Animal Spirits Podcast - Spirit Animal (EP.54)

Episode Date: November 7, 2018

A timetable for the next bear market, what impact the mid-term elections have on the markets, how much money FANG CEOs have lost in the downturn, how often bonds outperform stocks over 30 year periods, the number of Americans who consider themselves financially healthy, the psychology of different price points, the government's role in the student loan crisis, why real estate returns less than you think 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, the podcast that takes a completely different look at markets and investing, hosted by Michael Battnick and Ben Carlson, two guys who studied the markets as a passion and invest for all the right reasons. Michael Battenick and Ben Carlson work for Ritt Holt's wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. We're going to start the show up with a survey that was taken by the

Wall Street Journal. They showed six indicators that investors should pay attention to when thinking about the next recession. High yield bond spreads, yield curve, steepness, deal activity, weekly jobless claims, investor sentiment, and what the market thinks. And at the end, they let you vote on when you think the next bear market will start within three months, three to six months, six months to a year, more than a year. And I don't even remember what I clicked, but I did click something so that I can see the results. And we've got 49% of people thinking it's more than a year out with the other 51% thinking that it's within a year. And I'm sure the results will change, but just another, we don't need to go over the survey stuff. We know my results

aren't lazy, which we'll get to later in the show. But Ben, I'm actually surprised that more people don't think it's going to come sooner since markets are already in something of a downtrend. I don't know. I guess the six metrics here are kind of, I don't know if people actually use them to predict a bare market or if they use them to show that we're in a bear market at the time. Well, I think that yield curve steepness, at least one, the curve inverts is probably the thing that is always repeated or pointed to as a clear indicator that a recession is around the corner, if not already here. And people have been pointing to that for quite a while now that it's getting close and it's getting close, and now we're just, we're almost there.

But the curve has been flattening since, I think, 2014. True. Yes. It's been a while. I think we've talked about it for a few years now. And I think the other thing about this data is, remember that there's a huge difference between a recession and a bear market. And sure, bear markets are typically happened during a recession, but they happen outside of them quite frequently, too. So I think that people have to remember that it's not just a recession that can cause a bear market. It can happen for a lot of reasons. Well, let me ask you this. If you could only see one of these quote-unquote indicators as a timing tool, which would you choose? Ooh, I mean, I guess, I don't know. I don't know. I have no clue. What would you? Probably the yield curve, I suppose.

I would probably go with spreads, but I think that weekly jobless games are probably going to be a lagging indicator. Investor sentiment certainly is a lagging indicator. And you only see extremes like very infrequently. So I would probably go with. yield spreads. But again, none of these are going, in and of themselves, are going to tell you what typically happens with these things is that once you're in a recession, like it's usually too late. There's no magically leading indicator. If there was, we would all know and we would all see bear markets coming before they actually arrived. Quantifying a recession or bear market is way harder than it sounds. So the New York Times had a piece this week and it said the stock market typically rises after midterm elections. This year is anything but typical, which I feel like the last part of that, this year is anything but typical, you could say every single year.

But how much credence do you put into this stuff in terms of not just midterm elections, but seasonality and third year of a presidency? And don't you think that this stuff is just throw it out the window? Pretty much. Nobody's going to make investment decisions based on this. And I think maybe it's good to be aware. But actually, you know, it's probably not even good to be aware. You're probably better off not knowing how seasonality plays itself out.

But the data here was pretty compelling, I must admit. Since 1946, in years with midterm elections, the S&P 500 gained a median of 18.4% in the nine-month period from September 30th, just ahead of voting through June 30th of the following year, according to Ned Davis. In that same period in non-voting years, the index gained 4.9%. So that's a pretty gigantic difference. But I guess with an indicator like this or a seasonality study like this, you have to ask, like, why did this work? Or why did this hold true? And is this the type of thing where Mandelbrot said the trend has vanished, killed by its discovery? Like, why would this persist once everybody knows about it? And even forget about that, but taking a step back, why in the world were midterm election years bullish in the first place?

Like, what caused that? Is it because presidents didn't really do much to juice the economy when they first got in? But they really held that in their back pocket and they unleashed whatever economic tailwinds that they can provide before the midterm. so that they would get re-elected? Like, why would this even be a thing? This is the pumpkin everyone shows every year. It says correlation equals causation. So it's supposed to be really scary. Did you see this?

