Animal Spirits Podcast - The Four Most Dangerous Words in Podcasting (EP.88)

Episode Date: June 19, 2019

On this week's show we discuss are there more unicorns now because there's more money in venture capital, why we're bullish on the next gen of retirement savers, Mary Meeker's most important trends on the Internet, is the personal finance industry a scam, what works better -- fitness advice or finance advice, is QE all psychological, will Social Security run out of money, why do we need inflation at all and much more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by Y Charts. We're going to be talking about a little bit of their research today. But one of the reasons that we enjoy using Y charts so much is not only because it's a great place to come and do research on a bunch of different things, but they also do their own research and they kind of give you a leg up and a help by doing the research for you. So they've got a great piece on IPOs that we're going to discuss today. So remember, if you go to Y charts, mention Animal Spirits, sent you. They'll give you 20% off if you're a new subscriber.

Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holt's wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. There was an article a week or two ago from Techhunch showing that 151 new unicorns joined the list in 2018.

And a unicorn is a private company valued at a billion dollars or more. So in 2018, more than $135 billion was invested in these companies. Or wait, are they saying that $135 billion was invested or valuation went into those companies? It sounds like, it's got to be valuation, right? It said investors poured more than $135 billion into those companies. So you think that's actual cash, $135 billion was raised? It says it's a 52% increase year over year. I understand that.

But do you think, I'm saying, this is your story. Man, you put this one in here. But what do you think? What do we think? Do you think that's valuation or cash? Because if that's cash, that's a big, big number. Yeah, it says that investors poured in. I read that as that was money invested.

Cash, yes. All right. So 2018 was all. also the best year ever for unicorn exits. There were 39 that went public and 14 were acquired. And so far this year, there's six unicorns that went public. Uber, Lyft, Pinterest, Zoom, PagerDuty, and Beyond Meat, which is $131 billion in public valuation. Wait, what's, are you familiar with PagerDuty? I am not. No, I was just trying to figure out what that means, too. It must be some sort of throwback to the 90s. I have no idea. Never heard of it. So, all right.

So there's been 144 unicorns exits, and two-thirds of them were of the public variety. So Y-Charts did this thing, opposed five things to know before buying an IPO. And there's some good data in here. So only 38% of major IPOs have outperformed the broader market. And this is going back to, I believe this is 10 years of data. Do you have any thoughts here, Ben? Yeah, they also kind of broke it out by year. And you can see pretty much they go back to 2000.

2009. And pretty much every year, the IPOs are also underperforming the broad market by year as well. There was a couple outliers, 2015 and then 2018, actually. So what this is showing you is if you, so the average dollar invested in all these companies by IPO year, if you held them, so in other words, if you invested a dollar in all the companies that I peoed in 2009, in 2010 and et cetera, and for all those years, except for two, you would have been better off in the S&P 500. And there was. a decent actually from Jake that if you showed the cumulative returns, it might be a little bit different. That's possible. But I like how they're showing it all together because whenever we talk

about IPOs, we hear about either the big one that won or the big one that lost. So in this market, it's kind of been, you've heard a lot about Lyft because they kind of did terrible out of the gate. And you hear a lot about Beyond Meat. And you don't hear about some of these other companies. And they actually show here too that they show going back to 2009, the number of 25 largest IPOs each year filed by unprofitable companies. And it's been in the, call it six to nine company range every year from 2009 to 2017. 2018, it was 15 unprofitable companies that out of the top 25 that filed for an IPO. This is breaking out of a cup and handle. Now that I know what that means. So what is your main takeaway here from this story? Well, 2018 was the best you ever for

private companies in the private market and in the public market. And now, a ton of them are unprofitable. Josh and I were discussing this on the compound the other day about the fact that interest rates have remained so low. And you and I've talked before about, well, venture investors themselves don't care what interest rates are in terms of taking risks. But is it easier for these companies that are unprofitable and the fact that we do have more unprofitable companies going public? Is that being affected by the low interest rate environment where a lot of these companies are able to stick around longer? We've talked about like the zombie company thing, is that a real thing where these companies can stick around longer

because it's easy to access capital? Well, let me ask you a question. I'm not an expert here, obviously, but is it really that easy for these companies to access money? I guess the larger institutions can borrow money very cheaply. And those are the companies that are investing in these companies. So maybe I guess actually it is. Well, there's so much more money in venture capital now than there ever was before. And that money has to be invested. These investors don't want to just sit on capital commitments that never get funded. And so that money has to be put to work. And so a lot, even the, what's the big fund called the, the one that's investing in all these companies and putting billions into all the companies. The name is escaping me right now.

