Animal Spirits Podcast - Shielded Alpha (EP.92)

Episode Date: July 17, 2019

On this week's show we discuss the upside to social media, zombie VC companies, podcasting at Wealth/Stack, bubbles and career risk, using credit card reward points, where couples meet these days, the contradictory nature of having skin in the game, influencing and side hustling is hard, why specializing in sports could lead to more injuries 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

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

Welcome to Animal Spirits with Michael and Ben. Some tragic news this week. The world lost a real one, non-related sense, passed away. I didn't know him, never met him personally, but he was definitely one of the key figures in my stream for, I don't know, I guess, as long as I can remember. Yeah, he was a member of Finance Twitter. I think he was around our age, actually. And it's kind of weird because it makes you realize, like, it's easy to complain about

stuff on social media. But then you realize that there are these people that you interact with, almost on a daily basis, if you're really on this stuff like we are. And you feel like you kind of get to know these people. It's kind of a bizarre world. And like there's a really good aspect of it too where you can kind of feel like you get to know people through their postings in a good way sometimes. Yeah. So with him, there was certainly good and bad like everybody else. There were many, many times where he would favorite my tweet and I would sort of just shudder, like waiting to be knocked over the head.

And I will give him a ton of credit because he was as hard as anybody on various ideas. He just seemed to think, he seemed to find a lot of problems with a lot of different views. But to his credit, it's very easy to be anonymous and to just throw shade and throw Matov cocktails. With him, though, it never felt like it was personal. And I saw him go back and forth with a lot of people. And you and I have shared his tweets privately for years now. But he never, ever, like, called anybody a name.

It was always about the idea. Right. And data and, yeah, that's actually one of the best parts about finance Twitter realm. I think there are certain things that are problems with it, but there are, there's a lot of good there too and a lot of good back and forth, I think. So he poked a lot of holes and just absolutely tragic feel for his friends and family and the world is definitely a worst place without him. So his dear friends, George Perks and Scani Trader have set up a go-fummy page where you can donate to a local charity. related to covering the cost of kids sports in his memory, we'll link to that in the show notes.

Non-related sense, you will definitely, definitely be missed. All right, don't know how to transition away from that, but just going to get into the next topic. So, Ben, you and I have spoken a lot about these scooters, and somebody sent us something this week, thank you to whoever did, about Bird, which I think was the first scooter company, if I'm not mistaken. So in the first quarter, they lost $100 million,

dollars while revenue shrank to about 15 million. And they raised $700 million over the last year and a half. And they are down to their last $100 million, which sounds hilarious. But when you're burning cash like that, whether this is an ongoing concern is a legitimate question. So Barry on his master's in business last week had Scott Cooper on from Andreessen and Horowitz. And I guess he was like employee number one besides Mark Andreessen and Ben Horowitz. And it kind of gave me a sense of the sheer, like, size of venture these days. Like, we've talked about the Vision Fund quite a bit here. That's like the $100 billion one or whatever. But even in Dresden Horowitz, he was saying, they were started in 2009.

They said, well, we're a seven, Barry said, well, you're a $7 billion fund. And he's like, well, actually, we got to update that because we just raised a $3 billion fund. So now we're more like $10 billion. So there's just so much money sloshing around in these that a lot of these companies can probably make it a lot further than they would have in the past because isn't there a lot of good money going after bad in a lot of these cases, do you think, to give them more of a runway? Yeah, I mean, maybe. Yes, I don't know if this is bad money because I guess we'll find out, but the numbers today, I guess that's what happens in a bull market, are pretty astonishing. Did you hear the Bill Simmons podcast the other day, his nephew, Kyle,

who's his producer? He said he spent the night in the hospital because he got an accident on one of those stupid-looking bikes that you rode on in LA because the thing fell apart. Somebody tweeted the other day. Remember at the end of the social network, it said the company is now, it was like 500 million users and $25 billion market cap, which sounded huge, but now it sounds quaint. Yes. Very rewatchable movie, actually, by the way. Yeah, I haven't rewatched it in a long time. I rewatched. It sucks me in every time I see it on. So I listened to Bill Simmons had a podcast where he was doing a reaction to Ross Westbrook and Chris Paul trade, and then he had on Kamal Nanjani.

Yeah, I listened to that. So I finally watched The Big Sick this weekend. What did you think? I thought it was good, very good. I liked it. I think it got like a ridiculous rating on Rotten Tomatoes, but it was absolutely good. I thought Ray Bermanagh was great. So that movie cost $5 million to make, and I think it did $56 million in the box office,

which is amazing for an independent film. But I just saw that Spider-Man far from home, I guess it's been out for like three or four weeks now, did $45 million this weekend. And I mean, the world definitely needed another Spider-Man because we don't have enough of those. But it is a shame that these sort of movies just aren't made anymore. I know, I guess we sound like a broken record at this point talking about this, but all right, stick with the podcasts.

We have an announcement. We have a fantastic producer for this podcast. His name is Matthew Passy. And he was referred to us by Patrick O'Shaughnessy. He does Meb's podcast and Ted's and Coors. And pretty sure, I mean, that covers the finance podcast in our crew. But so in our- Couldn't do without him.

