Animal Spirits Podcast - The 1990s Really Were Better (EP.382)

Episode Date: October 16, 2024

On episode 382 of Animal Spirits, Michael Batnick and Ben Carlson discuss: an unbelievable run for the stock market, diversification vs. hedging, an unprecedented surge in household wealth, the new normal of negativity, some nostalgia for the 1990s, the stock market doesn't care who the president is, 100% yields, when to ask for an early inheritance, how to crack an egg correctly and much more! This episode is sponsored by Nasdaq and Fabric by Gerber Life. Visit: https://www.nasdaq.com/solutions/nasdaq-etf-listings for or more information on the largest U.S. equities exchange by market share. Go to meetfabric.com/spirits for more information on life insurance from Fabric by Gerber Life. Sign up for The Compound newsletter and never miss out: thecompoundnews.com/subscribe Find complete show notes on our blogs: Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's show is brought to you by NASDAQ, leveraging its reached, trusted execution platform and experience. NASDAQ helps with ETF listing processes by delivering a complete ETF ecosystem with deep liquidity and unparalleled marketing tools to differentiate, activate, and amplify ETF's issuers brands. I'd say business is pretty good. Stock is near an all-time high. We're going to talk about the boom in ETF listings today. NASDAQ, a clear beneficiary. Number one exchange for ETF's transfer since 2021. Number one.

Number one. Yeah. I didn't realize the stock is at an all time high. I wouldn't even know who number two is. How about that? I think they call that dominant. Okay, NASDAQ.com to learn more. Today's Animal Spirits is brought to you by Fabric.

Fabric by Gerber Life is term life insurance so you can get done right here, right now, covered right from your couch and under 10 minutes with no health exam required. Pretty good. The great thing is is that it's all done online. It's easy. All of their stuff through fabric is nice. Listen, I always thought Gerber was just baby food. baby food. I didn't realize they had this financial capability, but it makes sense to marry the baby food with the long-term planning for his child, right? It does. And the no health thing is good.

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Policies issued by Western Southern Life Assurance Company, not available in certain states, prices subject to underwriting and health questions. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnick and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are, solely their own opinion and do not reflect the opinion of Ridholt's wealth management.

This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spurits with Michael and Ben. When I spoke about my difficulty peeling a hard-boiled egg, I did not anticipate that being perhaps the number one email topic in the history of animal spurts? We got a lot of egg experts that listen to the show. I got a lot of stuff on hard-boiled legs, and guess what? My daughter, Kate, seven years old, I made her two hard-boiled legs last night using the

tent method, and she said these are the best hard-boiled legs I've ever had. Let me ask you a question, then I promise we'll leave the egg thing. How do you crack an egg? How does Ben Carlson crack an egg? One hand? No, but is there a... Where do you crack the egg, I guess, specifically? You mean on a bowl or on a pan or what?

Yeah, where do you crack it? Yeah, in the middle of the egg on the bowl. The middle of the egg on a bowl. So the corner, right? Yeah. The corner. Okay. Wrong.

Wrong. I bet you have had many an instance where you had to fish for a chipped shell, and it's really difficult to get out of the yoke or out of the white. It is usually. No, I know what I'm doing, though. Okay. Maybe you do. But here's the right way to crack an egg from an emailer.

And I verified it this morning. You crack an egg on a flat surface, right in the middle of the egg, boom. No, no shells whatsoever. You pierce it with your thumb and you're good to go. It's magic. Yeah, but doesn't all the stuff come out of it then? Yeah, if you smash it, control yourself. Okay.

That sounds like it would be, it was way more of a mess. No, no, no, try it tomorrow. Egg counter, a flat crack. That's okay. Moving on. All right, yeah. I was shocked, too, that the egg, a lot of egg content. Yeah, really seem to resonate.

You know why? Eggs are apolitical. This is true. We didn't get a ton of follow up on that, but I got one politics thing today. That's it. The stock market is on a heater. I had our chart kid Matt look at this for me over the past year through 930. The S&P 500 was up 36.4%. What about through 912?

What? Sorry. I told the friend of mine that I was going to drop a Howard Stern reference. Oh, okay. Sorry. Gotcha. That was a... Did you listen to one smart list?

He was pretty good. I did not. He was on smart list recently. So I looked at all the rolling 12-month returns going back through 1926, which is how far away the data, and that's in the top 10% of one-year returns. The stock market is on a heater. And then I looked at all the 3, 5, 10 going way back.

And, I mean, we've been doing great since, I don't know, the past 15 years. But the whole point of this exercise was to look at how little variability there is over time. Yeah, this is pretty remarkable. Right? I just got to say, I'm sorry, I can't help myself. Yeah. I noticed that Japan's not on this chart. I saw a stat this morning that...

The long-term returns in Japan aren't bad. Stop. Stop. It's true. As long as you invest in any time after 1989, you were good. 214 stocks in the S&P, I think that was a number, hit a new alt-time high in 2024. Not bad. So pretty decent participation.

Better than I, Josh and I were talking with maybe Dr. Kelly about this, or maybe somebody else, I can't remember. I had chart kid showed the rolling five-and-ten-year returns. And I just assumed that they would be like in the top, certainly the top quartile, decile even maybe. No, not the case. Just above average. Yeah, it's not that. And the funny thing is, is the three year number is one that got me because

2022 was an awful year. Well, that's the thing. It's funny. We think like, oh, the returns have been incredible. Oh, yeah? How about 2022? Didn't we have a two year period where stocks went nowhere? Yes.

So the three year period is actually pretty close to average because you had one bad year and two good years. And so the S&P's up 24%. Well, as 22 rolls off, the, the three years. year rolling period will be pretty... We keep asking, is this as good as it gets? And things keep continuing to get better. We're up 24% on the year now.

This has just been... So we had an 8% correction with a 20 plus percent gain. That's a pretty darn good year. Mentally, I'm mentally prepared for this as good as it gets. Not to call the top at all or anything, but like, how about this? When I say that mentally, I'm just, I'm soaking it in. I'm enjoying it. Because it's not always like this.

