Animal Spirits Podcast - The Big Long (EP.220)

Episode Date: September 1, 2021

On today's show we discuss a Covid outbreak for Ben, the shifting risk appetite for young people, getting rich overnight has never been easier, why money supply is not inflation, the labor shortage hitting close to home 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 Y charts. Oh, boy. Ben, I just checked the pre-market status of Zoom. They just reported earnings. It's not a pretty picture. The stock's down 14%. I don't know if you recall, but this is the stock, the one stock that I told a stranger, listen, if the market holds up, this is the one you want to be in.

All right, I didn't exactly say this one you want to be in, but he priced me. Zoom was looking good. So what happened was the revenue was up 54%. What's wrong with that? Nothing. But investors already paid for that. That's why the stock had done so well. And so when the CFO on the conference call or on the earnings call said that the growth would begin to normalize, investors did not take too calmly to that. I'm looking at the drawdown chart on Y charts and I see a 47% drawdown from the highest right now. That's not pretty. So anyway, on Y charts, you can look at all the of companies. You could see the revenue, you could see the revenue growth. They do all that for you. So go to

Ycharts.com. If you are interested in a new subscription, tell them Animal Spirit sent you, and you'll get 20% off your first purchase. 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 express by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritthold's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael

and Ben. For today's show, I'm Scotty Pippen. You're Michael Jordan leaning on me, sweating. What's going on? I'll try not to get my sweat on your new shirt, which looks great, by the way. By the way, kudos to you. You are 100% right. Tropical bros, not only is it fashionable, but it feels terrific. And it's got my mood elevated. I feel good. It's like a little bit of silk. I feel good. Yes, I've got the Hawaiian shirts. I've got a polo and I've got some bathing suits from them too. So all good. I've been reading in recent weeks these stories about how we're going to have to learn to live with COVID. And basically at some point, everyone is going to get it because it's not going away. It's more of an endemic than a pandemic. And basically,

at a certain point you're going to get it and then hopefully that helps with your immunity and all this stuff. Well, I got the damn thing. So last week, late in the week, my mother-in-law said she wasn't feeling good, symptoms of a cold flu type of thing. And it just so happened that the prior weekend, my kids were with her. It's probably been four or five days since they were with her. So we have all the take-home tests because my wife is on top of this stuff. You can get her from Walgreens or wherever. So she immediately tests all my kids. And my seven-year-old daughter, Libby, test positive. And everyone else and the family's negative. And the crazy thing is she was totally asymptomatic. No sign of anything. Had mentioned she was a little tired, but that's all. So we did another test,

positive again. And then they wanted us to go to the drive-through test just to make sure. So positive again, and everyone else is negative. So I immediately grab her. I take her to our place up north and we decided to quarantine. And we did that over the whole weekend. And on Monday, I woke up with a stuffy nose. I thought, oh, crap, I'm a little achy. I took a test. I'm positive. I told my wife, hey, I tested positive. We're going to have to quarantine for even longer now. And she gave our other kids a test. My son George had it too. So this thing just ravaged our family. Positive news. I'm really the only one who's sick besides my mother-in-law, who also lost her taste and smell from this thing. Obviously, we're both vaccinated. How are you doing on taste and

smell? I keep testing it just to make sure. I think it took her a few days to do it. So hopefully, that'd be tough. Ben, not to make light of this, but maybe we can get lemonade out of lemons. Can you drink an iced coffee? I know you don't like hot drinks. Can you drink an iced coffee? My mother-in-law said she drinks coffee and it tastes like she's drinking hot water. She can't taste it. Maybe that's the thing for me. So I told you yesterday, I said I tested positive of it, but I mean, I feel like I had a little cold. It's fine.

And then by the end of the night, I was in a world of pain. Chills and night sweats. And it feels like I have a pretty nasty case of the flu, basically. So luckily, my kids are still like, if we wouldn't have known from my mother-in-law, we never would have got the kids tested and we never would have known. They were completely asymptomatic. they are fine, which was kind of a worry for us because my son, George, has asthma. So we were kind of worried about his respiratory issues. He's fine. My wife and other daughter

are still negative. We decided to just come back together since more than half the family is sick. Now we're basically hold up and I feel like I'm in the quarantine again. Man. Are you taking anything? Dayquil and basically, yeah, I got a, whatever, quarantine for 10 or 12 days. I think they said 10. And this thing is legit. I can't imagine what it would be like if I wasn't vaccinated. It's a pretty good case of the flu. I woke up today, and it felt like I played a football game yesterday. My whole body was sore. It is interesting how our brains work that I had somebody the other day tell me that he thinks he doesn't believe the COVID stuff. And I'm like, I didn't really engage. I'm just like, whatever. But it's one of those things where you view

the world through your own experiences. And even though we can have all of this overwhelming data that it's real, that people are getting sick, that people are dying. Unless it happens to you, you're able to somehow block it off and pretend that it doesn't exist. I don't know what that is, what sort of defect that is in our evolution, but it is a bizarre thing. The whole path of the disease is crazy, too. The health department has been in contact with us. And they said, you're probably not going to get it since you're vaccinated and your daughter is asymptomatic. And of course, that didn't happen to my wife. Again, hopefully still is fine in my daughter too. So it's very bizarre. how it impacts different people differently, and thank God the kids seem like they're fine,

