Animal Spirits Podcast - Tesla Hathaway (EP.28)

Episode Date: May 9, 2018

On this week's show we discuss WeWork's community-adjusted EBITDA, Elon Musk vs. Warren Buffett & Charlie Munger, size is the enemy of outperformance, why index funds are too simple for institutional investors, why housing is a bad investment & 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 Batnick and Ben Carlson, two guys who study 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. So last week, there was an article that just further goes to show that we are in the 20th inning of this bull market. We work sold $702 million worth of bonds at 7.875%, which seems a little bit low to me. And they gave a new valuation metric, community adjusted EBITDA. I think you're missing fact that employees can bring their dogs to work at WeWork. That's true. We actually have a WeWork building in the Ridholt's family offices in Chicago and people have their dogs there. So that's all I got. So anyway, so $20 billion valuation. They sold 7.875% seven year bonds and you told me that immediately the price dropped. Yeah, I think it dropped to like 95 cents in the dollar in like

the first week, which is usually not a good sign with bonds. So the yield shot up to what. I left my CFO calculator at home. My brain doesn't function that quickly, but I'd say to not a good level from the people who bought it. All right. So they said that while it's adjusted EBAA was negative $193 million. It's adjusted EBITDA before growth was $49.4 million and its community adjusted EBITDA, which excludes general and administrative expenses was $233 million. Those expenses don't matter, though. They're just general. I wouldn't worry about it. Oh, there are just one time, every time expenses. Don't worry about it.

So speaking of cashburn, Elon Musk had quite a weekend. He's figured out this whole Twitter thing pretty well because there's really a few different ways you can go with Twitter. You can join motivation Twitter and post hashtags and motivational tweets or motivational quotes. Or you can go the troll route. And obviously, Musk has gone the troll route. So on Saturday, I think, so over the weekend, Buffett and Monk. were asked about Tesla.

I don't know exactly how it came up, but I think that Elon Musk said that moats are lame. And then Buffett and Munger shot back. And then Musk tweeted, I'm starting a candy company and it's going to be amazing. And that's just a cheap shot at Buffett and Munger's Seas Candy Company. The thing is, the guy has such a rational confidence or maybe it's rational in some ways that it's almost like he acts

like he has like this ace up his sleeve that no one else knows about. So either he is irrationally confident and his company is going down or he has, he knows some huge surprise that one else knows about and everything is going to be fine. But from all the financial people that follow Tesla, they seem to think this company is just doomed. Well, last week after the conference call, a Bernstein analyst Toganyi Saginaachi asked Tesla about their capital needs, which is a legitimate question for most people who invest in public companies. But Musk said boring bonehead questions are not cool. And as we talked about a couple weeks ago on our show with Morgan Housel, it just seems like this is the kind of company that

needs to be private. It's like just let him go experiment on his own with some private investor money and get out of the public sphere for a few years and then come back and go public once you figure everything out. But at this point, it just seems like being public is just a huge distraction for them. Yeah. And these are, I mean, these are legitimate questions. So, Tesla has had positive free cash flow in just four out of 37 quarters. So if you're an investor, like, these are not boneheaded. These are very obvious questions that you want to know before you invest. Right. Yeah. I just, this is again, this one falls into my too hard pile where they could change the automotive industry forever or they could be gone and bought by another company.

And I wouldn't, I wouldn't be surprised either way. So as you mentioned, this weekend was the the meeting in Omaha for Berkshire Hathaway meetings. What do they call it again? Woodstock for capitalists. It's where 5 million contrarians all go to the same place to talk about the same stocks. So on Twitter this weekend, a lot of people were posting the charts that showed that Buffett has lost his edge and he hasn't outperformed with the S&P 500 over the past 10 years. Therefore, the previous 50 years of his performance record should be struck in the record books.