Enjoy the ride. So Chart Kid Matt had a really good one, too. He said since May 2021, which was just after the peak of the craziness for the meme stock, stocks have gotten 19% cheaper. So he said in May 2021, the P of the S&P was 33 times. Now it's 26.7 times. So it's 19% cheaper. Over the same time frame, stocks have rallied 38%.

So he's saying earnings have grown more than the stock market in that time, which obviously some people say, well, 26 times is still pretty expensive. But this is the kind of thing where I think when people look at valuations, they assume static earnings. Right. Right. Like it's 26 times forever. Oh yeah?

How about two years out? How about three years out? Yes. Great chart by Matt. Really interesting. I never would have thought that if you would have asked me. All right. So I thought one of the interesting things you mentioned your talk with David Kelly from

J.P. Morgan. He talked about this difference between diversification and hedging. And I think it's a very important point. Because I looked at the spreads on bond yields and then the inverted yield curve stuff. Right? And I think if you use these kind of signals and you'd say, all right, now is the time. If you were one of these people that looked at these signals two years ago, wherever, especially the inverted yield curve, and you said, this is it.

There's a recession coming. The inverted uglub is telling me this. And I think a lot of people look at that as, okay, it's time to hedge. As opposed to his, I think his point would be like, okay, if you really think you're worried about some sort of signal that may or may not portend something happening, maybe diversification is a better bet for you than hedging. I think that that's the difference between being like an investor and someone who doesn't know what they're doing. Or being an investor and being a talker.

So I think the good news is that how many investors did anything with their portfolio because of the yield curve inversion? I don't know. Zero. Like it rounds to zero. You know what I mean? Like people that are actually investing in the real in the real world. The pundit paper portfolios, those were short. Yeah, exactly.

Yes. Okay. So he was talking about the wealth stuff. So I had to look at this. So from the top in 2007, we had like $55 trillion of household net worth in this country. The Fed has this really cool data series that you can look at. Source? Wait, you said the Fed?

Okay, I'm just... The Fed, yeah. So this is from the Federal Reserve. Pretty reputable. It dropped like $10 trillion in the great financial crisis, which was bad for people. Obviously, the stock market fell almost 60%. Housing prices were down almost 30%. You would expect a ton of value to be lost.

but it was like $11 trillion. From then, from the first quarter of 2009, we've added $100 trillion in household net worth. And since the pandemic started in 2020s, this is from Q1, 2020, we've added $50 trillion in household net worth. How many billions is $100 trillion? Don't answer.

There's a rule. You never do math on a podcast. Okay. The funny thing is these are the kind of questions that my son will ask me. Is it, wait, I was about to give an answer. I'm not going to do it. not going to do it. I'm not going to do it. So my question, so I have, I have like three

takeaways from this kind of data. One is that like you guys talk about on the podcast, this is one of the reasons we didn't go into recession, but two, short of a really bad exogenous event that totally changes everything in the economy, whenever we do have a downturn, most households are going to be able to weather it, right? There's a huge margin of safety built in there for people who own a house or own financial assets, which is something like two-thirds of the country. Not every. one, obviously. And then the other piece of this is the other one-third of the country that has not taken part, even though the bottom 50% has seen their wealth grow the largest relative amount over

the past four years. It's grown like 100%. Bigger than any other, but it's still a small piece of the pie. I think this kind of thing, this one-time jump in wealth that we're probably never going to see again, is going to bring out, already has brought out a lot of anger in people. Right? Because even if the percentages aren't as big for the top 1% or top 10%, the numbers are huge. It's just a massive, massive number. I just think so many people, just think about the baby boomers who have retired into like the greatest period they could have ever hoped for.

Their house is worth way more. Their stocks are worth way more. There's yield on their bonds now. If you had financial assets, you are pretty well set. You were doing way better than you ever would have thought coming out of a global disruption like we had. Yeah, I keep saying, things are good. There's nine streamers.

You've got individual egg crackers on Instagram. I mean, life is good. You know, Josh made a good point on that podcast with Dr. Kelly, asking a question like, in a services-based economy, aren't the cycles just different than when it was mostly manufacturing based and it was factories? And you just, you had the booms in the bus. And it's extremely scary to say that the cyclicality of the business cycle is different. now than it was then.

But how is it not different? Well, that's a good point because maybe this is why the commodities price spike didn't matter as much as some people would have assumed, right? Commodities did spike when inflation kicked up and the war in Ukraine started, but it didn't impact, like, what does Facebook matter? Yeah, how do commodity prices impact Google? Right. Yeah, they don't get.

That's why the thing is everyone always says, like, the worst case scenario for like stagflation is an oil shock, right? What if we got that and it didn't have as big of an impact as it did in the past? past because of this. You're right. Is higher oil prices really going to impact Nvidia? I don't think so. So from Bloomberg, here's one of the other things that's happening because of this. Since the start of 2018, higher earning households have raised spending more than twice as much as low-income groups. This is a study from the Fed as well. So they consider high-income six figures, low-income below $60,000. Middle income is $60 to $100. And this is like the wealth effect in

play. I mean, it has to be. This is especially since 2021. The high-income group has increased their spending way more than the other groups on a overall basis, on a percentage basis, that people feel richer so they're spending more money. Which this, I mean, logically it makes sense for people. Yes, totally. Right? So more trips, my house is worth more. Why don't I spend more? This makes sense to me. And this is one of the things that our house is worth more than it ever was. Why wouldn't I spend some of that money doing renovations on the house eventually? Right. I think that this, it totally makes sense. I don't know. As far as like the economy goes, the wealth effect thing to me is never really, I never really bought it. But as far as spending goes,

that, that's where it made sense to me. Well, you saw the, you saw the median, somebody had a chart of the median, was it the median 401K balance in the United States? Did you see that? No, what is it? 250 grand. Does anybody, we, we went over this month ago. Like, does anybody's mood or spending habits change based on the value of their 401K? I don't think so. No, but in But it's tied, I know, it's tied into the, it's baking to the pie. The retirement one is probably the biggest, but the other thing is, though, that for people who are in retirement age, they see that 401k balance and they go, yeah, I can retire earlier.

