Animal Spirits Podcast - The Rorschach Test (EP.81)

Episode Date: May 8, 2019

On this week's episode we discuss why Berkshire Hathway is the market's Rorschach test, Charlie Munger is still going strong at age 95, how many companies have avoided bankruptcy because of VC money, recession calls that won't age well, lessons from the new Jeopardy! champ, surveys of the week, why investors are getting smarter, why people always think it was better 50 years ago and much more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by Y Charts. Go to White Charts and tell them Animal Spirits sent to you, and they will give you 20% off your first subscription. Welcome to Animal Spirits, the podcast that takes a completely different look at markets and investing. Hosted by Michael Batnik and Ben Carlson, two guys who study the markets as a passion and invest for all the right reasons. Michael Batnick 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 Ritthold's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Ritthold's wealth management

may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Ben, you posted a few charts from Y charts as usual about Berkshire Hathaway versus the SEP 500. And I guess this is something over a Worshack test, right? Like anything, like mostly is investing, change the start and end date. And you could pretty much tell any story you want. So I just pulled up one of their performance charts and you can change it pretty easily by doing different time frame. So I looked at the last five years, Berkshire Hathaway, BRCA, the return basically tracks the

S&P 500. So over the last five years, it looks like Buffett is a closet indexer, which of course has been his whole career. Zoom out a little bit, go to 10 years and Berkshire is trailing by more than 50%. And so then it looks like, okay, Buffett has obviously lost his touch. zoom out a little bit further and go back to like 1993, I think it goes back to. So it's like 25-ish years. And they've tripled, Berkshire has tripled the returns of the S&P 500.

So it's kind of like choose your own adventure. Is Berkshire just an index fund now? Or is he lost his touch? Or does he still have it? And it's just a long time coming. And I posted this on Twitter. And it was funny to listen to the responses because it seemed like it was kind of equal between the three. Now, of course, the other side of this coin is, even though they've outperformed over the last call it 25 years, it's now I've got a chart here that we're going to share as well of the market cap. And it's now a $540 billion company. And I just want to mention to the listeners, it's kind of bizarre because you're looking right at me. And we're actually in the same room for the first time in a while. And usually we film remotely. And so I'm a little unsettled. Is Berkshire Hathaway, the biggest

venture capital fund in the world? It's, I mean, I don't know what you, it seemed like at they, so they had the annual, I was kidding. I was a bad hot take. Yeah. So they had their meeting this, this weekend, and they did a bunch of media. And I can't believe Charlie Munger is still doing media at age 95, that he's still kicking and going. But also prior to the meeting, there was news that they bought Amazon, one of the, either Todd or Ted, which is news because traditionally, Berkshire is not known for investing in high growth companies. Right. And they bought Apple before as well. It almost seems like throughout all the definitions at this point of what value investing is to them. Like, isn't Buffett just in Munger?

Are they just people who have bought stuff that has gone up a lot? Like, can we just say that as their definition of investing for the most part? So Super Mugatu shared something. Twitter, which I've never seen before, and it's a table of all these market wizards from Richard Dennis up top who compounded allegedly, I don't know why I say allegedly, but who compounded at 120% for 19 years, all the way down to John Neff, who did 14.8% for 31 years. And what really stands out to me in this table is Warren Buffett, 23% for 54 years. It's pretty amazing.

You almost forget about it at this point. He posts the returns on his annual report. So there's nobody close. Well, Shelby Davis, who I've never, have you ever heard of that person? Yeah, he runs the Davis funds. Oh. So Jason Zweig talked with Munger this week, or he put up an interview with him. And he asked, you know, will the returns shrink?

And obviously, at $540 billion. Munger said, we'll earn a lower return than we did on the way up. Not only is it harder to have all the extra money, but we had idiot competition when we were young. And I think that's part of the two that, and good for them for admitting it, but it was a lot easier back in the day, right? They obviously took advantage of that and a lot of other people didn't, but I'm glad that they're admitting that it's not as easy as it once was. But here's the question for you. Let's say Buffett's starting out today as a 25-year-old in his partnership. What kind of returns can he earn starting at, what do you start with, I don't know, 10, 20 million

bucks maybe? It wasn't a lot, right? In the 50s? Yeah, I don't know. I mean, you think he could destroy. the market the way that he did in the 50s? Not by the same, the spread would, would narrow a lot. Could he still beat the market? I think definitely. And microcaps? With a smaller.

