Animal Spirits Podcast - The Best Way to Get a Raise (EP.216)

Episode Date: August 4, 2021

On today's show we discuss Ben's recent trip to NYC, how the psychology around money can shape your relationships, the 1987 of recessions, the Robinhood IPO, changing how we think about debt, how much money it takes to feel financially secure and 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 our friends at Y charts. I got a new thing for the recession. I'm going to start calling this the 1987 of recession. So there was this chart going along around last week on Twitter saying that if you plot out nominal GDP, you have that big dip, and then it comes back and it's basically on the pre-crisis trend. So if you had a trend of GDP going up, it looks good. So I looked back at U.S. GDP. I pulled up on Y charts, and it basically went pre-pendendant. $21.7 trillion. It dipped to $19.5 trillion in that quick recession, which was we talked last week, two months, now back to 22.7. It's just this huge V, you know, like everything else. Retail sales also look this up on Y charts. This is even higher. This is like above trend. So I'm guessing this thing is going to continue to come back down a little, but went from 460 billion U.S. retail sales down to 380 billion, now back up to 550 billion. So this one is above trend. This really

was our 1987 of recessions, correct? It happens so fast. Everything is a V. I'm a line chart guy. I love using the line charts at Y charts. If you haven't tried it out, you go to them, tell them Animal Spirit sent you, and get 20% off of your initial subscription to the service. And I'm a VNAC guy, so I appreciate the Vs that I'm saying in the charts. And these are deep Vs, just like you like. That's right. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt 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 Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rittholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spears with Michael and Ben. I would like to share some thoughts on my first trip back to New York City in 18 months. Can't wait to hear your thoughts. So I visited you for the first time. And I have to say, it was great seeing you in person and it's hard to beat that.

I do feel like... Is there a butt coming? No, no. Okay. Well, but it wasn't that great? No. Here's the thing. It didn't feel like it had been 18 months or whatever since I've seen you because we see

each other on Zoom so often. I feel like that technology has helped. Was it anticlimatic? I mean, yeah. don't you think so? Because I feel like we see each other all the time on Zoom. And I think that technology has helped. Like FaceTimeing with your parents when you couldn't see your parents at the beginning of the pandemic, that sort of stuff. I think actually helped. Anyway, it was a good time. I hadn't been there since January of 2020. So I have some thoughts since it was my first time

back in the city that James Altiture has pronounced dead. I was, maybe it was where we were hanging out or what we were doing. I was shocked at how many young people there were. Is it fair to say that there are more young people in the city? Maybe it just felt like that because of the summertime and where we were at. But we have a couple of... Wait, hang on. Let me interject. I think it's more because you're 40. So that's really all it is. So we have two new young bucks in our company. Alex and Cameron that joined and I got to meet them for the first time in person. And they talked about how moving to New York City as a young person to them felt like going away to college for the first time. And they said that there

was this energy that they felt in the city. Maybe it was just because it's their first time living there, but I felt a noticeable uptick in young people. Who knows? You're right. Maybe it's because I'm getting old. Number two, masks are pretty much done in Michigan. I don't see anyone wear them anymore. New York City obviously is a bigger, more diverse place.

You're more on top of people. I was surprised at how much more mask usage there was in New York City versus Michigan, which pleasantly surprised. It was no one complaining or whatever like you hear on social media. We were just kind of falling in a subway. How about that we saw a screamer? Oh, yeah. Yeah.

in New York City five minutes and you have a person yelling at the top of their lungs. I really love the outdoor bars and restaurants and I hope that stays. And I'm sure for their sake, that gave them more real estate. I don't know how much that costs or if it cost them anything, but the fact that they took those parking spots and made them into these nice little outdoor spaces, especially for the summer, was awesome. And finally, you and I went for a nice romantic walk through Central Park. That whole Central Park just boggles my mind every time

we go there that someone had the foresight to say, no, no one touches this. You come in from this big, loud city with huge buildings and you go into this magnificent park where it feels like the whole city just kind of melts away. And every time I go there, I try to walk or jog through there. Central Park to me is just one of the best parts about New York City. Bar none. So anyway, good recap. Successful trip. Here's another thing, personal finance wise. My favorite line item, we went to a restaurant that had $12 bud lights. That's just New York City in a nutshell. I'm sure no one at the restaurant ever orders one, but I love that. Which restaurant?

The place we had dinner at, it had a $12, bud light. Bud Light was on the menu. That was a fancy dinner. I'm surprised that there was Bud Light on the menu. That's the thing. I'm sure no one really ever gets it, but $12 for a Bud Light. That's, you can buy a 12 pack for probably $9.99 in Michigan. The cocktails were $19.

Is that all? Yeah, no screaming deal. All right. So this is some bullshit. The CFA Institute just reported the lowest pass rate on record for the level one exam at 25%. Now, Ben, you and I once upon a time took the level one exam and not an easy test, not an impossible test, not a 25% pass rate test. The next lowest for comparison was 34%.

And I think what we're really need here is the denominator. How many people took the test? So where I'm going with this is if there was a spike in people taking the test, okay, fine, then it's reasonable. But if that's not the case, this is not cool. I do think that this was one of the first ones they administered online only, that you could take it online. So maybe it was more people taking it.

But still, that's ridiculous. Remember when you try to read the CFA curriculum and how they do it, it's supposed to be like if you get a 70% above, you pass. But really, it's rated on some weird curve. You don't exactly know what the score is has to be. it's kind of just a pass fail, but... So based on that logic, how did they have a pass rate of 25%? I don't know.

That seems to me that they're just messing with the numbers, and yeah, I don't like that. You see a lot of people in finance today who kind of mock this and say these designations are useless, but for me, I probably wouldn't have gotten one of the jobs in my career that I got if I didn't have the CFA or sitting for the CFA. So for a lot of people, it's still a foot in the door, so some people just have to get it. It's a really stressful time. Me too, but the opposite. The CFA was a foot out of the door.

