Animal Spirits Podcast - The Best Decade in Human History (EP.118)

Episode Date: December 25, 2019

On this week's show we talk about the one year anniversary of the bear market, the Christmas Eve miracle bottom, the new Peter Lynch interview, why it never pays to be a pessimist, the illiquidity premium, recessionary vs non-recessionary bear markets 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

Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnick and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holt's wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions and the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Ben, do you know what part of the cycle we're at? No, what part of the cycle are we at?

I took a flight to Charlotte this weekend, and they were offering five people $1,200 to get on a different flight. Did you take it? It's Christmas time, and this is a very busy season, but I did not take it, but that sounds like a lot of money. That's not bad. $1,200? And all it took was for that one guy to get beaten and dragged off of the plane for that to happen. A few things that I noticed. One, the Star Wars marketing budget, holy moly. It was all over the terminal. All over.

You know like those, the horizontal elevators, basically? Yeah. For people with luggage and I use it. Disney's not messing around. There was like 10 screens with the music playing, and it was everywhere. So what I got of that Bob Iger book about Disney and Star Wars and their relationship when they bought Lucas films from George Lucas, it almost seems like they're smart enough to realize that the movies themselves don't really matter that much because he basically

admitted we rushed these things out as fast as we possibly could because we needed to see a return on this $4 billion acquisition. And after they released the first film, I don't remember what that first sequel was called. I didn't really get into them. I think I was. I watched the first one and whatever. Star Wars just isn't for me. But he said he brought it to George Lucas and Lucas said, oh, this is terrible. There's nothing new in it. And Iger was like, yeah, that's the point. We want to give people exactly what they want. And guess what? They're going to eat it up regardless of whether the movie is good or not. And obviously some people did think it was good. But that was interesting to me just how they are so aware that it's just the brand of this thing. And we just have to get it out and people will consume it no matter what. I think that's exactly what they did. I think they gave the, people exactly what they wanted for the finale of the saga. I saw it and it was absolutely good enough. There was parts that were super cheesy and people in the theater like, oh, but.

Oh, really? It was that bad. Okay. I mean, and people laughing. Like, it was definitely a little bit over the top and silly, but it was good enough. One final thing that I noticed. So from the airport to the hotel, I took a taxi, which I guess is a bit of a new whale move instead of taking an Uber. So the taxi from the hotel to the airport was $77. It was a good drive. It was probably a 30-minute drive. Taking an Uber from the hotel back to the airport was $30. And people say that technology hasn't made our lives better, right?

There you go. So it's almost a year ago that we were in the midst of a bare market. I pulled up this story from the New York Times on Christmas Eve. So we are for our listeners, if anyone's listening to this dutifully on Christmas Day, I applaud you, but we are filming this the day before Christmas Eve. And on Christmas Eve last year, here's the headline from the New York Times. Stocks close in on bear market as Trump and Mnuchin fuel Christmas Eve drop. And this was on Christmas Eve last year. What did he say? What did Mnuchin say to freak out the markets? He said, I spoke to all the banks and don't worry,

they have ample liquidity. Ah, that's right. He held fire in a crowd of theater because I think the market was in a 15% drawdown at the time. And then the next morning, it opened down 3% or whatever was. Funny enough, that was the bottom. Yeah, stocks fell 2.7% on Christmas Eve and they bottomed that day. I definitely dunked on him. Like, to me, at the time, that seemed like, what are you doing? Why are you talking about liquidity in the banking system? For goodness sakes, nobody even, you know, the tweet meme that's become nobody, semicolon, this? Yeah. That's exactly what it was. So from last year, this seems like a lifetime ago, because stocks are up. I looked at it. Since they bottomed on Christmas Eve at the close, the S&P 500 is up 40%, almost, 39% in change.

Here's the returns from December 14th through December 24th. This is daily for the S&P, down 1.9%, down 2.08%, flat, down 1.5%, down 1.6%, down 2%, down 2.7%. And that's what we're looking at. And we did a podcast that Friday before it was the day before Christmas Eve in terms of trading days. And we were talking about people worried about recessions. And I went back and listened to some of this and looked at it. How did we sound? We actually sounded pretty good. I'm going to rerun a post with some of the stuff that we said this week on Christmas Eve. Do we deserve a pat on the back? Well, for some of it, we said, listen, if you're looking for a buying opportunity, down 20% is not the worst place in the world, especially if you're a long-term investor.

