Animal Spirits Podcast - The Undies Indicator (EP.108)

Episode Date: October 16, 2019

On this week's episode we discuss the streaming wars, recession-proof businesses, the China-NBA clash, the power of Twitter, underwear economic indicators, credit vs. interest rates, the winner of the no-fee ETF war, Robinhood's foray into banking, finding a new role as a CFA, the greatest TV characters of all-time 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 whycharts.com. Tell them Animal Spirits sent you and you got 20% off a new subscription. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt 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 Rithold's wealth management may maintain positions in the securities discussed in this podcast. I tweeted a chart of AT&T's

long-term debt, which is pretty astounding. Now, granted, this is an arithmetic scale. However, it looks like it goes from, I don't know, 10 billion maybe in 1999 to 170.7,000. $70 billion today. And of course, I didn't tweet out the other side of the ledger. But what do we make of this? So you're trying to avoid denominated blindness, which we've talked about in the past. It's pretty hefty growth. And so the other side of this is free cash flow. So we created a few charts on wide charts. So what is it? 171 billion in long term debt. And they have about 30 billion in free cash flow. And so you sent me this story from the Hollywood reporter that talks about how much debt they carry. Netflix has like 13 billion. Comcast has 108 billion. AT&T has

170 billion, call it. Disney's at like 60 almost. Okay. And so they said to your point, some people are getting worried that this content war is getting out of hand, that people are spending too much money. It's going to come back to the bottom eventually. And I think it probably, don't you think there's going to be one of these streaming platforms that just has an enormous bust and they spent way too much money, it's bound to happen. You don't think so? No, there will be flops, but when you say bust, what exactly do you mean that they just don't take and they get shut down or what? Because NBC is not going to shut down their app.

HBO's not going to do it. Disney's not going to do it. No, I'm saying from a financial standpoint, they're going to be forced to make some tough decisions because they're going to have like 18-month period where they have some flops because there's just too much competition now. Okay. But here's the thing that's going on is that this is part of a bigger story, which is that these companies, is they're basically subsidizing content in hopes that they sign on to other AT&T products and stuff like that. Apple is doing this. Why? Are people going to buy more computers, more iPhones

because of their content? I think that's the hope. I don't know if I buy that. But for instance, to your point about like things getting so expensive. So there was a bidding award for a Christmas carol between Apple, which has a new, is that Apple Plus? Yes, their new TV streaming. So Apple Plus has cost $5 a month. There's no way that they're going to cover. the cost of their content. All right. So anyway, so Christmas Carol was bid on by Netflix, Warner Brothers and Paramount. And this is with Ryan Reynolds and Will Ferrell. And they're paying these guys combined $65 million. The streaming has been good for actors and comedians, right? And pretty much I'm working in the content business, I guess. So AT&T spent like $109 billion to buy Time Warner.

And so this article says in the hopes that series like Game of Thrones and Friends would help the company add more wireless subscribers. Is that really, could that be? I mean, it just sounds so absurd. The whole premise like just sounds unless they do some bundling, which I assume that they're going to. Yeah, it seems like we've gone from one extreme to the other where Netflix was so far ahead of the game on this stuff and they were buying people's content and using it to

build up their own brand. And now all these other studios and executives are figuring out like, oh, that was obviously not a great idea to just sell our content to Netflix. We should just do it on our own. And there's way too many of them. But for me, as a consumer of this stuff, I don't know. I don't really, I don't know. I think it's going to be fine. Like Disney Plus is coming out next month. Did you see all the movies that they were showing yesterday on Twitter, scrolling through every single movie that's coming to Disney Plus? It's going to be huge. Some of these other ones I'm not quite as sure of, but as a consumer

of this stuff, I'm fine with it. They said in this Hollywood article, you know, we don't get worried until you have like a debt to EBITDA ratio of four and Comcast and AT&T are like three. Netflix is still under one. They're kind of a different story than those companies. So they're saying you shouldn't

be that worried yet, even though the debt loads are becoming pretty huge for these companies. I don't know. I think it's great. Here's my biggest problem with the streaming War, a place like HBO, they still don't have a skip intro button. How can you go into a streaming war without a skip intro button? That's like going into battle with a musket these days against a machine gun. How is that possible? This guy Matthew Ball wrote an opinion piece in the