We actually talked about doing some of this editing and stuff when we were kicking around the date of a podcast. And if we would have done it ourselves, we never would have got it off the ground. Well, we did give it an effort. We could not do without him. So anyway, continue. So Matthew is going to be at Wealthstack, which is our conference in Arizona in Scottsdale, September 8th to the 10th.

And he is going to be manning a podcast booth. So what we're going to do is we're going to have time slots where people can go in, just bring an SD card, pop it into the recorder. You'll have 30 minutes to record. If you are thinking about getting into podcasting, you could, Matthew will be there. You could talk to him. He got us all set up and started, answered all of our questions. So we're really looking forward to that. One more plug.

We are going to be doing another rekindled. We're going to be reading Super Forecasting, which was by Philip Tetlock. And he had a co-author. I apologize. I don't remember who wrote he wrote it with. That's going to be probably two weeks from now. Yes. That means we have homework. So stocks are at all time highs, Ben. I don't know if you noticed U.S. stocks, I guess, specifically. And U.S. investors put the largest net amount of assets for mutual funds and ETFs that hold domestic stocks in more than five years. So biggest weekly outflows

since 2014. I feel like you're just reusing this stat every other week with me. It seems like it's been a lot. I know. It just seems like this stat is. constantly the flows are always the largest ever of something. Well, because the dollars are getting bigger. So are you saying people don't trust the rally, the all-time highs? I'm saying they're fighting the Fed. Okay. All right, but what about you're not supposed to fight the wall of worry, but you are supposed

to fight the Fed? Well, maybe we're in a bubble. So it says research affiliates. Okay, so I thought that these two. Microbubbles. So research affiliates put out a piece called bubble bubble, toil, and trouble. And I thought this kind of went in nicely. with the James Montier podcast with Jeff Attack and Christine Benz from Morningstar, because I think

research affiliates and GMO kind of in a roundabout way have sort of a similar posture on the world. They look at things through like a value lens. And both pieces made really good points. But wouldn't you say that these two firms have been two of the wronger firms of the last, call it seven years? Yes. At what point do people find it hard to trust their opinion, even if they end up being right when you've been wrong this long. And Montier, to his credit, was telling them in the podcast that, yeah, I've been wrong. And, you know, obviously we were positioned wrong and got some things in the wrong direction, but I still think we're going to be proven right in the long term. I really, really, really enjoyed listening to Montiay. I thought that was a great conversation.

I really enjoyed hearing him reflect on how wrong they've been. Research affiliates, on the other hand, I feel like this was a waste of 15 minutes that I want back. They basically rewrote what they wrote last year in 2018. I forget what that piece was called. Oh, it's a bubble. So what? It was kind of a pat on the back type of a post. So we've spoken about this that I am of the opinion that the technology bubble is the root of all smart beta strategies. And anytime this comes up, you lean to what happened in 1999. So they were talking about how in 2018 in the fourth quarter, the fan mag, which is the fan stocks plus Microsoft, lost an average of 21 percent. And such rebounds are not on, and they gained it all back pretty much.

Such rebounds are not uncommon occurrence as a bubble unwinds. And I don't know, here's one more quote. As bubble technology stocks have come to dominate the world's list of largest companies, cap-weighted indices are making de facto bets that these growth-oriented companies can increase their valuations to the face of a slowing economy. Investors can reduce their exposure in this space by turn to smart beta strategies. So, like, obviously they're talking their book, and obviously we all talk our book, I just, can we really call like Amazon and Apple and Netflix? Are these really bubbles?

They said that they think Amazon and Apple aren't, but they, but they think that Tesla, Netflix, Tencent, and Twitter are. Which is kind of funny because Twitter, I think it's, isn't it still under its IPO price, basically? So, I don't know. I thought the reason, I didn't really care for the researcher affiliates piece, also because they talked about like, if you invest it at the very top of one of the biggest bubbles of all time, those stocks are now mostly underwater, except for my, Microsoft. Of course they are. Right. But does that mean that index funds are like garbage because I don't know. I agree. So my point to the Monnier stuff was he said that they have done some reflection and they decided they still have their mean reversion that they, because they calculated, I think the real seven year forecast they get for US stocks is like negative 4% a year, which sure could happen. But that's pretty low. And they said instead of changing some of their inputs on

their models, they've decided to just, what happens if mean reversion happens slower than it has in the past? And that's the change they made. But my point is, isn't it time for some of these places to think about maybe changing what those means are? Like, the averages they're using, like, isn't that the problem in some of this? Not the time it takes to get back to those averages. Yeah. Well, Montailles spoke a lot about this, and they basically said they can't come up with any reason why this time is different. Of course they can. They'd have to completely admit everything they've done to this point is hogwash. Like, that's career risk. which they've talked about in the other direction.

