Animal Spirits Podcast - Richer Than Ever (EP.224)

Episode Date: September 29, 2021

On today's show we discuss Rich Dad Poor Dad, why bailouts are here to stay, Cathy Wood really likes treasuries, sports gambling hits the mainstream, options are enormous, how much it costs for a down payment 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. One of the pieces of data that we could find there, and there are many, is real estate data. So before we get to that, I just want to mention that we just got some data released, S&P CoreLogic, up 19% year over year, up 18%, 18.7% from the previous month. The hottest cities are Phoenix in San Diego and Seattle. Phoenix had 32% year-over-year price increases. So this nationwide price index, it was the highest 12-month price increase ever for this home price index nationally.

Now, I'll have you know, this is lag. This is a lag. This is a lag. There's old data. This from July. This is July data. So it's basically October. This data is from July.

Now, more recent data, U.S. existing home sales fell 2% quarter over quarter down 1.5% year year, the number of offers on a typical home bin is now 3.8 offers on average compared with 4.5% a month ago. So all I'm saying is that I think I was right. I think my housing slowdown. Just a little dip is proving prescient. The market has gone from scalding hot to it's just going to boil your skin. Well, actually, no. Down 2% month over month. Down 1.5% year over year. That's existing home sales for the month of August. Anyway, go to ycharts.com. Tom Animal Spirits sent to you.

If you're a new listener, you get 20% off a new subscription. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Batnick and Ben Carlson work for Ritt Holtz wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast.

Welcome to Animal Spirits with Michael and Ben. You saw the Robert. Starting to show off with a sigh. Yeah, I don't know. An exhale. I feel like if you're someone who is not very well read, and I certainly wasn't coming out of high school college. Elitist alert. elitist alert. Why is that elitist? That's like the opposite of elitist. I was an idiot. For those of you who aren't as well read. All right, go on, go on. So the first time you read a book that kind of explains the world, whether it's history or markets or whatever it is, you feel like, oh, you just unlocked a key, the secret door, and now you're the smartest person in the world because you understand. And then you realize, wait a minute, there's so many people

that already knew this and there's a million books that are just like this. So for me, I can't remember what the exact books were that did this for investing. But I know for a lot of people, it's Rich Dad, Poor Dad. That one sort of unlocks a lot of people, especially young people, to go, oh, light bulb moment. For some reason. I'm pretty sure that I read that. I'm pretty sure my dad gave that to me when I was like 17 or 19 or who knows what age. Yeah. And then you probably first book I read. Use it as a doorstop. Okay. So for a lot of people, it's a light ball moment. For me, I think the reason that book never resonated with me is because I knew this guy is telling a story and he's using quotes and I'm going, he doesn't remember exactly.

what these people said. It's obviously he's telling a story to drive a point across. What he writes about didn't really happen. Let's be honest, right? Honestly, I have no recollection of the book or what you're talking about, but it sounds like you were reading with a very critical lens at a young age, so not to brag. It's kind of like watching a movie that's based on a true story, and they fudge the whole true story. You read about what the actual true story is, you go, oh, it's kind of similar, but not really. Let me turn the tables. I don't believe you. I don't believe you. What do you mean? There's no way that you read Rich Dad, Dad, Poor Dad, as a new whale and said this guy's full

of shit. No, because if he's talking about a story from 30 years ago and he's using exact quotes, that's what gives me, it's like, you don't remember exactly what someone said to you 30 years ago, word for word. That's the thing to me that. Did you revisit the book for this podcast or do you actually remember this? No, I actually remember this because I remember a lot of people. This was like, when here's what I did when I was younger.

I googled best finance books or best investing books, and I tried to go through the list. Hand up. So did I. Who didn't? In that book, Rich Dad, Poor Dad was always on the list. So eventually, after I went through my list, I have to read this book. It's on every list. So you knew you discarded Robert Kiyosaki before he started going crazy. Not really. Obviously, the whole point of the book, oh, okay, that makes sense. But the method in which he told the story, which I understand because guess what? Storytelling is an effective way to get people to learn about complex topics like finance. I get that. Why are we even talking about Robert Kiyosaki, the author of Rich Dad, Poor Dad. One of the best financial selling books of all time. Yes, I'm sure millions of books. And he turned that millions of books into probably thousands of seminars and newsletter subscriptions. And I don't even know what exactly he does. What's this guy's not worth? A few hundred mill. I'm sure he's worth a lot. But that's the point. So he tweeted this weekend, giant stock market crash coming in October. Why? Treasury and Fed short

of T-bills. Gold, silver, Bitcoin may crash to cash best for picking up bargains after crash, not selling gold, silver. Bitcoin yet have lots of cash for life after stock market crash. Stock's dangerous, careful. Wait, wait, wait, yet have lots of cash for life after stock market. Even this tweet is horribly worded. It's worded very badly. It's a horrible message. It's offensive to the English language. So this one got picked up on Finn to it pretty quickly. And Colin Roche sent me his history of tweets going back to like 2011 saying that like the world's biggest crash is coming. And this guy has been predicting a crash for years and years and years. All the time. I found one from 2017 talking about making a crash in Market Watch. And he said he's

he's not concerned about the professional investor who can go short. It's the person with a 401k their IRA. This guy has been trying to scare people out of the market for years. And if his personal portfolio was really positioned for this world-ending crash, he's not doing so. And the point is, personally, he's probably not positioned for a world-ending crash. He talks a big game. And I think, I guess the thing that annoys me about stuff like this is this guy obviously has a big audience. He has like 1.7 million Twitter followers. There are people, young people especially, who are impressionable who have read his book and probably hang on his ever word because they enjoyed the book. I think this book should now come with a warning label. The author is a charlatan. Yes. I mean,

