Animal Spirits Podcast - Raising the Minimum Wage (EP.179)

Episode Date: December 2, 2020

On this wee's show we discuss bitcoin vs. gold, billionaires and the minimum wage, there is no perfect number for your savings goals, the downside of FIRE, why credit card debt it falling, the pros and cons of Robinhood on investor habits, Ben's new book about saving for retirement 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

Today's Animal Spirits is brought to you by interactive brokers. Interactive brokers charges U.S. dollar margin loan rates from 0.75 to 1.59%. Their clients can also earn extra income by lending their fully paid shares of stock. Join interactive brokers' clients from 200 plus countries and territories to invest in stocks, options, futures, funds, and bonds globally. Minimize your costs to maximize your returns. Rates subject to change. Learn more at iBKR.com slash Y-I-B. That's I-B-K-R.com slash why as in W-H-Y-I-B. 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 Ritthold's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. We want to thank everybody who filled out a survey. We had over 1,300 people respond. And I'm very glad to learn that one of the, so we're sending out $6.50 Amazon gift cards, one of the winners had a college address.

So we're helping on a young person. Unless it's like a 35-year-old that has kept their college address alive this whole time, it's probably... We're going to make this person a dual winner. I'm going to send him a new electronic copy of my book, which I wrote for young people. Wow. Which we'll get into later. You would do that? That's just the kind of guy I am.

Let's do it. But is that a big enough sample size for this survey? Come on. It's plenty big. I'm kidding. $1,300? Yes. We got some good stuff out of this. Do you believe the results?

It's pretty good. I'm with it. So you remember my comment from last week that the Bitcoin thing really isn't getting out of hand yet because we haven't seen any wild price targets? I guess it was only a matter of time. The Winklevi twins were on CNBC today making the rounds. And they said, okay, I quote, our thesis is that Bitcoin is gold 2.0 and it will disrupt gold, which is what I said last week, maybe best case scenario.

All right. So do the math. Is there math coming up? Yes. If it does, that has to have a market cap of $9 trillion. So we think Bitcoin could one day be at $500,000 a coin. So at $18,000 Bitcoin, it's a hold, or if you don't have any, it's a buy opportunity because we think it's a $25x from here.

Seems reasonable. $9 trillion. I just love the mental gymnastics there that you have to assume it's just going to swallow up all gold value and gold is just going to disintegrate into nothing, like the guy in Avengers snapping his fingers. Gold is just gone. They're doing total addressable market, but for anti-fiat? What's the Tam here, basically? When I said digital gold, I didn't mean literally Bitcoin is going to take over the amount of gold.

Well, you didn't think big enough. You didn't think big enough. All right. I'm updating my model now. If anyone missed it because it was a holiday. On Friday, we had a full episode devoted to Bitcoin, talked with BlockFi CEO, Zach Prince. So go check that off. You haven't listened to yet. We've got some pretty good feedback on that one. We're going to get off it and get on to business, you know, stuff that we normally talk about. But this email made me chuckle. I don't know if you saw this. Good pod with the BlockFi guy. I still don't know. understand any of it, but I'm going to start buying teeny amounts each month. Okay, sure. Basically me. Here's my other comparison to gold. And this is still kind of mind-boggling to me that when gold peaked in early 1980, because it had this massive run-up in the 70s, it had this huge drawdown that lasted for a long, long time. It didn't bottom until 99, 2000-ish. And at that point, from 1980 to 2000, gold was in a 70% drawdown. And it came all the way back and didn't really have a break even until 2008, then it had another 30% drawdown or something, and then finally

went on its run. But even with that, so it took 30 years for gold to break even from a 70% drawdown. And still since the 1970s, it's done, I think, 7% or 8% a year. But this shows how fast things have come. And obviously, it's not apples to apples comparing Bitcoin and gold, but Bitcoin had 83% drawdown. And now it's basically come full circle in three years for a break even. So I mean, couldn't you argue that Bitcoin just has the fastest cycle of any asset in history because of the time it came up in and the way that it's structured? Yeah, the long-term chart of the rise in the fall and the rise again is pretty remarkable. But what do you say we move off of this topic? All right. I was just throwing it out there one more thing.

You're sick of Bitcoin. Is that it? I just don't want to like people to think that we're pivoting to Bitcoin. Oh, okay. No, I have not made the hard blockchain pivot yet. Sorry. Okay. Last week, we spoke about how dividends in the aggregate fell less than 1% thanks to Microsoft and Apple raising their dividends by hundreds of millions. I think in billions. Fed manipulation. Well, needless to say, 42 companies suspended their dividend earlier in the year. From the S&P 500. That's right. Six have resumed paying their dividend and seven more have given some indication that they're going to be back. So even though dividends only fell, again, the total amount of dividends paid out, it fell less on 1%.

If you look at the number of decreases or outright suspensions, not surprisingly, this was by far, by far the largest number since 2009. And rightfully so. And the reason it didn't impact the overall market is because these stocks got hammered so hard that they basically had no meaningful impact in a market cap-weighted index. Last week, every day there was a new Tesla superlative. Elon Musk is now worth more than Bill Gates. then it was Tesla is now worth more than Berkshire Hathaway.

