Animal Spirits Podcast - The Absence of Stuff (EP.83)

Episode Date: May 22, 2019

On this week's show we discuss why dividends are underrated, the billionaire paying off student loans, Goldman Sachs buying United Capital, the curious case of WeWork, ETFs that pay you, struggling to figure out your career, where dead cat bounce comes from, why Michael Lewis is wrong about HFT & 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

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

podcast. S&P 500 dividends per share have grown at a pretty decent clip. I guess this goes back to like the early 90s this chart. And when thinking about investing, I went back to basics. I reread Nick Murray's simple wealth, inevitable wealth. And I'm going to write a post about this. One of the things that he talks about is basically the entire boogeyman of investing is inflation. And it's so obvious, but we get lost in all the minutia. Like, why are we even investing in the first place? It's to preserve our purchasing power and perhaps even do a little bit better than that, right? Makes sense.

And so one of the ways that preservation manifests itself or why does it occur is because these businesses that we're investing in are increasing their dividends. They're increasing their earnings per share. In the event of a recession, they have the ability to trim the fat to sort of rise like a phoenix. Maybe that's a bit of a bit ridiculous. But so I just thought that this chart was a really good illustration of why investing actually works. And it's something that we probably don't spend enough time thinking about. Like the investors should be all in on the idea that stocks deliver returns over the very long run. And if you're not, you're probably going to run into some issues eventually.

And the other cool thing about this chart from Y charts that you pulled up from them, which again, they kind of, they helped us out. And I think that's one of the best use cases for. a research firm like this is the fact that anytime we have a question about something, they kind of help fill in the gaps, which they did here. But you see the drop in, say, 07 to 09 in dividends, and that drop is nothing. It sort of pales a comparison to the rise since then. Right. It's like the rise over time totally outweighs anything that falls when things go bad. And this is one of the things that people don't realize is that the dividend yield is risen like, not the yield, but the actual amount of dividends, has risen like 6 to 7% a year.

going back almost as far as you can take it. So the growth of dividends is almost as impressive as the growth in student loan debt. Hey, oh, yeah, it's kind of the same bottom left, the top right of the chart. Ben, and the biz, we call that a transition. Yes, I think you're the only worries about transitions in this show. So there was a billionaire yesterday, right? I guess it was this weekend at Morehouse College who said that he is going to pay off. He was giving the commencement speech.

And Robert Smith is the guy's name. I guess he's worth $5 billion and runs an investment fund, a private equity fund, I guess. And in his speech, he said he's going to pay off all the student loans of all the graduating members of that class, which, I mean, this guy, this is a baller move, right? Yes. It's not like it's a graduating class of 11 people. No, I think it's like 300 people and they said they don't know exactly how much it's going to be. They said 396 students.

But here's what we need someone to do. We need an economist to track these people for the next call it 40 years. and then track the class of 2020 for 40 years who doesn't get this if he doesn't come back and see the difference in financial their financial lives about buying a house, having kids settling down, how much money they make, how much money they save. So by the year, by the year 2016, we will be ready to enact actual policy change based on this study. In 40 years, we'll know exactly the impact of student loans. Like that, Nick Carlson, 2017.

This is a pretty cool story. I mean, if you have that much money, what's better? like a motivational quote from a commencement speech or this. I mean, those students had to be going crazy. I don't know, man. Those quotes, or it could be game changers. Okay. So a study in the wall or a story in the Wall Street Journal looked at the fact that there's actually a rise in teaching personal finance on campus. And the story is called even Harvard is now teaching personal finance. Well, it starts before campus. I think we mentioned this a few months ago, but 19 states now mandate high school students to have some basic financial knowledge before they graduate.

Yeah. So it's not bad. And it sounds like a lot. of these are more seminars than anything and they're getting a couple hundred students so it's still kind of starting small in a lot of ways but at least it's something it would be nice if it was more classes than sort of a one or two day thing but at least at least they're trying i guess the funny thing about the harvard one is that they asked one of the students about what exactly they're teaching them and one of them was using fifty thousand dollars as a low end for salary and discussing how to prepare tax documents for your domestic help so like having a nanny or a butler or something, someone who takes care of your, which was kind of funny for

Harvard that is just so out of touch. But I guess that's what they're learning there. But I mean, anything, this is a step in the right direction. So they have some cool charts showing family income distribution and anticipated started salary. And I was surprised to see that just eyeballing it. It looks like around a quarter of incoming students come from families that make $80,000 or less. So I thought, wow, that's actually much higher than I would have thought. They said Harvard has slowly increased the percentage of students from the bottom income quintile of families from 3% in 2000 to 2005 to 5% in 2006 to 2011. So I thought that that was actually pretty good.

