Animal Spirits Podcast - Person of the Year (EP.235)

Episode Date: December 15, 2021

On today's show we discuss the NYC boom, the treasury bonds of the Nasdaq, return expectations over the next decade, why young people won't be scared off by a bear market, who is most impacted by inflation, why in-dining fast food may be a thing of the past and more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Donating money to help people can be a wonderful and selfless act, but how can you feel confident that your donations are improving or saving lives effectively? You could do weeks of research to find the charities that are out there, what programs they run, how effective these programs are, and how the charity might use your money. Or you could just visit givewell.org. There, you'll get a short, vetted list of the best charities they found at saving or improving lives per dollar. Givewell spends over 20,000 hours each year, research, charitable organizations and only recommends a few of the highest impact evidence-backed charities they found. Over 50,000 donors have used Givewell to donate more than $750 million.

Rigorous evidence suggests that those donations will save tens of thousands of lives and improve the lives of millions more. And here's the best part. Givewell is free. Givewell wants to empower as many donors as possible to make informed decisions about their donations. They publish all of their research and recommendations on their site for free, no signup required. They allocate your tax deductible donation to the charity you choose without taking a cut. If you've never donated to Givewell's recommended charities before, you can have your donation matched up to $250 before the end of the year or as long as matching funds last. To claim your match, go to givewell.org and pick podcast and enter Animal Spirits at checkout.

Make sure they know that you heard about Givewell from Animal Spirits to get your donation. matched. 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 and the securities discussed in this podcast. Welcome to Animal Spirits with Michael and

Ben. Michael, I was in New York last week, visiting you for a couple days. Here's my initial feedback as a person in a flower state, not a coastal latest. New York is back. It was booming. And I don't know if you've noticed and maybe you don't notice as much because you're there, but I noticed. I was there in July and it still felt dead. The subways were half full. There weren't that many people on the streets. It kind of was empty. It was an eerie feeling. We went out to some shows and bars that night, and it just felt bizarre. The last time you were in New York City, I took a picture of the subway and I almost tweeted New York City is back, but I didn't want to, that's bad juju.

Remember, the subway car was literally 100% empty. It was just us. Yeah. So this time, we put in some work. We did a couple of YouTube videos, a podcast, we put in some work and we decided, let's go celebrate and have a drink after work. I think the first four bars we went to, we could not get in because it was shoulder to shoulder to. people and you couldn't move. Everything was packed. Did you go see the Christmas tree? I went to see the Rockefeller Center Christmas tree. People were everywhere. The shops were full.

It was frankly nice to see. It was just a boom town. Everything was booming. And I mentioned this on Twitter, but, and I mentioned to you at the time, Christmas decorations and lights in a bar. That gives me at least a 20% premium in terms of my mood, putting me in a good mood. You got to love it. Yes. So anyway, good visit. Great visit. The show, eh, see? Decent comedy show. D plus, C minus. It wasn't good.

Okay. All right. As of Friday's close, we don't have 68 all-time highs this year alone. So close to being nice. Since the onset of the pandemic, in March 2020, we'll call it, market peaked in late February, 87 new all-time highs. I don't like this. As of last Friday. Yeah, I mean, I do like it, of course.

As somebody that actually invests in the stock market, it's good. but as somebody who has to think about the stock market and talk about it, this just breaks my brain. How about this? I get most of my sentiment readings from Twitter, frankly. I guess you could say some other interactions with civilians who are out of the market, but I think most of our sentiment comes from Twitter. Is that right or wrong? That's where we get it. Is that a question? No, I'm saying. Oh, where else would you get? It really does not feel like all-time highs in the stock market because there are so many speculative names. Actually, I get it from my wife who said the third web, great contrarian indicator.

That's pretty good. But it doesn't feel like all-time highs to me, sentiment-wise, because all these other, if you're outside of the S&P or total stock market index fund or just these huge NASDAQ 100 names, you're probably not doing very good. And you have some stocks or some crypto or something in your portfolio that's getting beaten up. I feel seen. So this is from Goldman Sachs has this chart that's showing 35% of the S&P 500's year-to-date gain has come from five stocks.

and it's Apple, Microsoft, Google, Nvidia, Tesla, and the remaining 493, not much. I feel like we see some version of this chart every 18 months, every year. Yeah, we got into this a little bit on the compounded friends that I was on, but are these the treasuries of growth stocks now? They're not even growth stocks anymore. It's like growth value and tech behemoths. They are like their own country now with their own rules, maybe they're their own Dow. all the perma bears have been waiting for this speculation to leave the market.

It has. That's going to lead to the dot-com crash and the market's going to roll over. Well, all that stuff has gotten crushed and the market doesn't care. How long can that happen before the market cares? Or could we get to the point where this happens a lot where speculation gets crushed and the market just says, too bad, I don't need you? It's a fair question. I pause.

I'm thinking. I mean, in a real sell-off, well, this is a circular argument. I was going to say, in a real sell-up, these names will get dinged. The sell-off will happen because these names finally do get dinged. Yes, that's what will cause it, right? Wouldn't that be kind of funny? I feel like Apple was almost single-handedly holding up the market the last two weeks, Apple and Microsoft. While all of these names got wrecked underneath, the big boy said, hop on my shoulders, we got it.