I think you're getting a lot of that probably. All right, this is interesting. So you keep talking about it. Things are going well. Heather Long at the Wall Street Post asked, this is a great economy. Why can't we celebrate it? She says, by just about every measure, the U.S. economy is in good shape. Growth is strong.

Unemployment is low. Inflation is backed down. More important, many Americans are getting sizable pay raises than military. class wealth has surged to record levels. We're living through one of the best economic years of many people's lifetimes, yet it's barely mentioned the popular culture or the campaign trail. Do you think this is just the new normal that negativity will just always prevail? And we can't celebrate this stuff anymore. Yep, it's over. That's serious. Unfortunately, and it's... Yeah, I think it is. And I think it has nothing to do with who's in the White House. I just think

this is the state of our society right now. We will always, we will always focus on the negatives. I think that consumers and investors, you have to figure out a way to, like, to survive mentally. Get, tune it out. You can't, you know, you know what I mean. Like, protect yourself because it's always going to be, it's always going to sound like things are going bad. Well, we got, there will never be a time where we're all like, pretty good, pretty good. I tend to agree.

I, we got a few meals about the politics from people saying, you know, I was a Democrat. And when Trump was president, I had to force myself to like look at the things, look at the data. And someone else said, I'm over. And now that when Biden was president, it shouldn't have to be like that. But that, yeah, I think you're right. That's just the way things are these days, unfortunately. Because look at all these numbers. So the U.S. has by far the fastest growth of any country in the world right now developed. We're just crushing everyone. Canada, the EU, Japan, UK, Germany. Wages have risen faster since February 2020. Wages have risen faster than inflation, which a lot of people would not

guess. I mentioned this. The bottom 50% have seen their wealth nearly double in recent years. They have by far the greatest, you know, the top 0.1% has seen the second greatest, but the bottom 50% has seen the largest increase in wealth. It's only you own 2% of the pie, but things are pretty good. Look at this one from the Wall Street Journal. Look at how much lower the poverty rate is now than it was in the 1990s. Everyone looks at the 90s as like this economic nirvana. So many of the stats today are better than they were in the 90s.

The poverty rate is much lower today. It's like a third lower than it was in the 1990s. But I do think that it doesn't, really, for what? reasons that are super complicated. It just, it doesn't feel as good. And I don't think this is, I don't think it's necessarily nostalgia. I really do think in the 90s, things felt pretty good. Like, let's, let's skip to this, this tweet from, from, from our friend Jake at Economic. So, Jake tweeted, where is this? Jake tweeted, um, hold on a second. All right, we're back. Sorry about that. Michael's on any location. We were just talking about the

wealth effect of spending and you're a prime candidate for this. Don't shame me. No, I'm just saying. So you had to leave. Sorry, sorry, I didn't, my house didn't come. My house didn't come with a modern farmhouse. I had to do work. You had to leave your house because they were doing work on your house.

And now you're in a new location at another office. And what are you getting a second mudroom put in? Yes, I can't. The first one, it's just, it's nice. I like my mudroom, but I needed another. So they were going to be doing construction work outside of your office and you had to leave. Correct. Okay. Moving on. Okay. That was fun. All right. So we were talking about why negativity is the new normal. And you were talking about how in the 90s things were just different.

Go from there. Yeah. Okay. So Jake tweeted, growing up, I was solidly middle class. I also lived an hour further outside the city than my parents would have preferred, went to a sit-down restaurant one time a month, was a latchkey kid starting in third grade with two working parents. never would have even contemplated the cost of travel sports, went to a below average public school, was on a plane under five times under 20. Someone with this background would now view themselves as poor. I think it's largely expectations and not situations

that have made people feel things have somehow gotten worse. And you're probably, if you're listening to this and you're roughly our age, you're probably not in your head. The only one of these that didn't really resonate with me was the first one lived an hour further. outside the city. I don't, whatever. I don't know. We live in the suburbs. I don't think that was because my parents want to live in the city. But sit down a restaurant once a month, I think that makes that. Pizza Hut was a big deal for us. We would go to Pizza Hut like once a month. That was our thing.

I grew up with divorced parents. So I lived with my mom, but she was, she was working. So she came home at five or whenever she came home. I don't know. And I'm thinking like, what are we doing when we came home? I don't know. I let myself in and I watched X-Men and ate Cheerios or Oreos or whatever. travel sports was a no-go. I actually, oh, I'm sorry, I went to a pretty good public school, a very good one, actually. And then was on a plane five times under five times under 20. I don't know if that's true. I did go to Florida to visit my grandparents.

But I don't think, in fact, I know, I never did a vacation with my parents. Again, maybe because they were divorced, that had something to do with it. But I never did a, I never was on an airplane for vacation. Again, outside of seeing my grandparents. But, but again, middle class, like how to. fine upbringing. I had what I needed. I got a new pair of sneakers every school year. But like now it's just, I was looking at my kids this morning. And this is not unique to me in my town at least. This is not like crazy to me that worse like the rich people in my town. Kobe was wearing a Jordan like jumpsuit.

He had like a Jordan hoodie, Jordan, uh, Luca sneakers. And he has multiple pairs of Nike sneakers. And how did this happen? I remember getting a pair of the, the Nike airs where you had the, you could see the air in them. That was a big thing. And when I got the, those. I had to beat my parents down for like 18 months to get those. Like, that was a big deal for me. I remember my spending limit. I remember vividly because this is what it was for years. Never inflation adjusted, by the way. It was $60. And I could never spend more than $60 on a pair of sneakers. And now just kids have Jordans. So to get out of the old men mentality, here's a thing. This is progress. Right? We've made progress. Travel is better. People travel more. Restaurants are way

better, people go out to eat more. Travel sports is more expensive and you could argue whether that's better or not, but it is just the thing. Cars, people drive nicer cars these days and homes are nicer than they were when we grew up. Yeah. And you can say like the whole thing of people thinking that lifestyle was poor, it was just different. And now I think this is, it's just, this is progress. Yeah, it is. But it's also like, it's not all good or all bad. I would say like unbalanced, yes, I love that our kids have more than us. I don't. I just mean like my kids specifically, like kids in my neighborhood, I think just have it better than have more shit, more stuff.