So you and I talk to someone, I won't name names here, don't want to, you know, pat ourselves in the back. But we talked with someone who actually said they had a lunch or dinner with Munger in the last six months. And they asked him, if you were starting out today with small amount of capital, what would you do? And he said, my only investments would be in companies that aren't included in any ETFs or index funds, which is probably kind of hard to do now, since there are more indexes

and ETFs than there are stocks. But I think that's the idea that if they had a smaller amount of capital, it would probably be easier. And so it's almost like they're using their own logic against themselves where Buffett said sizes the enemy of our performance. And so, of course, it's going to be harder for them to outperform these days. But if you get indexed-like performance from Berkshire on a diversified set of businesses and you're not paying a management fee on that, not that you pay a lot and you're not paying taxes on dividends yeah well they don't pay dividends but right and they're going to buy back some stocks yeah it's i mean it is the the ultimate like roars shark test of did i say that right war shark yeah no you did not so jason's why

spoke with charlie munger at one point around 1030 p.m mr munger signals that the evening is over but then another thought occurs to him and he leans forward again reopening the floodgate of words he had just closed. He doesn't stop talking until a few minutes before midnight. How is it possible at 95 years old to have such energy? We're in Austin, Texas. I was out last night. I was sleeping by 9.30. I think it's a Cherry Coke. I don't know. It's, it is pretty amazing that he's still kicking at this age. And he wrote another piece about him, how he's been designing dormitories at the colleges that he gives money to. It's crazy. But obviously, it seems like a lot of people out there have their minds made up about these guys. And I can see, I can see both

sides in the equation, but I don't see taking a hard line stance either way with these guys. I think some of the stuff they do is okay and some of the stuff they do is maybe not so great and it is. So in that same article, or maybe it was, there was a few articles about him. I can't remember which one this comes from. But he said, part of the reason I've been a little more successful than most people is I'm good at destroying my own best of love with ideas. I knew early in life that would be a useful knack and I've honed it all these years so I'm pleased when I can destroy an idea that I've worked very hard on over a long period of time.

And I'm thinking, man, this sounds like such hollabious. No offense to Mr. Munger. But, and I wrote about this recently, that people love saying this. Like, it's one of the mental models, I guess. Like, destroy your best ideas. But who actually does that? And then later in the article, he actually made without knowing it because he was talking about how he thought that laying out the room this way was always the right way to do it. And he's like, that doesn't work.

I was so stupid for thinking of that. You want to know why it sounds so bad and life hacky is because so many people have taken their sound bites that they've done and turned them into a, fortune cookie advice on social media. It's lost all meaning. So let me ask you a question. Have you ever destroyed one of your best ideas? Oh, boy. The only idea that I destroyed recently, I'll let you think about that, is I used to think

town bagel was crap, but I had it recently and it was a good bagel. Okay, here's an... But that's so trivial. Okay, sticking with this topic, here's an idea of mine that you can destroy. I say bagels are overrated. I'm not even going to go there. Okay. New York people overrate bagels.

No, they don't. You've never had a good bagels. A bagel is a poor man's donut. Donuts are great. Yes, okay. All right, we can agree. I've never had a bagel before and thought like, oh my God, this is amazing. Every time I have a donut, I think, yeah, this is pretty amazing.