Oh, okay. No, no, no. Yeah, it's a really funny, dorky joke. But that's kind of my view of this is I think you get the bull market in opinions anytime these elections happen and people try to craft narratives around what happened and why. So if stocks do continue to go higher, it's because of whoever won the midterms. And if they don't go higher, then it's all.

also because of who lost the midterms. But I think that this study is showing that it doesn't matter who wins. That's the point. Oh, true. So it's just maybe the fact that people are hopeful that change will happen, that change will occur. And maybe it never happens. And that's part of it. But I just, anytime you try to give the politicians too much credit for what happens

at the stock market, I think it's a mistake. So let me pose this question. Do you think that this is robust? In other words, would this be bullish overseas and are there even midterm election overseas? I guess every political system is different, but I would be curious to know about that. Yeah, that's a very good question. If we're putting our quant hats on, we'd have to see it in different markets and across different time periods. So October was a pretty bad month for tech stocks.

According to Bloomberg data, the CEOs and founders of Fang plus Bat, and I guess we know what Fang is. Bat is Baidu, Alibaba, and Tencent. The CEOs lost $61 billion in October. That is way too long of an acronym. Because the Fang has two A's in it and then plus bat. I mean, can we just say the group of biggest tech stocks? We could say that. All right. That's a lot of money. But you wonder how much they've made in that time. Is this one of those like cool sounding tweets where Jeff Bezos lost? Like he made $40,000 every half second over the like one, you know one of those? It's one of those. Okay. But it is kind of interesting. And I don't know, I feel like we need a committee on these acronyms because there's

just way too many of them now. Sometimes there's two A's and fang. Sometimes there's one. I'm confused. Moving on. So Jason's Waggett at the Wall Street Journal had a good piece and it kind of ties into one of the topics we discussed last week. And someone asked us last week on the show if we think stocks could ever fall over a 20-year period. And we said, of course, that's a risk that it's certainly a possibility. Actually, I don't think it was a question. I think it was more like of a snarky comment, like you idiots or... Yes.

How could we ever think long-term investing is the right way to go, having you ever heard of Japan? So Jason Zweig talked about a new research paper by a professor from Santa Clara University. And he looked back until, let's see, 1830. and this wasn't as much about stocks showing a 0% performance over a long period of time, but it was about stocks versus bonds. And he looked at periods where bonds beat stocks or rolling 30-year periods and actually found that this happened more often than people would think. So he found, let's see.

Get to the point. Bonds earned higher returns in stocks in one quarter of all 191, three-decade-long periods going back to 1823. So what he was saying was that this professor said that Professor Siegel only used treasury bills in his study and his book stocks in the long run. I mean, but I think Siegel countered with something like, well, these weren't risk-free bonds because there was plenty of risk to own U.S. bonds in the 1830s. I'm always a little suspect when data goes back this far.

First of all, I don't know how accurate it could be. And second of all, I just think things were way different back then. But it is an interesting look at the fact that stocks don't always outperform what people would think are risk-free assets. I mean, didn't that just recently happen? That long bonds outperforms stocks in a recent 20-year period? Yes, towards the end of the Great Recession, I think that happened as well. And Seagull said, so Jason's reached out to Seagull, and he said, yeah, of course bonds can outperform stocks over a 20-year period. Like, that's not an iron.

That's not set in stone anywhere. No. And I don't think that that should be a worry to investors either. that just is something that happens depending on your start and end dates. And that's why you want stocks and bonds and gold. Yes. So anyway, it's interesting post and we'll put a really cool chart in the show notes just to take a look at that one. We've already done one survey this week, so now we're going to do another one.

This one was in Market Watch, and they found that only 28% of Americans are considered financially healthy according to a CFSI survey of more than 5,000 Americans. And a CFSI is legit. It sounds like a show on CBS. By the way, I feel like that's higher than I would have thought. So they also said 17% of Americans are financially vulnerable, meaning they struggle with nearly all financial aspects of their lives, and 55% are financially coping, meaning they struggle with some, but not all aspects.

So wait, you're either financially healthy, financially vulnerable, or coping? Yes. That's actually not a bad way to think about it. And I think this is one survey where I thought these numbers actually look right to me. So it's less than a third of people think that they are doing okay financially. and two-thirds of people are either coping or completely struggling. I think that actually sounds about right. Okay.

What would your results be on the Michael Badnick survey? Well, off the top of my head, I would guess that 15% consider them to be financially healthy. Okay. 50%. Wait, what are the topics? All right. Whatever.