I don't know if that's a good thing, that they've more stuff that they, you know, I don't if that's good or bad. But there is a downside to this. Like, it's expensive. Yes. This is the thing with people saying, I can't afford to live because luxuries have become necessities. Yeah.

That's the problem is, and those things didn't exist in the past. The other thing about the negativity with the 90s, I think we were so naive back then in a good way, right? Like, we didn't know. we didn't know all the time what was going. Sure, there was cable news, but you didn't watch it as religiously. There wasn't the alerts on your phone and the social media and the internet and stuff. And the internet websites that did exist in the 90s, you didn't check them all the time.

You barely ever checked in because it would take forever on your dial-up modem for them to work. I remember I had a dial-up modem, and I had one of the early versions of whatever the thing before Napster was. And people would call our house as I was downloading music in, like, 1997. And it would break up my download and I get pissed. And those was the kind of internet we had. Remember we had to plug into your phone jack for the internet? Anyway, this is just get off of our lawn type of talk here. But I think this is one of the great things about the 90s

is that obviously we have nostalgia for that period because we were young when we grew up in that period. But the ability to be naive was it was okay to be naive about certain stuff. I also think our parents were of the mindset, like, I don't care what everybody else has. Yes. Like, I don't care what your friends have. Like, this is what you have.

This is what you're getting. And millennials cannot have that. anymore. Millennial parents do not have that mindset at all. You have to have everything everyone else has. I put that blame more on the parents than I do on the kids, obviously. Well, maybe I'm guilty of this because I don't like, I mean, my wife does all the shopping. But yeah, you're right. It's just, again, luxuries to become necessities. Yeah. All right, back to the economy. This one Torseslock chart of the week, he shows, he had this whole piece. He's been pounding the table for the strength of the U.S. economy. He's not, he's not being bitten by the negativity bug. He's showing

household debt to disposable income for US, Canada, and Australia. Look at this. Their household debt to disposable income has just the ratios continue to rise since 2008. Ours has fallen almost every year since then. We're in so much better shape than any other country when it comes to household balance sheets. Hmm. All right, one more thing on politics. Wait, wait, what about this? What about this credit card debt thing? Oh, okay, that's another one. It's credit card debt as a share of disposable income. It's rising a little bit, but still way, way lower than it was at any time in the 2000s. We're doing just fine. Balance she was. All right, one more thing on politics. So Wall Street Journal had this piece on looking at the economy under different presidents. First,

they compare Trump versus Biden, and they look at inflation and growth and jobs and unemployment, and then they look at gross domestic product growth by Reagan and Bush and the other Bush and Obama and Trump and Biden. And... Here's my problem with this kind of analysis. Again, giving too much credit or too much blame. Was Reagan a great president for the economy, or did he take over an economy that did crappy for 10 or 15 years and was due for an uprising, right? Was Clinton a great president for the economy, or did he get lucky from the dot-com boom?

Was Bush a terrible president for the economy, or did he happen to inherit an economy after a huge, one of the biggest bubble he's ever seen and 9-11 in 2000? Like, was Obama great for the economy or did he happen to take over at the bottom, right? You know, when you put it, when you put it this way, yeah, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's situational. That's, that's, that's, that's, that's, that's, that's, that's, that's, help around the edges, but it's more timely or luck than anything. All right, one more thing. So, the election is, is a toss-up. Any model you look at, it's basically 50-50. It's funny people, people will get excited or hurt when it's, like, 51-1.

49. Like, oh, no, it's still, it's a toss-up. And the S&P 500 through the close on Monday has 46 new all-time highs, right? We always hear about heightened volatility and heightened uncertainty around elections. The stock market does not care. Not right now, but there are charts that do show, like, if you look at the fakes into election years, it does tend to go up towards the election. But I'm saying this year, the stock market does not care. Yeah, maybe we have some volatility, but would the stock, if uncertainty was at all-time highs, would the stock, would the stock market at 46 new all-time highs as well? I just say people, people care more about politics than the market.

How's that? Oh, shit. Raiders trading Devante Adams to Jets. I thought you were going to say they were going to trade Max Crosby to the Lions. I would have cared about that. That would be, you know what? By the way, that was horrendous. The Hutchinson injury was just really gross and awful and sad.

By the way, I am never going to MetLife Stadium until we get a new quarterback. I can't take it anymore. You can't take it. Maybe this is another old man thing, but is it, it's really cool to be at a game and be around people and stuff, but the experience of watching a game at home on a big screen TV is, it's 10 times better than it is to go to a stadium. I just don't see the appeal. I wanted to give Danny a shot. I did give Danny a shot.

I was a defender, but it's enough ready. Done, done, done, done. All right, back to the show. Sorry about that. Want some more good news? Please. This is from MarketWatch. Groceries are getting more affordable.

When you factor in rising wages, groceries costs about as much, day as they did in the pre-pendemic years. So this is grocery hours of work to afford a week's worth of groceries. And it had a spike, of course, in 2021, 2022. Now it's coming back down basically to where we were pre-pendemic. But again, look at this, look at how much higher grocery prices were relative to earnings in the 1980s, in the 1990s, and the 2000s. Yes, we had a spike when groceries got more expensive. Groceries are cheaper now than they were back in the 80s and 90s relative to wages. How many people would believe you if you told them this on the street? One out of every ten people, maybe?

Where did you get this data? Have you been to the grocery store lately? Every week. Look at this. This is surprising data. Agreed. Yeah. We'll take it.

All right. Did you listen to the Trillions podcast like I asked you yesterday? You know, your tone. Your tone. You're acting as if you know that I didn't listen when, in fact, I did listen. No, I just asked. No, you didn't just ask.

