Animal Spirits Podcast - The Least Happy Age (EP.109)

Episode Date: October 23, 2019

On this week's show we discuss the never-ending death of the 60/40 portfolio, why it feels logical and irrational to invest overseas right now, why rich people continue to work, how Blockbuster blew it with Netflix, the Influencer bubble may be popping, a recession may not be on the horizon, the age people are the most unhappy, Paul Rudd and much more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnick and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holt's wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions and the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. You wrote a eulogy this week for the passing of the 6040 portfolio. Yeah, it was

the 27th time it's died in the last 10 years or so. You're a comedian now. Come on. Sometimes you you know when the ideas are going to hit. And this is actually one of the times where I felt that it was, it had to, right? This one had legs from the beginning. When you told me that you were writing this, I was like, ah, well played, sir. Yes, this was a good one. It wasn't just an idea. you execute it so thank you well a bunch people came to me and said hey you have to respond to this and i said all right i could do it in the typical fashion but maybe i might wait sorry one more interruption one more interruption yes nobody came to me nobody cares what i thought you're not feeling it huh okay you probably already rid it before too but this happens all the time and

my general feeling is if you think the 6040 portfolio is dead then you just think diversification is dead. Correct? I mean, that's the general feeling, right? That if you think that stocks and bonds aren't going to provide diversification, I disagree. I don't think people who think the 6040 portfolio is dead think diversification is dead. I just don't think that they think that bonds provide diversification the way they used to. I think that they probably think that you can diversify with commodities, with different strategies other than just long beta. So I don't think they necessarily think that. I just think that they think that the 6040 is dead. Which, guess what? They might be right.

One of the points they make, they say, and this is, I hopefully a little tongue-a-cheek, they say the relationship between asset classes has changed so much that many investors now buy equities, not for future growth, but for current income, and buy bonds to participate in rallies. And you put a thing in here that said, this is from sentiment trader on Twitter. The S&P 500's dividend yield is now above the 10-year treasury. The 40 months after this happened from 1970 to present, SPX was up 95% of the time. Who cares about that? You care about that?

Well, a little bit, because I was thinking, wait a minute. Why is this the case? So 95% of the time, stocks were up one year later. And I think this is probably just a case of good old fashion trend following. Dividend yields get low when prices go up. Yeah. And they make the point in here, to give the Bank of America people credit, they talked about how the fact that there's a ton of companies in the S&P that yield more than bonds. And I've written about this in the past. And I actually wrote about it the other day. So I took the earnings yield. on the S&B 500, which is just an inverse of the CAPE ratio. And then I took the 10-year treasury yield, and I took it back to 1915. And I combined the two to give you a portfolio yield for the 60-40. And it's now at the lowest level that it's ever been when you combine the two. Wait, but this is not a joke, but what about buybacks? Like total shareholder yield changes the earnings yield takes that into account because buybacks juice the earnings per share growth. Wait a minute. I'm fact checking in my head. That's correct. Unless it's not.

Okay. Nevermind. You did not just do dividend yield. Right. So this is earnings yield, which is just the inverse of the PE ratio, basically. And I use... All right. So what are you trying to say? I'm trying to say, I don't know, maybe the biggest point is that no one actually holds a US 6040 portfolio. People also hold REITs and they hold stocks outside of the country. And so maybe that's part of the point. And stocks outside of the S&P 500. Yeah. How about this? Everybody is benchmarked. to the 6040, but very few actually hold the 6040. That's probably a good way to put it. And I just, the thing is, if low yields are here to stay and people need to go out further

on the stock market curve, I think stocks have always been the biggest portion of the 6040 from a number of perspective. So someone actually sent me a piece from AAI, and this was Charles Roppelot had written this just recently, actually. And he said, there's only been one 20-year period over the last 92 years. where annual bond returns stayed mostly below 3%. It was 1940 to 1959. And there was 13 calendar years where intermediate term government bonds realized a gain of less than 2%. And eight of those years sold returns to less than 1%. So that's probably a pretty good approximation of bonds from here

for a while. I just lost you and I'm looking at you. Can you just say that one more time? Because that was just a lot of numbers. Like what are the implications of what you just said? They said basically what happens if bond returns are low, which they're probably going to be from here. And they said historically, has this ever happened before and what did a 60-40 look like? And so a 20-year period during the 40s and 50s, bonds were up less than 3 percent over 20 years. But large-cap stocks are up 14 percent. So a 60-40 still did 9.9 percent. Either way, if bond yields are low and bond returns are low, you're hitching your wagon onto the stock market somehow. Which is probably not a great wagon to be hitched to at this point in time. But the thing is, if bond yields are

low and stock evaluations are high, isn't everyone in the same boat? It's not just a 60-40. It's not just a 60-40. it's everyone, our returns are going to be lower. Because if your initial bogey is lower, then everything's going to be lower. Well, we're all fishing in the same water. So if you expect lower returns, I don't care what you're fishing for. You're probably to get lower returns too. And it's sort of funny how like the next recession, bear market, whatever you want to call it, we're all going down with it.

