Animal Spirits Podcast - The Wealthiest Generation (EP.211)

Episode Date: June 30, 2021

On this week's show we discuss money piling into crypto, bubble experts, flows over pros, young people waiting to settle down, the housing market conundrum, households are richer than ever, FOMO lessons from The Great Outdoors 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

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farmers and administration to insurments and payments. Acreterter takes care of the hassle so that you can sit back and watch your money grow. Go to Acretrader.com or check out the episode to learn more. 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 express 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. Welcome to Animal Spirits with Michael and Ben. Noah Smith did an interview with Mark Andreessen that covered a wide range of topics, but one of the things that I want to talk about is his view on remote work. I thought he had a could take. And Dresen said, it's hard to overstate the positive shock that remote work works. Remote work isn't perfect. There are problems, but virtually every CEO I've talked to over the last year marvels at how well it works. And remote work worked under the extreme duress of a pandemic. With all the human impact of lockdowns and children unable to go to school and people being unable to see their friends and extended families, it will work better even out of COVID.

So the fact that A16Z invested in substack gives us these nice interviews with Mark Andreessen on a substack. That was a positive externality of that. Speaking of that, how about before we start recording, Jack Hopping on Spaces with Jay-Z? Not bad. I think our bullish take on that. If I can invest just in spaces and not Twitter, how does that sound? Can I do that? Yeah. Yeah, I think this is another one of those, it seems obvious, but a lot of people haven't taken into account. I mean, there's still people in some states have dealt with kids at home while they're working. It's going to be a totally different ballgame when people have the ability to do this stuff. I don't know. How much do you think?

So maybe, yeah, to your point, we haven't seen the productivity benefits that we're going to over the next 12 months and longer. I guess the countertake there would be people have been running on pure adrenaline for a while and just doing anything to get through this. Now that they're done, maybe they take a little more leisure at home and not work as hard. But I tend to think it's, yeah. By the way, A16 Z, Andrews and Horowitz, the venture capital, they just raise a 2.2 billion dollar crypto fund, which is pretty darn large in that space. I guess they're investing infrastructure stuff. It's to invest in companies that are building out whatever's being built in the crypto landscape. There's not a hedge fund. Yeah, they're not investing in Dogecoin or something.

They're investing in these companies. They're going to, and probably the defy protocol stuff, but it just seems to me you can fight this stuff all you want. But if this much money is going into the space to help build the infrastructure out, and this stuff is going to get funded, Some of it's, obviously, this always happens in venture investing where some of it goes to zero. But if these people with a lot of money and a lot of intelligence want this stuff to happen, eventually some of it is going to happen. So the people still fighting this stuff, I just, I don't get it. How long before paper currency goes away? That's a good question.

Can we start with coins first? Like, do we really need coins still? No, it's enough. It's more than enough. So speaking of crypto, Andresen said, well, first of all, he said he thinks it's going to take around. 30 years for us to like really see whatever we're going to see. It's not going to happen overnight. But he said money is the easiest application of this idea, but think more broadly. We can now in theory build internet native contracts, loans, insurance, title to real world

assets. And I want to pause there because we got like a dozen people sent to this article about title insurance. And that's your brand now. You're the title insurance guy. Well, so yeah, did not see that one coming. But somebody wrote, title insurance has an origin in usefulness. Real estate law is complex. A property's chain of title can have defects that are difficult if it's impossible to discover. In addition to muddled boundaries, unrecorded easements and liens and other problems with decades old paperwork, little of which is digitized. There we go. It's possible for the long lost heirs or ex-spassers of past owners to reappear and a certain ownership interested in a piece of property. Is it though? I mean,

that would be kind of hilarious to somebody knocks in your door and it's like, excuse me, sir. Yes, can I help you? Actually, you can. great, great grandmother's cousin used to live in this house and I'm the rightful owner, so you're going to have to pack and leave. It never happens. So they said that 1.2% are the claims or the industry's loss ratio. So somebody wrote, Lord knows I've never filed the claim, who has purchased some 30 properties in a career given the high price. This person said it's a total scam. Finally, the truth comes out. Yes. This is finally something that blockchain can hopefully solve for us. It's going to happen. This is the low hanging fruit right here.

