Animal Spirits Podcast - Remember Gchat? (EP.79)

Episode Date: May 1, 2019

On this week's show we discuss Tesla's huge drawdown, why making your stock bets public makes it harder to have an open mind, how our perceptions about retirement change over time, why does Uber lose so much money, how Charles Schwab seems to toe the line between bank and fund firm so well, will people drop Netflix for Disney+, how Americans have spent their money over the past 75 years, do young people require a financial advisor more than old people, the name for our new podcast, how to teach your kids about money and much more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by Y charts for the first time since May 2017, Tesla's market cap is lower than both Ford and General Motors, and it is in a 40% drawdown. We'll have these charts in the show notes. Stick around. Welcome to Animal Spirits, the podcast that takes a completely different look at markets and investing, hosted by Michael Batnik and Ben Carlson, two guys who study the markets as a passion and invest for all the right reasons. Michael Batnik and Ben Carlson work for Ritthold'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 Rithold'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. All right, Ben, I'm about to take you to the School of Technical Analysis. Do you have a ticket? You ready? I guess I have no choice. Let's do it. Okay. So this chart, we're going to put in the show notes, there has been areas in the past, called, say, 250 to 290, where sellers showed up from 2014 all the way through, say, 2016. And then once that

level was broached or breached, I guess either or both or wrong, I'm not sure, that former resistance turned it into support. That's where buyers showed up. Now, this could all be a coincidence. I could be finding patterns where none exist. But last week, prices broke below that level of support and that theoretically should matter, unless of course it's a false breakdown and prices move higher, in which case forget everything I just said. But anyway, there is a person on Twitter whose name has sort of become synonymous with the stock because of the way that he has defended it and spoken about in the past. And last week when prices broke below this level, he sent out a tweet saying that he is

respecting risk management or on paraphrasing, whatever he said. And he sort of got dunked on. And maybe one of the reasons is because he said prices broke through resistance, which they actually broke through the support. But anyway, here's the point. That was a good technical analysis actually there. Thank you. Here's the point. He might have done the right thing because let's say that he sold it at 245 and the stock goes down to 100. He'll look like a hero. But this gets back to something that I wrote about in my book that beating the market or picking stocks or whatever is difficult enough when you're just battling yourself and when you talk so publicly about a stock it becomes so difficult

to change your mind so I almost give him like a kudos for changing his mind when he thought the facts changed or the circumstances changed or whatever but you can't win when you talk about a stock publicly because if he held on and he dug in his heels people would have called him all sorts of names and now he admitted that he was wrong or at least partially wrong or whatever and people are dunking on him all the same Well, it's almost like you're fighting your own prior opinions. Yeah, exactly. So this is probably the easiest mistake that you can avoid is you never want your name to become synonymous with the stock, because it makes it so much harder to change your opinion. And kudos to him for doing so, but it's just, it's not easy.

So let's just stick with Tesla for a moment. There is an ETF, the ARC innovation ETF, that's an actively managed ETF. And if you sign up on their website, you are able to see their trades. real time, you get an email. And they were doing the opposite. They were buying plenty of shares on what is this, April 26th. So they were buying stock. Okay. So you're saying they're putting their money where their mouth is. They're the one who Kathy Wood is the one who runs that fund, I believe. And she said she thinks Tesla is worth $4,000 a share. Something like that. So she has spoken very publicly about it. And it's hard to say whether or not that's influencing her decision.

Maybe it is. Maybe it isn't. Looking at the drawdown chart, so they're down roughly 40% now, Their worst drawdown in history, which doesn't go back that far, just to like 2011, was in 2016, they felt like 50%. That was a buying opportunity, obviously, because they're still above that level. So I guess this is one of those stocks that is so highly volatile. It's kind of something for everyone because every time it falls like this, some people are going to think it's buying opportunity. Others are going to think it's going bankrupt, right? Right. So when this, yeah, so a lot of people are in the camp that, all right, finally, the death spiral,

is here. And Josh wrote about this last week that Tesla is a better short at $100 and at $250 bucks. So I'm going to forget what the numbers were. But I guess the point, and I said to him, well, well, I guess that makes sense because this is a stock that is so driven by sentiment, but wouldn't it become more attracted to a buyer at $100? And he made the point, probably not, because at that point, the debt to equity level is so lopsided that the company is literally a zero. Can I just say something here? I just want to give you some appreciation because you really came out hot on this podcast and I'm just getting back from vacation and I still like need a minute to like get back into it. So I, uh, I just want to give you a note of appreciation for really taking the,