I don't love throwing that word around, but like this guy, he's so far over the line that I don't know what else to say. The problem is when you have predictions like this and you already have made a bunch of money and you've sold millions of books, you know people are going to listen to you regardless. There's no consequences for your actions. If he was actually managing money for people, there would be some consequences, but he's not. He's just a talker. A few years ago, I think it was 2017. I wrote, I took a picture of the personal finance section in Barnes and Noble. You got Tony Robbins, you got rich dot poor debt, a whole bunch of books. Somebody tweeted to me, isn't Kayasaki in jail with Tony Robbins as his next

downmate? Kayasaki responded, nope. In 2000, here's a quote. That's actually a pretty good response. Here's a quote from 2016. I love gold. I was buying gold at 70 bucks an ounce. I'm a gold bug. On the other side, there's this guy named Harry Dent, a very smart guy who says gold is going to drop to $250 an ounce. Another very smart guy, James Rickards, the author of Currency Wars, says gold is going to go up to $10,000 an ounce. So somewhere in between is your reality. All right. That's fair. Somewhere between $70 and $10,000 an ounce. Look, I don't have a problem with people saying markets are going to crash, because that's true. Markets are going to crash at some point. I have a problem with people saying markets are going to crash tomorrow or next week and

giving a date and then saying this is the biggest crash in world history is coming and just trying to scare people because I don't see the point of that. That is not helping anyone with anything. That's just stroking your own ego. And so that really annoys me, especially when you have a big audience like this. It's horrible. It's truly disgusting because this is a dangerous. This is truly hazardous to people's financial well-being. And the thing is, like, what does he have to gain from this? He's been saying the same shit since 2011. What does he have to gain? The only thing I can think of is... Is he going to say, I told you so? Is it to sell more books? This guy's got more money than he could spend at 30 lifetimes. The only thing I can think

of is if you have this much money. Maybe what if he believes it? I don't even think you do. I think if you have this much money in cachet, you probably think to yourself, I can't go back on my word now. I can't say I was wrong then. So I have to just dig in my heels. And you've seen a lot of people do that, where they just, instead of saying, you know what, geez, I probably should have rethought my position here. I've obviously been wrong. I think it's really hard for people to do that, especially when they're successful. Well, you know why? It's very simple. The only thing worse than being wrong about a trend the entire way is being wrong again at the top of the bottom. Right. Yes. Capitulating. And capitulating and saying, you know what? Hand up.

I've been bad for 10 years. My bad guys. I was wrong. That the market crashes. Yes. You're wrong both ways. Yeah, I agree. That's why it's psychologically or emotionally, you're not going to do that to yourself. So remember the Evergrand story? That was like the biggest story in markets for a day. I do. Can I take a victory lap on that yet? I got a lot of hate email saying, Ben, you're not paying a big enough attention to this. Ben is poo-pooing this. I don't think you can. I think that you were right in the sense that we overreact to most stories. But if you're just like not going to pay attention to the news, you'd be like, this is a joke. I mean, then what's the point of doing what I was saying, though? What's a point

of doing content. Because if you're not going to have a, go ahead, defend yourself. I will tell you when I'm worried about something. When the pandemic broke out, I was worried about that. I thought this one seems like a non-story. That's all the same. But here's what I think a lot of people are missing. Oh, hold on, hold on.

But it's not a non-story. It's a biggest property developer in the second biggest economy in the world going bankrupt. I don't even know what sort of fairy dust you're smoking to say it's not a story. Because here's what everyone's missing on this story. When Lehman Brothers happened, everyone keeps saying I'm pronouncing around. By the way, kudos to you. Kudos to you. Good is to you. Correcting your mispronunciation. You're a big man. You're a big man.

Don't make fun of someone for mispronouncing word because it means they learned it by reading. So, there you go. Everything gets bailed out now. That's Morgan has a special, by the way. Shout to Morgan. I heard that at like my daughter's daycare a long time ago. I think they were quoting Morgan. Okay. Actually, Morgan was quoting J.K. Rowling? Or did she retweet? I can't remember. Either way. It's an old quote. That's like a Mark Twain thing. Like someone attributed it to Mark Twain or whatever. Damn. So now I'm misattributing quotes to misattributing.

I'm part of the problem. Yes. You really thought Morgan came up with that? I mean, Morgan's a smart guy, but that's like a really little quote. Excuse me. Shame on Morgan now. If he tweeted it, you got to put in a quote. I think his tweet said, like, I heard this from someone. He wasn't claiming he came up with it.

Sorry. Yeah. All right. So here's whatever misses from Lehman Brothers. The fact that that happened means it's never going to happen again. And you can tell me I'm an idiot. No, here's the thing. Everything gets bailed out now because they saw what a debacle that was.

So at that time, they said, you know what? We're going to let one of these go. So if everything gets bailed out, nothing gets bailed out. But if you really think that China wasn't going to step in and bail this company out, you're delusional. I'm sorry, we've seen what happens when a huge company. But we don't even know the details of the bailout yet. Who's getting paid back?

Who's taking haircuts? And not everybody's being made whole. Yeah, but it's not going to be this system. If you were following the store, you'd have a better grasp on the story. Okay. Literally everyone stopped paying attention to this last week, and I'm sure you did too. Come on. You're pretending to care about this story.

You don't really care. No, no, no. I like 80% agree with you. I just think that you would too, cavalier, that's all. Yeah, and I was right for being cavalier. I'm just saying one of these days the market's going to crash, and I'm going to side with Robert Kaisaki. We're going to say I told you so. I'm not saying that having this, the Fed put and all this stuff isn't going to lead to bigger problems down the line. Like, it could. There's going to be unintended consequences. But I'm sorry, any huge interconnected

company is going to get a bailout from now on. That's just the world we live in. And if you have you ever heard of moral hazard. Okay. Who cares? Like, Remember when markets were free? Guess what? Markets have never been free, ever. Man. I'm sorry. If you want to be one of these people that is constantly pushing conspiracy theories and relying

on what happened in the past, if March 2020 didn't make you realize that this game has changed and central bankers will do everything in their power to keep the markets functioning, I don't know what else to tell you. Now, that doesn't take risk off the table. It just moves risk around a little bit. Shuffles the deck chairs. Bob Klein from the Federal Reserve is resigning. Is this your audition?

Pretty compelling. Well, listen, here's the boring way of saying what I've said in the past is going to happen. If you remove the left tail from a lot of this stuff, returns are going to be lower going forward. So that's what we have to look forward to. Thanks a lot, Fed. That's where I come down to this. It's not like some grand conspiracy that the world is going to be cut in half because the Fed is saving companies. It's that returns are going to be lower going forward because markets are safer than they were in the past.