New York Times and he said that the streaming video era is already starting to resemble the old age of television that viewers were so excited to escape. Exactly. And you knew it was going to come to this. You're going to have the bundle of a bundle. And here's the other thing. Managing all your passwords, do you know how long it takes to enter in your password on one of these things? You have to click through every single letter. Why can't they give us a keyboard to enter in our password or make it easier to do this? It's so annoying. Apple TV has an app. Okay. Yeah. That's what they need to make a more app based, I guess. But I don't know. Look at this chart. Look at this chart from Carl Kintanilla. So this shows Netflix, the price increases along with the U.S. and

international growth. There's an awesome chart from Goldman Sachs. And it shows all of the hurdles that they've overcome. So Apple TV was launched in June 2007, Hulu was launched in 2008, Amazon and Zimvidio, February 2011. And they've just been able to fight off all of this. I wonder what Netflix's future holds, because obviously they were the first mover here. Don't you think they're like the consumer staple in this and all of this, though? They're the ones who were there first and it's one of those things where you're paying, what is it, 10 bucks a month, 12 bucks a month. Do you think there really going to be an exodus or do you think people are just going to add on to these other things? Well, I don't. I don't. So Netflix is now $13 a month. There was another separate

article in the New York Times about how much Netflix is putting into children's movies and shows and stuff. So in one of these articles, I can't keep track because there were so many. While many analysts think these corporations are relatively recession proof, they believe subscribers will continue to pay for their services while cutting other expenses. Each has continue to spend exorbitantly driven by the race to develop premium content. Are these companies recession proof? What do you think? I guess you could make the case that when there is a recession and people lose their job, they're going to be looking for stuff to take their mind off of it. So, they'll go to these things. I think I'm with you. Like, there are big, big ticket items are the first

things to go. I feel like cutting the $5 a month for Apple and seven for Disney and 12 for this. I mean, you know, obviously it adds up. But I feel like these are probably the last thing to go. I would be more worried about the actual cable companies and people cutting the cord. than getting rid of a streaming service. I think streaming services will be much longer lasting than people keeping the $200 triple play or whatever it is. I agree. And it's sort of besides a point because even if these businesses are recession proof, their stock prices are still going to get destroyed. Yeah, either way. All right. So there was two really long articles. I think they came out just about the same time. Oh, the New Yorker one is a few weeks old. I'm sorry. No,

it's not. I can't tell. All right. Anyhow, there was a New Yorker article and an Atlantic article on Amazon and Bezos, and they both have taken, it seems like the wind is turning. I'm going to steal your joke here because I just clicked on this Atlantic article and how come we can get free trades from Fidelity and Charles Schwab and e-trade, but there's no free stories on the Atlantic after 10. You only get 10 free trades on the Atlantic. Anyway, continue.

All right. So I pulled out some good stuff and let's just go through this and talk about him. So, but what I was saying before you so rudely interrupted was that it seems like journalists are taking a much more critical tone towards Amazon. Yes. It was all like, everybody was praising Bezos. But now it's like, well, his charitable giving is pretty lousy. Well, tech in general, like it's easy to hop on the backlash. All right.

True. All right. Amazon will spend. This is from the Atlantic, which was Charles Duhigg wrote this. And he wrote, did he write the power of habit? Yes. He wrote a few good books. Amazon will spend an estimated $5 to $6 billion on TV shows and movies this year.

These are some good deals, actually. It bought catastrophe for $100,000 an episode, and this is this deal. It bought the first season of Fleabag for $3 million. Okay. And I saw they just re-upped her for $20 million a year to produce content for them. I don't get why are they putting out a Lord of the Rings TV series? Is that something we really need? So $250 million.

I'm there for it. I'm going to watch that. I mean, 10 hours worth of the. original movies. And then the, what's the Bilbo Baggins one that they did? The Hobbit. They did The Hobbit. They did The Hobbit. It was good. I liked it. I thought the second one was unwatchable. They didn't need to make it two movies. I don't see the need to make, like the movies were amazing. And it's like 10 hours of movies already. What else can they do in a TV show? You'll find out. So speaking of things like...

Okay, there you go. I'm putting it out there now. I'm old for one this year on my calls. Lord of the Rings TV show. It's going to be a bust. I'll take the other side. All right. All right. So, getting back to, did this really need to be made? Did you watch El Camino? I did not yet.

What did you think? I thought it was about as good as it could have been. I don't know if I'm going to watch it, but I don't really want to. I feel like it kind of sullies the name of Breaking Bad. Like Breaking Bad was the perfect ending. It really was. So I don't think that this did any damage to it, but I also would have been fine if they didn't make it. So it was, like I enjoyed it.

It was fine, but it didn't really bring back any emotion. I was full after Breaking Bad. I didn't need a dessert. Yes, but honestly, with the amount of money flowing, I can see why they did. Like, I thought Better Call Saul was totally unnecessary to make. All right. That is interesting. Prime members in the U.S. spent $1,400 a year on Amazon purchases compared with 600 by non-members. 93% of prime customers keep their subscription after the first year. 98% keep it after the second. So, not a bad business. $1,400, it seems low to me. Maybe that's just because of my household. spends like that a month on Amazon. I did not know this. Bezos was an early-ish, I guess,

investor in Uber, and he got $400 million out of that company. Wow. Not bad. I did not know that. Talking about AWS in 2013, the CIA agreed to spend $600 million to place its data in Amazon's cloud. And, oh, Robin said this to me over the weekend, that Amazon clothes are becoming popular. And the reason why they're becoming popular are because influencers. Yeah, I had my ear to the ground on this one. Did you? I told you about, I told you about this like a year ago. Yeah, you did. Well, were you influenced by the influencer or did you just find it yourself? I just found it myself, so I'm pretty sure I'm the influencer here. Keep up. Yeah, not bad. Okay. Then this one's from the New Yorker. Amazon says that it cannot accommodate

the demands of Birkenstock and other companies that wish to, quote, limit availability of competitive price products in a statement because what was happening is that Berking stocks were being ripped off and copycat products were being sold, they were fake, and then Birkenstock sales reps were getting flooded with calls, hey, your product sucks, and they were just fakes. Yeah, they talked about this on that Amazon podcast you sent me. Right. So Amazon said that its role is not to decide who is and is not authorized to sell various items. Amazon is in a mall, a current executive told me.