taking the ball here on the, uh, taking the lead here. It means a lot then. So, so I was in Florida for a few days, four or five days and it was the first time I've really like completely checked out. I still had social media up and stuff, but I more or less left worked at home and laid on the beach and laid by the pool and had some poolside cocktails. And I, I came to a realization that if you would have told me this 10 or 15 years ago, I said you're nuts. I don't know that I could ever just retire to the beach and sit there all day and do nothing. Like people who either retire earlier, retire in their 50s or 60s, and the dream is to just go to the beach and relax the whole time? Like, I think I would lose my mind.

Two thoughts here. Do you think that anybody actually does that? Or is that just like an image that we've painted because we see that in brochures? Does anybody actually retire to the beach? It could be the image. And maybe golf is the other thing, I guess. But I just, I think if you would have told me 20 years ago, though, you know, you're going to get sick of just sitting on the beach doing nothing. I would have said, you're crazy. That's all I want to do. Don't you also think that your vision of retirement will change in 20 years? Maybe you will want to do that. Yeah. And that's maybe my point is that it's hard to plan for these things because your opinion is probably going to be changing a lot. And I think that's the other realization I came to that. Maybe I say that now, but in 20 or 30 years, that's exactly what I want to do. I'll just want my robot butler to get me a drink every time I needed to hit a button. You know, this reminds me of the question that is often asked, what do you wish you knew 20 years ago or something like that? Right. But what you thought 20 years ago is not how you think today and how you think 20 years from now is not how you think today. So anyway, all right, let's get back to this.

How is it possible, let's stick with the car theme. How is it possible that Uber lost $1.8 billion last year? like what do they spend money on and what do they spend $1.8 billion on? Obviously, I'm very ignorant here, but is this, it's because their rides are so much cheaper than cabs and they're losing money on every ride, right? I don't think this is, it's not the kind of business where you can scale up and, and the more volume you produce, the better your profits are going to be. But where are they losing money on the rides exactly is my question, because they don't pay for the cars. Is it, are they paying the drivers more than they're taking in? I guess I honestly, I'm not an Uber expert here, but I mean, if you look at the price of, I mean, if you had the choice between taking a cab to the airport, taking an Uber, wouldn't take an Uber 10 times out of 10 because of the price? Yes. So I'm just guessing that they're, they've just made such a huge push into undercutting the price to get that, to get that audience and get those customers that they've just

decided to take a loss on almost every ride. I honestly don't know. I would be curious how many employees they have and engineers and maybe maybe that's where all the money is going. I have no idea. I'm sure we can get schooled on this very quickly. It says they lost a billion dollars in the first quarter of the year alone. Yeah. And they lost 1.8 in 2018. Yeah. So I think the headline on CNBC when it first came out about their IPO was Uber says they may never make a profit, which is a bold statement. if you're buying that stock. That's not a great business model.

No, and honestly, it still could be a good stock for a while, which is kind of funny because people are going to, who knows, I honestly, the performance of Lyft probably doesn't give them, it probably gives them a little bit of pause, but it's, it's one of those things that people are constantly betting on the future and who knows what will happen. I, Tesla and Uber both fall into my two hard pile. I, there's no way I'm smart enough to wrap my head around what will happen to either of those companies. I really don't know. I just got a notification about the 18th of the day on my phone. I got a ring which was purchased by Amazon for a billion dollars. Is that right?

Something like that. Sounds right. And so I'm glad to see that my dog is using the doggy door. She's never used one before and she's going in the backyard. And so I got motion at the front door and it was an Amazon package. See, maybe that's why I could never have one of those. How about that? It's coming for a circle. Amazon bought ring and all right. So anyway, so I did not know this. So I see the guy throw the package on my steps and he took a picture on his cell phone before he walked away. Ah, just to show that it was there. Yes, just to show proof of delivery. Did you, so. I don't know they did, but it makes sense. And so last week, Amazon announced they're spending like

$800 billion to inter billion. No, 800, sorry, 800 million. Sorry, I was looking at the I think I was looking at the, all of the stock. I think I was looking at the Avengers numbers or something, $800 million to move prime up one day. So all prime users will now get one day shipping instead of two day shipping. Okay, that's got to cost a lot of money. Which is amazing. So I don't know when it goes into effect, but it's just, and then Walmart said they're going to kind of try to do the same thing, only they don't charge people a membership fee. So I don't know how you can compete with those places if you're selling stuff online. So I'm going to guess that you did not see end game. No, did you go see it? I did. I went Thursday night. By yourself. And,

No, I actually didn't go by myself. You know, I hate clapping in movie theaters. Does that make me a grump? Oh, what do you think is worse? Clapping in a movie theater or clapping when your plane lands? Okay, I knew that's where you were going. Both are pretty bad. They give me like nervous sweats.