All right. Next time you come to New York, you're sleeping over. And we're getting a bagel. We'll get a, I know you guys have never taken me out for a good bagel in New York before, and that's what I'm asking for. You can change my ideas and destroy that one. So did you see, I actually didn't watch this yet, the Chimath interview with Scott Wapner. when he said, what did he say? He said something. Okay. So he is a venture capital investor. He was an early

investor in Facebook. He said central banks have created an environment where both major drawdowns as well as expansions are almost impossible. And he said, I don't see a world in which we have any form of meaningful contraction nor any form of meaningful expansion. Wait, what? Nor any form of meaningful expansion. He's saying it's kind of Goldilocks. We're in the middle. It's not going to be too high are not too low, but he said, the odds that there's a recession anymore in any Western country of the world is almost next to impossible, save for a complete financial externality that we can't forecast. So we've got 50-year lows in unemployment. We've got people saying this. We've got inflation is dead. We're not market prognosticators, but. Well, on the other

hand, but there was a story in the New York Times recently where they said, is it possible that the U.S. could ever have an Australia like expansion the last 25 years? Anything's possible. Yeah, anything is possible. This note won't really age well. And I think one of the things this sort of thinking leads to is a company like WeWork going public, which is, so the Wall Street Journal talked about them. And I guess maybe this is what Buffett will invest in next, I suppose. But the numbers here, we've talked about WeWork before. The numbers are pretty staggering, how they blew through $2.3 billion of free cash flow in 2018 alone. Oh, hold on. Quick tangent. Okay. Nobody has actually does on how Uber is losing so much money. That's true. So I was in an Uber on the way here, and it was only $20. And I'm thinking, but wait a minute, Uber drivers don't make a lot of money. So that can't be worth losing all the money because they don't really pay them.

They're just spending a lot of money. On what, though? Where did the $1.8 billion go? Engineers. 1.8 billion. They're expanding in other countries as well. I think that's one point eight billion what are they spending it on where is it going if it's not going to the drivers I can't analyze this correctly until it IPOs because I'm an IPO expert actually we'll see so getting back to the we work one this is maybe a little tongue in cheek but maybe half kidding half serious how much how many companies has venture capital kept in business that should have gone bankrupt in the last five to seven years well it's only when the tide goes out that you'll find that who was swimming naked so they're right so they said analysts that

Stanford Bernstein wrote in a note to clients in January that the company would need to raise almost $20 billion in financing through 2026 to stop burning through this type of cash. And that includes a $4 billion cash burn projected in 2019, $5 billion in 2020. So it is amazing how people would read this, or maybe it's not amazing, maybe we're the idiots, how people would read that and blame the Fed. Right. This kind of gets back to a point I made on our, sorry, shameless plug, our rekindled podcast, where it's not even the interest rates, it's just how willing are people to give out,

shell out cash to these types of deals. And I don't think venture capitalists are ever making their decisions based on interest rates because they're not like private equity where they're loading up, they're taking on loads of debt here. But I mean, I guess as long as there's this soft bank and these types of places that are willing to give them the money,

maybe it doesn't matter until it does. And ethical public, I think there's going to be a lot more scrutiny. How about the Beyond Meets IPO? Did it triple on the first day? I think it was the best performing IPO in like 10 years. Okay, we've got to argue about this because I said it's a crock that they can call a vegetarian burger. Oh, that's a terrible take, terrible take.

How can you call a vegetarian burger a burger? What should you call it? I can't believe it's not burger. I don't know. I haven't come up with a good name yet, but I've decided that there should be another rebranding where hedge funds should call themselves. Are you an alt-burger truther? Hedge fund should call themselves beyond alpha. What do you think?

All right. So are you up on this Jeopardy guy? Yeah, if you would follow the wealth of common sense blog, you would know that I wrote a piece about it on Friday, actually. Okay. Well, can I tell you that? I just want something about it on Monday. Did you really? In my defense, I missed yours.

I was in Miami. Okay. In my defense, yeah, I missed yours too. All right. So he was in the New York Times. What did you write about it? I honestly didn't read it. No, because I just published it like an hour ago.