knock on wood. But I think I just have to rest for a few days. And hopefully it sounds like people like the flu. It takes two or three days to kind of get out of your system. And then I guess this is my booster shot since I'm going to have antibodies. But here, I got a market joke though. So yesterday, I told you I was fine. And slowly through the day, I was doing worse. And I felt like I was fading faster than Nicola's market cap. Decent? Not bad. Not bad. That's the best I can do. do right now. Sorry. All right. So just a quick update on that email. Sorry. One more story. Go ahead. We get home. I bring my daughter Libby home and my four-year-old George. We haven't seen him in four days or

whatever. And he goes, hey, Libby, I got COVID. So despite it all, we had to laugh at that because it's like, what else can you do? Right. He's like, I got COVID. All right. Great. So that ridiculous email that I sent when I was incredibly open-minded, pat on the back, that was a cold email. So this is the email that I sent that had that cover letter attached. Hi, my name is Michael Bannick. I saw you're posting at e-financial careers.com. I'm willing to do whatever it takes to get it to the hedge fund industry. So I guess that's, I thought that's what it took was sending that sort of ridiculous cover letter.

And I was looking at my resume. And I mean, this is why people take their life seriously as a child. Like, not as a child, but as a teenager, as you get into college, you do things, you intern, I had none of that stuff. So on my resume, literally on my resume was a valet Parker, a waiter, a cabana boy, a waiter again, and that was my job experience. Yeah, I was kind of the same way. I had nothing to fall back on it.

Can't believe nobody wanted to hire me. I know, especially after the Cavs lost the magic. So not that we need to spend too much time here, but I just thought this was a really interesting angle that encapsulates the current zeit guys. Ben, you wrote a post the books that help explain every market cycle of the past 80 years. And for more details, you can go over to the blog. We'll look to this. Obviously, as we always do. But for the 40s, you put where are the customers yachts, for the 50s, you put security analysis. For the 60s, you put the money game, which I think is the funniest, best financial book ever written. 70s, you put the go-go years. 80s,

liar's poker. The 90s won't up on Wall Street. 2000s, the intelligence investor, 2010's thinking fast and slow. And for this decade, it's Sapiens, at least, well, it's only two years into the decade. Does a decade start with the zero? Was 2020 the beginning? I just think Sapiens, especially if you're in the crypto space or meme stocks or whatever, if you haven't talked about Sapiens in a thread or in a podcast, you aren't doing your job because it's used as both an explanation for what's going on and a justification in a lot of ways. I mean, memes are the new fundamentals. So I think it makes sense. A listener sent us a video of Charles Hoskinson, who was the creator of Cardano, was one of the original founders of

Ethereum. I watched the video. He said he gave away all of his Ethereum to his secretary. That stake, I forget how many Cardano is worth, is now worth about a billion dollars, literally, about a billion dollars. I think she held on to it? Who knows. So in the video, it appears that he's wearing a robincho. Oh, really? I still have mine, by the way. So that was interesting. I'm sure this is a ridiculous overgeneralization. But how come brilliant people, such as this guy, Charles Hoskinson, are prone to having glasses? Or is definitely prone to poor eyesight? Are you asking why are most of the smart people nerds? No. I'm saying why do most intelligent people have poor eyesight? There has to be some sort of correlation there? Okay. Yeah, I don't know. That's a good question. That's a good research study for you. All right. So there's a story in Bloomberg, and the headline got a lot of people all up in arms. Get out.

Basically said, bubble talk is for boomers. Great line. And they interviewed this guy who's a younger portfolio manager. And he said, people who are maybe, say, 10 years older than me in their 50s, they probably were in the market at that time. And he's talking about the tech bubble. And they got burnt. They still think that tech today is the same thing as when it happened then, and it is going bust.

And he's talking about how Google's not going to go bust. Microsoft's not going to go bust. He's like, it's just not a bubble. And he said, I think to the younger generation, most people actually understand what's going on. And I thought this was a really interesting look at the whole idea between the differences and generations, because I think after the 2008 crisis, the biggest believers and the people who bought into the big short mentality and zero hedge and all this stuff were baby boomers. They had the most money. They lost the most. Maybe they lost their house, whatever it is. And they got burned twice really badly in the tech bubble, just as they were entering their prime earning years. And then, as maybe some of them are entering retirement, they

had the GFC. So understandable mentality, no? I think it makes sense. But it's interesting to see the dynamic between young people and little people play out because young people have been more right this cycle, right? If you've been more optimistic, you've been right as a young person. A year ago, we were laughing. Oh, you've got Druck and Miller, Tepper, and I forget who the third was that were cautious versus Robin Hood. And it was like, oh, guess who's going to win? Well, guess who won? I think this whole mentality, it's interesting because a lot of the younger people didn't really live through that 2008 or the dot-com blow-up, obviously, and I really didn't live

through the dot-com blow-up either as an investor. But so many people's brains got broken as investors falling in 2008, and they lashed on to, like, the negative. We read all this stuff about how pessimism sells better than optimism. And I think that's completely flipped on its head. So whereas everyone after 2008 was looking for the next big short, remember everyone who made money on the housing blowup, you saw headlines for them for years about this is their next big blowup, and this is going to happen. We had a fund we invested in who decided, like,

