Animal Spirits Podcast - The Bitcoiners Won (EP.386)

Episode Date: November 13, 2024

On episode 386 of Animal Spirits, Michael Batnick and Ben Carlson discuss: why Trump won, how the Dems fumbled the economic messaging, how this will impact recession spending moving forward, 30% gains in the stock market, credit spreads, the reflation trade, how many people understand tariffs, how Bitcoin won, tiny houses, Mighty Ducks, and much more! This episode is sponsored by Roundhill Investments and Fabric by Gerber Life. Today's show is brought to you by Roundhill Investments and the Magnificent Seven ETF, ticker symbol MAGS. Learn more at: https://roundhillinvestments.com/etf/mags Join the thousands of parents who trust Fabric to protect their family. Apply today in just minutes at https://meetfabric.com/spirits. Sign up for The Compound newsletter and never miss out: thecompoundnews.com/subscribe Subscribe to The Unlock newsletter: https://www.advisorunlock.com/subscribe Find complete show notes on our blogs: Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's show is brought to you by Round Hill Investments and the Magnificent 7 ETF, ticker symbol, Mags. Mags is the ETF to offer precise, equal weight exposure to the magnificent seven stocks, Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. These are the leaders at the forefront of innovation, shaping the future of innovation in today's economy. Winner of Best New ETF at the 2024etF.com Awards, Mags offers a simple and efficient way to invest in the Magnificent 7 in a single ticker.

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Michael, on the show today, we're going to talk about Scott Galloway had this chart on the median age of podcast listeners. And I think it was like 35 years old, whereas all the other forms of media are much older than that. And so if our audience is that median, that's a sweet spot for life insurance, right? We have a lot of people emailing us saying starting a family, moving to do a new house, these type of things. Life insurance is an easy way to protect your family, right? Got to do it. Fabric by Gerber Life has it all online. It's on your schedule.

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Join Michael Batnick and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ridholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. You know, I learned about hindsight bias, probably from Kahneman at some point. And it's the thing that after an event happened and you know the outcome, everyone looks back and life is easier to figure out the rear room here, right?

Hindsight is 2020. Yes, like Betty on the Bears yesterday at home against a Patriots. What was I thinking? Actually, a better example, Betty on the Giants. Just the money line. Just the money line. What was I thinking? I feel like one of us on this show told you to not bet Caleb Williams with those yards

and they're going to be proven right. Nobody needs to hear about my betting at the opening of the show. Back to you then. All right, this is what happened with the election. The election results didn't go the way some people thought it would. It wasn't really as close as people thought it would be, I guess. And then immediately the hindsight bias machine kicks in. And then you look at these stories and you go, oh, yeah, oh, of course.

Oh, but it's just funny because most of the reasons weren't really being given ahead of time. It's always after the fact that the reasons fall into place and you go, oh, of course this is what happened or of course that's what happened. Well, did you not experience hindsight bias yourself? Because I sure did. Oh, of course. Of course. But it's funny how just quickly that, especially with an election, that happens.

And it's like, okay, this and this and that. I mean, one of my first thoughts were, dumbass. You dumb mother fuck. We've been spending the last two years talking about how upset people are with the economy, even though I'm using air quotes, things are. fine. Like, why didn't we see this coming? Yeah. So John Byrne Murdoch, I thought, had the chart of the week where he, he's from the Financial Times. And he says, he has this chart. This is every governing party facing election in a developed country this year, lost voter share

for the first time it's ever happened. So this goes back to World War II. And you can see the line here. Actually, if you look at the red line, the U.S. is actually near the top. So I guess the U.S. lost voter share, the incumbent, but to a lesser degree than other countries. So this is basically saying every, every leader in power or every party in power lost voter share to the other party or the other leader that was running against them. We're all fed up. So this was, inflation was a global phenomenon. This incumbent being the one that gets blamed was a global phenomenon.

So that, this, to your point, makes sense. And you go, oh, like the wedding singer, that information would have been better if you gave it to me yesterday. But this is the thing, we had this information yesterday. Yeah, we did. Like, I took a picture of CNN exit polls. They asked voters how do you feel about the way things are going in the U.S. And only 7% were enthusiastic, 43% were dissatisfied, and 29% were angry. And if you asked us before the election to fill this out, like, just take a guess, fill this out, we probably would have been relatively close and still were surprised at the outcome of the election.

What? Right. Yeah. I would say dissatisfied and angry is probably a little higher than I would have thought. thought, just because it still was a, I don't know, 49, 48 election or something, but yeah, those are very high. Just further evidence of what we're talking about. Jeff Stein tweeted roughly 67% of voters rated the economy as not so good slash poor.

67%. A shockingly poor number amid a hot labor market booming stocks, much lower inflation, growing GDP, but widespread for voter dissatisfaction with the economy has been clear for years. So, Ben, you're right. This has been a week of narrative gymnastics and hindsight bias and, you know, An economist tweeted, economists are going to have to reckon with the fact that the public would have preferred a slower economy or slower recovery with much higher unemployment as long as prices have been stable.

And come on, that's obviously not it. And so Colin chimed in. Colin Roche said, people are mad because many economists spend the last few years saying government spending didn't cause inflation. Inflation didn't hurt people. And then it was okay to spend more money on broadly unpopular policies like student debt forgiveness. So Cullen, I think, and then he quote tweeted and said, in my opinion, some economists are reaching the wrong conclusion from the election. And it's important because after our results

happen, we're like, all right, what are the takeaways? And if you get it wrong going into it, that's okay, right? Like nobody sees the future. But then you also get the lessons wrong. Well, that's dangerous because that's that's for future failure. So Cullen tweeted, in my opinion, some economists are reaching the wrong conclusion from the election. People felt like the economic narrative was disingenuous. They were told inflation was transitory. They were told government spending didn't cause inflation. They were told inflation wasn't harmful because wages went up. They were told it was the best economy ever. They were told we needed student loan forgiveness, wealth taxes, rent control, and other fringe ideas that were broadly unpopular.