He described it as a website that offers unlimited shelf space for an almost unlimited number of products and sellers. And they said this in the article, that they are totally – skirting responsibility, and basically Amazon is a platform, and they're not, they can't police what goes on on the platform. Tech companies are very good at side-stepping this stuff. This sounds like a whole pile of horseshit. Of course. Tech companies are great at this. If there's a problem and it deals with them making money, they're really good at washing their hands of it and saying, sorry, this is the way it works. Yeah, we're just a platform. So yeah, so these articles did not necessarily paint baselson in the greatest light.

And I think that's fine. I mean, the guy has been on a pedestal. for decades. You know, mostly fairly so, but I think a more critical look is in order. So I think the NBA China story is like one of the most fascinating business stories in years. And I don't think that it's going away. And can you, can you plug yourself? Because I think you had a really good call on our rekindled episode for people that did not listen to it. What did you say? We talked about Malcolm Gladwell's books on Rekindle, if you want to listen to that. And I talk about tipping point and it's the idea of what makes ideas spread like wildfire and some people get angry about this because they're like why did it take a GM from an NBA team tweeting about this to make

more people pay attention and honestly I don't really even care what set it off I think it's just interesting how these things happen in the social media age and I mean is there a more powerful media organization right now than Twitter like like anything like what happens on Twitter and what it causes and the president putting out his edict through Twitter. It's got to be the most powerful platform in the world right now. More so on the Facebook? Yeah. I mean, just because of the reach that it has, even if it's not being used by as many people.

Think about what it just did. So the tipping point for all this, which is the Hong Kong protest has been going on for a while now, and it took this tweet that was up for like a half hour and got deleted because you had all these things coming together. The NBA is more popular than it's ever been, and it's more global than it's ever been. and you have these individual players who are so concerned with their brands and they're trying to make money outside of the game now and you just had all this stuff coming together. They've been like the wokenest league in history and then this happens and it's just

this whole collection of things that just set it off and Darry who has waded into Fintuit a little bit. He's like 25% Fintwit on Twitter. He's an honorary member. I'm guessing we won't be seeing any tweets from him for a while, but it's just amazing how these little things can happen that just blow up and explode. And honestly, I've been a little disappointed in the takes. Like, there haven't been that many good takes on it. Because on the one hand, you get the people saying, oh, this is crazy. Why are they defending China over this? Why aren't they defending

democracy? And on the other hand, you have people saying, well, of course they're going to do that because they're just worried about their brands and their shoe sales. So please deliver us the appropriate take. Well, I thought the best take I've read by far was Ben Thompson's at Strateker. and he talked about a story called the China Culture Clash. I thought this piece was just excellent. So at the start of it, he kind of gives some background on the story, and he talks about there's one rather glaring hole in this story of immediate outrage from Chinese fans over Mori's tweet.

Twitter is banned in China. So the whole thing got set off by a tweet and Twitter is banned. So that just shows, like, what I'm talking about, the whole reach of Twitter beyond this. But he also talks about how TikTok, the new huge thing in social, social media, which I don't get, I'm never going to be a first adopter of social media platforms. And so I'm definitely the old dad guy who's approaching 40 who doesn't get TikTok. Like, it doesn't make sense to me. Like, these people are dancing and doing stupid stuff. I don't get it.

But that's owned by a $75 billion Chinese startup called Bite Dance. And they have gone out of their way to also sort of silence certain topics on their, on their site, which, which I'm sure I don't know how many people using TikTok know that it's owned by a Chinese company. The point is it's just really muddied water here, but I guess one of the things I'm most surprised about is... Wait, what is your point? My point is that, well, I don't want to be one of those people that says, well, there's a lot of interesting things on both sides. I just, I'm really shocked by the fact that there hasn't been an articulate answer from someone in the NBA yet. Like Steve Kerr totally bungled it.

Did you hear LeBron's comments last night? Just, I mean, I can't believe there hasn't been a better, what I tweeted out last night was, I can't believe. Has any statement not been misconstrued? Exactly. There hasn't been a good, solid, like, okay, you know what? That actually makes sense on all this. And I get what they're doing and that they want to have their brand be okay and sell them like issues. And I just think the business implications of this are so wide-reaching.