Did I ever tell you this story? No. I was interviewing in 2010. I think Alianz had just bought Pimpco. And I was interviewing for an internal wholesale job. So for people that don't know what that function is, an external wholesaler goes and sells mutual funds or products, whatever the product may be. The internal wholesaler helps them with scheduling, with following up on emails, with internal research, with all that sort of stuff. And so the interview was going great.

And I was introduced to the hiring manager or the person that said yes or no. It wasn't hiring manager. It was whoever it was. It was some guy who we were chit-chatting. It was going great, good conversation, giving him my read of the market. That was sort of a joke, but not really. But I was telling him that I just, I love the market and I was studying for the CFA and this is the field I want to be.

And he goes, what do you mean you're studying for this? I said, well, I'm trying to learn as much as I can. And he's like, if you want to be an analyst, this is not the right role for you. And he was like, thanks, but no thanks. And that stopped me dead in my tracks. If I didn't mention that I was studying for the CFA, I probably would have gotten the job. And my career would have been very different. I had a few of those in the banking world, too, right out of college where I was interviewing for an analyst role.

And it was basically like, no, this is sales. We just put analysts in the description, but it's not really an analyst. Oh, okay. Well, that's not me. By the way, did you put on any hedging trades heading into the Olympics since they're going to be using golden bronze and silver? Wasn't that one of your investment theses for an interview in the past where you said that a certain company should be doing better because they're going to making all the Olympic medals?

That's not a joke. I mean, it's a joke, but it's not a joke. That actually happened. That was at the Texas was, it was really an interview, but it was more of a favor. This guy was, he's like, all right, let's hear it. So I spoke to the guy. He said, come in tomorrow at 10.30 and bring me five stock ideas. And Rio Tinto.

That sounds like an interview straight out of a 1980s Wall Street movie. Rio Tinto is down about 70% since I pitched it. But I didn't say which side. I just made the case. Nicely done. He should have shortened my idea. All right. Let's talk a little bit about Robin Hood.

We don't have to get too far into it because you already stomped all over me last Thursday when I was in New York when Josh and I and you all taped the Compounded Friends podcast. You really enjoyed letting me know that I was wrong about Robin Hood being bigger than Coinbase. You had the biggest shit-eating grin on your face. that's okay well no you're right it was a lot of fun it's very rare that you are like are so adamant so i just i had an equal amount of joy yeah you enjoyed that i'll still be right so i talked about it you can go listen to that if you want to talk about me buying it the one thing that's happened since then is that i did sell it the next day and they gave me a warning saying

ipo flipping warning if you sell ipo shares within 30 days of the IPO it's considered flipping and you will be restricted from participating in IPOs for 60 days. And it says, like, do you want to continue? And yeah, I think I'm okay on IPOs. I basically did this as an experiment. You know what's funny? They'll give you this sort of a warning, but they won't warn you for making like 1,000 trades in a day.

I thought the same thing. Why can't they do similar warning saying, warning, you're doing way too much short-term trading. You can have enough money in your tax account at the end of you paid for this. Warning, idiot. Check your P&L. This hasn't worked out so well for you. Yes, exactly.

Maybe you should buy an index fund. or maybe you should stop trading jolt cryptocurrency, something like that. Honestly, that kind of nudging, I give them credit for this in a lot of ways. I would love to see the numbers about how many Robin Hood clients got into this and how many are going to be in it at 60, 90, 120 days. I'm guessing we'll see how many people actually stick around for it. I don't think that anybody cares about that yellow warning light. This blew my mind.

So Gallo, I did a piece on them. And surprise, surprise, he was not too complimentary. they paid their chief legal officer more than $30 million in 2020, even though they hired him halfway through the year. That's so insane. This guy, Daniel Gallagher, was an SEC commissioner from 2011 to 2015. Gallo said, our business environment has more from capitalism, which depends on the rules of fair play into cronyism.

And, yeah, I say that's accurate. The fact that they got an SEC person in there? Yeah, I guess you cash out of it. eventually. That's what it is. It's not even surprising, but they paid him $30 million for six months worth of work. That's a lot, I'd say. Yeah, that's a lot. I mean, that's like what Kauai Leonard makes in a season. That is kind of interesting to think. Kawhi Leonard versus the chief legal officer of Robin Hood. Speaking of sports, I don't think this is my idea. I must have seen this somewhere. Somebody tweeted it. If I'm stealing from somebody, I apologize. This is apples to oranges.

But like, what's game-stop's market cap? 30 billion? $11 billion. Okay, all right, I was way off. All right, still. They've fallen quite a bit. GameStop's market cap is $11 billion. The New York Yankees are worth like $5 billion or $4 billion or something like that. Now, would you rather own 100% of GameStop or 100% of the Yankees? And I know you can't really buy GameStop, but you have any reaction?

All right. I think it would be interesting to see an analyst perform a side-by-side of revenues. And obviously, there's a brand thing with the Yankees where, but yeah, okay, I see what you're saying. I looked at this. The Yankees do around $600 million in revenue. GameStop did $5 billion. So maybe it's not so crazy. But still, from a bragging perspective, there would be way more people ready to line up to buy the Yankees than take over the entire company of GameStop. All right. So maybe here's, this is a little bit closer. Again, I know we're comparing market caps of companies to the value of a baseball team. It's like silly. But Foot Locker, 5.8 billion. Okay.

They've got a lot of foot lockers. Those referee uniforms aren't cheap. That's true. All right, where are we going? Sorry for the digression. Phil Huber had a good tweet. So we've spoken with Paul Kim from Simplify, and they've got some products that are similar. They have Simplify U.S. equity plus downside convexity.

