Animal Spirits Podcast - Stock Market Euphoria (EP.150)

Episode Date: June 10, 2020

On this week's show we discuss the insane move in the stock market from the lows, the surprising unemployment numbers, underestimating the Fed, going from the Great Depression to euphoria in a matter of months, why international stocks are finally joining the fun, private equity in 401k plans, racial wealth inequality, Airbnb's comeback and more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

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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. So you just did a quick post and looked at the rolling 50-day returns. This stat's been going around. This was the biggest 50-day return in S&P 500 history. I guess that goes back till the late 50s. Yeah, I think this is either a D-Trick or bespoke data point. Right, but you recreated it.

And then we talked this morning about if you had a 60-40 portfolio and you just let it free float, as of March 23rd or whatever, when the market bottomed, that would have been a 50-50 portfolio. So let's say you nailed the bottom, you rebalanced back to 60-40, and today that portfolio would be what? 6733. I mean, it's always easy to cherry pick and... That's unbelievable. I know I just did this, but in my head, I was like, I had to pause a sec, wait, that can't be right, is it? I mean, it's obviously always easy to cherry pick. We always get mad at these IPO numbers from Amazon in 1997, whatever, and you pick this

really small place to start, and obviously the returns look big, but it is cherry picking to look from the absolute bottom. But the fact that that bottom was not that long ago, so I ran through some numbers and Y charts helped me out with some of these. So at the bottom on March 23rd, the S&P 500 needed to rise 51% to get back to all-time highs. As of this morning, it needs to rise about 4% to 5% to get back to all-time highs. The five-year annual return on March 23rd for the S&P was 3.3% after that huge plunge. Now it's more than 11%.

I'm still in the dead cat bounce camp. Fair market rally. I mean, it sure felt like that for a while. I mean, at this point, it doesn't mean the market can't roll over, but this is not a dead cat bounce. This is a, I don't know, we've gone through two lives of the cat maybe, but it's still alive. So it's, I mean, I'm sure if you go back and listen to some of our podcasts from March, they would sound pretty, I don't know. Despondent, hopeless. Things did seem like that.

And obviously not just with the markets, but with everything going on, I was looking yesterday. I don't look at this stuff that often, but my blog page views, March was by far the most page views I've ever had in my blog. And it peaked on March 21st. The market bottomed. That was on a Saturday. the market bottom two days later. It's fallen off a cliff since then. It's our friend Phil Permanel, the higher the Vicks, the higher the clicks type of thing. Everyone is reading anything you could want to about the markets. And now things get back to normal and people just sort of let it go.

Your readers are the smart money. Did you see this stat by the Lute Hold Group? They said it has now been 50 trading days since the low, the strongest 50 day move of the index. but they showed conditions accompanying new post-World War II bull markets. And they're looking at valuation stuff, momentum stuff, internals, advanced decline line, things like this. And there are eight conditions. And previously at Lowe's, at least it looks on eyeball on this, at least five were met, five of the eight were met. Right now we're 0 for eight. I'm sorry, I'm going to pull my this time a different card.

this whole thing is just the market bottomed on a 9.4% day when everyone said markets this is not a good sign when markets bounce 9% that never marks the bottom guess what it did like I just don't think with this specific market that you can use history as a guide at all things are happening way too fast and it just I don't see how anything regarding history with this because something like this has never happened before all right I'm just saying I'm saying I'm saying throw it out the window. I'm just saying throw it out the window. Maybe I should become a trader like you. Credit where credit is due. I called you a new boil for buying jets and you wrote that to a nice profit. And not only that, you got out of slack like the day before it got crushed

from an earnings release. So credit to you, I'm going to pull some of that credit back though because you sold too early. It's up 5% again today. So I give you 80% credit. You should have held on to it for longer. That's what I'm going to say. I'll take the 80%. What's next on your trading action alerts plus for subscribers? I'm waiting for a pullback. Okay. From this obvious dead cat balance. Okay.

So Friday saw this huge uptick in markets. And honestly, a lot of the action lately, we've talked about this, this felt a little euphoric. I thought the most euphoric day to me was Friday. It felt like people started getting back into like, oh my gosh, this is actually real. And so one of the things was, so the consensus unemployment numbers were. Hold on. Before you get into the numbers, let me just. confirm your suspicions, your feelings. Tom Herden tweeted, today's volume was 17.6 billion

shares, the most volume on an update in a decade. And one more, Citi has this panic euphoria model, which is all quantitative, at the highest level since 2002. So it is crazy how I tweeted this. We went from recession to depression, to recovery, to euphoria, literally in under 100 days. We're five months into the year. And so Jim Bion. You know, it's June. June. Yeah, but June's not over yet. Fact check. Sorry.