I mean, but at a certain point, I mean, what is he? 111? I mean, isn't at a certain point we should expect in a four or five hundred billion company? Shouldn't we expect them to not outperform every year when they're that big? Yeah, Buffett and Munger have spoken about this ad nauseum. So 10 years ago, Berkshire had a market cap of $200 billion. And if you want to equate that $200 billion to AUM, which I think is silly, but I would pose a question, how many $200 billion hedge funds have kept pace with the S&P 500. That's true, but Buffett invest in financial stocks, and we all know that financial stocks are manipulated by the Fed. So it's kind of a give and take here. That's true. This is the

old push and pull going on. But maybe a more fair comparison is to compare Berkshire to insurance companies, which, Tadda, they did manage to outperform over the last 10 years, 125% for Berkshire and 119 for the S&P insurance ETF. And let's look at it this way. Like you said, you certainly can't compare this to AUN because it's a publicly traded company. They also own. private shares or private amounts and private companies. But let's say you own Berkshire Hathaway stock and it performs in line with the market. You're paying no fees on that stock to get an ultra-diversified group of businesses and holdings. And if this is a closet index fund with no fees, is that almost a win at this point at their size? Yeah, absolutely. And there's also no taxes.

Yeah. Yeah. If you're just a long-term shareholder, then I think you should be happy with that result when they're this large because again there's no way you can expect them to outperform at this size and Buffett himself has said in the past that you know size is the enemy of performance so the bigger you get the harder is to outperform I sort of get the mentality that like people are sort of over Buffett and Munger and especially the people that do nothing but quote Buffett and Munger all day long like that can get really tiresome but there are much worse people that you can emulate and the people that are like totally anti-Buffet he's a hypocrite and that I don't really understand It's the contrarian, being a contrarian against the contrarians because everyone who follows Buffett thinks they're contrarian, but then those who go against Buffett are the actual contrarians. And my head hurts from thinking, but yeah, that's kind of the idea that people, I think, there's always going to be a 5% faction on one and the other that's going to take things too far, I think.

Yeah. So in his latest annual letter for the Yale Endowment Fund, David Swenson, who's the CIO of Yale and has been for roughly 30 years or so, took Buffett. task a little bit because Buffett himself has actually said that a lot of these large institutional funds, endowments, foundations, pensions should stop the game of trying to pick managers and simply index their assets because it's lower cost. They can think more long term. And Swenson took exception to this because Yale is one of the best performing endowments for a very long time now, going back to the early 80s when Swenson took over.

So Swenson showed 10 different Ivy League endowments over the past 20 years and how all of them have sort of destroyed the 60-40 portfolio, and his point was, well, there are indexing probably works for most people, but actually for a lot of good endowments, it doesn't make sense because they can actually make the active decisions. And I get the fact that Swenson here is trying to defend himself in the way that they do things, but it's kind of a little like saying everyone should be in the top two or three percent or something. It's just, it's never going to happen. And one of the things that really caught my eye here in Swenson's letter was he talked about Yale's managers and how thoroughly they're researched. And he said over the past decade, Yale's manager turnover averaged about 7.7% implying a 13-year holding period for their managers, which is unheard of in this space because that's how these things work as you play this musical chairs game where you constantly switch out managers.

So I think the fact that Yale has the governance place to do that just shows why most of the other places probably should index because they don't have. that in place. Yeah, I think Buffett was probably talking generally. I don't think that he would tell David Swenson that he should index. Exactly. So it seemed a little bizarre because in my mind, Swenson is the Buffett of the institutional asset management world. And so actually there was another story in Bloomberg this week. Who's the Gartman? That's a good question. Lots of them, I think. So there's another story actually about this small Carthage College in Kenosha, Wisconsin, that in the last 10 years, they've invested all index funds and they beat 90% of their peers. And I've done some work on this in the past where I showed that the simple three fund portfolio

from Vanguard would have done better. So while, of course, anyone who's in the top 1% of endowments is going to do way better than the indexes, the majority of the funds in this space are probably going to be beat by an index over time. And I think it's going to be even harder going forward because there's so much competition for private assets in that space. And then the guy was asked, the guy who runs this Carthage College Endowment was asked, you know, why isn't the reliance of indexing more common when there's a half a trillion

dollars in college endowments and he said maybe it's too simple which kind of echoes some of our philosophy on this stuff yeah it's just politics i think like why would they indexed yes yeah there's there's a certain cachet to to not indexing in that space so you had an interesting experience over the weekend shopping for mulch sounds amazing yes i was telling you consider yourself lucky in some ways for living in more of a condo setting because owning a home is kind of a pain at times there's so much upkeep you have to do with it and now that it's actually finally nice in michigan and we've gone straight from winter to summer, I have to all of a sudden do all the landscaping and get all that stuff figured out. And this kind of tied in with a story from

Ken Fisher, who's just on the Meb favorite podcast. And he talked about how he's written a couple pieces about how homeownership really isn't as great of investment as you think. And I kind of like to echo these statements as well because there's just so many costs that go into homeownership that people don't take into account when they just look at the prices. So the comment section on this was hilarious. And over the past few days, I've been creeping a little bit more into the comments section just to see what people are talking about. And I sort of enjoy the insanity a little bit. You're brave.