And that would be the funny thing is if the stock market did roll over from these stocks and all the speculative ones come back and it doesn't even matter. But it seems like, let's say you are a growth stock high-flying speculative investor. Do you move from those speculative stocks that have fallen 50, 60% back into these names? Is that like a rotation thing we're seeing now? Well, I'm looking at- Is it possible? Remember a few months ago, people were like scoffing because a lot of the momentum ETS rebounds into value stocks. Yes.

And we're saying up the top, here's the top. I'm looking at a ratio chart of small value to arc. And you could choose your derivative. You can use large value and the cues, whatever. They all look roughly the same. Breaking out to the highest levels in a long time. Not in a long time. I should say, going back to last year.

Did we get to the point where just everyone had thrown up their hands and given up on small cap value? It's up 26 percent. You today, this is based on like the Vanguard small value ETF. Could be. Oh, you had a great question for me. I don't know if this is over the weekend talking about two stocks that are crushed, which is the better buy. And I think this is an easy, easy answer. But why don't you pose the question?

Let me start with this. So I can't tell if this makes me love or hate the stock market more. I'm on the fence here. So I never got into sex in the city. Did you? Did your wife watch it? My wife does. Okay. My wife was into it too. So the mainstay guy in the show died riding a Peloton. And the next morning, Peloton stock was down 11%. I guess it's end of the day down five. And of course, Peloton had to come back with an ad from Ryan Reynolds with that same guy kind of firing back. Ryan Reynolds. Ryan Reynolds runs a marketing firm now. Oh, he was the one that did the ad? Yeah, he runs a viral marketing firm, and he can turn him around really quick. Ryan Reynolds is like Doug Bonaparte, but actually funny.

Just kidding, Doug. With better hair, too. Oh, and better coffee. So I think it's funny. This is obviously algorithm, but the other thing is, so often a less tangent here. The inflation number came in higher than expected on Friday. We're going to get to that in a little bit, but Bitcoin, a million. immediately jumps up from the algorithms.

Then it comes back down. That's the stuff with like this Peloton thing. It's like it was on a TV show. I guess maybe they said it hurts a brand anyway. So Peloton now down 77%. Wait, hang out, hang on, hang on. Before you get into this, if you looked at a chart of Peloton and said, show me on the chart where the TV show made it fall 11%.

You wouldn't be able to. You know why? Because this stock was already in free fall. So I understand. I get why it was this new story. But the idea that HBO was just piling on at that point. Yeah, maybe it was pile. timeline it a little bit, but come on, come on. Okay, so Peloton and Robin Hood, both 70% off all-time

highs. Robin Hood is, I think, under 20 billion now, 19 billion market cap. What's the better takeout candidate here? Because I think both of these are name brands that if a bigger company took them out, I think it makes a lot of sense. This is easy. Maybe they wouldn't sell. Okay, who is it. There's no buyers for Robin Hood. Oh, really? There's not a single buyer for Robin Hood. Oh, I, oh, tell me who who buys Robin Hood. Vanguard, no. No, seriously. Tell me who buys Robin Hood. I'm thinking of a tech company that wants to get more into finance. SoFi, I mean, FTX. Square.

Square. Square buys Robin Hood for $35 billion. I think there could be many potential buyers for Peloton. You can't say something's cheap without looking at the fundamentals, but I feel like this is a more attractive buy than Robin Hood. Or I should say, is a much more likely takeout candidate. It has many more potential suitors than Robin Hood. I wish we had more of this stuff like this, that these big companies would go, you know what,

Screw it. Why do we need a couple hundred billion dollars in the bank? Let's make something. I mean, I know this is cliche, but like Apple as a potential getting into the fitness game or even Google. Yes. I agree. I agree. More user data. Yes. They have us as users, right? What do you think? I mean, what did you think before I said? I think there should be some places that are kicking the Taras and Robin Hood and making some offers. Who? I just said some of these fintech firms square. I think square would be a perfect. Why wouldn't they? I don't know. There's a lot of baggage around that name, bag holders. Why not a Charles Schwab or a fidelity? No way, stop.

Try to diversify their user bank. Yeah, Schwab's going to buy Robin Hood. I'm just throwing it out there. Where are we going next, Ben? All right. We discussed last week the return expectations from Vanguard. We don't need to get into it again. Those on the Compond of Friends, if want to watch it.

They're just saying returns are expected to be very low. This caught my eye because they're not like a GMO that's been predicting this for over a decade. They've been pretty constructive unequities. I just wanted to make one more point here before we go on. This would be a good thing for young people. They would rather have 2020 where their stocks go up a million percent and they do great. And they say, hey, I turned $2,000 into $6,000. Look at how awesome I am.