Go ahead. Five months in one week. Thanks for the actually. Jim Bianco tweeted that the consensus among economists was a payroll decline of 7.5 million people and the unemployment rate rise to 19.1. When the actual numbers came out, it was 13.3 percent. But apparently there was some problem with the numbers. It should have been higher.

It should have actually been 16.3. But what happened was they basically said the big takeaway, so the BLS puts out this data, they said, it's really hard to collect real-time data during a pandemic. And I guess the unemployment rate actually should have been higher in March and April, but it actually should have seen a bigger decline in May. So regardless, a ton of jobs were added, and it was like 2.5 million jobs when again, the consensus thought 7.5 million were going to go away. How did everyone get these numbers so wrong? I don't know. What are some of the things that you were reading? So I looked at like the all employees for leisure and hospitality on the Fred website. There was 1.3 million jobs.

adds added to the hospitality sector. I don't know if people, I mean, that's after 7.5 million were locked. I mean, again, these increases are coming off of a low base. People keep saying that. Lizanne Saunders tweeted this, leisure and hospitality, as you mentioned, by far the most, followed by construction, education, health services, retail, trade, manufacturing, et cetera, etc. Is it possible that people were still underestimating the stimulus in what was happening there and the fact that the PPP would cause people to be rehired and the fact that we're coming into the summer months. So a lot of these leisure and hospitality places that were going to be opening up, they rehired some people. I mean, that is just such a wide. There was literally no one

saying, I'm going to take a contrarian stance and say we're going to add three million jobs this month. And I mean, it was wild. And obviously, the market, again, things are still pretty bad. There's still tens of millions of people unemployed. There's a million charts to choose from in terms of what stands out, but the one from Bill McBride in terms of the percent of job losses relative to peak employment month for this recession versus all others, to me, stands out as still the craziest chart. And so, yes, we added two and a half million jobs, still 32 percent unemployed, still by far bigger than anything that we've seen in a long, long time. I guess maybe the hope is this summer there's going to be more people coming back to work

Ben initially thought. Maybe that's the hope. That's all I can think. This seemed like a, I don't know, things are going to open back up. Maybe we'll have a sell the news moment. That has not happened. This was like the market was legitimately surprised and had a huge jump on Friday. And I guess, again, you see all these people say, oh, I guess with $6 trillion from the Fed and $3 trillion from the government, what do you expect? But guess what? That was real-time information. People knew that was happening and still didn't realize this. So Stanley Drucker Miller was on CNBC this morning. And on May 12th, He said the risk reward for equities may be as bad as I've ever seen in my career. And of course, everyone says, well, who would you rather be with Robin Hood traders or Druck?

And of course, you pick the legendary investor. To his credit, he said, listen, I've been humbled many times in my career. I'm sure it will be many times in the future. And the last three weeks certainly fits into that category. He owned up to it and said, listen, I was wrong. I underestimated the Fed. He said he's been humbled by it. He didn't really think this would happen.

Listen, me and Druck, we underestimated the Fed. I get it, man. He said he returned just 3% during the market. it's a 40% rally. So he was very wrong, I think, on gold a few years back. I think it was the Iris Home Conference. He said, I've been so wrong. That's why I'm making the introduction instead of being interviewed. This is sort of in his wheelhouse in terms of admitting that he was wrong. So nothing new, but huge kudos to him. I give him credit for that. And he says, you know, I underestimated the Fed, but a lot of people that are complaining will say, well, of course this

happened. We had $10 trillion thrown into the market. But, okay, if you knew this was going to happen, why didn't you? So even though we knew this at the time that the Fed was going to reload the bazooka. Somebody tweeted hyper asset inflation or something like that. Yes. There's hyperinflation exists, but only in financial assets. The calling card of a charlatan. One other data point from sentiment trader in terms of how bullish people are, euphoric in fact. He showed a chart. Small trader calls, buys to open millions of contracts. It's absolutely one parabolic. This is one. wild.

So this is retail investors hitting the options market? Yes. Okay. And so it looks like it went from, I mean, this thing was below $4 million. A quadruple. Yes. In about a month's time. And it looks like it's been rising since basically 2019 as well.

Again, nothing I would ever predicted that we would get late 1990s type trading activity from retail from this. Somebody said, Bob on markets, this is truly shocking. This chart shows the combined balance sheet assets of the Fed, ECB, B OJ, B&BOE, as a percentage of their combined economies, it is now 47% of GDP up from 10% before the financial crisis. This is not just U.S. stocks. The Dax and Germany is up 44% off the lows. I think you're seeing something similar in the NECA. And what's happened is this really turned on May 13th, where the losers started leading and the leaders started lagging.