I'm pretty confident saying that. Well, that's fair. That's fair. But what's the left tail? Like a 70% decline? I think that's, I don't want to say off the table. It can't happen. But like, the odds of a 70% decline are much lower today than they were, say, 50 years ago. I think that's reasonable. I think the Great Depression, 85% crash in the U.S., save for Independence Day, four, three.

I think that's been taken off the table. Welcome to Earth. I mean, we had the greatest, the biggest quarterly drop in GDP ever in 2020. And the stock market fell 35%, 34%. Anyway. That hand tap right there. That was a mic drop. All right. I'm getting back to my theory that every rich slash famous person is a troll, even if they don't know it, just because there has to be something that comes from getting people on both sides, either excited and outraged at the same time. So Kathy Wood, I guess, was at the Morning Star Conference and she was debating Rob or not. And I think someone asked

her, what would you rather invest in over the next 10 years? Large cap companies as a whole in the U.S. or U.S. Treasuries. Her answer was U.S. Treasuries. That's not serious. Exactly. So she said because yields at 1.4, 1.5 percent, she's predicting deflation because technology is going to cost deflation. She says she thinks, I do really think that treasury bond will do well because of deflation, not inflation. And I'm telling you, this is like a do they believe it, do they not? She is so good at this now at trolling, whether she is trying to or not. I almost applaud her for this. Can disruptive tech do well if large tech does worse than bonds that are yielding 1.2%. By the way, she also said she expects her funds to answer the question. She said her fund expects to do 30% a year. I guess she's really hoping for the correlation of interest rates going down and tech going up. I mean, you never say never. I can't see a world. You know what? I'll say this is impossible.

This cannot happen. It cannot happen that her fund does 30% to year for 10 years. First of all, her fund would get to $3 trillion. about. Yes. If it did 30% of the year, that cannot happen while at the same time large tech underperforms government bonds. That cannot happen. Would you agree? Yes. There's no way in the world. She didn't say large tech. She said large cap companies, but you're right. Tech is the biggest part of large cap. Yes. If so facto, it cannot happen. Yes. Are you taking this out of context? Did you really say that? This is a story from AICIO. I'm quoting the exact story, unless they're taking it out of text. I'm using actual quotes. She says, I do really think the treasury bond will do well.

She's predicting deflation. Hey, it's a contrarian take. Here's the thing about the difference between Kathy Wood and Robert Kiyosaki. It is. Everyone's predicting inflation right now. Like higher inflation and she's saying deflation. Here's the difference, though. She offers contrarian takes that are sometimes right. A guy like Kiyosaki offers ridiculous takes that are never right. That's the difference. How about this? She also happens to have made, well, actually, I don't know how much Tons of money. But she's done very well. Her fund has done phenomenally well.

She's actually responsible for other people's money. There are actually consequences for her actions, maybe not her words. She could say whatever she wants. The funny thing is, so it was her versus Rob Arnott on the stage at Morningstar. I read a few of the just updates, people tweeting about what they were saying. The funny thing is most people in finance would rather believe Rob Arnaut, who's been saying value is going to be coming back and destroyed growth for the last 10 years versus Kathy Wood who's been right. A lot of the stuff she says people don't agree with, but she's been

right. And a lot of the stuff Rob or not says people agree with, but he's been wrong, which is an interesting way of viewing the finance world. A lot of people would rather be... I think this goes back to my thing about... Right, than make money. Is that a Ben Carlson quote? I'm sure I stole that from... Yes. No, do you want to be right? Do you want to make money? I feel like J.C. says it all the time, but I don't think he's made that up. Hey, no one in finance Twitter has made up a quote that's going to last forever. Everything we've taken is a form of a quote that's been said before. Money's as old as the hills. It's kind of like that. Wait, did you come up with that? I just did. Just now. That's awesome. Jesse, I'm going to start calling you Jesse.

So the reason why, again, people that have been saying values are going to come back or saying things they're going to come back or saying things that haven't been worked out, they're not all of a sudden going to apologize and say, I was wrong. And here's what, like, it's just a matter of time. Here, I'm only going to fall on the sword. You know what? Remember I said X on the XGE. Oil hit 80 bucks a barrel today. I was probably wrong in Exxon. I'm willing to be the bigger man here. Hand up. I think you were wrong. That's possible.

I'll probably be spread anyway. All right. Wait, what? I'll probably write eventually. Not wrong. We did our spaces last week, and someone on spaces alerted us to, by the way, sorry, we keep doing them at random times. We want to do it at 4 p.m.

Sometimes we can't do it. So it's just like your favorite indie band that does a secret show somewhere and then just text you out like when it's going to happen. That's us on spaces. Keeping you on your toes. Yeah. So someone alerted us to this, the fact that ESPN is seeking to license its brand to major sports betting companies for $3 billion over several years. I think they've been talking to draft kings and so these are the big ones.

This article from the Wall Street Journal says sports betting is on track of generate revenue about $4 billion in the U.S. in the U.S. in 2020, I tell you, if someone who is now addicted, addicted to sports gambling, 80% of sports gambling, I totally get it. I don't know why ESPN wouldn't do this. Technically Disney, Disney, I think that's a lot of people were worried about. It's like, well, Disney's getting into sports gambling, but with ESPN, it makes sense. But here's my problem. So I've been, my sports betting strategy, I'm the Charlie Ellis of sports betters. I've decided I'm not betting on the winners anymore. I'm betting on the losers. So I'm putting all the worst teams every week, the Jets and the Lions and the Texans,

especially I've made money on the Lions, the team I root for three weeks in a row by putting them in teasers and betting against them to lose. I've lost money in the lions, two out of three weeks. I'm just going to keep betting on the worst teams and putting them in teasers to bring their spreads down so they lose. And that's my strategy going forward. It's a great strategy. But here's the problem. By the way, hold on, hold on. You texted me that you're going to keep.