People knew these narratives were incomplete at best and wronged out words and they voted against more of it. And that's the bottom line. People were just not buying what the Democratic Party were selling. I think the other thing is that you can't expect economists to be the ones that bring this message to the people either. I don't think you can't, I don't think you could put blame on the economists or I don't think you could, if it went well, you could give them credit because people aren't going to get their news or their information from the economist. So I thought, blame the people that lost that were trying to deliver a message. Like clearly, clearly, clearly didn't resonate at all. So when I, after this kind of stuff happens, I don't want to hear when I'm

trying to parse through like the reasons and like the figure out the actual lessons, as you said, I don't want to hear from either side that's partisan because the winning side is going to say, hi, I told you so. And then the losing side is going to say, oh, my gosh, everything's on fire. We need to burn it down and start over. I prefer to listen to people who aren't partisan or that I, like, I would never know your political opinion. So I thought that Michael Sembless at J.P. Morgan, from an economic perspective, had the best take I've read of anyone. And he, that's the kind of guy where I, he just, he tells it like it is. I wouldn't need to be able to parse through what he says one way or another.

like this, he's a stunt Republican or he's a hardcore Democrat. Like, you wouldn't know because he just looks at the numbers. And that's the way that I like to view the world. I read the same post and I just thought, this screams RFK Jr. So here's what he said. And he kind of did the post-mortem for the Dems and saying, so he said, let's see, what I find notable as an investment person about the 2024 election outcome is how the Biden and Harris teams were not able to convert

the following into more substantial gains of the polls. He said, close to all-time high and labor force participation rate. a proxy for a very strong job market, a surge in reshoring activity of U.S. manufacturing jobs after reshoring progress declined under Trump. An industrial policy that overwhelmingly benefit to GOP districts, 75% of the energy bill spending is going to GOP districts, many of which are located in swing states. The largest surge in manufacturing-related construction spending on record, highest year-to-day equity gains in an election year since 1936, and then the inflation

surge was painful, but it subsided in wages arising fast than rents. The Fed was able to raise policy to stem inflation without triggering recession for the first time in 60 years. And he was the only one I saw that this was kind of surprising. He threw some shade on Janet Yellen, surprisingly. And I never thought about it. So he was saying, listen, you had all these successes. You never took a victory lap for any of these.

And I think people sometimes from a political party wanted, like, there was no victory lap ever done on COVID. Or inflation. Or inflation. So we should have been taking a huge. We have more work to do on inflation. Because guess what would have been worse than the highest inflation in four decades? Inflation then a recession.

So the fact that they never took a victory lap on this stuff and they just wanted people have figured out themselves, guess what, if Trump had been president during the same economy as Biden, he would have been taking victory laps every single day. And I think that's, that, that was, it was a messaging problem with the Dems. And guess what, it might not have mattered anyway. But I think his point is that, like, you had some of these victories. Why didn't you claim them? You know, it's such a good point. I wonder if Trump had been president for the past four years, and let's just say that it was his first term, would he have been reelected? I think probably. It's, people hate inflation, obviously. It's hard to say because it wasn't like,

globally, it wasn't like a conservative versus liberal thing. It was incumbent versus non-incumbent. But yeah, you're right, the messaging. The messaging of the framing would have been so much different. And we spent, obviously, like I said, the last couple of years, trying to shine the light on the fact that the, like, the huge gap between how the economy was objectively performing and how people felt it was performing was stark.

But, like, that's not what resonates with people, right? And people like, stop telling me the economy's okay when my burrito cost $14. And there was a chart that people were sharing on the internet. it shows them it's a morning consult index of consumer sentiment so it's a daily view of how people feel and then they break it down by political identification Republicans or Democrats and immediately after the election it shut up right Democrats feelings plummeted Republicans feelings skyrocketed and like you take

this as something other than what it is it's it's feelings that's it's it's it's feelings feelings rule everything it determines policy and and the mood and everything. And it's not data, it's feelings. Yeah. And so another one that was going around was people who were misinformed about big topics voted heavily more for Trump than for Harris. And they showed talking about like Brian.

How do they measure misinformed? Because this sounds, this is the type of stuff that like really pisses off people who voted for one party. Well, they looked. So one of the questions was the U.S. stock market is at or near all time highs. And people who said, no, it's not voted more for Trump. And so the point was like, and inflation has declined over the last year and is near historic average. And those people said no.

So it could have been people misreading these questions. But it was, but the point, I think the point is that the negative story won out because the positive story wasn't being told and it wasn't being trumpeted. And again, it probably might, it might not have mattered. But it might have because Morgan's, Morgan Housel's big thing is like best story wins. Yes. So, yeah, the best story, the, you're right. So, but Semblis was saying every other. successful president in history has had their treasury secretary who's gone out and just done this.

Clinton had Bob Rubin, and remember Obama had Timothy Gaetner. Remember that name? Geithner. I can never get that one right. Gatner, Geithner. Okay. Trump had Mnuchin. And it was saying, like, so maybe the reason Janet Yellen didn't talk as much is because she was a former Fed chair and didn't want to step on Powell's toes for anything. But he was saying, like, that's part of the job usually for the Treasury to, like, say, like, look all the great stuff we've done. they didn't do that. So you're right. The best story wins. And obviously that other story won. So here's my, I'm looking through this with a financial lens. Since we did think everyone hated inflation so much, does buy-bye recessionary spending happen now? Is it gone forever?

