Animal Spirits Podcast - The Bankrupt Barber (EP.96)

Episode Date: August 7, 2019

On this week's show we discuss how stocks have reacted to past Fed rate cuts, why is the stock market falling, why aren't there more unicorn companies in Japan, nature vs. nurture in your finances, why Michael bought a Peloton, Noobwhale t-shirts, can sovereign bonds really be in a bubble, CBD gyms, why people never feel rich, a rule of thumb on when to refinance, Amazon is getting into real estate, the most popular sandwiches and much more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by Y Charts. Go to whycharts.com, find the contact button, tell them we sent you when you sign up for a new subscription and you get 20% off, your initial sign up. 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 worked for Ritt Holtz 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 Ritthold's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. One of the reasons that we like Whitecharts

is because they make our job easier and they send us research ahead of time before we even have to ask for it. And so they sent us last week what happens to the markets over the past 35 years when the Fed cuts interest rates because the Fed just cut rates last week. And they show what happens with a 25 basis point cut and a 50 basis point rate cut. And it's kind of interesting. So they look one year out. And for the 25 basis point rate cut, they show the, what do you call it, the Morning Star style box. So value and growth and small, medium, and large stocks. Pretty much everything's up relatively big after 25 basis point cut on average. But a 50 basis point cut, almost everything is down looking out a year. So here's my take. Go ahead. In the 25 basis point cut,

they're up like anywhere from 10 to 20 percent. And the 50 basis point cut is down from 5 to 15 percent. I think the 50 basis point cut is almost like an emergency measure that you're doing when things are already really bad. And you're probably heading towards or in a recession. And so even a year out, it's kind of hard for stocks to be up. Whereas a 25 basis point cut, that's just kind of dipping a toe in the water. And things are probably still okay and that's why stocks are up usually let me ask you a question you think a 25 base point rate cut is like mid-cycle stuff whereas 50 is holy shit we need to do something and maybe it's like pushing against a string yes it's by the way i've never said that i've never said that phrase that

loud but this i feel like that was a good are you saying the fed is out of ammo or behind the eight ball it's yeah i i think that's probably got to be part of it is that when they get to 50 basis points that's when they're really reacting and or overreacting or maybe they've already miss the boat and there's nothing they can do. But I mean, don't you think I'm of the belief that the Fed only raised race in the first place so they could just drop them eventually just to show that they're doing something. Does it really matter? I mean, was this the ultimate sell the news thing? Is that what happened? I don't know. Wait, I did I did not know that you were a Fed truther. I know. How am I a Fed truther? Well, isn't that conspiracy theory been right there?

What's a conspiracy about it? They raise rates only to lower them. them? Yes. My, my, I think the Fed, let me ask a question. How much gold do you own? You're the gold owner here, not me. You take physical storage. I think that the Fed doesn't have as much sway as some people would like to believe, and that they don't, they don't know the direction of interest rates or inflation better than anyone else, as much as they would like to. So I think the Fed just doesn't know as much as people, like, because they change these rates all the time, and they're trying to guess what's going to happen in the future. And I think that a I mean, honestly, does a 25 basis point rate change in your savings rate or a mortgage or the 10-year treasury?

It doesn't matter that much to you? Not to the individual, but to the everybody. Yes, maybe it does. No way. It's all psychological. Well, then. All right. But isn't it, I mean, it is kind of funny that it was like five or six months ago.

People were predicting 6% rates. And now the 10 years well under 2%. Long-term treasuries are like 2.3%. I pulled up this other chart from Y charts. Since November, the TLT, which is the long-term Treasury I shares bond ETF, is up almost 22%. So there's a bull market always somewhere, I suppose, but it's crazy how the Fed was raising rates for two or three years straight. And now they're immediately just, all right, forget that.

We're reversing course. Well, they don't know anything. No one knows anything. So last Wednesday, the Fed lowered rates, I think stocks made an all-time high that day or the day before. And then they swiftly fell, whatever, three, four percent. And then over the weekend, we got this yuan devaluation news. It's kind of crazy that there's like obviously a ton of headline risk right now. And it feels like... Wait, wait, wait. There's always headline risk. Stop it. No, there's not. Yes, there is. Okay, but is it louder than others sometimes.

I mean, come on. What do you mean? I don't think so. I think people look for justifications. and maybe stocks had run up a lot in the last four or five months and they needed a reason to sell off. Let's use this currency thing. But what you just said doesn't refute the fact that sometimes there's more news than others. This news from China is big. Big Lee, some would say. Okay.

