Animal Spirits Podcast - The Recession is Over (EP.194)

Episode Date: March 10, 2021

On this week's show we discuss the wreckage in growth stocks, the outperformance of value, what the massive fiscal stimulus plan means for the economy, the inflation worry, the enemy of ARK, comedy sequels and more.   Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by interactive brokers. Interactive brokers charges margin loan rates from 0.75% to 1.59%. Their clients can also earn extra income by lending their fully paid shares of stock. Join interactive brokers' clients from 200 plus countries and territories to invest in stocks, options, futures, funds, and bonds globally. Minimize their cost to maximize their returns. Rates are subject to change. Learn more at IBKR.com slash compare. Welcome to Animal Spirit. a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holtz Wealth Management.

All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. All right, quick plug before we get started. We're hiring. Ritholt's wealth management is a fast-growing, registered investment advisory firm, and we're looking for a highly motivated tax staff member to help our finance and tax team with a variety of tax and accounting projects. Key tasks include but are not limited

to bookkeeping, reporting, billing, invoicing, and tax filing, as well as assist our financial planning team to service high net worth clients with tax planning needs. I grab that from Josh's blog. So you can read it. If you think this sounds like you, please reach out. Ideally, this is an entry-level position, somebody with some experience, but not somebody with 30 years of corporate accounting. That's not the job. And this is a remote position, work from anywhere. That's right. We're a remote company. Reach out. All right. I have a question for you. Please. How does it feel to know that there's a 35% chance that a story written about you could be used in a Michael Lewis book about the current bubble we're going?

What are the odds there? I don't think it's going to get that big that Michael Lewis is going to write about it, but maybe. Okay, just the current, the everything bubble, I guess, if that's what we want to call it. Okay, this is from the Financial Times, a story called Collectors Pay Big Money for a slice of blockchain basketball action. And it goes, case in point, Robin Batnik, a high school guidance counselor from Long Island, New York, said she became immediately enthralled with collecting top shop moments after her husband suggested it was an activity they could do together. The company that trades gifts together stays together. Words were put in my mouth, but I guess it's a fair, it's a fair takeaway. My favorite part.

And I quote, he was like, I have a confession to make. I just spent $2,500 on a hologram, she said. That's pretty much verbatim. Okay, we'll get more to this stuff in a moment. But yeah, there was a Financial Times article about NBA Top Shot, and you're apparently the go-to for, I don't know. The funny thing is, this article, if you're reading about someone else, you'd say, this is satire, right?

This isn't real life. Oh, totally, totally. I spent $400 for a Duncan Robinson moment. He isn't even good. I wanted to punch myself in the head. All right. Moving on. So the $1.9 trillion stimulus package passed.

Here's the breakdown of the numbers. $1,400 checks per adult and kid up to a certain income threshold limit. 75 grand, a single filer. Yeah, I think it goes at $150 for a couple. Unemployment is kept at $300 per week through September. $350 billion for state cities, $3,000 per kid. ages 6 to 17 and 3,600, 0 to 6, that's for the child tax credit. 170 billion for schools, 100 billion for public health.

These numbers are just massive. 100 billion for public health is $800 million toward aid for homeless youth and $27 billion towards emergency rental assistance. I think at this point, because the 2008 bailouts were so geared towards Wall Street, not Main Street, I think people are just assume all bailouts in government spending must be bad. So, win for Main Street? Conner Sen tweeted, a middle-class family of four gets $12,000 from this thing between checks and the child tax credit. And he says, that's an enormous amount of money with no precedent in American history.

I agree. When you look at these numbers, I almost think that we're underrating the importance of this. These are huge. So they looked at the Washington Post had this article. They broke everything down. They looked at the three spending bills, one from March 2020, December 2020, and then this latest one in March 2021. The original one went 40% to individuals, 30% to businesses, 10% to government, and 19% to other, which Lord knows what that means. This one is 54% to individuals, only 4% to businesses.

Yeah, 27% to government. So could this have been better? Yes, you could always say that. Is this a huge improvement on what the spending was in 2008? I think so. 54% to individuals. So they said a family of four in Massachusetts in which one parent lost a job would get around $66,000 from the government, including $15,500 in assistance that would

have been available without the stimulus. So that extra 50 grand or so comes from this. that's for someone who's filed for unemployment, a single job loser in Tennessee would get around 44,000, including 6,200 that would have been available even without stimulus. So obviously, those are the people in need, they lost their job. There's other people who didn't lose their job, their business is fine, they're going to get a check. It doesn't seem fair. And then there's other people who were just on the other side of this threshold, who probably should have got some money, and they're hurting more than you'd think, and they should have gotten it. So it's never going to be

perfect. But this amount of money, every time is different, obviously, right? We always say this. You can't say this time it's different because every time is different. This money, I don't know what this is going to do. I can't even wrap my head around how many changes this could bring about. Not only from an economic perspective, but like the future, I think everything's on the table at this point. This is like the start of universal basic income, I think. Crazy enough, it's going to start in the Trump administration.