Or is it during the next downturn, people are going to say, screw you, give me my $1,200 check again? I don't know. But I think we speak about like resulting in stories that we tell. Who's to say that inflation wouldn't have had. In fact, let me rephrase that. If we were in a normal recession where the world wasn't shut down and you sent out stimulus checks, what sort of inflationary impact would it have outside of the economy being shut down in the supply demand shock, right? Because you gave people all this money in the form of demand, but there wasn't any supply to give them the goods that they needed. Right. This was a total one-off. Yeah. So maybe like, maybe

Maybe fiscal stimulus during recession is the right call, but we're so afraid of what happened last time. Yeah. Yeah, right, this is a total one-off. The funny thing is, if you look at the path of inflation to how it got to where it is, Trump's COVID spending was literally the first thing that was the kindling. But guess what? It was the right decision at the time.

He should have done that spending. But that was the thing that got, so it was Trump's COVID spending, then supply chains, then the war in Ukraine, and then Biden's COVID spending. And it's kind of like, you know, the NFL player who one guy pushes the other guy and the other guy swings at him. The guy who swings gets the flag in retaliation. I just can't believe that no one ever mentioned on the Dem side. You know, Trump was the one who started the government spending. He was the one who, but guess what? It was totally necessary. And that's what they could have said. Anyway, I also think it's crazy that neither political party took wanted credit

for this whole election, three of our biggest accomplishments of the nation this past in this decade. Operation Warp Speed, which was like our moon landing for vaccines, energy independence, and then no recession from the inflation war combo. No one took credit for those in the whole election. And I know why they didn't, I guess. They didn't want to make people mad, but I don't know. I guess this is the way the world works. So what Matthew Klein said, so a lot of people are saying, well, the Trump policies

are going to lead to higher interest rates, right, because rates are already moving up. He says, would eventually lead to lower long-term rates. And his whole point is that maybe we don't get this kind of spending in the future. and that means that you should have, so bonds will be more of a protection going forward. You don't have to worry about the inflation as much. Does that mean that long-term rates should be lower in the long-term? I don't know.

A good zag, at least. That was my take. So are we done with that, the hindsight stuff? Again, we talk about this stuff in the edges, and it still might not have mattered, even if, you know, there had been touchdown celebrations and better messaging, it still might not have mattered because everyone hated the incumbent this year.

Yeah. So we have to give Theo his due. I guess this is the Shaq meme. I, you know, apology, I wasn't really familiar with the game. There was more stories on this Theo guy in France who did his own polling. The polymarket whale. The polymarket whale. I still stick with my idea that if this was, if he literally had $30 million in liquid assets and he bet it all on this election,

I still think that's a terrible decision from a risk management framework. But it sounds like he was more informed about this election than, I thought, and I guess this is another hindsight one where he said, he did his own internal polling and instead of just asking who are you voting for, he asked his neighbors who they're voting for. Am I naive? Is that, do other pollsters not do that? I don't know. Yeah. I, again, all credit to this person. But if he really is worth $30 million, he'd put $30 million on one wager, I mean, that's not true. You can't just look at the outcome and say, great idea, right? I put all my money, my life savings in the lottery tickets and one

of them hit. So it's a good idea. But it sounds like his. I would say, like, like, In his defense, this is not the lottery. He thought he had an edge, and apparently he did. So credit to him. Yes, but his line of thinking, yeah, it obviously worked. Okay, so through the close on Friday, we're recording this Monday morning, a little earlier than usual, because busy week this week, we're traveling, we're doing stuff. Michael has games to go to today.

My kids didn't get Veterans Day off. What to deal with that? Your kids did, mine didn't? I never know how the national school holidays work. It seems like everyone's on a different schedule. It is. Which I think somebody said, when we spoke with this last time, it's for like vacation travel purposes that if everybody had the same schedule. Oh, okay.

That makes sense. I can see that. Well, we do like a mid-fall break, and we already had it. So I think that was kind of our Veterans Day. So through Friday, the S&P 500 is up over 27% this year. So we're closing in on 30% gain. Everybody in the pool. I looked at this.

30% years. 18 out of the past 96 years for the S&P 500 have finished up 30% or better. So that's roughly 20% of the time from rounding up. There's also been eight times where the S&P has finished the year between 25% and 30%. So if we did 25% and up, now we're talking 27% of the time. It happens a lot more than you would think.

Samoa tweeted from S&P, 50 all-time highs this year, the seventh most in the calendar of year. Wow. I was wondering this. I was going to look this up. It's so crazy. much the market is up since interest rates at five percent or since uh since cash rates at five

percent yes and they've only lowered rates 75 basis points so rates are still above four whatever four and a half unbelievable if you like hit out in cash in well like early 20 23 or whatever yes if you timed the market to win any of the t bills you are which was under which which was seemed like a reasonable idea of the time yes so last week we talked about a stuff on the difference between the highest valuation stocks and lowest valuation stocks. And I think I was saying, well, isn't a lot of this just the biggest stocks? And Torsten Slack had a chart saying that the top 10, the average PE of the top 10 companies in the S&P is almost 50, pulled up by Tesla, which is like 120 or so.

But Broadcom and Nvidia and Eli Lilly, would you have thought Eli Lilly is trading for 62 times earnings? Is that a surprise to you? No. as one of the highest. So the average of the top 10 is around 50. The average of the top 4 is 40, and the S&P itself trades in an average 26.

So, again, I don't know if this lines up with that study from last week about the highest valuation stocks outperforming, but there are very high valuations for the top 10 stocks. Look at this chart from chart code, the forward PE for the S&P 500. So it's getting up there. It is getting up there. And, but does it matter?

Yes. Maybe. I mean, we've been, again, we've been on a spectacular run. And we've been asking for the last three months is this as good as it gets. Obviously, it got gooder. This is an interesting framing on value stocks and growth. John Authors via the daily chart book, the value factor had its best day since the worst of the pandemic after the election.

And he said, when growth is plentiful, investors look for stocks that are cheap. In these conditions, it's value that's in short supply, not growth. Yeah, interesting. Never thought about it that way. So that is the idea. Like, a lot of times you get these economic pivot points and then you see the changes in leadership and you wonder if this election is that pivot point. Well, I mean, it certainly was, whether it's sustainable or not or, you know, we'll see.