Christopher Cain tweeted this really great chart. Cumulative performance of the highest momentum stocks versus the lowest momentum stocks since the beginning of April. And you see the worst momentum stocks heading into April and think exactly what you're thinking about. Royal Caribbean Cruise, airlines, all those sort of stocks have been on fire. So yeah, initially this market was being held up by five or six tech stocks and that was carrying everything higher. Everything else in the last. five, six, seven weeks has caught up in a big way. Small cap value is up 50 or 60 percent from the bottom. A lot of these junkier parts of the market that were not. Retail? Yes, have come. And so it

sounds like the German, Germany has been one of the problems for international stocks for years, I think, because they have just held the reins in in terms of fiscal spending. They finally said their package, I guess, was 30 percent bigger than expected. It's 1.3 trillion euros basically to cushion the blow from the coronavirus. So they're basically going from, from being this big austerity champion to a big spender. By the way, can I just ask you a question? Was that Austerian a combination of austerity and Austrian? Because I think it actually worked.

Is that a word? Yeah, it's an austerity champion here, and I kind of put those together. Basically, everyone's saying anyone watching the EU saying three or four months ago, this would have been unheard of for Germany to totally change course like this. And this has forced their hand. And so we could potentially see finally international stocks play catch up, even though they already have to some degree. but everything else is keeping up now.

Did you see the chart? So Jason Zweig made this incredible chart at the Walshue Journal, used a lot of the data from Drew Dixon, who we mentioned last week. They show the average return through this time, through the end of May, of the most expensive stocks versus the cheapest stocks. And we know that growth, which is mostly the expensive stocks, has kicked the crap at a value for a long time now. But the return disparity between the most expensive and the cheapest is absolutely off the

charts and this gap has been closing feverishly over the past few weeks. So XRT, the retail ETF, fell 41% through the bottom, 41% and that's all the stores that you think of that are just getting bombed out. And now it's down just 2%. So something falls 40% that has to gain 70% to break even. And that's basically what happened, which is, again, inconceivable. For whatever reason, May 13th is the day that this sort of switched. The Russell 2,000 value ETF is up 32% since May 13th versus a 9.1% increase for the NASDAQ 100. So all that other stuff is finally playing catch up in these technology stocks that, unfortunately, probably at the time everyone who wasn't in there already piled in and said,

okay, tech stocks are the only thing holding the market up. I'm going to get into those. They're still at all-time high, so no harm, no foul. But you know, it's interesting. Last week, the NASDAQ composite made an all-time high without Apple, Amazon, Facebook, Microsoft or Google being at all-time high. So if you look at like the NASDAQEK, for instance, that's also playing catch-up. So a lot of what we were talking about in May, I guess in April and May especially, about the large stocks just dominating, Microsoft being worth as much as the FTSE-100, the NASDAQ-100, being worth as much as the MSCI, all-country world, the X-U.S. That was the top or the bottom, whichever were you looking at it.

Even though it's slowed down a little, the NASDAQ was down 29% from peak to trough. What's it up now? It's up 13% on the year. Wow. I mean, over the last year, this thing's up 33%. Wow. The numbers are just, this is certainly one for the history books, as the rest of 2020 is, obviously. Do you think that there's going to be some models that come out after this that said,

we would have done X during the corona crash? Oh, sure. And people are going to say that they're heroes. You haven't heard as much of it yet. But how come we haven't seen any returns for these tail risk strategies since they made 3,000% in one week? They show the returns when things go crazy. Now show them on the other side when things go up. Because they show, well, this tail risk strategy made 3,000 percent. If you would have had whatever percentage of your portfolio in it, I would like to see the other side of that. I'm just saying it's like a fair game. I'm just assumed that they already won, that they didn't go down 40%. Right. I think that's the thing is they have this setup where they go up way more than they go down. I would like to see both sides of it. Okay. So there was news last week how 401K plans are moving closer to be able to allow participants to invest in private equity. The new guidance, quote, there's a quote from Labor Secretary Eugene Scalia, helps level the playing field for ordinary investors and is another step by the department to ensure that ordinary people investing for retirement have the opportunities they need for a secure retirement. Now, I don't know that

you need private equity to secure retirement, but right now only accredited investors can invest, which are people with either $1 million in assets or $200,000 in annual income. So I understand the pushback, but let me ask you this. Is private equity any more dangerous than, say, levered ETFs? It's dangerous in a different way. I'm curious to see how they would implement this. Obviously, this is the reason Vanguard has launched this and did their toe into the water because they knew this was coming too. You think they had inside information? Well, I mean, the writing's been on the wall for this for a while, I think. So I guess honestly, the best way to do this would be in a Target Day fund. That would be the only way because here's the way private equity works. Let's say

