Animal Spirits Podcast - We Should Be in a Bubble (EP.202)

Episode Date: May 5, 2021

On this week's show we discuss the roommate theory, Bill Murray, the massive scale of the 5 big tech stocks, rational vs. irrational bubbles, pros and cons of Robinhood, crypto going off 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 Masterworks. Mark your calendar, because on Friday, we're chatting with Masterworks.io founder, Scott Lynn. In case you don't know, Masterworks.com. Masterworks.com is the first and only platform to invest in real tangible blue chip art. Since we spoke to Scott last year, Animal Spirits, listeners have invested millions of dollars on Masterworks. Both Michael and I have personally invested in a handful of paintings. Bosquiat, Herring, Warhol? Who else you got, Michael? Condo? We were looking at the portfolies yesterday. People? Not quite. Contemporary art prices rolls 14% annually between 1995 and 2020, outperforming both gold in real estate. I did not know that. So if you're looking for real asset to hedge your portfolio against inflation, go to masterworks.io, tell them animal spirits send you and begin investing in

blue chip art today. See important information at masterworks.com. 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 sole their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. All right, Ben. Over the weekend, I believe Ryan Rissillo was on a podcast with

Bill Simmons. And towards the end of the show, he gave Simmons his roommate theory. And this is the idea that the better you get to know a person, generally speaking, the less you dislike him, which has not yet happened to us. I mean, you and I, I still love you all the same. It might be happening with our audience. They might be getting tired of us. I hope not. But that's the theory is that the more you get to know somebody. It's very often that you like somebody a little bit. You get to know more. You're like, wow, what a great person. Usually you find that stuff that they irritate. You get under your skin. And you like him less as a result. You live with someone. You're always going to find something that annoys you about them. What he was getting at was this.

In 2021, we've never known each other better as a result of social media. And so one of the things that happened over this weekend that caused a little bit of a stir was Charlie Munger just not relenting at all on cryptocurrency. I forgot what he said, but he's not into it. I forget what the exact quote was. He's sticking with a rat poison. So what do you do when somebody you deeply respects says something that you completely disagree with? I think the tendency of people sometimes is to too quickly dismiss them, write them off, instead

of just saying, I admire this person. I don't agree with what they said here. It should happen, at least all over the internet, because I highly doubt that there's anybody that you follow who you agree with everything that they say. That would be kind of weird. Another thing that spread like wildfire over the internet this weekend was Professor Galloway's tweet about upgrading your peer group. Exactly what he said was this.

You constantly want to be upgrading your peer group. you want to hang out with smarter, more successful, more interesting, higher character people because you will rise or fall to the level of your peer group. And the internet took this and ran with it, quote, tweeted to a gazillion. Honestly, I like Scott Calloway. I happen to like him. I think the algebra of happiness was a terrific book. But some of the things that he does are cringy.

This tweet, people, I think completely blew this one out of context. I understand what he was saying. But what did you think about this one? Did this get under your skin at all? Not really. I understand why some people rushed to dunk on it because people think it's fun to dunk on him. It's funny because a lot of people in tech think they're being contrarian by being anti-Scott Galloway, when in effect they're all anti-Scott Galloway, it seems like, because that's the cool thing to do.

So I don't know. I didn't think it was that big of it. Like, I've outgrown some friends over the years that just sort of happens to serve people. Yeah, but I think he's saying that people were getting mad because they thought, well, you're not just going to leave your friends because they're not as successful as you or whatever it is. so I get that. Yes, I get that too. But do you really think that's what he means?

Do you really think that he's telling you to dump one of your good friends who doesn't have as much money of you? Come on, come on, people. Yeah, but both of us have realized that on Twitter, a lot of people take you very literally. And because most of the time, we're being sarcastic on Twitter and people, every time, you and I will send each other slacks back and forth of this person taking my sarcastic tweet seriously. I don't think this was sarcasm. I just think people took him too literally.

He goes, he has to clarify. He goes, all right. The point is, have people around you who inspire you. They will inspire you in different ways, make sure they inspire you and that you inspire them. That's all that he was saying. But we live in a world where somebody says something you don't like and you write them off forever. Same thing with Cuban. I like more Cuban.

I hate what he's doing with Doge. I don't understand it. It's confusing. I don't know what he's trying to do. It makes me like him maybe a little bit less, but I still like him even though I don't agree with what he's doing here. It's like you and I. You're not always going to agree with people on their food or movie takes or TV takes. And that's just people have different tastes and stuff.

So I think you have to think about that with social media because how many people do you know from high store college that you liked as friends and you see them post something, a picture or a caption or a fortune cookie piece of advice on some sort of social media and you go, oh, wait a minute, I thought I knew this person. They did this. It's like. Some things are unforgivable. Like some things people reveal themselves and you're like, oh, I'm done with them forever. That's one thing. But there's nothing wrong with outgrowing friends, not because of social status or money or anything like that, but because you move on and you want. to elevate yourself. I totally get it. Anyway, I'm still not over quickly. You're not a dodgeball guy? I'm still over Dodgeball. Sorry, just maybe I'll have to rewatch it. Sorry, never did it for me. I thought it was misused Vince Vaughn's talents. I'm sorry. All right. We can agree to disagree and move on. I mean, you're really telling me that Vince Vaughn and Justin Long were going to be the world champions of dodgeball. Oh, get out of here. Don't even go there. That was so not the point of the movie. All right. So last week, all the big tech giants reported, and these companies are just crushing everything. You wrote a piece about how Apple is

on fire and shared some stats. Here's one from George Perks. Facebook is doing revenue at north of a $100 billion annual run rate of 48% year-over-year growth, incremental net income margins of 54.8%. How is this even possible? Apple's quarterly buybacks, 90 billion, they just announced. That is more than, let's, oh, where'd this go? Oh, sorry. While you're looking for that, maybe now is a good time to share the fact that this is not a mole or anything I cut my lip shaving. You have your... Tiffany, Amber Theson,