I mean, so I was poking around in this Bloomberg billionaire index. Jeff Bezos is worth basically as much as the three heirs to the Walton family fortune. Combined? Okay. Combined. I think they're like 190. He's 185 or something. The Elon Musk's thing still boggles the mind to me.

I can't get over how crazy his, he's a second richest person. person in the world now. And there are people who... Wait, wait, wait, wait, wait, Elon Musk is? Yeah, I'm going back to that, right? Oh, my God. Yeah, I guess yeah, yeah. He passed Bill Gates, and he's the second richest person in the world. His net worth has jumped $100 billion this year. So with his quickly as he's done it, it took Buffett. What's wrong with him? Buffett took him forever to get this money. Loser. Do you think that is one of these guys going to be the first trillionaire or ex-putin, I guess? Maybe he is a trillioner already? Or is it going to be someone who invent something, another new technology that, I don't know, saves the world from global warming

or something. You think we're going to see a trillionaire? Oh yeah. In our lifetime, we will see a trillionaire for sure. So what is that? Like down three million? Okay. Bezos is worth a hundred By the way, by the way. I feel like we've had this conversation before, but we've gotten a few emails recently. It's Bezos. You can keep saying Bezos, but I'm just saying it's Bezos. I don't trust your pronunciation abilities. I've heard you pronounce stuff. Mr. Long Island guy, I'm going to go with Bezos. What's a difference? There's no difference. I just want the record to show for people that are emailing goes. Ben is saying Bezos. I'm trying to correct him. He's not taking the advice. So that's it's worth 186 billion at this point. Something like that. That's according to Google. That's got to be real. He would have to compound his money at 10% a year over the next 20 years to reach a trillion. Okay. All right. Seems doable. Now, if he would instead take that 186 billion and put it back in Amazon's IPO, or, He could just put $10 into Bitcoin right now, and it's going to 25 times. He's going to be fine.

So Brookings sticking with this theme of wealth and Brookings did this thing, windfall profits, and deadly risks. So a lot of hazard pay is going away or already won away and hazard pay for frontline employees. And so here's a line, basically the TLDR. If ever there was a moment that called for a rebalancing of profits and people, it is now. large companies are earning windfall profits buoyed by federal stimulus. There is a national reckoning on racial equality while disproportionately black and brown retail workers earn low wages and risk their lives in the job. Alarm is growing about runaway inequality and the unequal sacrifices shoulder by frontline workers putting their lives on the line. I didn't know this. Last year, the retail sector employed nearly one in 10 workers, 15 million Americans.

That's a wild number. I saw that from this too. I mean, should this be a bonus from the government, or should this come from these corporations that are now raking money and hand over fist because of, especially the ones that have done well, that they should permanently increase wages. These people who are going to the supermarket every day or going to an Amazon warehouse to keep everything running, they didn't ask for this. They didn't sign up for this. So I don't know the answer, but it's a problem. So Brookings, they laid it out from best to worst, companies to care of their employees, companies that didn't. Best Buy Home Depot and Target were one, two, and three. On the bottom was Dollar General, Walgreens, and CVS. So only two of these

companies already have a minimum starting wage of $15 an hour before the pandemic. And by the way, the minimum wage is just, the federal minimum wage is a travesty. It hasn't budged in more than a decade. What is it? $7.50 an hour. I think it's like $7.50 or $7.25, I think. Just really. That's why it's going to have to come from these corporations. They're going to have to be the ones to step up and do it. If Amazon and Walmart and all these companies are employing so many people, they're the ones you have to do. And it does sound from this report, Amazon's minimum wage is $15 an hour. So credit where credit is due. Yes, it is. But it said, quote, Amazon and Walmart combined earned an extra $10.9 billion in profit compared to last year and increase of 53% and

45% respectively. They go on to say that their workers basically got 6% pay bumps for full-time workers that earn starting wages. And of course, it gets into the stock price and the wealth of Bezos and the Walton family. And I don't even want to go there because that's all basically share price. But these companies have to do better. Of course, they got into buybacks in the piece. And are buybacks to the boogeyman? No, I think we've been through that plenty of times. However, some of these companies that just are not taking care of their employees. So dollar general, for example, is buying back $602 million worth of stock. They plan to buy back another $2.5 billion. And here's the thing that pisses people off.

How much of those buybacks are going to offset share issuance for C-level employees? Right, for the corporate executives. They broke this down, too, by how much you were given a bonus, they were giving a temporary wage increase, and then they were giving a permanent wage increase. And they showed like Best Buy and Target did a permanent wage increase to $15 an hour. Best Buy in Target? Best Buy and Target did a, and that's great. Plus, they also are giving these pay bumps now for people who are working through a pandemic.

but yeah obviously a lot of attention and rightfully so has been paid to the frontline workers in the hospitals and if anyone deserves hazard pay it's them putting the next in the line and going to the hospitals that just keep overflowing with people but there's a lot of people out there today too have kept the country moving I mean isn't it kind of surprising how little of a hiccup there was in anything that happened there was some stuff that was backed out I mean household supplies were backed up for building houses and stuff but that doesn't really matter the stuff that kept the world working. Everything, even though we shut down for two months or whatever in March and April, things kept flowing because these people are out there keeping it happening, right?