I think it gives me anxiety. I'm not really sure why, but I just really don't like it. Okay, so did you like the movie or not? I did like the movie. I wasn't blown away, but letting it marinate a little bit and thinking about the scale of it and what they were able to pull off. off. It was pretty impressive. So I've decided in the last couple weeks that I'm a huge hypocrite about Avengers because

I totally hate on it. I'm one of those people that just doesn't get it, but I love Game of Thrones. So that's like the cognitive dissonance in me that I can be totally a huge fan of Game of Thrones, but be totally against Avengers for whatever reason. So I watched the episode last night, even though I haven't seen it in three seasons. And even not knowing anything, it was pretty good. So spoiler alert for Avengers, they're going to make, Marvel's going to make way more comic book movies. Is that what happened? Probably. Okay. But did you like this one better than the previous one? Yeah, I didn't love, love Infinity War. That felt way too long. Maybe it was

just the particular experience I had on that day that I just wasn't ready for a three-hour movie. But I do believe that Avengers, as we know, like this version of the Avengers is probably done. But of course, they're going to make a zillion more, which I'm totally game with because I love it. I did bite the bullet a couple weeks ago and bought a couple shares for each of my kids of Disney stock. I just, I decided, do you know what, this is going to be the way I'll teach them how to, how money works and investing works. So eventually they'll have some Disney stock. So that was a long of offer. Did you not hear what I said earlier in the podcast about making your stock pick public? Oh, right. I've been pounding the table on Disney Plus for months. I had to like back it up a little bit. So BuzzFeed did a really good breakdown with some charts. And this compared to like say the 10th biggest release fast in the few. It's like not even in the same universe. So it looks like all of the biggest ones are obviously in the past decade, we'll call it. So this obviously isn't adjusted for inflation.

It's not, but where's the butt that I'm going at? No, it's not. There's no butt. It's not adjusted for inflation. Okay. And we all know inflation is fake, so. Yeah, it doesn't exist. So there was a survey.

I don't know who took it. But Netflix, allegedly, is at risk of losing 8.7 million subscribers to Disney Plus survey. Fines. Yeah, I call BS on this one. I feel like Netflix is kind of like the new banking or like your dentist or your doctor where you just, there's no like, there's no reason to switch once you're already there. It'll be hard. I feel like it'll be hard to get people to actually unsubscribe. I feel like there's just too much inertia. There's too many shows that you people watch or I just don't see people making a switch. Do you? No. Do you even know? How much does it even cost? Is it $13 a month? it's not that much it's not like you're saving a ton of money like for $13 you can get an egg and cheese

yeah or you can get like half a beer in new york yeah exactly so it seems worth it okay so they had a story in the wall street journal about charles schwab and it says how schwab ate wall street and it's talking about how Schwab now brings in way more money than places like maryland or morgan stanley and i think you posted this on Twitter. It said, Walt Bedinger, who is the CEO of Charles Schwab, wakes up at 3 a.m. every day. And the first thing he checks is how much money the company pulled in over the past 24 hours. Last year, that was an average of $624 million a day, more than its three biggest Wall Street rivals combined. Who were the Wall Street rivals? I couldn't figure it out who it was. Like, was it UBS Morgan and Merrill? Yeah. So they compare them to Merrill and Morgan Stanley here.