they put some money in Paulson's housing short, but it really wasn't enough to move the needle and really offset the losses in the other things. So their performance two of the night wasn't that great. They still lost like 20%, even though they were in the Paulson housing short. And so afterwards they said, you know what, we're just going to double down on something like this, and we're going to create our own Black Swan Fund. And every year, we're going to find greatest trade ever like Paulson's housing short. And it's like, guess what? That's a once in a lifetime opportunity. You don't get that every year. And so I think the opposite side of this is going to be everyone now is looking for the big

long. And we've seen all the reasonable financial advice that we've put out and we've heard from smart people and wise people over the years is you can't get rich overnight. Don't expect to speculate and then have it work out for you. But that has been completely turned on its head. Lower your return expectations. I've been saying that's just 2015. I could not have been more wrong. So think about how much money has been created in crypto in the matter of years and meme stocks and growth stocks. So I looked at this. How about it in a matter of minutes?

So I just tweeted this morning. Solana is up. The market cap started. Now a lot of that was minting, but still, Solana started the year with the market cap of $74 million. It's now $35 billion. So I don't think we've ever seen, in terms of the crypto universe, the NFT universe,

we've never seen so much money, and I don't think I'm being hyperbolic. We've never seen so much money made by so many people in such a short period of time, have we? No, and that's my point, is that what if, after all this, people assume making millions or billions of dollars in a matter of years is the norm? And they are constantly looking for the next big long. And what if that is just not the case? So even the S&P is up from the bottom in March of 2009, is up 19% per year.

The NASDAQ 100 is up 25% per year, over 12 plus years. So it's almost been too easy. So there was this story in the Wall Street Journal about social media people and the markets and how young people are latching on to social media. And this guy said that he had a video that was basically poo-pooing AMC, being like, be careful. This thing, it's up 10% in a day. It could crash any day now. And he said after the stream ended, this guy said he started shedding thousands of subscribers. And he said most videos with positive titles garner more than 200,000 views, while videos that have negative ticks in a company industry rarely get more than 60,000 views. This is a complete script flip from the Zero Hedge Days, right, of 2009, 2010.

2011, when people wanted that loss porn in macro, whatever, hate the fed. Now optimism sells, mania sells, it's pretty wild how things have changed. So with this in mind, we just got an email. With fintech, an endless investable universe, including crypto, Iowa is a service like you guys touch on with Rocket Dollar and access to financial education. Do you think the length of careers will shorten? So what this person is going for is, can you envision a world where young people work hard, but focus highly on their investment portfolios for 15 to 20 years instead of the climbing

the corporate ladder for 30, could have become a little more of the, the norm to meet a 45-year-old that is done working. Listen, the short answer, no, that's not going to happen. Not everybody's going to get rich and retire. However, a lot of people have. A lot of people have. If you look at the number of people that have like legitimately like $50 million in crypto, there's a lot of those people. It's not like a dozen. Like there are thousands of those people. What was your Ethereum staff from the other day? All right. So I was writing about how are people possibly spending hundreds of thousands of dollars on these JPEGs.

Well, because they're spending tens of ETH. They're not looking at the dollars. They're looking at the ETH. And if they've got 1,000 ETH, what's the difference if they peel off 10? The stat that I gave was there's 6,400 addresses that hold more than 1,000 Eth. So that's, what, $35 million?

Wait, is my bad bad? No, I'm sorry. Three million? That's three and a half. There's 6,400 people that have $3.5 million in Eath. and in terms of Bitcoin, it is... I was looking this up. I think I saw the number, maybe I'm off,

100,000 people with at least a million dollars in Bitcoin. Is that crazy? Is that too far off? I will confirm, but 16,000 people have $5 million in Bitcoin. 16, so what did you say, Ben? 100,000 of a million. Yeah. 16,000 people have $5 million.

Jeez. So that's my whole point is like, I think being a glass is half full person is a way better bent in life than being a glass set empty. So if you're going to choose one between optimism, pessimism, choose optimism. But if you think that you're just going to constantly every year find ways to get rich overnight like this, there's no way that this is going to continue to always be so easy. I think crypto is this like once in a lifetime moonshot rocket ship type of thing. Obviously, I wish that my personality of a lot of stuff in hindsight was more curious

and skeptical. But let's be honest, most things don't pan out. So most of the time, if you had to be at one extreme, and you should have, you should not. If you had to be at one extreme skeptical or optimists, well, you should probably be optimist, but if you go face first into everything, and by the way, I've been dipping a toe into the crypto stuff, into the NFST stuff. I'm not looking to get rich. It's more to learn and have fun than anything. Now I did a cannonball a la Van Burgundy. And I really feel like there's time dilation in the metaverse. The last week feels like four years. So as an example, some of the stuff that I've poked around with, So obviously, you've seen all the NFT stuff, all the rocks that are selling for millions.

And I'm sorry, a lot of people are listening, don't care about this. Again, there has never been the amount of money that's being created. Maybe it disappears. I can't look away. I'm utterly fascinated. So OpenC did $2 billion in transactions in August up from basically close to zero previously. I think it was certainly under $100 million in all other months, at least prior to May. But here's this, Ben.

So all of this crypto stuff, the decentralized stuff is a democratization of everything. and no gripe against OpenC, kudos to them and their investors. They've taken $200 million in fees in August alone. So they're cashing in. Oh, I want to talk about Coinbase for a second. So I opened up a Coinbase account. After I heard the Solana CEO and after seeing how high gas fees are with Ethereum, so there's a site where you could see your gas fees.