and the other thing is we talked about how silly it would feel to hit new all-time highs again in 2019 because we said you said well it'd have to be a 25% gain to get back to all-time highs and we said I can't imagine that right now and I think we had we're going on 20 all-time highs right now and it just seems like a world ago so no no no 30 32 actually of that many so I looked at this and I think one of the big differences that everyone is always looking for for a bear market and people argue, well, did that bear market reset the bull market or was that? I think what people are really looking for in a reset is a recessionary bear market versus the normal bear market. I looked at this a while ago for fortune. And so I looked at the number of double

digit corrections, either in and around a recession or completely outside of a recession. So there were 20 double digit corrections during or around are caused by a recession. 14 of those were bare markets. The average drawdown was 33%, and they lasted 330 days from peak to trough. Non-recessionary periods, there was 33 of them, so more double-digit corrections, but just six of them were bare markets, and that's hitting that 20%, which I guess technically last December didn't hit because it was like 19.8. No, no, no. That's not true. No one follows intraday prices. Well, I'm about to tweet it after we do this podcast, I'll do the tweet. Intra-day, it was 20.21%. So, I mean, obviously we're splitting hairs.

Here's what I think. I think the reason why it's not an official bear market, well, we know why. It's because it wasn't a closing basis. But the recovery was so quick that if you blinked, it was over. Yeah, it was back by, I looked. It was on a total return basis. We made those highs by like April, which is really fast. So same thing with the one in, I believe 2011 was similar. Maybe not as quickly. But it's hard to say that it's a bare market, even though I felt like we were in one. I guess with the benefit of hindsight, it just, it was over so quick. Again, plenty hairs. The problem is those non-recessionary bear markets, I mean, every bear market, obviously in hindsight, is a good buying opportunity. That's just a fact because we're at all-time high. So literally any day in history of the S&P 500 has been a good buying opportunity. But if we're talking about really great buying opportunities, you could do worse than buying in a

bear market during a non-recessionary period. But the thing is, when they start falling, everyone assumes the world is falling apart and we're going into a recession. So during that time, it's never easy. And I think, yeah, you're right. We almost need this more extended period. The recessionary periods, again, the drawdown length was 330 days. That's just peaked at troughs. That doesn't even include coming back. In non-recessionary periods, it was 134 days. Those recoveries are way faster. Every time stocks fall 10%, I just assume they're going to fall 20%. That's my personality. And it felt like that. And last year, we were kind of saying, well, there really is no reason for this. I know there was like a government shut down happening and people worried about the trade war.

What really started it was inflation coming in a little hot. Yes. It would have been hard to predict 2019 at this time a year ago, yet here we are. And I guess you could say that with like all the decades stuff too. It's just so there was this other chart flying around on Twitter. Colin Roche, I think, posted this. I don't know who it came from. But it looked at the length of time for the longest drawdowns in history.

And they looked at U.S. equities, REITs, global equities, gold and U.S. Treasuries and looked at the longest drawdown in history and how long it took to remake your money back. And so for stocks, it's like 36 months, I think. U.S. Reeds, it was closer to like 72 months. You might have said this, but these have to be real numbers, right? Oh, that's a good question. I thought these were just nominal. Maybe it is real. No, no, no. It has to be real. Oh, yeah, you're right. It has to be real. And the gold one lasts at 312 months. And that's obviously because it was from like 1980. Yeah, you're right. So these are real. Well, today, it's still below its 1980. Inflation adjusted peak. Yes. So.

That's, again, part of the difference between a blip correction that you survive and everything's fine and just this massive long drawn out. And again, I think we probably need to see a risk because even the 1987, which was 33% in a week, basically, that made those highs back in the long term grand scheme of things. It was just there wasn't a big deal. How about this? What if December 24th was the low? December 24th, 2018 was the low. And we're sitting here today and stocks are above that level, but barely. We're 2% higher.

To me, even though we didn't hit the official 20% on a closing basis drawdown, we would be talking today as if it was a bare market. Right, because stocks had gone nowhere for... Right. If stocks went nowhere for a year and came within a hair of a 20% official decline, we would say that we're in bare market. And someone came to us last week and said, you guys are talking about how great stocks are doing.

Well, from the 2018 highs, they're only up 10 or 12%. isn't that a good thing? That's what I said. That's a pretty good thing. If you consider the fact that over the last three years, the S&P is up 50% in total with dividends, and that's including a 20% pullback, things are going pretty amazingly now. Well, I guess the reason why it's good is because, yeah, it's only 10%. And that's kind of the point is we spoke about us a few weeks ago, Brooklyn investors said, listen, over the last five years or three years, we're up 10% a year or something like that. It's not too hot, but it's pretty good. And I had Nick McGuilly make this chart for me. So I was thinking like, what's the tipping point? At what level are returns too high

where they do really poorly over the next 12 months? And we're still working on this. I don't have all of the numbers, but it looks as if, so right now the S&P 500 is up 30% over the past 12 months. And we went and looked back at all the 12 month rolling returns. And it looks like the level in which returns really start to come down in the following year is at around 35, 40%. So that's like the meltup where it's just too much it's been pulled for. And that was the 1987 thing where I think stocks are up 40% in change year to date going into October when they crashed like that. I looked at a bunch of different scenarios and I shared this with you. I wrote a little post on it after we talked about it last week. And I said, what happens if the average return following

