a point as a society where we just don't believe anything? And that's good?

That my posture on the internet now is, I don't believe anything until it's like double, triple verified. Because I used to be the sucker who would believe everything. You're an eyeless. Yeah, but don't we all get to that point where we become numb to it once this technology hits, or is it you think it's the end? of humanity. You believe in nothing, Labowski. I think it's scary. I don't know. I can't believe

how complacent you are about this. I think it turns into viral videos and there's an app for it and people use, people do funny faces on an app and it's not as bad as people think. All right. Maybe you're right. It was pretty cool. And it was hard to tell sometimes too. And I didn't know Hayter did such a good Tom Cruise. But yeah, I don't know. I think it's the kind of thing that anytime that there's something that happens now, there's a certain amount of people that jump on it right away and then you get the backlash per grade who is policing. Isn't it kind of like Wikipedia where someone changes an entry, people immediately jump on that entry and fix it? What if this is the case where that happens and people immediately go, no, no, no, this is a fake? Look, and I can tell.

There's software that predicts that this is going to be a fake. I'm trying to go away from the end of humanity here because I agree. It could be really bad, but I'm hopeful that humanity doesn't take the bait on that one. Maybe I'm more hopeful then. I can't even tell if you're serious right now or not. Is this the real Ben Carlson? Because I don't recognize these takes. Oh, I mean, obviously we're going to do a whole podcast that we tape and we're going to switch our faces. See, I mean, this has already been done. Face off. Remember, Nicholas Cage and John Travolta? It's just an easier way to do it. Moving on. Survey from Market Watch.

According to a survey from policy genius, 20% of people keep their money management separate from their partners or spouses, 30% of a couple say they don't know the details of their partners and three quarters of couples share all financial accounts, not even holding a single credit card or checking account separate. So basically, people do things differently. Yes, but the one that kind of got me was almost a third of people don't know the details of how much their partner earns. Do you think that makes sense?

You wouldn't ask, like, how much money we may. Like, I get that people probably don't understand what they spend, but do you really think people don't understand what their partner earns? Well, if the surveys are to be believed and they're not, not employing. leave this. Okay. Okay. Well, did you see the CNBC survey or the survey that was in CNBC? It's from Career Boldler. 78% of full-time workers said they live paycheck to paycheck. Hey, how come Career Builders not on the podcast corner? How does ZipRecruiter just get all the career stuff? Career Builders been around

way longer. Why don't they have podcast ads? Don't know. Just throwing it out there. Does ZipRecruiter have their own podcast? That's what I'd like to know. Yeah, it's called The Ringer. true. All right. 78% of full-time workers said they live paycheck to paycheck up from 75% last year. BS, right? No way. That's impossible. That sounds high. Do you think people don't know what paycheck to paycheck means? Because if you're saving for a 401k and it's automatically come out of your account, does that count as paycheck to paycheck if you're actually putting something aside? Because technically you're saving money. And technically you're also living paycheck to paycheck. I think paycheck to paycheck is a crutch that people fall back on and maybe they don't exactly know what it means. Maybe I'm

wrong. Seventy-eight percent seems pretty high. I think you're right. I also think people don't have a good sense of their actual personal balance sheet or cash flow statement, I should say. They don't really know what's coming and what's going out. True. So last week, I spoke about a product that was disruption proof. And actually, it has already a lot of actuallys on this one. It has already been disrupted. The fly swatter. So, apparently, there is like a tennis racket that's an electric fly swatter. And if you're a sadistic person, this is a more entertaining way to zap a fly. Okay, so you got one of these.

I did. Did you touch it? Hell no. How bad would it hurt if you touched it? Well, Ramp said to me, pro tip, do not touch. Okay. So no, I did not touch. What's the kid's safety valve on here?

There's really none. Is your kid going to pick this up thinking it's a tennis racket? Yeah, it's dangerous. So when you zap, like, I just touch. a zucchini with it and it's loud you tested it on a zucchini yeah you're not you're not sounds like an infomercial you're not touching it um so anyway how it's not better it's not better than the traditional oh really oh interesting you think it you don't think it works good because you still have to get the fly right i'm not saying it doesn't work well but like with the fly swatter you go

bam this you're not going to swing it like that so you have to be more strategic so it just it's it's it's more effort than i was uh than i bargained for fly swatter works better on a wall electric fly swatter works better in the air. How's that? You're dead on. All right. So you can have, you can double fist. Technically. Okay. Did you see that? I never have heard of that before.