And I don't think of the story is going away with the NBA, so they're going to have to learn how to answer this question better. and hopefully someone will eventually. And I wrote last night, don't you think there's going to be some middling NBA player who's played for like 10 years, made $50 million, no his contract right now is guaranteed, and doesn't really have a shoe contract or endorsements to worry about,

and comes out and speaks on this issue in a thoughtful, articulate way. No. There has to be someone who does that. Enos Cantor kind of did it last night. I think someone's going to do that. It's Ennis. Ennis, sorry.

And I think someone's going to do that eventually and make a name for themselves like Kaepernick did. and get some stuff that way, but they're not going to get through Nike, that's for sure. Well, here's why that's not going to happen. I think it's so foreign, and most people in the world, especially like not single out of NBA players,

like I don't know the issues in China. No, but this is a bipartisan issue. You don't have to know the issues in China to defend freedom of speech and democracy. That's the issue. That's the thing that's pissing people off. Take it easy. I'm sorry. No, I'm just saying that's the thing that's making people mad

is you don't have to understand the back and forth between China and Hong Kong, you just have to say it's okay to have freedom of speech and, you know, and... All right, fine. You know what? Prediction. Robin Lopez will come out. Great. I think I think someone is going to think like, you know what, I don't really have a brand anyway to protect. I'm going to make a new brand by doing this and everyone in America is going to love me. It's just... Make a prediction. Well, the interesting part about the whole thing is that in the U.S., when you do this woke marketing, you kind of know you're going to upset some people, but

the U.S. consumer, like, just doesn't care. Like, there'll be a few people who burn Nike's on Twitter when something goes wrong, and when Nike did the Kaepernick thing. But then we just move back on and we buy stuff because we just don't care because we're the consumers. But in China, they can literally, like, wipe out. It's not like a left versus right thing where you know how both sides are going to react anyway. Like, they just shut the whole thing off. I think you already said this, but just in case I forgot, the irony is that Twitter's not even a lot in China. Yeah, that was the first thing I led with. Thanks for paying attention. But remember the Uber stuff from China in Super Pumped?

They talked about how hard it was to get in there and then they never made it in. Don't you think that some of those companies that couldn't make it in are probably going to be thankful for it in the end? Does Apple come up? I mean, people talk about this idea about like hypocrisy and how these NBA players speak out about stuff in the U.S., but not against China, but aren't we all kind of hypocrites of the consumers because we all get cheaper goods from China? That's what I'm saying is just from a business perspective, how far does this go? Does Apple get pulled into this? Do they get asked questions about it?

I appreciate your meta-wokenness. Okay, I don't need, it's not even about being woke. I think it's just, it's crazy. The other one to me that was crazy was ESPN basically forbid any of their people from talking about this. Like they- Well, that's not surprising. Well, yeah, because they have the deal of the NBA. It's just kind of crazy.

And Disney? Like, isn't Disney in China? But we talked about Sports Illustrated last week and how could they have seen ESPN coming. if ESPN is not going to let their people talk about these issues, well, what's the point of going to ESPN anyway? Because you can watch sports anywhere and highlights... Wait, what do you mean? What do you mean?

Why? Like, don't... People go to ESPN because they... Shouldn't they have some journalists who actually... Like, this is a huge issue for them. Like, this could potentially hurt the salary cap of the NBA in a few years. They said it could drop like 15%. This is a huge story for them.

And they kind of just glossed over and didn't talk about it. All they talk about is what goes on in between the, uh, the, uh, the, uh, lines. Yeah, but I don't know how you could ignore one of the biggest stories like of the past decade probably in terms of business and everything coming together. I just don't think it's going to go away because LeBron has Space Jam 2 coming out. He wants people in China to watch it. You know, the Rock's movies are made specifically for people in China, I think, these days because there's no way anyone in the U.S. is watching his movies. I just think it's like, this story's not going away. And the NBA players are going to have to figure out how to answer it much

more coherently than they have thus far. And even people like Popov and Spur, or in Kerr, who kind of dropped the ball, too, which is kind of crazy to me. Can I point something out? Yes. I feel like you're getting stronger in deflecting my potential interruptions. Yeah, because I'm used to it. I'm like Captain America with a shield, like knocking people out of the way. All right.

I was at, I heard somebody talking about, and this is an interesting point, you never really see Chinese villains, not just like in superhero movies, but just bad guys in general. They always tend to be Russian or Eastern Europe. or something like that, you know, something that you don't really think about. But this is why. Because China is so powerful. Yes. And again, if you do something in the U.S. to speak out against one side or the other, you kind of know how they're going to react, but you know the U.S. consumer is going to buy your stuff anyway. The Chinese, it's not a bipartisan or it's not a partisan issue where you know how each side is going to react. It's one side and you have a billion people to worry about. And the government can just totally shut you off.