Okay. He spoke about loss aversion. Okay. So anyone who doesn't know, Jeopardy has the biggest winner they've had in their history, and this guy is a sports gambler, which sounds like a really cool profession. Like, if you say you're a sports gambler, that just sounds, that's got some cachet to it, right? Oh, yeah. And so his name is James Holzhauer, and he takes a strategy where he immediately bets the most money,

so he goes right for the $1,000 squares. Anytime he does a daily double, he bets it all, and he's won more money than anyone has in jeopardy and way fewer episodes. Ken Jennings. Ken Jennings has won twice as much as him, but it took five times the amount of time to get there. So this guy's done it in 15 games. So he said if you don't take a risk like that, you're not going to win. Really, the big risk is never trying anything that looks like a big gamble. So the parallels to investing are obvious. But I wanted to talk about this point that he made. This was interesting. So the New York Times asked him, how did you learn so many facts? What was your education? He said he went to Illinois. Most people think he went to Princeton or something. thing. I have a strategy of reading children's books to gain knowledge. I found that in an adult reference book, if it's not a subject I'm interested in, I just can't get into it. Isn't that crazy? So he goes to the library and he goes to the children section. You and I should both be good at jeopardy then because of all the kids' books are reading. So that's the life hack. Okay, so here's the other

one that you missed from a different interview. So no more coffee. Go to the kids section. So he read, he talked to Darren Rovell, who now writes for some sports gambling site. I don't know what it is. But he interviewed him and he said, what's the trick? And he said, listen, and here's the investing parallels. He said, anyone who appears in the show has passed the same test, which I guess, I don't know if they give him a verbal test or written test to make sure you're smart enough. Oh, yeah, that was shocking. I had no idea.

He's like, it's really a lot of strategy that all these people can answer the questions. So he says, yeah, most people can answer. So he said the buzzer becomes most of the game. So it's how, and he timed the buzzer and he practiced it and he bought one himself. So he actually paper traded with the buzzer. Yes. He made one out of duct tape. And he said he found an ebo.

from a former champion that gave advice on when you can push it. Speaking of paper trading, are you watching the NBA playoffs? Yes. So I had a thought that there was a big difference between the regular season and the playoffs, a huge difference. A lot of weaknesses get exposed that don't appear in the regular season. The regular season is sort of like paper trading. That makes sense.

Here's why, because when you and I went to a Milwaukee Bucks game, there was a guy on the court whose balding was like just terrible. He was a regular season. You know what I'm talking about it. He was your hero. Yeah. Yeah, it was. But I said to you, I don't think this Bucks team can make it because they just, they don't look that good.

And they didn't have all their players and they weren't playing with the same intensity or whatever. And yeah, that is, that does make sense. Before we get into the next topic, liar, liar. I remember seeing a liar liar in the theater. And what year was that? Got to be 98. 94, I'd say. Oh, 94.

I remember seeing that and being like, eh. so it did not age good at all okay it was the uh liar liars jim carrie had his absolute worst oh oh let's actually stick with this for a sec anthony jesselnick so i read a piece about his stand-up special in the new york times and on the ringer oh you read a piece i thought you wrote it yes and i didn't i hadn't watched the new stand-up special yet and those two pieces of content made me want to watch the stand-up to see what i was missing because they made It's not like this guy's a genius. And so it's funny because it's almost like for a lot of the stuff on Netflix and HBO now,

they don't even really have to advertise at all because a lot of these places just do it for them because there's almost this fomo of content these days where if you don't watch something or get it, then you feel like you're missing out. And so I watched it. And it was really good. And he kind of reminded me of a more narcissistic version of Mitch Hedberg. Did you ever watch him back in the 90s? Yes.

And so I thought, because it was all one-liners and jokes. It wasn't like storytelling. It was literally just jokes that he'd made up. So I liked it. I think if you're easily offended, you probably shouldn't watch it. But if you're easily offended, you probably shouldn't be watching stand-up comedy anyway. Do you think that there is a line that should not be crossed in stand-up comedy? I think the line is way further or it's easily erasable in stand-up comedy.

What do you mean? I'm one of those people that is not a big fan of the politically correct stuff in stand-up comedy. I think they should be allowed more of a leash. Some of the stuff was pretty suspect, I suppose. So is Jerry Seinfeld the only comedian that's not, like, super disturbed or did not come from a tough childhood type of thing? He seems like one of the few that, yeah, he's not miserable, I guess. You sort of wonder how much of what Jessynook did was an act versus the real person. So that's what the stories, I'll post the story to the ringer.