Last week, we talked about how FinTech has a customer service problem. We got another email about something related. Maybe it was a Facebook problem, but... Yeah, another phishing scam. I guess, again, just don't ever click on the link on the email. But this one is from BlockFi, who we've had on the show before. They created a Twitter handle, just BlockFi support for quick response that you can get on Twitter, which I think a lot of people take to anyway when they have a problem and

they have a following. So that is solving this problem, right? Well, kudos to them because, yeah, people take to Twitter when they're pissed. But to have a dedicated- Yeah, a bunch of avenues. To have a dedicated response management team is awesome. And speaking of BlockFi, you sent me something, I don't know if it's from Bloomberg, about that free trade being over and this has to have Blockfire.

And then, sure enough, you as a customer, I'm not a customer. They're still not a lot in New York State, but you as a customer got notified of what? What's going on exactly? So this is from Bloomberg said Bitcoin's money printing machine breaks down as Futures Fall. and we talked about this with Zach Prince when he was on the show. So this is from the article. Bitcoin Futures, which typically traded a premium to the spot price, have collapsed along the curve amid a brutal sell-off in the world's largest cryptocurrency.

That's obliterated what's known as the basis trade in which a trader would buy Bitcoin in the spot market today and sell long-dated futures locking in the discrepancy between the two prices. Basically, futures prices have been trending upward in Bitcoin because people have wanted to own it. So now that it's going down, that relationship is flipped. And I know that you and I can never figure out the difference between contango and backwardation. And I'm sorry, I can't take you seriously right now because you have a wiper

on your head. This is the problem with Instagram. How did this get in your feet? It's a Cobra Kai thing. Honestly, I guess they thought that this is the perfect accoutrema. I don't know if I'm using that word properly, but for bald men. I guess if you're the Peloton champ of the podcast, you can wear that until I dethrone you, I guess. It feels kind of nice. Maybe this is for sweating because you can't wear this outside. My head will fry. But you can't wear outside because you look a moron, too. That's part of it. Valid.

Yeah, no, that's true. I don't think this is going to be catching on anytime soon. Okay. So anyway, this story came out, and I said to you, okay, this is, and Zach Prince laid out, how do you pay such high rates? This is how we pay it. And I said, okay, block-fights rates are going to go down eventually. It happened.

And their rates are still high. We got a bunch of emails from people saying, hey, what's going on? This is going to happen. And this could flip back in the future, and they could raise rates as well. But so I think their rates went down to their stable coins were 8.5 percent. and now it's 7% on the first 50 grand and a little more above that. So see that next chart. It's still pretty high.

What does the rate? So I think it went down to 7% on the first $50,000 you have with them. So look at the next chart showing stable coins. It looks like I'm guessing that this is the pay that you're getting has been collapsing as money rushed in. I guess this stuff was sort of predictable. But I almost wonder if paradoxically this works in block five's favor because now the yields seem more defensible or defendable. Previously when it was like whatever 8% it seems like almost. fishy, like where the hell is this deal coming from. If it comes in a little bit, maybe it seems

less bullshiny. People are like, oh, I guess this makes more sense than, you know what I mean? Right. People assume such high rates had to be a scam before. Right. And now they can see more reasonable. It's still a low rate world. But if you understand this stuff, and we had a few people ask questions when we sent them this story and they said, I still don't get it. But I guess that's the problem with this stuff. It's just hard. I was going to ask this. I talked about the money flowing in and just money coming into crypto. What is the premium going to be when we get an ETF announcement. What's the bump in Bitcoin going to be? Let's lay out the odds here. I mean, is that a free 20% gain, 10%? Like, what is that when that finally happens?

Well, futures mark the top. So I don't know that we should make the leap that the ETF is going to give it a price boost. I mean, maybe. But I'm going from the idea that I think when an ETF hits, there's a ton of new money on the sidelines that has wanted to get into Bitcoin, but hasn't had the vehicle to do it. But doesn't everyone think that an ETF is coming? Shouldn't that be priced in, although I guess if an Elon must tweet could send the price careening, then maybe an ETF announcement. I'm just throwing it out there. I'm saying minimum 10% bump when we get an ETF announcement. You ever notice I was with people recently and somebody made something. It was a recipe, whatever, they made it. But you ever notice that when you tell

somebody like, wow, this is, it was really good. They insist on telling you how easy the recipe was to follow. Instead of just saying like, thank you. It was so easy. I'll say, do you know what I'm going with this? Okay. No, you lost me, but keep going. It was just an observation. I was hoping for more of back and forth, but okay. What is this in relation to? I have no idea. I think I saw a piece of food and I thought of it.

