Animal Spirits Podcast - The Vaccine (EP.176)

Episode Date: November 11, 2020

On this week's show we discuss what a vaccine would mean for the markets and economy, why a post-pandemic market will be so difficult to handicap, the potential for a massive boom post-vaccine, market moves after the election, corporate America as our strongest institution, why this year has been so challenging for investors 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 our friends at YCharts. Last week, Michael and I took a little test run with YChart's new dynamic model portfolios tool. They gave us a little demo on this. It's pretty cool because most backtests allow you to backtest, say, a 60, 40 portfolio, and you take a look at it and see what performed over time. But this dynamic model portfolio allows you to make changes over time to your portfolios. So you can see had we implemented this change to our asset allocation or this holding, how would things have looked versus how it actually?

actually played out. And I think one of the big use cases for this is testing out how a change in allocation or a change in strategy or a change in funds could have affected you positively had you not made that change. So this is a cool one. Go to whitecharts.com. Tell them Animal Spirits sent you. They'll give you a seven-day free trial and 20% off your initial subscription for signing up. 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, writing, and watching. 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 Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rit Holt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. We're recording this on Monday morning and we woke up to some wonderful news. Doesn't it feel like the election was eight stock market cycles ago already?

Man. So the election was Tuesday night. What a roller course of this last week has been. Yes. Honestly, besides the usual people saying pump the brakes, you never know. It sounds to me like this vaccine news is about as good as it possibly could have been. From us being complete new whales, not knowing anything about it. Not priced in.

And obviously not priced in. Yes. So I guess Dr. Fauci said they were hoping for 75% effectiveness. And the Pfizer CEO was on CNBC this morning saying that it's actually over 90% effective in their trials. And he was saying that they never in a million years would have expected it to be this high. Do you know if you're in the 90%? Is there any way to know once you get vaccinated whether or not it worked for you? I guess it doesn't matter if it goes away, but that's it. Yeah, I don't know. If you had two shots, does that mean you're now 180%? Yeah, I like the

triple lever version of the vaccine, please. So Gottlieb was on CNBC this morning. He said, He thinks limited use as early as late December, if this goes through, widely available by third quarter of 2021. I guess you need two different shots for this to work. Whoa, whoa, third quarter? They have to produce this thing. And I mean, I assume there's going to be some hierarchy of medical professionals and old people and frontline people. I don't know if it's cops and firefighters or what, but people that have to be out. So I'm sure it's going to take a while.

Yeah, that does seem relatively slow. What about day traders? When do they get vaccinated? Well, they can always just trade in their pajamas anyway. It doesn't really matter. The Pfizer CEO said today, this vaccine will be available for free to all Americans. He said, I believe this is likely the most significant medical advance in the last 100 years, if you count the impact this will have in public health in the global economy.

Let's just rewind when we were talking a few months ago that there's never been a vaccine developed in 12 months or whatever it was. So this is sort of wishful thinking. And maybe, just maybe, hope is a strategy, Ben. Science is going to bail us all out here. This is amazing. Now, we still have to get from here to there. But do you think the fact that, let's say we have a light at the end of the tunnel and

you can say, listen, just give us six or nine months of behaving and then this thing is over? Do you think people will adhere to that? Nope. A couple weeks ago, you had asked me, how are things going in Michigan? And I said, well, it's cramping up a little bit. I looked at it today, and it's getting off the charts in Michigan. It's getting really bad. We were at two or three hundred cases a day forever.

Now we're four, five, six thousand cases a day is not out of the ordinary. I'm seeing people that I know, which hadn't happened before, that are getting it. Is this changing anything for you personally? I don't think so. We've been pretty careful the whole time, but it's just it hammers home. So my daughter, her school, her whole class got quarantined because they had a case. So she had to go from being in school to being virtual for two weeks. She's still there today.

So it just seems like it's hitting closer to home. I don't know if people have just, it's happened for so long and people get complacent and go back to their normal routine or what. I'm just hopeful that this light at the end of the tunnel will maybe help be like just a little bit longer. Let's try to kill this thing before, slow it down before the vaccine gets here. That's my only hope. Let's rewind a little bit. It feels we're talking about election night. It seems to your point so long ago, given the vaccine news and how the market is responding today. So election night. So it's going. It's going. And all the prediction polls start to tip in Trump's favor.