It's all an act, it sounds like. He's not like that at all. He said he realized early on in his stand-up days. he is kind of a good-looking guy in trying to tell stories about not being able to pick up women didn't work very well. Was his, is his past an act?

Did he make that stuff up about his parents? He said a lot of it is made-up stuff, yes. He said, I'm not mad at that. He said the whole thing is a schick. Okay. And he's trying to make fun of people that laugh at some of the stuff, but he said he has had to change certain jokes

because people were truly laughing at stuff that was kind of sick and sadistic in a little way, so. Okay. So according to a survey, 45% of students from over 100 institutions, college institutions, said they had been food insecure over the past 30 days. What does that mean? Hungry.

I don't, saying they're not eating enough, they're not getting a food, I don't get it. Yeah, like literally, not like eating ramen, but like struggling to feed themselves. Is this? I mean, the usual, they usually say that in college you get the, you gain the freshman 15 because. there's so much food at the food or whatever. I think it's beer. I guess I've never heard this before, but this is another, yeah, it doesn't seem to pass the smell test.

So there's one in Gallup this week, and they asked people kind of, are you part of the halves or the have-nots? And it's basically, are you rich or you poor? 56% identified as halves, 36% said have-nots, but the one that kind of stood out was 12% of people who make $100,000 or more, say that they're part of the a have-not group, which I guess the point here probably is where are people being surveyed from? Yeah, wealth is relative. Right. I think that's the point. And maybe food is relative too for your survey. I guess so. That was a weird one. Okay. So Morningstar did their annual fund fee

research. And this is another crazy stat that probably seems to only get attention for people like us that pay attention to this stuff. But Morningstar looked at the asset weighted fees. So not just the average based on what all the fees are, but what are they depending on where people are putting money. And they found that mutual funds and exchange traded funds had an asset weighted average of 0.48 in 2018, a 6% decline from 2017. And since 2000, it's just gone down every year. So they've got a chart that starts in the year 2000, which was right on 1% for active fees, passive, it was like point three. And the graphs go from left to right going down. And now the active ones even are under 75 basis points. I gotta be honest. What's up? I'm bored.

Okay. Is there a point coming? Next question. All right. No, is there, is there, I mean, fees are going down. I think it's, it's not so much feasible. Like, if you did a total average of all the funds, the fees probably are still not that much lower, but it's just the funds that people are putting money into. I think it's showing that investors are actually getting smarter. So, you know, in the short term, the market is a voting machine. Yes. In the long run, you don't pay attention. Okay, credit card reward points. This was a kind of a cool idea I thought. This was a story in money.com. They said the Amex blue cash preferred card is offering accelerated rewards points for 6% cashback on things like Netflix, Hulu, Apple, and other streaming services.

So they're giving a boost to things that you subscribe to. which I thought was kind of an interesting idea. Like, what if I know there's... That's smart on their idea. Yeah, there's already things like Apple Pay, but what if these credit card companies paired up with some of these other subscription companies and sort of work together in a way to...

I think that's another way that credit cards can kind of get back. So my wife and I went to Florida a couple weeks ago, and we paid for probably two-thirds of the entire trip with a bonus sign-out from a credit card company. And so I signed up like six months ago, got a huge bonus right away from the first... through unsuspending. And so it still boggles my mind that you're able to do these types of things through

credit cards and that they can still make money on their business and be able to give this stuff out basically for free to people who take advantage. We also were in Florida, as I said earlier in the show. And my wife had an observation. So this is a hotel mostly, there weren't really many kids there. And as people do by the pool, they read books. Not many people on the Kindle. Matter of fact, I don't know if I saw a single Kindle.

really shout to our rekindled podcast but everybody was reading a physical book okay see so if use a kindle paper white it actually shows no glare in the sun so it works i read i had mine outside i guess maybe people are worried about getting it wet or spilling sunscreen on it but i think the numbers are still probably i think if you look at like the sales of my book you can check i think it's probably 90% regular books and 10% electronics so i wonder if like kindle went up and then K back down. I'm still trying to talk you into it. I think it's perfect for people like us

that like to highlight stuff and go back to it. But, yeah, I guess it's probably not as big as people would have assumed it would be. That makes sense. Oh, this is a hot take from you. What's that? Instagram is the new mall. Well, it's not exactly a hot take from me.