an up year or following a down year, following double digit gains or double digit losses or just single digit gains and losses? It was basically a similar average across the board, meaning it's really hard, like you said, you have to almost get to an outlier event for the last year to impact this year because it just, it doesn't really have much of an impact on average. Yeah, it was interesting looking at this chart. It looks like everything is sort of similar, but there seems to be a sweet spot for momentum where it is just eyeballing list. Like returns start to go even higher for the following year when you're between, call it, I don't know, 15 and 30%. We'll put this in the show notes. So it's flat, flat, flat, it goes up and then it really starts.

to crash. And speaking of crash, somebody tweeted, Becky Quick is smart and more than qualified to host a financial morning show, having knowledge on many topics. But when she states she has to be in 100% equities, you know a huge correction is not far away and possibly a Japan-style bear market, contrary indicator for sure. So Becky, quote, tweeted him and said, I've been 100% in equities for the last decade. Pretty good mic drop. Yeah, that's not bad. I think 2008, I've talked about this before, just broke a lot of people's brains. And you're saying this stuff in jest about how they offered you $1,200 to get off the flight. And that means that's where we're at in this stage of the cycle.

Some people really believe that stuff. Well, that's why we joke. I mean, the joke is that there's people that for the last decade and forever and ever, this won't go away, are constantly looking for the signal. And let me tell you, if Mike Tyson opening up a trading strategy wasn't the top, Stop. Stop. Remember that? Mike Tyson?

Yeah, I still can't believe it wasn't... Neil Koonis rotates into cash in 2013. There's been so many that were like, man, this is perfect. And just stop. Yeah, it never works like that. And a lot of it is because back in the day, there just wasn't a lot of financial media. So anytime there was this turning point because of a magazine indicator or whatever, it was just coincidence.

It doesn't tell you anything. I always say, like, you're not going to find a contrary indicator on CNBC. If you see there's like a trading tournament on. the cover of sports illustrating for kids, that is a contrarian indicator. But anything that you see in Bloomberg or Barron's, just stop. Yes, just because there's too much up for these days and everything can be a contrary indicator if you really look too hard. So Barron's had Peter Lynch on an interview this weekend.

And doesn't it seem like he's looked the same for the last 40 years since he retired? I guess he retired in 1991. I mean, he kind of went out on top of it. He was like the Barry Sanders of his day for the investment business. went out on top in 91. And it's kind of a funny, the headline, Master Stock Picker, Peter Lynch, if you only invest in an index, you'll never beat it. Technically, that's not true. If you have securities lending in there, that's technically not true. You could potentially beat it. Or what if you use leverage? If it's a three-time ETF, quick note on Peter Lynch.

I was thinking about this. He is rich and famous and relatively anonymous. You know who's sort of like that? I don't know why I was thinking about this. Maybe it's a movie. I don't Tom Clancy. You have any idea where that guy looks like? No. But wouldn't you say a lot of the rich hedge fund dudes are like that where they make billions of dollars a year, but nine out of ten people couldn't pick them out of a lineup? Now, I'm pretty sure Ray Dalio could walk down the street, although now that he's an influencer, maybe not, but Bill Ackman, for instance, nobody would bother him or a few people would bother him walking down the street. Lynch had some pretty good quotes in here. He's pretty good at the legendary investor.

I think that's half of it. Don't you think? If you can come up with a good quote that people can use over and over again, like that's part of it. So he says, the thesis underlying everything, whether you're an actively managed fund or a passive fund, is that the U.S. will be okay. If you don't believe that, you shouldn't be in the stock market. And that's the problem with the people that are always looking for contra indicators these days, is that a lot of them just don't think things are going to be okay, which is just got to be a terrible, horrible way to go through life. I'm going to write about this, about the benefits of optimism based on that that Iger book coming up with a few things. So this was kind of interesting.

He was in grad school at Wharton. For his thesis, he interviewed Jack Bogle. He doesn't say what his thesis was, but I thought that was kind of interesting the fact that they came together. Where did you find that? Well, there was two Barron's articles, so they found it in one, and he talked about, he said his first investment in Flying Tiger Airline grew tenfold and paid for his grad school, where he met his future wife. And for his thesis, he interviewed Jack Bogle.