If you're a saver, this is what you want. You want a decade of crappy returns. And that's really hard to wrap your head around. But it's true. Agreed. You're 100% right. And 100% of the people that you would be right about don't want a decade of no returns. Of course.

because the problem is after a decade, forget about a decade. After a year, people start looking for other things to do with their money. I ran the numbers on this. So the Vanguard growth stock fund is up 19% per year over the last 10 years. Vanguard says they think growth could be basically flat to negative or maybe like a positive 1% annual return over the next 10 years. If growth stocks went nowhere for the next decade, the 20 year return, including 90% per year for 10 years and 0% per year for the next 10 years would be a 9% annual return, basically the long-term average. So I think that's kind of what they're doing here is calling for some mean a version. Wild. This is a good segue to our listener email. I'd like to present the argument that millennials will be more likely

to stick to their investment strategy and more likely to continue dollar cost averaging during a downturn because we are crypto natives. When there was a recent downturn like we had last week, it's nothing compared to what our crypto holdings do when they dump. I believe that we will be less likely to pull our investments or stop investing than our parents during a drawdown. I check my Coinbase account probably twice a day. I don't even look at my Vanguard index funds when the majority of my money is in it because it's so much less interesting. Here's the thing. I tend to agree with this. And I wrote a piece on this that was pretty close to this. But a lot of people came back to me saying that 2021 doesn't count. It was a 34% drop in three or four weeks. And then we came back so that doesn't count. Were people at the time saying, no, 1987 doesn't count. Good point. This was our 1987. People are still talking about 1987 to this day. But we're trying to paper over this. one saying, no, that doesn't count.

That's a very astute observation. I agree with you. And here's the thing. People are very quick to dismiss 2020. And that didn't count. You're right. Right. But if you look at the actual number, that don't have in front of me.

Wait until the next one, Ben. So they had the 1987 and then throughout the 90s, there was a few 19% corrections. Like the 90s didn't have anything. And then when stuff really started selling off from 2000 to 2002 and they had that 50% bare market, if you look at mutual fund outflows, it wasn't that bad. People didn't rush for the exits. It didn't happen. Even after 20 years, there was no soul-crushing bear market for 20 years, 20 years from the 80s and 90s.

And if you look at the mutual fund outflows in that early 2000s period, it wasn't like people were rushing for the exits. It didn't happen like that. This is very nuanced because there could be like a barbell of behavior where people behave really well inside of their 401ks and just sort of turn their brain off and keep buying in a good way. And then get really nervous in their taxable accounts, their brokerage accounts. the brokerage accounts. I think we like to assume everyone else is going to be the one to panic. Not us. Because someone has to do it.

And so I think you get some of that. Let's talk about how dumb magazine indicators are. So Elon Musk was the time person of the year. And who reads time anymore, honestly? People used to read it, I guess, when they go to the dentist office or the doctor's office. But now you have your phone. So you don't even read it there. This kind of pisses me off a little bit.

Now time is getting in on the clickbait game. Maybe they have been paying attention. They knew what they were doing here. Of course. This is very predictable. They knew what they were doing. They knew people would talk about it. They knew it would be really exciting for some people and other people would bash it. And that's what we all did. But if you're really basing your investment strategy off of, well, remember that one time that thing was on the cover of so-and-so magazine or Barron's or whatever

and that worked. So this is going to work now. Nonsense. It is nonsense. Total nonsense. All right, Ben, I lost a bet. I tried doing my patriotic part and betting that inflation would undershoot. We need to talk about your betting strategy because you're betting with your heart

and I'm betting with my head. Well, you think you're influencing the markets by how you bet. I also like my odds. I like my odds. I put 50 bucks to win one and a quarter. So Kalshi has this way of betting on the inflation numbers every month.

And they break it out into three tiers. And the middle one is kind of what they see as like, this is sort of our sweets button. Then you have a really high one and a really low one. The high one has lower probabilities. a low one has lower probabilities of winning. So I bet I think when it was 70 cents. I'm two and on my Kelsey bets, by the way.

Brother, this is the perfect juxtapition of our personalities. You're going for the short thing. Like, it's ready at 70 cents. It pars a dollar. I'm like, give me that 30 cents bet. Their line in the sand was 0.6. They said it'll be higher than 0.6, and I bet on that. It was 0.8?

I think it was 0.8. I do think there's going to be a time. I don't know what it is. I think we're all going to get on the boat of, okay, this is going higher and higher, where the expectations are going to overshoot and it's going to come in lower. And we're going to get in this a little bit

in our next talkier book with State Street. But I honestly wonder, my first reaction would be if inflation comes in lower than expected, that should actually be a good thing because the supply chain stuff is getting better and people are going to say, okay, here we go, economic boom, maybe. But I do wonder if inflation comes in lower than expectations,

if that could be like the reason for a sell-off. Am I playing like 40 chess here? Too much? Who said the line, don't tell me what you think, show me your portfolio? Was that Talib? Sounds about right. I feel like this is, don't tell me what you think, show me how you bet on Calgary.

I'm saying one of these months, it's going to make sense to take the low probability bet. I think it's in the next three months. Okay. I mean, this is like for the betting against the lions, just keep betting against them until they prove you wrong. This is true. Take the free money. All right, so there was a lot of dunking on Paul Krugman. People love to dunk on him.

I feel like he is, and just in terms of the same type of people that love dunking, he is the Galloway of economics. Yes. And honestly, that stuff to me, it's like, Great. You proved a point that thousands of other people already agree with you, like, dunking on this person, because you know it's going to get likes and everyone's going to retweet it. You're going to feel cool about it. So there was a clip from the Times and it said from a macroeconomic perspective, it would certainly be helpful if consumer demand were to cool off. Routing for low income households to have less savings. This is a direct quote. It's not great. But I think it's a point to remember, low income households are the ones who are hurt the most by inflation. So, Krugman retweeted and said, is there any good reason to believe that inflation hits low-income households especially hard? It does feel like that's just something people intuitively say because it seems to make sense intuitively.