You didn't just ask. Play it back. John, play it back. You heard what you said. There was... You're like my wife. If I text my wife something, I can say the flattest thing ever,

and she'll assume there's a tone one way or another because they didn't include an exclamation point. Your voice went up. I listened to the show. Okay. So there was a story in Bloomberg about 100% yields are fueling a retail boom in new QuickBuck ETFs. And it's essentially they're talking about there's this massive boom in,

derivative and options-based ETFs. Specifically, the income, the income. People love income. Yes, people love option income. And there's these like yield farm or yield max, ETFs now. They're bringing billions of dollars. And essentially what they're doing is they're selling options

on individual stocks. And the way that options are priced is based on volatility. And individual stocks have way more volatility than the indexes. So if you sell options on a stock like NVIDIA or Tesla or something that is very high vol, you can get a lot of income on that. And they're saying you get a 100% yield in some of these. They're selling like basically at the money options.

So they're effectively capping all their upside to distribute the income back to the investors. Why are they doing that? Because that's what people want. Right? Like there's so much demand. There's hundreds of millions of dollars going into these products.

And whether or not they're like good bid or whatever, it doesn't matter. What matters is that people want them? I know that these are relatively new for ETFs, the ability to have options in them in the first place. place. But doesn't it feel like in the last two to three years, a whole cohort of investors has just realized, like, the late bubble went off, like, oh, you can earn income from options? It seems like this brand new thing people are discovering, and they do think it's a free

lunch. And to your point, I don't know, I just think the volatility of these things rising and falling, this is the kind of thing that works if you have, if things are going well in the stock. But they're saying that there's one based on Coinbase, that they've returned 100% of its current share value back to holders over the past year, yet on a total return basis, the ETF is actually down because, so it's trailing that. It functions like a dividend payment, right? It just, when these, doesn't it just reduce the nav? Yes.

So, yes. And so I thought the guy that they interviewed on the Trillions podcast with Eric Belchunis was, he was actually relatively reasonable. And he said he puts it in his portfolio in proportion to its weight in the index. So if Apple's 5% of the index, he buys a 5% of the index, he buys a 5%. percent position in the ample one or something, I thought he was relatively reasonable, but I think these things could come back to haunt a lot of people as volatility changes. Oh, yeah, sure, sure, sure.

I think, but to the point that we've been making a lot about, like, how people are using different instruments, it's not 100% of his portfolio, not even close to it. Right. It's a very small percentage. But what he said that never, ever occurred to me as a reason why this particular crowd likes these type of strategies is because it sounds like this guy's in the fire camp. So he wanted a mortgage.

He's trying to live off of it or something. But he needed this qualifying income to show the bank that he has income to support the mortgage, which never in a million years would have occurred to me as a reason to own these things. Oh, I must have missed that part. That's interesting because he's like an entrepreneur basically.

Did you listen to the podcast, sir? There's no way you could have missed that. You probably stopped listening to it. You know, I do a lot of podcasts listening while I'm out, while I'm working out or jogging or something, and occasionally on my mind wander. I get that. Yeah, no, it's like when you're listening to an audiobook, you have like five minutes, you're just, your brain just turned off. It's just... It's like when I'm talking on animal spirits and your brain just shuts off for a few minutes. My brain never shuts off. I am easily distracted by incoming slacks and texts. My brain never shuts off. That's a problem with my brain. It never shuts off.

Okay. I have a question for you about our doc here. So we have the artificial intelligence headline. I think it's time to make. change. Can we change it to just innovation? Because last we could talk about OZempic. There's AI. We had SpaceX landed a rocket this week. Like it took off and it landed. You know, people always say the moon landing was fake. Couldn't you say that the SpaceX landing was fake where they just played the video in reverse? Right? It didn't really land. They just played it in reverse. But here's, but so self-driving cars is another one. So we have all. all this amazing stuff going on. AI, OZEMPIC is going to fix obesity in this country.

We have rockets that can land on their own and with self-driving cars. This story made its rounds a little bit. It's a couple months old, but it's story about Waymo. It says Waymo is now providing more than 100,000 paid robotaxy rides per week in the U.S. According to a LinkedIn announcement by the co-CEO, that's double the 50,000 weekly paid trips to company reported in May. So it sounds like it's mostly San Francisco, Phoenix, Austin, and Los Angeles. And the point is, for years, I was wondering, like, when is this going to happen? I think a lot of people were, and it seems like it's slowly but surely has already, it's already kind of here in a lot of ways.

And I don't feel like it's getting enough publicity for how crazy this is, that people are just getting in cars. Well, because it's driving on its own and no one's doing, no one's driving it for them. Because it's so, there's only, man, my brain is breaking. I'm trying to say it's only in a few cities. There was a phrase I was looking for. It's only in a few cities. But I think that what people, when people experience it, they're probably like, yeah, this is magic.

My biggest question is still, I don't know how it works in a place like Michigan or the northeast where there is inclement weather. I feel like these things just shut down if the weather's bad enough. Yeah. Like, do you think that they just, because I can't see some of the icy, slushy roads that I've driven on in Michigan or during a blizzard, I don't see how these things can navigate that. Counterpoint, what if they just know that the roads are lousy and they just go 15 miles an hour? Well, I'm thinking what if they just shut their fleets down for those days?

Yeah. If it's bad weather, these things do not go. But that'd be my only worry. But I think it's kind of amazing that these things are on the road existing. Well, there hasn't been any, no one's fought it or anything yet. It's just, it's happening. Cars today must drive better than in lousy weather than cars back then, no, than older cars. As an example, and this is not weather related, but I was driving my loner car.

And I was on the highway going 85. I had no idea I was going 85 until I was, holy shit. I could have been, I could have been going 45. Oh, is it so smooth? Do you have your car back yet or not? No. Okay. So, thinking back to the 90s and bad weather, so my very first car I drove was a 1989 accord.