Did you see that Vanguard is launching an alternative strategies fund for advisor? I think it's for advisors only, they said. Did you see this? No, but I know they've had one before that had a really high minimum. Oh, I'm sorry. Here's what it says. Vanguard announced today that financial advisor clients will be eligible to purchase shares at Vanguard Alternative Strategies Fund, starting an early, no. November 2019. I think the minimum is $50,000. And there's six alternative strategies, long, short equity, event driven, fixed income, relative value, et cetera. The difference here, the main difference,

as usual, is that it's much less than what is out there in terms of costs. What's the expense ratio? 66 basis points. Okay. I could be wrong on this. I'm going to have to do a little more digging and excuse him wrong. I think the performance for this has not been great because it's like a, it's basically like a market neutral fund in a lot of ways. Well, have there been any alternative strategies like this that have done well over the last 10 years? It's been a pretty tough environment for most of these. No, in one of my, so over the last, okay, so this thing only goes back to, let's see. Okay, so over the past three years, it's up 7%.

So, yeah. 16% over the last five years versus the S&P 500, which has done 50. So I guess not bad for an alternative. That's not terrible. What I've said, the problem for a lot of these is, in alternative strategies,

especially like a marker neutral, it's cash plus. So in the past, you were earning 4% or 5% on cash. That's why it was so easy to be a hedge fund manager in the 90s. You're earning 6% in your cash that you're holding. With these you don't, so it kind of takes the initial hurdle rate down immediately

of what you can earn on these things. By the way, you just compared it to the SB 500. You want to take that back right now? I'm giving you an out. No, I think that's what people do. Like, okay, fine. You want me to compare it to the bond market? Yes, please. Okay. Okay. So over the past three, it's pretty similar to the bond market, actually. Well, there you have it, folks. Okay. But you pay less money in owning a bond market, I guess. But yeah, sorry, I'll compare it to a 6040 fund the next time. How's that sound? Good. I think that's probably more fair comparison for a diversified one. Do you think this is going to be a

big fund? What's the, do you think it'll actually ever take off? I think it'll be $5 billion. Okay. Do you just pull that number out of thin air? No, it's in my model, my mental model. Okay. Okay. So I was in the supermarket this weekend. I spent a lot of time there. And I don't know. Is the supermarket a New York, East Coast term? Because we say grocery store. Okay. Same thing. I think I call it a supermarket. Supermarket is to soda as grocery stores to pop. All right, fine. That's not a hell I'm going to die on. I don't really care about supermarket. But, no, I'm just saying that's like an East Coast Midwest thing. You're an elitist.

You say supermarket. I don't know why I haven't used like the delivery services yet. It's awesome. We do it. We used shipped and it goes to one of our local Midwest ones here, Meyer. And it is amazing. Yeah, there's a lot of options. But I kind of enjoyed it.

So it took me about an hour. My wife sent me a list. I copied and paste the text into a list and I deleted everything as I went by. You know what the easiest thing, one of the better things about not going to to the physical store yourself, like when you go to the store, you always pick out 10 different things that you, that weren't on your list. When you do it online, you get what's on your list and that's it. There's no extras. But sometimes you want the extras. Here's the thing. You can text them as a shopping for you and say, oh, I forgot this. Put this in the basket too.

So I was listening to, you know what? It was nice. It took me an hour. I had some alone time. I was listening to Joe Rogan and Bernie Sanders. And, you know, you know, know, Bernie Sanders, I guess, comes off as, to some people, it's just like a crazy sort of guy. And there's things I agreed with, things I didn't agree with. But the point is this. The debates are ridiculous. He called them, Bernie Sanders called them a reality show. And hearing him with Joe Rogan, you actually got a sense of what type of person he is and what his views are.

The debates are just total nonsense. And to that point, Ben and I are doing a rekindled podcast. The book is called Amusing Ourselves to Death, which is such a prescient book by Neil Postman. Do you know when he wrote it? I feel like in 1979 or 84 or something like that. It's from the 80s, I believe. Yeah, we both read it this year, and I hadn't heard about it before. So we're doing a quick audible because we were going to do Muck and Gladwell, ones.