Yeah, you're pretty brave. Like, whenever I read a Bloomberg piece, that was the last thing I'd want to do is go into the comment section because it can get ugly. I would never want to see what people are commenting on stuff that I wrote. But anyway, what Fisher was saying, he's not saying not to buy a house. What he was saying is that no matter how wonderful your home is, it's a worse investment than virtually everyone thinks. that nobody properly accounts for all of the costs involved.

Yes, it costs way more than you think when you include taxes and upkeep. But I think the way that I look at a house is I never look at it as an investment. I look at it as an asset because housing in a lot of ways is consumption. It's something that you're going to have to spend money on whether you're renting or buying. So one way or another, there's going to be an outlay of cash. So I don't look at it as a productive investment. It's an asset that you're going to use. And so it's hard not to get emotional about it because it's such a big part of your life.

But thinking about it in terms of investing and how much it's going to appreciate, I think is probably the wrong way to look at it. If Morgan were sitting next to us, he might actually you because he says that a house is a liability masquerading as an asset. Ah, that's a good way to look at it too. But yeah, I guess you have to obviously net it out and think of what your actual equity is, which is a good way to think about it too. And that's why I say for a lot of people, I've cautioned a lot of my friends after, college, I remember saying never buy a starter home. I think that's one of the worst things you can do because the first five to seven years of a 30-year mortgage, the majority of your payments are going towards interest costs. So you're not even building up any equity. So it's just paying down the debt holder. So in a lot of ways, it really is something that you have to think very long-term

about if you're going to make any money on it. So let's give some of the numbers that Fisher gave. All right. So suppose on January 1st, 1995, you bought a house in San Mateo, California, which is one of the greatest places in terms of the real estate market. So the median home price was $305,000. And if you put down 20% plus 1% of closing costs and got a 30-year fixed mortgage rate going for 7.5%, your monthly payment was $1,700. So in 2005, when you sold your house for the median price, which was $763,000, which is a perfectly timed deal because that was just months before the housing price peaked. All right. So after your amortization payments, your remaining mortgage balance was $211,000. And after paying that off, you had a gain of $550,000.

Substracting your down payment, you had a whopping 803% return or 23.4% annualized. The problem is you forgot a mega boatload of expenses, all of which must be subtracted. Yeah, and I think he actually talked about the average upkeep is like $1,800, which I think is way on the low end for a house. Our house that we just moved into last year is new and we still spend a lot on upkeep. And then there's property taxes, remodeling, all that other stuff. I think, yeah. Again, I think housing is, there's a lot of psychic income that you get from something, something of ordering a, having a house. What did you just call that? Psychic income. Psychic income. That's new. So, okay, so I believe this is a failure term. I could be wrong,

but I've read it in a psychology book. And the basic idea behind psychic income is that you spend a little more money on something because it has a value to you. So why are wedding dresses so, important for wearing them for one day and you spend thousands of dollars on them because you get the psychic income of wearing it for a day. And yeah. Interesting. So you learn something. You can use that for your thirsty today learned on Twitter today. I did not, I did not know that. So he was saying that if you had bought, if you perfectly timed one of the best housing markets recently, then you would have got an 11% annualized pre-tax, which is a really good investment. But he chose like the best area. And then he compared it in a follow-up post. If you did the same thing in Seattle,

you would have got just 2% annually. And if you did it in Austin or Cleveland, you would have got even like negative returns. So the point, again, the point was not rent and then put the difference into stocks or an SP500 index fund. It was just that people tend to wildly overestimate how much they make on their house. And because you're dealing with big numbers, big round numbers, you think, you hear these stories about, well, my grandma bought this house. back in the 50s for $7,000, and they sold it for $250. Oh, my gosh. But if she just put that $7,000 into Berkshire Hathaway.

Yeah, exactly. She's golden. But yeah, it's – and Robert Schiller's data shows that over the long term, housing more or less keeps up with inflation, which makes sense because it's a depreciating asset in a lot of ways, and it has costs involved. So last week we spoke about the St. Louis Fed blog showing that the median account balance for people ages 56 to 61 is just $25,000. So I wanted to show what it would have taken for people to become in like the 90th percentile.