You're going to be able to date universal basic income in America if that happens back to Trump. It's a child tax credit one, I think is the big one, that I guess it's only here for a year. They're going to try it out and then the Democrats are going to try to get it in. More than 93% of children, 69 million would receive benefits under the plan at a cost of $100 billion, and the monthly checks, they're going to do it in checks, I guess, are going to be up to $300 for young children, $250 for those over five, would cut child poverty by 45% and more than 50% among black families. Now, the big thing for people in the investing

world to complain about is, okay, who's going to pay for this? Eventually, it's going to have to be paid back, and then isn't the risk inflation? And my point is, if we're going to risk inflation and spend a lot of money, isn't this something we want to risk it on? We could cut child poverty and half. Isn't that worth the risk? Obviously, yes, there's risks here. I agree. Things could get out of hand. There's no way you can say that inflation is not a risk here and it's not going to get out of control, even if you think that maybe it shouldn't. But that is a risk. I think that it's worth taking in this. If you're spending it on something good, right? If this money is all going to banks and airlines and whoever, then no, it's not worth it. But maybe in this

instance it is, even if this stuff makes you mad. I agree. Matthew Klein provided the other side of this, that maybe it won't lead to a spending boom like we're thinking. he said, rights for Barron's. He said, some economists fear that all the spare cash could lead to overheating one's widespread vaccinations restore pre-pandemic normalcy with too much money fueling a surge in demand for scarce goods and services, but that's not a likely outcome. A close look at where the money has actually gone implies that the excess savings will probably finance a modest post-pandemic consumption boomlet rather than an inflationary binge. So he looked at the data and said, according to the Fed, about 28% of the increase,

in liquid assets from the end of 2019 through the end of September went to Americans in the top 1% of the income distribution. Wow. When people talk about the Fed contributing to inequality, I guess that's what they're pointing at. But his point is that 28% of the gain went to people in the top 1%. They're not going to spend all of that money. It's not like they got money. Those people saved more money. They put money aside because they didn't spend as much. So they can't possibly spend all of that. Then he says, 70% went to Americans in the top quintile. So the majority of the money, unfortunately, we already know, went to people that are already wealthy.

So he says only 14% of the extra cash that was saved, which is just $330 billion out of $2.3. You're saying this money went to them. This isn't money that went to them. This is money they saved. Correct. Because the other people who got money spent it. This isn't like the government gave these people money. They just didn't spend as much as they normally do.

Yes, that's a very, very important point that I overlooked. So of the extra savings, only $330 billion out of $2.3 trillion is held by Americans in the bottom 60%. So people in the bottom 60% only have 14% of that, quote, extra savings. So even if they spend every dollar of that, we're not talking trillions. We're talking hundreds of billions, which is a lot, which is a lot. But it's probably not going to lead to run away inflation. I wrote yesterday that, and we spoke about this a few weeks ago, the thing to worry about is wages.

If wages start to rise meaningfully and they continue to it, then things start to get pretty hairy. That's the other thing is when people think about inflation, they immediately think prices are rising, inflation is bad. All inflation doesn't have to be bad. Like, we had inflation in the 50s. It averaged about 2% a year, which is higher than it's been here. And you had this big spike where like a third of it was over 3%. It got to as high as like 8%.

That was like one of the first. That was like one of the greatest decades that we've ever had economically, that boom after World War II. The 90s averaged 3% inflation the entire time. It got as high as like 6% or 7%. Yeah, inflation doesn't make us Venezuela. No, it doesn't have to be bad if it comes with higher economic growth. And we could see higher economic growth. And the other thing is people who hold debt, which is mostly middle class and lower class people.

That's true. If you hold debt, inflation is good for you. There it is. How come nobody's made that point? I'm sure people have made the point. But how come people aren't pounding the table on that? Say that again. If you hold debt, if you hold a car loan, if you hold a mortgage, mortgage, student loans, you want inflation because that makes your money you pay back worth

less. So that means your debt goes down. And guess what? If your wages are going up and your debt is going down, that's a good thing. I mean, obviously, guess what? It's going to be offset a little bit of rising prices. But if you're that worried about inflation, sometimes it rises for the right reason. It doesn't have to be the 1970s. And yes, could it lead to poor performance and financial assets? I ran this for my piece I wrote for Fortune this past week. So when inflation is rising from year to year, one year to the next, it's higher than it was before. The average annual return for the S&P going back to 1928 is like 7%. When it's falling, going down from year to year, it's like 17% a year.

So obviously, much lower than average, when inflation is above 3%, which is about the long-term average, going back to the 1920s. When it's above 3%, it's 6% per year. When it's below 3%, it's 16% per year. So obviously, falling inflation is better than rising inflation and lower inflation, like under 3% is better than higher in terms of the financial market. So, I mean, yes, could this hurt the financial markets if it happens? Probably. And those numbers would be even worse if you took in the inflation into account because higher inflation,

these are nominal numbers not real. But the financial markets are going to have a poor period at some point anyway. Isn't this a good reason for it if it happens? And again, to your point, it may not happen. So let's talk about that part. Are we getting too cute, Ben? Are we getting too cute thinking that we're going to have an absolutely massive expansion in the economy and stocks are going to fall? The funny thing is, that's what seems like a lot of people are worried about, and that does seem crazy to me to think that. To me, it can happen. You can't say that can happen because maybe valuations did get too high. Maybe we did pull all of the gains forward. Maybe we did. Yeah. But man, I don't know. I just have a hard time seeing our economy booming

and stocks blowing up. Sorry, I just don't see it. On the one hand, you've never had a recession like we had last year and then stocks do well right after it. So it's kind of hard to to say, like, well, we ever had an economy that is booming and stocks don't do well. But to say that stocks are going to crash in the midst of an economic boom, that seems... That's hard to believe. I'm sorry. The other thing is, to your point about inflation, people always say that the bond market is the smart money. The 10-year treasury is at 1.6%. Now, I'm not saying that the bond market and markets are all seeing all the time. A lot of it is based so much more on psychology than anything else. But if markets are that smart, why aren't 10-year treasuries at 3% right now?

If we're for sure going to have this riproaring inflation that everyone is worried about, it's like this big risk that everyone can see coming. Maybe I'm giving gold too much credit, but look at the price of gold. Went from almost 2100 down to 1680 to what you just said. I wrote that in my piece over the weekend. We don't usually see the big risk coming, right? Everyone is afraid of inflation. When is the last time that we all saw the big risk?