Yep. So kudos to Best Buy and Home Depot. They both gave their employees more than a 20% increase in wages. But I feel like this is one of the few things that has support from a lot of people. Both sides, every side. They included a survey that found more than seven and 10 American support raising the minimum wage, including a majority of Republicans. We just have to do better here. How about this? If you're going to issue stock to your C-level employees, there should be a ratio that you also give them to every frontline employee as well. Amazon has done so well with their stock price. You give your people all the way down bonuses, too, of stock shares. As little as it is, let them take part in the company when it does well like this, all employees. This is great work.

I'm really thankful to the people that put this work together. Okay, here's something I wanted to run by because after looking through this and they talked about how some of these companies have done so well. And the S&P 500 is up now what on the year? 15% almost, 12%. What's that? The S&P 500 this year. Oh, yeah. It's up double digits. Do you think you could make the argument that the stock market would be lower if we did not have a pandemic? Yes, I do. Good point. I actually think borrowing costs would be higher. The Fed wouldn't have stepped in. The government It would have stepped in. We wouldn't have had this loss in demand and some of these other companies that did. But I think you could make the case that the stock market would almost

definitely be lower than it is now without the pandemic, which is pretty hard to wrap your head around. I don't know why it would be lower, but it easily could be lower because would the S&P have gone up 15% in a year absent? Who knows what a catalyst could have been? Yeah, I mean, you're still dealing with a presidential election and all that stuff, but that's a good point. It's hard to think about the fact that the stock market probably is doing better because there was a pandemic this year, which I would not have believed going into it. Okay. Nick Majuli at Dollars and Data wrote a great piece called We Begin Our Lives As Growth Stocks, but end our lives as value stocks. Did you read this one from Nick?

I did. So he talked about how when he was 23 years old, he told himself he wanted to have a half a million dollars by age 30. When I was 23 years old, I, uh. That's a pretty good goal. So he says, well, Nick took education seriously. Yeah. He said he had two grand at his name to that point. Yeah, Nick's a very bright guy. He's very driven. He said he chose that amount because Warren Buffett had a million dollars by the time he was 30, but that was back in the 60s, so it would be worth whatever, $9 million today. And then he said he turned 31 recently, and his net worth still hadn't hit that goal, which I thought was admirable of him to own up to the fact that he had this goal, he didn't hit it. And he walked through some of the things. He's judging himself

next to some of his peers that he went to college with and they went to tech stock companies and got all these stock options and they probably worth a lot more money. And I just thought it was a really open and honest way of looking at this stuff. So after reading this, I thought, you know what, when I was Nix 8, I was probably 25, I did a little spreadsheet and I said, if I say, when you were 23, sorry, I'm saying when I was younger in my 20s, I looked at this and I said, okay, if I save X per year of my income and my income grows by this and my investments returned or Y, then I did it by every five years. So by age 30, I'll have this, by age 30, I'll have this, by H-35 L of this, by H-40 had this.

So I mapped it out. I kept a little note, and I still have this thing. So I looked at it. Where is it? Is it a spreadsheet? Google Drive? I just have a little spreadsheet. Yeah.

So I did this. And so I haven't thought about this in front. And I read Nick's post, and it reminded me of this. So, all right, I'm going to do it because stocks are up. And of course, do you ever check your balances when stocks are down? Like in March, I never would have logged in and see what my balances were. Yeah. Do you do that?

Like, the only time I ever check stocks or my balances from my retirement accounts are when stocks are an all the time high. Right? That's the way to do it. Isn't that the only time you do it? Anyway. I have to say, imagine being the person in Japan, waiting 30 years. Yes.

I wonder how their spreadsheet looks. So I updated my sheet. And this isn't to like pat myself in the back, but I am basically ahead of schedule for where I was when I was 25. Of course you are. I've got a point. So there's a reason for this because my expectations from the market, the market is done way better than the last 10 years than I ever would have expected.

So the market does better. So it'll balance itself out. And I probably saved a little more than I had anticipated. too. So where I wanted to be when I was 40, I'm a little ahead of the game since I'm going to be there soon anyway. But I told Nick this and I said, hey, I loved your peace. He was looking at the fact that he didn't reach his goal. I look at the facts and I did. But then in the back of my head, I think, I don't feel any different for hitting that goal. In the back of my head, I'm also thinking like, well, I know there's people who have way more money than me this age and I'm jealous

of that. But also, I'm thinking like, well, what if I would have just spent that money and enjoyed it more? There's never a perfect number because you will always regret one or the other, either you're short of someone, you think you've saved too much and you're like, I didn't enjoy myself enough. There's never a perfect equilibrium for this stuff. And then maybe when you get to a goal that you had, the goalpost move probably pretty naturally for most people. This one always stuck out in me from your money and your brain by Jason's like. I put it in here. The first time I read this, it always reminded me this. So he said, getting exactly what you plan for is basically a non-event for brain activity. It's the anticipation of the goal. It's not reaching the goal itself.