Yeah, it does. And I think that evidence is hard because you can probably make any point that you want here. But let's just stick with us for a minute. So Jason Furman tweeted, and this was clearly sarcastic, he said, clearly it is the media's fault. People are concerned about inflation. I can't think of any other explanation. So he showed the real wage growth by quartile from November 2019 to November 21. So basically over the last year, when inflation was running at 6.8%.

And the wage gains are needless to say, in some cases negative, actually in all cases negative, except for the lower. This is after inflation, obviously. Yeah, except for the lowest quartile where they're coming ahead of inflation. More than a half percent. But their wages are rising on the lowest end. By the way, this is why. rich people are constantly saying this. They're the ones dealing with inflation. Your pet theory

about why are rich bros from Silicon Valley always complaining about hyperinflation? Their lifestyle is hyperinflation. They're buying $5 million homes and $3 million NFTs. And the stuff they're buying is going up in price. The average seed value used to be $4 million. Now it's 20. Inflation. Yes. Asset price inflation. And that's not to say we're not getting inflation, but it is interesting that you often hear rich people claim it's a low income people that get hit by inflation the worst. In the past, that's probably been true. This time, it's different because the low-income people have got the most money. So State Street, which again, Ben mentioned, we'll speak to them on Monday, put out of a report, they said average hourly earnings of all

private sectors has increased by more than 4% year-over-year for four consecutive months, which is cool, but unfortunately, inflation is eating more than all of that away. And so Alison Schrager has a really good take on this. She said the proposition that low-income people have debt and high income have high savings sounds wrong to me. Low income people are often credit constrained or take out debt like payday loans, which frequently roll over, so sensitive to current rates. According to 2019 SCF, I don't know what that is. Do you know what that is? Whatever. Median debt to income ratio for households earning less than $30,000 is 3%. For households over $300,000, it's 57%. So also high earners have more equity, which is a

inflation hedge, low earning savers, low earner savings are more vulnerable. I think she's right. Ben, you made the point like a few weeks ago that it's the people on the lower rung that have all the liabilities. And so inflation is making that payment lower in over time. I don't know if that's true. I also think here's the problem. A lot of people in the middle class think they're in the low income scale. That's true. So people conflate middle class with low income. And people at the really low end of the income scale, she's right. They're not the ones taking out debt. They're probably not able to get a mortgage, frankly, most of the time. It's the people of the middle class. So people who are the ones who are already living paycheck to paycheck. If inflation is outpacing

their gains in a lot of cases it is, there's no margin for them. They have zero margin of safety. They're already spending more than they make. So it's not good. Catherine Rampel tweeted we could debate about this. And again, this is very messy. There's just so much going on this data. But what's undeniable is the fact that people hate inflation, as we've discussed a million times. There was a poll for you personally, which of the following do you consider the best measure of how the national economy is doing? And the biggest answer by far is the prices of goods and services you buy, which makes sense. The weird thing is the day before the inflation came out, the numbers on Thursday, we got numbers that said the people filing for unemployment was

the lowest it's been since the 1960s. The 1960s. Okay, I thought it was ever, yeah. Okay, maybe ever. lowest since late 1960s, and then the next day you get inflation, and it's like you don't get one without the other, but guess what? People not filing for unemployment or people going back to work, the people who already had a job, they don't care about that anymore. This is why the economy is so personal to you. Also in this poll, your personal finances somehow drive people's view of the economy way less than the prices that they're paying at the grocery store. And by the way, Ben, I went shopping this weekend and oftentimes I just call a head. head and I just pick it up and I don't really look at the bill. But I was at the self-scan

checkout thing. And I hit the bacon. Guess how much bacon was for a pack of bacon? I have no clue. Ten bucks. Okay. It felt like a lot. It sounds like a lot. That's like the price of like a six ounce beer in New York. Ten dollars of bacon. By the way, if I'm sounding a little sluggish, I got my booster shot on Saturday. And I feel like 85% fine. I just feel a little bit sluggish. That's a sign that it's working, correct? There you go. I was thinking about just like how we take technology for granted. So they asked me for my vaccine card. And in the past, you would have to travel with your vaccine card and multiply this by a million.

All the things that you do in life, there was no digital anything. Everything was physical. You have to have your papers. You have to store your papers, whatever. You have to like know where all your shit was. I slacked myself a picture of my vaccine card. I wrote vaccine. This way whenever I need it, I could have it.

So I opened my phone, search for vaccine. Boom. vaccine card. That's not bad. And that's not on the CPI data. So quality of life. I'm still living in 1985 carrying it around in a little plastic kit. Are you? Basically, didn't you see me when I was with you? You guys. You guys. You have to have your vaccine card. I'm saying, I like it. It makes you feel better about going into a bar or restaurant. We don't have that here, even though we're the worst state in the country. I'd like that idea. I asked you yesterday. I said, give me the Matt Klein take on inflation because I want to hear what he's got to say. Where did he fall on this? Because I'm still not a

subscriber even though I should be to his sub- This piece was mostly about why car prices keep rising, and this was like the perfect storm of dealerships pulling back. They thought demand was going to obviously plummet, which it did, but they didn't anticipate coming back so quickly. It was rental cars depleting their inventory, and it was semiconductors. And now the delays in the port. So it was like the perfect shit sandwich.