They have Simplify U.S. equity plus upside convexity. And the assets of the downside Convexity ETF is $250 million in the upside. 10 million. And this is no surprise, but this is just boom, nailed it. Nobody wants to hedge the upside. And that's why the options market can be so priced the way that it is. Don't you think it makes sense, though, in some ways that people think manage the downside and the upside will take care of itself kind of thing? Yeah, it makes perfect sense. It is interesting, though, how few people actually try to pile in more to the upside than the downside. We probably spoke a few weeks ago about NFTs, or maybe I spoke with Paki about that with Josh, that they're coming down.

They are surging once again. You see this chart, Ben? The weekly trade volume of NFTs. This is one that I would never timestamp smack the table on because honestly, if rich tech bros or crypto people want this stuff to happen and they're going to, like, if Gary V wants to just spend $3 million a week on this stuff, I don't know, don't you think they can kind of make it happen. And I would not want to be getting in the way of this train and trying to predict what's going to happen next in this stuff. Correct. There's a chart from the block shows that top shot looks like it's over. I mean, there was a huge run in the end of February, March, and now it's, the volume is pretty much dead. What's blown up is this thing. What's really making this going

is Cryptopunks are back and Axi Infinity. Pachy, Josh and I spoke about that. It's like a play-to-earn gaming type of thing. You earn money by playing the game. So you mentioned Gary Vee. he bought a Cryptopunk over the weekend for $3.7 million. And of the top 12 Cryptopunk sales, five of them were over the weekend. I guess the one idea is don't fight the Fed. Here's another one. Don't fight the geeks. If the geeks want this stuff to happen, it's going to happen.

This is insane. They want pixelated people that could be a Netflix show or something someday. I don't know. Sure. I don't know. This is one of those things where, I think you have to take your personal feelings out of it. Like, this makes no sense to me personally, but that's a lot of things in life.

There's stuff that I do not like doing. I have friends who love to go hunting and fishing. I don't have the patience or golfing. I have no patience for any of that stuff, but I understand why they do it. Like, I understand the joy they get out of it. It's the same thing with this. Personally, it never makes sense, but I get it. Well, I think you get it because you've seen enough of this.

If you weren't in the industry and you saw this for the first time, you'd be like, this is the dumbest thing. What? That's a natural reaction for most people. understandable. That certainly was my reaction. This is sort of out of order. I should have jumped on this after the chief legal officer or whatever his title was at Robin Hood. Bouchon has tweeted, No shame. After rejecting Bitcoin ETFs, former SEC Chair Clayton joins the fight for approval. This just seems like one of the dumbest things in all of the wealth management industry, the fact that it hasn't been approved yet.

I don't understand what they're waiting for. What's going to change about the industry that's going to make it easier for them to say yes to this? Agreed. But the point about Clayton was, Jay Clayton was staunchly against the ETF when he was working for the government. And now surprise, surprise. Who does he work for now? Private sector? This company called One River Asset Management. Okay. Oh, where he serves on the board and they recently submitted registration for, okay. So if he can't make it happen with his connections and who can, right? Adam Pritchard in your backyard from the University of Michigan, Ben, said, quote, he's no longer government official. He needs to earn a living to pay for his fancy Manhattan apartment, and you're not going to get paid for being neutral on these topics. All right. Listen, I get it. I'm telling you, selling out is cool these days.

I'm surprised as many people are up in arms as they are. All right. Last week we talked about crypto leverage and the use of it, and someone sent us a breakdown of leverage on finance futures. So this is like a 30-day average of leverage uses on finance futures contract. and it broke them down by how many people did 125 times leverage, how many people did 100 times. 20% of users who use leverage used more than 100, or 125 to 100 times.

Wait, wait. Remember that scene in Blood Diamond where the guy screams weight? Man, I tell you what, your movie references, I almost have to give you credit. They are so obscure. Like, you use movie references that no one else in any part of their life ever uses. Like airheads, blood dine, like you use. movies that no one

And I will say No one ever quotes And I've never used this one before But it was very appropriate So I'm saying wait because Are you going to do a South African Dialect too for this? I thought about it

Okay This chart is as of January 1st 2020 Yeah that's what someone said This is for 2019 But still Okay well not but still This is incredibly dated

Okay it's beginning of 20 Yeah you're right But it still shows how Prevent leverage was And I'm sure it even increased This is before stuff really took off. Yeah. You don't think so?

I just feel like it's weird looking at this data because it could be wildly different. But that being said, it did surprise me that it was 20% of people used over 100 times leverage. Wait, what's your blood diamond reference? I didn't get it. Which part? What do you mean? What was the line from blood diamond? When he screams weight, when the guy finds the diamond, you know, when they're all digging through the water?

Yeah. Okay. He finds a diamond. He like rips it up and puts it in his sock or his, I guess he didn't have socks. He puts it in his pants or whatever. And the bad guy with the machete and the eyepatch screams, wait! Okay. Or did he scream stop?

He might have screamed stop. All right. Either way. Let diamond. All right. I like that movie. Your movie takes never cease to amaze. So we got a listener comment who he works in manufacturing.

It's a cost accountant. They're raising their prices. He said it's interesting to think about this because their narrative of consumer goods prices increasing will be that it's all inflation for money printing, but I truly think it's more driven by supply chain and labor shortages, which are short-term problems. The even more interesting thing is that once we raise our prices to combat this, I don't see us lowering prices once our raw materials stabilize.