But for them, that's career risk to say our models that we've been using since the 1970s are, they don't work anymore. Let's try something else. Yeah, I think it's pretty easy to come up with a list of reasons why this time is different. Now, I'm not saying they should change what they're doing, but to say that they can't come up with anything, I don't know, how hard you have to try to do that. But to their credit, and we have spoken about this in the past, if you look at their holdings of what they're doing, they're walking the walk. Yeah, that was one of the more impressive parts about it. He said they own in their tactical asset allocation portfolio. They own no U.S. stocks and their biggest weighting is in emerging markets. Yeah. And don't you think that all of their investors, present and past and future investors, know exactly what they're getting. And probably it's a piece of their portfolio. So if you have 10% of your money with their investors don't know what they're getting into because every time this happens, they lose like half of their assets. So obviously the investors going into it don't get what they're trying to do.

Okay, fine. At this point, no more excuses. I think it's pretty freaking clear what their stance on the world is. And if you went into the strategy a year ago and you're out today, shame on you. Yes. Because it looks like they're doing exactly what they say they do. Let's stick with this for a second. So did you read Chris Meredith's piece from O'Shaughnessy Ascent Management?

Yes. On value. So I really – oh, so this is an interesting stat. They said, while the rise of technology stocks is a significant component of the reason I growth to outperform value over this turning point, about three quarters of the underperformance comes from financials. That makes sense. So this chart, number of firms, again, we'll look to this on the show notes, number of firms

participating in the auto industry in the U.S. So this chart goes back to 1894 to 1960. And I guess this is what you would see in all emergent industries, right? Yes, a huge influx of companies. at the beginning and then it tails off and there's attrition and companies go out of business and there's acquisitions and that stuff. So another chart that they had was the largest 10 names in the S&P 500 in January 2007 versus today. Today you know exactly what it's like. It's the fan mag plus a few giant industrials back then. When did this fan mag thing take over?

I don't know. That's a new one to me. I think I've heard it. It doesn't roll off the tongue very good. It doesn't. Exxon Mobil, General Electric, Microsoft City Group, Bank of America, Procter, Gamble, Walmart, J&J, Pfizer, AIG. Is it inconceivable that in five years the name will resemble more of this than it does today? I think that's possible. That it's kind of similar? Like, is it really that hard to imagine that these tech companies, which I don't think, I don't think it's a technology bubble, but is it that hard to imagine that these companies

collectively are down 35% of the industrial companies and the financials and consumer staples sort of hold their value better? I don't think that's that hard a scenario to imagine. No, that's possible. But does that really mean that these companies are going to all drift out of the top 10 immediately? Probably not. I guess I just don't like the premise that indexes de facto overweight expensive stocks. Right. Well, Amazon's a value stock now. Didn't you know? Well, that's true. But I mean, Facebook was 50 billion was what, like 80 billion when it entered the index and everybody was talking about a bubble back then. And it quintupled. Yes. That's a problem. When markets get really expensive, guys.

Guess what? When they go down, index fund's going to go down too. That's the point. Like, yeah, duh. Everyone knows that. And there was an article in Barron's maybe two years ago saying how index funds are overweight these stocks. First of all, that's not possible. The reason why they are quote unquote overweight is because the active managers are overweight. Well, and then you kind of gave the point that active managers actually hold these stocks in a higher concentration than even the index funds. Right. So that's what I'm saying. They're setting the prices. Index funds are not, cannot be overweight, that is the weight. Yes. So are we saying that index funds are properly rated? That's their natural weight. Did you read this article from movement capital

how to squeeze value out of credit card points? No, but this sounds like something I would read. So it's a pretty good and heavy lift of what goes on and how to use your points, but I'm never going to be the person that efficiently allocates their credit card points. And so at the end, there was a bunch of different companies that help you sort of sort through this thing. But shouldn't there be an automated service where you could just enter your points and it's sort of, and you're saying like, I want to go away. I don't really care where I go. I want to go to the Caribbean. And it spits back the most effective way to get there. Yeah. That would make sense. Uber for credit card points. I mean, the credit card companies would never back that because they

probably don't want you to use your points very efficiently. They want them to just toil and not get used. And, but yeah, that makes sense for people. But how big is the market for people who actually have enough credit card points to actually do something with them? I'd say fairly large. Okay. I stand corrected. Listen. Strong to quite strong.

It might be a micro bubble, but I think it's like, it's, I don't know. Yeah, I mean, I honestly mostly use these for cash or travel. I guess I've never really, or cash or just like the sign-up points. I really don't use them very much for buying. stuff through the actual credit card companies, but yeah. But the thing is a lot of these cards are specialized where you have to kind of use them for one thing and not another. So you use them where you can maximize your points based on what credit cards you're using. Correct, sir. Okay. So friend of the show, Ryan Kruber wrote a piece on Goldman, and I had a little back and forth

of them on this. This is pretty interesting. Did you know that Marcus, the company, is actually named after Marcus Goldman? I had no idea. I did know that. Okay. I did not. know that the, I knew that there was a Goldman in a Sacks. They did not know it was Markets. So Marcus is the new financial services company from Goldman, which you're starting to see some stories about it now, but I feel like there wasn't really a rollout for anything for this. It just sort of happened. What are you from Marcus? Yeah. I think it just kind of sort of started slowly building up. And so Ryan put some numbers behind this. He said that Salt Lake City after New York and London is now Goldman Sachs's largest office, which is where the

Marcus office is, which is kind of crazy. They've been generating $1 billion a month in deposits for their online savings account. They've done $5 billion in personal loans. They have almost $50 billion in the savings account. And they said they're going to add potentially credit cards, mortgages, auto loans, insurance. And so it's only been around for like two and a half years. And they already have four million new customers. We were earlier adopters.