And I would say that even though the 6040 portfolio might be lower, might have lower returns over the next call it decade that it has in the last 100 years, maybe it's just in purgatory, not like permanently dead because it will have a comeback. And again, people have been saying this for years and years and years. So if we sound a little cautious, good. But I guess the bottom line is that do we think that people generally should make wholesale changes to their portfolios based on what's what's going on today with these cinder blocks? How comfortable would you be adding more money to stocks in taking it away from bonds because bond yields are so low? Zero. Zero is point zero. Because even if you think that bonds are going to have low returns, which you definitely should, like, that should definitely be a strong assumption. If you are 100% stocks, I think that you have a greater chance of getting thrown off and getting scared if there is a big decline. But you need some dry powder. Like one of the reasons to hold bonds is not because they're going to provide diversification in a bare market, which I think it will. But it gives you something to rebalance out of and into

stocks, which you're probably not going to do if you have 100% stock portfolio, unless you're making deposits, which is, anyway, this is a big topic that we, I feel like we've spoken a lot about. Why don't we move on? Don't you think the logical yet, seemingly irrational thing to do here is to own more foreign stocks that no one wants to do right now? Because if you want higher expected returns, you go where the dividend yields are higher and the valuations are lower. Like, doesn't that? So, Ripple. Isn't, yeah. Libra, actually, from Facebook is just prime for a

rip. I mean, that's like the obvious answer, but guess what? The obvious answer like that never makes any sense because everyone says that foreign stocks are cheaper for a reason. Those dividend yields are higher for a reason. All right. So yeah, European stocks yielding what, four and a half percent. So what do you say? We'll have this discussion same time next year. Yes, mark it down. I can write that eulogy again because it plays well. Okay, the New York Times had a piece called, actually, I love this, the title of this article. Why don't rich people just stop working? and I'm sure a lot of people have this thought all the time when they see billionaires that put in 80 hours a week. Elon Musk talks about how he works, what did he say, 120-hour work week?

That's kind of like the opposite of the tip. That's the opposite of the Tim Ferriss book. Elon Musk puts in 120-hour work days. Yes. So it says here, yes, 120-hour work week. That one doesn't roll out the tongue quite as well. It's a four-hour work week. Tim Cook wakes up at 3.45 a.m. That's the secret to his success, right? 345. Do you think he writes this Peloton when he wakes up? So they did some good studies in here. They said one study from Harvard.

Wait, wait. Sorry. Why would you wake up at 345? I don't know. You wake up at 345 so you can tell people you woke up at 345, right? Right. That's the only reason. One recent Harvard survey of 4,000 millionaires found that people with worth $8 million or more were scarcely happier than those worth $1 million. In a widely cited, it's 2006 study, rich people reported. or that they spend more time doing things that they required to do, not that they wanted to do.

One of the best parts of this piece I thought was the fact that one of the reasons rich people aren't happy is because they spend more time than most people with other rich people. And it gets back to kind of the relative thing. That they're still comparing themselves to other rich people and they can't really be happy. And they said, Wait, comparing themselves in terms of like net worth? Yeah. So 20% of the world's ultra high net worth individuals with assets of $30 million or more living

just 10 cities around the globe, six of those cities in the United States. Don't you think part of it is most people just get bored if they stop doing something? And I think once you hit a certain wealth threshold, especially if you're talking tens of millions of dollars, don't you think power is more alluring than money in most cases? And so these people don't want to give up their power. Yes, I don't think that's a controversial statement or idea. No, so I think that's part of it. Other thing is people get bored.

But doesn't everyone have that number in the back of their head? Like, if I just had this much money, I would just retire and do nothing. But that works for like three weeks, right? You don't think a lot of people have that in the back of their mind? I hear that from friends all the time. If I just had enough money, I would quit tomorrow and do nothing. Really? Yes.

That must not be the cool thing to do in New York, I guess. I don't know. I don't have friends, so. You go to the movie by yourself. Okay. Well, this is a good segue into an article that was in the Washington journalist this weekend about Carl Icon. Hold, let me just read this to you and tell me what you think.

Mr. Icon says Brett is the leading candidate to take over the firm. Once Mr. Icon is ready to let go, which he doesn't seem to be just yet. Quote, I'm not going to give up making the real decisions. I'm still in charge, but he'd get a piece of the action. Carl Icon is worth $18 billion. And this sounds like season three of succession. But who's going to want to stay if he's gone? Why would you stay with them if he's not there? What do you mean? He doesn't have outside investors. Oh, okay. So he just has a family office thing now. Remember he called for a high yield? He called it a powder keg in 2015. Yes. That just goes to show you that if you have $18 billion, you can predict anything you want.

No one cares. Yeah, I wrote a piece about that. that. And he thought that he was doing like a public service. In 2015, I remember he went on CNBC and he was like, listen, if people who saw the 2008 crisis coming only spoke out about it, it wouldn't have happened. Something along those lines. And I was like, wait a minute, this doesn't make any sense. What are you talking about? First of all, the idea that everybody knew it was coming. And if they had said something, what, then this wouldn't have happened. He had a rendering of Larry Fink driving a bus off of a cliff because the I shares high yield bond ETF was going to destroy the market.

I'm, like, deep in this Netflix thing. I'm not exactly sure how I got here, but I listened to, oh, I know how I got here. All right. So Ted Citey's puts out a monthly mailing list of, you know, recommendations. And I listened to WWF versus WCW on a podcast called Business Wars. That was excellent. If you have any interest at all in wrestling, this was a lot of fun. So when did the WCW go down?