And it was kind of weird because it seemed like the stock market, at least. The stock market was going up throughout the election night. And it didn't really reverse course at all when the Trump lead started to slip. I thought that was unusual. I like this headline from Bloomberg. Uninformed gamblers fooled global markets with big bets on Trump. So these betting markets on elections, they're not like hugely liquid, obviously. You can move them around. It's not a ton of money in there. And so they were all over the place. And so it started the night with 31% odds of Trump winning. And an hour later, it got 79%. Wow. And then it crashed. What did move was the dollar. Right. That's what they're saying. Yeah, the stocks fell off. Interest rates run up and then came

back down. The markets were moving really quickly. But for some reason, the stock market went up and pretty much stayed up. There was really no change at all. And that was surprising. So there was this great chart from the Washington Journal that showed S&P 500 futures on election night from this one, this go around compared to last time. And actually, looking at this, it seems that what I just said was incorrect. There was a bit of a reaction. I guess I was sleeping. So past midnight around 2 a.m., but if you blink, you miss it, I guess is the point. But anyway, so last time we know that futures trade limit down finished the next day positive. The fact that markets are moving so fast on all this stuff, how many cycles have we witnessed in the past three weeks? 12, it feels like.

I mean, it's happening so fast. So we got this thing where apparently everyone, everyone I use in quotes, hedged out before the election because they knew volatility was coming. So we see a correction. Sox fell, what, 6% the week before the election? And then immediately the next two days after the election, stocks rise 6, 7%. So you have to like anticipate the anticipation of others anticipation or something. All the derivatives of this stuff, it's hard to wrap your head around. Like how people positioning are affecting the actual volatility in the market. Last week, we were talking about this chart that 20% of investors, said they predict that the market will rise if the election's results are contested.

And I said, well, that doesn't make any sense. That was perfect. Our producer Duncan, for our video, pulled it and you said, why would the market rise in a contested election? But, I mean, that made sense, though, last week. And then the market was contested for a few days, but the market didn't care. I still don't think it makes sense. And I don't believe that people answered this honestly.

Yeah, right. This is the survey thing. But, yeah, I mean, nothing makes sense this year. In what world would somebody have said, you know what? I think that election that's going to be an absolute shit show, but I'm bullish on stocks. I think those 19 percent misunderstood the question because I don't believe it. Here's a question. Do you think the stock market, not the stock market in particular, but corporate America is by far our most stable institution right now in this country? Corporate America, yeah. We've had a global pandemic. People quarantined for months. The president

himself contracted the coronavirus. We had this massive turnout during a pandemic for voters. the pandemic numbers were surging into the vote. The sitting president is making false claims about a rigged election. And corporate America continues to just do things as it always does. And guess what? Pfizer said today, they never took money from the U.S. government and did this all on their own. And that they're going to give the vaccines out for free to Americans. Is that all real? How many billions of dollars did they spend on this? I'd love to hear the story on this. But again, the best book on this pandemic is going to be about the science behind this and how it happened and progress forward and I don't want to like get overly optimistic and then in three weeks they say

oh we had a phase three trial something went wrong but it sounds to me like all the people that you should listen to in this stuff are pretty optimistic about this and I think it is amazing we just have to get there now here's another one let's say we're moving to this post-pandemic trade I've got a three-part question for you because you already talked about this don't you think that the post-pandemic trade is going to be 10 times harder than the actual pandemic trade even if you didn't make the work from home stuff and shift and you didn't buy Netflix and Amazon and Peloton and Zoom and all these things, that one seemed very obvious in hindsight. I don't think it's going to be quite as obvious this time around because some of these

companies that have been thrust into the limelight are going to continue to do well, even if they have some bad comps in 2021 or whatever. I think because we're seeing this mean reversion today, so here's some quick numbers. Hang out, hang on, hang on. I agree with you. I agree with you. All of these stay-at-home stocks are moving as a group. And I think that now, if there is a reopening or an anticipation of reopening, I don't want to say that these stocks are going to trade more