Five years from now, there's no way in hell you're going to remember this China news. No way. So false. So false. I remember August 24, 2015, very clearly. And I will remember... You blogged about... this. I have no recollection of that happening the first time. None whatsoever. It didn't impact me

in any way. Midwestern elite. All right. Let's move on. Okay. No, say your currency thing. Come on. You sound like you you were winding up there for a minute. I forgot what I was going to say. What was I going to say? About how this is the most important day in stock market history. This is the demarcation line. And from now on, all right. So speaking of haircut, since the Fed just cut rates, you called me last week. And I slacked you and I said, I can't talk now. I'm getting a haircut. And you said that I was ball-chaming you because you can't get haircuts anymore. I've seen it a million times. And I came out of the haircut place and I immediately said to you, this kind of reminds me

of our fund manager debate we were having because I'd say I don't pay a lot for haircuts. I get a haircut like once every three or four weeks. I'm not going to spend a lot of money on it. I go to one of those chain places that's right across the street from my office. I don't really care. If they mess it up, I'd say five out of six are good. One out of six, I get a faulty haircut, but I don't care because. you get what you pay for sometimes. But I'd say 45% of the people cutting my hair at these

places don't have a good haircut themselves. And like, do you think, is this like eating your own cooking as an investor? Like, shouldn't someone who's cutting people's hair for a living have a decent looking haircut? I know they don't cut their own hair probably. This is shtick. No, okay, I've got a point here. So you wrote about the CFP thing last week and they talked about how a lot of these people, the CFP doesn't talk about the fact that a lot of these finance planters with a CFP have declared for bankruptcy. Okay. And so with a person cutting your hair, you can see that bankruptcy on top of their head, right?

With a CFP thing, you can't see that, right? And so that's where my thought went. And so, so, so, right? It says it right there. My hair cut is bankrupt. And so, so I was wondering, like, and you wrote about this, like, does this disclose? someone from managing my finances if they're bankrupt. Not necessarily, but it would be something that would be nice to know. And so I thought about, I don't know if you remembered this from a few years

ago. So when Carl Richards' book, The Behavior Gap came out. He wrote about it in the book and he wrote a piece in the New York Times about how he, him and his family got caught up in the real estate bubble in Las Vegas. And he was very open and honest about the fact that they got over their skis. They borrowed like 100% of the home's worth. And they couldn't make their payments. They had to stop making payments and do a short sale. And I think it was actually. actually a good thing for him to put it out there and tell people like, listen, this can happen to me too. And he's now like the financial advisor to advisors themselves. Okay. So what's a point slash question? I'm saying, do you think it matters that people in that situation

are just open and honest about it? Or should those of them hold back and I just think that the consumer should know. Right. That's, yeah. It's case by case. And just that's all. The consumer should know. And even in my instance, I know that this person has a bad haircut. But I sit down in a chair, do I say, I don't want you cutting my hair because I see a blue streaks in your hair and it's jagged. This is giving me flashbacks. There's nothing worse.

Well, I should, there's a few things worse. But for me, this is pretty bad. Being like 21 or 22, however old I was, and getting a haircut and the barber holding up the mirror in the bag, do you like it? Do you like it? Yeah, I love it, asshole. Thank you.

This is great. This fantastic. Best haircut I've ever had. Yeah. You know, I'm like dying inside. You know, it's great. Thank you. I actually put it back on because you totally butchered me.

Well, I didn't have that option, Ben. Okay. All right. So you wrote a piece called The Big Lion Personal Finance, where you, uh, I didn't realize that you were such a, such a saver. Your parents gave you $20 a week for food and you made peanut butter and jelly sandwiches. Pretty much. I was one of those people that always stashed cash for some reason.

I was, and I think part of it is like that's just the way that I was, that I was, that I was brought up in that that I was what hardwired for. And I think some people just aren't hardwired to do that. Here's my point. One of the takeaways, you said, I used to be one of those people who secretly judged others for their poor financial habits. Now I see the error of my ways. People do like spend shaming quite a bit. I bought a Peloton, 39 months, zero percent APR. Why would I not do that? Well, assuming that I want to one in the first place. But here's, hold on. Here's, so why am I saying this and putting myself out there to get spend shamed and body shamed.

Social proof. I feel like if I talk about this and I still don't do it, then I'm totally hopeless. I don't think our listeners have got an update on your- On Michael's fitness levels lately either. I had a total dad-cat bounce. You called it. But the point is you are one of these people who can save money,

who can go to the gym. Oh, look at me. I go to the gym. Good for you, Ben. I need a kick in the pants. I'm not a self-starter that way. So I'm putting it out there. I agree.

I think some people, like, I've seen this analogy in the past where why do the best golfers in the world or the best basketball players need their own trainer or their own dietitian or a coach or whatever? Accountability. Right. Some people just need that. And I think it's great. I love the idea of picturing you in spandex with a headband on a peloton that. Well, you'll see it. But are we going to be taking mortgages out from Peloton in the future?

Is that where we're headed? that's pretty crazy that they do zero percent. But as we talked about offline, you said, listen, I'm looking at this like a gym membership because you're paying a monthly, what, 65 bucks? So it's 65 bucks and then plus like whatever, 40 or 50 for the thing. But here's another question. It's really not that bad when you put it that way. So I haven't like sweat from physical activity in like, I don't know, five years.

Although I did get some good exercise in the garden this weekend, I'll tell you that much. Okay. But so what price would you put on physical fitness and, and, and, you know, feeling better about yourself. Is there a price that's too high? No. Would you pay $10,000 a year? Yeah, if it works, then certainly do it.

It can add years to your life, can make you happier. Yeah, it makes you feel better about yourself. I totally agree. All right. So, Ben, a few weeks ago, you nailed it. I scoffed. I made fun of you, but you were right. And I'm here to say that.