Okay. Moving on. Yeah, so recipes, huh? I don't know. I don't know where I was going with that, but let's go to Grantham. Okay. Which, which, which, which, hold on. We should say, not everybody knows who Jeremy Grantham is, and credit where credit is due, Jeremy Grantham is a, I guess you could call me a legendary money manager who has successfully called, I think several peaks. I believe that he called, not I believe, he did call Japan. He literally

called Japan. He was on the right side of history in the dot-com bubble, as well as during the GFC. So I think the problem with that is the headline. So it says bubble expert Grantham addresses epic stock euphoria. I think when you become a bubble expert, you feel inclined to call the next one. And he's been calling the next one since 2010, basically. Yeah, so this is the tricky part. So he gave an interview to Bloomberg and he said, quote, the last 12 months have been a classic finale to an 11-year bull market, end quote. And you would think, I don't mean to be disrespectful because, again, he's done a lot of things right more so than we have.

But you would think that just a little bit of humility that he would stop talking like this given that he's been saying the same thing for a decade. It's almost like maybe don't try to overthink it. And he's talking about the meme investing. And he said Bitcoin should be avoided and all this stuff. I thought he would be a Bitcoin investor, actually. Doesn't he lean libertarian or am I making that up? I mean, well, he's not a big fan of the Fed. So that would make sense. I just, he's claiming this is like even worse than 99 at this point. In crazier, he says, here's something that was not in 1999. This is another one from Bloomberg. There is yield on corporate high yield bonds is now below inflation. On a real basis, the yielded. The yielded. The yielded. and high-yield bond is negative. What are the 6% yields in 10-year in 1999? I think this is just a whole other added element. The other thing, you and I talk about this offline, we're going to have to fight this

when we get older. And maybe we already are getting older, but to not immediately dismiss all this stuff that's happening, especially the young investors. Speak for yourself. I'm still very much fashion forward. Okay. I could still hang with the cool kids. What year?

Did a karate kid come out again? 1984. Okay. Nostalgia is a thing. But I do think that. So if you think about it, I think the smartest thing crypto ever did, the reason that it is what it is is because they understand incentives. Think about someone like Charlie Munger, who his whole career has talked about the importance of incentives. He calls Bitcoin rat poisoning. I wish that he could say, you know what? I don't really see myself

using cryptocurrency or investing in it, but I understand that they have used incentives to create trillions of dollars out of thin air. It's all incentive based. You'd almost hope that, but I think when you get to a certain age, you almost have your flag planted and you can't, because if something goes wrong with something you say that, oh, this new and exciting thing, I'm into it. If it goes wrong, that's like a blenish on your legacy. You just can't have that. We were speaking about it. It's like, oh, man, I hope this doesn't happen to us, meaning that we're going to get stuck in our ways. But of course we are. Everybody does. You're never going to be like a 60-year-old person who says, like, you know what, these kids probably know best. I'm just an old dinosaur. So when we're doing animal spirits, when we're both 60, we're going to be saying this hyperinflation is transitory, right? It's just, this 14% hyperinflation is just transitory. It's going to come back down. Don't worry. I mean, listen, obviously the meme investing stuff, it does seem crazy. It is crazy. But that doesn't necessarily mean everything is crazy. And the market is a giant bubble. So he said, meme investing, the idea that something is worth investing or rather gambling on simply because it is funny has become commonplace. It's a totally nihilistic parity of actual investing. this is it, guys, the biggest U.S. fantasy trip of all time.

Is it, though? Like, if we look at just the aggregate market and you look at the fundamentals of, I mean, earnings at an all-time high, buybacks and dividends, not too far from an all-time high, interest rates where they are, earnings growth. Like, I don't think that we should conflate the insanity with the meme stuff and the doge stuff with the entire markets in a bubble. I think there are two separate arguments. And I guess the longer you go in a bull market, the more insanity you expect to happen in

certain pockets. Can it get dumber, though? Oh, yeah, way dumber. It probably will get dumber for me. Way dumber. Yes. Here's another one. Brian Chappata at Bloomberg. U.S. junk coupon sets record low and race at the bottom. A junk bond maturing in seven years just priced to yield 2.45%. Junk bonds, high yield. This is back to my credit card thing. Junk bonds are yielding 2%. Inflation is 5%. Do the math on a real basis. Here you're the one. Zach Alfenacus Kiff. I don't know. I just think, I wanted to make this point later, but maybe just make it now. All this. stuff, housing, stocks, bonds. The only thing that has mattered and does matter now, same with crypto, I guess, is the amount of money in the system and the demand for these things. Valuations just don't matter if money wants to buy these things. Economic growth is going to be 7% this year. Inflation is running 5% this year. 10-year bond is at 1.5%. Why? Because people are demanding bonds. We've been in a 12-year