It's hot take from the Atlantic. They had a piece that says Instagram is the new mall. I like it. So I asked is it. So this was a piece in the Atlantic. They looked at how they think, influencers are going to be, I think what they're going to do is they're going to offer influencers way to, ways to sell stuff on their actual post where you can kind of click on

something and buy it right from a post, something like this. And they're saying, is Instagram going to be the new mall? The other take I heard was, no, it's probably more like the new QVC. It's definitely the new shoe store. Yes. Honestly, like, every time I don't, I'm still getting used to Instagram. I just started using in the past, I don't know, nine months maybe. Every time I go on, there. I feel like they know me so well. I think the microphone of my phone is listening to me because every time I talk about something, it's on there. But the stuff that they recommend me, I've bought in a lot of stuff off there. It's by far the best ad platform there is. Yes, I agree. Samuel Arbisman wrote the book. Hold on. What? I got something for you. Okay. This is the

portion of the show where Michael interrupts Ben. This is brought to you by. So this did not make it on to the rekindled podcast because there's just too much. But Steve Eisman, I think it was Steve advisement said this. And I wanted to get your take. I thought this was interesting. He said that the private market is more efficient because he said in private transactions, you usually have an advisor on both sides that's sophisticated. You don't have people who just fundamentally don't know that something works or don't know what something's worth. In public markets, you have people focused on quarterly earnings rather than the business franchise. You have people doing things for all sorts of insane reasons. I think that sounds good in theory, but not in practice. I agree with you,

but let me hear why. Because I think there's a lot of people in the private sector who have an information advantage over other people. And I think the people who can leverage that are the ones that can make out. And also in the private market, especially in a place like venture capital, the thing that matters more than anything is your relationships and your networks. So the venture capitalists all like to say, I mean, how many times on a podcast have you heard a venture capitalist say, no one wanted to invest in Uber or Airbnb except for the other 17,000 venture capitalists who have talked about it before because they're so contrarian. No one wanted to invest in this.

But, you know, it's the people who got it put in front of them that were able to invest in it. So I think it's a lot more about access and networks than it is about knowledge in a lot of ways. Okay, so efficiency is not the driver of returns there. And I think that there is more dumb money in the private investment space in terms of, institutional money than people give credit for. They just throw so much money in there that these private equity firms have to invest it. And even when they don't want to, and that's why all the multiples are rising in that segment of the market. Okay, what do you think? All right. So I forgot what I was going to say. So who's the Samuel Arborchagic guy?

So he's the guy, Samuel Arbor's man, is the one who wrote The Half Life of Facts, which I've mentioned on here a few times. And he posted something on Twitter the other day. And there's a study that he cited said that using inventory data from 1.2 million locations around the world and satellite images now that they have better technology, scientists estimate that there are three trillion trees on the planet Earth, seven times more than previous estimates. Three trillion trees on the earth. And again, seven times more than previous estimates. So I think anytime this is another reason that we're sort of anti-survey, because I feel like anytime you try to get like wrap your head around big groups of people, or just try to quantify anything in this massive complex system that we're living in, it's impossible. So this was a way to show that surveys are bunk once again because it's impossible to know. Wait, there's a disconnect. I'm not understanding.

So I'm saying it was impossible to sort of estimate how many trees there were in the entire world before they had the technology to do it. And so they probably took some samples, used a small sample size, and then built on it. So three trillion is a real number? They're saying based on satellite images. But I'm saying maybe, and then maybe in 20 years they'll have better technology and this number won't be right. Is this why GMO has been wrong on timber? Yes.