It's like vacation. My general reaction was, eh, it didn't register at all. It's whatever. It's a journey, not the outcome kind of thing. But you need like this bigger hit to have any feeling from that. It just, I don't know, it got me thinking that there really is never going to be a perfect number no matter where you are, how much money you have or what your income is or whatever. You're basically never going to be satisfied with it, right? Yep. I'm reading a book that Nick Majuli actually recommended called How to Get Rich. It's by this guy, Felix Dennis. He passed away a few years ago. He was the founder of, he was a big publisher, founder of Maxim. He has some good stuff on money. I'll save for next week because I'm not done with the book yet.

By the way, Ben, congratulations to you. You wrote a book again? By the way, I said to you, I was like, holy cow, three books. That's incredible. Yeah, and I said, my fourth one. So this was actually like a pandemic-induced book. I don't think I would have written this book without it. When we first started the pandemic, we already have half of our employees that work remotely, so it didn't really interrupt our business too much. The only thing that interrupted was all you people in New York are now working from home, and that changed a little bit.

But to get over that face-to-face stuff, we started having more Zoom meetings, and so we have two Zoom meetings a week. And one of them is Josh Brown, our CEO, interviewing one of our employees, which I think has actually helped a lot because it opens you up into a world of day-to-day things people are going through and doing that you might not see and stuff that they're dealing with and maybe helped with collaboration. So Dan Lerosa, who runs our 401k business and helps run corporate retirement plans, said, I love all the content you guys, but I work with these 401K savers. They're not going to read financial blogs and they're not going to listen to podcasts all the time and they're not going to consume as much content as you guys. I just need the really basic 10,000-foot building blocks that you can give to these people. So I started working with him and Tony and Dean Isola, who work with teachers in the 403 plans, and Dan McConaug, who also works in our 401K, and came up with what are the most important things someone needs to save for retirement?

So this is regular, normal 401K people, teachers. They don't want to spend all their time obsessing over this stuff and optimizing it like you and I do, obviously. So this was a beginner's book for people who just need to know how to get started saving for retirement, how much they need to save, all these little things you need to do. It's not a deep dive into investing. it's more of a personal finance book. I read it and cannot recommend it highly enough to people that Ben just described. It's not for financial professionals, but for people that are just trying to learn the basics, this is a great starting point. Yeah, I look at it as this is the book that financial professionals should give to people in their life who are asking questions and need help getting started. And so that's kind of the idea. I wanted to write it for just normal regular

people. It's not fire people who've already got all this stuff figured out and are optimizing and saving 80% of their income. It's not for financial professionals. It's for regular people who just need a little help saving and getting their finances in order. So yeah, more of a personal finance book. I self-published it on Amazon. So you can find it there. I think Barnes & Noble two I put it on. So any of those places. Sticking with this fire, did you read this post from Montevader? Yeah, I love that blog. So it's actually two people that write it. They're both anonymous. I did not know that. Yes. And I think they're great writer. So I really like that blog. Agreed. Okay. So they wrote about what goes wrong when the fire dream dies? You know, what can go

wrong. They set out a few bullet points that I thought were worth exploring. Bortem. Life is too quiet. Challenge disappears. Domestic tests don't translate into self-worth. Leisure without measure is like eating junk food 24-7. Number two, lack of social contact. Everyone's at work. There's a loss of comradeship. Isolation sets in. Number three, status anxiety. It's too soon to be out of the action. There's a sense of being sidelined, no longer needed being a disappointment to oneself, the community and those judgey types who ask. And what do you do? Number four, you're meant to be happy. what if you're not happy after fire? If this is bliss, then I might as well be paid to be

miserable. It seems to be the way the thinking goes. And then they finished with, I don't think falling into these existential tarpits is inevitable, but I'm definitely vulnerable. It's almost like you need a psychologist when you do the fire thing, because you're dealing with all these different emotions and thoughts. Yeah, once you conquer the financial aspects, it's like, okay, now this is your life now. And it's one of those things. If you're doing this, you've optimized your life in such a way that this is probably the only thing you think about. If you're one of these people that save 70, 80 percent of their income and you're pinching pennies everywhere and you're really cutting back and trying to optimize your life, and then you

get there. And it's the same thing with this perfect number thing we were talking about. It's like, then what? You're retired now. So there's another story, this Phenimus blog. I don't know that. Don't know that one. I'd never heard of it either.

So he talked about the fact that he retired early and finally hit retirement and his wife was still working. And he went through all of the problems with this. because he was getting bored. And he said, I like this one. There were several sources of my malaise. Everyone else is at work, including my wife. My wife expects me not unreasonably to do all the domestic chores. They have a fairly conservative withdrawal right, 1.5%. So they're not spending a ton of money in missed going to work. So yeah, there's a lot of stuff to deal with. And this is true for people if they're doing fire or any age. You have to understand what you're going to do with your next

step. I mean, I'm sure there's plenty of people who are happy relaxing and reading books all the time. but a lot of people, that's a huge leap to make to just go from doing something to doing nothing. Yeah, I mean, it requires a certain type of person to state the obvious to be A, able to save money like this, and then B, to be able to actually unplug, turn off, whatever, remove yourself from the workplace. I think that's tough. But I know, for some people, it's the absolute dream. So, of course, to each of their own. The New York Fed put out something. We've been talking about a lot about this lately. The state of low income America, credit and access debt payment. So this is just remarkable. As of June 2020, total consumer debt fell for the first time in over 10 years as borrowers paid down their credit cards, contributed to savings, and took advantage of debt moratorium. So they show a chart of the year over year percent change in credit card balances in lower income areas. And across the board, it's down. We actually talked about this internally in a Slack channel. One of the hypotheses for this was typically in a recession, it's really banks,