So it's just a crazy, the story is just, I think it's fascinating. And I don't know what it all means, but I thought Ben Thompson's take was the best one that I've read so far. And it was one of the only good takes I've seen on the whole thing. Well, I appreciate your rendition of Ben Thompson's take. Okay. All right. So we've never spoken about this before. But investors pulled $60 billion out of stock funds in the third quarter, which was the most money leaving stocks since 2009. And on a percentage basis,

is the biggest outflow since 2011. And over the same time, they put $225 billion into money market funds. Ben, what is going on? I just want to make it known that I protest this, this segment. I did not want to talk about this because we talk about it once a month. The same story. Once a quarter. The same stories in the Wall Street Journal, at least once a month, that stock market continues to rise, but people continue to pull stocks out of the stock market. All right. But now, but now, sir, what's different? What's different is that stocks are basically back to all-time highs. We're very close to it. I think this is going to be a running theme. And it has been for decades. Like, if you look at the money, there's been net outflows of stocks for like decades now. And I think it's just... Hold on. No, funds, funds. Yes, out of stock fund. Because I think what people fail to realize when they're reading these stories is that stock funds aren't the entire market. Exactly. People actually, people actually, believe it or not, do hold stocks directly. Yes. It's the fund you

universe is what retail investors know, but it's not the only thing. And don't you think this is just going to be the case forever because baby boomers are retiring at really high numbers? No, I don't. Okay. Prove me wrong. I can't. You prove yourself right. You think that... 10,000 baby boomers are retiring every day for the next 18 years. I don't buy that number. We've already gone over this on this podcast. Wait, that's a real number? Yes, we went over on this very podcast and proved that it's a real We did the math on it. You didn't believe it at the time. All right.

But you think that you really think that they're selling stocks? Why wouldn't they sell stocks? I don't know. I got nothing. This is why I protested. All right. So we've used the RV indicator before to talk about the economy. And the idea was that RV sales slow.

And that kind of shows what's going to happen in the economy. Someone sent us a piece about called what, The champagne, RV, and underwear indicators say about the economy. And this was a good one. I've never seen this before. Alan Greenspan first started talking about men's underwear sales as a warning sign for economic downturn in the 1970s. Wait, was this me undies? Yeah, that's going to lead to a podcast recession when they go under.

The idea is that undies tend to be the last clothing item men replace and when money gets tight. I love the, I love the word undies. Yes, it's great. Good news is it's expected to grow 3.5% between 2019 and 2020. and VCs have poured millions into a variety of new subscription underwear companies. Boy, that's got to be the most boring subscription plan ever. You have a pair of Tommy Johns? No, sorry.

Haynes probably, I don't know. No me, undies for me. Wait, I think that undies are the anti-content because they're the last thing you buy. Yes. So at the depth of a recession, everyone will just have Netflix watching in their underwear, right? in their old underwear. Okay, they also showed Champagne, like in the 80s and 90s, when those recessions hit, champagne sales tanked, which I guess that makes sense.

I think our colleague Chris will single-handedly keep the sales of Rosea going during that period. But, okay, why mortgage rates don't fall as much as you think? So the 10-year treasury is typically a benchmark interest rate for a lot of things. One of them being the mortgage rate, but 10-year treasuries are down to like 1.5%. They've dropped almost 0.5% in the last month or so, a couple months or so, but 30-year fixed-rate mortgages have basically stayed flat. So this is the idea that the demand for credit has a lot bigger of an impact on certain rates than the level of interest rates that are being set by the Federal Reserve.

know why this makes my head hurt. When demand outpaces supply, prices should rise. But in this case, we're talking about rates, not prices. And when prices rise, rates should fall, but that's not happening. Yeah. So the idea is that more people are demanding mortgages now. So that means the banks don't have to lower their rates to entice people to borrow. So I guess your greatest hope for much lower mortgage rates will probably be during the next recession when they fall. And I think I did the numbers on this. I think it's like since the 1950s, mortgage rates have fallen like 1.8 percentage points on average from the peak to the trough during a recession. And obviously, if borrowing slows during a recession, that happens. So the problem with this recovery has been, even though things have been looking better, we had a huge credit bubble leading up to the 2008 crisis and people have been raining in their credit a little bit. And so the real problem is that the Fed is manipulating rates higher.

Yes. And my point here is that maybe the maybe, just maybe the Fed isn't manipulating. all interest rates, and they can't do everything that people, some people think they would like them to do. And sometimes interest rate market doesn't really cooperate. If people don't want these loans, then there's nothing they can really do about it to force them much lower. So this is surprising. This year, more mutual funds were launched, I'm sorry, last year, more mutual funds were launched than ETFs. That is surprising. 345 to 247. And there's about four times as many mutual funds as there are ETFs. And I'm guessing that this is not counting multiple share classes. I'm guessing that this is distinct mutual funds.