This in turn will be good for corporate earnings in the long run. We spoke about this a few weeks ago with the KB Holmes and Lanar. Their prices are not coming down, even though the price of lumber did. And I was thinking about this. It almost seems like labor shortage should be like its own title, its own like, category in the docs. We've been talking about it so frequently. So Wysenthal tweeted last week, ending the UI expansion in Texas, which they did, has not solved the labor tightness problem for employers. This is a comment from a proprietor in the food and tricks industry. He said,

we are hiring a few employees after the federal unemployment subsidy ended, but continue to lose others oftentimes because they say they don't want to work or decide to attend a social function and walk off. They know they can get hired again by walking down the street, hire three lose four or hire two loose one. I've never seen anything like this. My almost 40 years of working, we continue to turn away business due to lack of employees. So my favorite taco place that we go to for chicken tacos every weekend tried to go there on a Saturday and they were closed. It was a sign on the door saying that because their staff has been so busy and understaffed that they decided to close Thursday, Friday, and Saturday. They're saying business is booming, but they decided to give

their staff a longer three or four day weekend because they've been working so hard because they have such a shortage. I'm sure part of that is thinking, like, we're going to lose people if they keep working so hard and I totally get it. In that same vein, the journal did an article, basically the best way to get a raise is to switch jobs. Wages for job switchers rose 5.8% from June 2020 to June 2021 compared with the pay increase of 3.1% for people who had been in the same job for a year or more, according to ADP. And one aspect that I didn't think of until reading this was, if you're giving raises to entice new employees, what do you do with your current employees?

That's a good question. The thing is, this is a great way if you're a young person to pad your resume, too. You can keep moving up and how much you make and then adding these companies to your resume. As a young person, that's great. And it shows initiative that you're taking on new jobs and negotiating potentially. I mean, as a young person who maybe doesn't want what they want to do, this is a great time if you're willing to put yourself out a little bit. And guess what?

You're probably not going to get denied at most places asking for a raise. Maybe that's the idea, too. Like maybe asking for a raise so you don't have to switch jobs, too, is probably not a bad idea at most places. Okay, I think it's probably maybe with rates where they aren't. And by the way, the 10 year was back down below 1.2% again today. I saw that. By the time you refinance, you're going to have to start the application all over again

to refinance again because rates keep falling. Ben, I'm supposed to be closing on August 5th. That's Thursday. I still don't know what my closing costs are. And like, it's so infuriating. When I first started this process, said, listen, I really don't want to be out of pocket a lot on this. I already spent money on the previous close or the previous refi. And it's Thursday. I feel like with a lot of the fintech companies, and it's funny, we're getting some polarizing comments about better.com. We've had like probably six people say it was amazing and two people said it was awful. But I I feel like at least with them, you know what you're paying. I still don't know what my closing costs are. This might be a deal breaker. I might pull out. We were comparing notes on closing costs, and $12 bud light is a pretty good analogy of your closing costs in New York versus Michigan. I'm paying $9.99 for a 12 pack, and you're paying $12 for one bud light in New York, basically.

Anyway, the Wall Street Journal had this piece about how rich people are borrowing against their portfolios. They say that Morgan Stanley clients have like over $16. $68 billion worth of securities based on other non-mortgage loans outstanding, more than double five years earlier. Bank of America has $62 billion, which is even bigger than their home equity lines of credit, probably because they shut those down. But they're saying that Merrill Lynch quoted an interest rate of 3.2 percent to clients with at least a million dollars, and if you had more than $100 million, you'd not get a rate as low as 0.87. I mean, I just think with rates as low as they are, the whole personal finance trope of debt is this ball and chain that's holding

you back. I really think you have to rethink that. these days. And this is the other thing why inequality gets so much worse these days when people have their financial stuff in order. Like the robber barons of the late 1800s at early 1900s, is they didn't have securities-based lending from one of these places that made their life so much easier so they didn't have to sell securities. The stuff you can do now if you actually have money is so much better than any time in history. And if you can borrow it, one, two, or three percent from your portfolio without selling, without having to take taxes. So no-brainer. Well, some people look at this and say, well, once the market gets an 80% bare market, then watch out. You're screwed.

I do think a lot of this. If stocks fall 120%, you're in trouble. But I do think this changes the way people should think about debt because you're also taking taxes into account here, not having to sell and change your portfolio. And you can allow the portfolio to continue to grow. We spoke about this with Josh. One of the reasons why I'm doing this refinance is to take money out of my house. My home price appreciated by 40%, as did a lot of homes. And I was thinking, Why wouldn't I just take that money into my pocket, extend my mortgage, give me more flexibility with rates where they are. It's a very easy decision. You and I were talking this morning about Rameet. So Rameet Sadie was on Tim Ferriss's podcast. And I think Rameet is the best money talker in the world.

I don't even know. Is money talker like a really ludicrous description? How would you describe it? He's like a money psychologist. Yes. Okay, perfect. I called him a money talker. What am I through?

So he's, he described like, how? like I'm a seven-year-old. He's a money talker. So this is like, so a couple weeks ago, I mentioned that I was putting a car top carry on my car to go in our family trip. And a bunch of people in Ireland and Great Britain said that they call it a roof box. That to me sounds about as good as your money talker thing. Okay. I'm sorry. There's a lot of great phrases in like Australia and in Europe that they have on us that we don't have. Roofbox is not one of them. I'm sorry. But that sounds like your roofbox sound like money talker. All right. So Remit's coming out with the new podcast where he talks to couples and discuss how they feel about money.

I'm definitely going to listen to that one. But all right, he tweeted the other day something that really struck me. He said, I spoke to a young woman who felt guilty about her grad school debt. She had 18 months left. I asked her how she would feel once it was paid off. Quote, safe, I hope. Maybe happy. Rameet says, when's the last time you felt happy about money?