But a lot of people have been talking about credit spreads, whether it's investment grade or high yield. You threw a chart in here from Torson Slack. I saw somebody tweet this morning. It's at the lowest levels since like 1998, I think, just absurdly tight between treasuries and these other bonds, these higher risk bonds. And I saw somebody make a good point that, yes, spreads are at the tightest levels in a long, long time, which of course is indicative of risk appetite. and confidence in these companies' abilities to pay them back and all that sort of good stuff. But you also have to look at the absolute level of yields.

Like, it makes sense that when the Treasury, when the tenure is at 2.5%. I don't want investment grants bonds at 3.5% or 3% for that matter. Like, I need a bigger spread. When Treasury yields are 4.5% and the economy is healthy, it makes sense that you're going to be okay with a 5.5% yield. You know what I mean? This is also the kind of thing where it's like valuations not being a signal in the stock market.

You look at this and you go, just wait. One day when spreads blow out, you're going to look back at these low spreads and go, of course, that was a sign. But look at historically, there have been long, long periods of time where spreads have remained narrow for multi-year periods. So you can't use this as some kind of timing indicator that spreads are tight. So I looked over the past year, Smallcaps had a huge run-up the first day after the election. They're up like 6%. And over the last year, the S&P and the Russell 2000 are basically the same level. They both gained roughly 40%.

39% and small caps have had these huge run-ups and then they come back. Then a huge run-up, they come back. But I looked over the past three years. Over the past three years, the S&P is up 33%. Because remember, the three-year period includes 2022, which is a bad year. But the Russell 2000 is basically flat. Well, higher interest rates killed him. Yes.

But this is the kind of thing where you would go, okay, if you're looking for what has more room to run and what's cheaper and what's underperformed, it's everything else, right? And small caps is one of those everything else things. Yeah. Yes. Yes. Yes. All right. So the election was an inflection point for risk assets. Again, who knows how long this is going to last, but the good times are certainly here. It's funny, though, that's an inflection point because it's an inflection point, but also things were already going really well. Yeah. Yeah. It's like things just kept, they just took off a little bit more.

Yes. So, Balchun is tweeted, the amount of cash flowing into ETFs is ridiculous. About $12 billion a day for the past week, and normal this is $3 to $4 billion. And it's basically all risk gone. SPY, the Q's, small caps, momentum, high yield, banks, Bitcoin. Okay, we need exit, we need exit polling for this, just like they have at the voting booth. Because I want to know, when this money flows in and you're seeing these much higher levels going in, I want to know, like, where is this coming from people?

Is this money market funds? Is this bonds? Like, where are you taking this money from to put it into the stock market? Yeah, that's a great. On exit polling. That's a great thought. Speaking of ETFs, I had a conversation with Mb Faber over at advisorunlock.com. That's advisorunlock.com.

We are going to be creating, as I think we mentioned this last week, we're going to be creating a lot more content for advisors. And Mb Faber and Cambria have this new really cool. idea that's being launched with the good folks over at ETF architect. And it's a way for investors to seed an ETF, yes, seed an ETF with existing securities that ostensibly have appreciated a lot. And you own it because for the most part, who wants to make taxes? Right? It's like, oh, I've owned stock XYZ and I'm up 900% and, you know, would I put all my money in it today or tempts on my portfolio in today.

No, but I also don't want to pay the taxes. So the ways that you were able to get out of those into a more diversified basket, like with something like called an exchange fund, not great. So Meb and ETF architect built this thing where you swap your existing securities for shares in an ETF. The tax bill doesn't go away, but you get much more diversification. Yeah, they're deferring. And we've had this from so many people coming to us saying, I've got huge gains in these

stocks. I know I need to diversify, but how do I do it without triggering a big tax bill? Yes. This is the, I think there's so many cool things that investors have access to today that people in the past could only dream of. Yes. Right. The fact that there's so many ways to solve problems for financial problems for investors these days that they have. And obviously having huge gains in your portfolio, like, oh, that's a problem. But it is if you want, if you know you need to diversify and lay off some of that risk. And this is such a cool way to to do it. And Mab was saying that he has never gotten more interest in something in his life working in the fund industry. And it makes sense. This is an amazing financial planning tool.

Yes, it's really, really cool. All right, I want to talk about this real quick. Speaking of Alpha Architect, Larry Sweger wrote a piece, and he was highlighting a study by Robin Greenwood and Marker Salmon called the Disappearing Index Effect. And this is the summary of their findings. This blew my face. You know, it's one of these things where we talk about how stocks tend to go up in anticipation being added to the index and fall when they're removed. And I think historically that was true. When it's just one of the things, do you unite your head yet make sense? Apparently that that's not true anymore.

So they say, what was your Mandelbrot quote? Oh, hold on, hold on. The trend has vanished, killed by its discovery. They say the impact from additions grew from an average total return of 3.4% in the 1980s to 7.4% of the 1990s. Despite the increase in indexing assets, the average price impact decreased in the 2000s to 5.2% and then it fell further to below 1% in the most recent decade.

And they say a similar pattern has the current, Logan, come here, with index deletions. The average effect of being removed was negative 4.6% in the 80s, negative 16% in the 90s, down to negative 12% from 2009, and a statistically indistinguishable event from zero to negative 0.6%

for 2010 to 2020. So, stocks getting removed from the index doesn't kill them anymore. Look at this little guy. What's up, big man? We went to, stop, the botanical gardens yesterday for like a nightmare

before Christmas type of event. You know, I saw that movie in the theater. That I'm positive of. This is not a field of dreams type thing. I did too, actually. And it was a little bit scary for me when I saw it, but I'm a little bit surprised

that it's become such like an iconic classic. I remember not loving it. We watched my kids a couple weeks ago. It was like, I think it was too sophisticated for us, but it's weird that our kids love it. Because, yeah, love it. That movie is my kids die hard. They got an argument about, is this a Halloween movie or Christmas movie?