Do you think that it's just a generational slash 401K thing? Like the 401K market is still keeping mutual funds afloat? That's not a theory. That's 100% of the case. And then maybe older investors just aren't as willing to invest in ETFs as they are in mutual funds? I don't know if that's the case. I think it's more the plans that are being sold. Yes, because ETI, I can't believe that someone hasn't tried to make it easier to invest in ETFs through a 401K, or that hasn't really taken off yet. I guess you don't really need them because it just kind of introduces more trading, but I'm just kind of surprised. So there was an article in CNBC. Who won the zero fee ETF war? Looks like no one. So I think we spoke about SOFI. They've launched an S&P 500 index fund.

You know what the winner is, Michael? Yeah. The consumer. That's who won the ETF fee war. So that's attracted, just $55 million in assets. Salt financial. I think that we spoke about this, that they had like a negative fee until it gets to $100 million in assets. They've only taken in $7.7 million so far. So this was a good article worth reading. But I think it's just it's really hard to launch an ETF right now. And Ben Johnson had a great quote.

Like when you're going from 10 to 7, and especially from 5 to 3 to 2 to 0, you're splitting hairs and the hairs have been split at this point multiple, multiple times. But they said that the biggest winner of all in the move to zero fee funds was on an ETF. but actually mutual funds. Fidelity, and this is the whole point. So Fidelity raised $6 billion in their core index mutual funds at no fee. The big story here, in my opinion, is distribution. You got to have it, especially when you're competing on fractions of basis points. So Microsoft won again, that we're saying? There you go. All right. All right, survey time. Six out of 10 high income millennials plan on foregoing retirement or wait until they're 70 years old because they plan.

to find enjoyable work that will not want to leave, according to a new survey from the Spectrum group, but nearly three... These are so dumb. I know. Nearly three and ten high-income millennials, and half of those between the ages of 30 and 34, feel they won't be able to retire because they'll never be able to save what's necessary. Running theme on the show, obviously that some surveys are done. Some surveys are better than others, but your opinions and what you think changes over your life.

So, yeah, right now, I could say, why would I retire? I love my job, but I'm 34 years old. Yes, it's hard to plan these things. And that's one of the reasons why it's hard to plan out the saving for it because it's so far into the future that some people don't want to think about it. Wasn't that, like, a part of a book that we discussed recently where it's like, you look back, I forget what book this is from, you look back on your clothes, your hair, and you're like, what was I thinking?

But then you think that in 15 years you're going to be able to predict what you're going to think then. It just doesn't start to square that circle. Yeah, or you predict that you're feeling. now aren't going to change in the future. Like, every new version of you is the version that's going to always be the same you. And that's just not the case. Things will surely change. So they might forego retirement because they can't afford it, not because they want to work forever. Right. And honestly, some people are going to have to work longer. That's just, and because we're living longer. True. There was an article in New York Times. And when I read this, I was, I mean,

I was shocked. I don't know what else to say. Here's a quote. At Enniac Ventures, a venture firm in New York in San Francisco. The partners recently combed through their companies and identified, quote, gross margins, a measure of profitability for each one. This was not something of the firm regularly looked at, but they were inspired by Mr. Wilson's cautionary blockposts. They're talking about Fred Wilson. All right. So I understand. Why would they want that in print? I understand. We never looked at gross margins before. this particular VC might be looking at even pre-revenue, pre-product, I don't know what stage they invest in, but why would you say that out loud?

This is like the people they interview in the Wall Street Journal stories about their crazy trading strategies and getting out of them, timing the market and stuff. I have no, I don't know. Not a good look. Let's put it that way. Yeah. Again, when you're very early on, you're not worried about gross margins. But if you're a professional investor, you have to at least be somewhat like tangentially aware

of expecting margins. I don't know. Yeah, a change in strategy because you read a blog post, typically not a good selling point for investors. How did you develop your process? Well, I read a blog post once. And anyway, okay. So Robin Hood is making a second go at their interest bearing checking accounts or savings accounts. remember we talked about this a while ago, I don't know if it was a year ago or what, but they

were going to launch 3% interest rates and then they put the kibash on that because they, it wasn't being insured. And so now they're offering 2% interest rates in a no fee debit card service as they try to become the bank for the avocado toast generation. It's going to be insured this time up to $1.25 million. I have a Robin Hood account. So I signed up for this just to see what it would like. It would be like. They're still on the waiting list. I was about a hundred $104,000 on the waiting list. Not an early adopter. I signed up the day I read about it.

So obviously there's enough people who want to do banking through Robin Hood. So I don't know. Maybe this company will be more resilient than I give them credit for. But I just don't see. Why doesn't a big bank, like we talked a few weeks ago about how Goldman has pumped all this money into Marcus? Why doesn't a big bank just buy Robin Hood? Wouldn't that be a smart move? Because their valuation is $8 billion.