She said, I can't remember ever feeling happy about money. So Rameet's comment is, paying off your debt won't magically change your money psychology. Having $1 million in the bank also won't magically change your money psychology. The way you feel about money is much less correlated with the amount in the bank than people think. Money psych is a separate skill. I could not agree with him more. Yeah, it's so true. All of a sudden, you're going to be this different person because you have a little bit more.

I mean, it can certainly amplify things. But like I was saying to you, like, you could put a million dollars in my bank account right now. And sure, it would make things a little more comfortable. But like, I don't know that it would really change my mindset on a whole lot of things. well we should also caveat that with the word financially comfortable but so yeah if you take somebody with debt and give them a million dollars yes but remit's bigger point is that there's no number that's going to change how you feel your relationship with money is not going to change because of a magic number and to prove how personal this all is there's people that are making

a hundred thousand dollars that feel poor there's people making a hundred thousand dollars that feel rich and substitute the number for a million dollars whatever your number is like it is so personal. And I think that it has to do with your upbringing. And also relative to where you are. So I was thinking about this being in New York City with you. I'm sure it's probably a lot harder in New York City to think in episodes instead of relatives because there are so many people that are doing really, really well or potentially really bad. That range is so much wider there than it is in other places, like where I'm in the Midwest. Of course, there's people doing great here, but there's probably more people in New York City to look to that are doing really, really well.

And that can be hard. That can really mess your head up if you try to compare yourself to those people. Yes. So Nick McGooley had a post in this vein talking about like what young people should do to get ahead. And one of the big things I had was that we shouldn't obsess over money. And again, easier so than done. But somebody, I guess in a Reddit thread, spoke about how they hit their fire number,

their coast fire at the age of 28. It was $200,000. And this is tough. He said, however, I regret my entire life. Why? because of my unhealthy fixation with money. I would simply never spend it. I always like seeing the numbers increase from the age of eight years old.

They're not taking any rest of life. And we'll like this as show notes. But do you think that you can change how you feel about your money? Or is this something that really starts with your childhood and your adolescence and what your parents, how you grew up? Can you change? A lot of it does have, you have these things that are ingrained in you, I think, by your upbringing. But this gets to the point, like all this talk about how feeling about money and me saying, well, if I had a million dollars or whatever, it wouldn't change that much.

A lot of it depends on where you are in your life cycle because people who are just getting out of school or in debt or have a low-paying job would look at me in that comment to say, you're a jerk. What are you talking about? But it depends where you are. You wouldn't say that at 21 years old. If you had a million dollars, somebody giving a million dollars to 21, you'd feel much differently. Yeah. Oh, yeah. It depends on where you are in life. And do you have a lot of debts you're paying off? Are you making a decent amount of money? And then this person gets to the point where they figured out how to save and invest and really optimize their finances. And now it's like,

okay, I need to optimize my spending. And that is a lot of psychology. That's why Rameet is so good at what he does because he taps into like the psychology of this all in what made people feel this way. I almost forgot to bring this up. What of the areas where this sort of behavior about spreadsheet might manifest itself is with your cell phone bill. And I am very much not a spreadsheet micromanager of my personal finances person. Like once in a while, I used to use an app called, I forget I don't use, oh, tell her money, just to, like, see where I was. So once in a while, I'm here, I'm there, but I do not have a very good grasp on my spending on a month-a-month basis.

And that's why I save automatically. My money goes out the door automatically, otherwise it would never get done. But for whatever reason, I was like penny, pound foolish, penny wise, I was pound foolish on my cell phone bill. I went from Verizon to T-Mobile to save maybe a total of $800. bucks over the course of a year, something like that. And you probably dropped 35 calls with me or that course that after. And immediately when I did it, like, I was like, oh, shit.

Because my wife was telling me not to do it. The service was way worse. So it's been a year with T-Mobile. So I went to Verizon and I said, take me back. Take me back. What do I got to do? I want to come back. You went back to your ex.

But I found out that I still owed 500. So I went to T-Mobile. They're like two doors down. So I'm going from one store to the next. I walked into T-Mobile. How much money do I owe you guys from my phone? I owe them $550.50. I came back to Verizon.

I'm out. I'm not going to spend $550 to get back to you. My service is bad. It's not that bad. I'll wait a year. He said, well, wait, wait, wait, wait, wait. Was that a negotiating tactic or are we being serious? Not as being serious.

Okay. So it turns out that with each phone line, you get $300. So if I'm pointing over three phone lines, I get $300 in gift certificates. cold-hard fiat gift certificates that I could spend. Not only that, but wait, there's more. Not only that, I also get a free Motorola phone or something. That's a $600 phone that I can resell. And my bill is going to be roughly the same.

I don't know how, what happened, whatever. So I said to the guy Verizon, how do you guys make any money? Like, I don't even understand. Like, you're giving me a $700 subsidy for a new phone. It's recurring revenue. Well, exactly. He's like, well, because you're spending. $35 a month per line on your phone, and we have a lot of customers.

You remember when everyone thought that was crazy that, remember AT&T at the beginning was like subsidizing Apple phones? That's nuts. Why would AT&T ever do this? Because they know they're going to lock you in. Yes. So anyhow, the point is, the reason why I shared this story is because while I'm in there, I saw several people, like really debating about $10 a month.

And these are people that, like, probably can afford, they're not going to notice a $10 a month that's missing. But for whatever reason, I've noticed that with cell phones, it gets in your head. I don't know why that in particular gets in your head. It's like, yeah, $10 a month. It's like, who cares? Here's my thing on this, but I think it's a scam. So you go to the car wash and there's like four different options.

It's like the floor one, which is just like regular wash. And then it's like premium, premium plus. Premium plus we're going to hand wash your tires or something. I always get the cheapest one. So do I. Okay. It's all the same brushes and soaps. How is paying $7 more actually?