I appreciate it. Do you know where I'm going with this? Yes. Okay. I asked you how you knew that there was no, like, Silicon Valley of Japan, and you said, I don't know, facts. And I was like, what facts? What do you know?

Turns out, you were absolutely right. Japan has only one unicorn. And it's the world's third largest GDP country, only one unicorn. So there's an article in fortune somebody shared with us. Basically, the gist is that they're doing like a Y Combinator thing. Or maybe that's not true. Somebody's doing a venture capital fund happens to be the brother of Masayoshi's son who's doing this. I think I was probably right.

I was probably right for the wrong reasons. The only reason I said that is because you just never hear about it. I mean, that was the whole worry in the 80s is that Japan is going to take over the U.S. But you just don't hear about a lot of technology or big startup companies coming out of there. And apparently they want to. But I mean, do you think it could ever happen where they're going to try to do Silicon Valley of in other places? Doesn't it have to be organic? I feel like trying to do that somewhere is just never going to happen or never work.

Yeah. That makes sense. All right. I don't think that we realized this, but I think last week was our 100th episode or was it two weeks ago? Yeah, it's hard to tell because we've had these bonus. episodes as well, but we totally missed the boat on that one. Yeah, so we're like, we're Will Ferrell in old school where he forgets that his birthday happened.

Damn it. So somebody emailed us saying like, why don't you guys do like a new whale t-shirt or something like that? Because someone pointed out to us last week that if you Google Newb Whale, our picture shows up, which is great. Well, it's funny in a couple ways because it's funny that you'd think like if you look up Newbill in the dictionary, you see a picture of these two idiots. but it's also funny because we've somehow turned that word into our brand.

So we went on 99 designs and we found a really good designer. I don't want to give too much away, but she's making a new well shirt for us. So what we're going to do with that money is give it to the Fisher House organization. So they provide housing and accommodations for veterans' families who are undergoing medical care away from home. And so we're going to be doing that. I don't know how long it's going to take to get the maid, but just wanted to put that out there. Stay tuned for that. It's a 2019 project for us. Hopefully soon. If we get this design, yes. And we have a few veterans on our staff and we thought this was a really good

organization to give to. So you can not only wear a new wheel t-shirt and represent the animal spirits brand, but also help some people out too. Yeah, help us and also help the veterans more importantly. All right. So in Barron's this weekend, there was an article, the case for cash now. and BTIG's chief strategist was talking about, quote, this suggests perhaps the biggest bubble in history. German 10-year boon yields at minus 0.4 percent, 100-year Austrian bond yields at 1%. Okay, that one is kind of insane. And so on. So UK guilt at 0.6 percent recall some of the history's great investment bubbles.

Among those of recent memory, the Japanese stock market in the 1980s, the dot-com bubble of the 1990s, and U.S. residential real estate in the previous decade. Can you really compare negative yielding bonds to the Japanese stock market bubble? So let's say that you lent to Germany at minus 0.4%. Let's say that you're a local investor. And, okay, if rates go up to 2%, yeah, the price of the bond is going to get crushed in the short term. But over a 10-year period, you're going to get your money back, right? Right.

There's no way that bond bubble in no way or form can be anything like a stock market bubble. Yeah. It's just a ridiculous comparison. Unless every government in the world defaulted, which guess what? They're not going to default on a negatively, in a negative interest rate bond. That's not going to happen. So I just think that these compare, I mean, is this sort of abnormal? Not sort of.

It's this very abnormal and hard to wrap your head around. Yeah, I don't get it. And you know what? I also don't get, now that we're on this, I don't get monetary policy there. Like, I just don't get it. I don't get how it works. Okay. So taking this back to our discussion from last week, we had a little debate.

will we ever see negative interest rates? I think here's a different way to frame this. What would surprise you more from current levels? Negative interest rates in the U.S. or 6% interest rates? Because I think at this point, I'd be more surprised by 6% interest rates. Yeah, I'm with you there. Maybe I'm a momentum trader here. Well, negative is a lot closer. This is true. All right, Ben. How's this? Article in the Wall Street Journal. Diapers promising to soften babies behinds and digitally track their sleep are hitting the market. Build as parental aids. The new products are also helping the biggest diaper maker lift prices. So baby births are falling.

They were down 2% to a 32-year low. Ah, so they're losing money and they're trying to figure out a way to charge more. So here we go. Kimberly Clark in July rolled out a Huggies line called Special Delivery, which is made from plant-based materials, comes in black packaging, and costs roughly five times the least costly diaper on the market. Are you kidding me? Okay, so you have a new baby coming soon.

How do you pick your diapers? Because here's how I pick them. we get the cheapest ones there are. Because, I mean, we had twins. We went through a lot of diapers. Okay, I'm a brand snob. I use huggies. Okay, I mean, what do we use?

I don't know. Loves, maybe, but I mean. It's not just that, but PNG is partnering with Google. So this is literally beyond diapers. Yeah, there's no, so this says they're going to develop a tech-infused diaper system that includes monitors and activity sensors that track when baby sleep and go to the bathroom, sending alerts to parents' phones. No way do you want to know this.