But Harvard ranked 2011 out of the 2,395 colleges studied in terms of the number of low-income students. So the reason this is kind of problematic is because in recent years, a lot of the Ivy League schools have said, if your family makes under a certain income level, you can basically go to school for free. So it would be nice to see these levels rise a little bit. And Harvard actually let these kids in for free and maybe do something good with their endowment money for once and not just buy up real estate and hedge funds and stuff. What do you think is more important in terms of predicting your success? Coming from a family in the 1% going to a mediocre college or having a degree from Harvard and not having any sort of family connections?

Connections, definitely, hands down. I think so. Do you think so? Yeah. Yeah, I think that networking and I think that all plays a big role. I mean, so we can get into a little bit now. I wrote a piece last week about how I had a little bit of a difficulty finding job when I first got out of school. And I saw so many of my friends who just weren't worried about it because they kind of knew they had some connections.

And going into interviews and stuff, it made things a lot easier because of the name recognition. Yeah, your piece was good. and I think that we all have stories like that. Speaking of, did I tell you, I must have told you the story about the time that I almost got hired by E-Trade, but I did get hired, but then I didn't get hired. Yeah, you had a few hits and misses there obviously as well, right? Oh, yeah. I was so excited because I was probably unemployed for like a year at this point. And I got hired by E-trade. The manager was like, you have no experience, but I like your attitude and I'll take a chance on you. And then the manager left. And so I was sort of in limbo. And it turns out that they found a ding in my credit report because, it doesn't even matter. It's a ridiculous story. But so the new manager wouldn't even interview me. And it was just, I was in limbo for like six months. Turns out the manager who hired me, we met with, Josh and I met with probably in 2014, turns out that he's now an external wholesaler for a fun company. I was like looking through my inbox. Like, man, this name sounds familiar. Came full circle, huh? Yeah, exactly. He didn't remember me, obviously.

So maybe that ding on your credit report that messed you up with that job is the reason you're getting denied for credit cards now. Could be. So I just, I went through it and I wanted to kind of share my story because when I came out of school, I really had no idea what I wanted to do. And I had, you know, some, I was based like a B student. I tried just hard enough and I studied and did what I needed to do. But I never really put much time and effort into figuring out what I wanted to do with my life when I was in school. I was kind of more there for the social aspects than anything. And it wasn't until I had an internship where I realized, okay, all these people, all my peers know a lot more about the job market than I do. And so I think that really hurt me. And so I think it's easy these days to fall in the trap of blaming the system or the politicians or something else that's wrong. And I think I probably even blamed like the guidance counselors at my school. But a lot of it was just that I never put in the time or effort to figure out what I needed to do. And that sort of probably helped me back

and is the reason it took a long time for me to find my first gig. But all those jobs that I didn't get, I think it was actually sort of a blessing in disguise because I think a lot of it helped me once I did get a job and to figure out that, okay, I need to actually change stuff and do something for myself. You know, I agreed with 96% of what you wrote, but I have to take umbrage with something. Okay, what? You said everything happens for a reason. Yes. Do you actually believe that? I think if you read it, I said, I don't believe everything happens for a reason, but most stuff does. I did it read it. Okay. Damn it, you caught me. Yeah, no, that would be, that'd be a little. I said, I don't believe everything happens for a reason, but most things do.

All right, fine. Well, most things don't happen for a reason. Okay. There is no reason, Ben. All right. Yes, we're just a tiny spec in this great ball hurtling through the universe and blah, blah, blah, that makes sense. But I did get some emails from people saying, hey, listen, I'm having a tough time, so it was good to hear. And I think the whole point of my piece was just that when you're a young person, you don't really have to have it all figured out right away. You have some time still to take some risks and try a few things. And don't worry if it doesn't work out right away. Because I had a lot of people who did have their sort of life figured out. And to me, that was scary seeing that, but then realizing, you know what, it just takes time. For some people, it's not that big of a deal. The big news in the R.A. world this week was the fact that they finally announced Goldman Sachs as acquiring United Capital. That's Joe Duran's group who had about $25 billion in assets. Plug. Plug.