bull market, and the flows for equity are going down. They've been going down for the last five years, the flows for bonds have been going up. Why? Because older retirees want to hone bonds. And the Fed does too. It's like that obviously can't last forever. Money doesn't, well, I guess it doesn't have grown trees with the Fed. But for right now, the only thing that matters is young people want to buy houses, old people want to buy bonds, and everyone else wants to buy stocks. Are you saying trees do grow to the sky? This is just back to the Tracy Allaway thing that I steal from all the time is flows over pros. Yes. If you're just beating your head against the wall, screaming valuations for 10 years,

but you're not just watching everyone who's buying stocks and bonds, that just matters more for now. It does. I want to thank Michael Wenner as I take a sip from my coffee. I'm reminded. He bought me a box of, what was that coffee called? VCs just couldn't leave coffee alone, huh? They had to take over everything. People are telling me my lifestyle creep is getting out of control. It was a gift. I'm drinking a gift. I still do the pour over. My lifestyle creep is not going out of control. I'm still a shewing Starbucks, 261 for a medium cup of coffee. Get out of here. So wait, the person that you pay to fold your laundry, where are they going to put your cobra headband? Where does that go? Probably in the garbage. Okay. All right. I guess this is not a

big deal, but Robin Hood IPO has been delayed. I guess the regulators are saying because they have such a large crypto business now, they may not be able to go public this summer like they wanted to and maybe have to wait till the fall. Where do you think they open? market cap wise. Well, I've been saying this for all. They're going to be bigger than Coinbase, which, by the way, to our last week, Coinbase is up like 8% today after Bitcoin had a nice little comeback. I nailed it. They were both oversold. Who knows? But the SEC is trying to wrap their head around the crypto thing. Like, what are they doing on this stuff? With not... What do you mean? It just seems like the SEC doesn't know what they want to do with crypto.

They're letting it get bigger and bigger without doing anything and without approving the ETF. And it's like they just keep saying it's too complicated and it could, like, all the stuff that they're worried about is not going to change. So why not just let this stuff out there and regulate it instead of trying to hold everything up? It seems like them holding this stuff up is not making anything better. As an honorary member of the Federal Reserve, do you have any say over the SEC? No, I'm just a Fed apologist.

So I just, in their PR department. So FedSpeak had a good take. He said, crazy staff from the latest odd lots with Joe and Tracy. The number of new container ships ordered in the first five months of 2021 is more than double the entire number of container ships ordered during 2019, 2020. His take, this will prove to be an overcorrection. So basically the supply shock we're having now, like a shortage of everything, is going to be eventually overcorrect and go the other way.

I can see that for sure, where the demand is finding going to wane a little bit and then now supplies everywhere. That makes sense. All right. This was from, someone put this together for the U.S. census. It's the percentage of 30-year-olds hitting adult milestones. So they're talking about living on their own. getting married, living with a child, owning a home, and they show it by 1980,

1990, 2009, 2000, 2010, and 2020. And it just goes down in a line. So it was much higher. 83% of people, 30-year-olds, were married in 1980. Now it's 48%. 63% had a child. Now it's 39. 58% owned a home.

You know what I would like to say? 32% now. This would be better showing 20-year-olds. And I think this is a good thing. I don't think this is a bad thing that people are delaying certain milestones of adulthood. As a child of divorce, I think this is a good thing. I think people getting mad at having kids at 22 is not natural. It is, for most people, you're still a child. Well, it's been natural for, it's been natural for thousands of years before the last 20 years, basically. But yeah,

I don't think it's a bad thing. I'm just saying this is how everyone always did everything. Point taken. Inflection point. We will never go back to 22-year-olds having kids. And I think that's a good thing. Yeah. And a lot of this is probably just people that are going to school longer. Instead of getting married and getting a job and settling down after high school, like a lot of people that now more people are going to college or grad school, and they're pushing those things off. How about enjoying your 20s? Listen, if you want to have a child at 23, do its right for you. But I'm just saying in general, like, this is not a bad thing. Yeah. Before my wife and I, from the time we got married until we had kids, we had a number of

year period. And we made a concerted effort to travel because we knew, like, once you have kids, it's not going to be as easy to travel. There's no such thing as a vacation with the little kids. We got married 20s. Geez. The day this comes out, it's my 14th anniversary, June 30th. Wow. Yeah. So 26, I guess, 27. How old were you when you had kids? Early 30s, which is probably, like, it seems like 30 is the age people shoot for now. I was 32. Married at 28, kids of 32. Yeah. I'd say that that's probably pretty close to average. Bald at 16. When did you start losing your hair? Ben, it's too soon to talk about this. Okay. Young 20s. I think you have like your consulting work in the future is helping people understand when to shave their head. I'm going to say

immediately. I wish I shaved my head five years earlier. It was horrible. But I've heard you comment on people before going, hey, that guy should totally shave his head because he's going bald and like no one will tell him. You as a bald guy can be the person who can tell someone, like, hey, just do it. I'm happy to tell balding people. If you have a friend who's balding, you can't tell that person to shave their head because it's just, who wants that to have that conversation? It's not your responsibility. It's my responsibility as a bald to tell the person to join us.