It's too much. And I didn't realize that the, diaper industry was a duopoly. PNG and Kimberly Clark account for 80% of the sales. Break them up. Well, you know what the best ones to buy are now, the Amazon brand. Those are the cheapest ones. So you get them on Amazon Prime. They send them. So I want to give myself a little pat on the back here since I have twins. People complain about this. I could probably, if they had a contest, fastest diaper changer in the world or fastest parent who could take one of those car seats in and out of a car. I'm basically like a NASCAR pit crew at this point. I can do that fast. I could

pretty much do with my eyes closed just saying uh video or it didn't happen but you do this so often that like trying to buy a nice diaper makes zero sense like we had some friends who tried to use the cloth ones they were going to save the environment by using cloth diapers do you know how gross that is with how much babies secrete fluids it's like secrete is a gross word that's pretty bad but yeah this is uh i i guess they can see the demographic rating on the wall here but Pivot here, idea for one of these firms, they need to go on on adult diapers because all the geriatric baby boomers are going to be aging. That's where they can pivot their business. How both moved at the exact same time? No. Coincidence? What? Something happened with Bitcoin?

Well, such a new whale. I can't even talk to you. All right. Sorry. I don't track it that closely. This might be the lead of the century. And by the way, if only they were signed a froth in the market, with that, I give you this. In the world of wellness, it seems that nothing. will stop humanity from punishing ourselves in ways as complicated and embarrassing as this mortal coil will allow. With that, I give you a Bitcoin accepting, CBD gazpatra serving, gym slash members only bar owned by Tony Robbins, Pitbull, and the guy who founded the learning amex. I think the best part of this is not just the lead here, but the picture. So it shows like these attractive people sitting at a bar and there's one dude with his shirt off and he's got oil or a bill over his body

and they're having drinks. I just... So there's a bar with low... calorie workout beer, cucumber kale juice with pit bulls voli vodka and CBD-infused martinis. If this isn't the top end, I just don't know what it is. It sounds awful. The CBD thing is something that's totally over my head. By the way, literally, like articles like this are what people are going to tweet in whenever the next recession happens. Save this one.

Yeah, if only there was a sign. So in some of the smaller towns in northern Michigan that we drive through, they still have these family video places where we can rent, literally rent movies. Like, they still exist somehow. I don't know how they haven't gone out of business. Wait, what? I think I missed that. I'm sorry.

They still have, like, it's like a family video is like a smaller regional blockbuster type of chain that are still open where people actually go and rent movies in these smaller towns. And all the signs now say, we serve CBD here. So they're trying to pivot from the movie business to selling CBD. So I don't know. One of my favorite comparisons for CBD was it's the balance bracelet of the 2010s. Remember those balance bracelets that,

You wear like a metal bracelet. You'd buy it at like one of the kiosks in the mall. And it's supposed to give you a better balance because it's this bracelet that, I don't know. I miss that one. I like that. Okay. Anyway. So the New York Times has this new graphic where you can type in your zip code and then you type in your income and then you give your age and then you talk about, do you think I'm how rich do you really think you are in the top 10%, 25%, 50%.

I don't know. And then it spits out the income levels by where you're based. And they did a study on this, and they showed the percentage of Americans who think that their income makes them wealthy and the percentage of that I don't know. They said more than a third of the respondents in the 90th percentile, so the top 10 percent of income, they define rich here by income, which we could debate, but that's how they used it. More than a third of the respondents in the 90 percentile described their income as average compared to general Americans, which is pretty crazy. And this is segmented out by where you live as well. So it's not like you can compare someone in San Francisco to someone in Iowa or whatever. They also found, they did this by country, they found the vast majority of respondents thought

they were lower on the income ladder than they actually were. So this whole idea of perceived wealth, people constantly think that they are less, they make less money than they actually do compared to other people. We spoke about this a few months ago. There was a study that showed that people on the lower end of the income spectrum tend to think that they're better off than they actually are. And people on the upper end, it's the opposite. Because people on the upper end live around people that have more than them.

And people on the lower end, they're just fortunate with what they're just thankful for what they have, generally speaking. Yeah. So it's kind of fun to go, maybe not fun, but interesting to go through this article and see where you sit depending on where you live and what your income is. And the Walsh Journal had an article. Families go deep in debt to stay in the middle class. And they probably quoted three families. And like, it gives their income and everything and their jobs and their names. and where do they find these people and why do these people give quotes?

Are the people in these articles paid to appear? Maybe this is like a survey thing where they reach out to people and say, hey, are you in this cohort, reach out to us? But what's the incentive? I'm asking, is there a monetary exchange? I think everyone wants their 15 minutes. And if you hear I'm going to be featured in the Wall Street Journal, then it's kind of like, why does someone sign off the waiver to be on cops and have their face shown instead of

blurt out, right? They want to be seen for doing something, even if it's getting arrested. These people are the financial media's version of cops. But this is just, it's so weird. Imagine showing somebody like, hey, we make this much and look, we're in the newspaper. I don't know. Just weird. I agree.