No, that would be a terribly unsmart move. in my opinion. They wouldn't have to spend $8 billion right. Now would be the perfect time to go buy them for $5 billion and a fire sale price. Goldman or JPMorgan, why wouldn't one of these banks buy them? I don't, I just don't see why that would not be a smart thing to do to get a whole new expensive. Okay. So what Goldman's doing, there's been some mixed results. You think they like triple down and buy Robin Hood? Yes. If they're going to make a push for that, why not? I mean, if they're really trying to go, if they're going down market in the RIA channel and they're going Marcus to have more banking for the masses, why not go for the millennial

crowd too and just do it? Listener questions, what do you think the future looks like for people with a CFA designation skill set, hearing constantly that the investment management function is being commoditized. As a 30-year-old charter holder, it's disheartening to know where I fit in our industry. I'm effectively being let go from a small RIA I work at because the owner is looking for a more pure client-facing advisor. There can only be so many influencers and podcasters or industry, so I'm not sure where to go. That was a nice sub-tweet of us right there. So someone sent me this this week. It was, what does the CFA good for? They broke out the job rolls of

CFA charter holders and then who employs them. RIAs are actually a pretty small employer of RIAs or of CFA charter holders. It's not that big. So private wealth management has like 16% of CFA charter holders. Obviously, the biggest one is that investment companies with like 23% and then across institutions and pensions and that sort of thing. What do you think? Because last week we talked about how do you avoid being taken over by a robot? This week, the question is, how do I avoid being taken over by a financial advisor, basically? Any thoughts? This is tough. I feel for this person because we've seen a lot of consolidation in the financial services industry. And I think this is probably a one-way train. But this person is still young. I would encourage them,

and it's not for everyone, but I think the CFP is still really valuable. Not just the designation, but there's always going to be a place for people that give advice for people. Here's the other thing. Last week I talked about having a broad range when you're young. I think when you get further on in your career, and if you have the CFA and you're 30 years old, you've probably been working in the industry for, I don't know, closing in a decade now, I think you should find your niche. And if you're an investment person, find your niche and become an expert in some sort of investing related topic. So figure out a way to manage retirement portfolios specifically in a certain way and figure out how to help the firm do that. Figure out a way to help

with tax efficient withdrawal strategies from an investment portfolio. So I think there are ways where you can translate those portfolio management skills into something, but you need to have some sort of value add and find a niche where you can actually add value to one of these places. especially if you want to work for an RIA. All right. So I think your answer is better than mine. So we gave contradictory advice. Mine was to change your stripes and yours was to improve your stripes.

And I think that yours is probably best. For some people, it might be hard to change your stripes. And if you want to, yeah, I think you need to, at that point, niche down unless you're going to go full, yeah, go for the advice thing. Okay, recommendations. Howard Stern was in Los Angeles this week and a few funny stories that I wanted to share. So not necessarily recommendations, but. Is Howard Stern like your favorite person on the planet? He's got to be up there, right?

You're a big Howard fan. Well, I've listened pretty much every day since I was like 15. So, yes, he's had a pretty big influence, I would say. So Jimmy Kimmel was on the couch on Monday morning, and he was telling a story of how Bill Gates invited him to roast him. And maybe Bill Gates didn't necessarily know exactly what a roast meant. But Jimmy said that, I don't know if this was in front of Microsoft employees, I think it was, but he basically bombed because nobody was laughing, except for Steve Bomber,

who was cracking up the entire time, like cackling. I thought that was really funny. Yeah, that's good. So Arnold was on later that day, and he was saying how they're thinking about making a sequel to twins, which at, you know, you're like, why? I love that movie. I don't know if it aged well or really poorly. No, I love that movie, too.

It's hilarious. Like, I love that movie, but here's what they're thinking. They find another twin, and it's Eddie Murphy. Okay. Like another long-lost brother. If they could pull that off, I think that would be hilarious. Okay. Remember the Titans, rewatchables was freaking awesome.

That's a Bill Simmons, a Ringer podcast. Did you listen to that? Yeah, that was good. I have a food recommendation. Okay. So my whole 30 has concluded. Did you go on like a weekend-long bender? No, I didn't.

I'm easing my way. out of it, because I don't want to, like, destroy my stomach and go back to my bad habits. So I made sweet potato home fries, and here's how I did it. You boiled the sweet potatoes for, like, 10 minutes to soften them up, then put them on the frying pan, and they were really, really good. Okay. You know what we've been using in our house lately? My wife put in some peppers and onions just for a little bit of flavor.

For a little healthier frying, my wife brought an air fryer. Don't ask me how this works. An air fryer. You, like, put it in this thing. It's like one of those, they're big in the infomercials, like the 90s, how they, how you do it for, like, little banana slices, you know? What is that called? A little banana slices?

You know how you, like, you dry out fruit? You know what I'm talking about, like little banana chips? Yeah, yeah. Those things. I can't, but humidifier, not humidifier, what's it called? Dehumidifier? The name is escape me. It's an air fryer.

Okay, wait, I have a question. Wait, does it fry the food or does it dry out fruit? Yes, it's for frying food, but without using fat to fry it in or oil. So you put in, you put in like your fries or your chicken nuggets and it cooks them faster in an air fryer without having to use all the bad stuff with it. I'm going to Google this. All right. I'll try to find it for you. I'm not explaining this well.