coming back on lending. And so credit card balances actually do tend to dip, like following the Great Recession, it did. But that's because lending was rained in. This time, it's happening because people are actually paying down their balances in repairing their personal balance sheets. Yeah, it's certainly not what anyone would have predicted on the outset of this. They also showed the median credit card balance available. They broke it down by low, moderate, middle, and high income versus the median credit score. And as you would think, they both go from left to right, lower to higher. And the median credit card balance available for low income, it's $1,600. For a high income, it's $15,000. I wonder what percent. Do you think that people go to their available

credit card balance regardless of what bucket they're in? Oh, push the upper limits of it. I don't know. That's a good question. I guess obviously it's got to be higher on the lower income because they don't have as much room to maneuver. It's also good. If you have the ability to up the amount of credit that they're willing to give you, even if you don't use it, that's a good thing that improves your credit score because the amount of credit you have available is better for your credit score. I mean, you would know. Not to brag. Not bragging my credit score again. Sorry. So I did a post on Robin Hood. I was on a Zoom conference and somebody said, is Robin Hood good for investors? And my basic line of thinking has been like, I still believe this to a certain extent,

that yes, Robin Hood is absolutely great for investors. Sure, a lot of them are going to make mistakes and lose money. But that's the point is that the earlier you make these mistakes, you get it out of your system, you learn, you learn how hard the market is, and you move on to your life, basically, and you forget about gambling in the stock market. But there's also another side of this is like, if your initial entrance into the stock market is one giant casino, then that probably matters. And you just assume it's going to be like that going forward. Yeah, the gamification thing about it is I can see for certain personality types, how you probably don't learn your lesson. And it only makes your bad habits worse. It amplifies.

them. Right. I say Robin Hood. Now that's like a catch-all because every place is now Robin Hood. But it's just hard to make such blanket statements. Is Robin Hood good for investors? I mean, it depends who. For some people, it's going to be phenomenal for others, not so much, and everything in between. But one of the things that I think is not so great about Robin Hood is that you're not benchmarked to anything. You see the money come in, go out, go up, go down. But do people really know what their performance is like? Are you actually beating the market or do you be better off just putting it in a total stock market index fund and leaving it alone. So I was hyper aware when I was like trading in 2010, I guess. I was hyper aware of my performance because I was writing it down every

day. You were calculating your alpha every single day in your sharp ratio, Sortino ratio. It was negative on most days. Oh, I don't know why. I just, who journals? Oh, Dan McMurtry. Did you listen to the podcast that he was on? No, I don't think so. So he was on a podcast with a guy named Bill Brewster. So Dan McMurtry is the guy that wants a supermugat-to account on Twitter. What an impressive guy. It's long. I highly, highly recommend it. So Dan is a young guy. I don't even know if he's 30 yet, but him and this partner, Alex, want a hedge fund. And if you think, I guess if you think that you can dabble, like, that's your competition. Very thoughtful, very smart. And I would not want to trade against that person. Anyhow. All right. So Interactive

brokers has this portfolio analytics tool where you can see your alpha, Ben, you could see your beta, your max drawdown. I wish that I had this when I was trading as opposed to me doing it by hand. So they give you the asset class, a sector, a geographic breakdown. You can add external accounts. So, Ben, your target, your 2045 will wush, be sucked right in. You can create custom benchmark. It'll show you a correlation versus different asset classes, performance attribution, the whole nine. So that is Interactive Broker's Portfolio analytics tool. How many investors do you think actually know what they're performance? is, it's got to be a pretty small number. Very few, very few. But you know what the thing is,

even the professional investors that do know and obsess about this stuff, and especially when I was in the endowment world, quarterly return numbers were everything. That's all they cared about, which is kind of ironic, considering that these pools of capital were perpetual, meaning they were supposed to last forever, yet quarterly performance was the only thing that mattered. Here's the thing. If you didn't like your performance, here's what they did. You changed your benchmark. It's as easy as that. My benchmark is ticker symbol, T-V-I-S. And I always beat it. It's remarkable. But I think for some people checking their performance probably is a bad thing.

But if you're actively trading and assuming you're beating the market, you should have some sort of idea of a bogey of here's the opportunity cost. By the way, speaking of that, here's another thing about, and again, I'm saying Robin Hood, it could be any place. Because it's so easy, I check my account like five times a day for no reason. It's become like Twitter. It's just like a habit. It's easy, yes. I don't know. My brokerage account makes up 5% of my portfolio, probably, and I never check the performance of any of my other investments. The only performance I ever check is Robin Hood. The last time I checked my 401k performance was, I think, when I

refinanced my mortgage. Other than that, I don't need to check. I know what it does. It's a stock market. It goes up, it goes down. It's also a good thing to not check those because if your dollar cost averaging in every one week, two weeks, one month, whatever it is, your performance is just going to be all over the place anyway because you're dollar cost averaging in over a different time. So you shouldn't really care about it in those types of accounts. So with this Robin Hood thing where it is addictive, I swipe up like it's Instagram or something. It's just part of the thing. I want to give Packy McCormick a shout.