It's both. Yes. And I don't know. There's a song in it called This is Halloween. So my son stuck his guns on that and the girl said it's Christmas. You know, speaking of Halloween, Robin secretly loves scary movies. Anytime I turn them on, she's right. right there with me.

We were watching Rob Zombie's Halloween in bed on Sunday morning. And she's like, what is this? So stupid. What a beautiful way to start a Sunday morning. And, yeah, that movie's a bit demented. But she liked it. She said this is so dumb.

It was she was trying to, like, poke holes in the plot. How did he get back home? Listen, this is Halloween. This is not Shakespeare. Yeah, you have to turn your brain off for the plots for these movies. Okay. But I didn't realize this index stuff

existed. That is a surprise me. Yeah. All right. So this last week has been a whole like risk on love fest for anything. Conner Sen tried to look at the other side of the economy. And I guess I think I mentioned like we're at the sweet spot of unemployment and inflation and all these things

and the question is like does it last. And he said Trump took over a stable labor market in 2017 with the unemployment rate falling throughout the previous year and payroll growth steadily rising at roughly 200,000 a month. That's not true this time. around. The jobless rate has been on a rise. Hiring is below normal and payroll growth has slowed since the first quarter. You wonder if a sentiment number has actually changed that, if hiring picks up again, that remains to be seen. And he mentions the fact that mortgage rates are higher and they are moving even higher because of Trump's ideas. And he says, Trump's ideas on tariffs

and immigration restrictions may be what voters want, but they represent a risk to the economy next year at a time when consumers are feeling the sting of higher borrowing costs and important aspects of the economy are cooling. It's possible that's all works out fine. Trump is famously unpredictable when it comes to his promises and we don't know exactly what the future holds. for Biden's programs or for Trump's proposed tariff for tax cuts. What is clear now is that Trump has inherits an economy that isn't easy to manage and his campaign promises may only make it harder. So this is where I think a lot of people don't know what to think

because does he actually follow through with what he said he's going to do or does he rip up that playbook and just start fresh and see what happens? That's where the handicapping is impossible right now. Did you, Ben, did you know that, so the S&P 500 just crossed 6,000? Okay. Do you know where it was at the lows in March 2020? Oh, you've swacked us this the other day. What was it?

20-something? 2,200. Wow. That was a generational buying opportunity, right? And remember, like, maybe for a year, we were asking, like, will we ever retest those lows? And ever is a long time, but I don't know. I hope not. I mean, at this point.

So we were at 666 was the intraday low, I think, on March 2009. And so we've gone from 600s to 6,000. I think the Dow went from five-something to 44,000. Unbelievable. What a run. All right. So everyone is in on the reflation trade, right? Rates going higher, worried about inflation.

CBS News tweeted this out. If Donald Trump Redis to return to Oval Office, U.S. retailers that depend on foreign suppliers are prepared to pass along the cost of his proposed import tariffs to consumers, potentially leading to higher prices for a range of products. Now, I had someone in my family this weekend. say, hey, what's the deal with this tariff stuff? I don't know what these are.

I've never heard of them. If you had to put a percentage on it, what percentage of the election knows what this is or what it does? Oh, 2%. Pretty low, right? Yeah. But once people learn what they are, they're going to be pissed, obviously.

So that's what I, like, will he actually do it? Well, I think from a financial lens, the good news is this man is a narcissist and he cares deeply about the scoreboard. And the scoreboard is the stock market. And so I do think that his goal is not to do any harm to the economy or the stock market. And his economic policies perhaps may be misguided. And if they do damage to the stock market or the economy, I think he'll back off.

I do think that if he says, I'm going to put a 30% tariff on all products come in from Mexico. I think the stock market would hold his feet to the flyer and say, all right, and I think you'd get a sell off really quick. And then I think he says, oh, no, never mind. yeah but we don't know he's not like an ideologue with these ideas i don't think that why does you know what i mean i think he thinks that's hard to say i think he thinks that's what people want to hear and if the people via the market tell him bad idea i would hope that he listens although we did this we we did the tariffs in his in his last term and the market didn't like it and he

still did it so i don't know we'll say but speaking of like interest rates again this is a real estate guy You don't think he's going to put pressure on the Fed to lower rates? I said this in our little, on our election show last week that if he's dealing with seven, seven and a half percent mortgage rates, I can't imagine that he won't be trying to pressure the Fed into buying mortgage bonds or something or buying treasuries to lower those long-term rates because the Fed can't control those, right? The Fed is lowering short-term rates now, but long-term rates are rising. The long-term rates are the ones for consumers that really matter because now you're going

to get lower rates in your cash and you're paying higher bar. growing costs. That's not a great, that's not a great tradeoff. Yeah. All right, Ben, so Bitcoin is at 82,000. It's up, I don't know, 20% of the last week, you know, just been on a stupid, crazy run. And you got to give it up. I'm a bit flabbergasted is the wrong word because I was, I was and am a believer in higher Bitcoin prices and I have been for a decently long time. But I almost can't believe it. Like, they did it. They won. Think back to 20. 2017 or 2015, when we were really like laughing about Bitcoin as a concept, right? And they kept plugging away and they kept plugging away. And yeah, they said some crazy shit. But they won.

I mean, this idea of digital currency and a new form of money and potentially a new financial system, which we're not there yet. But holy shit, they did it. They won. I mean, if you're, if you are still screaming about Bitcoin, just stop. Like, just... Yes, the... Find something else to do. I was talking to someone about this last week, and he was an anti, and he was saying, listen, everything they've said about crypto didn't come to fruition.