Yes. Okay, back to the young people stuff. 89% of homes sold in May or on the market for less than a month. So this stuff is not slowing down. Median existing home price. This is from the Wall Street Journal in May rose 24%. That's a record high from the year. before. 350 is the median existing home price sale. They have the data going back to 99,

and that's by far the strongest 12-month period, even stronger than the real estate bubble. I'm not saying housing prices aren't bananas right now because certainly they are, but showing a chart of median real house price over time misses a key aspect that you wrote about Ben. I saw the chart floating around with people saying, this is fine, ironically. But the quality of houses, the size of houses are so much superior today than they were back then. So it's not apples to apples. I also think this is getting back to the flow of stuff. It feels like the stock market in 2017, the housing market does, like where back then people

are going, this is crazy. Look at the Schiller-Kap ratio. Look at the Tobin's Q, all this stuff. It doesn't make sense. There's no way this can last. And if young people continue to want to buy houses, 24% a year can't last, obviously. But housing prices slowly continuing to go up. You know what?

It can last. There should be an article, housing expert. says. And you're the expert because you made the call in 2018 and now you have carte blanche at least to make one other prediction. All right. And so in 2040, when I'm still saying the housing market is here and it ended 10 years ago, I'll be the Jeremy Grantham of the housing market. Right? There you go. Oh, but in all seriousness, Bill McBride is, I don't know if he's starting to get worried. Yeah, he called it the housing conundrum, which I think is probably a pretty good. He's just saying, like, listen, the demographics are there, but this stuff is starting to,

it's just the rises and the supply and all this. Like, it's starting to become crazy and detached from reality, which it is. So it's kind of like, what do you say? What has to give? And with a demographic piece being there, I don't know what it is. He has this really great chart. There's a strong correlation between the inventory and home prices. And right now, inventory is low. There's a few houses coming on market in my neighborhood, as I said with the last few episodes, the prices are just insane. I am very lucky that I got in in 2019 because if I was looking for a house right now, honestly, I think I would wait. Now, with the caveat that it depends where you live, can you wait it out, but just the prices right now just seem, I don't think I would be able to

swallow paying the prices that are being garnered right now. Yeah, it continues to be a tough position. Where do you think the people in your neighborhood are moving, though? Because they're having to buy on the other end. Are they moving out of your area? Are they moving, staying there and just you, I mean, the thing that you have to remember, I guess, is that like, if your house is appreciated a lot, even if you're buying a house that has appreciated somewhere else, you probably have enough equity to pay for the down payment at least. So it's just can you handle the new monthly payment? I think that's the thing is like, it's like a club. Once you get into the housing club, homeownership thing, and your house is appreciating, you can use that as a springboard to the next home.

You have a good take on Black Rock, Blackstone. It's kind of like the contango backwardation thing. Oh, yeah. Well, I think Blackstone and Black Rock are the Bill Pullman and Bill Paxton of investment firms. I can never tell them apart, but apparently they're both into buying. And it seems like the amounts are always the same. So it says this is the Wall Street Journal. Blackstone bets $6 billion on buying and renting homes. And apparently they bought this place called Home Partners. They took it over. And this is another business model of renting. And they said that actually 20% of their renters end up exercising an option to buy the home in the future. So maybe. Maybe that's something for people where I don't know how the process actually works, where they're doing these built to rent things or existing ones and are fixing them up. I don't know if part of the rent goes to buying it out, but apparently eventually these houses you're renting, you can exercise an option to buy it. People say that Bill Pullman's best role, this Independence Day? Pretty good president. His actual best role, Lake Placid. Was that the big alligator?