He also, he pulls out the good one that I think has been used a million times. He said in the past hundred years, there have been 60 declines of 10% or more, and most people have lost more money anticipating the corrections than the actual corrections themselves. That's pretty good. After reading through this, I think a lot of stock pickers were quoting him on Twitter all weekend. I don't think that there's a lot you can learn from Lynch as a stock picker. I think he's one of those guys that did it his own way, and you can't really drill it down to a formula. And so I don't think emulating Peter Lynch is going to ever get you anywhere. What say you? I mean, do you read his books back in the day? I didn't walk away

from those thinking, I can be a stock picker just like Peter Lynch. I think a lot of people did. I think he created a generation of stock pickers. I loved one up on Wall Street. When I read Beating the Street, which was his second one, that was honestly one of the books that made me think, okay, I'm definitely never going to be a stock picker or an analyst because talking about all the stuff that he had to do and all the calls he had to have with management and flying around the country and checking on supply chains, that's what I checked out and said, oh, this is not for me. Not going to, I mean, some people can handle that stuff. This is not my forte. And I'm not going to do this.

Well, I suspect he was a much more serious investor than the clips that we read from him in these interviews. He makes it seem like, buy what you know, talk to your wife about what she's buying. But obviously, he's doing a lot. That's what I mean. In that beating the street book, he talks about the homework he does in some of these companies. And it was crazy. Some of the interesting things, he talks about how he's a big growth stock investor. But he said that it's kind of a red flag that all the growth investors are focusing. on Microsoft, Amazon, Alphabet, Apple, blah, blah, blah, the typical fang stocks. He said he's kind of scared if that's where we continue to go. So he says, if he were doing this today, he'd probably be flying to China and Japan every two months and maybe the United Kingdom or France. So he's looking globally for growth, which is kind of interesting since it doesn't seem like there's much growth there, but obviously things are a little cheaper. Here is my hot take for you. This is from William Bernstein. He wrote this in The Four Pillars of Investing.

He's trying to make the case that Lynch's track record is not as good as it seems. Let me lay out the evidence for you. So Lynch started working at Fidelity in 1965. He didn't get handed the Magellan Fund, which is the one that he made famous until 1977. But that fund was not open to the public until mid-1981. Before then, it was a private investment vehicle for the Johnson family, which owns Fidelity. From 1981, when it was open to the public, to mid-1990, the fund returned 22.5.4. percent per year versus 16.5 for the S&P. Fairly remarkable, but over 10 years, he beat the

index by 6 percent, something that could be done by chance alone. That is his case for the fact that Peter Lynch maybe is not as good as he thinks, as some people think. I don't think that's a great case. I don't think that's a great case. Basically, the idea was, and he had kind of the same thing as Ken Heibner, where I think he had 29 percent annual returns, but they said the average investor in his fund only made 7 percent because they were jumping in and out. I actually think that he said that. I can't remember where. Yeah, he may have. But listen, you can't disprove skill. You also can't prove luck.

So there was a lot of people that had the opportunity to get lucky. Is it possible? Yeah, of course it's possible. I don't want to. I don't know that I'm willing to say that. The fact that he got out in 1991 and probably, I mean, he could have made so much more money in the 90s, especially since he was a growth stock investor. I'm not saying he would have chased those tech companies, but the fact that he got out in 91, obviously not knowing where things were going to go the next nine years is pretty amazing. I feel like he also could have easily turned charlatan, and he never did anything like that, to the best of my knowledge, where he's offering stockpicks or seminars or anything like that. To your point, he became kind of anonymous and went away. Yeah, look at this chart, the largest stock in the SP 500. Yeah, today we have Apple and it's dominant, but look at, you know the old saying, like, nobody got fired for buying IBM?

Yeah. Look how big a percentage IBM was of the S&P 500 back in the 70s and early 80s. Wow. 9% of the index, and Apple today is 4.5%. Still a lot of room to run. By the way, I was just looking, Apple gained over half a trillion dollars in market cap this year, which is bigger than all but Facebook, Amazon, Google, Berkshire, Microsoft, and I think that's it. Anytime you play with the numbers on Apple or Amazon, it gets silly.

It's very silly. So speaking of being optimistic and you have to be optimistic, there was an article called, We've just had the best decade in human history. And these types of stories tend to get people a little bit angry because it's so easy to see all of the horrible things happening in the world and there are an abundance of them. The cognitive dissonance of understanding that things are getting better and they could still be a lot better, but there's also a lot of horrible things tends to hurt people's brains. Our friend Eddie Elfenbine often tweets, nothing makes people anger than good economic news. So one of the things that was in this article was talking about one of the things that people were pessimistic about was that we were going to run out of resources, that we were depleting the planet. And again, certainly a lot of that is going on, but just some of the numbers in here were really interesting. So experts in the 1970s forecast how much water the world would consume in the year 2000. And it is way under what they thought it would be. The quantity of all resources consumed per person in Britain. They said it was half as much as predicted in 1970, which, which is one of these reasons why even predicting out things like demographics, we can kind of

have a good, decent idea of these things and what they'll mean to certain countries. But I think the conclusions and takeaways from those are never as easy because you don't know how things are going to work out innovation-wise. That's kind of the rub there. The quantity of all resources consumed per person in Britain fell by a third between 2000 and 2017. And they say, fine, the quantity did, but the population increased exponentially. Well, Well, true, but here's a quote. That's a faster decline than the increase in the number of people, so it means fewer resources consumed overall. So this guy is Matt Ridley who wrote the book, The Rational Optimus. I think it came out in early 2010. So he's literally talking his own book here. I read that one. Did you read that? How was it? it was decent, not as good as factfulness. I kind of liked it. The general tone makes sense.