The vision fund. They can't just sit on that money. Their investors are going to want it to earn money and see IRRs. And that doesn't happen by the money just sitting there in cash or not being called. So I think a lot of these places are forced to invest money. Yeah. I think that makes sense. We're going to talk a little bit more about this, and Howard Marks wrote about this. Sticking with the electric scooter... Before we get into this, we have to discuss the elephant in the room here. Which is? You plagiarized me last week.

Were you first? I think actually, actually, we both plagiarized Vanguard. Yeah, we both plagiarized Vanguard. I think I beat you by a day because I posted mine on Friday and you did yours on Saturday. And we did, I was kind of offline most of the weekend. And I know I did a post about Vanguard does a report of a year called How America Saves. And it's a great report, but it's like 120 pages. And I saw you posting charts of it. So we both were probably going through it on the same day.

But it's a lot to go through. And one of our services to all of our readers is going through these reports and pulling out the best stuff. So, you know, pat on the back to us. We, you know, right? But we both did literally the same post about those graphs and charts and numbers from Vanguard. And didn't know it. We both had a very similar takeaway that retirees today might be in big trouble, but things are looking okay for the next generation. Yes, I think the fact that they're changing plan design and a lot of the numbers they show will put a link to my post in here and not yours because I was first.

But yeah, the funny stuff we had going back and forth, I slacked you and said, hey, did you do the same post as me or did I do the same post as you? And we said, oh yeah, I guess we did. And we said, we should start a podcast together. They show how these changes in plan designs are helping people save more. And the automatic enrollment feature is helping, like, I don't know, was it 80 to 85% of the people that are in those type of programs where they have to opt out instead of opt in are now saving. And the average savings rate is like 10%. And then also a lot of these plans that have automatic enrollment are also doing automatic increases every year. And so I think building those into the system now, especially for young people, is going to be so helpful down the line. I think the number was something along the lines of 50% of people under the age of 25 opted in, but only 12% opted out.

Right. And it was the same thing across income scale. So if you made less money, a lot of times you didn't opt in. But if you didn't have the choice and you had to opt out instead of opt in, it helped a lot. And it's crazy to think, you know, everyone would think, no, that doesn't matter. I'm rational. I would think through everything and just do it. But a lot of people just need that little nudge and that can help. And that a lot of that is. from the book Nudge by Richard Thaler that these plan design things are really, really important. Ben, did you know that more than a quarter of Lyme riders and Lyme is that scooter company use Lyme to connect to public transit? I did not. Is that what you're going to do? That's not the worst idea. It's not a good idea for where I live. And half of riders come from household earnings less than $75,000 per year. So somebody sent us this report showing that like these companies might be like sort of big data and they might be able to, you might be able to learn a lot about their users and transportation habits. This company, I clicked on job openings just to

see what was going on. They are hiring like crazy. They're like a gazillion job openings at the company. I thought it was interesting. But I saw a tweet last week. Roughly 35% of all personal trips are less than two kilometers. Did you read this in Great Britain? Why is it kilometers? It was a BCG report. All right. Seventy-five percent are less than 10 kilometers. So this person said, the economics currently don't work since the time to break even is 3.8 months, but the scooters only last for three months. Really?