This continues to be the highest part of inflation, correct? gas prices, new car, used car, basically. Those are the three big categories. Look at this chart. The yearly change in the prices of new vehicles. We haven't seen anything like this since the 1970s. Spin zone, positive spin zone. Cars last way longer than they have in the past. And this is transitory. Whatever you think about anything else? Yes. Use car prices have to be transitory. There's no way they can remain this high. If you can get some more mileage out of your car, this is how you fight inflation right now. That's a hedge. Keep driving your car and take good care of it. get an oil change every once in a while. I got one a couple weeks ago again. Show me the dipstick. See this? I got nothing. All right. Mohamed El-Aryan claims this has been making the rounds that the transitory call by the Federal Reserve was the worst call they've ever made. Worst inflation call in the history of the Fed. He said the Fed must quickly starting this week, regain control of the inflation narrative and regain its own credibility. Otherwise, will become a driver of high inflation expectations that feed down to themselves. I don't believe this

at all. I like Muhammad Illyrian. I do too, but is this call worse than the new normal in 2010? Better or worse? Worse call ever, but come on. He called the new normal in 2010. Was that a worse call than this? I'm kidding. So here's the thing. The Fed does not matter as much to inflation this time. The Fed printed a ton of money following 2008. We did not get inflation. The U.S. government, they're the ones who needs to get a hold of this narrative, not the Fed. If the Fed raised rates to 1% tomorrow. Sure, the stock market might fall, your bonds might fall. Is that do anything to the rate of inflation at all? Oh, I think you're right. So you're saying nothing. It was fiscal policy that did this. Fiscal policy, yes. Along with the virus and the economy reopening, obviously

turning things back on, it's not as easy as we thought. The Fed tried to make inflation from 2009 to 2020 and it didn't happen. All of a sudden, we get a pandemic. The government sends out checks. Now we have inflation. Man, you are a good PR person, I got to say. I'm saying this is why the government needs to get hold of this narrative, not the Fed. You're right. The Fed could raise rates to 3%. Would that do anything to the ships in Los Angeles at the port? I don't understand the idea that the Fed hiking rates to cause a recession and kill

inflation is a good thing for who? This is not the 1970s. We're still working through the supply chain issues. It's a whole pretzel brain thing where you go. Inflation is hurting the people on the lowest end of the income scale. We need to raise rates to start a recession. To punish them even more. So they're out of a job.

It's damned if you do, damned to do. If you don't, I guess. That's why the solutions here to these problems are not ever easy. There's no perfect solution to this. So this pisses me off. There was a report in Reuters that Meat Packers' profit margin jumps, as I told you, my $10 bacon. There was a 120% collective jump in gross profits since the pandemic and a 500% increase in an income. The trade group of the North American Meat Institute accused the White House of cherry picking the data. Well, okay. This is the coup de grab, Ben. This is a quote from somebody. I'm sorry, I don't know who they said this.

If rising input costs were driving rising meat prices, those profit margins would be roughly flat because higher prices would be offset by the higher costs. Give me a break. See, I hate to say it. Elizabeth Warren is right on this. A lot of these companies are taking advantage of this. And we as consumers, because we like to spend money, we have zero power. Like, what would cause companies to stop raising prices and start eating some of this margin if people stop spending so much? But we keep spending so they don't care. Correct? I mean, this is...

Guess who's to blame for inflation? Consumers. I'm only kidding. But that's kind of, right? I'm thinking. I'm pausing as I'm thinking. I mean, how much are corporations responsible for this? Listen, they're responsible for a lot of this.

Profit margins were already elevated and they spiked. Come on. Give us a break. I agree. It's very bizarre. All right. Hard pivot. Index coop raised $2.5 million, which I'm not quite sure what this even

means were $2.5 million worth of index tokens purchased? Yeah, we need an explanation here because the money came from... Again, index coup is a Dow. Yes. This whole thing is I'm still trying to wrap my mind around this. So this is from like Sequoia and... Do they have a bank account? I think they bought the governance token. I don't know how this works. Yes. So a Dow is raising money to show up their capital and venture capitalists are putting money into it. I would think it's on chained. It is, yes. But it's interesting how this all works where you can have. this cooperative that's putting together products. And again, the money technically is on chain as well. There's no custodian for this. What's the revenue that they're generating?

Didn't Peter share that with us? Yes. But the whole concept is still kind of mind-blowing to me, how this happened and how they're doing this. And I voted a few more times in some things on the Dow. If you want to listen, Mike Taramina, one of the members of the cooperative, or the Dow, I guess. We did a podcast with them a few weeks ago. Let's give a quick but a better explainer of the crypto index that we made. Because we didn't go into it enough last week, probably. Well, let's just some of the stuff that we may be, who is this for? Who can invest in this?

Right now it's only our clients. It's only our clients. We are hoping to open this up to the public, to the investable public in the first quarter, early in the first quarter. We are hoping to simultaneously open this up to financial advisors who want to use this index for their clients. These are SMA products for financial advisors that are listening. We are getting integrated with Orion and hope to have some of the other big names have solutions for advisors as well.