I think we were. We had our ear to the ground on this one. That's because we're rate chasers. But it says firm-wide, more than two-thirds of employees at Goldman are now under the age of 35. And so we talked a little bit. in recent weeks about things that are going to go away. And one of them was, we said, like traditional brick-and-mortar banks. And it kind of feels like Goldman is positioning for a world where that happens,

and they can be the one to pounce and take advantage. And I think it makes a ton of sense to try to get ahead and be like the young persons. You'd never have pictured 10 years ago that Goldman would be the one to do this, right? Well, 10 years ago, it was like all vampire squid stuff. Yeah, that's what I mean. The fact that they're doing this and going through this transformation, I think, actually says a lot about what the firm is doing. And I think it's really smart positioning to sort of get a new clientele. And then they just bought that RIA from Joe Durant. And I think

it's, I think it makes a lot of sense. And like I said, we both use Marcus, even though we're getting 10 basis points less on our savings account now. I think we can save to say we'll stick with it for a while. So it's, it makes sense. Yeah, I'm curious to see what banks are going to look like 10 years from now. And we'll see what kind of bonus points they give for the credit card, so we can both be very efficient on that. All right, so there was an article in the Walshry Journal. Congress is coming for your IRA, and this one definitely struck a chord. There was almost 1,200 comments last time I checked.

Do you always check the comment? You like to wait into the comments, don't you? Once in a while, I do. I feel like you always point out the comments to me, and I never even, like, think about going to them. All right, so did you read this? Can you imagine being the moderator for that? Like, they have to have moderators, right?

You don't think so? You think it's an algorithm? They just let people go crazy. If you moderated the, the, comment section, you would lose your mind. This is like that story about Facebook moderators, like having PTSD. Yes. Let's say that you just read the story and you see there's already 1,100 comments. Do you think you're going in there and going, all right, now it's my time to shine? Can you really add anything to the conversation at that point? Anyway, so why are people so angry about this?

So there's something, the Secure Act, which I think it looks like it's going to go through, gives non-spouse beneficiaries 10 years to pull out all the money in an IRA. And right now they can make that last a lot longer. So the point is that the government is trying to get their tax money earlier from IRAs. Is that the deal? That is exactly the deal. And some of the pushback in this article, I don't really have a strong view on this because I guess I just, I didn't really take that much time to digest it.

but, quote, the Secure Act would be a college planning nightmare for middle income parents. If the parents of college age children inherit a $500,000 IRA, the resulting highly tax mandatory distributions, say $50,000 year for 10 years, would make them richer on paper, not on paper in real life, than they actually are eviscerating their ability to qualify for a need-based financial aid. So, I mean, I guess that's maybe true. this was written obviously by somebody who is very anti- Anti-tax isn't inherent $500,000 that mean you're wealthier though well exactly so I'm not like I don't want to pay more taxes I don't think anybody does but I don't know I'm sure that there's uh two cents what this is like do you think that something like the roth IRA in years ahead is going to get more scrutiny your people I mean this totally makes sense that they're

going to want to the government is going to want to get their money faster from retirees that yes Totally. This stuff will probably keep happening. Right? I think so. Shielded alpha. That's a new one. What does that mean? So there was an article in Barron's and the Wall Street Journal about active ETFs. And this one's from Barron's. If regular ETFs are transparent and Presidians opaque, blue tractors shielded alpha structure would best be described as translucent. So this ETF would disclose its holdings daily to investors, but it would not disclose their ratings. Okay. I guess that's that's kind of a decent compromise. Well, that's what I thought at first, blush, but seeing a list of holdings doesn't do anything because what if this was like a

Sequoia thing where they had 30% of their portfolio and valiant. True. I guess you'd want to know. Maybe that's an extreme example, but I don't get why these fund managers think they're so special though, that they need to have like a black box. Right. So there's other ETFs are going to disclose their holdings quarterly. Like nobody's front. want of your ETF. Nobody cares. Exactly. That's the point. Unless you're a huge scale, it doesn't really matter. Why should? Nobody's front running a $100 million fund. Your idea, your idea to buy Apple is that special? Guess what? Most of the hedge funds own the fan mag stocks that you mentioned earlier, right? It's no big surprise. I get why some hedge funds would not want

people to know which stocks they're shorting because those could potentially move around or if you're trading microcap stocks or something, but if you're holding an ETF that has liquid stocks in it, I don't think you should be afraid to tell your investors which sort of stocks that you own. That doesn't make any sense to me. Yeah. So, do you, did you play tennis growing up? No, not much. Yeah, I was more of a ping pong guy myself. I got into racquetball in college a little bit. Did you? I think I took a racquetball class. No, we, well, you're supposed to wear goggles because the ball could get suction to your face if if not, but...