So he talks about how extreme poverty has fallen below 10% of the world's population for the first time ever. It was 60% when he was born. He's saying we worry about inequality in places like the U.S., but it's plunging in places like Africa and Asia because they're experiencing faster economic growth in Europe than North America. And he says, little of this made the news because good news is no news. And that's kind of something that you've talked about in the past. you've written about how it's just this gradual improvement. And it's not something that jumps out in the face. This is worth a read. Like you said, I'm sure a lot of people would disagree with it. But he also talked about how child mortality is falling to its lowest levels

ever. Famine is virtually extinct. Malaria, polio, and heart disease are all on decline. And it's hard to sit back and think this when you're constantly bombarded with this crappy news every day. But this is definitely worth a read for the more pessimistic of us, I think. Yes. And people are definitely going to change their mind after reading this. Yes, just like all those debates. The best thing about going into the debates of 2020 is that everyone's going to go into them with an open mind and only vote based on the facts. Not their feelings, just the facts. What was your takeaway on the cliffassness piece on the illiquidity discount? So as a sort of piece about private equity saying people have always said there's this illiquidity premium you get for investing in private assets. Could you just explain that real quick?

I think that there's a big thing that there's just not as much information there. There aren't as many people looking at these deals. It's much easier to have an informational edge and maybe an operational edge in some of these companies since everything is not on public record. And so there's always been this idea that there's an illiquidity premium. He's saying maybe the premium is the fact that these people are just forced to hold on to these companies for 10 or 12 or 15 years. And they don't look at them very often because you're not quoted a price every day. It's every quarter. and it's kind of an estimate.

I think there is something to this. I don't think the institutional investors in these funds would ever admit that, but I definitely think that it makes a lot of sense. You're just being forced to hold companies longer. Cliff said, what if investors are simply smart enough to know that they can take on a lot more risk if it's simply not shoved in their face every day. If investors are going to move from a better portfolio to a worse one because it's easier to live with, that may yet again be rational, but they should be open-eyed about what they're

doing. I don't know that they, not that they would admit that they're doing, it. I don't think that they think that they're doing it, even if it makes sense. And I've been on this train. I think it makes a lot of sense for you to lock up your money because you can't do something behaviorally that's going to shoot yourself on the foot. I think that is actually worth paying for. Forget about the management fees. I'm saying even if you're going to quote unquote, underperform an index fund, who cares? How much should you be willing to pay? Is it 1% a year to trail? Is it 2%? Is it 3%. I don't know. That's not for me to decide. But I think this is a space where

we're eventually going to see some innovation and see some quantitative funds come in. It's almost impossible to create an index of private equity or venture capital. I think people are going to try to do it. I can't imagine that someone's not going to try to come in and do that in this space in some capacity to give more people access, since there's just so much more money sloshing around in there and maybe make it easier to access this. Now, if they make that, they're going to have to have some sort of lockups just like this because if you try to make this a liquid vehicle, you lose all the benefits that we've been talking about.

but I think it's going to happen. You know what? We will find out eventually maybe. If returns start to come in lower and maybe even significantly lower than what they're expected to be, we'll find out just how much these places are willing to pay for that premium. But the problem is it takes you so long to figure it out because you get this long lead time and then these companies put out a new fund every two years, 18 months basically. So you don't know how your first fund is performing and they're already coming back to

hitting you up for the next fund. And guess what? If you don't re-up for the next fund, then you can't get in the next fund after that. So a lot of times these places don't really even know how the well they're doing. And maybe you're the portfolio manager of this endowment fund and you're not going to be there. You're the chief investment officer. You're not going to be there to see these through anyway. And someone else is going to have to clean up the mess. So a lot of times they just, I don't think they know how they're performing anyway.

Maybe again, out of sight out of mind helps. But I think it's going to be hard for them to judge it like they can something like a hedge fund. Okay. So a couple weeks ago, I talked about how I think robo advisors are coming for annuity. I don't think this was a huge prediction putting myself out there, but according to RIA Biz, Charles Schwab is already doing this. They announced last week that they are going to launch a robo advisor for retirement income that assures they can extract a paycheck efficiently from taxable and non-taxable accounts. I guess this just seemed like kind of a layup. Yeah, I think, I mean, I need to do more research, but my knee-jerk reaction is this is fantastic.