We're pretty sure in there's announcements that are coming out that there's going to be more of these coming because a lot of these places see the SEC is not going forward with ETFs and some of this other stuff. So we have defy in this. We have some stuff from the Metaverse. There's other stuff that's in here that you're probably not going to be able to get into an ETF forum for a long time. So a lot of these places are going, okay, we need to do a separately managed account, which is what this is. This stuff is probably coming. Our way of thinking about it is we're trying to do this for advisors and the advisors' clients. That was the thinking behind building this because we built it for our clients. So Kevin Rose did what people are calling a utility NFT. So it's not just a piece of art. It actually gives you access to exclusive things. If you have the NFT, then you can connect your wallet and get into the Discord. You can see his podcast early.

You can get basically a ticket to live events. there's other sort of benefits. And he sold a thousand tokens. And I was taking a look. It was a Dutch auction, which means that they started the auction, I guess, at five-eath, or something like that. And I went down a quarter, so four-seven-five, four-five every ten minutes or so. By the time it got to one-eath, it was sold out. So he raised around five million bucks, at least in a couple hours. I listened to him, explained the idea of this. He was on the Tim Ferriss podcast recently. And he had some interesting things. Sometimes I don't know why. it has to be an NFT? I think that's just a...

I know why. Well, to put a price on it, I get that, but... No, because if you have the NFT and you could connect your wallet instantly and prove ownership, that's why. Okay, but he was saying there are some golf courses or country clubs around the country that are like impossible to get into, and they open up a waitlist for this stuff, and he's saying, why couldn't they use NFTs for this and put a price on this stuff? If there was openings, they would have 50 openings a year. You'd put a price on it, And then someone who already has a membership could potentially sell it. And they prove their ownership because they have the NFT.

The way he explained it actually made a lot of sense to me. And I think that that's kind of what he's trying to do. And he's trying to basically the people who have ownership, give them some interesting things that they can do. His way of explaining this stuff, I think he's one of the more level-headed people in this whole space. I do love, I'm really enjoying the extremes, both on the one hand of the web three people who say, this is going to change the world, they're going to reinvent the internet. and the other people who say Ponzi.

It's dumb. Yes. But the Keanu Reeves clip, I watched it 15 times. It was fantastic. He had like a high-pitched giggle. Whatever you think about NFTs or whatever. And we'll try to play this in the video if you want to watch.

But the guy was trying to explain to him what NFTs are and he's doing some press for the Matrix. And he talked about how they're reproducible. And he just laughed in the face of NFTs. And I thought it was a fantastic clip. Whatever you think about this stuff or not, it was excellent. Keanu's never going to make it. Okay. So this is interesting. This is making the case for Web3. So there was a story.

The third web. There we go. There was a story in the times I didn't read it, but somebody had an Instagram account and their handle was Metaverse. And Facebook, Instagram, whatever, allegedly just took it. I saw it. Right. What are they going to do? So Punk 6529 tweeted Web 2K study in a tweet, meta off to the normal start. And web two, you own nothing. And so there was an article, Ben, that I wanted you to read called Impraise of Ponzi's. And they were giving the example of YouTube and Sye. So remember the gangham style dude? Who got the most YouTube views ever? He basically got famous on YouTube. The people that made him famous got nothing. Obviously, the users got nothing. Cy made, I don't know, a few million bucks. YouTube slash Google. They raked everything. So this person wrote, today, the main gatekeepers are the crowd and the algorithms that gauge and guide the crowd's attention.

My only critique of the Web3 stuff is everyone I read about this talks about how Web3 is going to make the current stuff we do better. When I think they'd probably have more success doing some stuff for their own way, because we have this thing called inertia where it's hard for people to make changes. I understand that some of this stuff could come along and improve it, I would think that there's going to be more success there instead of, saying, we're going to make the next Facebook on Web 3 and the next Google on Web 3, the next YouTube. That's to me what seems to be, TikTok didn't come along and say, we're going to make the better Instagram or a better Facebook. They did their own thing.

That's my thought process is it would make sense to do something new and different. That's the stuff that's going to work. Yeah. I mean, who knows if the original D5 projects that we're looking at, the unies of the world, like who knows if something doesn't replace that? You're right. I actually do think that the place it makes the most sense is probably in the financial world of replacing current system.

That's probably where it makes the most sense, not all the social media stuff. All right. Were you around when you go to Burger King when you're younger and you get the crown? Of course, of course, of course. You'd go to Burger King, they'd be lined up and you'd wear a crown. And even like when you're in high school, you'd put one on. Wait, wait, wait, pause. Would you really?

What? Yeah, sometimes you'd wear it upside down or something. And then McDonald's started implementing the like big playgrounds with the ball pits and stuff. At certain McDonald's, you'd have that stuff. I feel like that was. back in the day. That was like early 90s. Yes.

The ballpins. You go for the experience. Like I remember having like a birthday party at McDonald's. Like it was a place to go to. We all your friends and you had the playgrounds. I mean, that stuff's pretty much done for. We still don't have in dining.

The dining fun stuff? Like the experience at a fast food restaurant. Oh, dude. That's been dead for 20 years. So I'm just saying the pandemic, if it wasn't dead, the pandemic strangled it. All right. Where are you going with this? Chopped up its body.