Wait, what? I live life on the edge. That's what they said. Maybe they were trying to scare us. The ball can get sucked into your face. Into like your eye socket. If it got in your eye, it could... I don't know.

That's what they told us in my racquetball class. That sounds like a racket. Yes. Hey-oh. Okay. Do you think that if you were playing your very best tennis, you can win a point off Serena Williams? No, not a chance in hell.

Right? Seriously? Why? How insane do you have to be to say yes? So this is a survey? Well, one in eight men said that they think they could. Of course they did. This is kind of like the Billie Jean King thing from the 1970s, right?

I don't know what that is. They made a movie of this where some guy said she was like the greatest tennis player of all time to that point. And a guy, I can't remember what the guy's name was. They made a movie out of with Steve Corell. And I can't remember who the girl from La La Land. Her name is escaping me. And she destroyed the guy. He said men are better than women at tennis.

and so he challenged her to a match and she destroyed him. Same thing. Yeah, good luck with that. I don't know where this chart came from, but your couple met, basically showing how couples met and what's going on is not surprising.

People meeting online is... You know where this graph came from? I don't. Your boy Derek Thompson tweeted it. Did he? Well, I saw a lot of people tweeting it. Did he actually personally do the survey? I imagine this is a survey.

It's from a standpoint. for its study. Wait a minute. Hold on. Where does this data come from? How do they know how people are meeting in the 1950s and 1940s? Guessing it's based on surveys. They did surveys in the 40s? You know, how else, back then they had no technology. They had to do surveys to understand what people are doing. It is kind of funny, though, how, so this just shows this massive growth in people meeting online. Do you remember when online dating first started and people would be a little suspect about, you know, hey, so how did you meet? And they would go, oh, um, My mom signed me up for it, or my sister did.

I had no idea. And I went, like, that's how people talk about it. And now it's just like, oh, whatever. It's, you met online. Of course, people do it all the time. What do you think this family category is? Are these people marry intra-family? I'm guessing it's people that are introduced through their family.

Like, my mother knows someone who's perfect for you. Yes. Okay. Met in a bar restaurant. Yeah, I don't. I don't know. I don't know how I would do with the whole online dating. I guess it makes your life more easy and efficient.

You're just swiping. Sure. Totally missed me, though. Okay. Ryan Curlin of Alpha Architect had two surveys of the good kind, though, the good kind on Twitter. The first one was asset managers manage their funds better when they have their own money invested in the fund. Quote, they have skin in the game. And I voted false.

I don't think. I honestly don't think that matters. I think that if I was investing my money with an active manager, it would really make me feel better if they did invest in their own funds. I've seen this work both ways. But I don't think that it would necessarily, hold on, am I making sense? Because I think it would give me more confidence to invest with them. But I don't necessarily think that somebody who doesn't invest in their funds doesn't believe. or does a worse job? See, I've seen it work both ways.

One where you have, especially with like hedge funds that I dealt with in the past, where they'd have their whole net worth in the fund and you think, oh, they're putting everything they have into this and that's a great thing. The other side was- Yeah, that's too much. So after the financial crisis, there was one fund where the guy went completely defensive and hedged against the end of the world after the crisis was already sort of starting to go away. And he said, you know, I have my entire net worth in this.

I'm not going to screw it up. And so I think it can work both ways. Sometimes you try so hard that maybe you do good. And sometimes I think you worry so much that you do bad. So I can see both sides of this coin. I guess it depends on the strategy as well. But I personally would like to see, yes, the manager have a decent chunk of their own change invested in the strategy. I think that makes sense. If there was a strategy that you really liked thought made a lot of sense and the manager didn't invest, would you say, would you pass? I think that's a red flag. I think that's a red flag. that you have to look into more. Okay. Now, he also did another survey. There better be a good reason why they didn't have money in their own fund, I think. Okay. He did another survey later on.

Advisors, now, small sample size. There was only 78 votes in the first one, 54 in the second one. Advisors manage individual money better than they could themselves since they don't have the same emotional attachment, i.e., it's not their money. And this time, only 56% of people said yes. So this is like a sort of an actually, but I guess if you said true to the first one and true to the second one, there are some intellectual inconsistencies going on. If you voted true to both of them. Okay. I can see that.

It's, I do think there is something to be said for the idea that. A lot of people don't want to hear from their advisor or portfolio manager that I'm smarter than you or I have more emotional control than you, therefore give me your money. That's a terrible pitch. Yes, even if it's true in a minor way, people do not want to hear that. So there has to be more of a reason than I'm going to be your behavioral coach if you're going to hand over your life savings to me or whatever it is. There has to be more than that than just saying, I have a steadier hand than you do.