All right. So I fin, so first of all, Conan Letterman was great for the podcast. Conan's, Conan O'Brien's one is better. And the thing that stuck out to me was. Wait, wait, hold on. Hang on, hang on. He's back with a new season? Yeah, so it just started, new season.

David Letterman was his first guest. And maybe besides Howard Stern, over the last 30 to 40 years, Letterman and Conan have probably had more interesting conversations than anyone. And the thing that they were most, and they have probably a million stories, the thing that they were most excited about talking about was their kids, which I thought was just, like they got so excited because Letterman was saying how he basically wishes he would have retired 10 years earlier and had two or three more kids. and he's really mad at himself for that.

So he has a lot of regrets, actually. But them talking about their kids was like the thing they got most excited about, which I thought it was good. Well, actually, let me just interrupt real quickly. So I went upstate this weekend. We have a cabin up north. And Kobe was, we have a quad.

And he was calling it a green tractor. And he had like a little biker helmet on. It was so, it was the cutest thing ever. And he, unfortunately, like, he never wanted to get off. There was a lot of yelling and crying. Ah, yeah. I want to go back on the green tractor. One more time, one more time.

But it was just, it was really hard. He talked about how, like, Lederman was like, no one told me kids are so funny. And so I took my daughter to the doctor the other day. And she had to get, she had a little ear infection thing. And the nurse is checking her out. And my phone is in my pocket. I'm holding my daughter while the nurse checks her out. And my phone buzz is probably from you texting me or something.

Someone was texting me in the morning. My phone buzzed. And my two-year-old Kate thinks that farting is the funniest thing in the world. And every time her brother farts or her sister, she points it out and laughs. and so when my phone buzzed she shouts to the nurse she goes daddy tooted to the nurse because my phone was buzzing anyway it was the nurse was biting her tongue out to laugh and I had to say actually that was my my phone I swear it's my phone anyway so that was really great I finally finished the Sopranos and I got to say I feel like it's one of those things where you finish the show and you're depressed at the end of it because you know you're not going to be able to watch it anymore I don't understand how you watched it like in the background that work. That's impressive. No, not at work at home. I watch it at home in the background. I think, uh, I think you admitted that you watch it at work. No, I said, that's okay. Brian, Josh, aren't listening. No, I said when I type blog posts at home at night, whenever else

is in bed, I have a sopranos on the background. Instead of having a game on it from all the sopranos, I freaking, it took two or three seasons for me to really get into it, because I thought it was a little slow at first, like, all the critics that have said they don't like it for, there's like too many dream sequences. There's probably too many episodes. They could have done like 10 episode seasons, but by like the last four or five seasons, it was so good. And even though I knew who was going to die and what was going to happen at the end, it didn't really matter. Like, I was still kind of anxious at the end and like sitting on the edge of my seat.

I loved it. And so here's where I come up with because I think of my lifetime, my TV lifetime, call it the last 30 years, I think Tony Soprano is the greatest TV character that's ever been on TV. And so here's the ones I came up with for the greatest leading TV characters of my lifetime. and because I know people say like Omar from the Wire but he's not a leading character he's a minor character

so anyway let me know what you think I got so greatest TV characters of our lifetime called the last 30 years I've got Tony Soprano Walt wait hold on go slow okay Tony Soprano he was so so good like in the stuff he'd wake up at like 11 in the morning hung over after being out all night

and he'd come down like in his bathroom like that's the stuff to me that was so believable about him it's like he was good in any situation Walter White from Breaking Bad, obviously. Don Draper, Mad Men, and I got Carrie Matheson from Homeland. Those are probably the best leading characters of my career TV watching. What do you think? Did I miss anyone?

Probably. I mean, you named four, so I'm guessing you missed a lot of people. Let me come back to you. Okay. Think about that, and we'll talk about it again next week. Everyone can let me know while I'm an idiot or what I miss. I liked it so much. I read The Sopranos Sessions by Alan Sepinwall,

which goes over like every episode in the show and then they interviewed David Chase the creator to see what his motivations were behind some of the storylines. I didn't read it all but I looked at some of the my favorite episodes and parts and the whole Chase thing. So I loved it.

I can see why some people, I wouldn't say it's like the best show ever but it's obviously in the conversation and I get why it is, even though it took a couple seasons for it to like really get going for me. I thought it was awesome. Loved it. Not exactly an original take there,

but I'm saying I'm putting it out there Tony Soprano. It's 2019 and Ben liked the Sopranos. I mean, there were some stuff that didn't age well, and there were some actors in the show that, like, the second and third, you know, secondary characters on some of the episodes weren't that great actors, but... It's enough. Yes. Animal Spiritspod at gmail.com. Please go to iTunes.

Leave us a review. Knock down... If you leave us some reviews, I think the older reviews will get bumped down, and please do so, because we've got a few really nasty ones. You can check them out if you'd like. And we'll talk to you next week. You know,