Counterpoint, inflation is actually 10%. So maybe the market actually. is freaking people out because growth stocks have been getting wrecked. So if you looked at the S&P 500, everything seems fine at the moment, right? It's down 2% from the highs. You know that meme of the guy like mowing his lawn with the tornado behind them? So the tornado are SPACs and growth stocks and that guy is general electric. Right. If you're an investor who has poured everything into tech these past few years and then you've probably done well. But if you've come, a Johnny come lately, then you've gotten wrecked a little bit because the S&P,

of right now is down 2% from the highs. It's Monday. The Dow is at an all-time high. And speaking of it's Monday, I feel like last week was three years ago. A lot of the stuff that we put on the doc is stale. For example, on Tuesday, Jeff Mackey tweeted a chart of Target and Zoom, which both beat expectations like Zoom crushed. And he wrote, these aren't confident reactions to positive news. And that was on the day that Zoom was up as much as 7% closed down 6%. That tweet feels like it's five years old. What I said to you is we're having this second-guessing regime shift where you had all these companies that did awesome. Peloton and Zoom and all these companies. And people are starting to reassess like Square, Shop, Stitch Fix, Zoom Doc, you're sorry,

Teladoc. Zoom and Peloton are down 40%. Shopify is off almost 30%. Spotify is off 30%. Roku is off almost 30%. Some of these companies are just getting wrecked. And these are some of the favorites people, Tesla is off more than 30%. Everyone's favorite fund arc, which we're going to get into is down 30% almost. These companies and funds are getting just destroyed. And these are some of the favorite ones now. If you zoom out and look at the returns have been over the past year, you're still doing fine if you've been in for this long. But I don't know how you couldn't get a little nervous about the fact that this is happening. But this is crazy to me that you're having such a disconnect where the market doesn't care. It's shifted. We've done a seamless handoff into

these value stocks somehow. And the market hasn't been disrupted at all, but these stocks are getting killed. So a question for you. In three years from now, do we say, holy cow, I can't believe Peloton was a $50 billion company and insert Peloton for whatever, growth stock. Or do we say, LOL, remember that time that growth stocks sold off 40% for absolutely no reason? That was cute. Which do you think is more likely? I'll plant my flag in the latter. I think that for people that have a long-term time horizon, definitely not calling the bottom here,

but I think that for people that have a long-term time horizon, this is a gift. For people that were on margin with these stocks, 30, 40% ago, this is an absolute nightmare. Yeah, you're getting killed. That's probably what happened because some of the movies we're seeing. Last Friday, you saw stocks down 10, 15% in a day, and then all of a sudden they finished up on the day. That felt very marginally. Yeah, baby with a bath, water kind of thing.

But I think that's one of the reasons. People want to blame this on inflation, boogeyman, and rates. And sure, maybe that has something to do with it. But again, are you selling your Tesla so you can put it in a 10-year treasury now that it's yielding 1.5%. That's a stretch. I still don't think that's the argument. But are people starting to reassess? Did we pull forward too much? Did we give them two credit? I think people are thinking that.

It's not that bonds are competition because at one and a half, it's the discount rate. But then it's like, but come on, are we really going spreadsheet here? Are we really saying that people are paying X for Snowflake and moving the discount rate is wrecking their potential future earnings? Like, are we giving the market too much credit saying that? Sometimes I think people look for an excuse to sell. And if you've got these huge gains and you've got a company that's trading. at 100 times sales or whatever some of these companies got to. And you say, you know what, this thing's starting to roll over. I'm getting out and I'm going to look for something else. We have the momentum stocks turned into value stocks and value stocks turn into momentum. And rising interest rates, it's a great story. It's a great reason to sell. Before I forget, I just want to say real quick. I am Mia Coppa. Last week, I said that Alice Schrader and Buffett broke up after I booked the Snowball. It was Carol Loomis that writes the Buffett letters. And I do believe that

they might have had a falling out. But maybe I'm wrong on that. I feel like there was a falling out somewhere. Okay. And Alice Schroeder, she did write Snowball. Yes. Which was 300 pages too long. Okay. This is since the end of September. Energy stocks up 80%. Financial's up more than 40%. By the way, is Exxon the next general electric, Ben asked in September. It turns out. Maybe not. The only reason you remember this is because you bought Exxon like a boomer because the dividend is paying you to wait. Credit to me. So tech stocks are down a little bit, but you're seeing all these other sectors. So industrials are up 20 some percent. Materials. Commodities have been on fire. Financials. You're getting this handoff from growth to value

that people have been waiting for and waiting for years. I shared a chart with you before we got on here. Since September 1st, small cap value stocks are up 55%. Nasdaq 100 is up 4%. Again, zoom out and you say, ha ha, I've been owning tech stock for 10 years. This is nothing. But this is the kind of thing where feels like we're seeing a sea change here. And that doesn't mean gross stocks are done, but this seems like for at least a trade or a little cyclical type of thing, this feels kind of real for the value stuff for now. Well, how about this? They can both work. True. It doesn't have to be one of the other. It doesn't have to be one or the other. And obviously, this rotation was pretty wicked, especially if you were on the wrong side of it. But they can both work. But I think this crash in growth stocks

is healthy, though. The gains that you were seeing just unabated, that's not healthy. Like, Stocks aren't supposed to go up all the time. It shouldn't be that easy. So if you shake out some weak hands, and again, like you said, when was my post? I wrote a post, this is not the way. Right. If you're going to be a holder of these stocks for five or ten years and you can't handle a 30 or 40 percent correction every once in a while, you're not going to be long for these stocks because this is going to happen. These stocks are going to crash way more often than the market. And if you're not stepping in to be a buyer here, there's no way you can hold these for the long term, if that's the case, because this is going to happen again, too.