So again, the headline was families go deep in debt to stay in the middle class and then buried like 13 paragraphs into the post was counting all kinds of debt, including mortgages, consumers aren't nearly as debt burdened as they once were. In the fourth quarter of 2007, the last year before the financial crisis struck, households devoted 13.2% of their disposable income to debt service in the first quarter of 2019. That number was 9.9%. So this is another denominator blindness thing where they say household debt has never been higher. But oh, by the way, incomes have risen and so have assets. And so it's really not as bad as it seems just because it's higher than it's ever been. So I wanted to ask you this, your thoughts on this. And they presented this as if it was like a catastrophe, but I don't necessarily know that it is. So it spoke about a family that is

renting, even though they have a decent income. The number of households that have inflation-adjusted annual incomes of $100,000 are greater, but our renters nearly doubled from 06 to 2016. Is that such a bad thing? Yeah, I think that's probably a good. I mean, 2006 is the height of the real estate bubble. So I'm sure a lot of people did it. Maybe they lost their home where they just decided this is not for me. I think that's a great thing. I've always been on the thing that the kick of not everyone probably has the wherewithal to be a homeowner and they really have to think it through. So that's a good thing, I think. I thought they would think that. And then also not something that we've been speaking about with the cars lately. One of the reasons why it's been

a struggle to maintain a middle class lifestyle, they say, is because the average new car price, this is surprise me, this is really high. The average new car price is $37,000. That's because everyone's buying SUVs and trucks these days. Bring back minivans. Yeah, well, bring back the sedan. If I could drive a Honda cord with three kids and three carsies, I totally would. But it's not going to happen for me for a while. So you asked me if you should see the Irishman. I'm sorry, if you should read it. Yes. Do you think I should read it before the movie comes out? Okay. So I read the book called I heard you paint houses. And see, I actually think that would have been a better movie title. Yeah. Because that's a great line. So, you know, people, and I probably

have been guilty of this, like, oh, the book was so much better. Yeah. I do that all the time. We had this discussion here. How many times is the movie actually better than the book? Not very often. Well, you think this has let down potential. I'm all in. I disagree with you.

Here's why I think I have let down potential. I think that the trailer looked good and it had the great music like, dun, done, whatever it was, done, you know. But I have yet to see a movie on Netflix that was made by Netflix that has been like, oh my gosh, that movie, you have to see it. It was amazing. There has not been, that's my only worry. this one has Scorsese

Yeah but it's yeah But Conner point De Niro Pacino Pesci Are What are they 75 years old each Like can they still bring it I hope they can I love those guys

But I think this has let down potential I think there's 35% chance this thing is a letdown It's different this time I'll say that Okay so but should I read Should I read the book Will it make my experience better

That's what I'm asking you Okay so it was a very good book but I would say no, because the movie's coming out in a few weeks. Okay. When does the movie come out? September 24th. How about if I don't like the movie, I'll read the book. Actually, if you, what?

Okay. So Al Pacino was in Once Upon the Time in Hollywood, and speaking of disappointment, oh my God. Now, I will tell you. You didn't like it at all? I hated it. Oh, really? Huh. Did you see it?

No, I didn't. I mean, I never go to the movie theater anymore. Okay. I went Friday night at 930. What am I a maniac who goes to the movie by myself? I went Friday. night at 9.30, I went on a date with myself. The movie theater was 90% empty. And I fell asleep twice. And I had to like Google, like, does something happen? Because really? Nothing. It was,

it was 97% nothing and then 3% over the top violence. But I will say this. I was not the intended audience because that period. Here comes the hedge. Here comes the hedge. Well, because, yeah, I don't, you know, I don't, you know, I want to take it. Okay. No, that's... That period in Hollywood is obviously before my time. And I was talking to Josh about this morning because he liked it. I thought it was unwatchable.

You know how they, in In Glorious Bastards, they killed Hitler. It was like an alternative history. Yeah. Same thing happened with, I don't want to give it away. But it just wasn't for me. Like, I couldn't relate to anything that was going on. That was before my time. A lot of the movies and actors in the background, I didn't know who they were.

And the cast was loaded. But Chino was in. it. Luke Perry was in it. It was the final thing he did before he passed. But I will never see this movie again. I'm not going to give another shot. I don't need to. It was, I found it very hard to watch. You sent me your review on Slack on the weekend and you said you gave it a negative 6.5. Yeah, I stand by that. I get that like the acting was good and Decafrey and Pitt were great and whatever, whatever. Okay, I'm with you on the, I can never, just because the acting's good, but the story or the plot or the action is no good, like I can't, I can't wrap my head

on that. Yeah, I'm not that big of a film buff. Like, I don't go for the acting. I go for the, for the story. Right. I think, I think a good story can overcome bad acting, but not vice versa. So I think at some point, you're going to have to give us a review of the difference between a movie theater in Brooklyn and the difference of a movie theater in the suburbs. Because it's got to be. Night and day.

Right. It's got to be really, yeah, okay. So I listened to Jonathan Clements was on The Longview with Christine Benz and Jefford Attack. Yes, I listened to that as well. And one thing that stood out to me was like, He was talking about how they were talking about retirement, and he said that his dad retired to Key West, and he basically said it's a great place to go for three or four days.