And it didn't really take that much. But before I get to that, this was just a crazy stat that I stumbled across. So if you invested in a 6040 portfolio since 1980, which of course nobody did, but it would have taken just $6 a month, just $6 a month into a 6040 portfolio would have gotten you to the median account balance today. you were showing me these numbers as you're running them and that almost didn't make sense to me. It just seems so laughable. And again, that's the median. So it just takes nothing and it just shows how it just shows how crazy it is that people's retirement savings are so poor. So if you were to invest

10% of your pre-tax income into a retirement account, which might be a little bit on the high side, adjusting for inflation in order to get to where you to the 90th percentile, which I think is like $855,000, you would have needed to invest $160 a month, keep up with inflation, and that was the equivalent of you made like 60, about 60 grand today. So not a, not a terribly high number, but, you know, I would suppose probably a bit above average. But the point that I was trying to make was that if you waited just five years to invest or 10 years to invest, you would have been out of pocket. You would have had to invest in extra like $200,000 if you waited 10 years. Yeah, you did a nice table in here. And I think that the main point that I

took away from it is the fact that, yeah, you can wait until you're making more money. But even at the same percentage, you're going to have to invest a lot more money overall to get that point. And it's really hard to beat that compound interest over the long term. Yeah. So, Ben, would you rather lend money to WeWork at 8% or Argentina at 40%? I don't know. Yeah, Argentina. So Argentina raised, their central bank raised interest rates by almost 7%. And it says it's the third hike in a week. So now they're short term interest rates at 40%, which were just in April, at the end of April, at 27.25%. Can I translate these into Bitcoin instead of using the Argentinian peso. That's my question. Whatever works. All right, because isn't that the

point of Bitcoin that you don't have to deal with these types of crazy central banks in third world countries? But yeah, this is crazy. This was just sending the economist last week, and I had no idea of this, but 40% in Argentina. I'm not sure why this isn't a bigger story, or maybe it is, and we're just living in our own little bubble. But this article said that Argentina's peso had fallen by a fifth against the dollar since the beginning of the year, making it the worst performing emerging market currency. So again, this always goes to what you always say. If we're talking about which is a smart, best smart beta fund, we're already in the top 1%. Yeah, this stuff is actually impacting people's personal finances, not just their investments. And I think it's easy for people

to complain about the Fed these days because they think their sharp ratio should be higher in their hedge fund or something. But I mean, the relative amount of calm that we have from our central bankers in this country is pretty ridiculous when you think about it compared to something like this. So Argentina has had 25% average inflation over the past five months. Is that good? That's, no. It's the opposite. Yeah. So, so Bitcoin priced in Argentinian pesos is doing really bad this year. Is that what you're telling me? I'll get back to you. Okay. So Eric Balchunas wrote a post last week that a bare market would be the death knell for active funds. And we could argue about this to a blue in the face, but a data point that he wrote that I thought was

pretty insane. In the past four years, almost one trillion dollars has come out of active equity mutual funds, including in 34 out of the last 35 months. Yet their assets have increased by about $1 trillion over that time period to $6.5 trillion, thanks to central bank manipulation, obviously. So despite losing about 20% of their deposits, they saw fee revenue increase from $40 billion a year to $45 billion a year. So the takeaway here is active funds have really been saved by the bull market because the flows have been going against them every single year. And it's been relentless to places like Vanguard and BlackRock, but because the markets have continued to rise, it hasn't really impacted them that much.

Yeah, so I don't think Eric's point is that people in index funds are not going to bail in the next bear market. I think the point that he's trying to make is that money will just continue to come out of active, and when it does reenter, when it gets off the sidelines and back into the market, it will go into index funds and not active funds, which I think is probably, which I think there's some validity there. Yeah, so we could see the combination. of falling asset prices and maybe even an increase in the outflows to active funds. And that could

really shift the balance. He's saying it could shift it to more like 40 to 50% in index funds from the, what, 20 to 30% now. Yeah, I think it's, yeah, something like that. Okay, so there's a cool story in the economists. I know we're on record as saying that we're an anti-survey podcast, but this one was kind of interesting. So there's a working paper by three economists and they tried to figure out how much your free internet services are worth to you. And so they look at things... Hold on. What's free internet? The survey is already flawed. I pay for that. No, free services on the internet. Okay. All right, fair. So this is for when you go to Starbucks and you do get free internet. No. So they wanted to know, what would it cost to give up like free Google Maps for a year or access to email or even like Google search

engine. So they found people would need to be paid $3,600 to give up on Maps for a year, $8,400 to give up email for a year, and $17,500 to give up Google for a year. And I thought all these numbers were way on the low end for me. So they're trying to say, how much are these actual worth to people, even though they're technically free? Well, I would say that this depends on your economic situation because I think, like, 99% of the world would accept $17,500. in order to give up, to give up what? What is that attached to? To Google.