I'm guessing the other ones would be like a UBS or... Don't you think that TD and Fidelity are their rivals? Well, I think they kind of tow the line because they said it in this story. Schwab's bank made more than half the company's overall revenue of $10.13 billion in 2018 up from 29% of revenue in 2009. So Charles Schwab does a nice job of towing the line between custodian and bank and fund provider. So they're kind of like Merrill Lynch, UBS Morgan Stanley, but also kind of like a Vanguard, I shares. So I had no idea that the bank division was so enormous at Schwab. I think they said that half of its profits come from there. Did you just say that, by the way? Yeah. So if you want to know why Charles Schwab is offering financial advice for so cheap,

hello, they want to upsell people into their banking products. There it is. You know, so one way or another, it's just a way to get the foot in the door. That's exactly why Fidelity did the no-fee ETF or index fund. They want to get you in to use their other services. And obviously, Schwab is doing a wonderful job of that. So no trading commissions, no, you know, barely fee ETFs, all this stuff is just marketing to get you to use their other services as far as I can tell.

And obviously it's working. Can I actually myself? Let's do it. Sorry, I cut you off. Were you finished? Because I was about to move on to something. Let's do it. So I just made a joke about how a ham and cheese cost $14.

Okay. But there was a chart how Americans spent their money in the last 75. years. And if you see these green bars, which we'll link to in the show notes, of course, it's actually gone down over time. What has gone down? Food purchases? So it says how American spent their money in the last 75 years. It's reading, alcohol, tobacco, education, personal care, transportation, housing. And the three big ones, by far are housing, transportation, and food. And I assume that this is all inflate. Yes, it is inflation adjusted. And look at food. Do you see that in the green? Yeah, food has gone down.

Clothing has gone down. Health care's gone up. And education, I guess education was a tiny, well, was this based on a survey? It says, yeah, that's a good question. But the biggest jump, obviously, is housing. Even after inflation, housing looks like from the 1940s has more than double. So that's where people are spending their money, which makes sense. But a lot of the other things have fallen. So again, this kind of gets back to the inflation and things we need, health care, housing, education and deflation of things we want, clothing. I guess food is kind of, food is kind of necessity, but. So look at the spike in recreation in 1973. Yeah, what was that for? Inflation. Oh, no, this is inflation adjusted. Is that when people started buying newspapers because of the Nixon thing? I have no

idea. Color TVs, I don't know. Yeah. This is an interesting start, though, and it's, yeah, it's worth taking a look at. Okay, so Michael Kitsy posted a chart on his blog last week, and he kind of went through the different life transitions that people need in terms of financial advice. And he's trying to make the argument that maybe people early on in their life actually need more help with their financial advice and potentially a financial advisor than people old in their life. Well, you can make the case that a 17-year-old needs a financial advisor or at least some financial counseling because they're about to make one of the biggest financial decisions of their

life potentially. Right. So he's saying when you're young, you graduate college, you move out, you get your first job, you potentially go back to school. And so there's all these student loan things to figure out. Then you have marriage, children, your first home, potentially changing careers. So it does make sense in a number of ways. But I think the way that you framed it is actually probably the right one. You almost need a financial counselor, not a financial advisor, if that makes sense. Hourly? Yeah. Oh, I don't know. I mean, obviously that's his sort of business on the side for that XY planning network. So that makes sense there. But again, I think it just kind of shows that people need it. But I don't know if. how many people actually seek it out at that age or if they probably just ask friends and family for help. Yeah, I mean, think about where you are mentally and emotionally as a 17-year-old. Right. Or even in your 20s, you still don't know exactly what's going on. And so someone else posted

a link to this. I think this was our friend and colleague Brian Rosen. It was a Millennials and Money survey from TD Ameritrade. And I think we've talked about something similar, but this kind of brought it all together. They showed millennials expect to start on average their first job at 25 and not start saving for retirement until age 36, but they also expect on average to retire at age 56. So I feel like there's a little bit of a disconnect there. Didn't we talk about this? Didn't Jake Morgan do something similar? It's probably, yeah, fairly similar. The idea that I cannot believe that young people have ridiculous expectations. That's so weird. Right. Maybe they need a financial advisor to write those expectations.

So want to feel very old? Let's do it. You already are. No offense. Ralph Machio was on with Bill Simmons, and on that episode, Michael Lewis was also on. And Michael Lewis told the story about how he was going to write a book about NBA coaches, specifically Greg Popovich. Hey, I'll listen to that. All right.