on fundamentals. You know what? Yes, I do. That is what I want to say. I think that these stocks will no longer move as a group. I think that you will start to see winners and losers. That's probably a good way to think about it. I keep going back to Peloton. I never would have bought one if it wasn't for this. But now I love it and I think is indispensable. And Zoom too. I'm going to use Zoom way more. But it's just did they get enough customers and people to sign up in the last few months. So here, look at this. Zoom is down 16% today. Hang on. We're taping this around noon. But look at Palatine. It is so far off its lows. Holy moly. It had a low of 94. It's already at 108. So it's still 15% down. Wayfair's down 16%. Netflix is only down 6. DocuScience down 10. There was a

huge move. So AMC, which I think is trading higher because it heard Michael Badnick might be coming to its theaters again alone on Friday nights. It was up 80% pre-market. Now it's up like 46%. Planet Fitness is up 15 or 20%. The airline ETF Jets is up 12. Royal Caribbean is up 22. Win is up 22. Energy ETF is up 12. So you told me a couple weeks ago, credit to you. You said, I'm going to start making a rotation because I think the post-pandemic trade is going to hit hard and people aren't going to be ready for it. So you were buying cruise ships and casinos, your brokerage account, right? My Roth IRA. And your fun account. You were buying this stuff. And you said, I bought Carnival and Royal Caribbean.

And those things took off for a few days. And then they got stopped out during that correction. Hold on. Let me set the stage a little bit. So these stocks, the airlines and cruises, they're all one and the same, but I was trading Carnival and Win. And these stocks have had a lot of false positives, meaning rallies had failed. These stocks were guilty until proven innocent. So like a responsible trader, I bought these stocks and I put a stop in, right? I'm not going to ride these things down 30%. I have no interest in that. So I bought Carnival and I got stopped out. And it was a pretty obvious out. So whatever. I lost about 8%. When, I bought it. It popped. I was pounding my chest to you. See, told you. And then it rolled over. I got

stopped out. But then, credit to me, credit to me. It was a false breakdown. I bought it the very next day, which sounds like revenge trading. I've never done that before where I got stopped out on a false breakdown. I thought I bought it the next day. About, I don't know, three or four days later, I sold it. I was up around 12 percent, so I basically made back my losses. So I sold it on Friday. Friday, and it was up 33% this morning. That's... Ouch. Even though this isn't like a ton of money, that stings.

To get a big day jump like that, that's always really fun. Here's why this is going to be so challenging because are we going to see like a mean reversion in these trades for like a month where a lot of these stocks are still down 50%. It's a coiled spring and they... Hold on, you can't say coiled spring. You're not allowed to say that. No, why? Only traders can say that?

Technicians only. Oh, sorry. I play one on the podcast. It's guilty. I'm still proven innocent. And once you see the fib tr... Okay, sorry. But I'm just saying that's what's going to make this so hard because is this just a little relief?

And then these things, like you said, go back to trading on fundamentals that might not be better for a long time or that's why I think this is just so, so hard to play. I completely agree. Listen, these stocks are up 25%. They're not going to double and quadruple overnight. So there's going to be a lot of false hope and it's not going to be easy. Here's another one for you. Small cap value, the Russell 2000 value ETF today is up like 8%. Over the past three years, including today, total return is 2%. So it's up more today than it was over the past three years,

obviously that you could have said that anytime it was up. But I still think I wrote this yesterday. I wrote about how bubbles happen. And bubbles tend to happen. And this is a quote from Buffett. You're quoting yourself quoting Buffett? Yes. This is my Michael Scott Wayne Gretzky. While you're looking for that, the Dow Jones Market Neutral Momentum Index is down 10% today, which is its worst day since at least the early 2000s, long short, high momentum, low momentum, sentiment trader talking about news not being priced in. Since 1982, the largest positive opening gap the SEP 500 contract has enjoyed on a day it hit a 52 week high was 1.6%. This time it was up,

whatever, 5% at the open. And how about this? So if somebody went to cash, whatever, was hedging or whatever, whatever, was concerned that they wanted to wait until the dust settled. The dust settled at an all-time high. We got the vaccine at an all-time high. How crazy is that? It wasn't like we got the vaccine when we're in a nasty bear market, 35% off the lows. Like, we got the vaccine at highs. If you hedge the election, you got double whammed immediately, stocks up 7% in the next two days, and then three days later, vaccine news hits. So if you waited for that, you're out of luck, right? I saw a staff from Dietrich, four plus one percent days in a row, which has only happened twice.