So let's talk about ARC. We've got a few emails about this. I don't think that there is going to be a mass exodus. I just think that that narrative is too easy that people can get to come up. I mean, there's so much shot and fraud around this thing. By the way, I can never say that word. I can read it. I can't say it right. I don't even know if I said it right.

I don't know. I don't want to even try. I don't get the people that are rooting against her. I do. I just, I don't know. I'm not going to cheer her on, but I'm not going to say like, oh, yes, she's coming down. That's because they're too nice. You don't understand Schadenfreude, people being upset with other people's success.

Come on. People do that a little bit with, like, Buffett. I think that there's something to the fact that she's a woman on this. I think people are giving her way too much of a hard time, and she didn't get enough credit on the way up, and now people are hammering her on the way down. Don't necessarily disagree with. Bautchuta's tweeted, Arks Bad Week resulted in a pretty minor $740 million in outflows. She's still taken in $16 billion on the year.

But why don't we get to some really interesting data points from Ben Johnson over? right Morning Star. So he looked at the fact that can they get too big and his size the enemy of outperformance. People have been talking about this. I don't even think people are really talking down arcs process because if they hold these stocks for five or ten years, these dips like this in these potential liquidity issues, they shouldn't be that big of a deal, right? Are they in a 30% drawdown? 30% drawdown. So the fact that they are more transparent, which I think is a good thing, it may be bad for them structurally. So Ben Johnson said, among the 20 new names that they added across their five actively managed

ETFs in 2021, 14 sell their stock prices rise by more than 3% of the day after they revealed their purchase. And they own more than 10% of 26 companies. So this is getting huge. Because they're so transparent, and they talk about what they're buying and selling. People can see it on a daily basis and start trying to front run these things or trade off of them or trade right after them. That's where things get sticky is when the market starts looking at this because they are so big. And it's almost no fault of their own. And yeah, so at the end of October 2020, a third of their assets were in stocks with a market cap under $5 billion.

So obviously, with their growth, they can't really swim in that pond much longer. So that number went from 33% down to 14% at the end of February. And one of the reasons they have those huge gains is because they were in smaller companies. Now they have to fish in the pond with a bigger fish. So I feel like we both messed up the pond references the past couple weeks. They have to use bigger stocks, and that could curtail their performance. Again, sizes the enemy about performance. You have to go with larger stocks.

They're not going to have as big of a runway as a smaller and mid-cap stocks. So here's a good one. Only 64 of the 8,637 U.S. domiciled mutual funds in the database have ever gained as much as she did over a similar time frame. And of those 64, 26 of them trace their success to the dot-com. bubble. Wow. If and when they do start to see some outflows, like if they have another leg down here, which you can't rule out that these growth stocks don't have another leg down. It wouldn't shock me at all. And we start seeing them outflows, then it would be interesting to see what happens there, how that impacts them. To the prices. Yeah. Let me ask you a question.

What's the level? Because you've made the case that investors are getting smarter. And I don't know that this is necessarily smart to hang on to something that's in a 40, 50% drawdown. That's up for you to decide, I guess, as the investor that's in that fund. But at what level do you start seeing panic? Because I don't think 30% does it. I think that investors can handle a 30%. Now, if you went in at the very top, maybe the people that came in late are going to run. But the core fans, and she's got a ton of them, I think that they're sticking with her for the duration, unless it's like catastrophic. The worst thing that could happen is like, what if they have an 18 to 24 months? They're volatile. They don't really go anywhere. And eventually people just start

looking for momentum elsewhere. But I'm saying, like, these things take time for the enthusiasm to die. It's not just going to be a peak and crash. I mean, I guess it's possible, but to me, that's unlikely. And investors have been conditioned to know that when stocks fall a lot, you buy more and then it works out for you immediately. That's what's happened in recent years and months. So, yeah, maybe there is something to that where people just hope that that happens again. You know what else feels like a year ago? Buzz. Dave Portnoy's ETAF. Right? Yes. So have you checked this thing out much? There are some people asking what are our thoughts on it. I mean, obviously, Portnoy is a salesperson. He's a promoter. He's not going to have any hand in the construction of this or the portfolio management. It's based on an algorithm. I think it came in with a ton of money on day one, right? This thing's already got over a billion dollars in assets, which Portnoy can move money. But I mean, if you look at the holdings on this, so I'll pull up on Y charts, so it's ticker buzz. It's the Vanek Vector's social sentiment ETF. They're looking for companies that people, are talking about online. The top holdings are for Draft King's, Twitter, Facebook, Amazon, American Airlines, Apple, Netflix, Tesla, Microsoft, Pfizer. This thing's probably going to do fine. It's going to be probably hug the NASDAQ 100 or the S&P 500. I mean, isn't this just a closet index fund potentially? Yep, looks at. Performance-wise, this thing will probably just trade in line with the market. If you look at the numbers and it is pretty, I think it's 75 companies or something. I don't think this thing's going to blow up, but it again, it shows the power of

the ability to sell. You could have taken the best investor or the best algorithm on the planet. And I think they actually tried this before with a different company. The ETF was out for a couple of years and it fizzled out because no one bought it. Now you get a frontman on it who's pushing it to his legion and people buy. What do you think the total assets are as in March 5th? If you hit rewind on this podcast, 120 seconds, you could hear me say it. Well, I'm sorry. I was searching. What did you say? It's got over a billion dollars already. No, it doesn't. no no what is the asset then 2801 million dollars oh okay i got bad numbers okay 281 million that's a lot that's a ton yeah right okay yeah that's pretty good where are we

going from here ben here's a lead from a reuters article in october 2020 miami based art collector paolo rodriguez frail spent almost $67 in a 10 second video artwork that's 67000 what did i say 67. Okay. 67 thought, it doesn't matter at this point. It would have been the same. On a 10-second video artwork that he could watch for free online, last week he sold it for $6.6 million. Damn.