doing that until it stops working, just keep doing that. It's not going to stop working. You'll lose once or twice. Yes. Maybe I'm going to lose twice in a row, but if you stay the course and you ignore the noise and you stick through it through the volatility and last the whole season, betting against the Jets is a great strategy. I'm not like an options trader. Like betting in crazy parlays, that's an options trader. Those are always going to lose almost. I mean, like, you're going to hit one of those every few. Yeah, they are, but you're never going to win one. Babe, I'm in for the fun. Okay. I'm in it for the fun too, but here's the problem with sports betting. It's an app on your phone that you can bet on, you constantly want to bet. Once you start winning, you want

to bet more, which is like being at the casino. They want you to play more because then the odds go in their favor or not yours. I know it's a little different, but. So what was the Sunday night game last week? It wasn't a great game. I can't remember. But you stay up all night. So I almost do not bet Sunday night games intentionally because I don't want to stay up. I want to go sleep. I watched the whole Thursday night game with Carolina and the Texans. Maybe one of the worst games I've ever seen. But I bet on it. Unwatchable. Unwatchable, unless you bet. on it. Cuts both ways. But I can see how sports gambling is going to be huge and get addicting. And that's why any time you watch a sports podcast and they have to read those disclaimers,

they read them as fast as they can. Gambling problem. One 800. Blah, blah, blah. By the way, wait till you discover coffee. Okay, never happening. All right. So speaking of parlayes and options, Wall Street Journal, by one measure, options, activities on track to surpass, activity in the stock market for the first time ever. So the notional value. Hold on. Hold on. Hold on. By what measure? I'm getting to it. You're a little feisty today.

You're throwing it. Just bring it. I don't care. You're letting me out of here. This isn't even my opinion. This is a story in the Wall Street Journal. I'm correcting the Wall Street Journal by one measure. I want to know the measure.

Tell me the measure. The daily average notional value of traded single stock options has exceeded $432 billion compared to $404 billion of stock. So, notional value. So it's a bullshit measure, as I suspected. Nine of the 10 most active call option trading days in history have taken place this year. By one measure, they keep saying by one measure. It's obviously option stuff, it's hard to measure. By one measure, option trading by individual investors has risen fourfold over the past five years.

There's these charts that show the average daily volume going back to 1975 and how it's... So that's legit. I mean, listen, that's all you need to say. Every time the Wall Street Journal writes a story, they find some individual investor who talks about how they're doing creates. So this guy, Rick Keeler, a 40-year-old individual investor says I'm hooked on options. You could lose it all really quickly, but you could hustle and kind of hit the jackpot. Kind to hit the jackpot. But by the way, this guy bets on parlays.

There's like a theme of the show that we've been speaking about for years. Where do they find these people and how? Are there ads in the local newspaper? Would it shock you if this isn't just like some writer coming up with name? Because the names are always kind of out there too. Like, you know when the first time you saw Anchorman and the best part about it was all the different names of the characters? You're like, where do they come up with those names? Sometimes that feels like the Wall Street Journal to me.

Obviously, they have people on speed dial. But do you think this is just because obviously everyone said, okay, 2020. everyone's bored, gambling, this is going to go away. In 2021, there's been more options activity. Do you think this is just the new normal where this stuff is just elevated and people are realizing this is what I need? I need the action. Did you just drink your whole water bottle in one sip? No, no, no. It's like not functioning properly. You went to town in that thing. I just try to take a regular set, but it got like backlog. But is this something that's going to, we're going to look back on in years and see this big spike and come back down and

Or is this just kind of the new normal where? No, I don't think this goes away, whether it's Robin Hood or whatever. Like, people don't get unaddicted to things. That's a good way of thinking about it. Mark it down. That's the title of the show. People don't get unaddicted to things. This is why I'm never going to be able to delete the apps from my phone for sports betting.

Yeah, you're hooked. They've got their tentacles in you and they're never letting go. I did my first ever live bet on a game. It's like, oh, geez, once you go on that rabbit hole, there's a million different things to bet on. Is there anything more fun than betting on Aaron Rogers or Mahomes when they're down in touchdown to? That's the thing. The lions were beating the Packers. And I said to you, whoa, they're giving a lion seven points still. I should bet on the lions. And then I thought, wait a minute,

George Costanza this. No, the lions are definitely going to lose in a painful fashion, bet on the Packers, and I won. There you go. That's basically like options trading. It's leverage. In game is leverage? Yes, pretty much. So when I was in high school, my senior year of high school. Forty years ago. Yeah. All the casinos in northern Michigan, this is before casinos were really big and prevalent everywhere, but they had casinos on the Indian reservations up there. And they changed the rules from the gambling age, legal age being 21 to 18. And so we would go on Friday nights to play blackjack. It was amazing. It was amazing. It was kind of funny because the first time we went, they just assumed everyone got in the door was 21, so they're serving everyone beer. Don't tell

my parents I was 18 at time. But on Friday nights, we would go, and there would always be a huge line at the cashier. And we had a buddy who worked at the casino. And we said, why is there such a huge line in the cashing line? And he said, oh, people get their paychecks on Friday. They bring them to the casino, cash them, and then play with that money to gamble. And it's just I think I know where you're going with this. Jeez. Is this a segue? Yeah, you like that?

Pretty smooth, huh? I do. Very well done. All right. See, we were not doing this in the early days of the podcast. We had terrible speaking of. Well, speaking of. This is completely unrelated.

Coinbase announced this week they're going to enable direct deposits into crypto. I want to know how this works. So let's say that I get, so let's not let's say. I do. Like everybody else, I get a direct deposit still in Fiat because I'm crazy like that. Let's say that I want 80% of my paycheck going to chase, not going to tell you the account number, but let's just say that I want to go into chase, and I want 20% of it to be redirected into crypto to automatically purchase Dogecoin. Can you have multiple avenues on your paycheck?

It says they can put as much or as little of their paycheck at no fee as they want. I guess the answer is yes. I guess this is not much different than directing a percentage of your check to your 401K. But I think. when people say, oh, pay me in crypto, that's what they think this means. When really it just means you're direct depositing. And I think the point was people were complaining that it's too much of a hassle to move money in every time. And they just want to make it easier and automate it. I understand. Listen, if you're dollar cost averaging into crypto anyway, then this just seems like an easier way to do it, no? Yes. I think the worry from people was like, oh, pay me in crypto.