The best day ever after an election, again, and it was a contested election, I mean, holy smokes. Imagine thinking that you can predict the stock market after watching it this year. Why would you ever think that you know what's going to happen to this thing? I don't think anybody actually thinks that they can. I just think that it's the illusion of control. If you ask an investor who's doing something and you say, and you look and you're like, come on, you really think you know it's going to happen. I don't think anybody would say, yes, I do. I just think it's just a way for us to make ourselves feel better by doing something. That's why, like, good

investing is being uncomfortable at times. You have to be willing to be uncomfortable. Otherwise, it's not going to work. Here's Buffett. Remember this from like three or four years ago, he wrote this. And for some reason, always stuck with me. He said bubbles happen because people see neighbors dumber than they are getting rich. And there is a lot of that going on this year. Think about you profiled a bunch of billionaires a few weeks ago, talking about how in April and May, Stanley Druckmanler said the risk reward for equity is maybe as bad as I've seen it in my career. There is a lot of career risk on the table. Now, if we see this vaccine hit and we have a timeline and the housing market continues to go crazy,

we see some sort of spending boom and people to start traveling again en masse, which I really think is going to have. I think Disney World is going to go bonkers in the next whenever this happens. I think trying to get into Disney in the 18 months after this is going to be impossible. What Buffett quote would you use to describe me selling a win on Friday before a 30% pop? Never sell before the weekend? Try not to get kicked in the groin before a vaccine hits. I don't know.

But I'm just saying maybe this is a massive sell-the-news moment and this will sound stupid. I should have skated to where the casinos were going. Not bad, Gretzky. We could see a massive boom in the next two to three years, I think. I think that is very possible. What type of boom? A stock market boom? Stock market slash economic boom.

I think... Are you calling for asset price inflation right here? How about I'm going to put it on the table right now. Roaring 20s is a possibility. The playbook for the Roaring 20s is setting up. Happy to have this thrown on my face later. I think post-pandemic, we could see this massive release valve of people just saying, in just spending money. Savings rate is still like 16%. People have pent up money.

People have been sitting on money trying to hedge out the election. Actually, I'm probably more bullish on the economy than the stock market right now. But I think we could see a massive boom in the next couple of years. I'm putting it out there. I texted Robin this morning. Let's book a vacation just in case before I think gets sold out. I booked one a few months ago. What did you book it for? I booked it for like the end of May, middle end of May. My wife's birthday is in May,

so I booked it around there. But now that you're saying that the vaccine is not going to be here until Q321. I know. Hopefully I win the lottery or something. I don't know. Or hopefully by then we have more rapid tests available. I don't know. That's the thing. We still need to get through this to get there. But I'm just throwing it on the table that throw out valuations and everything else. If sentiment goes crazy because this thing is over, I say watch out. Okay.

Happy to have this turn on my face later. Chris Cole tweeted, The stock market is a derivative of the options market. The market action the last two days has little to do with who won the presidency, Senate, or expected policy or stimulus action. It has everything to do with dealer hedging of short dated option flows. Gamma, Vana, charm? Vana and charm.

The Vana White options? Is that CFA level seven? That's beyond me, but it sounds interesting. You say beyond me? Beyond me. That's news to me. But anyway, this is reasonable. This does not seem like a take.

This guy is, this is his world, so I'm assuming that there is evidence behind what he's saying. He's saying people hedged before the election. And then when that moment of the election craziness didn't happen as bad as people thought it would, then people had to rush back in and close those hedges. That's effectively what he's saying, right? Yes. And this is sort of what we said last week, that this was a possibility. Obviously, we didn't call this. But we said all of this buying, if the worst doesn't come to fruition,

the pressure is released. Yes, there's definitely been a release valve pulled. Yeah, I guess the only thing you hang your hat on if you're bearish here is that we get a huge sell the news moment when this is all over with and people decide to sell our stocks and I don't know. Well, I guess the other bearish case is like maybe now there's not going to be stimulus and the Fed is going to be less accommodative. I honestly think we need stimulus to get us through this next, however many months it's going to be. The case for stimulus is kind of easy way now. It's like, listen, this is temporary. It's not open-ended. We know where the vaccine is. It's nine months away. We just got to get through to that side. This is not open-ended stimulus. It's finite. So there was a story in the Wall Street Journal and it said, why Democrats lost so many South Texas Latinos? And they tried to figure out why did some of the Latinos change from Hillary Clinton to vote for Trump this time? And they asked a few people, and a lot of people said, okay, so it says, some voters said they had adored President Obama but didn't know much about Mr. Biden.