Anyway, Ralph Machio has a 27-year-old child. Yeah, that's... I mean, you watch the karate kid movies growing up, right? Of course. Yeah, I think he was kind of old to be playing karate kid at the time, too, but, yeah, that's, yeah, okay, I do feel. I really like the Michael Lewis stuff with Bill Simmons, but I have never felt more on par with Michael Lewis from a career perspective

than listening to his new podcast and hearing him read an advertisement for ZipRecruiter. I mean, right? Like, listening to Michael Lewis read an ad for ZipRecruiter was just, I don't know why. It just, it filled me with a lot of joy that even, someone like Michael Lewis has to do that. I don't know why, but it was perfect. While you were in Florida, you posted an old blog post and you were talking about Slack. And that got me thinking, remember G-chat? Yes, we actually used to use that with each other. Did we not?

I think when I first started. I mean, that was huge, right? For like probably at least a decade, that was how you communicated with people outside of like, I guess tech. I mean, during the day, that's how you spoke to friends. Have you ever tried to explain Slack to someone who's not on Slack? it's impossible because it sounds, it's one of those ideas that is like, yeah, it's instant messenger. It's almost impossible to explain unless you use it. But you just did. It's like instant email. It's instant messenger with email. Right. And so someone goes, well, duh, that's it. Why didn't I think of it? It's one of those, God, that's such a simple idea and it's so successful. And why, you know, because for us, our company, it's more or less done away with internal email

in a lot of ways, right? You don't have to deal with those reply to all emails and you can just have these little pods of conversations or one-on-ones. And it's, it really is so simple, but such a, like a useful tool. So this got me thinking about like, oh, remember that thing? So do you remember when people used to pay for ringtones? Was that a thing? Yeah, I guess I can't say I ever did that. I've got a few more, but riff on this. Go ahead. For my first cell phone, it was 50 cents a text message. Oh, my God. I would tell me, and that was when you had to scroll through the three button to get to the letter. You had to hit the button a few times to get the right letter.

And now how text messages effectively are zero dollars. So see, no inflation. Yes, we just, we just solved it. There you go fed. Do you remember Jean-Paul, Gautier? No, who's that? The collode. Oh, no.

Is that what you used to wear? I think everybody wore that. And I smelled it in Penn Station the other day, and it really brought me back. Okay. I don't wear Colon anymore, do you? I don't have, Seinfeld's got a really good bit on Cologne, but that I can't recall right now, but no, I probably stopped wearing Cologne after college, I'd say. I don't mind it, though. I'm not like an anti-Coloner. I just, well, I mean, the worst,

the worst ones are when you leave a room, someone else leaves a room and you can still smell their clone after trail. Well, everyone is anti too much Cologne. Do you remember when all Kindle books were 999? That's not, I guess I didn't realize that. I forgot about that. That was like the big thing. They started 999. I still think that you should make the change to Kindle. No, never going to happen. Okay, so sticking with this, so I, when I was in Florida, I reread the big short, and I thought I was just going to skim through it, but I pretty much reread it word for word.

I give a plug. Going on the Kindle, it makes it so much easier for our rereadables pod, which we got a million suggestions for names, which was really good. And a few people even gave some books, even though you told them not to. I think my favorite, the most creative one was Booktub Time Machine, I think. I think that was the one that made me laugh the most, which obviously we're not going to use. So we went with, drum roll, turn the page. Turn the page.

Turn the page. So that's our new segment. We're going to do our first one, just to hold us to it. We're going to say it now. So we'll do our first turn the page on the big short on it'll be next Monday. It'll come out. Yep. And so tune in for that.

I think it's, I got so much out of rereading the big short that I forgot about. It is, it was very, it was worth it. It was worth a reread. So I'm excited to discuss it. I already reread it for my book. I think I was. looking for a particular scene. So I will re-skim it. I don't know that I'll reread it, but I will re-skim it. I'll be ready to do the podcast. The first time I read through, I read it in a hardcover, and this time I did it on

my Kindle, and I highlighted a lot in it. You might need to carry me through it. Okay. Lastly, do you remember Traveler's checks? Travelers checks, yes. And wasn't the check spelled with a QU for that? I think it was. Yeah, that's a, I mean, I've heard stories for my parents where they would need money on a weekend and they used to not be ATMs. And so wasn't that the Paul Volcker line that the biggest innovation in banking over the last three or four decades is the ATM machine? So get this. So I'm reading a book called Tradeoff by this guy, Kevin Maney. And I bought it used on Amazon and look at that. The author signed it. Oh, wow. Good book? It is a good book. Is that what you think that's one of those deals where the author goes into the

the bookshop and signs a bunch of copies? Well, it's made out to somebody. It looks like it's to Ben, actually. Okay. So this book is all about what he, it's a business book and he talks about fidelity versus convenience and fidelity being quality. So he talks about like, say, Bo's headphones versus replaceable headphones. And it's, it's really how you have to either be extremely convenient or extremely high

fidelity. And what he calls to the fidelity belly are companies that are sort of neither. like he used the razor telephone as an example. So this book is very good, highly recommend. I'm not done yet, but I already give it a recommendation. So speaking about it, you just mentioned the ATM. It was created by this guy, or he helped to invent it, this guy, Don Weltsill, at a company called Docutel.