That's a long time ago, right? They merged in like, I don't know, the aughts, so not 10 years ago, maybe 10 years ago, I'm not sure. So I went back through the catalog, which is vast, by the way, business wars, health. There's a lot of really good stuff in the catalog. And one of them was Netflix versus Blockbuster. So I binged that. So I tweeted about it. Somebody recommended another podcast about Netflix versus Blockbuster called Acquired, which I listened to.

It was only a two-part series. Also excellent, filled in another few gaps. And now I just bought the book called Netflix, which is probably overkill at this point. Is this all just like penance for shorting Netflix 12 times in 2011? You know what? My best trade ever was buying put options on Netflix's stock the day before they announced earnings after they had split up their rental service and their streaming service. The stock was down like 30%.

I made like five or 10 X my money. And I was like, oh, my God, I'm going to be retired in six months. You're just going to roll it over and keep doing that for every earnings release. I gave it all back in two weeks. Carl Icon. Okay, so Blockbuster in November 2006 launched a thing called Total Access. It was their answer to Netflix. Basically, it was an online rental service where you could rent the movies online, bring them into Blockbuster and return them. And they were doing really well. I was a customer. I had that service for a while. Oh, you did? Yeah. It was terrible. Okay. So they were doing very well. I think they took like half of Netflix's subscribers. Reed Hastings offered, I think, $200 per sub to buy it from. blockbuster. So anyway, the CEO of Blockbuster, Carl Icon, so Carl Icom bought a big piece of the

company, I think maybe 20% of the company, something like that. And he wouldn't pay out the bonus that was owed to the CEO. And the CEO was like, you got to be kidding me. Like, look what I just did. You're not going to pay me. Fuck you. I'm out of here. So he quit. They put in a new CEO, this guy who used to run 7-11, this guy, Jim Keys. And immediately he said, you guys are way over budget, $475 million, I think it was a number, on market. for this total access, we got to kill the whole thing and focus on the stores. So Carl Icon killed Blockbuster. Pretty much.

Like that's not a, I mean, obviously a lot of other things happened, but not a huge exaggeration. And so one of the heads of total axis is like, wait a minute, just talk to read Hastings. He's going to, he's willing to buy us. And Jim Keyes is like, no, no, no, shut it down. So this guy spoke to read Hastings later and was like, we were like, we were dying. We were totally good about you guys or hoping you guys would buy us and have a merger. Hey, Michael, are you think what I'm thinking? Big mistakes to business mistakes.

Oh, not bad. All right. Some other stuff that I, just some interesting tidbits. In 1998, Jeff Bezos offered Netflix $12 million for the company. Did you know that? Last week you said that he bought a piece of Uber. Do you think his idea is to just buy a small piece in all these young technology companies so we can just keep an eye on them and understand what's going on in the marketplace?

It's got to be it right. He's obviously paying attention. At their IPO in May 2002. they sold a quarter of the company at a $300-ish $350 million valuation, which is tiny. What if you would have invested $10,000 on that day? Last week we spoke about are these companies recession proof? And I think that these companies, not just the streaming companies, but a lot of the young tech companies, it's funny how today all the old stodgy companies are trying to like pivot to a subscription model

and trying to convince investors that they're tech companies. In the next recession, these tech companies are going to try and convince investors, that they're consumer staple stocks. Probably. And the thing is, when we said, are these companies recession proof? A lot of people tried to gotcha us and say, like, this is ridiculous. So I just did a piece for Fortune a few weeks ago where I found that in the last 10 years, Netflix has had like 30 different double-digit corrections or something like that. Just ridiculous amount. And I think 11 times they fall on 30% or more. And so they haven't really needed a recession to fall a lot. So that has nothing to do with the stock price.

We're talking more about business because obviously sentiment changes a lot on this company very quickly. So from October 2007 to the bottom in 2009, the S.P 500 fell 55%. Netflix gained 65%. Didn't lose subscribers, although it was very obviously young in history of the company. However, even though they gained 66% over the time period, they did have a 55% decline. So the business did well. The stock got hammered, recovered. Again, we have to sometimes separate business from stocks, which is, I know they sort of seem interchangeable, but they're not.

But you made the point in your piece about how terrible Netflix options were when it first released. I remember we had it right away, and there was nothing to watch on there. It was awful. It was terrible. Yes, it was awful. There was a story in the Wall Street Journal over the weekend. Online influencers tell you what to buy advertisers wonders who is listening. So maybe this is the type of thing where I am seeing something that I keep looking for in terms of my call that influence.

influencers have peaked. But you know what I am noticing, like, exploded over the last week is promoted tweets on my phone? So you don't see promoted tweets on tweet deck. But I guess on Twitter, on the app and on your phone, I'm seeing a ton of promoted tweets. It seems like every time I press refresh, which is, I don't, you know, have a big problem with it. But have you noticed that? I have not seen it on my end. You must be someone they're testing it on. Okay. This is the lead. Ipsi, an online cosmetic brand, was a pioneer in paying social media stars hefty fees to promote its eye shadow and lip gloss on Instagram posts and YouTube videos. Now the brand is leading the way again, this time by pulling back. So what's going on

here is that they've done a lot of studies and a lot of influencers are inflating the number of people that follow them. They're buying followers on Instagram and on Twitter. Here's a good number. An influencer marketing agency estimates that companies will spend between $4 and $8 billion globally in 2019, which is up from $500 million in 2015, but still a fraction of the $624 billion companies will spend globally this year on advertising. So part of the problem is that they just have a hard time tracking what they're actually getting out of these people. Yes.