The only last, like, I guess they probably do just get beat to crap, you would imagine, right? People throwing them down or running into stuff or. One thing we didn't mention last week on the show, I know we talked about this article from Fortune, but that article was highlighting a few people who make a living going around and collecting those scooters and bringing them back their drop-off points. Oh, really? Huh. So I don't know that I'm bullish on, forget like the safety stuff, but this is a, but this as a, I guess as a viable investment. You'd have to, I would think it would have to be Uber and Lyft that control this, wouldn't you? Because they already have that now. Well, Lyft is here. I don't think Uber is in the space. Maybe. I did see that the one that we, the bird one that we used mostly in Austin just acquired another one last week.

And that would be the other thing. There's probably going to be a lot of acquisitions in the space until there is just one dominant player. So Lyme put out a pretty long research report that I have not had a chance to read thanks to Vanguard taking up all that time with Ben hijacking me. But we'll link to this in the show notes. Can we put in Scooter Expert on your LinkedIn profile now? I think we're getting to that point. I feel like I feel like I'm getting there. All right. Let's talk about Mary Meeker's Internet Trends.

Is this the third time that we've done this? No, it's the second. Yeah, you love going through these reports. That's your thing, right? I do like these. Okay. All right. So let's just talk about some interesting slides.

So, e-commerce, that's a percent of retail sales. What would you guess if you didn't know? I guess it's hard to say, but... It's not as big as most people think. What is it? 20%. I would guess a third maybe. What is this?

This looks like it's about 15%. So plenty of room to run. And that's one of the things that always kind of is confusing and, like, contradictory about the Amazon stuff. You assume Amazon's taking over the world, but there's still so much stuff bought outside of the internet that there's still room to grow. Right. Right.

So it's nice to look at this data because sometimes the stories just don't really reveal the truth. Another one that falls into that bucket is nobody uses Facebook anymore, right? Yes. That's what everyone says. Wrong. There's a chart showing percent internet users using select platforms over one times a day. Oh, Contrere. There was a guy on Twitter who said his 12-year-old daughter doesn't use it anymore.

Neither were friends. All right. Never mind. Throw this out. On the very bottom, at 2, 4, and 5 percent is Twitch, Pinterest, and Snapchat. Then you move up a little bit higher. It's Twitter. And here's where Facebook just absolutely dominates.

So first of all, 15% on Facebook Messenger and 19% on Instagram. And sitting all the way up top is the king, Facebook, 30% of users, of internet users using these platforms. That's a lot. It's wild. And it still never, for whatever reason, never resonated with me. I think if I would have gotten into it younger, it would have. Here's one of the stats that Meeker put in her report, which is what, 300 pages? It's huge, isn't it?

Quite long. More than 50% of Twitter impressions now involve posts with images, video or media, whereas Twitter used to be text only. It's kind of funny how it sort of devolves into that where gifs and pictures devolves. I think it's actually a wonderful evolution. Don't you think it's like we're going from reading books to reading like picture books when you were kids or something? That's what it seems like. And obviously, picture says a thousand words or whatever, but it's fun. That's a crazy number to me. Here's another great one. Percent time spent in media versus advertising spending. And the biggest takeaway from me, from 2010 to 2018, mobile has absolutely destroyed print. How is radio still so high?

Like, radio hasn't come down that much since, it's come down a little since 2010. Again, we'll post these, but it's still pretty high. Because think about people that listen to radio in 2010. It's probably still the same demographic. They were 55 years old then and now they're Yeah, that's true. It's a kind of thing, yeah, where it won't die off until that demographic dies off. That's probably true. I think that's true. And TV is still hanging in there.

Can we take her to task, though, for this chart crime here about the USA income statement? Net losses in 45 or 50 years. This is the, no, you know what? It's so dumb. These charts like this are so trying to compare the U.S. to a household or a financial statement. It makes no sense. All right. Counterpoint.

this chart proves MMT or it just proves that you shouldn't view the government as a household exactly

it just yeah it's not a household you can't make the comparison the USA doesn't have profits and losses

okay but I do you think that she was doing this with a dot dot dot after it it looks like there's a dot dot dot before it

you're the one to this report I'm just using your I'm just using your notes here since you were the one who went through it see

I didn't want to double up on going through reports twice in the same week. So you're the only who I went through this one. So I'm putting the burden of bonus on you on this one. All right. Quote, student debt doesn't count because it doesn't affect your credit rating. End quote. That's an alleged quote from Susie Ormond. Do you believe that she actually said that? What's her name again? Orman, Orman, Sus, Susie? Ormond. What is it? Ormond. You said Orman. Ormon. Sorry. I thought this was, so this is in GQ and a lot of people were talking about this.