Come on. You're going through the same thing as everyone else. There's no way they're really washing your undercarriage of your car any better on the premium plus one than the regular one. What sort of morons get their premium plus plus? Yes. Such a great point. Yes. You always get the cheapest car wash because guess what?

Your car is going to be dirty in five minutes anyway. That's a truly funny observation. You know what that's from? What's that? Step brothers. Okay. More people will probably recognize that one. You know, I've only seen that movie once, surprisingly.

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accounts on top of a $50,000 emergency fund. Recently brought her first house. Blessed last week with a delivery of our first child who was squirming, refusing to sleep right next to me as write this email. My do list this week involves opening a 529 plan. However, when I think about investing the $8,000 tomorrow into VTI for her 529, it doesn't feel good. The valuations are too frothy. these stocks can't be worth that much. The tax advantages seem too paltry. I don't have this thought with my other investments, but I can't reconcile this discourse. Why does this feel so shitty? Further, I know this isn't a real problem that we have more than enough to take care of her, valuations, and tax advantage educations, be damned. But I can't help with thinking about how we are

extreme outliers. We are winners in the current system. Folks without our means may actually need better savings programs for future education to say nothing about health care diapers, bottles, et cetera. And there's nothing here for them. Affluence is a great thing. My wife and I have months off of work, paid, of course, at our generous salaries for paternity maternity leave. Most of my peers, most of other new parents out there do not have this luxury. As I sit here consoling, are screaming six-day-old. I know I'm lucky to have that $8,000 on hand to drop up to our $5.29 tomorrow. It should feel great.

So why does it feel so shitty? This is getting back to the same point of how money things can sort of, I'm sure there's something else going on here in this person's life. My first thought is, I don't know. Why does it feel so shitty? Does this person feel guilt over his fortunate situation? I think that's what it is. or am I completely off the market?

I think that's part of it is thinking that there are so many other people out there who are in way worse situations and maybe this person had a leg up because of where they were born or their parents or a lucky break or the college they went to, whatever it is, for whatever reason,

they're in a very good financial position and they know there are a ton of people out there who would love for this to be a problem that they're worried about, like valuations are their biggest worry, right? If you've gotten to that point, you've kind of won the game, that your biggest worry is your investment portfolio.

I guess the thing is, one, be grateful for what you have. that's probably a first step to understand. And this person has obviously got there. You understand you're in a very good position. Other people aren't. And two, try to figure a way to give back potentially, whether that's money or volunteering your time. And obviously, that's kind of tough with a newborn. But I feel like that's a simple way to figure out a way to take that money that you're doing good financially. Set aside some money each month or each year or whatever it is to give back to someone and find some organizations or programs that you can give your money to and look

at that as another sort of investment. Again, this is another money psychology thing. I think that people get tied up on. I think that's a good thing to feel a little bit. I don't think it's good to feel guilty, but like if you have those feelings, you're probably a decent person because there's plenty of people with means that don't feel any of that. And they feel like they don't think about the fact that they were lucky because of where they were born or how they're brought up or raised or they just assume that they should have that no matter what. And it's only because of their hard work that they got there, not that they maybe got a break or two that someone else didn't get. Yeah, that's a good way to think about it. Okay. The Wall Street Journal is, I think they are

unbelievable at these type of real estate stories. So they wrote a story about how real estate is booming in Boz, Montana. Apparently it's called Boz Angeles now because so many people from L.A. are moving there. When they talk about these people that, so there's 33 sales of Bozeman homes priced at a million dollar more in January, between January and April, more than four times as many during the year earlier period. Median sales price is up $467,000. us up from 24 percent, up 24 percent from 2020. They show the median days on the market, which was actually high. We're pretty low already. It was like 18 days in January 2020 before the pandemic is now down to six days. When they talked about how this couple that moved from

LA sold their home for $1.2 million, which is a 56% rise for what the sellers paid for in August 2020, about a year ago, basically. This is just another thing that shows like, I don't know, if this is the internet moving things faster or the pandemic or both. But just that, these trends that were in motion in this sort of stuff, the pandemic has just shifted things around so much faster. It's like people didn't have time to just take their time and think through these things. Like, it just happened. And I think these cities like this, I don't know, unless this was the Kevin Costner effect from Yellowstone, right? Which, by the way, when is season four coming back? I'm waiting. I haven't heard any announcements yet. I am waiting. We've spoken

a lot about renters and people renting single family homes. We probably mentioned these companies in passing, but invitation homes at American homes for rent are both having monster years. Their stocks are up 37 and 40%. So we missed the boat on this one, even though we've been talking about it forever? Yes. Okay. Well, what are you going to do? Would you rather own invitation homes or the Atlanta Braves? Oh, not a Braves fan. Oh, sorry. The Mets and the Yankees versus Invitation Homes and Pulte Homes. Cuffer. All right.

This is yours. Survey of the week. How much money do you need to feel financially secure when asked how much they need to have saved to consider themselves financially healthy, Americans put the number at $516,000 on average. Only 20% said they would need more than a million. These numbers are lower than I would have thought. Well, who was asked? And where?

I don't know. Although response is very widely, most said having $500,000 in the bank would be enough to cover bills and expenses as well as future needs, including summertime. retirement savings without worry. I don't know. This gets back to a point that like in 50 years millionaire is still going to be a status no matter what, right? I don't know. You think millionaires are going to go out of style somehow? Was there people in the past walking around like saying, I'm worth five figures, like $10,000 was a lot or something or $50,000? I don't think millionaire will be in the lexicon like Jeffrey Labasker, the millionaire. Nobody talks like that

anymore. Nobody refers to somebody as a millionaire. Multi-millionaire? That's what they do. Multi-millionaire is the thing. And that's also a weird thing, but nobody, like seriously, a millionaire is gone as a phrase. That's fair. All right. So I think we are in a new place of the pandemic where corporations are going to make

set policy going forward. So there was all this stuff last week that Disney is going to mandate employees be fully vaccinated. They said Netflix has also announced that it's going to be a requirement for cast and crew members. I guess Google, Facebook, Twitter, the Washington Post, Lyft and Uber. and now Walmart also said that people at their headquarters and regional staff were going to be vaccinated.