It's called Fees.WTF. I've spent $900 in gas fees. for a few thousand dollars in Ethereum basically? Barely. Yeah, yeah. It's absurd. So Solana is the alternative to this. I started buying Solana at $70 last week at Coinbase. Now Solana is $125.75. And now I did not buy a lot. The plan was to dollar cost averages to build a position. L.O.L. Too late. Whatever. Is what it is. But on Coinbase, I was telling you about this, you can't see your cost basis. Am I taking crazy pills? What year is it? So great, Salon is at $125. What did I pay for it? Well, I don't know. I have to go in and look at my transactions

and the fees are, depends on how much you're buying, but could be 2, 3, 4%. There was obviously they did that on purpose. I wonder why they did that. Because if people had lost 80% of their value after 2017, they didn't want to see what the cost basis was. Do you think that was something about that? I have no idea what the motivation was. It seems very odd. This is still why I think Robin Hood could overtake them in the crypto game because Robin Hood's interface is just so much better.

Oh, Coinbase am I saying, yes. Okay. So the NFT stuff, it's going so quickly. It's hard to make sense of what catches on and what doesn't. But there's a lot of people that are taking advantage, obviously. And some of the people that are getting rich, at least on paper, who knows if they're taking the money out, these are not Wall Street people. These are not finance people.

A lot of these people are artists and outsiders and people that never would have had access to this. So I think from that point of view, it's pretty great. I tried to dabble on uniswap just with a little bit of money. And I can't find it. For what? Like yield farming or what? I might have lost some money. Is that what you're trying to do with yield farm?

Yeah, I was trying to yield farm. Honestly, I think the transaction was approved, but now I can't find it. I don't know. It was only like a few hundred bucks, but still. I don't know if it ever got transferred from my MetaMask wallet. The whole thing is pretty out there. But we keep coming back to the same point, is that all normal people see, a lot of the listeners, all that you see is the tales of speculators, the JPEGs, the rocks that are going for hundreds of thousands of dollars. What most people aren't seeing are the Charles Hoskinsons of the world and the Anatoly guy from Solana and the founder of Ethereum.

A lot of people don't see what's actually being built. And I think that... Like the ridiculously smart people that are involved in this. So dismiss all of it out of hand because all you're seeing, which I understand, all you're seeing is the nonsense, I think is foolish. And that's what we did, right? In fairness. Because the loudest voices in this space are snake oil salesmen a lot of times. A lot of times. And the people who are actually creating value in building behind the scenes don't want all that attention. In 2017, when we were, I think I was calling it a bubble.

I'm pretty sure I was. It was a bubble. It was all ICOs and all nonsense. So there was no substance there. And it's different. Now things are happening. I think that's why a lot of older people getting back to the boomer bubble talk. They lived through like everything that was said was going to happen with the internet happened and more. I think anything in the late 90s people said and thought was going to happen, it surpassed their wildest dreams. But you still had to go through the dot com blow up in the meantime. I think that's maybe what people think. I also think people don't hold themselves accountable. Like if you are scoffing at snowflakes valuation understandable or whatever, you're dismissive of X, Y, and Z. Guess what? You probably thought

that Facebook buying Instagram at a billion dollars was crazy too. And if you thought that in 2011, maybe it's time to, I'm not saying that you have to go well in on tech, but maybe it's time to stop being so completely dismissive. And maybe, I don't see how you can say things aren't different. I'm not saying that manias persist forever, but come on, like the world is moving on. Yeah, this is why, again, the difference between optimism, pessimism and like assuming you're going to eat rich overnight, the young people having more optimism these days, I think that's a great thing. So there's a whole spectrum of where you should be. The time to be optimistic, on AOL was when the internet came along.

You're like, oh, America Online, what's that? The time to be skeptical was when they bought Time Warner. Yeah. All right, I want to do a few context things. This is like something we've done for a lot over the years is adjusting the CAPE ratio because everyone uses that to say the market is ridiculously overvalued. And so a guy who works for nucleus wealth sent me this. And I saw making the rounds on Twitter.

He said basically the corporate tax cuts a few years ago that Trump made broke the CAPE ratio. He's basically saying, If you're using this 10 years of earnings and taking the average, effectively what you're doing is taking the first six years had a corporate tax rate of 35 percent, and the last four I have a corporate tax rate of 21 percent, and you're averaging those. So the average tax rate would be like over 29 percent. But that's not the way the earnings works today. The earnings today have that lower tax rate of 21 percent. So he's basically saying it's still high, but it adjusts down from 38 to 29. It's big difference. He also adjusted, yeah, for buybacks.