There was two. Remember that was a twist. There was two big alligators. Okay. I thought you were going to say your favorite was. while you were sleeping. Wasn't he in that one? Never saw that. He was. Never saw that. Sandra Bullock Romcom. All right. This is from Conner Senate Bloomberg. So between the end of 2019, before COVID hit in the first quarter of this year, household liabilities rose 5%

$820 billion. Household assets, though, rolls by 15% or almost $20 trillion. Basically saying the net effect is the ratio of household assets to liabilities is close to a 50 year high. Here's another one from the Wall Street Journal. U.S. households added $13.5 trillion of wealth last year, according to the Fed, the biggest increase in record going back three decades. Americans of All Stripes paid off credit card debt saved more refinance into cheaper mortgages. So they added, again, $14 trillion almost in wealth. In 2008, U.S. households lost $8 trillion. I mean... Different this time.

I just can't get over how well the U.S. consumer is doing. I know the reasoning, but... Just say what you want to say? What? The Fed threaded the needle? Oh, no, I wasn't going to say that. I think this has more to do with the U.S. government than the Fed. This is the Treasury more than the Fed. sending out money. The start of the pandemic, I mean, we were staring at depression in the eyes for four weeks, basically. It really felt like that. And to see this- Oh, I was thinking about that today. Stop. Do you know how fast you were going? I'm going to have to write you a ticket to my new movie,

The Naked Gun. Liam Neeson. Buy your tickets now. I get a free Tilly Dog. Chili Dog, not included. The Naked Gun. Tickets on sale now, August 1st. I went for a walk this morning. Just a quick little stretch the legs. Did you jog to? I know people want an update on your jogging. All right. I wasn't going to say this, but yeah, 0.5 miles.

It's like a muster. The best YouTube comment was 0.7 miles isn't bad if you have one foot missing or something. I don't know. You got to start somewhere. Give me a break. Next week I want you to make a mile. That's your goal. I'll try.

One week? You only give me a week? Come on. You can do it. 3 miles, you can do it. Oh, speaking of that, in all sincerity, I wanted to say that March for the Fallen is back on this year. The date is September 25th. Unfortunately, I'm bummed.

I don't think I can go because I'm going to Giant Stadium the next day for Eli's Ring of Honor. So I don't think I'm going to make it. But September 25th, March for the Fallen, it's a good cause. A lot of people, if you're in the financial Twitter universe, a lot of people are going to go out for that. So that was a lot of fun. I'm sorry, I can't go. West Gray and company. I'll be back there next year.

here. Oh, here's what I want to say. So in terms of getting back to Andreessen's comment about work from home, working better after COVID, do you remember, well, I know you remember, we weren't away from our screens. No, never. Because the stock market, there was just so much going on. We were glued to the screen for quite a while. I would say probably, I don't know, June, July, we started to like maybe reopen. March and April for sure, March and April 2020 was just, I felt like I was running on adrenaline the entire time. It was a very bizarre period. Yes, for sure. Okay. Do you care at all about Peter Thiel's Roth IRA? That was a big story last week. ProPublica had another one where they're outing a bunch of rich people. Somehow he turned $2,000 in 1999 and spun it into PayPal slash that his next company's got $5 billion.

I'm struggling to muster up the outrage on this one because I think no matter what, whatever the tax system is, the rich people are going to to figure out ways around it. I don't know what the solution here is beyond if you really care that much doing a wealth tax or something. Like, otherwise, I don't know what else you can do when he's playing within the rules. Here's another one. Ted Westler, who is the Warren Buffett Berkshire Hathaway, new investor, $264.4 million in his Roth IRA at the end of 2018. Do you think he used the backdoor Roth? Is that why? How he got that much money? I don't know. I know a lot of people were angry about this one. This is always the one I can tell when like an outrage thing has been hit where when I get a bunch of civilians, as you call them in my life, that send a story like

this and say, what do you think? I just like, if he's playing within the rules, unless the government changes the rules, I don't know what else there is to say about something like this. I'm with you. Okay. I don't know. So Nick Majuli wrote a piece recently saying that like actually millennials aren't the poorest generation. Alison Schrager took it to a new level and said actually they're the wealthiest generation. She made a good point that I want to talk about. She said, in finance, an asset is worth more when it's predictable, and wages are much less variable than they used to be. Before, wages swung around as people change jobs and worked more hours.