Even though I'm apparently on the other side of the Susie Orman debate where what did she say? It was the stupidest thing she's ever heard about my post about her. Stupidest thing she's ever read, something like that. I thought this one was too harsh. I'm actually, I think it's gone too far. So the title of the post is on GQ. It's called The Personal Finance Industry is a scam, which, side note, do you know what GQ stands for? Gentleman's Quarterly?

I honestly just learned that this year. I've been a subscriber to the magazine. I had no idea that's what it stood for. I just wanted to know if I'm the idiot here or anyway that's what how many do you ever get any print magazine sent to you anymore no do you do you Q and Esquire my two holdouts it costs like six dollars a year but what do you do with them I still like looking at them I mean they're probably 40% ads at this point but they're good for one long cover story like the latest GQ had Seth Rogen on it so do you find the cover story and then read it online no I probably could but I kind of like

that's one of the areas where I like having the physical thing there. Like there'll be 10% of the magazine that I like reading. And I probably could do it online. Sure. Why do you keep adjusting your bike? Oh, I don't know. I'd say, uh, that's just something I do.

It's not very good radio. I guess that's what guys in the biz do. Yeah. Yeah. That's a podcast thing. Okay. So this takes, Wait, hold on, hold on.

I don't, I don't think that this is too harsh at all. I think that a lot of the personal finance industry is a scam. The personal finance industry is a scam. for those of us who aren't already loaded. It's not that saving money is bad. It's that for some reason we have an entire field of experts who are supposed to be taken seriously when they claim that every single American can get rich. I agree with that. But you can't tell me that Susie Orman and Dave Ramsey is, they have faults. And I've pointed out a lot of them for them. I think that

they are definitely, they have some issues. But you can't tell me that Susie Orman and Dave Ramsey haven't helped some people who are on the lower end of the income or wealth scale. I don't buy that for a second. Listen, nothing on the internet is properly rated anymore. I don't agree with that. That's my theory. Okay. I thought this was a little too harsh to say that personal finance is only for people who already loaded. That is not true. Can we say that this article is like 85% of the way true? Yes. Maybe I'm just trying to be contrarian since I already basically wrote this article like three months ago. But yeah, I think I understand taking them to task. And I said like they're out of touch in a lot of ways. But I think that, I mean, they've both sold.

she sold millions of books. You can't tell me that some of the people who've read those books haven't, at least in some way, improve their finances because of that message. I will pull this number out of my ass and say that 15% of the readers are helped. Great. And if that's the case, that's awesome. I think that's 15? Sure. That's anything. It's hard to. 85% failure rate is awesome. Considering it's 100% failure rate for everyone else who's not reading personal finance books, sure, I'll take anything. Because guess what? No one wants to read about personal finance. ever like people hate that stuff i've i've pitched books about it and the editors always say no one reads personal finance it has to be like a self-help type of book and unfortunately that's the only way

people will read this stuff so if you can help a small percentage of those that read it i don't know yeah i think that's that's probably a win unfortunately because most people i'm looking for an analogy but i can't draw anything okay and again do i agree with everything that susy orman and Dave Ramsey, Susie Orman. Is she French? Sorry. Well, because you think that her 12% returns estimates are actually way too low. Yeah, right. If she would only put in that iron condor strategy. I don't know. I just think it's a little too harsh. And I just think, all right, we've, we've beaten the dead horse on the coffee thing. Everyone gets it. Like, let's move on. That's all I'm saying is like, okay, we get it.