The video was by a digital artist named Beeple, whose real name is Mike Winkleman and is apparently a celebrity blockchain artist and does NFTs. And the New York Times had a post on this guy. He made $3.5 million in a single weekend selling his artwork, all online, all in these NFTs. this is wild. This whole CEO of Twitter Jack just sold his first tweet, I guess, which is an

autographed NFT for $2.5 million. This is stupid, right? Can we just say it? Yeah, that's pretty dumb. It's stupid. Well, hold on, hold on. The selling of the tweet stuff, to me, that's a bit much. The art stuff, the prices are astronomical, but his art is pretty cool. I mean, here's the cool thing about it is. So, in his case, he put this in his contract. Anytime there's another sale, he receives 10% of it on the secondary market. The stuff you can do for artists, and I know the Kings of Leon did an album through NFTs somehow. So I think that part for the artist is very cool that you can do that.

Having that ability where it's in the contract and you're going to take part in it, can imagine if like Picasso's family got a piece of every one of his paintings now? Can we say that the speculation has gotten out of control? Yes. While also acknowledging that there's some cool stuff in the underlying technology? The speculation is stupid. I'm not saying the technology is stupid. the technology behind it. And I think this is one of the reasons that Silicon Valley has won

over the past 10 or 15 years versus finance. Because when finance people hear about this stuff, they immediately poo-poo it and go like, oh, this is so stupid. When tech people hear about this stuff, their immediate response is to be like, well, wait, this could be something. Let's try it first. And if it fails, it fails. But let's give it a chance. Like, you never see tech people immediately talk down something like this. They say, like, let's give it a chance and see what it does. Even if this completely falls apart and goes away, they're at least giving it a chance. a shot. It's the technology behind it. That's cool. Not the speculation is ridiculous. Let's stick with this and talk about Packy. Man, it took me 30 minutes before I mentioned him.

Packy McCormick and Mark Rubinstein did a post on A Tale of Two Jacks. I don't think we think about this enough. It's sort of nuts. Like, Jack Dorsey is literally the CEO of Twitter and Square. And he looks like he lives in that big temple at the top of the stairs from Ace Ventura, too, when nature calls. Dude, that was on yesterday. I was watching. while I was on the Palaton. What a great movie. It is kind of underrated. I put out a thing that we'll talk about coming to America too, maybe later. They're just, are never good follow-up to a classic comedy. That one's actually pretty decent. I was watching the original, but... Oh, the original. Okay. It was a back-to-back. Ace Ventura was a good sequel, and we definitely

will talk about coming to America later. But here's what I wanted to mention about that post. So they were talking about the history of Square, and in 2008, I think, there was 30 million businesses in America doing less than 100 grand in sales annually. million of them did not accept credit cards. So this is where Square came in. And I was thinking like, that's fucking crazy. Basically, a little more than 10 years ago, small businesses cannot take credit cards. And so obviously, I don't have the answer to this. But what else are we going to say in 10 years? I cannot believe that this was in place. When you pair this with a company like Shopify that's allowing people to set up their own storefront online,

there's never been a better time in history to be an entrepreneur if you know what you're doing. And with Amazon cloud services and all this stuff, the infrastructure is in place for you to start a business on the side or make it your full-time career if you want and you know what you're doing. It's never been better for that. I got a few emails sticking with banking about my $0.88 charge where I canceled my credit card. We got a lot of emails on this. So thank you for that for everybody that emailed those. Somebody wrote, when people steal your credit card, they often want a really small number like $0.88 to see if it works. and typically it's low enough that it won't set off the fraud detectors. So they run $0.88 and see if that works.

And if it does, then you know what happened. So credit to JPMorgan Chase for alerting me and credit to me for taking this threat seriously. Ben, you pooh-boot it. Well, when I do this, I typically tell them to take it off and they block it and then everything's fine. All right, credit to you. Another email said, quick explanation on what happened with your Starbucks account. Starbucks pays a payment gateway to process credit cards and they can add on an additional feature called payment refresh.

If your credit card is updated because of lost, fraud, or expiration, Starbucks will automatically get the updated credit card info. They are charged for it, but it works out for them so that people don't have to. Anyway, I'm all for it. I think that's a wonderful service. Yeah, it makes sense. All right. Where are we going next? There was a big paper from Citi on Bitcoin.

It was like 100 pages. And it got dragged. This was amazing. According to them, which is obviously according to a survey, 36% of small, immediate. businesses in the U.S. were accepting Bitcoin in 2020. Come on. 36%. I'm going to go like maybe 0.36%. That's a tad high. So let's stick with the digital art thing. Phil Perlman tweeted, I'm not an art collector. I don't know anything about art. Actually, Masterworks. I guess I'm an art collector. But I don't have any physical art. Phil Perlman tweeted a digital art. It spoke to me, Ben.