For better or worse, these orders said they felt they knew Mr. Trump better. Others said they appreciated getting a pandemic stimulus check bearing Mr. Trump's signature, which showed he cared about them. What is it going to take for politicians to realize giving people money makes them happy? Here's the thing. If I was consulting either Democrats or Republicans, here's what I'd say. I would say day one, I'm never raising anyone's taxes again. Do you honestly think raising taxes is ever going to make a dent in the deficit? or the government debt?

No, of course not. Right. So I would say we're never going to raise taxes again. We're going to try to increase minimum wage and we're going to send out checks during every recession. Who says no to that as a voter besides people who bitch and complain about free markets? We're never going to get government debt under control anyway. They might as well keep people happy. I agree with you.

Doesn't there have to be a better way to do an election? And this is not a joke. What about the blockchain sliding in and doing something? Isn't that what this is for? technology? It would be great if we could just put our fingerprint on our iPhone and vote that something to do it. I agree to make it easy. The current system is obviously beyond broken. This is the first time I've ever voted by mail before, and it was really easy to do. Obviously, they just need to figure out a better way to count them because it takes forever. I don't know.

But yes, I agree. That would be nice if we could make it easier. So guess what? You knew the actual day off instead of waiting a week to find out who won. Yeah, this should be like a Scantron, right? Yes. The problem is people already are concerned about the way that this election works now. So if you changed it, people are going to be even more concerned about the safety of it. I know. What? Technology is susceptible to hacking. But blockchain is the safest thing in the world. That's what I'm saying. All right. So I went to Starbucks last week to pick up a cup of coffee. I guess they were overwhelmed by orders. Whatever, whatever. I go in to get my coffee. It's not there. So I wait outside. There's somebody standing next to me and you could tell that she's annoyed. So somebody comes behind us and he's like, are you guys online or she just give like such a, like this is such a shit show, go in and be waiting all day. And I always get very uncomfortable in those experiences. You're in line and somebody is like being aggressive. You know what I mean?

They're trying to like. They want you on their side. Yeah. And I'm just thinking like, I don't know, this is that big of a deal? Give the people a break. Right. Especially now as people are coming with new ways of doing things on the fly. So anyway, the reason I bring this up, they went to Christmas cups already.

it's November, first week of November. Is that premature? Or is that about right? I hate to admit it, but I think just because we're so bored, we put up all our Christmas decorations yesterday in our house. Okay. I know. And it was 70 some degrees out in Michigan, but there's nothing else to do. I get it. All right, I get it. Ben Carson has COVID, by the way, so expect your mentions to blow up. Oh, he does. Someone tagged me on Twitter last week and said that Carlson needs to be fired from the government. You're just one L away from getting COVID. I guess so. I got to be careful. This story surprised me. You would think, at least I would think, just knee-jerk reaction that beer and wine and liquor sales are going to be booming because everybody's staying at home drinking. But then it's like a duh. Well, actually, bars and restaurants make up 20% of alcohol sales. And traffic there is way down. So wine sales are just 50 to 60% of last year's levels. I don't know what the percentages are, but that's got to be a huge amount of how the bars and restaurants make their money, too, because they just jack up the margins on their drinks.

So that's got to be another thing that's hurting them. I did go out the other night, outdoors, and a cocktail was $17 or $18, which is like a lot, a lot. It's a lot for anywhere, but it's certainly, it looks like Manhattan prices. That's a lot for around here. Sounds about par for the course for New York to me. Well, Manhattan, yeah, but for Long Island, that sounds a bit much. Are you going out to dinner at all? I have not.

I don't think I will. We might have done one outdoor brewery for a drink, but I can wait. I waited this long. It doesn't matter to me. I don't have to go to a restaurant to be happy, but I understand why people are, again, getting sick of all this stuff because it's been going on for a long time. But again, I'm just hopeful that the light at the end of the tunnel will help people because the winter is going to be tough. Obviously, this thing is going crazy again. We're going to see some places where we start hearing hospitals filling out.