you're an individual and you have a million dollar portfolio and you commit 10% of your portfolio to private equity. So you have 100 grand. You say I'm going to invest with big behemoth private equity company who's in my 401k. Now I'm going to do a 10% allocation. You don't just hand them $100,000 on day one and they invest it for you right there at the spot like if they do in a mutual fund or ETF or stock. They call that capital in over time. So I'm wondering who is going to be managing that process. And then throughout the life of the fund, which could be 10, 12, 15 years. you get distributions paid back. And sometimes they net out the distributions with your contributions. But I'm wondering who's going to handle this. So in a target date fund, I can see how

that would work because they would handle that for you and they would handle the rebalancing and the cash flow is going in and out whenever these companies have a capital call that they want to invest for you. If you just have a self-directed 401k and you say, I'm going to put 10% in private equity. I mean, is it going to sit in cash until then? Is it going to sit in a stock ETF to match that? I don't know how this works. Imagine there's an ETF. that tries to track something? That's always been one of my reasons for sort of pumping the brakes on private equity for a lot of smaller institutions because it's operationally challenging.

If you have Vanguard doing it in your Target Date Fund, I can see how they could make that way easier and it wouldn't be that much of a problem because they can do the rebalancing and cash flows and handle the capital calls. If you're doing this on your own, I don't understand how an individual could ever do that. So I would imagine that these would only be workable in Target Date Fund. Maybe I can be proven wrong. but I have more questions on this than answers at this point. But yeah, the dangerousness of them is different from a levered ETF and that the risk is just so much different. But are there

going to be lockups on these? Can you jump in and out of them? Like, how could you jump in and out of a private equity fund? What if there's steep penalties? Yeah. I mean, that's the thing. Because usually a private equity fund, if you put money in there, you're locked up. And if you give them that money, you can't just get it back whenever you want. Doesn't that make the 401K a potentially good place to put these dollars for people who behave? What about all the people who leave their job and cash out their 401k? What if they say, I want to cash my 401k out and no, you can't do that. We've got 10% in private equity. You've got to sit there for 15 years. I'm curious to see what the guidelines are going to be around this. That'd be my biggest thing. It's not from an investment

perspective. It's what are the operational guidelines around this? Because private equity itself, it's a lot of headaches. It's not that easy to implement. There's got to be some sort of minimums you would think, right? That would make sense. Yeah, they're going to tell you, you can't take your money out of this for eight years or whatever it is. I think, and maybe if a company like Vanguard or Fidelity or Schwab is doing this and they have a big enough pool, they can say, okay, new investors coming in will be paying out old investors that want to get out at a certain point. So maybe they find a way to make some liquidity. That's possible, I guess. My point that it's potentially dangerous. So small investors should have access to it doesn't

hold water only because there are a million potentially dangerous investments that small investors have access to. I'm not necessarily advocating that they need to have access to this. I'm just saying that argument in particular is easy to poke holes in. Yeah. My biggest worry is anytime you get more sophisticated strategies like this, by the time it reaches retail, you're getting the seconds and thirds or, you know, you're not getting anything good by any means. That'd be my worry. Again, maybe someone like Vanguard, if you take the fees down and you get the second helpings, but it's from the leftovers, but you're getting way lower fees, maybe that can help a little bit. If you're not paying two and 20, but you're paying one in five or whatever it is,

maybe Vanguard won't even take a performance fee, something like that. Maybe that would make it a little more of a level playing field. By the way, I noticed I was in my car the other day and coronavirus is over. I'm not saying that the cases are gone. I'm just saying people are behaving as if it's completely gone. And thank God the cases have dropped dramatically. I think there was zero deaths in New York City the other day. But Ace Hardware, Home Depot, CVS, everything is absolutely.

Absolutely packed. Yeah. Things certainly seem like they're moving back to normal and people are moving on to their summers. I mean, with all the protests that are going on, the next two or three weeks are going to be very telling to see how well the transmissions of this stuff happen outside. And that could potentially be good news, I guess, if we don't see a huge, huge spike in the next two, three, four weeks. So last week, we talked about the protests a little bit and how we taped that on Monday morning and we'd watch the stuff going on the weekend that looked horrible with all these protests and... back and forth and looting and police brutality. And after sitting in that for a week, we were in Northern Michigan last weekend, which is not the most diverse place by any means.