So Packy has a substack. I think we've spoken about him before. And this mildly takes the sting away from selling Wynn before a 30% pop. So Packy wrote a substack piece about Slack. And the basic thesis was that the threat from teams from Microsoft is overblown and the market has it wrong. Pack is a smart guy, and I thought, you know what? I agree with this. I'm going to buy a little and I'm going to build a position. So, as everybody probably knows by now, Slack is in talks

to be bought by Salesforce. Again, doesn't quite take the sting away from Wynn, but thank you, Packy McCormick for his substack, not boring, which is awesome. By the way, I don't know if you read this. He just came out with another one, talking about how we're never going back to the office. And he wrote, quote, we are at the very beginning of a multi-trillion dollar gold rush to build software that makes remote work as enjoyable as the best parts of the real thing. I'm waiting for the rollouts of new stuff to come in, the Zoom kit or whatever it is. Well, exactly. So Packy writes about the next generation of companies to simulate the office space from home. So anyway, thank you, Packy. Go read this stuff. So I hold Slack too, and I've

held it for a while because 90% of my investments are pretty much automated, rules-based. I don't mess around to them. It's contributions, rebalancing, all that stuff is totally automated. And the other 10% I just have a little fun with. So in my Robin Hood account, I'm buying stuff based purely on qualitative factors, not quantitative. So I bought Slack like a year ago because we use it all the time. And I thought, I love this tool. It makes sense to me.

It hasn't really done much until this time. It's done terrible. Yeah, it hasn't done very well, especially compared to all the other tech stocks that have been knocking out of the park. So when Salesforce announced, or someone announced, I guess Slack probably leaked this one, kind of like an NBA trade. the woge of finance put it out there and said, saleshorse may be interested in buying Slack.

It was up, what, 30, 35% in a day? This is why stock picking will never go away. So much fun. It's so much fun. You and I were so overjoyed. How much money do we have in there? It's not going to change our lives. It's not going enough to change our lives, but it felt so good. We were getting. Yeah, we were going back and forth. We thought we would have been popping bottles of champagne if the real world still existed because one of our companies got almost taken over. You know, can I tell you something? Hold on. Before you get into that, I'm actually having a little bit too much fun with Robin Hood. I moved my stocks over to Schwab. I'm too addicted. It makes no sense. Too easy. So you just didn't want to deal it anymore. I don't want to deal with it. It's so easy to deal with it. It's so easy to do. Yeah, it probably is better to have a little bit of it. You can't remember your password to get into your Vanguard or Schwab account. That's probably actually a good thing. We want to do it's so easy to do. It's not good habits for young. Yeah, it probably is better to have a little bit of a, you can't remember your password to get into your Vanguard or Schwab account. That's probably actually a good thing. We want. We I wondered, apparently this is like one of the biggest software acquisitions ever. And we wondered, like, should we sell this now that it got the pop or should we wait until it goes through? And so we don't deal with this tax stuff on a regular basis. We lean on our advisors for this. So we said,

what is the taxable nature of this if something happens? So we went to Bill Sweet our CFO and tax expert at Reholt's wealth management and said, okay, not knowing what the deal is going to be, because someone else could come in too. Google could come in and say we're going to buy Slack for you more someone else could, I guess. If they just take them over, do we hold this new combined company? Because I don't know, we use Salesforce too. Why not? Right? This will be our Peter Lynch portfolio. Bill said if there's just a straight up exchange for the stock, there's no taxable event and your cost basis just carries forward until you sell that new stock. He said this happens more like an AT&T where there's a cash out where they could buy a company and then pay like a $7

share something special. That would be taxable. But so if we just keep letting it ride on Salesforce slash Slack, we're fine as far as taxes goes. By the way, I'm sorry, I just got distracted by a Slack that came in. Can you repeat that message? Hey-oh. So we're good? Yes. As long as we hold, we're good. Okay. Unless you want to roll that over into something else.

Jeff Mackey tweeted, so Best Buy reported earnings last week, their U.S. revenue increased 21% driven by 174% growth in online. So you were talking about this last week. I made a joke about Macy's getting into Palaton that didn't go over well. But the thing was that all of these companies are now in e-commerce. Best Buy already was, but all of these companies are there. So Target, for example, I drive to Target twice a week. We do the pickup there too. Yeah, right? I don't even get in my car. They bring right to your window. I did it at Best Buy the other day. I got to tell you about this. We got a little Nintendo Switch for my daughter. It's like every other week she's back to virtual schooling and just bored. She's got two weeks of Christmas vacation coming up. So we got one of

little Nintendo Switch things, just the handheld ones, so I picked up a Best Buy that dropped it off. My video game life ended after Nintendo 64. That was pretty much it. I mean, college, we played Nintendo 64 Mario Kart. After that, video games were kind of out of my life. I stopped with Xbox Call the Duty. That was my last hurrah. You buy the video game console. Then the video games themselves cost like $50. And then within the games, you also have to like pay for extra upgrades. It's like merch, digital merch. Then you have to like buy the charger for the joystick. I mean, it's a great business model for them, obviously? What a racket. Why is it not easier than this? We had to buy like 10 different things for this. Just give me it all at once. I thought there were no cartridges anymore. Isn't everything software? Even a digital game cost like 40 or 50 bucks, which seems insane because what is the marginal cost of production on that? Anyway, I'm just old man here complaining.