It was interesting to look at some of the language on this, since there is a labor shortage. I didn't see if they said their actual store employees at Walmart or their Disney people who are at the park because I'm sure they're having a hard time hiring people too. But don't you think that it's going to be easier if this stuff comes from corporation? So you and I went to the comedy seller in New York when I was there. And unbeknownst to us, you needed to have vaccination. vaccination proof to get in there. I'm perfectly fine with that because that's the business saying, listen, this is, it is what it is. You have to do this. You had to have vaccines to get into schools

when you grow up like some people are failing to recognize that. Do you think this is what it's going to have to be is all these corporations just falling in line now and they're going to be the one setting policy going forward? Meaning what? Meaning anything the government does is going to be extremely polarizing. And isn't it easier for the corporate, like, don't you think the government should be pushing corporations to do this so they don't have to? So they don't have to have a vaccine passport or mandate the vaccine, if the corporations all do it and people say, you know what, fine, freedom. I don't want to get it. Then great, you don't work here. You don't go here. Yeah, I'm fine with it. I have no problem with for the betterment of society

and your coworkers get the vaccine or don't come to work. If you don't want, fine, work somewhere else. So another thing. So Walmart announced last week, it's going to pay 100% of college tuition and book costs for its associates starting in August. That's 1.5 million people at Walmart and Sam's club. That's a good question. I mean, it says 100%. Yeah, I don't know if they have sort of a ceiling on it, but that's pretty amazing. So they got to free tuition before the government did. Fantastic. That's awesome. All right. So we have been relatively anti-dor-dash people and food delivery as a business until they change their model. Like the economics of it don't make sense. I think I'm leaning that way with the buy now pay later, but not quite as much. So Square just bought after pay.

And I was buying a new party shirt the other day, a little nice Hawaiian number from Tropical Bros. You ever heard of this one before? I've never heard of them. You have some nice stretch material trying to make the summer last a little longer. And it says $48.95 for the shirt or four interest free payments of $12.24 with after pay. So that's the one that Square just bought. Why would Square pay $30 billion for this company, not just do this themselves? Can I just say one more thing?

Close or another area where I'm cheap. I'm not cheap on like a normal at all, like a daily basis, but I don't spend money on clothes. I would say I rarely buy anything that's not on sale. There's no reason to. Exactly, because you know that it's going to come. So Reuters talk about this. They said these companies generally make money from merchant commissions and late fees, not interest payments. So they sidestep the legal definition of credit and therefore credit laws.

That means buy and now pay later providers are not required to run background checks on new accounts. Unlike credit card companies and normally request just an applicant's name, address, and birthday. Critics say that makes the system an easier fraud target. I guess the point is I think we probably don't understand this business model well enough, but I guess they're much smaller purchases in most cases. So you probably think like the defaults on that are going to be smaller. And I would say like, hang on. I actually thought the opposite was true, but maybe you're right. I thought why would you buy a $48 and not just pay it? Like, why would you pay that later? I thought it was higher purchase, higher ticket items, but maybe that's

not the case. So like I probably, I would have bought the Peloton anyway, but the fact that I knew I could pay it off over four years for $60 a month or whatever it is. With a firm, I think it was 60 payments or something like that. So that was a no brain. It was 60 bucks a month No interest. It just made it easier. I bought a Dyson last year, a new handheld vacuum. And I don't know, it was two or three hundred bucks. And a firm had it and it was a $20 month payment. I go, sure, I'm going to try this. Like I didn't need to. I could have bought it, but I'm like, yeah, why not? I guess it's, I don't know. Isn't this just a huge R of opportunity for people with good credit scores? Yes. To not tie up their capital. It's also, but you're losing the credit card rewards. I did think about that. So after pay is technically a tech company. It's Australia's largest company. And Square bought them for almost $30 billion.

After pay is not profitable yet. Okay, it's still early. John Street Capital did an amazing threat on this. That guy's the best on what's going on here. So I think that I don't know all the economics of these businesses. How do they become profitable then? I don't know. But it's not just so.

People get interest free. If they miss a payment, then the interest starts to kick in. they get paid from the merchant. So they provide, I guess, the money up front to the merchant at a discount. So if you're buying a Peloton, they'll pay a Peloton 95 cents on the dollar, keep 5% for themselves or whatever they end up charging. I don't know the path to profitability, but there is $10 trillion worth of online payments. By now, pay later represents just 2% of that market. And it is definitely, definitely going to be bigger in the future than it is today. From the perspective of Wall Street trying to analyze these companies, I guess,

it's easy to model them out. You know that you have these certain payments over a certain period of time and you put some sort of default rate on them, 2% or whatever it is. And it's easy to model out because you know that those payments are coming in overtime. How about this? Maybe we're giving the market too much credit. But actually, no we're not. Square paid $30 billion for them. They're not idiots. Softbank just invested in Klarna at like a $60 billion valuation. What's a firm's valuation? So I'm not saying that these companies are cheap. Maybe they're wildly overpriced. Who knows? But there's a business. there for sure. All right. I just haven't figured out what maybe I just don't get it. But

someone's going to write a sub-stack on this and school us on that. It has to be because no one's writing about Chinese tech companies anymore, right? Yeah, true. What's going on with Scarlett Johansson? So she said she's suing Disney for Black Widow because she said it was a breach of contract after she was supposed to get a big back end of the theater. Didn't get it because it went to Disney Plus. That's BS. Maybe they pay her off to keep her happy. But why is this technicality. They're saying there wasn't box office revenue. I guess. She's saying it guaranteed theatrical release exclusively. I mean, maybe they pay her off to keep her happy. They wanted to do more movies with them. Well, her character is done. Okay. Spoiler alert. Did she die?