And driving through downtown, there was a protest going on probably a thousand people. Downtown where? Grand Rapids or somewhere else? Traverse City, Michigan. And Northern Michigan, just sort of a Northern Michigan beach town. And a thousand people, 90% of them young. I think that's my biggest hope from this is that young people are leading this, and they're continuing to show up and show up and show up. And people have for years said that the young people are lazy and entitled in their snowflakes, but they show that they care. And the fact that they've shown up and continue to show up to these rallies, and you see

these rallies getting bigger, they seem to be getting more peaceful, too. I am extremely bullish on the young people in this country. I know a lot of people for some reason aren't. The fact that they show up and they care, I think it's the young people are going to push us to change, which I guess is technically, typically what happens. long TikTok short Facebook maybe that's it so one of the reasons for a lot of the disparities from our perspective so the new york times had a piece it's called black workers already lagging face big economic risks and so they go through a bunch of economic statistics to show

how black people are so far behind in a number of ways and so they show unemployment rates by races higher for black people that it is for white people this one's kind of crazy less than half of black adults now have a job. And that's from February to April. It's gone from 60% to less than 50. For comparison, it looks like Hispanic, white, and Asian are all between 50 and 55. Median weekly earnings, they show by race and sex. They show white men and women versus black men and women and black men and women are both much lower. Our colleague Nick Majuli did a piece on median net worth using the survey of consumer finances. And he showed that this one's kind of crazy. The median black household with a college degree, Nick broke this out by a bunch of

different ways. So he didn't just look at net worth. He looked by education levels, all this other stuff and his piece is worth reading. He showed the median black household with a college degree has a net worth similar to the median white household without a high school diploma. So usually it works that you work your way up. You go without a high school diploma and then college and then graduate degree, whatever, and people typically make more. So that shows you how far behind. And it's just a lot of these little things that Nick made the point of compounding against you over years and decades, in centuries even, that has helped back. And obviously, financial stuff is one of the biggest reasons that this group of people has been held back for so long.

Yeah. Nick went out to say, if you wanted to find a black household under 35, comparable to the median white household under 35, the black household would need to be at the 80th percentile. This means that a black household under age 35 has to be in the top 20 percent to have similar wealth to a typical white household under the age of 35. So just incredible, incredible numbers, which explains a lot of the unrest. Morgan Housel tweeted a chart, Visa spending data. And it looks like it is basically unchanged year over year. And so maybe it's not just the Federal Reserve that's propping the economy up. Maybe it's just consumers are spending money. I honestly think if you could somehow bet on the U.S. consumer, maybe that's, I guess your retail

ATF is probably the wrong way to do that, but Discover Financial Services has been on fire. I feel like you could only hold the U.S. consumer down for so long before they just had to spend money. And they found different ways of channeling that. And so we've talked about this before, but you're seeing this big Airbnb rebound, that looking at some of the biggest places. So it's all these beach towns that are seeing these huge advances in Airbnb and Bloomberg had an article saying that Airbnb saw more nights booked for the U.S. listings between May 17th and June 3rd than the same period in 2019. And a similar boost was in domestic travel globally. So people aren't traveling internationally anymore. They're traveling within their borders. But you're seeing

this spike where things are almost getting back to normal in some ways because people want to just get out of their own house for a while. Connors said tweeted RVs are the new commercial real state, Thor Industries put out a statement. One new trend we are seeing is an evolution from work at home to work from anywhere as RV buyers use their new RVs as their office wherever they are or wherever they want to be. RVs are on fire. And a matter of fact, so if you look at the stock chart, Thor Industries was a low, holy cow, it was a low of 32 in March. Now it's at 111.31. So I actually thought about getting an RV and maybe driving to Yellowstone or somewhere, but it's sort of difficult with the kids.

You would have felt, okay, driving an RV? What do you mean? I would not trust myself driving one of them. It's driving a boat on the highway. I was a valley parker. You parked RVs? No, not once. Don't you need to get a specific license to drive one of those or not?

Like a trucker's license? I don't think so. Okay. So you were going to do the Clark Griswold and hop in an RV and... Exactly. So anyway, I finally did secure a house in Norfolk, Virginia for the summer. I looked into the RVs and just decided it was just too much with the kids. So got a house instead on Airbnb.

Okay. I feel like I understand the RV that you can go other places, but being cooped up in your house and then being cooped up in a little RV, I would rather be in another house than an RV. Personal preference, but I can see why people are buying those. Other things like, it's hard for people to find bicycles right now because they're selling out. Obviously, we talk about the Peloton stuff. My kids love going to the park, and I feel bad that we can't let them go for now.

I don't know if that's going to open up in the summer. It's going to be better. but we got our kids a trampoline last week. And it was kind of a prize for my daughter for being so good for us. She had to be on her best behavior to get this trampoline. I could not find one anywhere. Amazon Walmart Target. I finally found one in our local Meyer,

which is kind of like a local Midwestern Walmart. And I called them at 10 o'clock Tuesday night. And I said, do you guys have these trampolines? And they said, yeah, we have six of them. Come pick it up tomorrow morning. I went to go get the next day by lunchtime. There was one left. So a lot of these things that people are doing,

like there are certain pockets that are just doing really, really well. and things that people probably didn't plan. And I anecdotally, another one was CEDUs. They have more demand than supply than they can even comprehend right now. And so a lot of these businesses, I'm sure that they wish they somehow could have just ramped up supply to meet this large demand. But a lot of places are certain pockets are really doing well. In March, U.S. bike sales were up 39%. So I bought a bicycle, as listeners know, I've been talking about it.