It's a horrible place to retire to. I like that idea of it sounds great when you visit somewhere, but it sort of loses its luster after a while, and I think I would be the same way. I'd probably go nuts, living full time in a place that people come and go vacation. I think so, too. That's all you got there. Okay. Here's the stat of the week that was flying around Twitter. As little as 3% of the global population flew in 2017, and at most, only about 18% have ever done so. Do you think this is a survey? What percent of the people that never have flown can do a push-up?

Crossover. So it says, according to the International Civil Aviation Organization estimates there were 3.7 billion global air passengers in 2016, and every year since 2009 has been a record breaker. So obviously there's people that just fly all the time and repeat passengers. But with that many people flying really only 3%. Does that seem low to you? Ridiculously low? So the point was, you know. Well, aren't there like a billion or two billion people living in poverty? Yeah, probably closer to two or three.

So I guess that kind of cuts it in half almost right there. But yeah, that one kind of surprised me. So there was an article in Washington Journal talking about refinancing, how it accounted for roughly half new mortgages. I actually, I'm an idiot. Yesterday, I was thinking about, I was like, wait a minute, should I refinance? Because rates of, even though I just got a mortgage, rates are down so much. So I, like, I sort of knew it was dumb at the time, but I put my information and it's like this calculator. And I got like 30 phone calls right away and they won't stop. Whoops. So how far below our rates from where you got in? Because you were asking me,

is there a rule of thumb? The rule of thumb that I've always heard is basically, I mean, you do the break-even calculation on your closing costs, but the rule of thumb I've always heard is basically 1%. That's kind of when it makes sense to do something. Okay. So I'm not quite there yet, but it's within spitting distance. So if the Fed can manipulate a recession for a mortgage rates to go lower, you can refinance. Is that we're rooting for now? I'll have to default to my house, but. It'll be totally worth it. So, friend of the show, Julian Hebron, at the basis point, put a story out called Everyone's missing the end game with Amazon's real estate referral deal with reology.

By the way, by the way, I love how you act like, oh, yeah, Mark was looking for reasons to sell. This is no big deal. It's just noise. Oh, yeah? Noisy mic, noisemaker. The Dow is down 635 points. Okay. Well, what's your point?

This was a particularly noisy headline weekend. Okay. All right. I'm sticking with it. The doubt doesn't fall 640 points because it's looking for a reason to sell. The stock market is crazy. We went down 20% in two months in the fall for no reason. And then guess what? We hit no way. Then we hit new highs two months later and everyone forgot what happened. And now guess what? We're going to have another 10% correction. Everyone's going to freak out. And then we're going to get new highs again by the end of the year. And everyone's going to go, oh yeah, forget about that.

Now this is the one that's going to, I don't know. know. This happens. I'm sticking with it. All right. Sorry, you were saying? So there's a company called Reology that owns Coldwell Banker Sotheby's in Century 21. And they're partnering with Amazon called this turnkey program. And so if you answer these questions through Amazon, the Reology agents will contact you. You sell your home through them or you buy your home through that agent, then you get up to a $5,000 credit from Amazon to spend on home devices like Alexa. That's a lot of diapers.

Yeah, assembling furniture. And you and I both know, we've moved in recent years, it's very expensive when you move. Not only the moving cost, but you have to buy a bunch of new stuff for your house, get rid of stuff. $5,000, I mean, that basically covers your closing cost right there. And it sounds like these companies are all relatively small in the grand scheme of things, but why wouldn't you do this? If all else is equal in terms of the commission rates and all that stuff, Amazon is just looking for a way to get you in the door and buy stuff from them.

I mean, this seems like a layup, right? Not knowing the details. It definitely sounds like it's worth you're into. Is there any industry right now that Amazon would go into that you'd be surprised? The sandwich industry. Good one. But I mean, if Amazon went into health care or, or let's say they got into banking or investing and they did index funds, any of this stuff

where they can just freak out the current people who run the show. I mean, none of it would surprise me at this point, right? What I was doing with that sandwich industry, I was trying to give you a lifeline to segue to the next topic. Yeah, I got it. I just didn't want to take it. All right. So someone put out a study, these are the most popular sandwiches in America.

And they asked the percentage of people who are really like or somewhat like the following sandwiches. Number one was grilled cheese, which is at almost 80%. I'm not a grilled cheese guy. I thought people stopped eating grilled cheese at like age 11. Like obviously, I don't, I'm not anti-grilled cheese, but if you have an elementary school for this. Number two is, if you have a grilled cheese, I'll take a bite, but it's not my favorite sandwich. Number two is grilled chicken. You know what's an overrated one here? BLT. Who ever gets, who's, who's ever satisfied by BLT? My wife gets BLTs. Bacon is something you put on another meat. It's not its own meat. I agree.

Bacon's in addition. I'm also, I don't like rose beef, but that's just personal preference. By the way, they also have a bacon sandwich on here. Not even a BLT, just bacon. Who has bacon as just a sandwich? That sounds British. I don't know. Oh, no, that's ham sandwich.

Who has a bacon sandwich? Here's what they missed on here. No Cuban. Where's the Italian? Are you kidding me? Oh, no Italian. That's true. Wow.