Yes, I still don't really know how they're going to do it. but I think a big huge firm like Charles Schwab or Vanguard can effectively do this in a pretty cost-effective manner and manage it for you. I just think it's kind of the illiquidity premium thing for out of sight, out of mind. It probably doesn't really make sense in a lot of ways intuitively, but in practice it does. I think that's kind of the same thing of this is they're going to give you the same kind of portfolio and they're just going to bucket it in different ways and they're going to take withdrawals for you and give you a quote-unquote income,

but it's literally just taking withdrawals from a portfolio. They're just going to be doing it in a different manner than doing it for you. It's going to be a similar portfolio, don't you think? Yeah. You know what? We'll go away, potentially, in 2020. Disney's share of the box office. They got 80% of box office hits this year.

So here's what they did. What do they have? Ten movies that did a billion dollars or something ridiculous? Star Wars, Aladdin, Lion King, Frozen 2, Toy Story 4, Avengers Endgame, Spider-Man Far From Home, and Captain Marvel. What are they going to do next year? A remake of every one of these, probably? What else can they do?

I mean, that was the other thing from Iger's book. It's just staggering how many assets they own, but they kind of push the chips in this year, did they not? There's not much more. I know they're going to do, let's see, the other one, Moulon is coming out. I know they're doing a live action one of. They've kind of done most of the live action ones at this point. I guess their big thing is going to be Disney Plus now. I guess so.

That's pretty wild. So Elon Musk yesterday tweeted, just looked at my wiki for first time in years. By the way, don't believe that. He's definitely got a Google alert set up for his own name. By the way, can someone please delete investor? I basically do zero investing. And then he said, if Tesla and SpaceX go bankrupt, so will I as it should be. And it looks like if that is going to happen, it's not going to happen anytime soon,

because Tesla just hit funding secured levels, which is really remarkable. How long ago was that that he tweeted that? Maybe a year, year and a half ago? 2017, I believe. If you would have asked me at that time, and it got down to, what did we say, $180 a share, will this company ever get back to $420 a share? You could have given me like seven years. And I would have said, probably not. And it's already there. I just, how many brains has this one stock broken. It's unbelievable. Around 16% of the float is still held by short sellers. And since the lows, again, so it's a cherry pick a little bit, but since the lows, short sellers have absorbed, according to Business Insider, a $7.6 billion loss. Wow. This thing is just ripping.

And is there any news? I mean, is the only reason it's going up because it hasn't gone out of business yet? Is that as easy as it is? I don't know what's going on, but this is wild to watch. So on a year-to-date basis, Tesla is up. Surprisingly, it's not that much. It's only 26%. I guess it's over the last few years that is really up. So it's up 100% over the last three years, which is basically brings us back to when he tweeted that. And most of it has come since this summer, actually, the majority of it. So they're up 90% over the last six months. That is a face ripper if you're a short seller. I guess you got to be kind of used to that. That's your thing.

One thing that I forgot to talk about last week when we spoke about Miles's piece on NBA viewership and why it's down, I think I might have seen this. So I don't think it's my take. What about the fact that there's so many more podcasts to allow you to easily catch up on what's going on? My MBA viewership has definitely gone down. I don't know if it's because I listen to Bill Simmons and that's where I get a lot of my MBA takes from. I'm not sure. Maybe I'm connecting dots that don't exist.

Podcasts are now like SportsCenter was in the 90s and 2000s. It's an easier way to keep up with this stuff and not have to watch it. And there's just too many games, I think. And it's, I like the idea that there's just too much else going on and there's so many other entertainment options. And so like the Netflix guy, Reed Hastings said a while ago, our biggest competition is sleep because there's just so many options for entertainment these days. Who wants to spend three hours of their life watching an NBA game when you could watch 36 shows on Netflix, Hulu, Disney Plus, whatever. There's just so many more options. whereas back in the day, sports didn't have as much of a competition there.

That's what I think. In NFL, there's only 16 regular season games. There's still that sort of capacity constraint thing where people will still watch, but I don't think the NBA has that. All right, listener questions. I'm teaching a personal finance course next summer, and I'm seeking insights for people in finance and investing. If you were teaching a personal finance course to a bunch of 19-year-old kids

who likely come from lower middle class or poor families, what would your primary focus be? saving and spending? I think running your own household. So how do you become your own household CFO, for lack of a better term, which I got from one of the new millionaire next door books? I think a lot of people just never realize how to set up a system in place to pay their bills and allocate their paycheck when it comes in, understand taxes.