And this is from the book. Docutel met resistance from bankers who mistakenly thought customers craved a high fidelity relationship with tellers. Quote, the bankers always said, our customers, they know Susie, they've known it for a long time and they feel very comfortable coming and talking to her and as soon as he likes to talk to them. Clearly, this was not the case. Right. So they were skeptical of ATMs because they thought that people valued the relationship with their teller, which sounds laughable now, but in the 60s, that was not the case. Also, in the 60s, computers were not really a thing. Right. Yeah.

And I think ATMs didn't really, so this was in the 60s, but ATMs really didn't take off until I think like the 80s. Like they exploded in the 80s, I believe. So did I ever tell you in college I was a bank teller for two summers? That was my college. much job. Nope. Worse job I've ever had in my life. Why? It's one of those things. I mean, this was before, I worked for a smaller regional bank. It was fifth third bank. And they didn't have any of it computerized. It was all still by hand. And at the end of the day, you'd like take all your slips and try to balance them. And of course, it never balanced because it would always get so busy. And you're counting people's money out for them by hand. There's basically no upside.

Either if you do it right, people expect you to. And if you get something wrong, you miscount. then you're an idiot. So, and you're on your feet all day. So I have, Wait, why were you on your feet? Like, you stand at the window. Yeah, you stand all day. You couldn't sit in a bar stool?

There was like one old person who would have the one bar stool that would get it and everyone else had to stand. It was not a fun summer job. I'll say that. Short the bankers. Yes, okay. So let's move on to some listener questions. Wait, hold on.

Before we do that. So this is now the third week in a row where this has come up. So CNBC tweeted, Henry Block, co-founder of tax company H&R Block dies at 96. But his name is spelled BLO-CH. And obviously H&R Block is B-L-O-C-K. Oh, they didn't want it to be, they didn't want people to call it H-N-R blotch. I guess so. But who's, who's H-N-R? Is it human resources blotch? I don't think that human, it's called, it's not human and resources. That's true. I don't know. All right. Listen to questions. All right. And just so you know, we've been answering some listener questions and we'll try to get this more on our Instagram page. So if you don't, if yours doesn't come across here, we may answer it on an Instagram. And so follow us there. I think it's what is it, Animal Spirits Pod?

Yeah. An IG. Okay. All right. My wife and I are expecting our first child that I'm already thinking about the best way to teach him how to save when he's old enough. My mom taught me a lot about saving and financial literacy growing up in the early 90s. She'd take me to a local bank and open a joint savings account. And at the time, banks paid a lot more interest in their savings account. So I could actually see the benefits of compound interest. And there was something of a psychological and behavioral reinforcement taking place. Is there a question coming? Yeah. Despite my background as a psychologist, I'm struggling to think of the best way I can teach behavioral savings lessons to my son in the same lasting way because technology. has basically made everything more digital. What are your thoughts on how this or how you will approach these lessons with your own kids? So I actually replied to this person and I recommended the book, The Opposite of Spoil by Ron Lieber, which I just purchased and started reading based on your recommendation, Ben. So this is a good question and I have no experience dealing with this. So I don't really, I don't know. Do you have any sort of hacks on this? I don't know. I've heard a lot of things too. Actually, my daughter just turned five this month and my mother-in-law gave her like $20 and $1 bills

and said, you can either buy one big thing or you can buy 20 little things at the dollar store or something like that. And so she's trying to help teach that too. I honestly don't know. I guess I did learn a lot from the opposite of spoiler. I kind of recommend that to everyone in terms of teaching, giving and saving and spending. And I don't know. I'm willing to open this one up two suggestions because I don't really have a concrete answer quite yet either. Okay. Would you ever consider saving for your child's retirement instead of their college education?