It's not a... Doesn't matter. And that was my point. My point is it doesn't matter. Yeah. It's the adoption piece, and it's the fact that people think it's worth something, and that's all that matters. You know, what kept me on track with Bitcoin, and I've used this quote in the past,

Um, so I owe a debt of gratitude for this one is, is, is, uh, um, holy shit, uh, who, oh, Bill Miller, my gosh, from Leg Mason. Well, he used to be at like Mason, Bill Miller gave an interview in Barron's years ago. And he said something like Bitcoin supply is increasing at 2% a year. Do you think demand will increase faster or slower than that? And that was it for me. That was it. It was an adoption thing.

It always was for me. And it always, you know, uh, and, uh, and, And they won. Like, it's now being discussed on a serious level. Of course, the institutions are there. BlackRock and everybody else is coming through. And now you've got the president is bullish on Bitcoin. And if the central banks legitimately start buying Bitcoin, it's fucking wild.

Like, they did it. So someone sent us this meme that was going around. And it's a guy holding a coffee with a vest on, a finance bro, saying, I don't understand Bitcoin, but you're wrong about it. And someone sent us the take was the. fundamental issue is that Ben is a glass staff full guy. No one like that will ever get Bitcoin or why people buy. It's a glass staff empty asset. And I don't necessarily agree with this. This is a technological. I mean, I know that people who are in crypto have a lot of glass staff empty views about the economy and the dollar in these things. But this is a technological asset.

To me, that's a glass staff full asset. It's both. I think the ideological principles of where Bitcoin came from was glass half empty. But I need to defend Ben's honor here because Ben owns probably a lot more Bitcoin than, well, not probably, Ben owns a lot more Bitcoin than this emailer thinks. So credit to Ben. And I bought it in 2017 because I didn't want to be this guy. I didn't want to be the guy beating my head against the wall going, no one understands. I bought it because I wanted it as a hedge.

Like some people call it schmuck insurance. That's what I wanted. I didn't want to be a schmuck screaming about it. And the funny thing to me about crypto is every boom and bust, like when the bus happens, it's like this thing is over with the SBF stuff. It wasn't that long ago. Like this crypto is done. It's over.

It's never coming back. And then every time there's a boom, like right now, it's like, this thing is never going down again. There is no end. Well, but wait. I feel like check the tape because I think that, I think that, not that you and I were bullish in November 2022, but we did say, why isn't it much lower than 50,000? Yes, we were saying it should be at five right now.

The fact that it's not going there is like, uh, huh. All right. So you and I have spoken about this a lot. Not a lot. We've spoken about it recently, more recently. when do we sell? So for me personally, I've always said, I didn't ride Bitcoin from 70,000 down to 15 just to sell when it got back to even. And it's the only, and it's the only asset that I could think about owning that has asymmetric upside. So for me personally, I think I'd rather

sell late than sell early. But at 100,000, I will be forced to light it up a little bit. That's my line in the sand where it, because this, it's already gone in nuts. And again, to feel it. You're going to feel like you're going to eat it. So here's my, here's my plan. I will not feel like an idiot 100,000. I will have way more money in Bitcoin than I ever thought I would. The only time I've ever sold is to do taxis house harvesting. So I have more money than I would have ever thought. And when it hits 100,000, I'm going to sell half of my position. I'm going to do the regretmentization thing. I'm going to follow my own advice. I'm selling half in that way. That's the Grand Rapids Hedge.

Yes, but either way, if I go to the extreme, I'm going to probably feel like an idiot. So this is the way that this takes away the feeling of being an idiot. So I still have some on the table, but I'm also locking some in. And then guess what? When it inevitably crashes in the future, because it will. It'll crash at some point again. Yep. Then I'll probably buy some more back.

Um, anyway, just, just like stepping back, they really did it. And, uh, listen, it pains me to say it. I don't know if it pains me to say it, because I do own it. Um, so let me know where credit is due. Yeah, credit where credit is due. It doesn't pay me to say it. They won. Uh, it just, it is wild to think about, right?

Like, they had this idea and, of a digital. currency, and it sounded like, it sounded like insane. I've told the story. They willed it into existence, and so credit to them. I've told this story before, but I was at a speech, and Muhammad Ilerian was talking about it. This is like 2009, so Bitcoin was still, you know, the white paper's out and stuff, but no one owned it.

And they asked him, like, do you think that we could ever create another asset class? And he kind of said, well, no, everything's just a derivative of what's already out there. And crypto literally is a new asset class. I'm not like throwing shade at him for saying this, but like, no one. thought that this was going to be an asset class like this back then. Yeah. Yeah. All right. So Michael Saylor is still going at it. This beautiful maniac is buying. He bought 27,000 between October 31st and November 10th. He bought 27,000 Bitcoin for $2 billion and an average price is $74,000. So I don't know if this man is a genius or a maniac or both, but they have $12 billion worth of Bitcoin right now.

That is kind of scary. Like, is this guy going to become the richest man of the world? It is nuts. I mean, the stock obviously is going crazy. Someone, the reason that I'm going to be okay selling a little bit is because the crypto people are getting very cocky again. And they should be. But someone did a poll, what we were saying about Michael Saylor last week, and put it in a video and sent it around a bunch of crypto places. And people tag me on it.

And they always use the word tradfi. Like, look at these two tradfai analysts talking about Saylor. And then they, I sent you this, and they compared Michael Saylor to Nicola Tesla and the Wright brothers, which, which, again, he, it's worked out for him. But that's why I'm going to be okay because people are getting really cocky again. Well, but they deserve to be cocky. They won, like, the biggest prize of all. They do. But the Wright brothers, that's a little, a little far.

All right. So, so flows are going nuts. Nakerosy tweeted, I share's Bitcoin ETF has now surpassed, I share's gold ETF. in assets. It did this in 10 months. IAU launched in January 2005. Look at this chart, Ben. Wait, so what does GLD have for assets? Are we still a ways away from that? Yeah, I think so. BlackRock took in $4.1 billion of trading volume, trading volume on Wednesday, not flows, but I think it's a billion dollars. Okay, so GLD has 75 billion in assets. Yeah. But if you put it, if you put all the ETFs together for Bitcoin, against all the gold

ETFs together, it's closer than you think, probably, right? Yeah, so, I guess, is this advisors? Like, where is this money coming from again? At this point? I mean, the people who are just getting in now, and this has to be more hedge fund, institutional trading momentum plays, right? I would think. I can't imagine that advisors are now en masse.