Wait, wait, I have to ask, was this a survey? I mean, obviously it was. Yeah, it's got to be. Ridiculous. Yeah. It's not great. Tuna's at 64%. There's no way 64% of the population likes tuna sandwiches.

Right? I'm anti-tuna. I gave Kobe a bite of tuna yesterday and his whole body shook and he spit it out. Yeah. Tuna's, yeah. Okay. So we've spoken about this, but we haven't spoken on the show because it looks so like we're taking us to complain about this. But there's all of these tweets that list like 15 people.

And it's like, who did I miss? And obviously the people doing this are trying to get retweets and they're succeeding so that I guess they get their follower count up. But I'm starting to think that literally it's Russian bots or something like that. It's got to be. It's like three or four of them a week now. Yeah. And it's literally the same list every single time. And it's just very bizarre.

So somebody wrote back, somebody responded, somebody who was on the list responded, I'm not a financial thinker, L. Well, stop the misinformation. I don't get it. But Twitter's a weird place. But there was another one today. It's just, it's constant. So for my recommendations this week, I was going to talk about Bill Simmons had Kara Swisheron, who she's part of the, she started that recode. She used to be at Wall Street Journal. She's a heavy influence on the tech media side of things. She does the pivot podcast with Scott Galloway. She's very, I think she's very good and very insightful. And they talked about social media platforms that could go away and they'd be a net positive to the country. And they both agreed that Twitter is number one by far. And this got me thinking because I think, like our little community of finance Twitter is exceedingly helpful for the people that use it the right way. And it's not really that negative. I don't think there's a lot of sniping going on. There's a lot

of sub-tweeting, but it's not that bad, whereas things like politics, Twitter can be pretty nasty, and then the media Twitter can just be this crazy echo chamber. But that was kind of surprising. I mean, I think one of the problems is when you get to the level of them, where you have maybe millions or hundreds of thousands of followers, you are getting just taken apart at all times by people who are reading your stuff and there's always negativity. But I was, yeah, I was a little surprised by that, but they wouldn't think Facebook as opposed to Twitter. Yeah, I would think, uh, mainly because I'm a Twitter fan. My nature would be Facebook, but I guess we don't really see the Twitter the way that everybody

else does. Like, I wonder, do you think that most people are on Twitter as just civilians or Do you think it's like pockets of Twitter, like media Twitter, finance Twitter, movie Twitter, basketball Twitter. I guess it's hard to say because like we were talking about last week, it's so concentrated at the top in terms of people who get the most engagement. There's probably so many people on there that you just don't realize. But what do you do in the topic of Twitter comes up with you said civilians, but just normal people who aren't in our finance circle? It doesn't. I don't spend time with anyone. That's true.

You go to the movies by yourself. I mean, it's great. I don't put myself in a position to have any conversations with anybody other than you, Josh, and Robin. That's not a bad place to be. I've been making the comment for a couple years now that I've been proactively trying to whittle down the number of friends that I have in the world. And not because I'm antisocial or anything, but just because it's just when you have kids and stuff, it's hard to do, right? It's hard to keep these things going. So if you're a friend of Ben's and you're listening, it's not you.

It's him. But I have this conversation, I don't know, once a month. You see someone at the grocery store or at like one of my kids' teaball game or something. They haven't seen in a while since college or whatever. Hey, we need to get together for beer sometime. Yeah, I'll call you. And we both know, we're both thinking to ourselves like, that's never going to happen in a million years.

Like, we just know that, right? But we still play along. Okay. Listener questions. What large projects are you guys working on now? Any second books in the planning stages? I'd be curious to know if you have any how they're going and how the topics are different from your first books.

This was a timely question because I just, I guess, a month ago handed in the first draft of my new book called Don't Fall For It, which is a short, and the subheading is a short history of financial scams. I don't know how I really got into this, but... It was good, but you could probably wait for a paperback. Thanks. Yeah, I think you're the only who's read the whole thing so far. And I have a few editing things to go on it before.

it's done, but I have a cover picked out. And I think it'll be out in January, February, 2020-ish. Publishing business takes a while to get these things out for some reason. And I think one of the reason I wanted to do some sort of a different one than the first one is because I think it was interesting when you were doing all the research for years. It kind of gave me the bug to want to do something different like this. Yeah. Do you think this is the last traditional book you're going to write? Or is that premature? Premature, but you and I have talked for a while now about trying something different. And I think maybe if we put it out there in the podcast, it'll lead to us actually doing something.

But I think we started talking about the old social proof. Yes, yes. I'm trying to taking a page out of your book here. So you and I have been talking about it. We first brought this idea up when you were finishing your book and you were basically exhausted from that process and said, I need a break. And then I got into my book, so we put it off. But we want to do. By the, your endurance is incredible.