But over time, people change jobs less frequently and worked less. This helps explain why wages have stagnated because in the past, increases were partly driven by more moving around and less secure positions. An asset pays predictable income each year is more valuable than a riskier asset. So anyway, I just thought that was an interesting observation that I never really considered. The TLDR, sorry, too late, is, so when you account for less risk and more stability, a millennial's reliable $1 wage in 2021 is worth more than a nomadic boomer wage in 1991 that might swing from $0.50 to $0.50. So she's showing that the biggest difference in net worth right now is student

loans are way higher these days for young people. But that translates. Yeah, it leads to higher income and more predictable income. And that's long term actually a good thing. So ipso facto, millennials are the wealthiest generation there is. All right. We've come full circle. on this one, by the way. Because we have those scary charts before saying millennials are screwed. I guess they're okay. Have you taken on debt to invest? They asked this by a generation. Overall, people, Gen Z, millennial, Gen X, and they asked no or yes. Gen Z says 80% yes, taken on debt to invest, whereas boomers 9% say yes. I'm going to guess you're calling BS on this. I don't know. Are there any surveys anymore that we don't call BS on? You did a piece last week

that was like, I can't remember who did it, but it was like investors expect 15% returns per year individual investors. Oh, in Texas. There's no way individuals really expect that. Come on. There's no way. I feel like we see those surveys every year where they say individual investors expect 15 percent. I don't believe rational people actually expect to earn 15 percent per year. I just don't believe it. I don't believe 80 percent of Gen Z is borrowing money or investing on margin. There's no way it's that high. Well, don't you think it's like who is actually answering these questions matters more than. Yes. That's what I mean. So like, if you're answering a survey about what your investment returns are. So someone sent us this.

Oh, wait, hold on. Here's what they don't say. This survey was Robin Hood users. Oh, probably. So someone sent us this commercial. It's called sampling bias. And it's like, yes, I love responding to surveys. And no, I toss them in the bin. And it said, we received 500 responses and found people love responding to surveys. Anyway, we'll put this one in the video. But it's a perfect illustration of our issues with surveys. It depends who you ask, how you ask it. all that stuff. There's a good chart from Bank of America. Spending at clothing stores. I wonder if this includes Instagram. Maybe not. It does say clothing stores. The two-year change is 35%. That would take the base effect out of it. Right. So people are going back to the store?

I'm guessing a lot of people, if you haven't been out to see people in 18 months, you need a new wardrobe. You got to buy those five-inch shorts now. Didn't I even tell you the short shorts are back in. No. Yeah. Seven is the lowest you can go, I heard. That's a cool thing now. You got to wear short shorts. I did buy running shorts or mesh shorts from Amazon, and I didn't notice they're above my knee. Not much, but... You can't wear shorts below the knee anymore. It's a new rule.

I did not know that. Okay. Sorry, I don't make the rules. You're wearing a viper on your head, though, so you don't follow the rules. You're a bad boy, I think. Okay, this is one of my favorite listener questions of all time. I would love to hear your take on how the movie The Great Outdoors represents FOMO. Have you ever seen this movie? I never saw this movie. Okay. John Candy Classic. And I'm going to tell you to not watch it because I think it's a great 80s classic, but you're going to watch it and go, oh, that wasn't that good. Because it's very 80s. So I know you're a huge John Candy guy, but I love John. So it's John Candy and Dan Aykroyd plays like this shooter guy from Chicago who's like a stock broker and he's got the huge Zach Morris phone and he drives the Mercedes. And John Candy is super jealous of him. But it really turns out that Accrode had lost his job and was broke and he's just all show. And it's, yes, I love this.

I could do a whole blog post on this probably, but Great Outdoors is a very good FOMO. Why does it represent FOMA? John Candy is very jealous of him because he is showy and flashy and he's got the slick back hair and the nice clothes and he drives the bends, but it's all a show, and he really is broke and lost his job, and John Candy realizes that all he needs is his family. He doesn't need these showy things. Anyway, it's a good movie, but I'm recommending you not to watch it. I saw the trailer and I think I'm going to skip it.

You probably should, even though that's a great TBS USA movie from back in the day that I watched way too many times. Let's say you win $100,000 today. What are you doing with that money today? You have a house, not paid off yet, no student loan debt, four on K and solid investment portfolio. Well, this is not easy. I need to think about this. You have a house. Let's say you get a big bonus even. Inherit money, whatever. Could be 100K or less or more. I think this is where it helps to have some sort of idea about what you're going to do with a big lump sum like this. Where there's a bonus, like in my rule of thumbs usually save some like short-term savings, invest some, and spend some.

Carve out a chunk where you're going to spend where you're not going to feel bad about spending it. And then save whatever that percentage is for you, what do you feel comfortable with? And then save, invest, pay off debt with the rest. That's my simple formula. If I got $100,000 right now, I probably would, I mean, I would give some away.