It was a stick shift. It had like 110,000 miles on it. And the tires were completely bald. Thanks a lot, mom and dad, for giving me bald tires in northern Michigan. So I'm the first time I ever drove in the snow, it was a blizzard. I'm literally driving. We lived on a very steep hill growing up. And I'm literally driving down.

the road. And, you know, the little tiny Honda core, remember how small they used to be? Was it a boxy? Did you have a two-door or a four-door? It was a four-door, but it was a manual. So, I mean, with a stick shift. So, but I was literally driving straight down our hill and went to hit the brakes. And my car did a full 360 on the road and just stayed on the road and kept going. The very first time I ever drove in the snow. That's how bald the tires were. It was like a fast and the freerous move. My first car was in 1998 gold Buick Regal. Okay, we both had gold cars.

I mean, it was... You don't see what a gold cars anymore. No, they're ridiculous. Why would you buy a gold car? It's true. And the average age, I was like, you know when Bill Gates walks into a room and now the average net worth is a lot higher? I'm usually trying to figure out an analogy for, I was the only person under 50 driving that bea and Regal. Yes.

You see that in Florida somewhere in the retirement community, right? Speaking of cars, we got an email. Hey guys, caught up on the podcast. Michael was right on the money that cars used to have bench seats. Everyone could squeeze across, including the front seats. That's wild. Bench seats in front. Oh, wow.

That's true. People sit in the middle in front. Because the thing, the gear shifter was right next to the steering wheel, like on a bus. That was the worst seat. If you had to sit in the middle in the front, that was awful. Yeah, not great. Please don't crash. I don't want to die.

However, it also used to be more common and legal to have infants and small children on laps. Wow. It reminded me of this article. So there's an article that this person linked to, do car seat mandates, let's say, what's the title? Do car seat mandates reduce the number of children families have? And I saw the article and I was like, what? But then he said, TLDR, a study hypothesizes that car seat mandates are disincentive to larger family sizes. As a father of three myself, I agree with this.

And even if you can buy narrow car seats and fit three across, it's a sweaty, awkward nightmare dealing with the straps and tightening. I also think our propensity to travel more these days as a factor is it is very difficult to book hotel rooms for families larger than four, restaurants too. Amen. The modern world is built for units of Ford, Ben. I thought you would like this. By the way, there's nothing more frustrating, and I'm exaggerating, than putting in a car seat

when you can't get the clip and you do start sweating. I had three car seats at once. I was very good at it. I look at a NASCAR pit crew for this. I know, like, the trick is you sit on the car seat to weigh it down. Yeah, I get irrationally mad trying to put in car seats when it's not. It was hard, but I was very, because we had three. So, yeah, this person is true.

Family is urgent. So we have three kids. And going to hotels is a pain. They always say, like, we can't promise you that we'll have a pull-out bed for you. And sometimes I try to make you get two rooms. And so obviously we just say we have two kids instead of three to sneak someone in. But it's a huge pain in the butt with five. Yeah, I mean, that's why you're an Airbnb.

Yes. Speaking of Airbnb, I tweeted this last week. Airbnb since going public is down, they went public in late 2020. It's down 7% in total. S&P is up almost 70% in that time. And I made the point that like good companies and products don't always make for good stock. And I couldn't believe the amount of people who wrote back to me that I hate Airbnb. People hate this product. Hate it. Really? I mean, maybe it's just Twitter. But I thought you were going to get more of like, oh, well, yeah, that's how happens you buy a company at 90-time sales. Yes. And a lot of people said that too. Well, guess what? It was, it was. It was expensive. And I bought Airbnb along the way, like as it fell. So I bought it a few times.

I bought it at the IPO. And I finally last week sold it. So if you want to use me as a contraindicator that Airbnb is going to take off now, do it. But I've held it for a few years. And I think this is, it's not even like a good product versus good stock thing. Like the Airbnb was just an amazing idea. And I thought like it had the chance to be like kind of like the next Uber in a way like that. And it seems like it's just not going to happen. And the funny thing is, is whenever we do, because I do love Airbnb's more because it's more room, it's easier to relax than it is in a hotel room, and you have laundry for kids, especially in like a week-long vacation. I would much rather do an Airbnb, but we always book through VRBO.

Why? I don't know. I find a better selection. Maybe it's where we're looking when we go to Florida or something, but I always find better houses on, like, do people call Verbo? Sorry, VRBO to me. We always book there more than we do Airbnb. But anyway, if you want to use me as a contraindicator. I sold them all my Airbnb bought. I will not be buying Airbnb. All right.

Survey of the week, a bunch of people sent me this. In a new survey, 300 executives said climate change is hurting their businesses and nearly half believed being based in the Midwest to be less risky financially. Three quarters of survey respondents said their companies have been considering relocated due to climate risks with nearly a quarter saying they've already relocated in part because of climate change. Six percent said they plan to move their business in the next five years. They're saying the Great Lakes, fresh water. Good climate hedge. I'm still sick with this. Very good beer.

Beer City, Michigan, or Beer City, USA, and Graham's, Michigan. All right. Did you see this Reddit post going around yesterday, making the waves? I do not. A lot of people tagged us on this. You don't look at your Twitter mentions anymore or notification, so... Here and there. A few people tagged us and said, hey, I want to hear your thoughts on this.

And the headline of this is, WTF is wrong with our parents. And this person said, they're in their late 30s, two small children, high cost of living. They have a small house. They're in credit card debt. Kids go to daycare that bled their savings. He's a typical millennial stuff. Last week, he said he found out that his father-in-law, he found his father-in-law's account summary,

which I don't know how you find that without snooping. But he said his, he found out his in-laws are worth $10 million, and he mentioned it to his own dad and has said, he's doing just a bit better than me. So let's say his parents are worth multiple millions as well. And the whole point is he's asking, why are they not helping us? That part's an assumption by you.

You don't know how much money his parents have. Okay. Did you read this or not? He said, well, he's doing just a bit better than me then. Well, to me, I saw that as like sarcasm. Like, he has so much more money than I do. Okay. Regardless, the point of the post is...

No, no, no, no, no. I just don't say it's interesting. I feel like sarcasm is a native language to New Yorkers. And people like you, no offense, it's not a judgment. You just take things at face value, which is very nice. No, I'm a very sarcastic person. Well, oh, well. But yes, you're right.