I can't believe you're ready to write another one with me. Just wait. Once you get that Peloton going, your endurance is going to go through the, roof. Okay. Yeah, it's my fitness levels that aren't keeping up. So we want to do something that we have all these ideas for a book, but we said, you know what? Writing a book is kind of a pain in the ass. It's a lot of work and it's a lot of back and forth. And we really like the podcasting format and think, I mean, to be honest, just not a lot of people buy books, especially nonfiction. It's really hard to get a big book going in terms of getting a big audience. So we thought,

what if we did sort of a slash between a book and a podcast? And that's one of our ideas. We've got two kind of big ideas floating around, but that's something that we're working on. I think now that my book is almost done, we're going to actually push forward and do this, where you and I do a podcast book, where it's a book idea that we'll be doing in podcast form. We haven't really looked into the technology of this, but we were thinking like one chapter a week, a dollar a chapter type of thing. Yeah, something easy. And we'd have a discussion on it and it would be all research that we put into place, something like a heart. or history of...

So we're going to do the research as if we were getting ready to write a book. We're just not going to actually write. We're going to have all this research in bullet points and we're just going to talk the way that we do in the podcast. That was sort of the idea. Yes. So that's something we'll do.

I think we could probably do one of those a year. Maybe that's ambitious. Whoa, whoa, whoa, whoa, whoa. No. All right. Sorry, maybe I just future me is probably going to be sorry. I said that, but I think it's possible. I mean, shorter ones in the future.

We've got two big ideas. We could do shorter ones in the future. Okay. How about you? Are you, was that your first and only book, the only one you're done? Who knows? Never seen ever? I mean, I have, I have no desire to do that again currently, like right now. Maybe things will change, but. It's not a fun process. Recommendations for the week. Anything else besides, uh, yes. So wait, one question. Go ahead. What was better? Crawl or once upon a time in Hollywood? That's not even, I mean, that's, that's insulting to crawl. those alligators were fantastic okay probably had more action okay what else you got for

recommendations we spoke about the russell crush show last week the loudest voice yeah doubling down okay i still have to get into it it's on my list i've seen two episodes of euphoria i'm in really yeah i still don't know if it's dark it's it's very very dark so if that's not really your thing then stay away okay but yeah it's it's if you're into that's sort of thing, then absolutely dive in. Okay, I started raised in captivity by Chuck Closterman. Oh, how is it? It's good. It's so, it's a collection of short stories. I'm not so sure. I'm not so sure I'm into the short story idea. Each, each chapter or story is probably, I don't know, six or seven pages. And I feel like reading fiction, I want more character development. And he uses,

it's all fiction. Yes, they're all short stories, meaning that he just, it's fiction. And he uses the stories in kind of an interesting way to make points about the cultural of today. So there's some really interesting points that he makes in some of them, like especially about how there's a really good on about how every generation sort of moves forward a little bit and the older generations, I'll hate them. So there's a couple good ones, but I think if I'm reading fiction, I want more character development and get to know the stories a little bit more. And they're almost too short for me. But it's good because he's a good thinker. I rewatched wedding crashes this weekend. Not going on a limb here. Holds up.

I think the first 60 minutes of that movie, I think it kind of dies off at the end. The first 60 minutes of that movie might be the best comedy of this century. It's very good. And I totally agree. It definitely dies off. The last time, it's the last time Vince Vaughn had is like 90-mile-dollar fastball. And he is, I mean, he just brings it. And I was dying the whole time.

It's been a long time since I've seen it. This one has been flying around finance Twitter for a while, I think, for at least in the last month for recommendations. I can't remember who I saw. but Alchemy by Roy or Sutherland. And I've heard him on a few podcasts. He's a marketing guy in the UK who's got a really interesting way of thinking about it. So it's a really good behavioral one through the eye of consumerism. So he says modern consumerism is the best funded social science experiment in the world.

And he's a very counterintuitive kind of behavioral person. And so he talks about driverless cars. So he says some scientists believe that driverless cars will not work unless they learn to be irrational. So he says if such cars stop or lie, whenever a pedestrian or appears in front of them. Pedestrian crossings will be unnecessary and Jaywalkers will have to march, we'll be able to march into the road, forcing a driverless car to stop suddenly at great discomfort to the occupants. So he says to prevent this, driverless cars may have to be angry and occasionally fail to stop and strike the pedestrian on the shins. So he's thinking about these problems like

two or three staged into, it's kind of interesting. His brain is pretty interesting. So that's one of the better behavioral ones I've read in a while. Dow is down 700. I can't believe you're still quoting the Dow in points. I never knew you were a Dow points, truther. You knew I was. Yeah, that's true. Honestly, most days of the week, if you told me what is the Dow at in points, I would be able to give you a, I wouldn't be able to get it was in a stone's throw.

I'm sorry. Let's show off. Okay. All right. Okay. So, Mr. Smart guy, these bad headlines stick around for a month. Does that mean we're going down 20%? Is that what you're saying?

Because the headlines are that bad? I have no idea where the market's going. All I'm saying is that sometimes the news matters, and you seem to think otherwise. I think sometimes investors use the news as an excuse. Sometimes they do, Ben. Sometimes they do. All right. Agreed to disagree, as they say. All right. Send us an email, Animal Spirits at Animal Spirits pod at gmail.com. What do people say in the end of podcast? Subscribe, rate and review. You can find us on, why do people say at the end of podcast? You can find us on Apple, Spotify. You can find us where you're listening. Yes. I don't get it. I always want to say that, but maybe they're just meant to say that.

All right. We'll talk to you next week.