You know what I mean? I'm not speaking for every, all 30,000 advisor, whatever it is. I'm sure there are some that are putting their clients in today, obviously. Right. But, like, a wave of advisors all the sudden chase... That's not how advisors behave. Right. Yeah, I don't think so either.

I mean, yes. But this obviously feels like a momentum thing to me. You want to talk about this? What is this? Oh, Sean sent us this. Which, by the way, a lot of people pointed out that Sean is actually an Irish word. And somehow the... Listen, we know that words come from different dialects,

and that's what makes words that don't look right to pronounce. but I'm just saying, let's just start over. Every word has to look like it sounds. That's all I want. I get it. There's some history there, but Sean is seen. Well, there's an alternate spelling, of course. You know, Sean Kemp.

That's true. All right, so Julie Chang tweeted this out. This is a top selling Lanar home community north of Houston. The house is currently listed for $163,000. It's two-bed, two-and-half bath, a thousand square feet, roughly. and saying, like, these things are selling like gangbusters. And I think we need to make more of these. I don't think people realize that the houses,

our grandparents were buying in the 1950s when they came home from the war, they were this size. They weren't two-story, they were flatter, but that's how big they were. They were like a thousand square feet. Where do you put the boiler in this house? And it's their room for a bucket.

Did you get it fixed yet? Yeah, of course. Okay. But I can see the, the appeal. of this if you want to become a homeowner. Yeah. It makes sense. I looked at the pictures, too. It's pretty nice. All right. A bunch of people send us this after I said, where's our private credit index? They said, it's been here for a while. Cliffwater Direct Lending Index. This thing exists. Covers $350 billion of assets and 15,000 loan holdings. It's gone back away as too, I guess.

Middle Market Corporate Loans. Okay. I'm not going to lie. I've been, involved in some way with private investments for the last 15 year, maybe longer than that. And I still have like the middle market, mezzanine, like some of these phrases. Well, I think middle market is just like, it's like midcaps, right? It's like a size thing. Yes. But I feel like they made those terms up to like mezzanine. Yeah.

Sorry, mezzanine, that's a balcony. right yeah just speak english damn it yeah all right i listened to a call this week for great quarter guys zillow and zillow was up like 20% the day they reported and how do i know this because i still own the stock one of the very few individual stocks i still own they've had a great year so it's there's a gap up at 84 so more room to run that gap's not going to get filled or we're filling the gap we're filling the gap but what how do you does the 20% gap up get filled down? Or that's different at? Perhaps. Okay. Adelaide. The interesting thing to me was how much their whole presentation was about

rental, the rental market. And I think they just see the writing on the wall that housing activity is probably just going to be low for a while. Like, it's hard to see housing activity all of a sudden just come roaring back. Oh, is it the 7% mortgage? Like, what gave that away? That might be it. So they talk about the rental, market, and they talk about how there's, I don't know, 26 million units that are single units, 22 million that are multifamily, and they look at kind of their tam of this. But I thought the interesting thing was the amount of turnover that occurs in these, what was it? Oh, average turnover is like 35% of online listing. So it's like, they call these long-tailed

multifamily units. So less than 25 units, more than 25 units. And it's, 30% for the long tail, 40% for multifamily. Are those numbers higher than you would have thought for rental? That's very high to me. I don't think so. How long do the people stay in a rental for? I don't know. Yeah, I guess so.

I mean, I guess that's the whole point. It's more flexible. 40% turnover every year? It seems like a lot. I guess it happens. All right, Duncan is none too pleased with DoorDash. Welcome to the club. New DoorDash night.

for everyone to be aware of. They allow restaurants to recharge your credit card after an order's place if they needed to adjust the price. So I just ordered two entrees that were 1999 of the menu 20 minutes later after placing the order. I saw an additional charge pop-up. They adjusted the price from 1999 to $28 per item. Is this just a New York thing? No, he doesn't live in New York anymore. DoorDash told me there's nothing they can do. Yeah, this is nonsense. He's mad at his private burrito taxi. All right. Scott Galloway had this. He talked about how this. He talked about how this This was another hindsight bias thing.

Everyone said, okay, podcasting was the thing that really swung the election. And he looks at the median age of audiences by cable news and primetime TV news and newspapers and talk radio and magazines. And all of those are 50 plus. Cable news is 70. It's the median age. Primetime TV is 65. It's the median age. Podcasting is 34 for the median age.

And I think that from our experience of talking to our audience, there's obviously a wide range. But that seems to make sense to me. But what, like, what happens to cable news and when a generation dies off? Do we graduate into it? It goes like this, and then, like, eventually it'll peak and then just, whoop, right? It'll just go all the way down. I mean, like, when that generation dies off, does cable news die off with it? Like, or do we just graduate into it?

Do we become our parents? Well, we do become a parents. That is a rule of the show. So that's what I'm wondering. But can you see your stuff? I'm never watching cable news? This is different. We're never watching cable news.

This is different. I tend to agree. By the way, one thing that we can all rejoice on is the fact that there's no more election commercials. Oh, thank God. I appreciate that. Bill Burr made a good point. He's like, why do we drake this election out for a year? It did seem way too long.

I think it should be like two months. That's it. Yeah, nobody changes their mind. You know, I'm not going to say what I was going to say. Let's keep going. I saw the wheels turning. I'm not going to say anything I want to say. That's okay.

All right. Wine cork. I got a few good tips on this. Take the bottle and tip it on its side and have some sort of receptacle underneath as some wine will come out. Take something along and feel like a fondue fork. You definitely have a fondue fork in all your drawers, right? I'm sure you. I don't know what, I don't even, I don't even, is fondue?