You have to actually show some sort of chops and, like, understanding that you have some expertise in the area. And I think, honestly, one of the biggest reasons, and I think a lot of people in the development world miss this, is that a lot of people just don't pay attention to this stuff as much as we do. We're in this world and we're constantly reading about it and paying attention and studying it. Some people just don't have the time.

They have other stuff going on in their lives. And so for a lot of people, it's just outsourcing expertise and time and understanding and having that peace of mind that someone else is doing this and paying attention to it all the time. so I don't have to. It's reducing that decision fatigue, I guess. So we've been speaking a lot lately about banks with like upping their offers and opening their offers. So I just got an email while you were talking, Ben, like a chase offer for a Maserati. See, people always ask us, how do you guys have so much time to like get stuff done and read? And the way that you have so much time to get stuff done is that you don't pay attention

when I'm talking. You just read your emails. I have an extra 30 minutes my day. Yeah. So I mean, that's life hack during your podcast, read emails. Maserati Capital is a program under which Chase whatever. Sorry. Sorry, Ben. You were saying. I think you were done. Yeah, I think you're done. So someone sent us this. This is pretty funny. This is from Axios. They did another survey and they said legal marijuana is boosting snack sales. This is kind of funny. Within the U.S., Nielsen data shows that sales of both salty and sweet snacks have increased over the past 52 weeks with salty snacks reaching sales of almost $30 billion in sweet snacks, hitting sales at almost $7 billion. And they show the difference between when pot was recreationally legal and not legal,

and it's up like 1% in both over the last year. So the munchies are having a field day with snack sales. I thought this is kind of funny. This is good use of a survey, right? It's totally pointless, but kind of makes you smile. Interesting. So what's increased more? Looks like Candy has seen a higher boost.

Okay. So, yeah, maybe it depends on like the strains you're using. I don't know. But this is, yes, kind of funny. Phil Bach had a, did a podcast with somebody from S&P. I forget who it was. But they were talking about like active trading or trading and what says prices. And this guy said 90% of trading is still done by active traders.

So they would need index funds and ATFs to be 85% of assets to be half of trading volume. In other words, maybe index funds aren't assorting prices and they can get a whole lot bigger. That makes sense because now it's like, okay, so it's 10% now. So don't you think the volume would be so dried up at that point if 85% was index fund and to make up half of that trading? Or do you think that active traders would just make up for and trade even more? Like, would there be more high frequency trading in that scenario? I don't, I don't know. I don't know. But I can't see index funds getting that big.

Like, no way. I think it's going to, I think it never would be just be, I think it never get that big just for the sheer fact of all the corporate people like CEOs and stuff with stock options. I think that, them owning all those stock options and the people who found companies like Zuckerberg and Bezos. Well, forget about that, but what about percentage of fund assets? Yes.

Fund assets, I think it's going to be the majority, and I think not that long. Yeah, I agree. I just, I don't know about 75%, but maybe we'll say. So, Rabid Sadie tweeted, greatest thing about crossing 100,000 followers on Instagram is I get, quote, influencer partnership offers now. These deals are hilarious. Write three posts, two stories, tag us 16 times, and we'll send you three bottles of juice.

And I think this is so appropriate in terms of bubble in the performance. received bubble of how much influencers make. Right. It's really hard. And so I sent you this last week. And so Tim Ferriss probably has I don't know, it's probably got it in the top 20 or 30 biggest podcasts in the world or in the country at least. Yeah, easily. And so

I made the point to you that he started, he said on his podcast, he wants to do a new experiment where he does a fan-supported version and stop because he reads like five minutes worth of ads at the start of his podcast. And he said he wanted

to try to get rid of those ads because it was a pain in the ass to actually have people figure out for them which ones to do and how often to do it. So he tried to have this donated version, which just works on people giving it money. And he stopped it after like one podcast. And he said he was going to try it for six months, but he stopped it after like two weeks. And then he wrote a blog post about it, which you can read. But I think it just shows even if you are at a Tim Ferriss influencer status, it's really hard to monetize if you don't go through the typical channels that everyone else is going through. Well, because who's going to pay somebody they perceive to be doing so much better than them financially?

That's also true. So he pulled his audience and 72% said, no, I would not donate. These were 18,000 people who responded. 24% said they would give $5 a month and 4% said they would give $10 or more per month. So this gets back to like this new podcast service called Luminary, which is I think you pay a month that you're an annual subscription for it. And I just, I could be totally wrong on this. I don't think it's going to work.

Unless you get like a huge, huge podcasting name to go on there, people are used to the ads. And I think people are, that's just the way people have like been come up on podcasts. And so I think it's going to take a lot to get that to ever change. Yeah. So, but let's say that these numbers are right. Out of 18,000 people and he has a much, much, much, much bigger audience than that,

much bigger audience. 24% said they would give $5 a month. month. So that's 4,320 people. And that alone would generate $21,000 a month. Yeah, but this guy's probably making a couple million bucks a year on his ads. So he would have to have a huge influx of donations. And he's probably got a million listeners too. So that helps as well. This survey is just a small sampling of that. But it just shows that once people figure out a way to do something, it's hard to get that entrenched way of doing things to change. So I think people are, Guess what? They'll skip through the ads if they don't listen to them. And if, I mean, the people who really care just won't listen and fine, good for them too.