Yeah, I guess if you gave up, if you gave up Google Maps and Google for a year, you'd have the median retirement savings balance. Boom, we just solved the retirement crisis. Wow, that was easy. That's so simple. All right, Carlson Batnik 2020. For the Fed Chair.

Let's make this happen. Although that sounds insane. Seriously, like, would you, I would, all right, this survey is bullshit. it. I would easily take $3,600 to give up Google Maps. Yeah, I could see that one. Yeah, I could give up Google maps. But giving up email and giving up Google, like, I could not give up Google. Could you? Well, what did people do before Google? They just walked around not. Like, if you have a

question with friends at dinner, like, what was the name of the actor in that movie? Or what was, what is the, what was the year did this happen? In the past, people just go, huh, I don't know, no clue. You would go to Incarta? Yeah. Open up the A section. Do you know that Encarda was owned by Microsoft? I did not know that. Something else you learned today. All right. Two things we learned.

All right. Wait, so what do you think about the survey? You think this is on the low end? Do you want to change the opinion? This is for me personally. I think they're on the low end. But I agree with you. It depends how many people they surveyed and what the...

You're right. This just goes back to why we're anti-survebrate. This survey is nonsense. Yeah. Yeah, that's true. Yeah, the point stands that I think there's a lot of value. And their whole point they're trying to figure out is maybe something like GDP is a flawed statistic because there's all these things out there for free that have a lot of value that you just can't put a number on. That I agree with. Yes. So some good tweets this week that I saw from Len Kiefer showing the length of this current expansion, 91 consecutive months of positive month over month jobs. growth. It's a lot. It's a lot of months. Which would put it on, that's a record, does it not? I think that's the record, yeah. It's got to be pretty close to what we saw in the 80s and

the 90s. What is kind of interesting, when you look at these economic stats, people assumed following the crisis that immediately we were going to have a double-dip recession and things were going to continue to be crazy. But it seems like the economic cycles are just getting longer. And maybe they're not as big as they once were. But it seems like the volatility in economic data and stats and the length of time that these things last has just been extending. Did you hear us talking about Argentina five minutes ago? I'm talking about in the U.S. This is just another point to why we're lucky to be in the U.S. and not dealing with those

types of situations. Well, Buffett always said that if you're being born today in the United States, you're the luckiest generation ever. All right. I think we've hit our limit on Buffett quotes for the day, but that's fair. There was another cool chart showing the cumulative change of non-farm payrolls going back to I think the 1950s. So right now, we're at over 17 million jobs since June 2009. A lot of jobs. Yeah, I feel like that's a lot. It's a lot. Yeah, these are cool. These charts are probably better

visually than podcast worthy, but so we'll put it on a show. I'm pointing to my computer like anybody could say. Yeah. Look at this. So I got a cool, speaking of charts, I got a cool one from a listener. So last week we talked about how things are getting better in the world and how I think something, a place like Africa could be a huge opportunity for investors in the years ahead. And this is a I don't know, maybe multi-decade type of thing and not in the next few years. So there's a forecast of the world population by continent between now and the year 2100, which I think this is a little bit of a prediction, but who knows. So they show Asia, Europe, Central America, South America, North America.

They're all pretty much the same between now in 2000, or the year 2100. Africa right now is something like 1.2 billion people. By the year 2100, they're forecast to be four and a half billion people. Let me ask you a question. Well, two questions. What's Oceania? Is that like islands? I don't know.

Is that a future place? Is that like Avatar or something? It's like Waterworld or something. I saw that. I really don't know. Good question. We like to be transparent here. Are you long Africa?