Joe Duran is coming to speak at Wealth Stack. Yes. Great timing. Our conference in September, which is in Arizona. We had him signed up as a speaker, had no idea that this was happening. And so I think the timing's pretty good on this. We'll see what he can actually say about it. But what did you think about this?

Because there's been some takes all over the internet about this in the financial advisory world. Some saying that this sort of shows that RIAs are sort of making a lot of headway in this space. And maybe it's showing that some of these bigger financial players are scared. What do you think? You know, I think this just goes to show that big banks aren't just going to roll over. You just stole my take. I stole your take. No, I don't have any takes, but I thought yours was particularly good.

So why don't you actually deliver your take? Yeah, see, I was just letting you take, a bad take, and I was going to jump on you the better take. But, I mean, there's been huge growth in RIA numbers over the years. But these firms like Goldman and Morgan Stanley and Merrill Lynch and UBS in these places, they have so much money. And they're not going to just roll over. So the fact that they buy one, I guess in a way you could say, yeah, this is showing that their RIA space is here to stay. And there's people that leave these big firms all the time and start going. independent, but this was Goldman Sachs' biggest acquisition in the last 10 years, I think they said,

which is pretty wild. And they also talked a little bit about Marcus in there, which we've mentioned a number of times, has like 35 billion in assets already. So they're obviously making a push to this space, to the sort of mass affluent space, which I guess now they're private bank. They said manages about $480 billion, but the minimum account size is 10 million. So this is more United Capital, I guess, skews more in the one to $5 million range. So I think that you have the exact right taken. It's too early to speculate in terms of what's going to happen to the advisors at United Capital, what's going to happen to Joe Duran, what's going to happen to the clients. We just don't know. We can't know. But I think that Goldman was uniquely positioned for this because Morgan

Stanley couldn't have done it. J.P. Morgan couldn't have done it. Bank of America Merrill Lynch wouldn't have done it. So I don't know that I see a lot of wirehouses bringing on RAs the way that Goldman just did. Yeah. And the other thing is a lot of these RAs. It's sort of a reverse of what we've seen. We've seen a mass exodus of teams leaving the wirehouse, going to dependents. Well, the ones that are going to matter are the ones that are backed by private equity and other investors. Those private equity companies and their investors want to see an exit because they want to get their money back. And so a lot of these firms are going to have to sell out, right? Eventually, there has to be some sort of exit plan.

Correct. So I think that was part of the case here, too, that they needed to, they needed to though. Speaking of exit plan, we work. So I thought that this was just, I thought that this was just like a headline. We work urges investors to see losses and investments as it reports first quarter loss of $264 million. But that's something that the CFO actually said. And here's my hot take on this. I don't see the problem with it. Like, I understand why it makes for a really great headline. But early stage companies losing money is, you know, is not new. It's not like, oh my God, I can't believe this company is burning cash. Do you think this is controversial? Well, the thing is, if they didn't have a bunch of venture capital money,

they wouldn't be blowing through so much money either. They wouldn't be having such huge losses. And if rates weren't so low. Yeah, blame it on the Fed. But I mean, the massive growth they've seen is because they have investors who are willing to allow them to do this. So, yeah, so I don't really, I don't want to say I don't see the problem because obviously I understand why people are up in arms and why this made for a good article to dunk on. I mean, this company is obviously going for it, and they're going to start buying up their own real estate and leasing it back to the company, which now they just lease it and they don't own any of it.