Anyway, I guess the big picture point is like for side hustle people, good luck. Yeah, it's hard. You have to be a celebrity to have a side hustle. Pretty much. Yeah. Something that if you're, if you're, if you're on your side hustle, will your main hustle, that's, that's, that's really hard to do. So did you read the story about on ESPN about specializing? I thought it was kind of interesting because so it's called these kids are ticking time bombs, the threat of youth basketball. It kind of tied in with the David Epstein book range, and it was basically saying specializing kids too young can be bad for their health. So they said by the time players get to the NBA or even college, a lot of times they're just already broken down because they've been playing year round to their entire lives almost. And they said that the number that was kind of crazy to me was they said those who are highly specialized in one sport at the exclusion of others and played it year round were at higher risk for serious overuse injuries such as bone and cartilage. injuries and ligament injuries. And the higher risk was about 125% of an increase, which is kind of crazy. And Epstein's point was you should be playing a lot of different sports and trying to have a wider range of specialties than just focusing in on any one thing. So this is kind of

interesting tie in with that. Yeah, I mean, it is interesting that Adam Silver spoke about this. Obviously, this is on his mind. I don't think there's any going back, though, even if the data is is there. Right. You can't just, yes, you can't be the person that says,

and the point they, they gave some comparisons where they said, Kobe didn't really play much in AAU coming up. He didn't really get into competitive basketball like big time until he was 15 or 16.

And they said a lot of times in the past, like the older NBA guys would take the entire off season off, like Larry Bird, even Jordan wouldn't play very much in the off season. And now these guys

are posting Instagram workout videos every single day. Don't you think like 95% of NBA players in five years? now or maybe even today are starting at a very young age? Definitely. Like it used to be like, oh, he didn't pick up a basketball until he was 15 years old. Right.

Yes. And now that's all they do and they're giving up on other sports. Like unless it's somebody coming from like Joe L. M. B'd, if they're growing up in the United States, they're playing at a young age and playing hard. Yes, all year round. All right. Listener questions. Or wait, do we do recommendations?

What do we do first? Listener questions. All right. Okay. What if bonds aren't beating inflation and stocks have had above average returns over the last 10 years? What do we do about a low expected return world? I feel like we've been getting this question for seven years now, but eventually it's going to be a question that matters. Okay. Well, I think I would agree with GMO and research affiliates in this regard. The rest of the world hasn't done very well at all in terms of their stock performance. So if you're worried about US stocks having lower returns because they've done so well lately, then I mean, the easy answer is to look elsewhere. And this sounds trite, and maybe it is, but you can always, not you could always. If you are able to, I would suggest saving more. Most people don't have that luxury. Saving more and maybe adjusting your expectations as well.

I really do hate that advice of Save More. Like, it sounds so fucking hollow because it is, because most people can't save more. Right. And guess what? If you're asking this question, you're probably not making half a million dollars a year. Hey, but guess what? Save more is good advice, whether we're not. returns are high or low, right? Like saving more money is always good advice. So that's not

just if returns are low. Like if you can save more money, that's a good thing no matter what. So yeah, save more money is, like you said, it's kind of hollow because it always works. But the other thing is you should probably adjust your expectations because returns just aren't always going to be high. Like there's always, everything is cyclical. And so this is just how things work. And especially with interest rates where they are, especially in a diversified portfolio, you're just going to have to adjust expectations from what they were in the past probably. All right, RE emergency funds. Is it a real thing?

Do advisors advocate having one? R.E? Like, I've always pronounced... This is in the subject line. REE? Okay. I don't know. All right.

Big debates on animals. A fork in the road. I'm benton. All right. How about this one? Niche or niche? I go both ways. I say niche.

I think it sounds cooler. I think I say niche, but I think you're right. Okay. Does a home answer? equity line of credit count if you have six months of all living costs available to you immediately. Basically, what are your feelings in an emergency about emergency funds? This is actually one way that I diverge from personal finance thought. I don't think you need to have six or 12 months if you're a responsible adult because I think a lot of what people

consider an emergency is really just stuff you can plan on. It's your house maintenance, car repairs, car maintenance. I think that's the kind of stuff that you should plan for having happened to periodically. What about a disability? I know there's insurance for that, but not everybody has disability insurance. Okay, well, that's like a, yeah, that's a really emergency. But I'm saying, if a really emergency happens, I think, in your finances, I think there are other ways than just having a ton of cash backstopping you. I think, like, a credit card can be used for an emergency.

And I think, like he said, a home equity line of credit. Like, there's other ways to tap into, so I'm not a big person. I'm not a big advocate actually of having 12 or 18 months saved in cash because I think for most people, that's, that's just never going to happen. They're never going to, they're never going to get to that goal in the first place. I agree that 18 months sounds very high, but I think that six is okay. And I think it's just personal preference. I think it just comes down to defining what you really think of financially emergency is. I think there's a lot of variable costs that happen periodically that people just need to put into their budget and plan for.