And I think that's the thing that a lot of people who take a lot of this data at face value don't like take time to dig in like this is a really good I've never seen it done like this before one more and this was like the chart crime of all chart crimes the inflation adjusted s and p 500 i can't remember who tweeted this has never recovered from the 2000 peak and they inflation adjusted it first of all they didn't use dividends second of all they used the m3 money supply and so Colin roche wrote about and he's like probably one of the best sources for this like for debunking this kind of stuff he basically said why do people insist that inflation is an increase in money supply. He said, if I take on a loan for $100,000, the money supply is technically increased,

but what if I don't actually tap that loan? So he said that this would be like basically calculating your weight changes by how much food you have in the refrigerator. It's like potential more than anything. And this is something crypto people do all the time, basically saying money supply is 3x from here. So that means inflation is really 20% per year. And Colin's whole thing is no, no, no, no. This is not money supply. Money supply is not inflation. There's a difference between money supply and actual price rises. That's also, for me personally, that's why it was tough to be bullish on crypto

is because I have such strong disagreements with the takes of the people that are, and for the reasons why they're bullish on Bitcoin. So it was hard to get over that hurdle. That's the other thing, though. Could you have foreseen in 2017 that there was going to be Solana and NFTs and all these, and FTX and all these other platforms

that have come, like, I think that's why it would be so hard to be a maximalist in that space because we just don't know what other tokens or protocols or projects are going to come in the future that just seemingly come out of nowhere. What does this say to you? So modest proposal tweeted this. Yale's venture program barely beat the cues over the last decade. That's probably more a statement on how ridiculously incredible large growth has done. Obviously, it's not an indictment on Yale, but maybe just

to show how hard it's been to beat the index. Yeah. So they're saying that Yale's venture portfolio manager is taking over for David Twentzy to pass away. And they've returned and 21.6% per year or less 10 years. It sounds awesome until you realize the NASDAQ 100 has basically done that as well. I don't know. Maybe this gets back to my point about the big long that. It's everything. Private equity is done well. Venture capital is done well. Startups have done well. I mean, if you have a startup idea right now and you can't get funded and get a $10 million valuation on it, like it's probably never going to happen, right? Because there's just so much money sloshing. Andrews and Horowitz just announced are launching a $400 million seed fund.

And by the way, Acquired, did a two-part podcast on the history of Andrews and Horowitz. And I'm pretty sure $300 million was like the size of their first fund. Geez, I know. And yeah, they're doing $2 billion crypto funds and it's wild. All right, I want to talk about the shortages. I've been seeing this. So I talked a couple weeks ago about my dryer, how it was hard to get anyone. Are you still rocking the pickup truck? Yes. And I realized very quickly that I am definitely not a truck person. I don't look right in a truck. I'm too small. I dress like too much of a yuppie to be in a truck. Like it does not fit. You can't get in a truck wearing one of these.

Right. Yeah. So I am definitely not a truck. And also, I feel like I'm constantly going to hit something. It's so big. And the reason I have a truck is because my car got in a little fender bender. And I brought it in to get my bumper fixed in the first week of August. They basically said, because parts delays, it's not going to be ready until August 31st, which is the day we're filming this. They just called me last week and said, sorry, three more weeks until your car parts are in because the sensors from Ford. We also got a letter from our school district, basically saying the crisis involving a lack of school bus. drivers is not isolated to Forrest Hills or even Michigan. It is a nationwide problem. Fewer and fewer people want to do this job. They're having to cut bus routes because they can't find enough bus drivers. They're basically saying the hours for this job don't make sense for a lot of people. We just got a email from our daycare yesterday saying they might have to close some of the classrooms because they cannot find enough people to work there. This stuff is starting to get real. I wish I said this earlier. Just an obvious disclaimer. If you're feeling like FOMO at some of the crypto stuff. Just take a breath and don't do anything that you might regret. If you want to

dollar cost average or some sort of, that's fine. But don't feel like- You're doing a lot of this stuff with play money. Yeah. I'm literally dollar cost average with a little amount of money. So do not feel like you miss the boat. And so I know it's tough. It's really, really tough. When you see people, like I just said, 16,000 people have five minutes. Listen, I get it. FOMO is incredibly, incredibly powerful, but take a breath and be careful. Okay. That's my point is that like trying to find the next big thing is going to get in the back of everyone's brain. It's going to be very hard to do. How could it not? I'd be lying if I said that I wasn't getting a little bit poisoned by this. Like it's really, it's really difficult to not be infected, especially when

you're looking at it as frequently as I am. Why just survive back to school when you can thrive by creating a space that does it all for you, no matter the size. Whether you're taking over your parents' basement or moving to campus, IKEA has hundreds of design. ideas and affordable options to complement any budget. After all, you're in your small space era. It's time to own it. Shop now at IKEA.ca. We had an email and there's just so spot on. In discussions with many people I know, both in the city where I live and the farm community I want to move to, a common theme keeps arising. If you are any type of tradesman of any level, you will make more money than you could spend. They can send themselves a jack-of-all-trades, handyman, property

maintenance, something like that. He goes, is this a thing all over the country right now? Can it be this easy if you have some basic repair and troubleshooting skills for common home maintenance issues? Curious if you hear this from a lot of people, we live at different states, so he wants to hear us. And my wife and I have said to each other repeatedly over the past year when we've had various work done to the house, either work that we wanted to do or work that we needed to do because stuff was breaking. He's like, for whatever reason, and I'm sure that this is partially pandemic related, maybe they're overwhelmed. But this was even happening pre-pandemic. Finding a reliable handyman, plumber, electrician, whatever, that is reliable that will

text you or call you back has been incredibly difficult. And I was just thinking, we say all the time, do none of these guys have calendars? If they just had somebody helping them with their calendar, like I feel like they're leaving so much money on the table. So, yes, in my experience. Well, the other part of it is they're so busy they can turn down work and they don't need it. I think if you were ever going to start a business of like this where you,

fix stuff for people or do renovations, like now it would be the time to do it. You could make as much money as you want, depending on how much you want to work, I think. There are some tech services. I forget what they're called that. Like, there's platforms where you could find handymen. But yeah, I think, listen, if you're reliable, you pick up the phone, you get back to people, you do good work. There's always room for somebody like that. All right, Ben. That's two hard things to find in life. A good car repair place and a good handy person around the house that can fix stuff for you. Yes. So I saw this chart going around last week, basically saying, so in 2002, new home sales, so this is newly built homes, at 200,000 and under where 60% of total new houses sold.