Let's move on. All right. I think part of it, too, is probably how you feel about yourself relatively. Even if you have $10 million, you may not think yourself as being wealthy if you would rather of 20 or 30, so maybe it depends on how people think about this stuff. So a lot of times on Twitter or just in articles in general, there is a headline mismatch. And we spoke about this earlier in the year, and I can't remember what article it was. But CNBC had an article, millennial women worry about earnings, out-earning, boyfriends, and husbands.

And I think the tagline was, millennial women are worried, ashamed of out-earnings, boyfriends, and husbands. But then the article, there's a quote in the article, that, also says the overwhelming majority of millennial women breadwinners don't believe the men in their lives should feel emasculated by the gap in their income. Directly contradicting what the headline says. What percentage of people these days do you think never bother to read past the headline? And I know I'm guilty of this too, but it happens all the time, correct? Yeah. And I guess there's just problems with articles like this. And there's so many

that just throw out certain snippets that don't really tell you much. So the University of Chicago found that a wife making $5,000 a year more than her husband was associated with the greater risk of divorce, right? So you take that out of context, but it doesn't tell you how much more likely, and it doesn't tell you anything more about these people. So let's say that a woman earns $5,000 a year more than our husband, but their collective income is only $60,000. Like, that is information that you would probably want to know. Very context dependent, yeah, when you can't read that in a headline. By the way, I don't know who these people are that care if their spouse makes more than them. If it's together,

I don't see the big difference. It seems so obvious that if you're married, you are one household and therefore you would, and you would want that pie to be as big as possible, regardless of who is contributing to it. By the way, do you know any of these married households? I know a lot of people don't like to talk about money around their friends or family because it's kind of a taboo subject. But have you encountered a married household who keeps their finances separate? I don't, I wouldn't know. I have some friends who do that and have talked about it a little bit. What do you mean?

Like, totally separate? Like the, they take their percentages of what they make and then they apply that to their mortgage and their grocery payments and their utilities and that is freaking odd. Is that not, I mean, I guess it works for them, but it seems to me like that would lead to way more heartache and pain and stress than the alternative, which is to pool it all together and you're both on the same team. Yeah. So Robin's paycheck goes to my account. Her credit card goes to my account. So all the bills are paid through me. Right. I don't see what the point of ever separating these things out is. I think

that just put a lot more strain on your life than is necessary. Okay. So you wrote an article talking about, you listened to a podcast on how I built this where Guy Raz interviewed the founder of Temperpeutic. Yeah, it was a very good podcast. I enjoy it. I did not realize that temporepetic, the material came from a NASA discovery, actually, and they used it in the original spaceships to try to soften the blow, were there to be a problem on one of the spaceships? So you wrote something in there that was really sort of mind-blowing. I guess not totally surprising, but mind-blowing nonetheless. You wrote, so positioning these pillows as a high-end product likely led to an increase in sales, while a lower price would have decreased demand, turning everything you've read in economic. textbooks on its head. Yeah, he was basically surprised that they wanted to charge more than he was charging. He was selling him through chiropractors. And he said, I'm selling 70 bucks to chiropractors.

And they said, no, we need to charge 90 because you need to have some sort of differentiation from the competitors because you already have seven pillows on the market. And it was way more successful than they ever could have imagined. They thought the reason was because he charged so much. He said if I would have charged 30, no one would have bought him, which is kind of mind-boggling. I don't know if that's social proof or what that is, but we are so anchored to prices. We perceive value based on how much something costs versus how much value is actually received. And Robert Chialdini, I always said C. Aldini, but I guess Chialdini makes more sense, was speaking about this over the weekend on Barry's podcast, which was really good.

If you haven't listened to it, we'll link to that in the notes. Do you remember when the guy from, the guy who started the Apple stores, I think, believe his name was Ron Johnson, took over J.C. Penny a few years ago. Yes. And J.C. Penny is notorious for having sales all the time. Every week is like the biggest sale of the year and they give out coupons to people. And he said, you know, it makes no sense to have people look for these coupons and cook them all the time. Let's just have everyday low prices. And the people, the customers revolted. They wanted to have those coupons, even if it gave them the same. And he ended up leaving in, I think, within under a year or two. Yeah, right. Like you give yourself like a win if you buy something on sale. Right. And I get that. It's so psychological, but it's crazy that people. think about this stuff. And obviously, there's an obvious correlation here between the stock market where people feel better when stocks are going up, even though they're putting money