The hospitals in our city where I live are starting to fill up. It's getting scary again. Yes. And I hate to be an optimist, but here's a positive spin. It's already November 9th. Doesn't it feel like this year went by in the blink of an eye, or it doesn't not feel that way? Sure. March lasted like 9,000 days and the rest of the year went by pretty quick. So it's possible that this winter drags on and it's terrible.

By the way, I hate daylight saving this time. I never used to think I did. Getting dark at 4.45 just really sucks. Well, the worst part about it for us is it throws off her kid's sleep schedule. So I get to be one of those parents that complains about it, yeah. Because it's bright early in the morning. But anyway, I'm hopeful that we'll blink and it's going to be February and then we're going to be able to look forward to spring. Whatever. I'm ready for the vaccine to be here. It's going to be

great as long as it comes. All right. Are we really under questions already? Yeah. All right. Well, this week was obviously dominated by the election, now COVID. And so our doc is light this week. We didn't know nothing to talk about except for this. It's kind of the only thing going on, right? Should we just schmooze for a few minutes, fill in some time? Well, we got a bunch of questions. We'll answer some questions. Okay. All right. Just wanted to say thank you to Michael. Every time I'm thinking about buying a house, he has another maintenance expense. and I appreciate the benefits of renting. Cool.

I do feel that there are people who rent who probably get way too much flack from others for not buying. We've said in the past, you do not have to buy if you don't want to. I am firmly on the side of people that choose to rent and rent-shaming people is really bizarre and weird and annoying.

The silver lining of my plumber ripping me off is people listening and say, huh, it sounds like a lot of money. Maybe this buying thing is overrated. And I agree. And so does this next listener who says, I am one of those buying a house as purely lifestyle consumption choice and generally a terrible investment in dollar terms people. Of all the many grapes I have with homeownership, one is that

I have to take a huge chunk of capital out of my investments, sink it in the property and lose out on all the future returns. What are your thoughts about using an equity partnership service like Unison? Not because you can't cover a down payment, but because you don't want to liquidate your portfolio to do so. I'm all in. I mean, I think it's a very, very reasonable idea. Yes. It is not just for people who can't afford to put down a down payment. If you run the numbers on it and you can spreadsheet this and realize it makes sense to just keep your money growing and not tied up in your house and you're okay forgoing some appreciation in the house when you sell in the future, have at it. I think it makes sense.

So this person shared with us a really, really good video that breaks down the rent versus buy discussion. And so we'll link to this in the show notes. What else, Ben? All right. We've been getting this similar question a lot. We'll see if they change the mind after today. I'm considering buying into a diversified portfolio of global growth stocks with names like Tesla, Shopify, Zoom, Baba, et cetera. This would be roughly 50% of my portfolio with the other half being diversified mutual funds and ETFs and both growth and value. Companies I want to buy are collectively up roughly 100% of the past 12 months. On the one hand, I'm saying myself, I'm an idiot, performance chasing, buying ultra-expensive stocks. Every book says this is a bad

idea. On the other hand, I'm thinking low interest rates, technology is changing the world. Has there ever been access to 5 billion people from your basement using one network before? 35, been investing since I was 20 and endured big drawdowns in the past. they not sell out of stocks. Thoughts. I get it. We get a lot of these questions. After today, you're going to be able to buy some of these stocks for much cheaper than they were in the past. This is what makes it so hard. I mean, this person is very clear-eyed about what they're doing, but we don't have the answer. I don't know what the future holds. I guess it just depends what part of your portfolio you're comfortable doing something like this. So he says 50%. I don't

know. Could you still create a lot of value if this worked if you put it in 20% of your portfolio, 10, 15, maybe smaller than 50? Well, that would be my thought process is thinking, okay, if I'm going to do this, what if I make it a smaller percentage? And if it grows and becomes a greater piece of my portfolio because of the growth, then great. And if not, okay, it didn't hurt me as bad. That's true. So if he starts at 50% and he's right, then this could grow to 120% of his portfolio, if my math is right. Carry the one. Yeah. 50% is a big portion of portfolio. Just try to think through the ramifications of maybe doing a smaller amount if you're really going to do this. Here's another one. There are plenty of new marketplaces being created for

luxury goods, places like Stock X, Grailed. I don't know what Grailed is. More and more people have access to what used to be hard to come by clothes, shoes, watches, and bags. Are these goods becoming a legitimate asset class? I know watches have always been sort of an investment, but I wonder if all of these new market makers are expanding what items can qualify. For example, a Raff Simon's X New Order Parker. Did I even say that right? What is that? Okay, I've never heard of this before. Graled is the largest online market. place to buy and sell menswear. Find high-quality men's street and designer pieces. Could I find high-quality V-nex? I guess so. I'd never heard of this one. All right. I'll take a look.