But how else are people going to, I don't know. I don't know what the alternative is. hear that Doug Bonaparth, move on, says Ben Carlson. But then we have people like Remit, who we talk to, Ramit Sati, and I think he's helped out way more young people than something like that. But a lot of times his financial advice is geared towards people who have figured out their personal finances and moved up the scale a little bit. So unfortunately, the people who pay attention to this stuff are the ones who actually get it and stick with it. And a lot of people just don't do that. All right. Question. What do you think has a higher success rate? Personal financial advice or

like health gurus. Oh. Work out people. Personal finance advice by far. Really? Even if you say it's 15, what do you think the success rate is for, I think in the book that I read, mindless eating, it said 95% of diets fail and people gain all the weight back.

I take it back. I take it back. I think 15% is way too high. I'm going to cut that in half. Okay, but let's say diet success rate is, I think 7%. Let's say diet success rate is 5. If personal finance success rate is 10, that's way better. But I agree.

I don't think it's 10. Both are hard. And this gets back to the vanguard stuff where we need to design better systems for people and not just try to give them advice. That's the problem. Like tactics don't work. You need to build better systems. We need to ban candy. Yeah, that'll do it. Just don't let people buy large sodas anymore. Yes. All right. Social Security. What is this? The New York Times said next year for the first time since 1982, the Social Security program must start drawing down its assets in order to pay retirees of all the benefits they have been promised, according to the latest government projections. Unless a political solution is reached, Social Security's so-called trust funds are expected to be depleted within 15 years. And by then, benefit checks could be cut by 20% across the board. When's the IPO? Right. We need a unicorn. But here's the other side of this. The government can literally print money out of thin air. They are not, no politician is ever going to cut social security benefits for current people who are receiving it. So this is one of those things that

this is like the nightmare scenario for people and maybe we do get I don't see it there's no way that this ever happens I mean for people our age if they said hey instead of your retirement age being 65 is going to be 68 or 70 or whatever right that I can see but for current there's no way it would be political suicide you'd have to be insane to take that on and I agree I'm actually quite bullish I'm quite bullish on uh on social security so Daniel ashby a fellow advisor did a piece for um um Hold on, hold on. That's Ashby Daniels. Oh, Ashby Daniels.

Sorry. I wrote that backwards. That happens. Good catch there. Sorry, Ashby. So on his website retirement field guide, he wrote that the depletion of the trust fund does not mean Social Security is bankrupt. Payroll tax revenues keep rolling in and can cover 80% of current benefits initially,

declining to 75% of the end of the projection period. So it's not even like they have to cover the whole thing. It's just small pieces they have to make up. And guess what? Politicians will find that money because they do not. not want to piss off seniors who are receiving social security checks. That's not going to happen. Agreed. Okay. So Howard Marks had a new piece out, and he had this time as different quote, which one of them was kind of interesting because he talked about John Templeton's famous idea that

the four most dangerous words in investing are this time is different. The four most dangerous words in podcasting are, the battery is dead. Oh. No, the battery did not die. I just had to get the court to play. Oh, yeah, don't you have a plug for that? Okay. Yeah, I just got it. The foremost dangerous words in podcasting. So Howard Marks had a new memo out to clients and readers called This Time is Different,

and he had a little anecdote here that I'd never heard before. And everyone's heard by now, the Four Most Dangerous Words in Investing are this time it's different from John Templeton. And actually, he had a piece from October 11, 1987, which I guess that would be, what, a week before Black Monday almost, which is kind of crazy. but this piece said, even Mr. Templeton concedes that when people say things are different, 20% of the time they are right. That's one I've never heard before, which, you know, I'm kind of in the camp that things are always and never different. But anyway, you sent this piece to me

on Slack, and I thought it was interesting. Mark said, I think some part of the impact of quantitative easing, maybe psychological. In other words, QE stimulates the economy in part because people accept that QA is stimulative. If the Fed took exactly the same actions but did so without making an announcement, would the effect be the same? And so he's saying that quantitative easing is mostly psychological, which I actually kind of agree with. I think he's dead on here. Yeah, I thought this was interesting.

I don't really have an opinion one way or the other because I still don't really know what QE is. And the problem is there's no alternative universe where we can say, what would have happened if they didn't do QE? Would rates have been higher? Yeah. Would inflation have exploded? Whatever.