And what's also happening is that it seems like this is like everything else, a winner-take-all market where they call it like there's nano accounts and then micro and macro and mega. And at the top of the line is celebrities, like Ariana Grande, who has like, I don't know, 15 million Instagram followers or maybe 150 million something crazy. So you're still sticking with your influencer bubble is popping thesis? It's changing. Put it that way. Okay. So this chart shows Instagram influencer engagement rates year over year in categories like travel, food, lifestyle, fashion, beauty and sports, and they're all down. Not a ton, but call it the one to four percent range. This is going to be great when the next recession hits and we can say that

influencers were a leading indicator. The influencers were telling you the whole time a recession is going to hit. The influencers are the fly in the ointment. Pay attention, folks. Canarying the coal mine here. Bill McBride had a piece on housing and recessions. He made the point. So maybe this might not be as economically viable as tracking influencers for recessions. But he said that when the year-over-year change in new home sales falls about 20%, typically a recession will follow. The only exception was in 1960s when a Vietnam buildup cut the economy out of a recession. And basically, changes in new home sales are still growing and he says last fall I wasn't on a recession watch

new home sales are up solidly year over year no worries is it possible we still get another like four years out of this thing and it just keeps chugging along where people just keep waiting for this recession to happen like if you look at the actual indicators that kind of such a signal these things and they don't always work things are still okay famous last words. When I was at March for the Fallen, I was talking with Eddie Elfinbine. And I was like talking about the stock market particularly, not so much the economy, although I guess in this point, in this case, I was using them interchangeably. Stocks like aren't going down. I know that's dumb because they can go down tomorrow. But like they are hanging near all time highs for so long that I was thinking like, what if this is not the ninth inning or the 11th inning, but it's really like the seventh. And we have another five years of solid gains. whether it's for multiple expansion or maybe earnings grow or whatever the case may be. But what if not only is the 6040 not dead, it was just born. See, you really are.

You really are ramp capital. You just outed yourself. How many people think that we have another five years ahead of us? There's been plenty of times where the economy has not gone into recession. Stocks have fallen, double-dits, a decent amount. So that kind of thing is not out of the realm of possibilities. But if like a recession is a few years away, yes, for sure, markets could continue to charge higher. Out of 1,000 investors, how many of them do you think would say that stocks will deliver

8% returns on average, or compounded, I should say, over the next five years? I would say, if you asked me, I would say, no, I don't believe that. And I would guess that 90% of investors would agree. The funny thing is, is that five years ago, no one would have believed that either. And it basically happened. But yeah, could it continue? another five years. That'd be a tough sell. Stranger things have happened. But doesn't that get us basically back to tech level valuations unless all of a sudden... Well, what if earnings start growing faster than they have? What if we discover like a big asteroid that is just full of gold and it's full of earnings per share and buybacks? And we farm it and bring it down to Earth.

Anything is possible. So let's stick with the 90% theme and the Eddie Elfinbine theme. A few weeks ago, he had a great tweet. Did you see this, the social experiment that he did? No. All right. So he tweeted social experiment. Please answer this poll. But let's see if we can make results come out exactly 90%, 10% go. And there was a choice for 90% and a choice for 10%. And I voted for 90% because that's what you're supposed to do. And 35% of people were contrarians. In other words, 35% chose 10%. When Eddie was explicitly telling you that you should choose 90%. All this tells you is that everyone on finance Twitter wants to just watch the world burn.

No, honestly, what this tells you, and I'm not kidding, so there was 13,000 votes. People want to be contrarians. That's fair. And I think being contrarian has sort of lost all meaning because everybody thinks they are one. Or people just don't like to be told what to do. Well, this did it do for you? It's interesting.

All right, Ben. Tough crowd. I saw on Twitter, Jim Bianco tweeted a chart showing cumulative of net issuance of equities. And actually, he linked to your post about how Bernie Sanders wants to ban buybacks. So I was going through the thread and I saw something in here that I thought was pretty big news that sort of seemingly went unnoticed. A lot of the narrative. You know, if you really wanted to show some outrage on Twitter, you'd say, here's something no one's talking about. That's about as animated as you get. So the narrative is that buybacks are

responsible for basically all the market gains, or at least a big chunk of it. Would you say that's a fair narrative? Yes, a lot of people think this. Ed Yardini just wrote a book. He does like these pamphlet books. And he was telling Barron's that the central bank appears to have forgotten that corporations buy stocks to help offset dilution from employee stock ownership plans, an amount that Yardini and Abbott reckon accounts for as much as two-thirds of their purchases. And the Fed agrees. In an email to Barron's, a Fed spokesman said, the current source for equity issuance data in the financial accounts of the United States does not fully incorporate issuance to employees by public corporations. Well, this seems to be like a giant deal that

the data source is not accurate. So the article says between 2011, the year that share accounts began declining in 2018, the average annual spread between the two growth rates was only 1.3 percentage points. If these buybacks really are having a tremendous impact, EPS would be growing much faster than overall, which is not the case. So this like a sort of mind-blank. that the data is not accurate. Wait, what Fed data are we talking about here? I don't know where you get this data. Is it Federal Reserve.org or whatever the case?

But like the public data that people are using to make these declarations is literally inaccurate because it is not showing share issuance. Okay, so it's not showing like the net amount, basically. So two thirds of the buybacks are going to share issuance. I'm outraged, frankly. So they're using faulty evidence here to make their points. Correct. It's not fault to effort. It's just fault the data is wrong, which is just sort of mind-blowing.