That part was maybe a little bit of, is there a potential conflict of interest for, is it the CEO who is buying real estate and then leasing it back to the company? He's going to be part of the fund. They had a longer piece on Bloomberg about this, but the idea is they think one of the biggest problems for commercial real estate is getting your tenants and having a good occupancy rate. But if they can basically guarantee the occupancy rate, then maybe hopefully they could keep their valuations up. Obviously, that's sort of being agnostic to the economy and what other buildings are going for. But I think that's the idea is that they can, they know,

they already know they're going to have tenants. And so they don't have to worry about bringing people in. So they know what their cash flows are going to be from those buildings, more or less, which makes sense. I just, it's a great company because we use them within our firm and we've used them in some other places, and you and I are going to use them when we travel in a couple weeks. And it's a really great concept. It's just how much of a runway are investors going to give them? As a consumer, not an investor, I am definitely willing to see those losses as investments. So please keep it up. All right. So I want to talk about expectations. So our friend Jake over at Economic had a tweet, and it was two fill in the blanks. Taras with China, blank negatively impact the U.S.

economy over the short run, revised trade IP terms with China, blank needed for the U.S. United States long-term economic success. And it was four choices. Will slash is, will slash is not, will not, you know, et cetera. And so 54% said will and is, meaning tariffs with China will negatively impact the U.S. economy. And revised trade is needed for the United States long-term economic success. And so this is exactly what I mean when you see that you don't really see the odds

until after the fact. But this type of tweet exposes, it shows people where the odds really are. Now it doesn't necessarily show where people are putting their money, but I think that when you're thinking about what's going to happen, like, so even if you knew that the resolution of this tower of thing, questions like this get to like really, how are people positioned potentially? Right. Yeah. It has nothing to do with what they really think about this or what economics they've looked into. And Michael Santoli had a tweet that showed people asked, you know, how could the stock market possibly continue to climb if we keep having these trade wars? And he showed the Cold War. over a course of 30 years or whatever and stock market did fine. So I'm not trying to compare the two identically here, but it's always hard to tell. And the thing is every time the stock market falls one or two percent on one of these days because trade war talks were called off or whatever, I mean, the stock market has been doing fine.

And sometimes investors just look for any excuse to sell, right? Or the computers do, I guess in this case. But I think people who hang on every word for these things is, it just doesn't make a lot of sense to me. So sticking with computers, you told me to listen to the Michael Lewis podcast, which I haven't listened to any of them, but based on your recommendation, and I guess it's been meeting to get to. I listened to two this week. I listened to the one on high frequency trading, and I listened to the one on consumer finance, which I thought was excellent. But what did you want to say about the HF2 stuff? I think I'm a huge Michael Lewis fan.

I thought the podcast was great. He finished off the season with his high-frequency trading stuff, and I thought this was a big L for him. I think that's his one glaring, like the, what was it called, Flash Boys? Yeah. That book is not, I don't think it's aged well, and I don't think it will age well, and he seemed to double down on it in his podcast, and he was trying to say that high-frequency trading is sucking up like $90 billion a year from investors' pockets, and he was kind of pushing the I-E-X exchange from that Brad Katziyama guy. And it just doesn't, I don't see it. So there was a piece in the FT from last year. And then they said that HFT companies' revenue fell below $1 billion for the first time in 2017 from a high of 7.2 in 2009.

So there's been so much competition in this space that it's basically eaten away any sort of revenue or profit they could have made. And so I think he is totally blowing it out of proportion. And I think he just has this sort of anti-Wall Street bent that is kind of clouding his views here. because I don't think – I mean, do they really provide a natural service to the market? No. I mean, does it make sense that you can have these cords a little closer to shave off a fraction of a penny? I don't think it's really doing much of a public good there, but they are providing liquidity. And frankly, before all the computer trading stuff existed, the spreads were enormous on stocks, and you paid an enormously high commission. So I think it's sort of a give and take. And if they did tax some of these things, and they went away and their liquidity went away, I think you'd see spreads widened out a little bit. So it's kind of a, it's just part of a functioning market, I think. It's funny. He had his son on the show to talk about buying Apple and what would happen and what this upset him. And his son, much like you and I were like, I don't really see what the problem is. So I understand, I mean,

of course I understand why what he thinks the problem is. I forget he threw it an outrageous number on what sort of money is being taken away from pension funds and stuff. What would Was it $70 billion or maybe I mean. Yeah, that number. He said like closer to $90 billion, which seems like a totally made up number to me. It does seem made up. And to your point, there's a lot of benefits that we're probably not seeing. So I agree with you.