Listen, instead of complaining, why don't you just buy the stocks, old man? Obviously, I guess I should have. All right. Listen to questions. I would love to hear your thoughts on the pod related to what I see as an inevitable wave of white-collar layoffs coming. I think companies who sheltered in place during stage one of the pandemic were focused on survival, rapid change, and protected employees. These same companies, now somewhat stabilized, are now waking up to just how much less they need. I think there's a range of causes, simply looking at costs and getting lean, rapid adoption of new technology, making a job obsolete. Also, and I'm being frank here, a realization they have employees who don't do much work and three people's work can be done by one from home.

This is a take. Pretty hot take. Is this possible? Possible. Aren't we also going to have the hyper-optimized people that have three remote jobs because they work so much? I don't know. Do you think this is possible that we could see a big layoff of middle management or something like that? I think it makes too much sense. I'm going to take the other side of this. I don't think that's happening. The working from home thing, doesn't it make it harder to know how much people are actually doing and getting done. As long as stuff is getting done, it's hard to know who to give credit to it during a time like this. Yeah, I mean, getting back to the work from home stuff. So again, Pachy McCormick was writing about, there's no going back. People that have

gotten used to not community are not all of a sudden going to go back to work five days a week. I'm certainly not. And it's not necessarily the employers that are going to determine, okay, it's time to come back. It's the employees. They have to leverage now. The best and most forward-looking companies are going to adapt, they're not going to make all their employees return. But like Netflix that we talked about a few months go to Reed Hastings, there are going to be places that are going to say everyone back to work on day one. Oh, for sure. And they're going to lose a lot of talent. Maybe. I'm pretty confident about that.

You think employees have more leverage now? I do. I'll take the other side of that one. Okay. Deal. I think employers will always have the leverage. Because they'll say, fine, we're going to pay less for your remote people and we'll hire someone in India. I don't buy that. Good luck finding a job.

I do not buy that. I don't know how we measure this, but... I think the employers have had the upper hand for so long. I think it's going to be hard to relinquish that. All I'm saying is don't fade packing. Do it at your own peril. All right. All right. What else?

I'm a homeowner with about 150K in equity, relocating for my job. Like it will be a three-year stint. Current home is not our forever home. So we like to take advantage of moving with this employer and sell the house since they're covering all the closing costs. It's not a bad deal. We'll be renting in the new location. I'm concerned about residential real estate ballooning during these next few years while

I'm renting. Thanks, Ben. What does that mean? I'm causing the housing boom here? Hey, what does that mean? What should I do with this money during this time? just a boring savings account, or would it make sense to explore other options, is a REIT a good idea in this case. So they're worried about they're going to be on the sidelines, cash on the sidelines because they're renting for three years.

Don't want to miss a potential housing boom. What should they do with that money in three years time? That's a tough one. Well, if you need this money in three years, you should not be risking the stock market. But if you're going to, if you're going to, maybe a residential read is not the worst idea. If this is your thesis and you're right. Yeah, I just, that's such a short time period for me for betting on something like this if you really need the money. If I need the cash at three years, I'm sorry. I'm sitting in cash. Yes, because how much are you really missing out on in three years of a housing boom?

Yes, there's leverage involved when you want a house or... How about this? What if you just take, I don't know, 20, 30% of your money, 10%, 15%, whatever you're comfortable with, but definitely not the whole thing. Put a little bit, yeah. Or guess what? Screw the closing costs. Hold your home for three years and rent it out and sell it when you need to get a new place. I mean, that's a little bit more work, obviously, but that's an alternative to, I guess. Okay. Recommendations. I'll start. I listened to 8mm on the rewatchables. Did you see the 8mm? I watched it a long time ago. It was one of Joaquin Phoenix's early roles.

I know it was a really weird movie. I saw it with my dad in the movie theater. I was 14 years old. It's a movie about the snuff film industry. So my dad and I were laughing about it. He's like, that's like taking you to a hardcore porn. I was like, yeah, with murder. It was worse than that. And Nick Cage. Anyway, the rewatchables. That was a lot of fun. Probably better than the movie. But, man, machine, remember that guy?

It's been so long since I've seen the movie. Me too, but that is burned. I vividly remember that guy taking off the mask and going, what did you expect, a monster or something like that? That will never leave. All right, I saw, I don't know how, how I missed this movie. I was 10 years old. This should have been right in my wheelhouse.

I watched Crimson Tide over the weekend on, I think Amazon Prime. A Denzel classic. Amazing movie. Not like Meg joke. Like, Denzel and Gene Hackman head to head. I also recently saw a Red October. This is like 50 times better. This was a real deal movie.

Tony Scott. I think Hunt for the Red October is actually kind of overrated. It was fine. It was not great. Tarantino did the screenplay for this. I don't know if you knew that. For Crimson Tide? Yes.