This year, it's 2% and it's much higher. New homes of half a million dollars were 3% of sales in 2002, but nearly 30% in June this year. And a lot of people are saying this is another inequality thing. The housing market is rigged, blah, blah, blah. I think there's a lot of reasons this actually makes a lot of sense. One of them is interest rates have fallen. I did a comparison of 2002 rates at 6.5% to 2.9% today. And if you built a new home for a million dollars, and I'm assuming a 10% down payment, you would pay less by $500 a month than you would have for a $750,000 home back in 2002. So rates are a huge piece of it. Obviously, it's big. But down payment, down payment. You have to mention that. Yes. People always say that in property taxes. But I don't think people

make housing decisions, unless you're living in a very high cost of living area in California or something, where people told us on our listener questions that they have a $2 million dollar starter home, I think most people make their decision based on the monthly payment. Obviously, the down payment is not easy, but the majority of homeowners- Do you really? Oh, yeah, definitely. I think people go to the bank and say, what can I afford? And they try to look at their monthly budget and monthly income and figure out their

monthly expenses they could do for their house. You don't think that? I don't know. I mean, I think if you don't have the down payment, then that's it. Isn't that how you look at it, though? Can I handle this monthly payment? Yeah. And the other part is it's been 20 years, so it's, there's inflation. So my whole point was, like, it actually makes sense. And the home builders got burnt. So it makes sense to me that they would build higher end homes or more pricey homes because they probably get higher margins on those. The lousy part about this, I forgot to put it on the docket figure where it was, is that a lot of the institutional buyers of these homes are happening on the lower end.

Right. That's a part of this. That's really shitty. But they're also the ones that are building. So my whole point, my conclusion was, if you want a starter home, that's $200,000 or less, and you can find it in the right area. it's going to be an existing home, not a new build, which I don't know, sort of makes sense to me, especially for the home builders that got so screwed in the 2008 crisis, I guess. So being sick and having the whole fame of quarantine, I feel like I'm back in freaking March 2020 again. We're going to be basically holed up in our house for like 10 days without leaving and that was honestly the worst part until then I got sick. Oh, well. Yeah, yesterday you said I just have some sniffles. Yes, it could be worse. So we spoke about when the more for rents was lifted in terms of like landlords being able to raise rent, that it was going

to go up. I'm not saying we predicted this, but it's gone up, it's gone up fairly significantly. The median rent price in the United States. So there's a good thread from this guy, Rob Warnock from Apartment List, which I think I've used in the past to buy an apartment when I was in my younger days. He showed the median rent price and it's gone from, I don't know, $1,100 to over $1,250. Like, and it took off, this chart took off like crazy in 2021. He basically thinks because housing is so hard to come by, rents are increasing because so many people are having to rent because they can't find a house. So like the Google search volume for apartments for rent is at an all time high right now. And I guess a lot of it's because it's hard to find a house. So any part of

the real estate market. And I think it also makes sense. Wouldn't it, if housing prices are rising like crazy, that rents would rise to match that, doesn't that make sense to you? Yes. If a market's going to find some sort of equilibrium. Oh, this is interesting. Maybe not terribly surprised, but interesting. Startups are spending more on Airbnb than they are on office space. So currently, only 60% of startups are paying for rent. So you're saying a startup that has two or three founders will get an Airbnb and just all be together and live together while they're trying to get things off the ground? Yeah. That's kind of interesting. Or maybe they're using that for office space. That's probably what you mentioned. I thought that was an interesting little

nugget. Oh, we're finally seeing some buyer fatigue. So Rick Palacios, is he a real estate agent? He puts really great threads on Twitter. I think he's just a real estate analyst, but yeah. Okay. He does, like, channel checks in every big city in the country. All right, so, for example, in Phoenix, here's an agent in Phoenix. Buyers are nervous, they're overpaying, sales are nervous, it will be a correction, and they miss the opportunity.

Both sides are crippled with questions and fear. Here's Houston. Some of my clients are waiting to buy due to the high-cause bidding war. They feel that any house they purchase will be upside down in equity due to the bidding wars that are going on. That makes sense. This is interesting. In Charlotte, institutional buyers are killing the first-time buyer.

That makes sense. I do think the first-time buyer slash starter home are the people that are definitely out of luck the most out of anyone in this whole real estate game, unfortunately. Nile Bayer tweeted, buried in today's existing home sales release. Millennials make up more than 50% of new mortgage issuance, a demographic tailwind, if you will. You damn right. I mean, that's as much as interest rates being low are people like me, not you, people like me, Ben, that are trying to get into a house for the first time? Household formation. Are you saying I'm not a millennial? Is that you're saying?