Because it sounds like you are. Is there even a way to do it? I'm sure there's, I think there's probably a frontier market fund you could invest in. I guess I'm probably not unless it's any. emerging market funds. But if someone figures out a way to do that, the funny thing is, when I was in the endowment world, everyone was really big on this and probably the last few years that I worked at the endowment, so probably 2012, 13, 14. And people wanted to invest in private equity funds in Africa, which I thought was absolutely bonkers because if their public markets aren't

up to snuff yet, investing in the private markets have to be so corrupt and so difficult to do. And I just can't imagine what some of those funds are doing these days. Yeah, that's interesting. But yes. So when you look at things like economic growth, one of the biggest factors is productivity and population growth. And Africa is going to have an enormous growth in population over the coming decades. If and when that happens, I think there's a good case to be made for some money in that area. That's all I got. All right. So let's move on to a listener question. Why shouldn't someone hold cash and wait for the likely correction to buy in a much lower prices? I have a long-term investing horizon and I'm perfectly happy to invest in index funds now and hold a for 30 years. This person's in their mid-30s. However, since valuations are at or near all-time highs, isn't it highly likely that there will be a large drop in valuation at some point in the next five years? If so, shouldn't I be waiting for that dip to invest rather than buy current prices? What say you? My first thought when reading a question like this is if you have 30-plus

years to invest, then you're probably one of the few investors who shouldn't care about valuations. I think you should be more worried about valuations if you have a shorter time horizon. But if you have a longer time horizon, you know, I think trying to wait for every dip is just a, I mean, think if you did this in the 90s or the 80, you know, I just think it's the kind of thing that trying to time these things when you're young and you have that big of a time horizon in front of you, I think that's, that's a tough stance to take. Yeah, I think that if, I guess it depends, if he just inherited a million dollars, I would say that there's more, maybe a deeper conversation that you could have about that. But if he's talking about like building cash in his

4-1K. Like, he's contributing, you know, 5% every two weeks, but he's just sitting in cash waiting for a correction. That, to me, would seem like a very, very foolish thing to do. The way that I look at is I think that cash is like a gateway drug to trying to time the market all the time. And I think if you have decades and decades in front of you, if you're going to try to continuously time the market and get cute with these things, I think it's just a recipe for disaster. And that's not to say that maybe he's right. Like, now it's probably not the best time in the world from a valuation perspective and there are going to be better entry points. But that's why you invest periodically in dollar cost average and diversify by

investment horizon and valuation level. But trying to continuously time the market when you have such a long runway ahead of you, I think, I just don't think that can end well for that many investors. And after this recent pullback, the CAPE ratio is only at the 99th percentile. So we've actually stocks are looking reasonable here. Yeah, it's got a lot of room to run. But I looked at, I actually did look at stocks versus cash on a real basis and was surprised to find that cash outperform stocks 36% of the time, going back to 1926, looking at rolling five-year periods on a real basis. That was higher than I would have thought. That is interesting. And I think part of that is because cash probably yielded a little more in the past. But I guess another way to look at that

is probably over one-third of all five-year periods, stocks are probably going to be down after inflation. Yeah. And I would also say that there is definitely a fallacy thinking that you're going to be the one who's going to be rushing for the doors when everybody's running for the exits. Yes. Right? I'm just going to wait for a market crash and then I'm going to invest. Yeah. Okay. Good luck with that. Yeah. I've had coworkers in the past who said, all right, I'm going to wait for a 5% correction, then I'm going to put my 401k back in the market. And when you get to that 5% correction, you start thinking to yourself, you know, I'm going to wait until 10% now. And then you get to 10, I'll wait till 20 and there's just never a good time to put that money to work. So unless you

really have that steady hand and can follow some simple guidelines or rules to get yourself invested, it's really going to be hard to actually pull that off. And then what if you said this in 2013 when we finally broke above the 07 highs and you said, ah, the markets reeked of euphoria. When they reeked of euphoria, you're going to wait for a pullback and now we're whatever, 70% higher, whatever it is and you just never got it. Then in that case, your brain is mush for the rest of your investing career, you will never be thinking objectively ever again. Because markets could crash and the crash would take them back to the level that you first passed on them at. Right. Exactly. And you've been sitting in cash the whole time

killing yourself. So it's a really psychological exercise and I guess it's possible you could get in at better valuations. But I don't see the point in trying to jump in it out and you have that long of a time horizon ahead of you. All right. Let's move on to our recommendations. What do you got for this week? So I've been, I've been on kind of a fiction reading kick lately. and so I keep talking about these long-running detective series that I read and I actually just read another one the last week because I did a little traveling last week and it had some extra time on a plane because I was circling a tornado. And so I read two kinds of truth by Michael Connolly.