We're going to do that next, but we think this one is kind of pressing. And we have to get a podcast in an emergency one just in case you have a baby because you have a baby number two on the way. So we wanted to get one in and we're going to tape it this week just in case. And that's the one we're going to do. Getting back to the grocery store thing. So I was walking down the aisle of junk food. And I was thinking about, you know, when you grow up, there's houses, kids' houses that you don't really like them, but you just went there for the food because you know they have like donuts or whatever. Yeah.

I wonder if there was ever a study done on kids who grew up in how. households that had junk food. So this is like the marshmallow test? Yeah. Did they grow up to not have? That's a good question. Because I feel like... I mean, that's the thing with my kids.

If it's in the house, they're going to eat it. If it's not in the house, out of sight, out of mind. This is a way over generalization. But I feel like those kids were sort of knuckleheads because their parents maybe were loosey-goosey with them. Like what type of parent has candy and donuts and cookies in the house at all times? Now, if you are one of those parents, I apologize. I'm not trying to cast judgments, but...

Well, you just sugar-shamed a whole segment of the population. No, because you know what? I have a very specific person in mind, so I know this doesn't apply across the board. I'm just asking. Okay. Yeah. That's a... Okay.

Do you have any hypothesis? Are you... No? I don't know. But don't you think... Let's go the other way. The weird vegan family who... Whose kid doesn't touch sugar until the age 18?

Which household does a kid grow up better in? I don't know any of those people. Okay. There's a lot of really health conscious, all organic, never sugar, you know, all this stuff. Don't you think those kids, when they hit the age 18, they're on their one in college and they actually taste the stuff for the first time, they're going to go mad. You know, the kids in college who showed up and hadn't touched a drop of alcohol in their lives, and they go crazy that first year and drop out. That's these, that's these, uh, vegan kids, right? These vegan kids.

Can we add that one to the shirt? All right. Listener questions, unless you really wanted to get into my post here. I wanted to ask you something, but I can't remember exactly what I wanted to ask you. All right. We can save it for next week if there's nothing of that. Okay. I wrote about like retirement or something. Yeah. Our retirement freaks me out. Okay, never mind.

Okay. You've touched upon this previously, and there's a slew of articles out there, but can you earnestly break down who has the most impressive investment track record of all time? Earnestly, I can. I like this question so much I wrote about it. You do. Do you agree with my assessment? Okay. I said it's hands down Buffett.

Can I confess? I skimmed your article. That's fine. I'm, I usually read every word, but I don't know. You can just read the, so I broke down. I think your conclusion is pretty accurate that Buffett has a six-decade track record. Yes, of 20, over 20% a year. The numbers are just silly.

So since 1965, Berkshire is up 2.5 million percent, while the S&P is of 14,000. thousand percent, which is what happens to 20 percent annual return versus 9.6. The ones that I didn't know before, and so I said, like, I would have accepted Drucken Miller or Simons probably too, but he had a period from 1976 to 1989 where he did 47 percent a year, which was after his, the 1973, 74 bear market, which was really bad. So 14 years, he did almost 50 percent a year, which is just insane. And I said, because he grew it to such a big number, and obviously there's leverage involved in different businesses and private assets. It's almost a $500 billion company now.

No one has ever managed that much money before and done what he's done. Were those numbers audited? That's what I want to know about Druck. Have you ever seen people told me he's only at five down quarters in 30 years? I thought it was two. Are we sure those numbers are real and not made up? Well. I mean, people were calling GE the new Enron this week for some reason

because the guy who called the Bernie Madoff thing said that GE is just as bad as Enron in terms of accounting. What if Druck is the new Enron? I'm just kidding. Don't send me hate me on that. All right. Wait, wait, wait, hold it right there. I am reading, I'm almost done, the man who solved the market, how Jim Simon's... What's throwing that in my face?

Launched the Quant Revolution. This book is on sale, November 5th. Okay, so what is his, what was his track record, 80% a year or something? Total medallion trading profits. Take a guess. Going back to when. The 1980, 1998, yeah. Five million. What?