It just grabbed me. And I said, I got to have it. I got to have that on the blockchain. So I wanted to figure out what the process was like. My eyes are rolling back in my head. I wanted to go through the process just to see what the experience was like. So here's the deal. You need to buy this with Ethereum. So I went to my Coinbase account and I bought Ethereum. Then I wanted to transfer it over to my Metamask wallet so I could actually buy this painting. But I found out that the message from Coinbase is while we wait for your funds, you can sell or convert your Ethereum. If you'd like to send your Ethereum, please wait up to six days. Six days, it might as well be six years. Now, I was speaking to a friend who said, the reason why it took so long to process is probably

because I had the money pulled from my bank account and not a debit card. But come on, what are we doing here? Six days. This is why crypto needs Wall Street more than they think. We'll get to that in a second. One more piece of the journey. So on Metamask, which is the wallet that, I guess, takes the Ethereum from Coinbase to give it to the artist. By the way, you're worried about an 88 cent credit card charge. Someone is going to steal all of your crypto from all this crazy shit you're doing, and you're not going to know what hit you. So listen to this.

There's something I met a mask called the gas fee. The gas fee was $53. Now, the piece of art that I was trying to buy was like $100. So between this, between that, the whole thing costs like $200. box and it was, it's not there yet. So crypto needs Wall Street. Explain. Okay, well, first of all, so the one thing is I read Charles Schrobb is exploring. This is from the block, a white label solution for crypto brokerage, which again, the hardcore crypto libertarians are going to say, this is crazy, we don't need you. So I tried the stupid NBA top

shot because you got me into it. There was a bit of FOMO. Stupid. Stupid. Stupid my ass. It's not stupid. No, I understand it. But here's the problem. Let's say you're a 12-year-old kid who gets all their Christmas and birthday money and you have 200 bucks and you buy. this NBA top shot thing and you think it's cool and you trade around a little bit. You go, know what? I need that money. I need to take it out. Here's what happens. I bought one of these top shots right at the top. I sold it for a couple hundred dollar loss. Paper hands. Paper hands. I know, I am. I tried it out. I'm like, you know what? I didn't get into it. I didn't pull my wife into it like some people. It's kind of cool. Like when you wait for those packs and

there's 200,000 people, like that's crazy. So I tried it with you a little bit. It just, it wasn't for me. I tried it. I think more or less I tried it just because I knew it would be good fodder for the show. I'm trying to get my money out. Good luck with that. I think it's, stuck on the Ethereum blockchain for all of history. You know that's seen an Ant Man where they go into... Is that the Metaverse? What do they call that? I didn't watch Ant Man, sorry.

The Nether Region. Is it the Nether Region? You never saw Ant Man? Oh, you're not a Marvel guy. That's right. Anyhow, that's where your money's just floating around, never to be seen again. I clicked, get my money back and it's like, okay, we'll contact you in four to eight weeks to get your money back.

I tried to contact their customer service. I'm pretty sure my money's gone. Getting your money off of this stuff is basically impossible. Guess what? Getting your money on? Very easy. That's true. You're not lying.

They don't want you to get your money off. But, like, I'm just saying, if they're partnering with the NBA, this is all middle-aged guys like you. Can I call you middle-aged? Wait, dude, what middle-aged? 35. I am bald, but... It's older people speculating on this stuff. But you could have some die-hard NBA fans who are in this.

Hang on a second. What are you talking about? This is young people. This is a young person's game. I'm the old man. Okay, there are people trading funny money. They're all just using their theory that they got because they're huge gains. But there could be regular fans who don't have a lot of money trying to get it off.

And the NBA is screwing them because. it's impossible get your money off of this thing. All right, so two things. One, I agree with you. Not only can you not get your money out, the marketplace has been down for like 90% of the time where I go on, because I got two packs and I want to sell my cards. The marketplace has been down for like 90% of the last week and a half. They need to get their shit together.

In their defense, and I don't think they deserve defense, but it's still in beta mode. They're still super early. Maybe they didn't expect it to blow up like this. But okay, but it's been weeks at this point where the volume has been blowing up. Get your shit together. So allow people to take their money out. out without waiting 60 days and open up the marketplace for goodness sake. So I think that they don't have an infinite window. They got to get their act together. Yeah. But in terms of like the high fees and

like how hard it is, if you're not keeping this stuff in cold storage and transferring it to someone else with cold storage, there's still a lot of grinding of the gears in this crypto marketplace that they need some bigger players to come in, I think to help with that and bring the fees down and make this stuff more transmissible. There's still a lot of stuff that's very slow and it doesn't do what it set out to do. Speaking of that, I tried to move money. from Schwab to my bank account. I sold securities and- That was a very boomer thing to say, by the way. I don't know why I just said that. I sold a few securities. They were not a margin. It's T plus two still. I get it, but like it still feels pretty ancient.

This is like back to the Robin Hood thing. Maybe having a little bit of time for a breather is good for the financial system because the quicker you can transact and move this stuff, the easier it is to make a mistake or do something you don't want to do. So maybe that's part of that needs to be built in. why do we not have better plumbing? I don't know. Anyway, you're a big card guy. Big card guy? What do you mean? You're about to find out. Introducing the new Affirm card, the card that puts you in control. Schedule to launch later this year. The Affirm card is designed to bring the power of Affirm to your wallet. You'll be able to use it for everyday shopping and then decide later if you want to pay overtime with no interest or fees. Here's why I'm bearish on this. This is way too many

choices for people. It's way too much to pay attention to and make decisions on. I think personal finance-wise, that's not a good thing. I get that it could be like layaway where you can determine that. But like having to micromanage every decision that you're making with something, I think that's too much. Thoughts. That's a fair point. I'm all about convenience and making your finances easier with this stuff. So I don't like having to go in and then make a decision for every purchase. That's my initial takeaway. I just want to talk about real estate for a second. So last week we spoke about how we're bullish on eye buyers. And we got an email from a real estate broker and it was in his defense, or not in his defense, credit to him.