Am I better off putting my cash equivalence into that coat or a 60 basis point savings account? This is back to our question about alternative investments. I don't know why I'm thinking about Dera leaked. Yeah, can't turn right. Obviously, this stuff is not the same. as cash. But if you're like us and you're willing to have a smaller piece in your cash portfolio and you want to invest in something else, sure, but just don't pretend like this is a cash replacement because nothing is a cash replacement or a savings account of replacement. Investing as a coat is about as far away from cash as you are from China, Ben. Yeah, that sounds about right.

All right, let's move on some recommendations. By the way, as we've mentioned, we've still got, oh my gosh, we have so many questions. We're thinking about doing like maybe a quarterly show where we only do listener questions so we could dig out from under these. Yes. The election stuff I don't have any answers for yet. What do you mean? I've seen a few questions. What does a Biden presidency mean for the market? That sort of thing. When will you have answers? What are you still running some models? Do you have answers? No, but I don't think I ever will. That's the thing. We actually on Friday are going to talk with Mike Arone from State Street. He's a macro expert and he's going to talk about the election and what it means. And hopefully we talked to him a little bit about the vaccine

too and what that means. But I just have always been of the minds that that trying to pick the sector or industry winners based on the president's policies, that's probably one of the worst things you can try to do. Except for short stocks. Yes, because the stock market always goes up. Speaking of, Meb Faber did a podcast with, I forget his name, he's an expert on short selling, the actual mechanics of it and how it works. And he said that Tesla shorts are down $42 billion. Imagine they just bought Tesla instead. Yeah, right. Ouch.

Right. So we can't claim that the two days after the election, though, we're short covering, or can we? I do believe that it had more to do with positioning, like Chris Cole said, than it did with potential fundamental ramifications of a Biden presidency, with the Republican Senate. How many times this year has the market been caught off guard? A hundred? It seems like the market has got caught off guard every time something happens. Listen, I was caught off guard on Friday. I sold a win. That's true. I sold a win for a small win. I feel bad about laughing about that, but it is

kind of perfect that you sold the day before 30%. You got to laugh. You got a laugh. That's pretty funny. I read a book somebody recommended called The Monopolis. And I'm just going to say it should have been an article, maybe even a podcast. It did not need to be a whole book. But I did learn some interesting things. One of them being that, what do you know about monopoly? Just first thing that comes to the top of your mind. This is about the game monopoly. The game, the board game. I don't know. I know that I've probably started.

I bet 85% of the games of Monopoly have started. I haven't finished. It's the game you never finish because it drags on and gets boring. So I love Monopoly. It's been a while since I played it. But the story goes that it was started in the Great Depression. People had nothing to do. Whatever, whatever.

Not true. So when was it started? The game started. It was called the Landlords game, I believe, in like 1904 or something. It was a derivative of what we know now as Monopoly. and then it was played and played and played all over the place. And then the one that we know today was actually started by like the Quakers in Atlantic City.

I think the patents started in 1934. And so Parker Brothers actually started selling it, got the rights to it in 1934. And anyway, it should have been an article in like the New Yorker. It was basically like who actually invented monopoly. I wish more nonfiction books would be like 50 pages instead of 300. If you created a version of every good nonfiction book that was 50 pages of all the best stories and anecdotes, I would buy more of them. So there were some really neat anecdotes about how they use Monopoly the board game to

like get maps to our troops in World War II, that they would bury a map inside the board or whatever. They would laminate it. And so there's some cool stories like that, but 250 pages for that. Come on. Come on. All right. I got two Nick Majuli recommendations that I will in turn recommend to the audience,

movies. One was called The Invitation. And I think I watched both of these on Hulu. The invitation is with Logan Marshall Green, who is kind of like a poor man's Tom Hardy. He was the guy from Upgrade. Oh, right. Okay. All right.