This was a story talking about Chipotle lanes, these new Chipotleys that are drive-through. Of the 41 that opened in 2021 so far, 36 of them have these drive-through Chipotle lanes. And they're saying that they're getting higher margins of these because no labor. The dining room, they don't spend as much money. They don't have to clean. Isn't this so much better. Do you really need to sit down in Chipotle? Exactly.

So I'm saying like that fast food or fast casual in dining experience, they're all going to say, why did we ever care about this? We get higher margins. All people want to do is order on their phone, pick it up and go somewhere else. It's going to be that simple. This is like what it used to be like in McDonald's. at least according to the founder. Yes, remember, they would just, as fast as they could to get you the food out.

And it's all automated, or it's the assembly line. It makes sense. Amen. Say no more. This makes sense. A recent survey of 2,042 adults conducted by Harris Poll said 41% of respondents had a favorable impression of Jerome Powell. Is that high? 27% had unfavorable and 32% didn't know who he was.

But here's who likes Powell the most. Millennials and households with high incomes. Millennials like him 47% to 24%. percent who don't like him. Households that make more than 100 grand a year support him at 55 to 25 percent. Millennials Hart, Jerome Powell. Thoughts. Title of the show? That's not bad. Because we know he didn't really cause the inflation. It was the government. Here's one. We've talked about this a little bit. Bloomberg has the Treasury issued $1.3 billion of Series I bonds in November. Those are the inflation adjusted bonds. That's by far the most on record since

it began breaking out monthly totals eight years ago. This is the one we've been talking about. limited to $10,000 a year, but they said that over 130,000 people bought it on top of the hundreds and thousands of Americans who already bought them earlier in the year. And they have this chart here that shows people just rushing into these things. There is a huge, huge demand for yield. We know this. Here's something that government can do. So they have a $10,000 limit on these. Why don't they lift the cap on these for like six to 12 months and say, listen, we know inflation is harming you. You don't need to have the $10,000 cap anymore to earn these annualized yields. And when the yields come back down and get more normalized, we'll put the cap back

on. But hey, if you want some inflation protection, we're going to offer it to you, courtesy of the U.S. government. Boom. I love it. What do you think of that? I love it. Love it. Who do we talk to? Joe Biden. Give me a call. Who do we talk to? Okay, Joe Biden. All right. Let's go straight to the top. You can invest as much as you want in inflation protected securities. All right. This is from Axios. ESPN subscribers by year. Peaked in 2011 at 100 million, now down to 76 million. remember, do you remember back in the day? They'd have it every half hour, every hour, depending on how long it was. And you would have to wait till the very end to watch the top 10 plays. And you'd have to wait to watch the highlights. And you would. Yes. Sports

Center was my favorite show for a long time in like the 90s. I don't know why this moment sticks out to me. When did David Robbins score 71 points? Was it like 1992? 94? I don't remember. It doesn't matter. But I do remember seeing, you remember they had like the bottom of the screen, the thing that scrolled, and I saw that. I was like, wait, what the hell? And you had to wait. You had to wait because I thought I misread it. Because, of course, back then, we had no HD.

So I thought I just misread it. You had to literally wait for it to cycle through. When was, oh, 94? Here's the thing, Clippers. Twitter has replaced SportsCenter for me. If I'm, like, behind that an NFL game or something, and I want to see all the touchdowns, it's easy because someone will post them. The Bears were playing the Packers last night.

I wasn't watching. I was using my Bowflex, not to brag. By the way, you look jacked in those pictures that we put on Instagram. Somebody made a comment. Oh, okay. I'll put out Ben's. So you only be a fitness influencer now. Is that what we're going for?

Could be. That'll be my new side hustle. There was a ton of scoring in the game and I'd miss it. Came in for the second half and I watched all the touchdowns, immediately caught up on the highlights instead of waiting until 11 p.m. to watch out. What do you think the average viewer ages for SportsCenter? Got to be older, right? At this point? I mean, people who were just.

It has to be. I mean, that used to be my favorite show. I used to watch it all the time. Yes. Oh, I was telling you earlier in the show about how technology has made our life so much better, except when it doesn't. I had a Zoom meeting and this person was halfway across the country. You were actually there. I was there.

I saw this. And I realized I was five minutes late because they emailed me. I'm like, oh, shit. They said I'm in the lobby. So I scrambled. In the lobby. Dylan, we have somebody coming. We have somebody downstairs.

Michael was doing like a code red. Total code red. It turns out he was in the Zoom lobby, not the physical lobby of the building. You thought this was a Zoom call and you thought the guy actually came to her office when he wasn't supposed to or didn't know. Yes. All right, you want to do a listener question here? Wondering if you might shed some light on buying bonds right now for someone that's in their late 30s. Not as interesting as yoloing into Tesla calls, but I'm interested in adding some bonds to balance out my stock exposure. But I'm having trouble with if rates rise, which seems likely, bond prices will fall. If rates stay low, what's the point? Wouldn't I essentially just be as well off keeping that money in cash?

I understand if bonds pay you 5 to 6 percent, but a fund like B&D is yielding 2 percent and rates look ready to rise. It seems like a no-win situation. Rates rise, prices fall, rates stay low and you or nothing. Here's the thing. I get the question. It's a good question. When stocks crash, cash doesn't do anything.