And this gets to a bigger point. And I think we spoke about this a while back. The person that commented on Dave Ramsey, like, I don't like this stuff, but I like that stuff. I think that all of that gets lost in social media and just media in general, that if somebody says, something that you do that you disagree with it's like fuck that guy forever right you know and so i adore michael lewis but i totally disagree with him on this or not totally i i mostly disagree with him on this and i tweeted something from a scott galloway wrote a book called the algebra of happiness and he would be the first person to tell you that he is not a happiness guru or or he's not the

type of person that has it all figured out he is a deeply flawed person like like most people but i think that he is not full of shit when he's writing about how flawed he is. And so he had a video on CNBC this weekend where he told Jack Dorsey and Elon Musk to put down the blunts and put it on a tie. And I don't really know what he's talking about. And so I could do with that, that sort of shtick, I don't really get it. But I'm able to like, not that I'm so terrific, but I think that like you should be able to disagree with somebody and not totally kill them. Yes, I agree. Because like I said, and they are rekindled from a few weeks ago. I think he wrote the best finance book ever. But the Flash Boys one was one that I don't think will age well. And I really didn't enjoy it that much because I think his take was off. So yeah, you don't have to agree with everything or disagree with everything from people. So anyway, so that's Scott Galloway book. I read it this week. And it's called the Algebra of Happiness. And it's just, I just really love his stuff. It's a lot of stuff that I've read before. But him talking about being with his mother when she was dying is something that I could obviously relate to, him being.

a father to two boys is something that I can obviously relate to. And I just think that he, I just really enjoy his writing, even if I don't agree with 100% of what he says, which again, I think is a pretty healthy way to view the people. In his podcast with Karas Swisher, I think is really well done on technology. So a few people sent us this piece from ThinkAdvisor that talked about the negative fee ETF that was just approved by the SEC, patting ourselves in the back a little bit. We kind of called this, but it wasn't exactly going out on a limb. I'm still waiting for my credit card rewards points for these, but this kind of got me thinking

because my wife's retirement plan, she has a 403B with a hospital. Real quick, real quick. We actually spoke about this, this ETF a few months ago, but I think the news is that it got officially approved by the SEC. Right. So it's a negative expense ratio of five basis points. For the first $100 million they raise, and then it goes up to 29 basis points. Right.

So, again, it's a PR stunt, but I think the bigger ones are eventually going to do this, too, and in some ways with securities lending, they already do. but my wife's retirement plan, she has a 4-3-B, and it's a decent plan. I'd say a half of a mix of kind of crappy active funds and a half of a mix of low-cost index funds. So you just stick to those index funds. And they were Vanguard, and we've used them for years. And they sent out a letter this weekend saying, hey, we're making a change to these four Vanguard funds. It's like a small-cap, mid-cap, total market, and maybe one of their bond funds. And those funds cost us four basis points apiece. Each of them were four basis points. They made a change from

the Vanguard funds to Fidelity funds in the same exact space that pay, that costs three basis points a year. So they went from four basis points to three. And I wonder how much brainpower and effort administratively was taken on that decision to save one basis point. Like does it, is it really worth it when they have all these other funds that they just let go that charge much more? It just, it seems like it's kind of silly once you get to that. There's just such a law of diminishing returns there. And it seems silly to me. I agree. Okay, so last week, I had a call with a reporter about credit card delinquencies rising for young people.

And they asked me why I think this was the case. And they showed that we've talked about this before, but credit card delinquencies are kind of rising for most people. So it's showing share of credit card balances that are delinquent by 90 days or more. Probably if you don't get approved, you can never be delinquent. There you go. Life hack. So this has gone from like 5% in 2014 for people ages 18 to 29 to about 8% to. now. And they asked me, why do you think this is the case? So I wanted to ask you the same

question. Do you think it, are these things just always sick? It's still way below where it was in the crisis, which was up to like 14%. Wait, I'm just eyeballing it. It looks like it's still below the 200-day moving average. Yes. There's a head and shoulders pattern here somewhere. So why do I think this is rising? I don't know, because it probably can't go to zero. I mean, look where it is. It's still pretty damn low, isn't it? This starts in 2007. So it starts at it. But again, even in 2007, it was... But I'm saying, but look at the percent on the, on the axis. Yes.