It was like the most fair, level-headed response. Like, typically we get in a, we've got an e-mails on the past when we speak about the subject from brokers attacking us that we don't get it. But he said that we made fair points. However, Zillow also charges 6%. What you're really getting from Zillow is convenience, is that you're going to close a lot quicker. Right. You don't have to wait.

I thought that was a good point. Yeah, you know the price right away and there's no haggling back and forth. So it's basically, you're not saving money, but maybe it's just a different experience. So this is the place where I think rising rates is probably almost necessary right now in real estate. This is another place we need to cool off a little bit. You wrote this piece about like how housing the supply is just getting lower. We got this great email from a listener who said he saved up like $80,000 and he's not even trying to buy. In rural Texas.

Yeah, yeah, he's trying to buy in rural Texas, not even like a huge city. And you can price out and people are offering 30% over the value, all cash offers. and all this stuff. There was a piece in our local Wood TV 8 here that one of the real estate people called it a bananas market and how people are selling in a day and that these people are having to leave their office early because a house went on sale to go check it out. Otherwise, it's going to be gone. Derek Thompson had this thing where he broke down this divergence between housing and rent. So he said in San Jose, home prices rose by 14%, but rents fell 7%. He said this is happening all over the place in Seattle and New York and Boston and Austin and San Francisco.

Hang on. Somebody wrote, the senior economist Zilla said, I can't think of a time when anything like this has happened. And he's talking about the divergence between rental and home prices. It's insane. First time home priors, man, I feel for those people like big time. This sucks. Here's the thing, though. I think millennials, they drew the short stick on terms of like timing like the 2008 crash and awful job market. Losing your hair at 23. Here's the difference. Gen Z, I think is set up pretty good. If you're coming into one of these cities that the rental market is down, and you can now rent at a lower price, you're not ready to buy yet. Like, this is a potentially good thing. So you have this potentially booming economy. We're going to be at full employment. Janet Yellen says by 2022 already, housing construction should go crazy because people are going to want to buy. And you're finding great bargains on rent. Gen Z potentially is actually coming into a much better situation than millennials did in their early years.

By the way, that survey about Bitcoin, 99 Bitcoins.com. We haven't had a good anti-survey one in a while. Man, unbelievable. Oh, Morgan Stanley. I guess we probably should have said this earlier. But Morgan Stanley said with the current pace of vaccinations, new fiscal stimulus, and spring weather right around the corner, it's hard not to imagine an economy that's on fire later this year. In short, the recession is effectively over. Boom.

Don't you think the recession was over in May, basically, more or less? Well, now it's officially over. Okay. Real quick on podcasting from the Wall Street Journal. Number of podcasts available through services like Apple and Spotify More than doubled last year to 1.7 million I can't believe I'm sure a lot of people started them when they're at home Here we go

Who was listed? Matthew Passy Mr. Passy says the man for his services has exploded during the pandemic requiring him to expand his stable of contract podcast editors from 3 to 10 We know that guy Wow He produces our podcast. Helped us get off the ground

You got a Wall Street Journal mention Nicely done Matthew Go Matthew What's Giving Alpha.org Real quick, before we get into listener questions, I mentioned a couple weeks ago about the need to give back because things have been going so well for some people and so poorly for others. And I got a ton of email back from people saying, hey, I give to this organization. And I've actually had a few calls set up with people to talk to different nonprofits.

And I had a call last week. He's a financial advisor, but he runs a site called Giving Alpha. And he runs this totally on his own. He doesn't take a salary from it. His name is Harley Monk. And some people who want to give back, but don't know where to give it to, he'll help you figure out where to give back if you have a certain area of interest or topic or type of person or group whatever that you want to get back to. He'll help you figure out the best

one to do it and give back to the organizations that will put your money to work fastest and not have a bunch of it bloat in organizational access and stuff. If you have something that you're trying to get back but you can't figure out where to do it, giving alpha.org and he can help you out and do it. He said I'll have a phone call with you, whatever, help you figure out the best places to get back. I thought that was a cool idea. All right, Ben, let me ask you this. Listener question. My wife and I are saving toward a down payment on a two to four unit multifamily in the Grand Rapids area. Thoughts? Well, let me finish the question. We're closing in on having that money ready to go, but are hesitant to jump into anything in that short of a

timeline because we both think once the moratorium amount of infections is lifted, we will see more foreclosures and a softening in the multifamily space. Well, there's $40 billion going to mortgage assistance. So maybe not. I hate to have a large amount of cash in a savings account any longer than absolutely necessary since we're both young and not looking for any short-term investment or income. My question is, how long would it be until we see the full effect of COVID on the general housing market? If we say, let's hold off another six months to a year, are we waiting for some reckoning that is never actually coming? I think, yes. Sorry, I know that this is a question for you, but you'll chime in when I'm done. The demand from people our age or

my age, there's so many people like me, even if interest rates rise a little bit. I mean, that would probably do. But I think that demand is going to overwhelm supply, even when supply comes back on the market. Your thoughts. Yeah. And the Grand Rapts area is on fire at the moment. I think you would have no problem filling those places as a rental. And I think trying to time these things, I think people have been saying this stuff about the moratorium stuff for a while. And if we have a booming economy and I don't see the need to try to time those things if you're going to make that purchase. Six months to a year, especially in a real estate purchase, I don't see the need to time that kind of stuff. One more. I'm a 40-something with a finance background and an MBA,

have spent over 10 years in the nonprofit sector, is it too late to switch over to become a financial advisor? If not, what would your advice be on the best way to go about it? All the training programs need to be tailored for fresh college graduates, thanks to investments and learning from you and others on Fitwit. Taking a pay cut to start over is financially viable. You know, I actually spoke to an advisor last week who got into the financial advisory industry at 36 years old, I believe. He had a clever way of doing it. I think it was through the marketing angle. So he started out that way. He took a significant pay cut and said, hey, let me help you on, I don't know if it was social media or whatever, but just let me help you with your marketing