That's what this means. Bitcoin can go to $300,000. You should not pay yourself in Bitcoin. I mean, this is your life you're talking, right? When I joined Riddle 12th Management, I said, pay me in stocks, and they gave me a percentage in my 401k, that every time I get paid, I get paid in stock market cachet. Pretty good, right? When you joined RedHalt's wealth management? Yeah, that was my one negotiation tactic. I'm joking.

What do we buy for you, Ford? I hope you bought Tesla. Tesla is in the stock market index, so is Ford, yes. When is Coinbase doing this? I don't know. It's coming. But is this a roundabout way of them, like opening bank accounts for people and then doing their lend program still? Is that what's going to happen?

Are they lending to people? No. They backed away, by the way. They backed away from the SEC. Their earned product got turned off. Are they lending or no? I don't think so. All right. Inflation. There is a chart from Michael Semblis and the team over at J.P. Morgan. They do great work, by the way. Just truly top notch. I am in the market. Are you a subscriber? I'm not. Should I be? Wow. Wow. Yes. I mean, I look at the guide to the markets every month. No, this is like the team behind guy to the markets, but like actual content. The guy behind the guy.

It's very, very, very strong. Okay. All right. There's a chart showing core CPI components. And the COVID basket, as not we predicted, but as pretty much everyone predicted, things like airline, a lot of the stuff that was jammed up, prices have come back down. They spiked. They came back down. That's the good news.

The bad news is all the other. their stuff keeps going up. Thoughts? Are you trying to take a victory lap? Not that you got off of team transitory for a week. I just want to talk. Well, I mean, the supply shortest stuff is probably lasting longer than people thought. All the ship containers that keep showing in California being all backed up. John Tracy had a podcast today. They're doing an excellent job covering all the shortage of stuff talking about the railroads. And it really is like the knee bones connected to the hip bone or wherever the knee bone's connected to. Not the hip bone. Is there a knee bone? I don't know, whatever. It's all interconnected. And you block one route and things go cabloy. And basically,

there's blockages everywhere. It is surprising that it's lasted this long. I guess it does show the internet can't fix everything. The importance of the physical nature of everything, moving stuff around still matters quite a bit. The IRL world. Yes. Guess what? Web 3 is not going to help people move their ships around. By the way. Not yet. Not yet. What? The whole web three thing kind of annoys me. I'm just going to put it out there. On both sides. On one side, you have people saying, this is dumb. It's just digital, whatever. And then the other side you have people saying, it's inevitable. Web 3 is going to happen. I don't know. I don't like either take. I'm in the middle on this one. Both sides annoy me. You have to choose. I told you. I'm out of

the Metaverse. I'm out of the Metaverse. Okay, fine. We don't want you. Here's a thing. You're not wanted. You're on it. But here's a thing. It's like there's people who love seafood. They love oysters. They love, I'm not a big seafood fan. It doesn't bother me that other people like seafood. That's my stance on the Metaverse. Good for you if you want to buy like a digital hat. Cool. You put it on your character.

Good for you. It's just not for me. But I don't look down in you for doing that. I'm happy for you. If you like buying digital goods, go for it. All right, but that's such a coppa. It's so lame. I don't like what's going on on both sides.

What are you like a gym teacher? You're trying to like calm everyone down? Pretty much, yeah. I'm not a big fan of the extremes. I don't like either extreme on most issues. Okay. I'm the gray. I'm not the black or the white.

I'm the gray. that's me. That is you. All right, FedEx gave a warning. They cut their financial outlook. Labor shortages caused expenses to soar. So the stock got killed, which is absolutely annihilated. I think it's in a 37% drawdown. The tight labor market added $450 million to costs. Four hundred fifty million. If we're thinking through, by the way, when you think about like when the pandemic started, doesn't it feel always? Let's do it. Let's do a little exercise. Let's think through this. Go ahead. Doesn't it always feel like six or seven months ago? even though we've been in this for well over a year and a half now.

Like, in my mind, it's always like, oh, the pandemic started six or seven months ago. It's kind of like how 2005 always feels like it's 10 years ago when it's really not anymore. The election was not even a year ago. That feels like seven years ago. That's true. But I'm thinking through stuff that from the pandemic that's still going on that is a little surprising. So the supply shortest stuff lasting this long and still getting worse is a little surprising to be that they haven't been able to figure it out yet, break those bottlenecks.

the fact that COVID is still here in such a bad way in that we're still having a hard time getting so many people vaccinated is surprising to me. I kind of thought, okay, we got the vaccine and we're kind of done with this thing. This has lasted way longer than I thought it would be. Now seeing why it's happened and the fact that it's politicized makes sense, but the fact that it's still going on has surprised me. The labor shortage stuff, I think that has legs. We've talked about this about daycare and teachers and buses and all this stuff. If you think labor shortage has legs, how could you think that inflation is going to just go right back down? If all these higher wages for 15, 17, 18, 20 bucks an hour aren't getting people off their butt to take these jobs, what if a lot of people just have reassessed their life and don't want these jobs anymore?

When I was in Team Transitory, I don't want to use when. I still think some of this stuff will be resolved. I don't think like it's going to spiral out of control. We're going to have four, five, six percent inflation next year. But the one thing that I did say, I hope over and over, was I'm not. I will change my mind on wages. To me, that's the big, big, big thing. Because all of the hotel, car stuff, airlines, eventually... Does it make a big enough difference if all the wages are rising fastest on the low end? Does that really impact inflation that much if the wages are rising where

people have been held back for years now? They have deserved more money for a long time now. Well, yes, if then the employers, FedEx at all, are going to pass it through to consumers. So the COO said, the impact of constrained labor markets remains the biggest issue facing our business. Here's this. The Sordy Hub in Portland, Oregon had 65% of the workers needed to handle the normal number of packages, only 65%. There's another reason why supply chain issues just all over the place.

Across its divisions, salaries and employee benefits expenses in the latest quarter was 13%, including 27% in its ground division. And here's the inflation. The company on Monday said that it would raise its rates an average of 5.9% early next year. The highest annual increase, it or UPS has implemented in eight years. How much do you think FedEx got paid to allow their plane to crash in Castaway? Had to be a lot, right? Bad marketing?