to work as opposed to stocks going down and wanting to buy when things, you know, are on sale. Yes. So Berkshire Hathaway reported earnings over the weekend. And I just want to read a quote from the Wall Street Journal. Berkshire bought a roughly $300 million stake in pay TM in August and bought stone shares in the company's initial public offering this past week. Both PATM and Stone fit the mold of typical Berkshire investments in at least two ways. Let's see. Berkshire's investments demonstrate the maturity of the financial technology industry, which is grown from a curiosity in Silicon Valley in the wake of the financial crisis to a sector

that has attracted to nearly $35 billion of venture capital globally in the first nine months of 2018. So $35 billion in VC money in the first nine months of this year going to Fintech. And then I was thinking that are the entrenched banks missing the board on this? Are they in trouble in the future? Of course, not tomorrow, but maybe like 50 years in the future, or are they going to be the natural buyers for these new young companies? I think the biggest problem technology firms have in the finance industry is dealing with regulations because tech firms don't have much regulation to deal with,

and I feel like trying to get into the entrenched banking industry could be tough from that angle. I suppose if there's enough money, it might not matter. So what was the huge fun we talked about a few weeks ago, SoftBank? maybe SoftBank can just write some checks to get in there. But I would imagine it's going to be hard for them to completely displace the current banking industry, whether that would be a good thing or not. And obviously, this is a drop in the bucket. I think this was Combs, not Wetchler, who bought this. But it's certainly not something that you're accustomed to seeing for Berkshire Hathaway, making investments in financial technology startup companies.

What's going to happen when Buffett's not around anymore and we can't jump to conclusions about everything he does, by the way? Because every time Berkshire does something, it means the market is going to do something else based on what he's doing. So if he's sitting on a lot of cash, then that means stocks are overvalued. But if he's buying stocks, that means he, I don't know. Well, Munger once said all I want to know is where I'm going to die, so I never go there. And so if Munger doesn't die, we'll have him to lead on. Okay.

So Noah Smith had a pretty good piece in Bloomberg this week about student loans. And some of the stats in here kind of were mind-blowing. So he was looking at a bunch of studies for student loans. He said only half of students went to college in 1995 or 96 had paid off their loans within 20 years, which is pretty crazy. I didn't realize that the terms could last that long. Well, is that a typical term? Is it 20 years? I mean, I guess mine was, I guess that is mine, but only half of them had done so.

I thought 20 years was kind of typical. That just seems loaded. I guess people just keep rolling them over. I don't know. So then he also said in 2010, the Student Aid and Fiscal Responsibility Act effectively nationalized the student lending industry. and that made it easier for basically the government to lend to students. And he said the percentage of student debt held by the federal government rose from about 30% to almost 80%.

And student loans now comprise 45% of the federal government's financial assets. That sounds very high. Mind-boggling. And the most mind-boggling thing about it to me is the fact that the government continues to charge such high interest rates on these loans. I mean, they could effectively make life so much easier on young people if they just did a cap on these things and charged people 2% interest because they're the ones holding it all. I don't, I guess I just don't understand why they made that decision.

So there was another article in CNBC. Somebody moved to a jungle in India to escape a student debt. And I think when you read articles like this, seriously? Boy, that's cold, Ben. He literally moved to a jungle in India. I don't, that just, that's. When you read articles like this, it sort of is easy to blow this out of proportion. even though we understand that student debt is a real issue. But the average is what? 17 grand. Yes. It's not as high as people make it out to be. Right. So this guy was a philosophy major, which I guess shouldn't be too surprised that he had trouble making a decent wage. But his balance was around $20,000. And he said, if you're not making a living wage, $20,000 in debt is devastating.

And he said, adjusting to a new country has not been easy. Quote, some toilets here are holes in the ground. You squat over. Recently, he ate spoiled goat meat at a local restaurant and landed in the emergency room. Still, he said, I can't believe you're laughing. I'm sorry. Hold on. Still, he said, I have a higher standard of living in a third world country than I would have America because of my student debts. And here's some numbers to contextualize what's going on. So half of student loan borrowers haven't paid even one dollar toward their debt principal within five years, or I'm sorry, five years interim payment. And this I didn't know, but it makes sense. Moving to another country to escape student

debt is risky because if the person wants or needs to return to the United States, they'll find that their loan balance has only grown. The Education Department typically can't garnish someone's wages if they're working for a company outside the United States. However, they can take up to 15% of Social Security benefits when they start collecting. So the loans don't disappear if you leave the country. And in fact, in 2017, the government seized more than $600 million from student borrowers' paychecks in 2017. That's a big number. What would the economic stimulus be, I'm not smart enough to figure this out, if we did like a cash for clunkers for student loans.