Okay. I think this is just one of those topics that people already have their mind made up either way. Yes. The data is probably not going to change that anyway. Some more good myth-busting. William Cohen wrote a piece in Vanity Fair about Trump tweets and futures, potentially being keen on it before the fact. And I am not a future expert, obviously. However, I was. reading that piece and I was like, I don't get it. Where's the evidence? Like, where's the smoking gun? It was just bizarre. And obviously, it went viral because of the potential implications of it. So then George Parks wrote a piece for Business Insider that completely just took a machine gun to it. Finn Twit jumped on this one immediately and said this one doesn't smell right. Okay, good. Because again, to a layman like me, it didn't really make sense. The idea that somebody can write something without the facts and just sort of connect.

collecting dots that might be invisible. George did a poll. This is interesting. Which kind of commentary typically confuses and obscures more relative to how much it explains? Sports or markets. And I had to think about this. I mean, markets are far more complex than sports. Not even close.

True. This is from the end of that piece. And I was ready to get it. It says on Friday, August 23rd, markets were roiling in the face of more bad trade news. someone bought 386,000 September E-minis, which is just a futures contract. Three days later, Trump lied about getting a call from China to restart the trade talks, and the S&P 500 shot up nearly 80 points. Potential profit on that trade was more than $1.5 billion.

So they're trying to say that this is insider trading lasts three days, apparently. This piece made no sense, and George Perks did a good job of dispelling this myth and talking about how this was a lot of different traders and not just one trader going here. But don't you think that if you're going to be insider trading from inside the White House, there are much better ways to do it than just doing on all these trade talks, which you'd never know what the reaction of the market is going to be anyway when this stuff happens? Yeah. Yeah, this was definitely. And I was glad that people immediately pointed it out and said this doesn't make any sense. So you had a similar reaction.

Yes. It made no sense. John Reck and Failer at Morningstar wrote this piece about the best predictor of stock fund performance. And I got to say, this one kind of hurt my brain reading through it, correct? There was one sentence in there that I read a million times. I was like, wait, what factor? I forget what the sentence is. But it wasn't specific.

And then it said, and then it revealed what it was talking about. The best predictor of stock returns are whether they're held or overweight by the best performing mutual funds, which is kind of hilarious. And I don't know what to make it. It's like, wait, could it really be that simple? They basically take the holdings of a mutual fund. And then they see whether those holdings are currently overweighted in top-performing mutual funds of the past. And then somehow that predicts the performance of those funds in the future because they have high-quality holdings. So past performance is an indicator of future performance?

They said because they wrote the paper in like 2005 or 2006 and it actually worked going forward. The funds that held junkie stocks held by bad managers did worse. Oh, here it is. Okay. This is in the first paragraph. When the authors sorted funds by the paper's new measure, the bucket that contained the lowest-decile funds recorded the single lowest-future alpha, the bucket with the second lowest-decile posted the second-loest alpha, and so forth. With one minor exception, the pattern was unbroken. So I read that sentence like three times, and I was like, wait, lowest-decile based on what? And then they tell you what it is.

Yes. He's pretty skeptical of it, too, even though it kind of worked, quote-unquote. but it does kind of hurt your head to think about it. Maybe it is that simple, but I think that's probably a case of those are the more high-quality stocks, so everyone kind of owns them. You know the scene in a national treasure where Nicholas Cage is like, could it really be that simple? We're going to steal the Declaration of Independence. Okay, survey, 45 is the least happy age. So this is a study in the UK. Two thousand Brits were studied and they found on that the more than half of adults agree that the older you get, the more difficult it becomes

to find amusement in everyday life. But then they also tracked where that point of least fun is and it's at age 45, which I think that actually kind of makes sense, even though we're anti-survey. No offense to British people. They're always unhappy? I don't know if that's sure or not. But do you agree that 45 is probably a decent age when people begin to be unhappy because, let's say you thought you were going to be a world beater and you're going to have this great job

and do all this stuff? and maybe it didn't really come to fruition? I think 45 is probably a decent age where hope is extinguished. Ask me in seven years. We both watched Living With Yourself this weekend. I finished it. So Living With Yourself is a new show. How did you finish that so fast?

I'll tell you. Living with yourself is a new Netflix show with Paul Rudd. Okay, I was going to save this one for recommendations, but we'll do it now. I turn it on. The first episode is 25 minutes, and I'm like, oh, I'm definitely here for this. So there's eight episodes, so the whole season is what? It basically felt like an extended movie. Right. So on average, so it's 200 minutes. It's like a three and a half hour movie.