So all bars, it's still less than 5%. Ages 18 to 29, it's up to around 8%. Yeah, still relatively low. Is this a canary in the coal mine? I think so. We're seeing a dead cat bounce, which was another good Wall Street Journal one. I've never heard this before. So they went through and figured out where does the term dead cat bounce come from, which

is... And so this was written by Ben Zimmer at the Wall Street Journal, and this is something you say every time stocks fall a lot and then they rise a little bit. People say, nope, it's a dead cat bounce. And I guess this dates back to the 1980s. And there was a British book published 1981 called 101 uses for a dead cat, which was obviously supposed to be a humorous book. And someone for The Guardian, a British newspaper wrote something about there being a dead cat bounce. And I think they actually used it the wrong way. And it was talking about a market that continues to fall and it's changed since. But this is something that gets used a lot.

I wanted to ask you, what are some of your other favorite financial phrases that get used and used and beat into the ground? Cautil, say, optimistic, like stuff like that? Yes. Second half story. Yeah, that's a good one. I mean, there's a lot of animal ones. So there's this Black Swan, you know, there's the Canary and the Coal Mine.

Yeah, but nobody, does Black Swan really get used a lot? You don't think Black Swan's gotten used a lot since the crisis? Nope. Okay. Shot down. We've seen this movie before when you know it ends. Yes. A perfect storm.

The easy money has been made There's a lot of that just get used And yeah, I don't know I think canary in the coal mine is probably my favorite Because I still don't know what it means Is that they sent a canary down there When they were blowing up the mines And if the canary sang it was time to get out or something

Yeah, there's one that just I was thinking about That just slipped my mind I think you Josh and I did a blog post on this Like 50 phrases financial people say or something like that Yeah, that's possible Do you remember that? Yeah, I think so We'll try to find that one

Okay Oh like Drux says Yes. All right. I got two surveys for this week. One of them from Charles Schwab. They say, according to their modern wealth survey, three and five Americans pay more attention to how their friends spend money compared to how they save, with an equal number saying that they're at a loss to understand how their friends are able to afford the expensive vacations and trendy restaurant meals they portray on social media. Oh, I think it's like five out of five. Yeah, I was going to say, this seems low to me. Yeah. Like nobody is, nobody ever is like, wow, that's a nice BMW. I wonder how much, I wonder if they're maxing out of the 401K. Honestly, that's what I think. I steal these SUVs on the road and I think that person is not saving enough for retirement. Nope, that person is not saving enough for retirement, which is maybe I shouldn't be thinking that way.

But most people outside of our industry probably just see the spending and they equate it with success. That's because saving and building wealth is the absence of stuff. There's nothing to see when someone is saving. It's so, yeah. Wait, say that phrase again. What? Saving and building wealth is the absence of stuff. hashtag life coach all right now here's the worst survey of the week this is why we

we're so anti-survey a new poll by the workforce institute at cronos predicts an estimated 10.7 million Americans will skip work the morning after the game of thrones finale is that the donut company the donut company did a survey cronuts yeah close enough I mean I don't know how much extrapolation is done here but let's just say it's a lot you think there's really 10 11 million people that didn't go to work this morning because of game of thrones so what is that going to do to GDP in the second half? Did you watch it or not? Well, I was watching the basketball game and flipping back to Game of Thrones during the

commercial. What did you think of the ending? It was a tad slow for a finale, I will say, but I enjoyed the final season because I was never one of these people that got so into the story and was invested in this. I just thought it was entertaining. You know, I don't care for, I don't care for people complaining about people tweeting about Game of Thrones. Right.

This is like the, I think this is one of the... And get, if you really hate it so much, get off the internet for three hours. I mean, this is going to be one of the last shows that was like appointment viewing television because everything's going to be streaming in the future. So everyone is watching it at the same time. I mean, it was an enormous event and the too cool for school people get lost. Like, you shouldn't be happy that you didn't watch it. And you're mad that people are mad or I don't know.

I don't get it. I thought it was entertaining that finale was a little. But here's a thing. Mad Men was an unbelievable show. I wasn't a fan of the finale. Seinfeld the same thing. I was not a fan of the finale, but I love the show. I think there's a lot of shows like that that are going to be

stand the test of time as a good show, but people just didn't like how it ended. Do you know 85% of all finalies underperform their benchmark? That's true. I mean, it is really hard to nail the ending. Unless something like Breaking Bad where the entire series was written beforehand. Yes. I loved the show Bloodline, and I hated the last season. Yes.