No, she died in the last movie. Oh, she got a game. Sorry, I don't pay attention. I watched that way, did she? Okay. I don't know. I would probably bet on Disney's lawyers over this, but I mean, the stars can try to fight this as much as they want, but Matt Damon was doing interviews for his new movie, and he said, he talked about how he's like infuriated at the way his kids watch films. He's like, the way they watch is different to how we did. How can you watch movies you're texting? As someone who makes these things, I can't say that I love that. Movies, as we know of them, aren't going to be a thing in our kids' lives, and that makes me sad. This is going to be your old guy yelling at the cloud thing. I agree with him. I think movies for kids are like, if you

have the ability to watch what you want, when you want, where you want to watch it, and how you want to watch it. I don't care how great the movie theater experience is. For kids, they're not going to care. I am strapping my kids in their seat to watch Jurassic Park. Okay, but I think that it's just going to be so few and far between. I think you're right. I think he's right. Yeah. But I'm saying that the Hollywood actors and directors that are going to try to fight this are going to go kicking and screaming and just have to have Netflix, throw them so much money or something because there's nothing they can do at this point. It's over. All right. It's getting late. Let's skip listener questions. We're doing a listener mailback episode in a few weeks anyway.

Okay, recommendations. I'll go first. We were talking about fashion earlier. Bird Dog shorts. They're the ones that come with a liner in them, pretty comfy stretch material. The greatest invention they have is a side pocket for your wallet. In a zipper, so it's not a front pocket. It's not a back pocket. It's a side pocket that perfectly fits your wallet. Did these cargo shorts? No, no, no. These are like athletic shorts. They're like kind of in between khakis and gym shorts. They're stretched. They're called bird dogs. They have a come with a liner in them.

They're so comfortable. And they have a side pocket. Whoa, whoa, whoa. Come on, Ben. These are $60 shorts. Sorry, I'm sure you can find a podcast that will give you a 20% off. That's probably where I found them on some podcast. Okay, wait, hang on.

Is this a bathing suit? You can use them as a bathing suit as well. I probably have five or six pair of these. It's pretty much all I wear in the summer. They are so comfortable. But the side pocket is the best Because if you sit on a wallet all day It's so uncomfortable, yes?

Yes Having your side pocket is great And it's a zipper so you never lose it So my kids wanted to watch Jungle Cruise this weekend So we rented a form of Disney Plus I'm contributing to the fall of movies The audience loved it

I feel like this was a movie created By a Disney algorithm My kids loved it Did you like it? I don't know It was definitely decent action I feel like I would love it I love adventures

So here's the thing Pirates of the Caribbean And one and probably even two were like, there were Disney movies, but I really liked them. It felt like this movie took, let's take all the best stuff from Pirates of the Caribbean and Indiana Jones and some of these other and like mishmash them and like create an algorithm. That's the movie. So I thought it was just like it was something about it that just felt like it was created in a lab, even though it was still kind of entertaining. There was a torpedo part in my four-year-old George goes, that was awesome. So he liked it.

And finally, I just watched episode eight, I think, of Dave season two. I think this season has been phenomenal of that show. Every episode feel like there's parts of it that are an overarching theme, but mostly it feels like every episode of this own little mini thing. I was telling you, he feels like the millennial Larry David, but in a way that he has so much more like thoughtfulness and meaningfulness I have to be honest, I don't, the last three episodes where it's like serious, Dave, I get what he's doing, but I just want to laugh. Oh, see, I think it's great.

I don't think it's bad. I just, I prefer that other version. Okay, so him going, I don't, the stuff that's a little over the top for me, like I like how he mixes in stuff about relationships and like the part where him and his buddy were playing one-on-one basketball. That was great. And like having their fight on the basketball court and working, I don't know, I think this season has been really good. I'm not complaining. Maybe a little. I re-watched for the first time in a long time,

long time, Boogie Nights. Mark Wahlberg's best movie by far, not even close. And this is one of my favorite movies ever. It's sort of like Goodfellers in the sense that the first half is a much better watch than the second half. That's the problem. The second half of the movie is such a downer. It's tough. It's so depressing.

It should have been like two movies or something. The first half should have been in its own movie. Who did the documentary, the podcast documentary, oh, originals on almost famous? Oh, yeah, the ESPN guy. I forget his name. Jim Miller. Jim Miller. I feel like you could do that with Boogie Nights because the cast is just ridiculous.

It's Paul Thomas Anderson. Mark Wahlberg, Julianne Moore, Heather Graham, John C. Riley, William H. Macy, Don Cheadle, Philip Seymour Hoffman, Louise Guzman, Alfred Malina, Nina Hartley. Nina Hartley, okay. Philip Baker Hall. I mean, incredible. It's just the second half of the movie, like I would turn it off halfway through. Nina Hartley's a porn star. She plays William H. Mace's wife. Remember that?

Oh, yeah. Yeah, that's a good running joke. Yeah. Tough second half, but man, it's a great movie. What I got? I had a busy week. I was with you a few nights at one night. I don't know, what I do this week? My consumption of media, I will have my final Project Hail Mary thoughts next week. I'm 90% of the way down to the book. That's kind of a long one. So I'll have that all thoughts. Oh, Thomas Jane. I forgot to mention. Thomas Jane was in Buggy Nights. Okay. Great cast. Send us an email. animal spiritspod at gmail.com.