Oversupply? Yes, there's way too many trees. Okay, finally, this one is not shocking to me at all. Billy McFarland, the co-creator of Fire Festival, with Jarl, is crafting his comeback plan from jail and is going to write a book called, Prometheus Prometheus. He spelled it wrong. I like the movie Prometheus.

He spelled it wrong. The God of Fire. And I don't know anyone who would ever read this seriously because the guy is such a liar if you watch the documentaries. But again, I'm sticking my take that he is definitely going to start a venture firm or a hedge fund when he gets out

and someone is going to give him money because he's a good sales person. Yeah. Yeah, I'm going to invest in his credit card. All right. Let's get to listener questions. Okay. Hi, Michael and Ben.

I agree to your comments on saving for a house using a high-yield savings account. What do you think about using contributions to a Roth IRA? That way you can tap into the contributions to use as a down payment for the house because you can basically withdraw the contributions tax and penalty-free up to a certain amount. So, Roth is after-tax dollars. So here's the deal with the Roth. You cannot take out any of your gains, but you can take out what you contributed up to. Again, I don't know the exact rules.

it's probably not a, I guess it's not a bad idea. If you need the money. No. I mean, the downside is you don't get to, again, tap that growth. I think I would say if you can take it from somewhere else, do it. But if you have to, it's not a bad bucket to take it from. I think a Roth almost acts as your, I think, emergency cash.

Your emergency emergency emergency. Yeah. Right? That you can take those contributions out, but you can't take any of the growth. And again, I don't think that you're shooting for growth for something like a down payment for a house unless you're really willing to, sort of bet that money. But again, I mean, it's not the worst idea, but yeah, I'm kind of indifferent on that. Just trade harder. What do you mean, Roth IRA? Just trade, bro. Okay. Recommendations. What do you got? Did you listen to Jackie Mack with Bill Simmons? Yes. So she told the story about how she developed a

relationship with Joelle Embed. She went to Cameroon, had dinner with his parents, and then tried to go to Philadelphia to get some time with him. She was there for four days, and she got eight minutes with him. That's, yeah. And the moral of the story was getting access to these players is much harder than it was in the past. Sports reporting used to be a very inefficient market. Well, the thing, the great thing now is today players can go straight to their fans if they want through social media, Instagram and Twitter and such. And the question was, have we made these sports reporters? I mean, what's the point of having 30 sports reporters at a at a press conference after the game.

Like, I mean, what's the point? And there was... Well, Bill Simmons talks about it all the time. That's just the way things have always been done sort of thing. Like, if you were designing that today, all right, so talk about destroying ideas. This seems like a sacred cow type of thing. Yeah, well, so there was a story in the Wallster Journal today, and they talked about this huge amount of local newspaper reporters that have gotten fired in the past one or two decades because of the internet. The question is, did we need all those local newspapers in the first place?

Yes. What do you get from the local news? Here's what you get. Murder, weather. Murder. Well, that's charity. That's TV local news. You don't think that's what you get the newspaper?

No. I've lived in New York your whole life. Right. You get actual, you get good news. In small town America, the local newspapers, I mean, it's kind of good for the local sports and coverage. Are you say I'm an out of touch coastal elite? I am. And I'm in a flyer state. But I mean, I feel bad that this has happened and this many people have been disrupted and lost jobs. So the results of this story said nearly 1,800 newspapers closed between 2004 and 2018, leaving 200 counties with no newspaper and roughly half the counties in the country with only one. Getting back to Mr. Buffett, remember, he used to invest in newspapers. Buffalo News, Washington Post. That would be a horrible. investment today.

Yeah. Anyway, what were we talking about again? I don't know. I saw Creed 2 on the airplane. Okay. Very good. Okay, so I did the, I was watching, I watched Vice, the Adam McKay movie. Oh, what did you think?

And I had Creed 2 on the seat in front of me. And I think I watched enough on a seat in front of me to kind of get it. Okay. You know? Yeah, yeah. I watched the training montage. Yeah, but I like box movies. But Vice was way better than I thought it would be.