It's like the cheese, the melted cheese, then you dip stuff in it. Oh. You've never been to a melting pot restaurant before? Uh-uh. what's what's the meat that you cook in a liquid i thought that was fondue no fondue is cheese what's the meat that you cook i said i am not very cultured or worldly i don't know about these things okay so solely pressure so but it sounds like basically there's no good way to do this okay all right someone also says if your iphone isn't handy you need to hang up after a call

double click either ear pods it'll hang up yeah what if my hands are full that's the problem You know what? I felt like a hypocrite. And I think I told them myself, like, how would I know that the other person doesn't hang up? I guess because I don't hang up. Exactly. I told you, this happened with us the other day. It was like a six-minute call, and we just had a standoff. No one would hang up.

I finally had to hang up. We talked last week, and neither of us hung up, and it just kept going. Really? All right. So, guilty. You know, my mom used to always say a phrase, you can notice an elephant. An aunt and somebody else, but not an elephant than yourself. Guilty is charged.

I guess I don't hang up either. All right. Kept this one relatively quick. I have to go to Kobe's got an all-day lacrosse tournament. Like, we're off for Veterans Day. So a thank you to the veterans who served this country and who served this country. I think, I don't know. How many percent of people, like, have a family member or ancestor that was a veteran?

We were talking about this today. For most of us, it was, yeah. And we have a handful of veterans on staff of Riddle's Wealth. Shout to our veterans. All right. Recommendations? Are you caught up on the penguin? No, I'm still a little behind.

I would have been doing lately. I don't know. I will watch it, though. I'm going to binge it. I thought the ending was spectacular. Okay. But it was a one-season show? It's not coming back, or it is?

Oh, no, no, no. It's coming back. Oh, yeah. Okay, I thought it was a miniseries. All right. Really good. All right. So my wife and I watched my old ass on Prime this weekend.

We started it. Was it good? Okay. 90-minute movie, which is great to me. This is the kind of movie that you want to watch on your couch, not in the theater. It's a coming of age. You know the premise, obviously. Yeah, yeah.

The middle-aged version of herself comes to an 18-year-old to talk to her and give her advice. And I loved the setup. I thought it was, I don't think it's a Michael movie. I could be wrong, but I really enjoyed it. And there was, the weird thing is, is that I'm, I'm now seeing this movie through the middle-age version or the parent as opposed to the younger person. There was a moment where it's a daughter who's 18 going way to college. And she's having a conversation with her mother.

And the mom is talking about, like, I feel like I was just rocking you to sleep as a baby. And I'm thinking about my kids going away to school. And I had the same thing. Like, I got choked up at this point where they're talking about the daughter leaving for school. And I thought the ending was very well done. It was my wife kind of guessed it. I didn't guess it. but it was really good coming of age movie.

You know what? I think it is a Michael movie. How about that? Okay. You know, somebody, somebody, because, no, you know, I know coming of age movies are more your thing than mine. Somebody said to me recently, can remember who it was. I love how everyone abends recommendations. It's like, I don't think you're going to like this.

That's true. Give it a try. I really like. But again, I'm viewing it now, instead of the young person, I'm viewing it through the lens of the older person, the middle-aged person. And that's a weird change for me. I was just reminded of this. I was out to dinner last night with friends. We went to the thing in the Bronx.

So we went to Arthur Avenue for Italian food. And they have an eight-year-old, nine-year-olds who's in a stock picking contest. And he said, oh, talk to Michael. He loves talking to kids about stocks. And my friend was joking. And not that he was making a joke to the song because how would the son know, right? But he was, you know, in his mind, he was like laughing when he said that. And his eight-year-old said, he doesn't give me those.

vibes. All right. That's really young for stock picking contest, right? Smart eight-year-old. I'm glad they're getting them in early. All right, one more. We watched Mighty Ducks and Mighty Ducks too this weekend for our family 90s revival. And the thing I told you, I texted you, I forgot.

Emilio Sves is a terrible actor. Horrendous. Just really bad. All right. What's more impressive? What's more impressive? The Bitcoiners willing a currency and asset class into existence? or the Mighty Docs getting an NHL team?

I was telling my kids this. I'm like, you realize that this movie spawned an NHL team. What's more improbable? It is pretty crazy. I don't know. I think Adam Banks having his wrist be fine just in time for the last game was more improbable for D2. Yeah.

My kids were cheering at the end of both of the movies. That's great. It's so good. It's so good. All right, Ben. We've got gladiator coming up. You're not saying that. in the theater, are you? Come on. Of course I am. Oh, you are? Oh, yes. But here's the thing. Would you allow

your son to watch Gladiator 1? Because we went to see a movie yesterday with her family and we saw the Gladiator 2 poster and my son goes, I want to watch number one so bad. And I said, eh, fine. And my wife said, absolutely not. I'd let him watch it. You don't think so? Although I'm such a hypocrite. Like, I, you know, I saw a nightmare at elmshoot when I was 8. Yeah. But no, the Gladiator is definitely not appropriate for our kids. Of course it's not, but I don't care. No. All right.

Okay. Oh, thanks to everyone who signed up for our Chicago live event. I think we basically sold out the venue. Oh, yeah, yeah, yeah. So the venue was at capacity. A lot of people were disappointed that they couldn't come, but we have good news. We've got how many employees we have in Chicago? Ten?

More? A lot. We have a big presence in Chicago. All right. So we're getting phenomenal office space. I can't wait to get it. It's being built out as we speak. speak, and it's got, it's got a venue attached to it that is going to be great for podcasting.

Yeah. We'll do more stuff there in the future. Hosting. So, yes, we will certainly be doing that in the future. All right. Thank you to everyone for listening. Thank you to the veterans. Thank you to Duncan and squad.

As always, Animal Spirits at the CompoundNews.com. We'll see you next time. You know,