That's a Harry Bosch novel. Have you ever watched the show Bosch on Amazon Prime? Nope. I think the fourth season just started. It's pretty well done and it's based on this series, this detective series. It's probably... Hold on. Is this another one?

Yeah, it is. So this is another one that's probably read 25 to 30 of these. and the guy who writes them used to be a crime reporter at the L.A. Times, then he became an author. And they're really good, and they're very procedural with the detective work. And again, if you like this kind of stuff, Bosch on Amazon Prime is pretty good. I also read Reducing the Risk of Black Swans by Larry Swaydrow and Kevin Grogan, who are both from the Bama Lions, and Swaydrow's written, I don't know, probably 10 or 15 books at this point. This one, I don't know if I could technically recommend it, but it was about alternative assets.

And I don't think I necessarily agreed with all the points he made, but it was definitely, he used a lot of academic literature to back up his stance. So right or wrong, he kind of backed it up. But it was interesting some of the alternative assets that he chose. Not really my cup of tea, but I think it's an interesting book for anyone looking for something outside of stocks and bonds. And finally, my wife and I, I've just figured out that there are no good movies anymore because there's never anything good to rent. So we actually just did a rewatch and we watched the movie Arrival. Did you see that one? Yeah, didn't you just watch that? Probably a year ago. So we watched it again and it's actually really good on a second viewing because you pick up a lot of stuff. And it was a really, I thought it was one of the more intelligent sci-fi movies I've seen probably ever.

That was just, it actually aged well. Wait, was it better than Alien versus Predator Requiem? By the way, I thought of you the other day because there was someone tweeted out that aren't aliens and predators, both aliens and predators? Oh, man. That's good. Mind-blown. Speaking of re-watching, have you ever listened to the podcasts with the re-watchables? With Bill Simmons.

Yeah. I have not listened to it, but I know the premise. Okay. I have not listened to it either, but it's a great idea. Yes, for the most re-watchable movies. Because there aren't that many of them in my mind. I'm going to disagree with you. There are a lot of re-watchable movies?

Yeah. Tons. Anyway, okay, by the way, Wodgebaum, Stan Van Gundy and the Pistons have parted ways. Okay. That sounds about right. So he, what did he do? That was, that was, so he blew up the team to get Blake Griffin, and that was a... I don't know.

I'm a Detroit sports fan, so I'm used to pain and misery. I wonder if Stan Van will ever be given the case to the car ever again. Yeah, well, probably not. What do you got for your recommendation? All right, so sticking with basketball, so Bill Simmons, the book of basketball, is huge. So I've been reading chapters here and there. And it's hilarious. This is probably like one of the only books that I'm,

L-O-Ling, constantly. Yeah, it was pretty good. So one interesting data point, in his first five seasons, James Worthy missed 42 of 43-3s. In the next two seasons, he improved to 4-4-39. So for his first seven seasons, James Worthy took 82-3s and missed 77 of them. Is that bad? That's not good. And then he was talking about Robert Parrish, how he just never, he looked the same for his

entire career. Yeah. He said, I can see any 80 Celtics highlight and know the season immediately from Larry Bird's hair and mustache. But Parrish, from 1982 to 1993, there's no way to tell. It's impossible. Yeah, he did look the same the entire time. Same haircut, same look. And then Stephen Pinker's Enlightenment now is sort of the same thing that I'm reading a chapter here and there. So he quoted, I forget who wrote this, but this is just a really interesting quote. We are led to forget the dominating misery of other times in part by the grace of literature, poetry, romance, and legend,

which celebrate those who lived well and forget those who lived in the silence of poverty. The errors of misery have been mythologized and may even be remembered as the golden ages of pastoral simplicity. They were not. Yeah, he does a really good job of trying to be very realistic about this stuff. Yeah, it was a really great book. And that is it for me? Yeah, send us an email, Animal Spiritspod at gmail.com with any questions, comments, feedback. We've been getting a lot of good TV recommendations.

And one of the ones I got recently for about five people is Babylon, Berlin. So that was the follow-up to Dark. People said, if you want another subtitle show. So that's going to be in my queue. Thanks for listening.