Yes, the last two seasons were pretty bad. It's always like an anticipation thing. You're inevitably going to be let down because your expectations for a show that you love just cannot be matched. That actually happens a lot with novels where they build up is much better than the actual ending. Because sometimes it's just hard to get there. So I was fine with it. That's why I don't read detective books. Okay.

But the detective books always have a good ending to them. All right. So you put this in here retiring early. What is the secret to retiring early? Oh. So the secret to retiring early. early is make lots of money, don't have kids. Oh, oh, thanks. Yeah. I mean, that's pretty much that's pretty much it obvious. Having kids is expensive. Yes. Of course it is. Okay. Moving along.

All right. What's this? Oh, did you see this? A stainless steel rabbit sold for $91 million and a white canvas sold for $15 million. Now, I don't want to say that we're in the late stages or that we're in the 11th inning. You're talking about the late stages of capitalism or the late stages of the bull market. A stainless steel rabbit for 91 million dollars? I think the white canvas is even worse. Yeah. I don't know. I mean, these people, you know what? If the Fed is not behind the curve, I don't know who is. Coming back around, like, this is why the guy paying off the student loan stuff was so great. Because you could waste your money on crap like this. And I mean, I guess you could make the investment implications, but this is just like a, I mean, this is just showing off

basically, but... It sounds so wrong that somebody could spend $15 million for a white canvas. And again, I'm not trying to get holier than thou, but $91 million for a stainless steel rabbit. Yeah, that's... Like, there are people that could do a lot better with that, but whatever, whatever. Before you cut me off, is there anything else you have to say before I get to listener questions? I'm definitely cutting you off again.

All right. I'm just waiting for my moment. Last week, you touched on typical investors' timeline for holding an ETF. What do you think is the actual recommended time horizon for holding an ETF? You know, before we get to that, you know what I did this weekend? What? Can you see how red my head is? Yes, it looks a little reddish.

Oh, yeah. I gardened. Sun-touch. Oh, yeah? I garden. I was going to wait for Tony Isola, but I couldn't wait because I just had the urge. Landscaping has to be the worst part about being a homeowner. All right, so let me tell you what I did.

I got top soil. I got manure and I got some other thing. It's a word I've never heard of before. And you know the machine that like grinds up the dirt? Yeah. A tiller. Is that what it's called? Yeah.

So we did the tilling or the tiller of the tilling. And then we made like a sifter and we poured dirt in it and gave it one of these back and forth to get the rocks out. And now I can't walk. My core is sore. And speaking of sore, my fitness pal has been fantastic for me. Thank you very much. How so? Because it gives you a reminder if you forget to put it in a meal.

And so I think just the act of putting in a meal, except for that giant dinner that I had last week, I've been very well behaved. So what do I plan on planting? I guess just like tomatoes and cucumbers and all that sort of stuff. So you built like an actual garden? An actual garden. I'll take pictures. All right.

Yeah, I've learned that stuff is not for me. Landscaping. And if I could have AstroTurf on my yard, I would do it. But you don't like getting your hands dirty? I don't know. It's just not really. Would you say that you're more of an indoorsman? No, I like being outside. I just don't like doing landscaping work. Okay.

All right. Where were we? Oh, what's the appropriate amount of time to hold an ETF? Yes. Forever in the voice of the sandlot. This is a good question. This is a good question, yeah. This is a good question, though, because a lot of people don't spend the time to think about what's my time horizon before they go into an investment. And so the idea is it's different for everyone, but you have to understand, are you saving for retirement? Are you saving for a house down payment? Are you saving for vacations? So figure out

where your time horizon is and then don't get it twisted with someone else's time horizon and just define it for yourself and figure out what type of what investment is for, basically. You have to tie your investments to something. Otherwise, you're really flying blind. I think is what Ben's trying to say. Exactly. Okay. 23-year-old. has been contributing to a permanent life insurance policy. Yeah, single. I was attracted to the idea that my money would not be tied to the market and would more than double by the time I was in my 60s.