I don't know. Oh, proud. Did you just say? Did you just say five million? Oh. Did you hear me say Buffett since 1965 is two and a half million percent? Okay, dollars. Okay.

I don't even know what the base is, so I'm not sure. All right. So I'll just tell you. Way to play along. Jeez. It's probably got to be at least five figures. $65,000. Okay, total profits.

$104 billion. That's a lot. $104 billion. That's more than Amazon's ever done since inception. I'm guessing. All right, so here's the deal. Since 1988, 66% average returns before fees. Shoo.

That's amazing. And the smartest thing he ever did, which I wrote in my post, is, close the fund down to outside capital. When, like, when did he close the down to outside capital? Did it, does it say in there? Yeah, I think it was 2002. I forget. Okay, so he did for 15 years or so, and then he closed it, and it's only partner capital, basically, in that fund.

I don't want to give anything away in the book because it's not coming out for quite a while. But Gregory Zuckerman, who wrote the quants, got, there was a lot more in this than I thought there would be in terms of not like, not in terms of what the model actually was doing. because nobody knows, but I think people are really good to like this one. All right, next question. Okay. I'm stealing that one from you at Wealthcast. Okay. Is social media making new cultures?

Like, the Facebook culture is different from the Twitter culture versus the Instagram culture. And do these culture members lose touch with their surroundings and family due to their effort of online culture? I guess some people could get lost in the show. So there was the Wall Street Journal article this week about how girls, especially teenage girls are having like their anxiety is off the charts and this gets back to the one we talked about last week that maybe a lot of millennials say they don't have friends because they're able to view

all this stuff online I could see how social media could screw with a certain cohort of the population yeah but I think there's also there's there's fewer people online and this stuff than people realize like what is Twitter's like 300 million members or something worldwide which is a pretty small number in comparison Facebook is obviously the big one I don't know. Do you think technology reached a turning point when social media happened and they're going to look back at this and say, oh, this really screwed us up? Yes, I do. This was bad. I don't think this is overblown. I don't think there's any putting the toothpaste back in the tube. But I think that there's some very legitimate stuff in this. Our brains aren't wired for this. I do agree with that. And one of the things I saw, maybe it was Bill Maher, who said, you know, in the past, we could read the newspaper and it would always be bad news. And you go, well, at least I'm not that person. But now you see. see online, people say, oh, man, I wish I was that person because people are putting out fake

lives on Instagram and this thing. So it's, yeah, that, our brains probably aren't hardwired for those comparisons. All right. Okay, on your last podcast, you guys mentioned the idea of coming up list of things you wish you knew about finance at a certain age. I'm a 23-year-old graduate student getting my MBA. We'd like to know if you have any general things, no-brainers that someone their 20 should do with their finances. What do you got? I think you should start saving a little. It doesn't have to be a lot. You don't have to be a hermit, but I think you start saving a little to develop that habit, I think my first job I started saving 50 bucks a month. And I slowly worked it up over time. You were like the perfect financial citizen. You've never traded. You never, like,

you don't have a blemish on you. I'm sure I do. I do. In your, you know, my problem is, I care too much. The, the problem is, like, I think in your 20s, here's what you should do, especially if you're going to settle down on of a family someday, travel. go have fun, do all that, get all that stuff out of your system. That's something my wife and I did is we went on a few, like, we did one trip to Mexico where we planned it a week before. And we went, let's like do some stuff like that where when you don't have the responsibilities holding you back, you can just go have some fun.

And so I would say make sure you spend some money on yourself and have fun in your 20s before you have to settle down and hunker down in your 30s. Those are both good pieces of advice. Yeah, I would say that right now, even if you don't make a lot of money and you probably don't, it's so easy to automate. So like literally, if you could save $20 a month, just building a foundation of habits, not necessarily like saving a ton of money, it's probably a good place to be. All right. Recommendations, what do you got? Spend your first year or two living like you did in

college. Like, don't change your lifestyle very much. And that's how you get into that good habits. All right. Recommendations. So I rewatch the limit list this week, the Bradley Cooper one, where he takes a drug and it's basically like Adderall on steroids, I guess, and his focuses his brain. And you were talking last week how you are going to write a piece about inequality. And you're going to kick the hornet nest and you're probably getting a lot of hate mail for it. But I'm going to put out limitless as a metaphor for income inequality. So this is the thing where Brad the Cooper takes the pill and he's just a struggling writer before and then he writes a book. He learns all these new languages. He goes, he does the she's all that and he gets a makeover. And instead of