Three and a half hour. So I watched six episodes on Friday night and I woke up Saturday morning and I finished it. And Paul Rudd is very unhappy, probably 45 years old. So there you go. Proof. Yeah, that is true. We're six episodes in. I thought the first two really drew me in and then it kind of tapered off, it's tapering off towards the end. Yeah, it plateaued a little bit. But here's the thing. For three and a half hours, I'll watch anything. Yeah, it's entertaining. I was thinking about this. Do you think Paul Rudd has to, be like the least polarizing actor on the planet right now like how many people would ever go ah screw that guy he's the ben carlson of actors is that good or bad i don't know if that's good or bad i'm the paul rudd of bloggers is that what you're saying yeah just you know just solid just just just

nice wholesome there's not people who like are fanatics of paul rudd but do you think there's anyone who hates paul rudd they go i'm not going to see that movie paul rudd's in it i've been all in up the paul rudd train since clueless he looks the same he looked older and clueless than he does now he has an age. And here's, here's something else. I don't know if you know this. If you add Paul Rudd with Tony Romo, you get Jeremiah Loan. Can you make a meme out of that for me, just so I understand it better? Yeah. Okay, so Vanguard has a piece, and they, someone from Vanguard passed this along to me. This is pretty interesting. And by the way, I think Vanguard is probably, no one needs like a pat in the back as little as Vanguard these days, because Vanguard can seemingly do

no wrong with all the money they're taking in. But I think that their research capabilities is, it's underrated. Would you agree to that? They have them really good, like, white papers and research pieces. Yeah, we've talked about this before, but who cares? Apparently, not you. I mean, did they really need any more positive prices? It's enough already. So they went back to 1950, and they showed how U.S. households are positioned in terms of stock ownership. And so in 1950, it was basically like 97% individual stocks, 3% funds. And that's just because the mutual fund industry was just getting started at that point, basically. And it goes, down by decade and really starts to change in like the 80s and 90s. So through the 80s,

it still is pretty low. Today, it's 43% is owned in funds. And this is a really cool chart that we'll put in the show notes. And 57% or whatever is still in individual stocks. And I've got to imagine the bulk of that individual stock money is just held by very, very few people in terms of like corporate executives and that sort of thing and business owners. But this is a really cool way to show how much influence mom and pop used to have on the markets back in the day. And they're kind of trying to make the point that this is a very good thing for individual investors because they've just taken a lot of risk off their plate and gotten more diversified. Any thoughts on this one?

You said it all. Okay. Anyway, I'm writing a piece for Fortune about this right now about some of the trends in asset management and how these things have changed. Obviously, high cost to low cost is a big one. You know what? I'm feeling left out. I'm going to start writing for Forbes. Okay.

I'm going to what up you or is that one down you? Maybe if you start writing for Forbes, someone will ask you for your thoughts on a 60-40 portfolio. That's not a bad idea. You can write Forbes contributor on your Twitter bio. This was really insightful, smart, call what you want from Bob Eager. So it's really hard for big ships to turn. And there was a whole piece this weekend by Robin Wigglesworth of the Financial Times. What percentage of your time in the last three weeks has been spent reading about streaming wars?

95%. A lot. I don't know why. I'm like all in. You're all in the streaming wars. I am. So this is what he said. It's a risky bet for a company that most recently generated $6.7 billion in quarterly revenue from its legacy television business. Iger argues that it would have been a bigger risk to sit back and do nothing as customers ditch cable for streaming options. This is necessary. He says the risk would have been essentially maintaining a status quo approach in how we are managing content. Who says this as a risk? This seems like a layup to me for them to do this. Oh, really? You don't think that this seems like a layup for Disney to do this? Well, you're skimming, and I'm actually reading, and I will tell you that a lot of people are saying this is very risky because they're not going to be casual positive. I've been bullish on this one from the start. This is going to be enormous for Disney.

Well, I'm just telling you that it is a risk financially. Okay. I don't see it that way. No one's buying DVDs anymore. People want to watch things through streaming. Well, Disney's not selling DVDs, but... Yes, they are. But they are? Who's buying DVDs? Little kids. We own DVDs still. The one's the last time you bought a DVD In the last few years Because a lot of those Disney movies

We just got the Lion King for my daughter last Because you can't get these streaming anywhere That's why they needed to do this So kids can watch their movies Streaming somewhere Because otherwise you have to buy the DVD They don't play it anywhere else My point is, sir

That you have to give Bob Eiger a lot of credit Because they could have kept going with the status quo And they would have been just fine Eh, I'm saying this was an easy decision If you were to listen to episode 16 of Netflix versus Blackbuster, when family video stepped in and started selling CBD oil, that was a risk. You're playing Monday morning CEO. Give them credit. Okay.

All right. 45% of adults admit they find it harder to make new friends. In fact, the average adult hasn't made a new friend in the last five years. Okay, so I agree with the first half of it. I don't necessarily buy the second half. Is adult a New York way of pronounce? announcing that? It's a change with me.

Okay. What do you say? Adult. Sorry, I just had to put that out there. I think I'm like 60, I'm like 60, 40 adult adult. That's definitely not as easy as finance and finance, right? That's cut and dried. Yeah.

Do you want to find new friends these days? Well, that's what I was about to say. What adult needs to find new friends? Not me. I think you're saying adult on purpose now. Well, I'm self-conscious to that. but strangely, if it wasn't for social media and blogging, I would have made zero new friends over the last 10 years probably. Well, no kids too. When you get older, you start to have friends

with your kids' parents. Those become your new friends. Have you run into that yet? Starting. You will as he gets older. Because nap times line up, they do want to do the same stuff. You almost have to do that. And then so your friends who have kids that are different ages or single friends, they completely fall off and you need to find new friends that have kids the same age. It just makes life easier. You know what we haven't spoken about? Not QE. Do you have any thoughts on this? Not QE? What does that mean? The fact that the Fed hasn't been pulling back on QE? No, they are engaging in more repurchases of treasuries. Do you live under a rock? Are you trying to, is this another one of your sleuthing things that you found out that no one's