Did you see it? Fantastic. I saw it in the theater. That's when the guy next to me, drank my old fashion, and I had his Kampari. There are very few movie makers anymore that kind of, I think, are must see. Adam McKay. He's great.

He is a really good storyteller. So he did the big short. He did this. He also did all the Will Ferrell movies. Yes. By the way, you ever see the other guys most underrated Will Ferrell movie? Hilarious. Oh, really?

Yeah, I think I love it. I love that movie. So he took politics and finance two relatively boring topics and made them really entertaining, and he has his own little twist on how he tells the stories. Very good. I thought, and Christian Bale and Sam Rockwell were amazing. And Amy Adams, we're all amazing in this movie. Christian Bail as Dick Cheney. I mean, he's the best actor there is right now, isn't he? In terms of the range of his performances. I'm sure I've said this about six actors on the show, but it was great. And finally, my, one recommendation I got from some, we got a lot of good recommendations for how to teach your kids about money. I think the best one was probably called the book called the First National Bank of Dad by David Owen. Did you read that?

I didn't read it. I ordered it from Amazon. By the way, I feel like parent finance books is going to be like your new detective series. It might be. So he was on a podcast with Russ Roberts. It was an old one and I tracked it down and someone said, you got to listen to this. And he made a great point. I listened to it.

It's like 2012. But he said the hardest people to teach money for in terms of teaching your kids are people who are poor and people who are rich. Because if you're poor, you don't really have a lot money to throw around anyways. And if you're rich, it's really hard to teach scarcity. So he said, it's really only people in the middle who a lot of people probably don't don't even think they are there that can teach kids about money because they have maybe more of a balance between the two, which I thought was a really good point. So I'm going to read that

book, the podcast with Russ Roberts, I thought was really good. And finally, I've been reading the big change. America transforms itself. And it was taking a look at the change from 1900 to 1950 by Frederick Lewis Allen. Oh, we like that guy. Yeah, I've kind of started to go through all his books. The funny thing to me was, I think I'm going to write about this, but he talked about how people in 1950, which people now look back as like the golden age, were saying how crazy it was that how much better life was in 1900, which sounds awful because back in 1900, anyone basically in the middle class could afford like a whole bunch of servants, probably more like slave labor because it was so cheap. And so people in the middle class could have like their own 10 people

being their own servants in their house. So everything was better when 50 years ago. Yes. I think that's how it's always going to be. Things were better. back then. I couldn't believe the take, because he wrote this in the 1950s, that everyone thought things are too expensive in the 50s. They were way better in the 1900s, early in 1900s. And so, yeah, another good book by him. And yeah, that's all I got. All right. So I picked this book up on the sidewalk in Brooklyn, probably a year ago. A book called Chasing Phil. It's got a good cover, good name. Is that how Brooklyn libraries work? Pretty much. Books on the sidewalk? Yes. And, um, So I read it, and I was, like, thinking, man, this would be a great movie.

Turns out it's going to be a great movie because Robert Downey Jr. bought the rights, and I believe he's going to play the con man. So it's a book about two FBI agents before undercover operations were a thing, and they used their real names. Undercover. They use their real names. So it's called Chasing Phil. They chase this con man around the world, and it's a very good book. Definitely recommend. Okay.

Okay. One more. we watched the Zach Ephron Ted Bundy movie on Netflix I would say probably a pass Okay well you saw the You watched a documentary right It's a lot of Ted Bundy

You don't yeah I never realized he had like a girlfriend the whole time And was portraying himself I didn't watch the little thing So I'd say it's probably a pass If you kind of watch If you know the story But kind of crazy

What he's able to do But the point was Like those guys using the real name With technology being the way it is today Could a serial killer still operate And maybe Maybe they probably couldn't the way they could back in the 70s and 80s before the technology we do today.

Okay, all right. Anyway, thanks to everyone for the feedback on rekindled our new rereadables podcast. We'll be doing those more sporadically. Send in your book recommendations to Michael's personal email. Animal Spiritspot at gmail.com. We'll talk to next week.