It doesn't matter how low rates are, for the most part, bonds are the flight to safety. True, but the one thing cash does is it at least gives you the back. ballast. That's the point is, like, at least dry powder. Bonds give you the ballast plus. I guess here's what I want to debunk. The idea that if rates rise, your bonds like go to zero. I know that's not what this person is saying, but bonds, I don't want to say that they aren't as sensitive what we think, because you could just literally look at the data and see how rising rates would affect them. But even when rates rose from the 50s to the 80s, what was the worst nominal return for bonds in a single year for the 10 year. Yeah, there was still positive. Negative 4%

and a bad year. That's the thing. Eventually you want bond yields to rise because that means you're going to be earning higher income. Again. So that's one of the things where eventually it catches you up. Yes, you will take a step back, but you're not taking 10 steps back. It's not like your principal is going to get like cut in a half or even close to it. Depending on the bonds you own. And if you're that worried about it, then you own shorter duration. If you own the mean bonds, the zero coupon bonds, then yes. When rates rise, those things get absolutely shredded. All right, recommendations. You ever see in Bruges? Yes, I love

that movie. Very good movie. It was basically three characters. Colin Farrell, Ray Fines, and I never knew this guy's name, but he's a big time that guy, Brendan Gleason. Ah, yes. The blonde hair guy. I would put this in, like, the very British, dark comedy. It's a quirky movie, yes. I love this

kind of movie. It's like a gangster. Sort of Guy Ritchie-ish. Definitely, mileage may vary on this type of movie, but I very much enjoy it. Actually, wait, so do you know how to pronounce it? In bruges? Is that what it is? Somebody recommended it, because if you were just reading it, you would think it's in bruges. Somebody recommended it to me. I can't remember who recommended it. So thank you for that. And I can't remember why, Ben, but I watched Inside Man. I rewatch that one recently, too. How good is that movie? It's a good movie. Bank

Robber movies I'm in. One of the better upper echelon bank heist movies. And what happened to Clive Owen? What happened to that guy? He should have been James Bond. I mean, there were scenes with him and Denzel, like, going head to head. And that was a very good rewatch. I haven't seen that in way too long. I like that one. Good twist at the answer. Oh, I want to ask you about this.

Hawkeye? Oh, you're not a Marvel guy. Nah, just. I haven't seen anybody talking about it at all. I haven't watched it. The Marvel and Star Wars series on Disney haven't really piqued my interest at all. But not just you. I don't see anybody talking about it.

Yeah. Honestly, they should probably just make movies and put them on there instead of TV shows in the future. What are you up to this week? I started reading on the plane. I held off because, so Lee Child has written my favorite Jack Reacher book series for a while, which they're going to have a new Amazon Prime show, and obviously my reputation there preceded me because a bunch of people sent it to me, saying, Ben, what do you think of this? And I'm obviously pumped. But he decided to retire after 20-some books writing about this Reacher character.

He decided to retire. And I said, okay, that's fine. But then he came back and said, no, actually, my brother's going to be writing the books now, and I'm going to be helping him and editing them and giving them feedback. I said, I'm out. He's written like 22 books. That's it. It's jumped the shark. Because this has happened before. Like, a guy like James Patterson, who wrote like a long, came a spider and kissed the girls that were turned into good movies. After a while, his books at the beginning were really good. But then he got really big and decided to get ghost writers and they fell off a cliff quality wise. I waited for a and I asked my dad about it because he reads these two. And he said, no, I'm like, it's not going to be any good. The brother's writing it. He

said, no, you got to read it. I started reading it. It's good. It's called like the Sentinel. It's good. Here's my complaint. some of the time I feel like these people who write these books can't ever finish them. So it's like 30 books. I want one of them to kill the character off for me or give them a happy ending. I need it to end. I need to either get married or get killed. I need something for these loner detective people.

Like, I need you to land the plane because I think they can never make themselves to do it. Okay. My one hole in my movie resume is basically my movie career of watching movies started in the 80s. I've seen all the good 80s movies. multiple times. You've never seen like alien. No, I've seen alien. But it's few and far between

so I just a couple years ago started watching the Godfather movies. I'd like never seen those before. Somehow I got on a Jack Nicholson kick. The only one of his from the 70s I've seen is Deer. That's not Jack Nicholson. Nicholson's not that? Yeah, he is.

And Dennis Hopper and... That's De Niro. Hang on. No. No, he's not. It's Christopher Walkin and Bobby Day. Oh, you're right. He's not in that, is he?

okay so for some reason i thought it was nicholson anyway that's one of the few 70s ones i've seen in high school because my dad was talking about it it's a crazy movie like an yeah hunter i hated that movie yes yes it's very bad so anyway for some reason i thought nichol is in that anyway i needed to catch up a nicholso i've never seen china town or the shining you never saw one foot no i never saw it i'm not much of a but did you say it but no so i this weekend i watched one floor of the cuckoooooooo's ass i haven't seen that so china town and the shining is next it was really fantastic i mean this is it won't like best picture, best director, best actor.

It's like Nicholson when he's 38 maybe. Excellent. Like it's a movie that I felt like there was a few things that like, oh, you can tell it's the 70s, but more or less, it felt like a movie that could have been made today. And it was very good. I've been looking for an excuse to watch that. Yeah, I'd never seen it. And I think it's based on a book.

Oh, it's definitely based on a book. I love the name. So that's all I got. All right. Animal Spiritspod at gmail.com. We'll see you next time. Thank you.