So it's kind of just fun to argue about. But I think he's true that it's a lot of it is psychological. Maybe on the part of investors, but do you think the average person had any idea what QE was or is? No. It's definitely one of those things where just phrasing it quantitative easing, like made it, I don't know, 60% of the population is immediately chopped off. I don't care about this. It sounds way too complicated. Like, do you think that small business owners were making decisions based on what the Fed was doing with interest rates? Well, I mean, it depends. It's like that's maybe, which is why it affected the stock market more than in the real economy. Yeah, that's true.

I mean, it gets down to this difference between interest rates and credit and how willing financial institutions are to lend money to people like small businesses. So that could have been impacted. But again, I mean, the Fed can buy assets and bonds and maybe they can do stuff to long-term interest rates that way, but they don't control the long end of the curve. So I agree that a lot of it is psychological. So the people who say that the Fed has been manipulating stuff, they probably don't like that idea, but I kind of agree with it.

So last week we talked about what happens to people who default on student loans. And actually in the New York Post, they had a story. And I think we've talked about something like this before. But this guy defaulted on his loans by basically moving to China and never coming back. And he moved over to Hong Kong to become a English speaking teacher and decided because he couldn't find a job after going to college. And he said, college ruined my life. And he said he left in 2011 with $30,000 in debt. And he had, hasn't looked back since and paid it off. So maybe that's the, that's how we get out of this student loan debt crisis. Wait, what did he do? He moved to China, become an English speaking teacher. Right. And he's never coming back? That's what he says. So he left his debt and hasn't looked back since. Okay. So that's a solution. Somebody sent us an article about his favorite leading indicator. I don't know if he was kidding or not. I don't think he was RV sales. And I don't know what to make of this, but they're down significantly year over year, like something 20-something percent. Any thoughts here, Ben? You're in the, you're an RV country.

It's, do you know how much an RV costs? 150,000. Like a big RV could be like as much as a house. Really? You could spend upwards of two, 300 grand on an RV. Okay. So the Fed needs to cut rates immediately to stabilize the RV market. Yeah. Well, maybe these people are worried that their social security checks are going to be cut. So they're not buying. RVs anymore. Do you think there's anything in here or do you think it's noise? It said 47,000 units shipped last April and 40,000 now. I don't know. Maybe the percentage sounds worse than the actual numbers. I'm going to lay it. I'm going to be honest here. I'm not a big RV expert, so I'm not sure what to make this one. Well, you don't have to know about RVs to

know about the RV indicator. Let's just get that straight. Is there a cup and handle showing on the RV? I don't know. Okay. Before we get into questions, I want to to talk about something that you talked, kind of talked me into buying. And I bought an Apple Watch. I thought you were going to say, uh, beyond meat. Oh, no, I, I haven't tried one of those yet. And I, I don't think I ever will. Well, I won't ever become a big eater of those. No, that's not, not going to happen. Real meat and cable. That's like my, I draw the line there. Sorry. So I got an Apple Watch, kind of, you kind of talked me into it. And I, I, I maybe purchased it for an irrational reason because I like to run three or four times a week. And I, I, I, I like to

listen to podcasts or music when I'm running. I need... So what's irrational about that? So I hate wearing the armband with my phone. Of course. So I wanted to buy the watch so I could listen to them through that, and it's much easier. And for that, I love it. And there's actually some other stuff about it I like, but there were some behavioral quirks

about it that I thought were interesting. So did they offer you the Apple Care when you bought yours? I don't know. It's $79.99 or something. And they said, if you pay for this and anything happens to your watch, it breaks, you pay 50 bucks for it. Otherwise, if you watch breaks, you have to pay for a brand new one again. Do you do that one or not? It's kind of like an extended warranty. So he said to me like it's whatever, 79.99. And I was like, oh, you know, I don't. And he goes, or it can be $3.99 a month