I did not know that. So it was, I mean, definitely see that if you haven't. Also missed this one. What year did this come out? Oh, 1999. All right. So I was fortunate. The insider.

Russell Crow, Al Pacino. No, it was very good, like very good, but it was just, it was like two hours and 40 minutes. Boy, we need some new movies, huh? You're going way back through the Rwatra. 99? I'm just saying, every movie recommended today is from like 20 years ago. Well, 99 and 95. Running out of movies here. Check out this run from Russell Crow. 97 LA Confidential, 99 The Insider, 2000 Gladiator, 2001 and Beautiful Mind, 2003 Master and Commander. I've never seen that one.

That's actually pretty good. Okay. Yeah, I've been meets to that. 2005 Cinderella Man, 2007, 310 to Yuma, 2007, also American gangster. Wow. Not bad. And then things sort of fell off the rails. All right, what do you got? Okay, one of my favorite old rewatchables, when you were in college, this seems like a movie right up your alley. Were you a daze and confused fan? It's funny you mentioned that. I put it on my list today. I've never seen that, believe it or not. I was eight years old when it came out. You have to watch it multiple times for it to get it. But it's one of those movies where I saw it in high school, I liked it. But then when we got to college, we watched it obsessively. We would go out, party until 2 in the morning, come back to our dorm room, pop in some pizza rolls, and watch Days and Confused until we passed out. And we probably never finished the movie. But I love that movie.

Richard Licklider made it. And there's a book out called All Right, All Right, All Right, which is Matthew McConaughey's headline for the book. Oh, that's why I saw it. Okay. So Matthew McConaughey, this book is by Melissa Mayert's. She's actually Chuck Kohlsterman's wife. So that's a pretty good writing duo for the husband and wife. It's an oral history of days and confused.

So if you're not a big fan of the movie, you're probably not going to like this, but it's an amazing book. It interviews all the people who did it, how it got made. It's all about the movie business. It's background on like Austin, Texas back in the day where they filmed it, how they discovered McConaughey. And just an awesome book. If you're a fan of that movie, I know this is a niche recommendation. Really into it. That's very niche.

By the way, speaking of husband-wife, power couples, I learned from listening to the big picture, Amanda Dobbins's husband is the guy that wrote the GQ piece on George Clooney. Oh, nice. Not bad. Okay, I like that. One listener sent in and said, Clooney cuts his hair with a floby. Remember those? No, a floby? It's like a vacuum that you'd put it on your hair and it would always cut the same length. And Clooney says he... Oh my God. I had never heard of that, but that's like what Garth got his haircut with in Wayne's World. I mean, obviously, you wouldn't need to use it, but... Harsh Ben. I know. So this Tony Say guy who was the CEO of Zappos who passed away. Did you hear about this? No. Okay. He wrote the book, Delivering Happiness, about how he built.

Zappos into what it is today. He passed away this week, and it reminded me that book. He was just an amazing original thinker. It's one of the better business books I've ever read. I haven't read in a while, but talked about how he built the culture at Zappos, and he made a bunch of money. He sold it out to Amazon and made a bunch of money. Instead of just sitting on that money, he tried to develop a whole ecosystem in Reno, Nevada, and tried to build his own town of incubators and startups, and it didn't work out, but he's just a very original thinker. So delivering happiness was a good one. Five-year engagement, have you seen that one? No, I never heard of it.

Jason Siegel and Emily Blunt. It's from, like, 2012. It's Judd Apatow movies, so it's kind of like most of his movies, a little long, like two hours. When my wife and I watched it the first time, I remember thinking, like, oh, this is okay. It was funnier on the rewatch, and it actually had, before they got huge, it had Chris Pratt, Mindy Kaling and Kevin Hart in, like, character actor roles.

If you're into those Jud Apatow-style romantic comedies, I thought it was funnier than I remembered it. It was actually pretty good. Kevin Hard and 40-year-old Virgin, that small role he had killed me. Yeah, so it's one of those types of things where in Chris Pratt, before he grew 5 o'clock shadow and got buffed to be a superhero guy. He was really funny in like a schlubby best friend role. Okay, did you finish the undoing?

What a show. I did. That was pretty good, right? It's six episodes. In episode five, I turned to my wife about half hour in and I said, uh-oh, is this going to drag? And then stuff happened. And then it said, at the end of the show, on next week's season finale or series finale.

And I was thrilled because I didn't know it was only six episodes. No spoilers here, but I'm a sucker for a hooded. done it. And up until the last 10 minutes of the show, it was still, I don't know, 50, 50 between two people, right? It was pretty good. Hugh Grant and Nicole Kimman were both incredible. Donald Sutherland is 85. It was a little over the top of times and there was a little overacting, I think. But all in all, six episode, Hugh done it, and where you're guessing the whole time who the killer was, I'm in every time or something like that. Every time. Did you see knives out? Oh, yeah. Yeah, I love that. Right. Yes. Yep. Big whodunit guy. Good call. Very good. Yep. I wasn't sure. I wasn't

sure if they were going to blame the Fed. There you go. That was pretty good. No, the Fed just killed shortsellers this year. That's it. Blutts on their hands. Email us Animal Spiritspod at gmo.com.