I would keep something cash for a pitch of the fat variety. And I don't know. I guess that's what I would do. Okay. That was the worst answer I've ever heard. I mean, hearing myself, it's a terrible answer. Because it's not easy. That's what it means. I think you have to have some sort of framework for this, where if you get like an unexpected amount of money, where it's a bonus or whatever it is, and investment pays off something.

You have no student debt. You have a 401k and a solid investment portfolio. What else do you need? I don't know. You're not buying a car, right? That's what I mean. It's like, that's when you can allow yourself to go crazy and, yeah, you don't want to pay up debt and have fun, like go on a vacation, do something, splurge a little that's what I'm saying. All right. Fine. Fine, Ben. Fine. I'll go on vacation. Okay. All right. Any good wrecks for the week. Actually, you know what? That's a good idea. It would be very nice to take, like, friends and family on vacation. I don't know about friends. Maybe just like family. Friends and family could be a weird mix.

There you go. I like it. All right. Oh, now let's do the housekeeping items. We are going to be changing the Friday episodes to Monday. And as a matter of fact, We just recorded a good one. So our talk your books are going to go from, and listener questions, all that stuff, just a scheduling thing from Friday and a month. So podcast on I'll be Monday and Wednesdays. Yeah, we just did one of the ground floor, which is a real estate debt investment platform,

another fintech that I think is going to go out a lot of interest from people. Okay. Oh, I just want to thank the listener. And I want to thank you, Ben. But first, I want to thank the listener who told us to watch Mr. Inbetween. And I want to thank you, Ben, for giving it a bump. And I will say that if that show was an American-made show, it would be very much talked about. How far along are you in it?

I finished season two. I binged. It's been a while since I binge watched something. Probably Yellowstone, but I binged. Yeah, very quick. The best comp I could come up with is flea bag, where it's just like the first season was good, but the second season I thought took it to another level. But it's action.

It's that one episode, it might be like episode 10 of season two or nine. Which one? The child abduction one. Okay. Yeah, yeah. That felt like a half hour long movie. Didn't it? Like the whole episode was like a movie.

That was just awesome. The show is very, very dark. Yes, but it's got a like a subtle hint of humor to it. Like I just love his sense of humor. Yes. In ways it's funny, but it's incredibly dark. And this might be shortchanging it, but one of the best things about the show is that it's like 26 minute episodes.

Yeah, it doesn't like not. over the head with, like, minute details. It moves. It is what it is. So that's about as full of an endorse as I could possibly get. Again, with the caveat, it's dark and possibly disturbing. How come Australian people are way cooler talking than we are? Some of their sayings, like, what's news? And like, I'm going to get some dimmys. We can't say stuff like that and it's come off cool, right? What's news is better than what's new? Because what's news is like instead of what's up. And all these sayings that people in Australia use, I'm like, wait, what does that mean? And I have to look it up, but they talk way cooler than we do, by far.

Yeah. Excellent show. Oh, and then there was an article in GQ about Dave. Did you read that article yet? No, I didn't get my GQ hard magazine yet. I like to read in physical form when I get a GQ, so I'm going to wait. And for all the Dave viewers, man, episode three was without a doubt the most absurd one yet. It's out there. He's got a warped mind. So I gave you a mystery in between. I got a lot of people saying they started and they love it. You didn't give it to me the listener gave it to us. Yes, the listener, but then I moved the ball forward. Fair.

The listener got us to the one-yard line. I pushed us forward. I'm going to offer a Mayaculpa on Search Party. If anyone follow me into that one past season one, it should have been a one season show. It's like they got a bunch of money from the TV studio and decided, sure, let's just keep going and it just is nonsensical. What sort of loss are we talking here?

15, 25 percent? No, this is like a made-off situation. Ooh. After season one. Yeah, pretty bad. Season one is worth watching. After that, no. I like the Seth Rogen book.

I mentioned that before I just started it. He's got some really good Hollywood stories in there that really made me laugh. I think that if you like the Hollywood stuff behind the scenes, he talks about Nicholas Cage and Kanye West and some of his crazy interactions with those guys. The Seth Rogen book, if you like Hollywood stories, not that bad. I think that's all I got. All right. Yeah, and Michael would like to recommend a Cobra Kai headband.

How much did you pay for that? It's pretty comfortable. How much do I pay for this? How much do you think I paid for this? 25 bucks. No way. 14, I think. All right.

Just wait. until how much that could have been with 10% returns over the next 20 years. But then you don't look so quick. What does this say? No mercy. Okay. No mercy. All right, Animal Spiritspod at gmail.com. Again, we will be back on Monday after the 4th.

So everyone enjoy the long holiday weekend. Thank you.