using these powers for good where his brain is like functioning at full capacity, he immediately tries to pick up women and then he becomes a day trader. And then he goes from being a day trader or working with Robert De Niro, who's like the Warren Buffett, and he becomes rich. And at the end, instead of becoming rich, he turns powerful and wants to become a politician. So that's like a good metaphor for capitalism, I think. Instead of using that brain to like solve a lot of problems, he just decided to make a lot of money and then gain a lot of power. And he went into money and politics. And I feel like that's kind of just the way the system is set up to be. And that's why you're going to almost always see these huge, huge, big range between the wealthy and the poor.

Right? As long as the Federal Reserve keeps doing what they're doing, you're damn right. You know what? So Limitless was a very good science fiction movie, and I hadn't thought about it until you posted. I was like, oh, man, I like that one. You know what else I'll put in that category. And I know I spoke about this when it first came out. And it's not like amazing, but if you like science fiction, this is a good movie.

Upgrade. You see that one? I know I told you to. No, I never saw it, actually. Okay. Upgrade. Hour 40, very watchable. Okay.

I think you actually recommended it on this podcast before. I did. It's sort of like Ex Machina, a little bit. Okay. All right. Oh, I finally read Loon Shots. You were right. The first half is way better than the second half.

But the stuff about how they discovered sonar and radars back in the World War II era was just that kind of bloom. I'd never heard that story before. The first half was like amazing. Here's the problem with those kind of stories, I feel like. It makes people with dumb ideas feel like they're probably good ideas. Like, I think that there's a good, it's a good thing for a lot of people to, like, push through and not listen to the naysayers. But there's a lot of people out there with dumb ideas who go, hey, no one. knew, but no one believed this stuff at first, so I'm just going to keep pushing my idea through, right?

Is that fair? You're a take machine. No one believed in us. All right. That's all I got. All right. I did like Loon Shots. Here's a recommendation.

Have you ever had fresh, fresh mozzarella? Does it count us from Costco? No. I cannot believe that this was the first time I had, like, warm, fresh mozzarella. It was so freaking good. Just from an Italian restaurant? From, like, an Italian, like, meat shop in town. It is pretty good.

It's nice, soft cheese. It was unreal. I saw... Do they call it mozzarella there? Probably. I saw good boys in the theater. Pretty good? Pretty good.

I would say, like, a 7.6. It was only 90 minutes, which was great. It was, it was mostly funny, and there was, like, probably three really, really good laughs. Okay, that's not bad. Right? I think it's pretty good. Like, three very memorable belly laughter moments. And I don't think you could ask for much more than that.

I read a book called The Rise and Fall of Dinosaurs. I've never read a book about dinosaurs. Oh, actually, that's not sure. I read a book about a fossil under last year. You probably read a book about dinosaurs in like five. Yeah. But this was incredibly readable. Like, not too technical.

It really towed the line very nicely for a layman. If you are at all interested in dinosaurs and their history, highly, highly recommend. I think it's just mind-boggling how long ago they existed. What is, 160 million years ago or something? I think the asteroid hit 66 million years ago. That was the Cretaceous period, but the, I'm probably going to get this wrong. The Panjian or whatever, like when they first started, it was 250 million years ago. It still blows my mind, too, that people didn't know dinosaurs existed until after George Washington had died.

There's just something no one knew about it. Yeah, the numbers, they're so big you can't even comprehend them. Like, there's so much in here that I, that was like, holy cow. For instance, when dinosaurs were on the planet, there was no grass. Really? Just no grass. What? Shrubs.

Trees. I don't know. Anyhow, highly recommend. Okay. That's a good, that's a good, if you ever go to a cocktail party, we said last week, there's no cocktail parties anymore. Guess what? No grass in the dinosaur era. That's a good one.

That's a good one. All right. All right. Go to newb whale.com. Right. buy some swag from us. It's all going to a good cause. Send us an email. What do you say? Subscribe, rate, review. Find us where all greater podcasts are sold. Animal Spiritspot at gmail.com. Talk to you later.