Literally face-pombing right now. Yeah, paying $100 a month, this rate I'd contribute roughly $50 grand over 40 years and then I could cash out in our tire. What do you guys think? Okay, this is not your fault. Somebody sold this to you. Nobody goes looking to buy a permanent life insurance policy.

Well, especially at that age with no dependence. I think that's the biggest thing is that you're a single person. So our colleague, Jonathan Novi, always says no one really needs insurance. You just have risks to manage. So what risk are you trying to cover here if you don't have a wife or children that are dependent on you? If your risk is that this money is not tied to the stock market because you absolutely cannot stomach stock market volatility, you don't need to pay insurance for that. You could do it in form of just bonds. right something easier yeah this i mean there's there's a time and a place for insurance in your life but a 20 year old healthy single person by the way a hundred dollars a month over 40 years gets you to 120,000 dollars what's the iR on that and what would that money be if you just put into freaking short-term bonds well i figured if you made six percent a year on that over 40 years you'd be close to 190 thousand dollars or so all right and what if you just put it into the Amazon IPO in 1997, just go back in time. I would talk to your friend who sold this to you. Yeah, it's definitely someone, it's definitely, you're right. You know that.

Someone's, their friend definitely sold them this. The friend who got a new job and needed to sell some policies. By the way, I was, I was a 23 year old who was told that permanent life insurance is for everybody, even grandchildren. So I get it. Yeah. Okay. Recommendations for the week. I will start. So I read the second edition of I will teach you to be rich by Remeet St. and I've been a big fan of his ever since he started blogging. I think I've probably been following him since I started, since probably 2005, 2006. He's been on it for a long time. It was a 10-year anniversary of his book and he updated a little bit. I had thought about writing a personal finance book at one point. And I usually just give this one away, though. So if you're like,

if you have someone in graduating college or a young professional just starting out, I think this book is the perfect one to give them because it goes through things like bank accounts, credit cards, paying off debt, saving and investing. I think this is just a really good book for anyone who wants to get their personal finances in order. I'm about halfway done based on your recommendation. Actually, we're doing a video with Rameit next week. He's coming in.

And I think it's great. I'm really enjoying it. It's obviously a lot of very basic stuff for beginners, but I have definitely picked out a few things that I never knew before. A lot of people need to go back to the beginning too to actually figure out. Oh, for instance, one of the things that was that I didn't know. I wish I did was that if you buy tickets on your credit card, your credit card insures that so like you can call your credit card and have them cancel it.

So a few weeks ago when Robin and I went to Miami, it was sort of a last minute thing and I didn't know if we were 100% going to go. So I paid probably, I don't know, 150 bucks for flight insurance. Turns out if I read Rameet's book, I wouldn't have done that. Yeah, and sometimes it extends your warranties on your purchases. There's a lot of good credit card stuff. If you actually read through the little prospectus that give you, there's way, more stuff. Like it does your rental car insurance, all that stuff. It can save you a lot of money

if you check it out. We started watching Chernobyl this weekend. We're just one episode in, but it's really good. How many episodes is it? It's a five-part mini-series. And I didn't know a ton about it before, but... I know nothing. Like, if you want to summarize career risk, this is the show for you. It is... Like, I knew, like, there was an explosion, but I didn't know the extent of how bad things got after it actually happened and how much worse they made it. Is Chernobyl like the 1987 equivalent of nuclear energy? Yes, I think so. We also watched Dead to Me on Netflix over the past week or so.

Oh, how was that? Christina Applegate. I actually liked it. It's kind of the first two episodes, if either they pull you in or they don't, there's kind of some nice little twists in there. And then it had the sister from Bloodline, which you mentioned. She was in Freaks and Geeks.

I liked it. It was a pretty good sort of 10-episode show. I probably don't need to see the second season if they make it. It was probably one season. I didn't like that. This reminds me of that. Remember the show with Fred Armisen? Yes.

Forever. Forever. Yeah, you already took me to school on that one. You didn't like it. I'm still mad at you. I guess so. All right. Dead to me, it was, it's not like drop everything you're doing and watch it, but it was entertaining.

So, that's all I got. All right. We're good. No other recommendations for you? Nope. All right. Shoot us in email, Annal Spiritspot at gmail.com. We'll talk to you next week.

Thank you.