I went to the park this morning. So I've been putting the bike in the back of my car, just putting the seats down and throwing it in there. And I get to the park, I take out my bicycle, and the tire is completely flat. It's sort of like off the room a little bit. So I'm like, oh, great. We needed to get a bike rack. I went home, got my air pump, drove back to the park, and I couldn't figure out how to get the air there. Just a complete nob whale.

And now I'm beginning embarrassed. I'm like sweating because I see people looking at me, having zero success. So I ran a mile. First time I've done that and God knows how long. long. So I finally did buy a bike rack. They're freaking expensive. This thing was like 400 bucks almost. So I bought it on Amazon and I decided to go the interest rate free route. So you could break this up over 12 months. How cool is that? Yeah, I've done that before too. They allow you to do six or 12 months. Here's a question. Did you get spandex yet?

I have spandex. I've only wore that inside the house on the Palaton. Okay. Actually, let me check in. Have you been palatoning? Yeah. Two, three, four days a week maybe. I like it. I think it's great. Show me your thighs. Do you have biker legs yet? I think I do. Yeah, I like it.

I just wanted to mention that there were 140 million stimulus checks sent out for $1,200. Two people in my family both got debit cards, prepaid debit cards. I think four million got debit cards. And I think it's for people that don't have their information on file with the IRS. But what happened was, and this is anecdotal, I don't know how many people this was, but it came in a plain envelope from Money Network cardholder services. People thought they were fake, right? Yeah.

You're like, what is this? And people just threw them away. Probably thought it was like one of those fake credit cards or whatever. All right, survey of the week. Ben, this is from 500 epidemiologists, 511. Is that enough for you? Is that enough? Hey, nerds, please stop emailing me.

You know, Ben, a thousand people is a perfect sample size to get to 90. percent confidence interval plus or minus three percent. I don't care about the sample. I understand the sample size thing, but I don't think you do. That only works in a, I do get it in a vacuum, though. America is a vacuum. Listen to these two surveys. Here's two headlines I read this morning.

Headline one, Americans are more troubled by police actions and killings of George Floyd than violence at protests polls find. Here's another one. 52% of Americans support deploying military to control violent protests. Those two headlines seem completely at odds with one another. So I don't see how you can say more Americans are troubled by police actions than by the violence at the protest. And you can also say 52% of Americans support deploying military to control. Those are not at odds with each other. Yes, they are because here's the thing. People lie on surveys. They don't exactly know what they're talking about. Sometimes people don't even know what they think. So I'm just saying, yes, a sample size, I get how that works. But that doesn't mean you can totally extrapolate and say that those samples are right. Yes, you can. So I'm saying your margin of error has to be way bigger because sometimes people have their biases.

and when you ask them or how you ask them can change the way that they answer these things. No, but those are separate arguments. How you ask has nothing to do with sample size. You could mislead 300 million people if you ask a question. Right, of course, but I would like to say 52% of Americans say this caveat. I just want some caveats. Anyway. You can't say it was such certainty.

That's all I want is I don't want such certainty on these. And stop asking if I've taken statistical classes, listeners. I have. I get it. But I just don't want so much certainty about this stuff. I want a little more gray area. All right. Listeners, Ben doesn't like being wrong.

That's what we've learned. Nerd, stop sending me all this stuff about sample sizes. I get it. I'm going to create a burner emails to send you them. 511 epidemiologists were asked questions such as what activities they said they might start doing soon, later in the year, maybe a year or more. Bring in mail without precautions. 64% said this summer. 3% said never again.

Wow. Very conservative. See a doctor for not. Have you given up on all, like, wiping down your groceries and the mail and boxes and stuff? Yeah. Don't you feel like that was like the first two or three weeks and you're like, you're wearing gloves for everything and wiping it down? And now it's like, eh, I feel like that stuff went out the window pretty quick. You know, it's interesting about these questions is that the answers are pretty much all over the place.

So who are you going to believe? So they said 41% would get a haircut at a salon or barbershop this summer. Small dinner party, 32% would do it. 1% said they're never going to attend a small dinner party again. They're just antisocial. Send kids to school, camp, or daycare. 30% said this summer. 55% said 3 to 12 months.

Ride a bus or a subway. 20% said they would this summer. 40% said 3 to 12 months. That is actually higher than I would have assumed. Wait, say that one more time? That's higher than I would have assumed that 20% of epidemiologists would ride a subway this summer. Hmm. This is interesting.