And during the next recession, the government just said, we're going to wipe away 50% of your debt. What would the economic implications be? I don't know. Okay. Maybe this guy would move back from India and be able to use a toilet. It's not a hole in the ground. But isn't that crazy that this guy, this guy had to go to India to flee?

But I guess he's probably not aware that he can't come back, really. And obviously it worked and he's not paying his. student loans off anymore. I don't know. I figure you have to get to six figures to move to another country and live in the jungle before the student loans. I just, I don't know, 20 grand. It doesn't seem like it's, anyway, moving on. You're a Midwestern elitist. I guess so. All right, let's move on. So we got a listener comment. I had friends that bought houses in the 1988, 81, 83 period that were paying 16% 30-year fixed rate. And then he goes on to say, the house that I bought in 2000 for $630,000 is now worth approximately $1.2 million.

And my initial reaction to that was, holy shit, that's like a, what a home run. But then the next part of the email was, which translates into a 3.6% annual return. And of course, if you paid $630, it's now with $1.2 million. It doubled, but over a 17 or 18 year period. And that's not so great a return, especially considering the fact that he's not factoring taxes or upkeep. or anything like that. And this is not a house that he, which he intended to flip. I don't believe, obviously, because he's held it for 18 years. But what did you think about this? I mean, after inflation and all the other ancillary costs of homeownership, it probably was

either a loss or probably break even on real terms. So it's interesting because you see those numbers and you think, wow, this person did amazing. The point of his comment to us was it's not as great as you think in terms of real estate. And I think that's one of the reasons people always assume the American dream means buy a house and it'll make you wealthy or it's the biggest investment you'll ever make because you deal with big numbers. And everyone has, you know, my grandparents bought a house for $10,000 in 1945 and now it's worth $300. And so it must be a great investment. But until you actually run the numbers and get beyond just the big, you know, six or seven figure values, it's hard to see. Did you say $10,000? I was just, I was making that

up. Okay, because what if you put that into Netflix? Yes, that's true. back in 1940, you would have done amazing. So I looked at some real estate data from Schiller a few weeks ago for a piece. And so from 1890 to 2018, and I guess again take the early data with a huge grain of salt or, to speak in your terms, a grain of sand. The total gain after inflation from that whole period was 73%, which works out to just over 0.4% annually on a real basis for home prices. Obviously, that's different in different markets. And, you know, it's not the same thing, depending on where you buy, but... Wait, how do home prices do in midterm election years?

Now we... All right, I think that's... We just found some real estate alpha. Okay, moving on to some listener questions. Let's see. The behavior gap between what returns investors earn on their investments versus the returns of the underlying indices have been calculated by Dalbar and other data service providers consistently over the years.

The explanation given for the differences that investors tend to sell after decline and buy after markets have risen, thereby hurting their performance. who or what investors benefit from this tendency. Okay, so I guess the question is if investing is a zero-sum game and these people have negative alpha, where is the rest of the returns going? Yes. What do you say? I think that it's harder to quantify this stuff than most people realize because you don't ever,

I think the behavior gap is probably worse at the extremes. And when we're just in kind of the middle innings, so let's say from two to, seventh inning stretch most of the time it's hard to tell because people are dollar cost averaging they're selling their investments to pay for retirement needs so i think it's i think the behavior gap calculations are a lot harder to specifically say with certainty what they mean most of the time and i think it's only at the extremes where they really matter okay so i would agree with you but i guess the direct question is if everybody's losing where are the gains going and i guess your answer is that it's not that simple yes i think it's not that simple to tell the motivation of the

buyers and sellers, or the reasoning behind them. And I think, like, if you take the simple performance of your dollar cost averaging and your 401k and look at it versus a lump sum, the lump sum is going to kill you over any time period to look at more or less. But that's because you don't have a lump sum to invest at the beginning. So you're forced to dollar cost average. And I think that kind of skews the averages in some ways. So if everybody's losing, who's winning?