Right? They're plane crashed. But he still delivered the packets at the end, so maybe that helped. I see you with the hard pivot away from inflation. I see what you did it there. I don't know what to say. Okay, speaking of inflation, see, that's another transition, Michael. No, this isn't. Okay. So Bill McBride from calculated risk started a substack, and it's all

housing market stuff. Oh, really? Yeah, you didn't know this? His calculated risk newsletter. So everything he does on substand is now just housing related. So he was saying that from the peak of the bubble, if you just looked at absolute numbers, mortgage debt is up $573 billion. So that sounds bad. Absolute numbers, you'd look at the mortgage housing bubble. Debt is higher now. than it was then. But as a percentage of GDP, it's less than 50%, whereas at the peak, it was over 73% of GDP. The point is, homeowners have way more equity now in their home, and interest rates are lower. So this is why, like, you can't look at absolute numbers in this stuff and how people are doing much better than you think with their house. This is why it's so hard for people to wrap

their head around, geez, we just had the highest ever gain in a 12-month period for housing market and people are still doing better than ever. Obviously, the housing price is rising is helping that. I feel like people aren't using mortgage debt as a boogeyman. Thankfully, are there? I think people who use boogeyman always use debt as their boogeyman. What's the biggest boogeyman in terms of this sort of right now? I'll throw out M1. The money supply, yes, people not understanding what it means. That's probably a good one. Here's a good one from George Perks. How much does the median home in the United States take all the houses, median value. How much do you need for a down payment for a first-time buyer? This surprised me. Did

you see this? Are you cheating? Did you look at the number? I did. I'm looking away, though. Okay. But the median home price is 350,000. Medium existing home price is $350,000. We've talked about low rates being a boon for home buyers for a long time. And every time we say this, someone says, whoa, whoa, what about down payment? The median down payment needed for a minimum down payment is $12,200. That doesn't sound too taxing to me for a lot of people. If you're really going to put some money into a home and you want to have something down, that doesn't sound too bad to me. I completely agree with you. I have a really good counterpoint, though. Bring it. The first-time home buyer represented in the latest report 19% of all sales. Normally, it's the average has been

around 40%. That is a gigantic drop-off. So I agree with you. The data point you just gave is compelling, like it doesn't sound too onerous, but the number of homebuyers, first-time homebuyers, suggests that it is. Okay. And part of that obviously is based on where you live. If you live, in a high cost of living area, and you're a first-time home buyer, you're probably not going to do it in a lot of places right now. You can't unless you have rich parents or it's very hard to do. Like my neighborhood, for example, has priced out a lot of people that are just like us or just like me, first-time homebuyers. Like, I'm very lucky that I bought my house. I don't know. I'm looking at my calendar. What you're going to buy my house? 2018? Because prices are up 30%

since. And so a lot of people can't do it. Like literally, can I get into a house? house. So I think a lot of stuff gets lost in the median. I agree that trying to use median to say that housing is a bubble, nobody can get in as disingenuous because people can get in. But yeah, you're right. It depends on where you live. That's really it. Where do you live? Some people are getting totally boned and some people are okay. Yeah, if you're in a flyover state like me, it's much easier to buy a home. If you're a coastal elite, it's like you, it's much harder. Here's another one that pairs nicely with the mortgage data. Federal Reserve said on Thursday, the net worth of U.S. households was $134 trillion in the second quarter. That's the highest has ever been.

That's well over the fourth quarter of 2019 when it was $110 trillion. People have gotten richer during a pandemic, which is another surprising thing. They took a look at money in the bank, cash and cash equivalent holdings since 2017 is up 50% almost, more cash on the sidelines. And basically, they're saying, because of the pandemic, a lot of people are leaving it there and a little concerned and that cash is going to stay on the sidelines. Last week we talked about the increase in bond fund flows being crazy. I think this is another data point like that. You have these crazy extremes in the market of speculation on one end and cash hoarding on the other. It's a very bizarre market. It is weird. There's enough data points out there that you can put together any story that you want and make it sound reasonable

without showing a lot of the other data. Here's another one. So Eric Beltunis, who we like to mention, no, I agree. Yes. I'm sidingly with your point here. He tweeted this morning that VO, which is the S&P 500 ETF or Vanguard, just broke the record today. It's September 28th. Brook the record today for largest inflows for an ETF ever in a year. There's still three months to go this year, and it's already broken it. So this is another one of, well, now everyone's an active trader, but wait, money is flowing into Vanguard, hand over fist still. And so you have all these competing ideas going on, which I guess is what makes a market. You have crazy options volume, but you also have all this money going into Vanguard. You have tons of cash on the sideline.

And all this money going into fixed income that we discussed last week. At the end of the day, as the saying goes, it's all the Fed's fault. That's the whole thing is there's just too much money. There's too much money in everything, in housing, in bank accounts, in stocks and bonds, in startups, and everything, if you're trying to bet against this. Josh wrote a great piece about this. There's just too much money. And I kind of do feel like that's just like the bottom line. There is too much money.

It is clearly like, too much money. Yeah. It is clearly affecting everything, everything. People are dying for yields. There is so much money. Yes. People were unironically tweeting today that they're worried that the 10-year treasury. yield is rising to 1.5%.

Right? Like, this is worrisome. Treasury yields are at 1.5%. Too hot. Too hot. Yes. It's bizarre. Okay. Listener email. It may be of interest that here in Brazil, where I live, almost everything you buy at a store can be purchased in monthly installments, even T-shirts. Sometimes you even get a slight discount if you pay what's called a vista, which means all at once.