until it's paid off. And I'm like, so if I pay, if I pay $3.99 a month, is it going to be the same exact amount? And he said, yeah, it'll be the same, whatever the number was, $79 or $99. And I was like, it's just how they frame it. I was like, oh, $3.99 a month, that's nothing. Yeah, sure that. But if it was 79.99, I was like, oh, that's way too much. So I got the monthly plan, and it's like how they frame it really. You know what? I don't, I don't think that's irrational. Like, that would fall in the, in the bucket of what financial economists call irrational behavior. But I don't think that's irrational. You don't want to pay $80. You'd rather pay $4 a month, even though it's the same thing. Yes. It's just funny how they frame it. It's like the doctor saying, you have a 90% chance

to live or a 10% chance to die. It's the same thing, but how you frame it can can change a lot. And the other thing is so it tracks you if you start going for a run it'll it'll say it looks like you're running and then it's say do you want us to record this run and so the first time i did it i clicked yeah and it's showing my pace and it's showing the amount of miles i've gone and it's kind of weird because it gets into your head and you get like competitive with yourself with these things it's just it's kind of crazy how the technology can and i think that it's going to have a huge impact on health stuff in the years i had too where and it gives you these these these things during the day like stand up you haven't you haven't stood for a while it's kind of

crazy how this stuff will i think get into our head someday and i think that maybe the watch has more legs than i anticipated when i first got it i kind of like it but it's it's kind of in my head a little bit in some ways but you like yours though right you're a fan i do i didn't get the mobile one though i might need to return and get so i got i did get the cellular one and it's an extra 10 bucks a month on your data plan for mobile so that to me didn't you know that was a no brainer. But if they would have charged me, whatever, 250 bucks right off the bat, I probably would have said no, but it was 10 bucks a month. Anyway, question time. What's the deal with inflation? Is it bad for our, it's bad for individual spending power or a roads of value for money, yet

economists want 2% inflation per year? Why do we need inflation for a healthy economy? Can we have a goal of zero percent inflation? So I'm going to write a post about this, so I want to hear your thoughts first before I get into my thoughts. I don't want to spoil it. Okay, well, here's my, here's my thoughts. I want you to give me some, well, I have thoughts. Okay, and then you can give me some feedback on my thoughts. Go ahead. No, you go. Okay, the reason we need inflation, it's another psychological component because deflation sounds wonderful, like the idea that, oh, prices go down. Who wouldn't want prices to go down? But that's like what causes a death spiral for the economy. Because if prices are going down,

then it turns into an expectations game where people are going to wait to buy stuff because they think prices are going to continue to go down. Whereas in- Okay, I disagree with you. Really? That's basically what happened in the Depression and why we had to run on banks. No, you're right. That's why deflation is bad. But I think the reason why they want inflation is very simple. If the economy is growing and people are becoming better and more employed, then you should expect wages to increase, which is directly tied to inflation, probably the biggest component of it. So it's just another way of saying that, like, you can't have a healthy economy without inflation, which is sort of what we've had for the last several years, which is kind of confusing. True. At least confusing to the people that are running the government. It's not that inflation is good. It's that deflation is really bad. So inflation is like the lesser of two evils. I think it's just, deflation is way worse than inflation is bad. So, all right. I'm seeing the CFA get dragged on Twitter this week as a potential waste of time and money. I'm considering a move to finance from engineering and beginning to study for the CFA versus an MBA. Which would you guys recommend? We get this a lot. And so I have a post that I wrote on this, but what do you think about the CFA getting dragged? I think it's just Twitter. Whatever. There was a

a great meme, like the boy looking at the girl, and it was CFA Wall Street data quants. Yeah, that's pretty good. Did you see that? Yeah, that's not bad. Here's a thing. The people who drag on the CFA the most are usually those who are already pretty secure in their career. Or CFA's. Yeah, or CFA. And I have it. You have it. It's easy to talk about it now and say, like, oh, I don't need it. Like, Warren Buffett doesn't have his CFA. What does anyone need it for? But Howard Marks does. But when I got my CFA, I was. three or four years into my career, and it definitely helped me advance in my career. Like, my employer expected I would have the CFA, and I was studying for level one going into getting