So you're saying you could have read this as sarcasm. That's fair. No, no, no. I'm like 90% sure that this person does not have $7 million. The dad who's saying, well, he's doing just a bit better than me then. Okay. Either way. Keep going.

So he's saying here are our own effing parents sitting on their piles of gold watching us navigate a new level of f*** up economics and shopping for discounts and raising our children in subpar school districts and for what. And he's saying like, give me the money. So he's saying his parents are loaded. So maybe you misread the sarcasm. Hang on, hang on. I'll give my last dollar to my son to make. Here are our own fucking parents. Yes.

I think he's talking about her parents. But be that as a mate. So what's your way in the situation? So people were really angry about this one, saying how could these parents not help their kids? What's going on? And so I think this is generational. I do think that there's a generational thing

with baby boomers and people in older generations that they just, just it wasn't like this for them. They didn't have their parents helping them and they don't understand. Their whole mindset is, I will give my kids an inheritance someday. They will be getting this money.

They'll get it when I die and it'll be great. And I think young people now are of the mindset of, no, help me now when I need it. And that makes more sense to me too. But here's the thing. I need more details. I need more details before I cast judgment. No, but I'm not casting judgment either way.

Here's a thing. If I'm thinking about this from a young person perspective, you have to ask your parents, talk to them. they're not going to just get it on their own. That generation, for the most part, I'm not saying all of them. Some of them need a little nudge. And you just need to say, listen,

I'll take my inheritance now knowing it's going to be smaller than it could be someday, but it'll help me more now. I think you have to just have that conversation. I agree. That's the problem. I do agree with that.

But so I'm just, I'm curious, are people's reaction to this more like, wow, their parents are assholes? Yes. That's what I, yes. But it could be. But I want more information. What if this person is, what if this person is just like lazy and not really do what they're supposed to be doing, which I'm not saying that they are, they aren't.

I just, I need more information because what if, what if that's the case? And I wouldn't blame the parents. What if it's, what if it's, what if it's two brothers and they've been robbing houses and their parents decide to cut them out of the will? What if that's exactly, exactly. What if this person is a robber? Just a deadbeat dad that's not doing the right thing. Sorry. You didn't get my menendez reference there.

Sorry about that. Speaking of sarcasm. My bad. You're not watching. The Menade's brothers got cut out of the will for, anyway. All right. I paid a water bill yesterday for $46. They charged me a convenience fee of $2 on a credit card.

What are we doing here? So that's a 4% charge just for using my credit card. And this is through, why do governments have to pay that convenience fee? And what's so convenient about it? That sounds like an inconvenience fee to me. Okay, Jerry. What is the deal with that? I'm just saying.

No, it's a good point. So at MetLife Stadium, the parking was $35. Or so I thought. It was actually $46. Why? Because there was a surcharge fee and a service fee and probably a convenience fee. It is quite annoying. It is quite annoying.

That's all I'm saying. It's annoying to get that stuff. I paid a couple bills yesterday. Every time it's like, oh, we're going to do a 3% surcharge on your credit card. Isn't crypto supposed to fix this? Huh? What am I paying with stable coins? Don't look at me.

I don't know. When's it coming? I'm a Rails guy. All right, we got an email from somebody who is a civil engineer, just a sort of a PSA, talking about flood zones. He said, to see the flood map for your neighborhood, search FEMA NFL viewer. That's national flood hazard layer. As you and others have alluded to, just because you're not in the mapped floodplain, doesn't mean your home can flood.

Water doesn't obey FEMA maps. Some areas have very outdated floor studies and there's always a bigger storm. That's true. So anyway, there's a link here, but I would check that out if you're considering moving to a potential. So the point is, just because you haven't had one before doesn't mean it's not going to happen. Like, right? Yeah. I don't think Asheville was ever prepared for something like this.

I'm looking up my address right now. They don't really give you a lot of information here. All right. Not bad. Okay. Last week, Ben, we were speaking about the most awkward place to have small talk. So somebody followed up and said, have the most awkward, embarrassing moment to have the most awkward, embarrassing moment at a urinal last week.

Did you see this? Yes, very good. I walked into the bathroom and the only urinal open was the middle one in between two guys talking. To avoid the small talk, I walked up and was scrolling my phone while doing my business. I found something funny. I wanted to say my wife, so I took a screenshot.

As I pushed the buttons, the shutter sound echoed as loud as a horn. I can only imagine my faces. I had to look at both dudes telling them. I did not take any picture to only take a screenshot. That's pretty good. I was in the bathroom at MetLife Stadium. Sorry for the MetLife Stadium, but this just occurred to me. By the way, what a piece of shit that stadium is.

Oh, my God. You've never been, right? No, I've heard nothing about bad things. It just garbage, especially after going to a beautiful Minneapolis stadium. I forget what it's called, Bank of Something, so-fi, and where the Raiders play, and then we've got this hunk of junk metal, just garbage. But anyway, so there's two guys arguing in the bathroom about to get into a fight. And with all the fights at football stadiums, do you think that people go to the stadium

thinking that they're going to get into a fight? I often wonder that. Or people just decide, like, just lose their minds at the game because they've been drinking too much. It's so crazy how prevalent fights are at football stadiums. A bunch of maniacs. It is. It seems every week that it's just the social media is just littered with videos of fights. What are you doing your drive home?

Like, man, can't believe that fight I got in today? Like, I don't know what the thought process is, right? Like, man, I thought, I had the low ground. I thought I was going to win for once and just didn't happen. Yeah, imagine coming home with a black. guy and your wife is like, what? Jersey's torn up. Sorry, got into a fight.

Happens. You know what the thing is? Don't wear a jersey. It's always guys in jerseys that get in fights, right? No, I do have a bone to pick, actually, about stadium goers. When people just wear a random jersey, that might even be a different sport to a sporting event. That's a thing?