I'm kidding. That's the fourth time I'm asking this question. I'm saying, I think that the gas... I'm just going to... I'm going to say the obvious answer is the Illuminati. Okay. Well, maybe that's it. Maybe the winners are the financial firms who are collecting the transaction costs

and all the frictions that are happening between those buys and sells. All right, that works. Okay. Do you think it's harder for clients to hold on to an investment strategy through a bare market or a flat one? This is a good question. I don't know. I think it's probably... We've had this conversation before.

I think for a wealth management firm, it may be harder to hold on to clients during a flat market than a bear market. Because I think people freeze during a bare market and don't want to rock the boat in some ways in terms of who their outsource investment provider is. What do you think? Yeah, I agree with that. I think it just depends because it depends what type of a flat market. 2014 to 2016 was flat-ish. We had a 12% decline, I believe, in the winter of 2015 to 2016. But if it's, so that wasn't that bad. That was like an 18, 20 month period, maybe. But if it's like a 16 year period of flat markets, so for instance, 66 to 82, where you have a bear market in 69 to 70 and then a really other nasty bear market is 73 to 74, if you consider

that flat, and I don't know if that's really flat, but that would be devastating for everybody involved. And unfortunately, those markets that go nowhere for a long time typically are extremely volatile. So. Yeah. But I think to your point, like in a bear market, A, misery loves company. If everybody's getting killed, like it's, you know, they're sort of not comfort in that, but there's maybe inertia and like a, you know, a deer in the headlights type thing where you don't do anything. Yes. I think you could make the case that it's almost like almost every environment is hard in one way or another. Like I think even in a bull market, sometimes the hardest thing to do is hold on. And I think that's been a

problem for a lot of people for the last three or four years. Yeah. I mean, all environments are hard. There's no, there's never like an easy period to invest. Although 2017, was pretty easy. In hindsight, but of course, the daily headlines were like a catastrophe. So you're saying the easy money has been made? It was made. All right. It's still being made. Okay. I'm holding you to that. Let's move on to some recommendations. Okay. So we watched Ready Player 1 this weekend, and I held off watching it for a while because I loved the book so much, and I heard a lot of bad reviews about it. And I think the bad reviews were right. It basically was nothing like the book. and it was an okay movie, I guess, if you went in without reading the book, but it was probably

one of my favorite books of the last five or six years. And so this got me thinking, are there any movies out there that you've seen that are actually better than the book that it was based on? Okay. So how's this? I came up with two. Okay. Shawshank Redemption.

Honestly, I did not know that was based on a book. Okay. Well, I'll do you one better. Well, actually, I can't want up you, but I did not read the book. Okay. I didn't either, obviously. So it's a Stephen King book. Oh, okay.

Oh, maybe I did know that. But I find it hard to believe that the book was better than the movie. Right, even though you've never read the book. I'm going to agree with that without even knowing. I'm going to give you credit for that one. Okay, and here's another one. Jurassic Park. Ah, yes, I actually read the book.

That's true. It's a much better visually than it is in the book. All right, here's the only one I could think of, Fight Club. Movie was way better than the book. I didn't know that was a book. Yes, it's a book. And I actually read it after the movie. Maybe that skewed my line of reasoning a little bit,

but I thought the movie was 10 times better than the book. So every time you see a movie where you love the book, it's like always a sell-the-news event because when you're reading the book, you create all these visuals and you have ideas for what the characters look like. And inevitably, it's a letdown unless it's like such an incredible movie, which is rare because there aren't that many incredible movies. And it's harder to pack everything from a book into a movie. But it kind of, yeah, it disappointed me, but I was expecting to be disappointed.

So it lived up the expectations, if that makes sense. All right, I was also reading, let's see, I was reading this week, the last couple weeks, The Cuban Affair by Nelson DeMille. He's one of my other favorite fiction authors. But listen, he's not alive, is he? He is alive, as far as I know. And this one was actually about like an attempted heist in Cuba. And the reason I like his books is because he mixes fiction with real life learning about

what's going on. And so I learned a lot about Cuba in this book, actually. Hold on. Who is this Cecil B. DeMille? Nelson DeMille. Oh, Nelson. Okay, because I was like, yeah, he died and he was, all right, is that any relation? I don't, I have no idea. I'm guessing not, but nice try. And I also want to recommend one of my favorite books of his, it's probably one of my favorite books of all time. It's called Nightfall.