my second job, and that definitely played a role just studying for the test in getting that role. So I think in terms of career, there's a lot of places that just expect you to have it. And unfortunately, whether or not it helps you make better investment decisions or not, it's maybe irrelevant, but it proves that you actually want to be in this business and put in the time and effort. So for the people that need it for a career advancement, I see no problem with going through the program for that aspect of it. We've both written about this for those interested, we'll link to this on the show notes, but I don't want to beat this dead horse anymore. Okay. I have been very slowly been reading range. And I thought, I have like mixed

feelings. I thought that it was sort of boring in some areas, but the longer I read it, there's some stuff in there that's really, really thought provoking. I don't know why it's taking me so long to get through. It's the kind of book where each chapter could be its own standalone. I don't think they really tie that much, tie that together. Yeah, I guess some chapters are way better than others, is what I would say. But I was thinking, I was reminded of this when I was watching real sports on HBO. And do you ever watch a show, Ben? It's been a while, but I occasionally watched in the past. I love that show, but I kind of never watch it, which doesn't make sense. Like, I don't DVR, but when it's on, I watch it and I always enjoy it. So Norway has

been excelling in international sports, and apparently they did really well at the Olympics, which I don't remember. And one of the reasons why is because they let kids be kids when it comes to sports. Like they don't keep scored. There's no like mandatory, anything like that. So that reminded me of a lot of the stuff that's in range. That makes sense. Yeah. I like the idea of like giving people a broad background. And I've kind of, I've always thought too in the investment world, being more of a generalist can be a lot more helpful in being a specialist, especially when starting out and trying to learn what you like because there's so many areas to go into. And I definitely liked how he framed that, that a lot of

good athletes end up coming from a diverse background of interest. Any other recommendations? No. Okay, I had an epiphany about movies. Go ahead. After finishing Fleabag, did you finish it yet? No, no. I won't give any spoiler alerts, but... Wait, you finish the second season as well? Yes, and the second season was awesome. Like, the first season I like, the second season, and here's my epiphany, because the second season was basically a movie. It was like a three-hour movie that was split up into six different parts. And I've complained for years that, like, over the especially last four or five years, there really haven't been that many good movies. Like, if you look at the Oscars of Best Picture or even the category, I mean, you couldn't argue that the movies are getting any better today, and I think they're getting a lot worse.

Let's get out the best movie the last few years? Probably, don't you think? It's probably the most memorable. There just haven't been very many memorable movies. Entertaining movies are not good. It's Get Out. It's Get Out and the Meg. Yes. And Alien versus Predator 16. So here's the thing, though. If Fleabag was made in the 90s or early 2000s, it would have been a crappy, cheesy romantic comedy. But because we have streaming now, TV picks up the slack for bad movies. And so I didn't realize someone sent me some stuff after I tweeted about it. Fleabag was made for two. seasons. It's only two seasons. So the end of the second season was like the series finale. And the whole second season was so good. And she freaking nailed the landing on the ending. It was so good. And afterwards, I told my wife, I'm like, that was an awesome movie that we never would have got before streaming existed. And so I think my epiphany is I can stop complaining about there being so many bad movies because that has given us really, really good TV shows. And maybe in the

past a lot of the good actors and actresses wouldn't have done TV before. Actually, let me ask you a question. I think you lost me. I think you lost me. How has it picked up the slack for shitty movies? Because a lot of the good stories in terms of like drama and comedy has gone from movies to TV shows. And so you just get a little, it's just you get a longer version of a movie in a TV show

and more character development. And again, this would have been a shortened, it would have been some cheesy romantic comedy with Matthew McConaughey and Jennifer Aniston or Adam Sandler or something. And it wouldn't have been. Speaking of that, I follow, I think. Speaking of that, there's a new Adam Sandler movie on Netflix with Jennifer Aniston. There is. Oh, gosh.

Oh, boy. I mean, good for him. He's bringing in the paychecks and all, but I couldn't tell you the lesson. I watched a Sandler movie. All right. Thank you for wide charts. Thank you for listening. Send us an email to Animal Spiritspot.

com, and we'll talk to you next week. Thank you.