paying attention to? No, everyone, do you even work in finance? Everybody's paying attention to this. Oh, okay. Well, I feel like you're trying to be like a Fed truther here today about what's going on. No, I'm not kidding. All right. So Ben is proven once again that he's a better investor than me because he doesn't pay attention to the news at all. Here's something I don't get from this piece that you put in here. They spelled treasuries with a YS. T-R-E-A-S-U-R-Y-S. Isn't I-E-S? That's fair. That's fair. No, it goes both ways. Y-S plays. Y-S plays. So James McIntosh wrote a piece about this. He said between 2002 and the summer of 2007, the Fed increased the amount of treasuries it owned by 25% almost every week the Fed bought more treasuries yet no one thought

that Fed was somehow engaging in QE. So Jerome Powell said that they're going to start buying treasuries again, but it's not QE and financial Twitter blew up. I honestly don't know how you missed it. Oh, okay, I did see this. I made a QE4 joke. Remember I did the poll? What's the best? I said, what's the best movie sequel of all time? And in the last one I put QE4 and no one got the joke. Well, some people are right. All right. So you did see this. Don't you think that this is just never going to end? The Fed is always going to be buying buying. for now on. I think this is never, like, 40 years from now, we're going to be having the same argument. Like, why are they still doing QE 40 years later? It's just going to never

stop. We're going to be having the same argument for the next 40 years because things never changed. But he ended this with many people are confused about how money works and things banks lend based on reserves, somehow multiplying the amount of reserve money the Fed creates. And I totally am with this. I have no idea. I'm very confused about how money works. These are the same people that thought that it was going to lead to hyperinflation because they don't understand how. I don't understand it either. It's like the Fed is buying this, but someone then holds this as an asset. It's like two sides of the same coin. You have an asset and a liability and they can sort of cancel each other out for the Fed. So don't more coins mean more assets mean more

inflation? Yeah. Have you been to the grocery store lately? Miles tweeted a chart from bespoke. That was fantastic. It showed the S&P 500 cumulative performance based on volume. And it showed days with above average volume and days with below average volume. And there used to be a theory. I guess some people still talk about it that if a stock goes up, but there's not a lot of volume, be wary because volume is not confirming. Yeah, we know those gains don't count. Banks do not accept that. And this just destroys it. Miles tweeted, basically, stocks go up when volume is below average and down when volume is above average. And the notion that rallies locking volume aren't real is fake news. You follow the volume stuff more than me. My theory is I don't

care about the volume. I don't know. I just... I don't follow volume. What are you talking about? When you do like your technical analysis junk... I am nonsense. I haven't looked at volumes since 2010. Okay. You're probably shorting Netflix on low volume. Listener questions. Please discuss whether or not office space is one of the most hilariously accurate,

underrated movies of all time. I don't think you can call office space underrated. I think it's properly rated. I'm going to zig. I think it's overrated. Oh, what? Okay. The Sandler one I could take.

You say office space is overrated? What is wrong with you? I mean, not really. No, no, no. Hold on. Not really. It's a very good movie. You just threw the line out in the hot take just and reel it in a little bit. You're just testing the waters. Not really.

I liked it. I don't think it's that funny. How about that? Like, did you laugh out loud during it? Yes, it's amazing. It's hilarious. What scene did you laugh out loud at? Anytime with Lawrence, the neighbor is hilarious. When they break the printer. Breaking the printer scene didn't do it for me. Okay, when they go to the...

I like the bobs. The bobs are, I mean, it's one of the most quotable movies of the 90s, I think. that people still use a lot of that. And the fact that it was made before, like, technology changed a lot and it still holds up. I think that it's, wow, I think it's one of the best comedies in the 90s, and that's a big threshold there. The office space is overrated. Man. Slightly. Moderately overrated.

You can email him, Michael at Terrible Takes.com. Okay. Any other recommendations besides Paul Rudd for this week? I do have some recommendations. Is there Trader Joe's in Michigan? Yes, I have one right by my office. Okay. You got to try this.

Dried baby bananas. Do you think they're made in a dehydrator? That's the word we couldn't think of last week that it, that's so many people sent us. Have you ever had dried baby bananas? Little banana slices. Is that what I said last week? They are so, so good. They are dehydrated, but sort of still juicy, kind of.

They're amazing. I don't really do dried fruit. Sorry, man. Try it. No, no, no. This is not, it's not freeze dried. It's different. You got to try it. If you don't try it, I'll send you a box. Will you just go get it? Sure. I'll buy some. You're not going to get it. You should start a food blog now that you're into all this stuff. Actually, somebody emailed me a person on Instagram that does like food recipes and I took them up on it. Last week, I made cauliflower alfredo. You steam the cauliflower for like 10 minutes or you boil it for 10 minutes. Put it in a blog. blender with some sauteed garlic, salted pepper, and milk, and you blend it, and it's like Alfredo sauce. Not quite as good, but a healthy alternative. Okay, I've heard a lot of people under the cauliflower-crusted pizza. I don't, that's got to be like sacrilegious in New York, though, right? No. Well, I eat it. So last week, we spoke about how important Twitter the platform

is. So in one of the Netflix versus Blockbuster, I think from the one from the business wars, you're laughing. This episode is going to be called Netflix, Netflix, Netflix, Blockbuster, Netflix. No, but listen. So there's this guy, Jeff Bukas, who was the head of Time Warner maybe. And it said, viewers are egging Bukas on to let them pay for us content only not through cable. In 2012, the guy named Jay Caputo puts up a website asking people to tweet how much they pay for a standalone HBO streaming service. Twitter blows up with a couple hundred thousand tweets in the first 48 hours after computer launches, Take My Money, HBO.com. So there you go. And today, it turns out, Mitt Romney has a burner account. I'm sure most celebrities have one, don't you think? So they can say what they want to say? I think there's a lot of people in finance, not just anonymous. I mean, we know that, but like big names that are lurking online. Okay.