I think I would spend a lot of time on just the really personal finance stuff. And if you save a little time at the end for investing, that's fine. understanding markets, but I think the personal finance stuff, especially for young kids and understanding what to do with a paycheck and how to further your career. I think that stuff's way more important. We agree. You know, really understood saving and spending, Jamie Lee Curtis's character in trading places. I was listening to our podcast this morning. We did a random watch on Wall Street on trading places. And I missed an opportunity to say that Jamie Lee Curtis was joining the fire movement. Yes, I missed that too. Yes, I teed that up for you, didn't get it. So she had

$42,000 saved in T-bills in 1983. He was going to retire at age 25. Live off the interest. Totally missing that one. Do you mind if I read a listener question? Have that it. Name check the companies you think will be 10 daggers by 2030. That and what you guys think will see in general by 2030. Is this a serious question? It's just kind of having fun, I think. Okay. Huh. Well, I don't pick stock, so I can't even begin. I wouldn't predict that any of the mega cap companies that I know are going to be 10 baggers. I don't think Starbucks is going to go up tenfold in the next decade. If you want to find a 10 bag or read the Peter Lynch article in Barron's, he talked about it. I wouldn't be able to either. Here's the non-answer on what to expect

in 2030. It's kind of like the Jeff Bezos thing. I think a lot of people have used this framework at this point. Figure out what's not going to change. I think that's much easier than figure out what then what is going to change. That's a good way to frame it. I have a take there. I think that people are, I'm making this up. I have no evidence. But I get the sense that people are betting against giant tech. And I think that we're going to be talking about Google, Apple, Amazon, Facebook, and they're just going to be a giant dominant part of our lives for the foreseeable future. I don't see that going away. Here's my hot take on this. A lot of people think that we're going to regulate these tech firms. I think it's always going to be just a little slap on

the wrist. I don't think we're going to be able to, they've made consumer lives so much easier. I don't think that there's enough ground swell support unless Facebook helps elect some shmow off the street somehow. I don't think that it's ever going to happen because these tech people still have so much more control and so much more money to throw out the government. I don't think that stuff's ever going to happen. I've always wondered if I understand the following correctly and if this scenario could possibly happen. When the day comes that I want to sell my holdings, if there are no buyers for the stocks and or ETFs, is it possible I won't be able to sell them? Sure. If there are no buyers, you can't sell. I don't know. That doesn't matter if it's an ETF or a stock or... This would be pretty far down my list of worries, especially ETFs

or mutual funds. There are in the ETF space, there are these market makers that come in and if it diverges too much from the NAV, they're going to trade that to try to make the difference because they know a fund shouldn't be trading for that much more or less than its price. So I wouldn't worry about if there's not a buyer on the other side of your transaction, you have much more to worry about than your retirement. Right. This person always says it's not just ETFs. It's stocks too.

So yes, if there are no buyers, we're all in very, very big trouble. Somebody said, what about sharing some book recommendations for the little kids you guys have? My almost three-year-old, he grew up on a book called the Gruffalo. And he absolutely loves it. There's the Gruffalo, the Gruffalo's child. And there's a show that they made, or I guess a little short movie that they made on Amazon Prime, which is fantastic. now he's really into No David.

Okay, my five-year-old is starting to learn how to read now that she's in kindergarten. I have it pretty quick. And she's been enjoying the book Owl Babies in Ted's Shed, which I'd never heard of before. But it's kind of the thing where I said it again, on the Malcolm Gladwell, when we talked about how having a high tolerance for repetition

is important with kids. And so she likes to read the same book over and over again. And if it rhymes a little bit, she starts to get to know the words. And you can see it clicks a little bit more each time that she reads and learns more. So she likes to read the same book. And those are the two she's been harping on lately. So those ones would be like, my little kids like anything with the animals in it. So they don't really care. So my two favorite books, my two favorite children's books, this is cliche for good reason, are all the places you'll go. I reread it

when Kobe was born and I forgot how magnificent it is. I know it's at every graduation. But there's a reason. It's a great book. And the other one was the Giving Tree. Oh, that's giving tree is my favorite too. And my least favorite, and it's grown on me a little bit because I read it a lot, Tacobi, is Good Night Moon. I just, I don't get it. It's horrible, isn't it? It's not a good book. No, I think we talked about that here before. All right. I've got a lot of recommendations this week. Can I go first? Please. Watchmen, I was very unsure of. I was so entertained every week, but I was really confused because I didn't know what the hell was going on. So it's definitely

a long-term investment. And I wanted there to be a payoff. And I was getting worried that there wasn't going to be one, they were going to draw it out a few years. The final two or three episodes were amazing in this show, and they gave us the payoff and explained everything and brought it all together and all these different stories, like these three different story arcs. It's one of my favorite shows of the year, and I was really surprised because I couldn't tell if I was going to like it or not. But if you stick to the end, it's worth it going through a few shows coming away, going, what did I just watch and what is happening? And it's totally worth it. So I think you should definitely hop back on that one.