So the highest never again is not. surprisingly, hug or shake hands when greeting a friend. But what's surprising is not that that's the answer, but how few said never again? Only 6% said never again. You'd think people would want to, maybe I'm wrong on this. I'd never realize this. Someone told me this weekend, I could have a bad source here. The reason people in Japan bow at one another is because of sanitary reasons. So you're not shaking hands or touching someone. So to say hello or goodbye, you bow. Well, you're not a big hug guy to begin with. I am. I would be good at the bow. Another high one was exercise at a gym or fitness studio.

14% said they would do so this summer. 4% said never again. What's your plan for going back to the gym? I notice your arms are looking a little deflated. No offense. I have the home gym. I have the Bowflex. I'm honestly probably people are huffing and puffing and sweating.

I'm probably no gym until vaccine. I don't see what the point is. If I get to work out in other ways, maybe I'm way too cautious, but I see no reason to do it at this point. Listen to questions. You guys mentioned on your podcast. about a home equity line of credit. We're in the process of refinancing and debating whether to take cash out for investing or not, which would be better, a HELOC or cash out refinancing, in your

opinion. I thought through this as well. And by the way, I'm mad at the Fed because of this, because I was ready to take out a home equity line of credit and put it into the market. You and Warren Buffett were both too slow. Maybe next time. Yes. I definitely, I feel your pain. We talked to, I don't know how this works. It might be different at different places, but our mortgage servicer said, if you do a cash out, you'll actually pay a higher rate. So they said, wait and just do a he lock if you'd rather do that. That was what he recommended me. I don't know if it's like that at most places. So that's what I was told. Do you pay a high rate on your mortgage if you did a cash out? Makes sense. How should a young

investor at the beginning of their career think about retirement savings portfolio management over the long term? At what level would you move your portfolio to a specialized manager? And on what level might you consider adding alternatives. These are big questions that I really think are investor dependent. I think when you know, you know. And for some people, that might be $50,000. For some people, it might be a million dollars where they're like, all right, the dollars have outgrown my comfort zone. And I want somebody else to do this for me. Well, not necessarily even the dollar amount. It's the complexity and how much time and effort you really want to put into it. If you're half-assing it and not putting all your time and

attention to it. It really depends on how comfortable you are doing it yourself. Some people are, they'll read all the books, they'll learn stuff, they'll follow the blogs, they'll do all this stuff to learn and understand the rules and guidelines, and they can do it on their own fine. Other people either can't or don't want to and just don't have the time or energy. So it really depends on how complex things are and how much of your time and effort you want to put into this stuff. I don't think there's any rules here. It's really just personal preference. The Yield-Curban version is supposed to predict a recession. I find it hard to believe the shutdown and the economic collapse was predicted by the yield curve? No, it was caused by the yield

curve. Just kidding. Yes. So do we say that the yield curve inversion predictive power is broken or should we expect another downturn in the immediate future? Ben, thoughts on the yield curve? The yield curve got so lucky. This is basically like the Golden State Warriors last year against the Raptors and Golden State had two of their top four players get hurt, right? The only winner in 2020 is the yield curve. Yes. Very lucky. I don't know. Ask me the next time around, I guess. But I'll give this one, let's call it a push, right? Okay. This is like you got a 20 and the dealer got a 20 as well. We'll push till the next hand.

Agreed. Any good recommendations? Yes. So I'm back to reading, at least for the moment. Somebody recommended a book called Boomtown. It's an interesting book. It's about the history of Oklahoma City, which might not sound interesting, but every other chapter is the Oklahoma Thunder, Oklahoma City Thunder. So it's history of the city, history of the thunder. And it keeps going back and forth, and it's pretty interesting by this guy named Sam Anderson. The basketball team's been around for like 10 years, hasn't it? Yeah.

Okay. I mean, it seems a little earlier for the history. Pretty interesting franchise. Maybe you've heard of a few people, Russell Westbrook, James Harden, Kevin Durant, Sam Presti. Seems a little early for that, but I'll take your word for it. No, no, no. Stop.

I got a book called Flash Crash, a Trading Savant, a Global Manhunk, and the most mysterious market crash in history. I did not order this book, but it showed up at my doorstep. So thank you to, I guess, the publisher for sending it. I'm going to give this a read by Liam Vaughn. Oh, I watched a Jeffrey Epstein documentary on Netflix. Worth it? Is it a hard watch?

Tough watch. I mean... If it's a tough watch for me, I probably won't... I don't like that kind of stuff. It's hard watch. Okay. It's only four episodes, but I knew next to nothing. I knew nothing about this monster. And it didn't go so much. It was pretty much about the victim. So it didn't really go too much into how he made his money. And it's, at least from watching the documentary, it was sort of unclear. But yeah. Here's a question. Do you think Netflix killed the movie documentary documentary? Documentaries used to be like the length of a movie, like 90 minutes or 120 minutes. Now they're episodes. I don't mind it. Did Netflix kill the documentary movie? By the way, Thor Industries. Man, I miss this trade. I'm slacking, Ben. This is up a lot.