So are you doing any other recommendations? Two more. Do you have any good broccoli recommendations? My broccoli is still growing. Funny you should mention that. Still growing. Not to brag. So I watched The Spy on Netflix six-part series with Sasha Baron Cohen as an Israeli spy.

Started a little slow. Overall? Fantastic. Worth watching? Highly recommend. It's not like a true story. Highly recommend. 100% true.

Oh, it is a true story. Yes. He was excellent. And then lastly, Morgan tweeted like something along the lines of like stop bad books immediately. So I have a trouble stopping books. I'm not quite sure why, but I did it and I feel like a sense of relief. I was reading a book called Blood Meridian by Cormick McCarthy who wrote The Road and no country for old men. And this got like just stellar, stellar reviews was like his magnum opus.

People loved it. I had a really hard time. I was like 150 pages in and I just stopped. I'm not sure if I wasn't paying attention or what. It just, it didn't catch me. Can I give you a hot take? Like, 99% of all old books suck. Like, have you ever tried to read the classics?

Like so many of the classics are possible to read. Well, okay, so this book I think was 1984. I did last year I tried through Dracula. Impossible. Yes. Absolutely impossible. Maybe it's just me. All right, I've got a recommendation for you.

I don't know if you're wearing spandex. on your Peloton yet or what you wear to work out? I do. Actually, I've been sideline. I literally have an injury. My freaking knee is finally starting to feel better after that Marshall the Fallen. I like really hurt my knee. Instagram got me. I was looking for a pair of new workout shorts. And I'm not usually one to spend on these, but this 10,000 workout shorts. I think they're like crossfit shorts or something. But they claim they're the most comfortable workout shorts there are and they say you get a 30 day free trial and you can send it back. So I'm like, all right. And

they're, I don't know, 50 or 60 bucks, more than I would typically spend on a pair of workout shorts. That's a lot. That's a lot. It is a lot. I think you get 10% off your first order if you sign up for your email. These probably are the most comfortable workout shorts I've ever worn in my life. They're amazing. They're called 10,000 shorts. They are so comfortable. What happens if you enter animal spirits into the promo code?

Yeah, we should be sponsored. Yeah. They give you your Peloton name. All right, I'm going to pat myself in the back here because you know what no one does anymore? Changes their mind. You know what I did? Change my mind because I read, I heard you paint houses. I told you not to read that.

by Frank Shearan. I had to read it because I'm going, I'm trying to change my mind about the Irishman. Wow. This is the book the movie was based on. Come on board. The water's still warm. Okay. I mean, there are some slow parts to it, but the story, why did they not keep the name?

I heard you paint houses. I'm sure they did some surveys on people about this and figure out the best name, but that line is amazing. So what did you think of the book? I mean, the guy is obviously a great storyteller. I don't know if he's a good storyteller or the author is, but he's got a wild story. The stuff about interlacing the Kennedys in there with all this stuff in Jimmy Hoffa and how the mob was trying to assassinate Fidel Castro when he took over in Cuba because he shut down all their casinos.

There's definitely a lot of good stories. I think it's possible the movie could be slow at times because there are a point, like, I don't know how they're going to explain a lot of this union stuff. The whole background, it makes for kind of an interesting business book in a lot of ways because the background on the unions and how labor actually got, like, do you think, my God, are you writing a blog post? I'm thinking about it because don't you think it would be like 12 things you can learn from a hitman.

Well, obviously, the best one is I heard you paint houses as a line. That was just an awesome line. Do you think he made that up after the fact? Because that's almost too good. No, no, no, no. I think that's what they said. Yeah. I mean, there are some great, great stories in here.

But don't you think that like, isn't it kind of crazy that maybe the reason wages grew so fast is because we had these mobsters and Jimmy Hoffer running these unions back in the day. Did you not read the book? I'm thinking here. Hold on. So are you suggesting that median income hasn't risen in 30 years since the decline of the mob? Are you thinking what I'm thinking? And also the fact that basically no one knew the mob existed until like the 1960s, basically, they thought it was all just kind of fake. And then they realized, wait, this is actually a real thing. La Cosa Nostra did not know. It means this thing of ours. and it was heard on government wiretaps. Very good book, yes.

I think the movie, if it's three hours long, there's going to be some slow parts, but the characters are all just really good. So we're seeing a matinee. Josh, Chris, Nick and I are seeing it the morning it comes out. I wanted to read the book because I wanted some more background on this. Yeah, I've come around and I'm in now, and I think the book is probably worth reading

if you're going to watch the movie, don't you think? You told me not to read it. You know what? I didn't want to give you a homework assignment. You could watch a movie and be just. It was fine. I enjoyed it. Again, credit to me for changing my mind. I think... All credit to you. I turn that hot take around. Yep. All right. Animal spirits pod at gmail.com. Send Michael an email bashing him for not liking office base and thinking it's overrated and we'll talk to you next week.

I did like it. You just said it was overrated. Slightly. All right.