Yeah, that's what I'm saying. Okay. This is interesting. Oldest millennial that there is. We got an email. Thought you guys would find the below. Interesting. Anecdotally, I've lost three listings in 30 days to Zillow.

Neighbor home was 200 square foot larger, sold for 433. Zillow offered $4.30 days later. Highest sale price in the neighborhood this year was $2.45. Zillow offered $2.95. Highest price in neighborhood was $3.25. All of those with the 1% service fee. I am very, very curious to see. see what the I buyer situation looks like in five years. Was it a success? Are they overpaying?

Will it be profitable? All those sort of things. Yeah, how much bigger they are, how many more cities they're in? Because I think a lot of it is there's Phoenix and Charlotte in some of these certain cities that they're coming into. But honestly, I think even in a seller's market, just having them give you an offer and knowing what it is without having to negotiate, there has to be a lot of peace of mind with that to make your life easier. Where you say, all right, I'm just going to go with Zill or Open Door, whoever, and make my life easier. We did a listener mailback episode on Monday, and somebody emailed us to the follically privileged and bald bro.

I think he's talking about me. I am sure you got a few emails about this, but the least painful solution. So we spoke on the podcast about how difficult it is for whatever reason. Apparently there is a technological solution. Somebody emailed us. I forget the name of the company. For a rolling over 401K. Yeah.

About why is it so difficult. The least painful solution I found is calling my role over provider, in this case, E-Trade, and then letting them call my former employers 401. one K provider with me on the phone. This does a couple of things. First, they don't try to do any retention techniques or upsell. The other finance bro, game respects game. Secondly, normally E-Trade can give them an address and I never have thought to touch the roll over check. Okay, so there you go. That's the most bizarre part to me that a lot of these places will literally write you a check that you have to then send. That seems just so antiquated that that still happens.

All right. Is it too early to say that we have been completely wrong about a firm? Too early. How? How was about to say, look at the stock price. because the stock got killed. It went from 147 down to 46. And by the way, no, it's interesting. I forgot to talk about this chart. Oh, everything's going up. Take all the risk. Everything pays off. No, no, no, no, no, no. Not only is that not the way the real world works. That's not even true today. So Liz Ann Saunders tweeted this chart, a great chart, contrasting the maximum drawdown of the S&P 500, which has not had a max drawdown greater than 5% in seemingly forever, versus the average. This is a Goldman Sachs index, not profitable. tech, SPACs, Bitcoin, most shorter stocks, and the IPO index. And a lot of those names have been getting crushed. So it's this idea that risk has been eliminated is just pure bunk.

The thing is that we, again, to our Independence Day analogy, the aliens moving from planet to planet, the speculation moves and moves and moves. And then you forget about this stuff that has gotten completely crushed. So our firm went from 147 to 46, but then on Friday, they announced a deal with Amazon and the stock did pretty good. Stock was up. like 40%. I still don't get this. Amazon partnering with them and Square are doing, I don't know why these firms aren't doing this themselves. Because Amazon essentially already has this. You can do this on Amazon where you pay over six months or 12 months and it's like zero percent interest. Okay, this is super bullish. This is one of the most bullish signals that you could find. I've spoken about this

before that every time you say to yourself, I don't get it. Why can't this company do that? What's so special about Zoom? Skype had them. How is it so hard to build this? Clearly there is something that we're missing. Because if it was so easy, why would Amazon partner with a firm? I don't know, but obviously they know a lot more about the space than we do. And I would just assume that there's good reason for this. All right. This one surprised me. Peloton cut its price of its lowest price bike by 20% to 1495. I think that's the second time they've cut the price. Armshire quarterback here, that is not a good sign. There's no way that's, I mean, I assume they're worried about competition. I'll take the other side of this. I would agree. That's not a great sign. I think that we will look

back on this in the rear of mirror and say it was just a stumble. I'm bullish on Palaton long term. I think there's a big opportunity for this company to be like the workout brand. I still think it's got brand cachet and, but this just, that's a pretty good price cut. That's all I'm saying. Yeah, it's significant. By the way, you're worried about something. I actually got on the Palaton for the first time in a month or two the other day. It felt nice to dust it off and get the sweat on because, and that's not a bear shilling on Palaton, but listen, it's a summer. I'm wearing this Flamingo t-shirt. Almost. I've been biking to the beach. So, So unfortunately, I don't use mine in the summer very much because I'm out running.

When the gloomy weather returns, I will be back on. Hey, for my 10-day quarantine, I will be using my Peloton probably. Okay. I hope you're able to. Oh, this is interesting. Joe Rogan's influence apparently is waning. So The Verge did this really interesting study showing what happens to people that go on the show to their Twitter following count before and after he went exclusive with Spotify.

They took off people that have gigantic Twitter audience. and it could be a coincidence that people are listening to podcasts less now, but this chart was pretty interesting that once he went to Spotify, his audience shrank, which is how hard is it to listen to them on Spotify if you're a fan? That surprised me. But I'm so entrenched with Apple Podcasts, even though when they changed their podcast player, it was noticeably worse. Like, it's hard to delete a podcast. Like, I don't know who decided this was a good idea. It's an awful user experience. It's not difficult to switch. I know. I tried using Overcast and some other.

ones, and I just, I couldn't do it. I'm used to the Apple one. That's when I go to. So if it's not on there, to me, it's like it didn't exist. I have a $1,000 idea for one of these companies. I now have, I don't know, 15, 20 podcasts in my library, and I probably could delete a few, but I'm at the point where I would like some folders. I want sports, I want movies, and I want finance. I want some folders. Okay, that's not a bad idea. Is that so much of an ask? Nope, I like it. Somebody asked me for a book recommendation. And I was like, huh, I feel like I've written about this before. Ben, click on this link. How neat is this? So I Googled, like, I think Michael Battenig, best books, favorite books, something like that.