Oh, yeah. Like, I saw a guy in a Tampa Bay Lightning jersey. All right, I made that up, but, you know, that's just for a fact. But you see it all the time. Makes no sense. Okay. This is why I stay home and watch it on my 70-inch flat screen. Ben, did you, uh... I don't get to fight. I'm just getting fights with my kids.

Did you watch it's what's inside? You did watch it's what's inside. I liked it. Very good, very good recommendation by you. They can make a sequel of that movie, but it was very good. Good twist ending. Didn't see it coming. I liked it. I enjoyed it. Credit to me? Yes. Um... Good call for you. Oh, Terrifier 3.

Oh, wait, wait. I told my wife, I said, I watched this really good movie on Netflix Fest, and you should watch it. And she said, why did you watch it without me? I said, well, Michael is the one who recommended and I thought it was going to be terrible. So. That hurts. But that happens with my wife all the time. Why did he watch it?

Because you say no to everything that I suggest. Yes. True. That's, yes. That's why. Blair Witch, we spoke about it last week. And I was wondering, like, I'm sure there is a reason. Why don't they re-release old movies?

So Pulp Fiction, it's a 30th anniversary. Would Pulp Fiction not make $10 million if they re-released it? They actually do show. At our movie theater, They show random old movies on one of the theaters, one of the screens. Oh, really? I would, like, I would, I would love to see Blair Witch again. Imagine Blair Witch and IMAX.

Are you kidding me? That is, I don't know. Do you really want to see if that girl's nose in IMAX? Yeah. At the end? Okay. Are you watching The Penguin? Sorry, I haven't got into it yet.

Okay. That's okay. I'll stop asking. I will. I've been watching, I've been going through the Menendez Brothers show. And I got to say, so you obviously have been watching it because you didn't get my reference earlier about being left of the inheritance. Not true.

Not true. Not true. I saw episode five where the entire thing was just, was it Lyle or Eric? One of them just in jail, just talking for 35 minutes. That was impressive acting. How did he do that? They are pretty good. Did you see that?

The brothers are good. Yes. It was a 35-minute monologue. That was the entire show. Yeah. It's very well done. It's the kind of show you don't feel very good after watching. Like, none of the people are redeeming in any way.

The name of the show monster. I know it's after the Jeffrey Dahmer, one, too, was called. monster. It's just you don't feel very good about yourself after watching this show. They're just so screwed up. But it got me think about the money and happiness thing because they're loaded, they're wealthy. We talk about the money and happiness thing. These are the kind of people that no amount of money in the world, they could have been, they could have been as rich as they were or poorer than poor, and they would have been unhappy either way, these kind of these people. Yeah, just garbage people. I mean, obviously. Yes, but just not great feelings from

this. Book recommendation. This is strategy. Make better plans by Seth Godin. I had the opportunity to interview Seth Godin last week. It's going to be on our Animal Spirits feed next week. Here's the thing I love about Seth Godin. I've been reading him for years and years and years. He's got a daily blog. He's written like 20-some books. I've probably read five of his books. A lot of stuff on marketing and sales. He'll have like a three-sentence blog post. And those three sentences, the way he can simplify complex topics is something that I really, really respect in someone. Like, the ability to take hard stuff and make it sound easy, even when it's not,

like that, he's a master at that kind of stuff. He was very good. I was kind of blown away. And I asked him for a bunch of advice, too, on the podcast. You weren't there for it. But so next week with him, but I'm a huge, huge, huge, Seth Godin fan. So that was really cool to do. I was actually kind of nervous.

I never get nervous for the kind of stuff. I was kind of nervous to interview him. Yeah? Yeah, I was very prepared. He also said he liked the name Animal Spirits because he obviously had no idea who we were. He said another backup name for the show should have been spontaneous optimism,

which I guess is another Cain's saying, which I've never heard before. Oh, I've heard that. Yeah. All right, Terror Fire 3. Oh, geez. Terror Fire 3 killed it at the box office. I've never heard of one and two.

Oh, really? No. I guess that shouldn't surprise me. It's just, it's been, you know, all over the internet. Yeah, it did, it had the biggest weekend box office, $14 million. Okay, just another horror movie? No, it's not just another horror movie. It's over the top, over the top, over the top, grotesqueness.

Yeah, but I feel like you say this with every horror movie now, though. No, no, no. I do not. I do not. I'm not a horror porn. sort of guy. There's been so... Because you literally talk about

a horror movie every week. How could you not have... How do they not just keep trying to one-up each other? That's the only way they can stand out, right? Well, this really is the one. And I'm surprised that there's such a big audience for this.

So I thought about going to the movies for this, but I said to my friend, I was like, you know what? Fuck, I don't want to go. It's just... This sort of stuff doesn't do it for me. I did watch Terrifier too, though, over the weekend.

And I'm not recommending it. It is over-the-top grotesque. for the sake of it. And I don't know. It's just not for me. Like, I, you know, I get why people like it. Not my cup of tea.

If our production team had more time, I'd have them go through all of your horror recommendations. You'd be saying the same thing for every one of them. No, no, no. I don't like hostile. I don't like, I don't like that stuff. Okay.

I just don't see how they continue to make a new horror movie every week. I mean, obviously people like them. They wouldn't keep making them. They'd make money. I mean, they keep pumping them out. Why? Because that's what the audience wants. It's not just me, Ben.

So horror movies are the new like Avengers. They're the new superhero movies. Yeah. We're just going to beat into the ground. Yeah. I'm here for it. Oh, Smile 2 next week. I will be in the theater for that, for sure.

Did you see Smile 1? I heard it was grotesque. No, I did not. It was not grotesque. You did not hear that for me. Nice try. Very scary. Very scary.

Okay. Thank you to everyone for listening. Thank you, John, for hopping on. Duncan, Daniel, Nicole. the whole team. It makes spend for his patience as Michael changed venues. We did it.

That was the first for us, actually. Changing venues mid-show. My favorite part about it is that your general contactor's name is Tito. I don't know why. I feel like if you have a name like Tito, you have to be in construction. Is that fair? He's the only Tito I know. All right.

I guess we're just five. All right. Animal Spirits at the Compound News.com. We'll see you next time. Okay.