So you don't have to scramble every time something comes up. Okay. All right, recommendations. I'm not finished with it, but Spider-Man into the Spider-Verse, excellent. Way, way, way above even already high expectations because everybody liked it. It's basically like a comic book in a movie, but it's not just for children. Yeah, my daughter is a big Spider-Man fan, actually. We tried to watch it, and I thought it was, eh.

I just, I don't know, cartoons, I just can't. Okay, so here's a cartoon recommendation for you, because if you have kids, you have to have a high repetition or high tolerance for repetition, because my kids, like, watch a movie and then watch it for two weeks straight. And so Coco has been on Netflix. I actually like it. Don't know it. Okay.

It's actually kind of, it's one of the new Pixar ones probably out in the last two or three years. Good, decent music, unique story. All right. Anyway, trust me, ignore Ben, into the Spiderverse, quite good.

Okay. Anything else? Let's talk about that Aziz special. Okay. What did you think? Okay. I like Aziz, I like his TV shows.

Like, I like watching him on screen. I don't care for his stand. up. However, I thought this was better than I expected, but it did feel Super Mugatu's comment aside, which he said that Aziz basically ripped off a lot of local comedians, it felt very Chappelle-esquey. Like, I don't, I don't, people said that to me too. I don't buy that. He's always, this Aziz has always been kind of a smarter guy. He wrote a whole book on like modern romance. And so because he was doing social commentary, people said, like, oh, he's trying to be Dave Chappelle. I didn't get that. I agree with you. I think his TV stuff is way

better than his stand-up. I thought his stand-up has always just been okay. It's never like really laugh out loud funny I thought I actively dislike a stand-up I thought this one was much better It's kind of the stuff that you go Oh, that's interesting Oh, that's kind of funny You don't like you don't laugh hysterically

Like the first half I thought was better than the second half But I thought it was pretty good You know when people When you recommend like I feel like comedy is very personal And if somebody doesn't agree with your taste in comedy It could be sort of awkward For instance, probably about 10 years ago Maybe more

A friend of mine tried to show me a disease stand-up and I remember us laughing because it was so painfully not funny and my friend got so mad at us for not thinking it was funny I'm like dude I sorry I think this is terrible but it really did feel like he went full on Chappelle to me okay he was going for like intelligent comedy that kind of makes you think and laugh like his whole delivery it was very much

it felt like the Chappelle's specials and I can't speak to whether or not he was ripping off other material obviously we don't know that okay so I'm halfway we're halfway through the new season of Stranger Things, which I like. I thought the second season, I loved the first season. Second season, I thought, was just okay until the very end. And I like the third season better so far halfway through.

So I heard it just keeps getting better. So I'm still into that show. And I don't know what took me so long to get into the rewatchables podcast with Simmons. But I listened to the No Country for Old Men one with him and Bill Hater, just because I'm a huge Bill Hater fan. Well, I don't, you know what? You and I are on the exact same page. I don't know why I took me so long either because I listened to all of his podcast. But I listened to this one also, and it was quite good.

So I rewatch No Country for Old Men because it's on Netflix. And the first time I watched it, I hated it because I thought the ending sucked. Like, the ending totally ruined the movie for me. But actually, listening to The Rewatchable, I didn't realize this was based on a book. Me either. I thought it was just the Cohen Brothers trying to be different because you get to the end. And it just, I think it's too late for spoilers on this one because it's 2007. But when they have, like, the whole movie is a buildup to this fight out at the end.

And then they don't show it. And then the movie just kind of trailed off and ends. And that, I was like, whoa, what? What happened? They didn't show any. They didn't show it. You know, I remember watching this, and there will be blood on bootleg because I used to work in a restaurant. Like taping it in the theater?

Like with a handheld? Well, some were real good quality and some were crap. It was sort of a roll of the dice. But what did you think about this movie? What did I think about it? Yeah. I didn't love it the first time I saw it either. I've seen it since then it grew on me.

You know what I did not like there will be blood, but I feel like that deserves a rewatch because. I didn't like that one either. Does it not does ever rewatch? No, I don't know. It was a little dark. Maybe. But I think people just like that because they think he's like such a great actor, Daniel DeLuis. But I have no patience for that.

It made me appreciate it a little more. I thought it was just the Cohen brothers trying to be weird. But the fact that that was the way the book went to, I'm like, okay, that's not as bad. But I think that that Shiger guy or whatever is an all-time bad guy and an all-time movie bad guy. Like, he is so good. I have no patience for great acting in a bad movie. Okay. It's like when Russell Westbrook had a triple-dub on the Warrior, on the Thunder.

Congrats. Who cares? You suck. You miss playoffs. Okay. But so, yeah. I don't know if they miss playoffs. I think that's false, but you know, you get the point.

Okay. All right. So if you want to follow along with us in a couple weeks, read Super Forecasting by Philip Tedlock. We'll be doing a rekindle than that. Send us any year recommendations. Animal Spiritsapot at gmail.com. We'll talk you later.