because I see what you're doing. I think you can do a better job. And from there, he slowly pivoted his way to becoming a financial advisor. I thought that was pretty clever. We get questions about this all the time. I think it's cool that there's so many people out there who want to become a financial advisor. This is becoming one of our most popular questions. By far, here's our most popular questions. I want to become an advisor. Don't know where to put my cash because I'm not earning anything on savings, and I'm a first-time home buyer. Those are the kind of ones we get a lot. But there is no really good answer, but I agree, sales and marketing are something that are never going to go away. If you can help someone grow their

business, it's going to be hard to come in and just help people and give financial advice because you think you're good at it. RAs don't really have a training program. Right. Yeah. So maybe you go to a big wirehouse place and go through the training, even though you said it's for recent college grads, and then you get some experience that way, if you don't mind taking a cut. But I agree. If you can help some way in the sales in prospecting and bringing in new business, advisors are always going to want that. All right. I want to talk for a second about Wanda vision. Your thoughts on the finale. By the way, honestly, I don't even know what that white vision was. I don't think I understood what happened, but what were your thoughts?

I watched it last night. I do think a lot of the stuff from the Avengers, like the plot line, I mean, it's hard to ever like say like poke holes in the plots because it's all just the magics. But I feel like there's always just one magical loophole or, oh, we fixed it. But I liked it better than I ever thought I would have, even though there's probably a lot of the Avengers stuff that went over my head. So Chris Ryan at The Watch, which is a Ringer podcast, he said, this is what I was trying to say last week. He said, I appreciated the craftmanship of the show more than I connected with it. But I actually did connect with the finale. I thought that was great. When whatever the town is, when that went away and Vision went away and the kids went away, like, that was moving to

the extent that a Marvel show could be moving. I thought that was good. I thought for like Disney's first Avengers show like that, I thought it was really good. They crushed it. Yeah, better than I thought it would be. Ted Lassow. I watched it. You watched it, right? Yeah, do you finish it? I did. I thought it was, it was just good. It was just nice. It was light, it was fun. It was entertaining. I don't think could anybody other than Sadecas pull that off? Don't you think it also got a pandemic premium just because people were looking for something lighthearted like that and nice? It wasn't great. It wasn't great. It was just nice and good enough. But, but, But I think that Sadacus, like, was 80% of that show.

Without him, it falls apart. He's great. Yeah, they have a bunch of good characters. I love that show. I think there's going to be two more seasons. I might not watch season two. I might, I might not. We'll see how it goes.

I watched Gone Baby Gone. I think this was Ben Affleck's first directorial debut, as we say in the biz. You ever see it? Yeah, it's a great movie. Very good. Very, very good. They nailed the Boston people. I thought were just great in that.

All right. Podcast Rec. Land of the Giants. They've done one on Netflix and Amazon before. Jason Delray. Yeah, I think it's a different host this time, but they did it on Google. And it's hard to wrap your mind. Like, Google just seems not like it's always been there, but they talked about the idea

of these guys. Like, when I was in college, we had like Ask Jeeves in Dogpile and some of these other search engines that just didn't work. I don't know how I made it through college without Google, basically. Then they talked about, like, them having the idea coming out of undergrad for this. It's just kind of crazy that they had this in their heads at that age. When I was in college, I had no aspirations for anything. These guys thought of Google.

I rewatch Superbad I've probably seen it a dozen times All-timer Is that the best high school movie ever? For my money I think it's close Well American Pie is also up there But Super Bad is the best to me

I watched Judas in the Black Messiah Because it's going away from HBO They do this thing where they have the new releases For a month I was going on next week I thought that was a great movie Better first half than the second half But I had never heard that story before

And the fact that that guy Fred Hampton was only 21 You know such as charismatic Damn yeah that's crazy Keith Stanfield who plays the FBI informant I don't think you ever watched Atlanta, but he's my favorite character in Atlanta, too. He's a great actor. I think he's awesome.

Oh, I forgot to mention. I knew coming to America was going to suck. Nobody had high expectations. I laughed a few times. I thought Leslie Jones was the best part of it, but, like, I don't think Eddie made me laugh once, and Arsenio was, like, barely in it. I don't know. It was so disappointing.

I love the first one so much. I'm not going to do it. So I actually rewatched the first one with Robin because she's never seen it. And I haven't seen it in probably a decade because I feel like I've seen it a hundred times. Yeah, I have to. Easily one of my favorite comedies of all time, and comedy sequels are hard. They're just usually don't work.

Was there a Soul Globe reference or not? I don't think so. I can't remember. Okay. Last thing, last thing, before we sign off, I just want to mention audio briefly, spaces and clubhouse. I think they're super cool. I think that people's initial eye roll is like, do we really need another social media

platform? And I totally get it. But think of it sort of like TV, where it's like, oh, see what's on. There's no commitment. It's not homework. You hop on. You see what's going on. If there's nothing there, you just hop off. I'm pretty bullish on it. So I think it's going to be very big. I tried clubhouse today for the first time. I spoke with Josh and Michael Anthonylli hopped on. I see the appeal. I don't think I'll be a super user, but I'll hop on occasionally. Neither do I. I. I don't think I'm going to be a super user either, but I totally get it. All right,

we've got Perth toll on Friday. Yep, Life and Liberty Indexes. Thanks again to Interactive Brokers. Interactive Brokers charges USD margin loan rates from 0.75% to 1.59% rates are subject to change. Learn more at ibkr.com backslash compare. Get us an email, Animal Spiritspod at gmail.com, and we'll see on Friday.