That was very good. Okay. I appreciate that. And you know what I really appreciate? People that are able to differentiate between things that are good and things that you should actually watch, read, listen to. You know what I mean? There's certain people, Chris, who I work with, for instance, anything that he watches or reads that he remotely likes, you have to see it. I'm telling you you have to. And being able to say, yeah, it's good, but like you don't have to watch it. Life will go on. That's a skill I appreciate it. Here's some ones that I can kind of think in the other boat. So we did a Brad Pitt doubleheader this weekend. We watched Once Upon a Time in Hollywood and Ad Astra. And I really enjoyed both of them, but I can see how someone would not like either of those movies. I could definitely see how they would not be your cup of tea. Ad Astra was a sci-fi one in the first hour I thought was interesting from the sci-fi stuff.

But then you realize throughout the movie, it's more a movie about relationships between. It's about his parents. I can't believe I really like that movie. I feel like that's a movie that I would ordinarily hate, but I think it might have caught me at a good time. I started in the theater. It was beautiful on the big screen. I liked the Brad Pitt, Tommy Jones' father-son stuff. Yeah, I did too.

So I liked it better than I should have. Usually those movies I want more of the sci-fi stuff, but I enjoyed it. And so I think some people might be put off by the fact that it was a little slow. But this is to the point that I just made. At Astra, I saw somebody absolutely slaughter the movie, and I totally get it. Like, I could easily see why somebody wouldn't like that movie. Same thing with Once Upon a Time in Hollywood. I wouldn't be able to explain the plot line to anyone really in detail.

the only thing that mattered for me was I thought Brad Pitt and Leo were just amazing. Like, those are like two badass movie stars that just here we are. And they did like the Sam Cassell dance, that whole movie. I thought they were amazing. I think Brad Pitt was probably better than Leo and Leo was great whenever he cried in that movie. And I thought like it's very subtle humor where it's kind of like dry, but for some reason that dry humor really got to me. And I thought this was the best movie of the year that I've seen. Well, let me ask you a question.

So do you suggest that I watch it again? Honestly, I think for some people, this movie just might not hit the nerve. But my wife and I loved it. That's why I love you. I can understand why people wouldn't like this. But for whatever reason, I thought this movie was great. This is the best Tarantino movie, I think, in a long time. I just...

Slow down. Slow down. It's better than... Sorry. Better than what? Better than what? By far better than Django. I think it was better than...

What's the World War II one? It's better than that. Don't even. I'm sorry. Brett. If this movie was made with two other actors besides Leo and Brad Pitt, it's probably a bad movie, but those guys were so amazing in this. It's not better than Inglorious Bastards. Just stop. I think it is. Sorry. For what I was looking for, I think it is. I think this is the best one in a while.

Sorry. That's what I got. All right. What do you got? Like I said, I was on an airplane. I had no interest in reading. Did not feel like it. I saw yesterday. Very pleasant movie. I liked it. Very pleasant. That's the kind of movie you come out with a smile on your face, right? Yeah, it was just good. I saw The Aeronauts on Amazon Prime.

It's about, I think it's based on a true story. It's about a meteorologist. And they're like, what's a meteorologist? He's trying to predict the patterns in the weather. That's a movie or a show? He gets laughed at it. It was an Amazon movie. They take a balloon up into the atmosphere.

That's not that great. Okay. It was okay. And a few weeks ago, I think I forgot to message us. We watched Iy Tanya. Yeah, I watched that before. They nailed it.

I thought she was pretty good in Once Upon a Time in Hollywood as well. And I feel like all three of those movies that I just mentioned, I Tanya, the aeronauts, and yesterday, they're all skippable. Probably. One of those things where you've got to be pretty far down the line. Yeah. Yeah. But I enjoy airplane movies because I feel like you are just completely distraction-free. Yes.

Yeah, you don't have your phone unless you're paying for the Wi-Fi. I think you can watch movies that aren't that great on an airplane and they play a little better. I love watching Ben movies. movies on airplanes. I started watching Childs play. I didn't finish it. It wasn't very good, but I enjoyed it. Yeah. Okay. So we will be back next week, I think, for the new year. So this spare last one of 2019. Thanks to everyone for listening. We really appreciate it. Merry Christmas and happy holidays to everyone. Again, we appreciate everyone listening. All the feedback you guys sent us. Merry Christmas and Happy Holidays. I believe it's Happy Hanukkah. Oh, isn't that included in

the holiday? Sorry. Excuse me. Sorry. Sorry. Happy Hanukkah to Michael. Thank you. Send us an email of some of your favorite movies of the year, Animal SpiritsPod at gmail.com, and we'll talk to you next decade.