All right. I went to buy a printer for 100 bucks, and when I paid a Vista, everyone in the store was surprised that I would do this. You see, people here refer to their salary as their monthly salary, so the States, most people walk around thinking, I make X per year. Here, they carry their monthly salary in their head. So he's saying, buy and now, pay later is already enormous in Brazil. You and I have been talking about this for a while. I think our first initial thing was, we don't get this. How is this a business? We evolved. We said we were wrong. We understand why it's a business because credit cards charge fees. Merchants want to understand their

buyers better. They have their bank account. But that morphed into us being, oh, no, this is kind of going to be worrisome because obviously a lot of people will say well what's the difference between buy now pay later and a credit card with a credit card you can negotiate your payments lower if you get in trouble financially obviously you're paying higher interest rates and with a buy now pay later you're paying none but I don't see how you can discharge the debt on a buy now pay later easily when they have your bank account information what if you stop paying your palaton do they come and get it do they repossess it but how do you stop payment they have your bank account do you close your bank account yeah I don't know tell them I can't pay anymore what if people

lose track of how much money they owe that's my worry Is there like an app that aggregates your afterpay, Klarna, a firm transaction? It's one hub where you could see how much money you actually owe. What happens when Macy starts doing this on their own in Amazon and Walmart, obviously, there's always going to be people who mess up with their money. But if you do this 12 times, it's different if you do it once because there's a big ticket of them you want or need, like furniture for your house or whatever when you move in. You plan for that a little.

But if you do this with a bunch of different things, it's going to screw with your finances in the future. You're spending your future money now. Five years from now, a firm is the biggest lender in the United States. They can't pay their debts. Ben says no big deal. Fed comes to bail them out. One of the stories I read, the reason that, so Walmart tried to have their own credit card arm and they realized that the bank they were working with wasn't approving enough people. And so a firm came in and said, hey, we'll approve all these people. We don't care.

And that's my worry is that this is going to be like a little crazy subprime thing where people are going to get their finances really screwed up because they just do installment payments for everything and not realize they're spending their future budget right now. They're locking themselves was into it. All right. I got wrecked by the listeners last week for saying that I don't use Apple pay. I'm rightfully so. It wasn't that you don't use Apple Pay. It was that you were asking for Apple Pay when Apple Pay exists. Like, I mean, boom roasted. No, no, I was talking about my driver's license to it was more than the credit cards. Last week, yeah, I lost that one. Apple announced that it is working with several states across the country which roll out the ability for residents to seamlessly

and securely add their driver's license or state ID to their wallet on their iPhone or Apple Watch. Georgia, Connecticut, Iowa, Kentucky, Maryland, Oklahoma, and Utah. Great idea. But here's the problem. How are young kids supposed to use a fake ID on their Apple wallet? It's going to be harder to buy booze. Have you heard of Web 3? True. You don't need to buy booze anymore. You just drink it on the web. No, no, no. Use the Metaverse to create a fake ID. Hello. Oh, okay. Earth to Ben. This is the problem, though. If everything is going to be an NFT in the future, How are people supposed to buy beer before they turn 21? Because everything is getting into the blockchain verified.

NFTs are going to ruin high school parties. You still a big fan of this now? You don't condone underage drinking? I do not. Okay. Yeah, I'm kidding. We spoke about how the child care system is broken. And we got an email.

I run a nonprofit preschool in California. Payroll, including benefits, is 68% of our gross revenue, including fundraising. You were right about the ratios requiring a lot of staff. Big picture, we lose money on the infant program, break even on the toddlers, and the preschool pays for the whole thing. There is no fix that capitalism can provide. It's not a sustainable, profitable, business period. And perhaps it shouldn't be.

I agree 100% that government should extend care into younger ages. And I also think companies have a role to play here with longer leaving subsidies for child care. I think this is kind of dry. I really do. This is not sustainable. And to the mean old man who sends us an email every time we talk about daycare, You're blocked. You're blocked. How about that? You're wrong. You can keep on emailing us. You're blocked. We're not going to see it anymore. We got another email. Talked about filling out paperwork. I complained about going to the doctor last week. We can fill out paperwork. And speaking of, you ever a little thing called bedside manners. This doctor told me that he was surprised to learn that I was 36 when he saw my x-ray. He thought I was 20 years older. And that really upset me.

Wait, is this when you sneezed and blow your back. Yeah. I almost cried because I, I, I was like, it hit me that like my own mortality type of thing. I have two young kids. I can't be that messed up. What am I going to do? So the next day I told him, I was just FYI, like, is it really that bad? Because I told him, I was upset. He goes, well, I probably exaggerated it.

Let me show you the x-ray. And I said, why would you exaggerate? This is not like a story you're telling to your friends. You don't exaggerate somebody's health problems. What's wrong with you? Anyway, my back feels better, but that pissed me off. It's like Robert Kiyosaki is your doctor. He's using scare tactics.

He's predicting a crash in my back. Great. Filling out paperwork, this company just came public via SPAC. It's called ShareCare. Not a recommendation, of course, but it's trying to build a platform app that connects to various parts of the health medical world that are currently fragmented. They want to be the one-stop shop for health providers, employers, and consumers. Good.

Please. This is an idea that people have been kicking around for years and years now, though, and it hasn't happened because all these places don't communicate with one another. Well, share care. The time is now. It's enough. And I also learned my handwriting was always terrible. I cannot literally write anymore.

When I write a check, I feel like my hand's going to fall off. What's the point of writing? It's embarrassing. Can you believe that we had to learn cursive when we were younger? What a joke. What a waste of time that was, right? We should have learned coding or budgeting or something. All right.

Award shows. I know this has been trending down for a long time. Who was talking about? Maybe it was Linton. I can't remember. But the Academy Awards just crashed. Nobody gives a shit about the Emmys. the Grammys, the Golden Globes.

It's, I mean, nobody watched the Olympics. We are so done with everything. I think it's not that people are done with it. It's that we didn't have enough choice before. We have way more choice now. You can watch YouTube, listen to podcasts. You can watch streaming shows. There's a million cable channels.

I think part of it is just there's more choice now. And back in the day, there wasn't as much choice. Yeah, but I don't know. There's been choice for a while. I feel like it really, it's been trending down with the opening of choices, with the more options. It's been trending lower. Yeah, it was already moving lower.

It crashed. And I don't think that's because we have more streaming today. I just think something could happen. I don't know. Maybe COVID. Okay. Here's something else that we don't have anymore. Took our kids to the homecoming football game on Friday night because they had a parade

in each of the classes, the freshman, sophomores, juniors, seniors, each had a float. And then they threw candy out to the kids and all the sports teams walked to the parade before the homecoming game. And here's what I'm thinking. The floats were 1960s, 70s, 80s, 90s. Each of those are a pretty distinct era in terms of music or fashion. We don't have that in the 2000s. You couldn't have a 2000s party or a 2010s party because there is no distinct fashion

or style that really sticks out. I don't know. Clothes were a little baggier in the 2000s and now they're slimmer. But in college, we would have a 1980s party and everyone would dress up and it was, you knew it was an 80s party. You couldn't in 20 years have a 2000s party or 2010's party. It wouldn't work. And you could do a 90s party.