And it took me to a site called Books Chatter. And it cataloged, I don't know how it did this, every time I tweeted about a book in a positive way. Like, for example, this is from May 2021. The only audio book I ever did was City of Thieves. It was excellent. Then it's got the price of peace. Anytime I tweeted like terrific book, great book, it picked it up. Pretty neat, right?

Yeah, how they do this? I don't know. Is there a Ben Carlson book recommendation list? I googled you and I couldn't find it, but I'm sure there is. I'm doubling down on Dark Matter as a... Okay, I like it. It should be a movie. Read that book.

I'm really deep into that one. Okay. Oh, great recommendation from a listener. Just a tremendous recommendation. Michael, buy your TV from Costco. It comes with a five-year manufacturer's warranty at no additional cost. There you go. I feel like Costco's prices are a little pricey, though.

They're higher than you get at Best Buy or Amazon. That's been my experience. But you get a five-year warranty. If and when. And you're still watching a TV with a line across it. I am. It's not that bad. But yeah.

It's a new move. I'm hanging on. I got a couple of wrecks in quarantine. I never would watch this on my own, but my daughter and I watched Cruella on Disney Plus. And? Not bad. I'm a big Emma Stone fan and she was very good. It was way too long.

It was like two hours and 15 minutes. But it didn't feel like a Disney movie. It feels like maybe they're trying with some of these other shows. are doing Loki and some of the Marvel Universe stuff to try and push it a little more towards adults. And it was actually like kind of funny. And then I was watching shows. I couldn't watch any shows my wife because we were away from each other. So I dove into Outer Banks on Netflix. Have you seen this? No. But I bet to the Outer Banks. Beautiful place. It's a ridiculous show. Like totally ridiculous. And usually if I was like a, if I was being a snob, a TV snob, I would say this show is just,

It's kind of like 9-0-2-0 and Dawson's Creek and the OC combined with National Treasure, and some of the plot lines are just so absurd, and yet for some reason, I still enjoy it. Did you watch it with your wife? She already watched it. I needed something to watch, and I hate myself for liking it and enjoying it, but I do even though it's ridiculous. Okay. Oh. Anything else?

Here's something. Why, this is only on teeny bopper shows and rom-coms. They call each other by first and last name. I think because they assume the audience can't remember the first and last name of these people. What is wrong with you? Sarah can't. It's like, listen to me, Michael Batnik. Like, no one actually talks like that in real life. It's only on teeny opera movies and rom-coms. I think I noticed, like, bad writing, bad producing than I do, like, really good. For example, Robin watched Clickbait this weekend.

And by the way, it's been a while since we binge watched a show. Like, come on, we need to get back in the binge game. So Clickbait is, was a number one or number two thing on Netflix with Adrian Grenier. He gets kidnapped, whatever, whatever. Storyline's not important. But it was entertaining now, but it was pretty bad. And like I said, if you close your eyes and it sounds like they're reading, it's garbage. Like, that's like law and order. You close your eyes and low in order and it sounds like they're reading. You can just tell bad acting, bad directing, something like that. I said to her, like, what is it with Netflix? Like, there's just a lot of their projects, it just feels like a hallmark type production. I don't know. So we started

watching Dr. Death on Peacock. It's got Alec Baldwin and Joshua Jackson, who was was Pacey and Dawson's Creek and then Christian Slater. And it's about this doctor who killed a bunch of his patients on surgery. And it was kind of an interesting story. It was based on a true story. But you're right. It was the same thing where it was like the whole production value and the acting is just off. I can't do it. Yeah, it's tough. I stopped that one. I went to the movie theater on what night did I go? Friday night maybe? No, Thursday night. Whatever it came out. I saw Candyman. Jordan Peel wrote it. It was directed by Nia da Costa. She is the first female African-American.

to have like the top box office movie. So that's pretty cool. And the movie was, I'm not recommending it. If you want to see Candyman, go say it or don't. I loved it. It was like legitimately super scary, incredible. You're a big horror guy. Yeah. And you know what's weird? Like I do this. I cover my eyes. I get scared, but I enjoy it. And this was frightening and well-written and incredibly well-acted. And like the reviews were fantastic. So I enjoyed that. And lastly, not a recommendation. just FYI. You ever see DejaVu with Denzel and Val Kilmer? Yeah, I like that one. I think it's on Amazon Prime. That's a movie that does not work if Denzel is not so spectacular.

Because it was kind of silly, but he was so freaking good. He's got a few movies like that, actually, like Equalizer and Out of Time that are kind of like, eh, out there, but with him, he makes it work. Yeah. All right, Ben, listen, you did it for the people. You powered through. Thank you for doing this. I'm going to go sleep the rest of the day. All right. I hope you feel better soon. Animal Spiritspot.com. We will see you next time.

Thank you.