So this movie is for a very specific audience. It's a slow burn. It takes a really long time to build. I guess it's in the thriller, horror genre. It's a dinner party. I don't really want to say anything more, but it's weird and of the depressing side and not very uplifting. It's a slow burn horror. If that's your speed, it was a good movie.

Okay. You're not selling it very well, but... Listen, it's not for everyone. I'm saying it. That's what it is. The second movie is also a dinner party. And as Nick said, that's where the similarities end. So this movie called Coherence, this is, I will recommend to, I think, a wider group of people.

This was like a sci-fi thriller. And the only thing that I'll say about this movie is that the dinner party was incredibly realistic. I don't think I've ever seen anything like this, where the writing and the acting was so good that you really felt that you were watching a dinner party and then this one's

sort of a mind and things start to get really weird excuse my language but this was an interesting one so coherence is the name of it and it was on Hulu and by the way

I was trying to remember the name of this movie I kept drawing a blank coherence is that even a word I couldn't recall I was like there's a C in an age is a cohesion?

Anyway, it's called coherence and also on Hulu that was a good movie I think you would like it Ben okay we got roasted a few weeks ago because we said we didn't really have a will and trust in place, even though we have kids. So I remedied

that situation with Helios. So Helios is actually a company that we had on in the past on one of our talkie books, and they help advisors do a lot of their outsource investing. But they also have this Helios integrated planning. And I just needed something simple that would take care of our kids in the event that something happened to my wife or myself, or both of us, obviously, went through the process. It was very quick. I went through a call with them. They showed me how to do it. The hardest thing is, it's weird because you have to pick who is going to take over your kids. If you were both to die, it's kind of a weird conversation to have, obviously. That's a hard conversation. But it's just boilerplate in for, I don't know, 70, 80 percent of the people who don't have

weird trust situations. And they go through some knockout items beforehand. Like, if you have a certain amount of assets or you have this going on in your life for this, it's kind of a knockout and you'd have to go to someone who's more of an expert. So it's heliosplans.com. You do it for a one-time fee on your own or you can do it with an advisor. How much is it? It's like $400. Go through all these questions and then they send you all the docs legally signed. How long did it take? It probably took us 15 minutes from start to end.

Very easy and something that I've been made to do for a while before. Let me ask the question. God forbid something happens to you guys. Where do you put this? Do you print it out and leave it somewhere? How do your kin even know that it exists? That's a good question. I don't know.

I guess we'd have to leave it with our files somewhere. Is it on the blockchain? But if I die, if you take over my portfolio, please don't short any of my stock. Okay, I don't want you to short anything in my portfolio. All right. Finish the Queen's Gambit. I think that's the best show of 2020, and I don't even think it's close. I don't know why I haven't finished it yet.

I've got two episodes left. It's very good. I thought the last couple episodes were great. I just loved it. That was like one of the things to get our mind off the election when we finished that. Finally, the undoing on HBO with Nicole Kidman and Hugh Grant. It's only six episodes. I think there's been two or three so far.

Is it a rom-com? No, it's kind of like the affair mixed with big little lies. This is a new genre of TV shows I've noticed in movies. It's really uber wealthy people that under the surface are miserable and or have some sort of really crazy secret. So it feels like the affair, but I think it's probably a little better. And it's only six episodes. It's not, remember the affair should have been one season probably.

Yes, it would have been a great season. It was a great season. The first episode is kind of bizarre of this undoing. And then there's a cliffhanger at the end. And then the second episode is like, oh, okay, this is. is going to be kind of wild. So I, two episodes in, I'm into it. All right. Question for you. Did you ever watch Banshee? Somebody recommended that we watched that? No. Cinemax, maybe? It's with the guy who was Homelander.

Okay. Nope. Never watched it. All right. I think I might give it a spin. All right. Send us your Rex. It's funny because when we get feedback from listeners, some people say the only part of the show that I like is a recommendations. And some people say, I always turn off the show right when the recommendations begin. So we kind of have like red and blue states in our podcasting audience, right? Animal Spiritspot at gmail.com. We'll see you on Friday with another episode of Talk Your Book talking about the election.