11% today. Okay. Are you ready to hop in? Write it for a little bit. What else? Oh, Robin was watching the wrong Missy, the new David Spade movie on Netflix, which got horrible reviews on Rotten Tomatoes. I think it got like a 30-something. And I will say, it wasn't good, but it wasn't terrible. Therefore, I actually laughed a few times and it surpassed my expectations. Would you ever consider watching something like that? I don't mind David Spade. It was a cheap David Spade. It was a cheap David David Spade rom-com, more calm than rom-com. Right, very low expectations. If there's nothing else on, I guess I'd watch it.

There hasn't been a single good movie released on video, like as a new release in, I don't know, seven weeks probably. It's been a dry spell. Last thing. I'm up to season five of Seinfeld. Slowly working my way through. Jeremy Piven as George. Yeah, that was pretty good, right?

His hair, he was like Elon Musk. Yeah, I don't know if he got a wig or just translates. Oh, 100%. 100%. He went from looking like me, potentially, to looking like a full-haired man. Yes. You should get a piece. I think Josh and I joked about this.

Like, we should do a video where I just, I wear a wig and just don't even mention it. Right. That's a good one. All right. I've started reading again as well. It took me a while and I'm back into it. I've been reading a lot of history and doing a lot of history listening on podcasts, too. But Bubble in the Sun by Chris Nulton is about the 1920s.

Florida real estate bubble? Oh, I've heard of that. Never read it. It's very good. It's a good history. Probably a little too long, but I am enjoying it. And the guy who was second in command at Standard Oil with Rockefeller basically founded the majority of the big, well-known, nice beach places in Florida. As of the late 1800s, Florida was basically uninhabitable. No one lived there. They had to do a lot of work. So this guy who was the second command at Standard Oil, he laid down 155 miles of train track from Miami to Key West, when you couldn't really reach Key West because instead of Islands. Took them eight years to complete. And it cost $35 million at the time. They basically said it was about as dazzling a feat as building the Hoover Dam. Wow. And it was totally privately funded.

How great was season one of Blublin? Yes. They should have stopped then. Yeah. After that, it went downhill. A couple other podcasts, Hope Through History by John Meacham. You got me onto that one, or at least. So good. You helped me. What do you mean at least? Hold on. What do you mean at least? I literally told you to listen. Okay. I thought you got me on his book, Yeah, I hope through history is very good. You can listen to it pretty quick. What did you listen to? I listened to all of them, but the FDR one, I thought was great.

They talked about how... Excellent. During the Great Depression, the World War I soldiers marched on Washington, D.C., and said, we want our pensions now because we have no money. And we fought for the country. We helped. Hoover, who was president at a time, sent other soldiers on them. They tear gassed them, which obviously is...

That was MacArthur, right? Yeah, and then they did it again when FDR took over for Hoover, and his wife went out there and talked to them. with like a couple secret service members and they kind of figured it out. So instead of tear gassing people, they went and talked and they actually just figured it out by talking.

Seems kind of pertinent to today. 1619 is a podcast from New York Times. It actually came out in January, but it's pretty pertinent today. It's about how slavery transformed America. And a lot of good stuff in there that you would never think of. I'm not the first one to make this point.

People have made this point how we were growing up in school. You didn't really learn about slavery in history class. Something that was just never really, You learned about it through movies or TV shows. This is a really good historical account of it. I'm enjoying it. So that's what I got. I've been doing a lot of history stuff lately.

Oh, wait, last one. So because of my bike riding, I'm booming bull market and podcast listening. Dan Carlin, his supernova in the East, the fourth installment is out. He is not that I know so many history teachers, but for me, he is the best history teacher that I've ever listened to. I'm also reading his book called The End is Always Near. And he explicitly, at least five or six times, talks about how a pandemic is one of the biggest threat that we faced to man. And this book was written well before this happened.

He talks about how commonplace pandemics used to be and how it's happened many times before and extremely possible that's going to happen again. So he kind of called it. He's the best. If he just covered every important topic, they could throw out every economic textbook and just have the kids listen to this. He said, to imagine the 21st century world being hit with a great plague like the great disease pandemics of the past is fantastic.

see yet it's also extremely possible and has happened many times before. Wow. Nailed it. Take a bow, sir. Okay. All right. Animal Spiritspot at gmail.com. Let Ben know how incredibly wrong he is for tripling down now. We appreciate the comments and we will see you next week. Stop emailing me, nerds. We'll see you next week.