That's, I guess it's kind of like a form of mental accounting if you think that you're going to leave your children some money someday, but would you ever say give them money for retirement instead of funding the 529 plan? I think I would almost always put the importance of the 529 over saying. for their retirement. What do you think? Yes, I agree. I actually emailed this person back as well and suggested that maybe if you want to do this, I would put like 90% of the money in the 529 and maybe 10% in a retirement account. But probably the biggest gift that you can give a child is to have them come out of school with as little in student loans as possible. Yeah, and here's the way that I

look at this. I almost think of my children and I imagine someday my future grandchildren as part of my retirement plan. So I would love to be able to spend money on them someday out of my own money. So I think I almost look at that as being more important than an inheritance in a lot of ways. So things like, yeah, things like family trips and I thought you meant it in reverse that you were going to be relying on them to support you. No, no. I mean, I would just, I think it would be nice while you're still alive in your in your later years to be able to not support your children or grandchildren, but to help them out in other ways and to maybe buy them some experiences while you still around.

Well, if you have the luxury to take your family on trips when your children are older, that's probably like the best thing ever. I think so too, yes. Yeah. So I think maybe one of the old school mentalities is I'm going to leave inheritance to my children because that's what older generations did. But I think people would much rather appreciate seeing, you know, you being able to see the enjoyment of allowing your money to, you know, give them some experiences.

That's kind of the way I look at it. All right. How do you feel about saving for a house down payment, call it five to seven years for time horizon in a high yield savings account? I love it. Yes. Is this kind of what you did? Well, actually, no.

So I was in a different position because actually I figured this out too late. I wish I did. But this makes a lot of sense. If you know that you have money that you are going to be saving for a house in five years, I would not risk a penny of that in the stock market. This is exactly what I did. I'm sure there are people who are, what would, don't mind taking a little more risk. But for intermediate term goals like this, this is exactly how I personally save.

Well, how about this? If you could, let's say that you did want to risk it and not all that. Let's say you wanted to put in a 50, 50 stock and bond portfolio. And you were making so much money that if in the worst case scenario in year five or whatever it is, the market, the portfolio sees a 20% down to him that you could replace that. with money that you've been saving in a savings account, maybe you could do that. But, but generally speaking, I would, I would not touch a penny of that. I would not put a penny of that on the stock market. Yep. Okay. Any other recommendations besides the one book you already talked about? Nope. Okay. I finished a bunch of books on vacation, nothing really to write home about.

I did start reading America's Bank by Roger Lowenstein, which is the history of the Fed. What does that mean nothing to write home about? I mean, no great recommendations. I kind of, I did one of those things where I have a million books on my Kindle, and I have so many that I just sometimes don't really finish all at once. So I kind of went through and finished a bunch of books that I started and never finished. So I did a lot of that. You know what's funny? You and I are on the same schedule because I am doing the same thing. Right now I'm reading. So I just finished the George Bush biography last week. And right now I picked up Franklin Roosevelt, the political life. I stopped reading it. I think these three books I stopped reading because I was I was reading them while I was

writing my book. The other two books are Lords of Finance, which I really liked. I have to finish that one. That was good. And I have to finish, what's the book on oil? Oh, the prize. That was another excellent first 100 pages that I think I stopped because I was writing my book. Yeah. In some books, I'm fine with just stopping after you kind of get the general feel for it. But I'm reading America's Bank right now by Roger Lowenstein, which is the history of the Fed. I think unless you're a huge nerd about this stuff, it's probably a little overkill. But I never realized that they tried so many times to have something of a of a central bank in the U.S. before, and it just never really got off the ground. And I think it was kind of the panic of 1907 and the realization that the Fed of the

country was more or less J.P. Morgan, the person, not the bank. He was more or less the backstop to the entire system, and it was definitely needed. And there's probably a lot of Fed haters out there who should read this to kind of get a better understanding of what it is and what it does, but I don't think that that would really work for them anyway. But interesting book. And I also rewatched a quiet place on my plane ride down to Florida. That was my second time watching it. I freaking love that movie. So good.

I know they're making a sequel. Oh, they are? Yeah, I heard they're making a sequel. I don't know. A Quiet Place, too, Tokyo Drift. But I really like that one, and it was good on a rewatchable. So anyway, send us your questions, Animal SpiritsPod at gmail.com. Look for our new podcast on Monday, turn the page, where we'll be talking about the big short

and we will talk to you next week.