And it's this conspiracy theory fiction book about TWA Flight 800 from the 90s. And there's a lot of stuff mixed in there with terrorism. And that's one of my favorite ones. And finally, I read The Long Tail by Chris Anderson, which was mentioned on an episode of Econ, talk with Russ Roberts this week, who we mentioned last week as well. The book's probably not worth reading because it was actually written in 2005, and so much of it is just out of date at this point. They talk about like Rhapsody as the biggest music service, which I don't even think exists anymore. And it's pre-Iphone. But a lot of the stuff he predicted actually came true in terms of what technology was going to do. But the idea behind it is really interesting.

And it's worth probably finding the old econ talk with Russ Roberts and Chris Anderson to just listen to that instead of read the book. But the idea behind it was pretty amazing. So that's all I got. All right. Kara Swisher interviewed Elon Muxk, which was excellent. At one point, she said, Elon, you're not even high and you're laughing at yourself. I thought I liked it. I enjoyed, I thought both of his podcast he's been on this year have been enjoyable, whether you love or hate Tesla. Yeah, no, I thought he sounded totally reasonable. Like it was, did not match up with the person that you see on Twitter. That's why I think social media probably brings out the worst in a lot of people, because you read some of the stuff he writes and you think this person, is an unhinged lunatic and then you listen to him speak and he's I mean maybe he's just trying harder but I think it's it's easy for social media to open up those those doors of just

saying stuff that just off the cuff that you probably would never say to a person's face Scott Galloway who hosts a podcast with Karaswisher called Pivot wrote something about social media just how it is so bad for teenagers and I can't imagine what it's like being 15 with Instagram and Facebook, he wrote, it's one thing to hear about a party you weren't invited to, and another to see it unfold real time on your Instagram feed alone in your room. I really hope this stuff is gone by the time our kids are that age, don't you? Something else replaces it. It's scary.

Okay, so I actually went on sort of like a book hiatus. I haven't been reading much lately, which feels kind of nice. But I did read this week a book called Everybody Lies. Actually, I have about 50 pages left by six. Seth Stephen Devidowitz, and this book is our spirit animal. Okay. So he talks about... Did you do that on purpose, by the way, since the podcast is called Animal Spirits?

I did do that on purpose. He talks about how Google is digital truth serum and how... One of the reasons why surveys are so flawed is because people either don't tell the truth, they lie to themselves, they don't know the truth, and there's so many amazing studies and data points in here. it would be too many to list them all, but I just want to read one part in terms of why surveys are bunk. He wrote, the power of Google searches is not that they can tell us that God is popular down south, the next are popular in New York City, or that I'm not popular anywhere. Any survey can tell

you that. The power in Google data is that people tell you the giant search engine things that they might not tell anyone else. Take, for example, sex, a subject I will investigate in much greater detail later in this book. Surveys cannot be trusted to tell us the truth about our sex lives, I analyzed data from the general social survey, which is considered one of the most influential and authoritative sources for information on Americans' behaviors. According to that survey, when it comes to heterosexual sex, women say they have sex on average 55 times per year, using a condoms 16% of the time. This adds up to about 1.1 billion condoms per year, but heterosexual men said that they

use 1.6 billion condoms every year. Those numbers by definition, wait, it's not even the punchline yet. those numbers, by definition, would have to be the same. So who is telling the truth? Men or women? Neither, it turns out. According to Nielsen, the global information and measurement company that tracks consumer behavior, fewer than 600 million condoms are sold every year.

So everyone is lying. The only difference is by how much. See, I would have just assumed men would be the bigger lies there, but that's pretty good. So this is, inject this confirmation bias of surveys into my veins because he's just totally proving us right, is he not? He is. And being an anti-survey podcast. So the title is everybody lies, big data, new data, and what the internet can tell us about

who we really are. And there are some freaking awesome anecdotes in here. So I highly, highly recommend this book. Okay. Oh, and then lastly, I do have one more thing. So I went on a date with Robin over the weekend, which is very rare. And we saw a star is born. What did you think?

I enjoyed it very much. I think it was probably 20 minutes too long. How long was it? Two hours? It was, I think, two hours 15. But I think Lady Gaga is incredible. She's amazing. She really carried the movie.

He was very good, too. I'd definitely give it a thumbs up. I heard Brad the Cooper's hair is just magical in the movie. Oh, my God. So jealous. Okay. All right. We'll put it on my list.

Send us an email. Animal Spiritspot at gmail.com. Rate and review our, you're on iTunes for us, too, if you can. And we'll talk you next week. Thank you.