It would be grung. Did you say that already? Yeah, well, I'm saying, yeah, 90s. All those decades pre-200s. What are people for the 2000s? That's what I'm saying. This whole century, we don't have a distinct, I think people just dress better now than they did in the past.

There's no distinct crazy out there styles. I mean, obviously some individuals, but there's no overarching theme. So I don't think they're going to be able to do this anymore. There are going to be no 2000s or 2010s floats in the future. Caprize, white tank tops. Oh, this is all for women. Bedazel jeans, skinny scarves.

Oh, yeah, but that's not in 2000. I think you're right. It's a good call. There's much. Okay. Oh, trucker hats. Remember that? Okay.

That was dumb. You definitely never wore a trucker hat. Yeah, not really. The Von Dutch, no. Hold on. I definitely didn't wear a truck hat, but you just said not really. So it sounds like you did wear one. You bought one you never wore it.

I definitely was not a Von Dutch guy, for sure. No way. Oh, I got another one. Speaking of hats, fedoras. That's not a bad one. That's true. Did you wear fedores? No.

Seriously? No. I was way out of fedores. I got one more. A lot of head gear. You can see I'm a hat guy. I never wore any of these, by the way. I'm 0 for three.

No fedores, no trucker hats, no visors. Remember visors, the John Gruden thing? That's for football coaches, though. That's not. You wear a visor. Definitely big visor guy. No way. Remember people used to wear visors upside down now?

No way. I would never wear a visor. You couldn't wear a visor because you could a nasty sunburn. Right? You'd have a weird. All right. No listener questions because we're doing a full show on Monday for that. One more 2000 thing.

Remember the Lance Armstrong bracelets? Ah, that's not bad. Yeah. Okay. I do remember those. I'm all out. Okay. Recommendations. Take it. I watched. I never heard of this movie. We spoke about it. I watched this on Amazon Prime. 30 minutes or less. It's with Jesse Eisenberg, Aziz Ansari, Danny McBride, and Nick Swartson. I saw the cast. I'm like, how did I miss this? Never even heard of it. 2011. Was it a good movie? No. Was it funny and dumb? Very. Very funny. entertaining, right? And filmed in one Grand Rapids, Michigan. Very dumb. Grand Rapids, Michigan. Not bad. And it's like 90 minutes. So I think it's worth watching. It was funny. Dumb but funny. What else? I am slowly making my way through the best biography I've read in a while. I can't remember the last time. I read a biography. The contrarian. It's about Peter Thiel. And I think he might be, and this is not a contrarian take, pun intended. I think he might be like the most important person. in Silicon Valley slash most influential over the last 30 years. More than more Condrescent? I think so.

Okay. That's a take. I think so. I think more influential. You could see his fingerprints on everything. So yeah, I think so. Worth reading. It's very, very, very good.

History, personality. It's excellent. Very good. All right. Lastly, so I was away this weekend with my friends. We were upstate, did some breweries, hung out of the house. I haven't been with my friends in that style in five years or more. It's been a long, I can't remember the last time. And we turned on Netflix, the house on Netflix. And the number one trending thing on Netflix is something called Squid Game. Are you aware of this phenomenon? I watched the preview and I'm like, I'm out. I'm out. Okay. Too weird. It is incredibly weird. It's huge, right? It's number one. So I think so. It is the Hunger Games in Korea. And it's incredibly.

odd and dark and kind of funny and violent. And it is just like a marvel, like a massive accomplishment, the way that they made this thing. It sounds like it's right up your alley, honestly. Oh, it's perfect for me. I'm not recommending this at all to the general public. But I feel like if you happen this, if you were going to watch a squid game, you already watched it prior to me talking about it. So if you followed Michael in a crawl. Yeah, it's number one. It's number one on Netflix. Anyway, I'm seven episodes in. All right. I mentioned, I'm kind of in a lull for TV right now. I feel like before, like Succession and some of the other shows come back. I don't like what's happening, by the way. I don't like what's happening. We're about to be in the eye of the storm. We're going from zero to 100.

Yeah, it's been nothing. So Succession, Ozark, curb. I think Yellowstone is coming back. Yeah, all this stuff. We've been trying other stuff out. I mentioned that we've tried nine perfect strangers. Might have been the worst finale I've ever seen. This show totally went off the rails. Worst. Oh, just a terrible finale. I can't believe it was Nicole Kidman and Melissa McCarthy and all these good actors and actress. and the finale was just terrible awful show so you would recommend it sounds like we started foundation on apple tv that's this big sci-fi one looks like dune it kind of reminds me of game of thrones in that i feel like i'm never going to completely know what's going on with the story because there's so many characters and i'm not going to ever know any character's names but i'm still kind of entertained so that's where i am and did you start watching scenes from marriage yet

i don't really want to watch it i'll be honest i just just don't want to watch it okay i'm three episodes in It's Oscar Isaac and Jessica Chastain. Here's what I'll say. I love them both. They're both amazing actors. The entire show for three episodes so far has taken place in their house, and it's all dialogue. Nothing happens besides conflicts and argument and making up. And it's the acting is amazing.

I really want to keep watching to see what happens, but I also don't know if I actually like it. It's kind of a hard watch at times, and Jessica Chastain may be the most unlikable TV character of the past 10 years. And she's good at it. It's very bizarre. I don't know. It's hard to explain. I'm going to have to keep watching it, even though I can't tell if I like it or not.

That's where I am. You should watch American Rust. Tell me how it is. What's American Rust? The Jeff Daniels one. Oh, okay. I'll put it on my list. New one on Showtime.

All right. All right. We've got Tony Stick on Monday coming back to redeem himself. Got absolutely lit up for his 529 college take. We're going to give him a chance at redemption. People have very strong takes on 529 plans, which I did not know. Animal SpiritsPod at gmail.com and we'll see you then.