Cindy Crawford, Beauty Mall. We'll go away. Apple's $90 billion buyback is larger than 400 of the S&P 500's components. 330 S&P 500 companies with trillion 12-month revenue

that are smaller than Apple's beat in the second quarter of 12.2 billion. These companies are so gigantic and I just don't think we've seen anything like them ever. So Apple's a $2.2 trillion

company right now. I mean... I wonder, I feel like standard oil was relatively larger than them. If we could recreate my famous pie chart, what would standard oil be like relative to the rest of the companies? There was no S&P 500 then, obviously. There's no. I think the difference now, though, is that the fact that their results keep improving so much. So they, here's a tweet that said, the level of sales for the first quarter for Apple equaled the holiday quarter of 2019 in its third highest quarter ever. Like, these companies are, like any expectations they had from

analysts were just crushed. Like, the fact that these companies are still so big and still doing this. So they have a combined Apple, Amazon, Alphabet, Microsoft, and Facebook. This is from New York Times. Combined annual revenue of $1.2 trillion, 25% more than since the pandemic started. In less than a week, those five giants make more sales than McDonald's does in a year. I just, it's hard to fathom some of the sheer size of these companies. And isn't this, I mean, all the speculative junk that's happening right now? Couldn't it all go to zero and it wouldn't matter because these companies are so strong. And I'm not saying that, of course, these companies will probably get hit to if a lot of the speculation were taken out of the market. But these companies are so big. This is why I think

since you're not a market viewer, you probably don't know this. Let me tell you that Apple is now 6% below that opening pop. Actually, I think more. Apple popped on earnings day, closed on the lows and has been selling off ever since. Surprisingly, the stocks, they had initial pop, but they all kind of came back in. So that just shows how much of those expectations, I guess, were already. And does this also show like how useless a lot of the analyst estimates are because even though they crushed expectations, obviously the market had way bigger expectations than the analyst did even. Yeah. It's four days since the stock was trading after earnings and it's almost seven and a half percent below the highs. With all this said, these huge companies, the pseudonymous Jesse Livermore

was on Jim O'Shaughnessy's Infinite Loops podcast. And he made this comparison I thought was really interesting. He talked about like a rational versus an irrational bubble. And he was saying an irrational bubble would be something like, let's say Bitcoin is at the prices it currently at and it's rising really higher Ethereum, but you can create an infinite amount of them. So if that was the case, it would be completely irrational because there would be a way to see that like this is a house of cards that doesn't make sense. But since you have that scarcity, he said even Bitcoin is like, it's kind of a rational bubble right now.

Like I don't see what causes it besides like a lack of speculation to end. And I think that other than higher inflation in the Fed or a mania that just continues to take things too far. The stock market technically is, I guess, in a bubble. I sent you the Shiller-Cape ratio. It's by far the highest it's ever been besides the tech bubble. It's like 37. So let's say valuation-wise, we've probably been in bubble territory for a while. But shouldn't we be in a bubble right now? I don't think we're in a bubble. Okay, in a bubble in terms like it has to crash. But I'm saying like, if we were ever going to be in a bubble, shouldn't we be in them now? Interest rates have been low for 12 years. The stock market has been up 11 out of the past 12 years.

It's had the best year ever, basically, over the past 12 months since 1950. There's nothing else to invest in in terms of safe assets. I actually think crypto, let's pretend we're a thought experiment. We're in a world where crypto didn't exist. You didn't have that mania side of the market. Don't you think the stock market would be going even crazier if it wasn't for crypto? Yes. Satoshi was never born.

Good point. Traveling back in time, Michael J. Fox, make sure Satoshi was never born and crypto doesn't exist. I think the stock market is even crazier right now. Michael J. Fox invested in it. Wealth Simple. Did you see that announcement? No, I did. Michael J. Fox, Ryan Reynolds, and Drake. They're a Canadian company, so they're getting Canadian companies.

Being an investor is the cool thing to do as a celebrity these days. If you're not an investor and don't have your name tied to something, then you're not paying attention. All right. So one of our favorite research pieces is this Besson Binder piece from a few years ago that shows that the majority of stocks underperform cash or the index. And picking the winning stocks is way harder than it sounds. And you can poke holes in this because, you can pull holes in this because, It's basically just showing how a market cap-weighted index works and the biggest stocks have the

biggest impact. But John Reck and Thaler at Morningstar decided to recreate this and figure out over the past 10 years how many stocks in the overall market actually beat the index. So over the past decade, the U.S. stock market is up close to 14% per year. Only 42% of stocks in that time. Again, this is an amazing 10 years of return. So the stock market over the past 10 years is up 9 out of 10 years. The biggest down year for the S&P 500 was a 4% loss in 2018.

So a pretty good period. Only 42% of individual stocks finished with a gain. And 36% posted a 10-year loss, 22% completely gone. Either they went out of business or they got taken over. Four out of five large U.S. stocks trailed their own benchmark. I guess this is as much about the tech behemoths as it is anything else. But these numbers are shocking to me, even though I've read this data, I would have figured over the past few years, it wouldn't have been this much of a bifurcation. So even in a bull market, only 42% of individual stocks finished positive. Wow. That's showing how hard it is to pick the actual winners. So yes, if you were in those

big five tech stocks, you crushed it. But if you weren't, you had just as good of a shot of picking losers as you did picking winners, potentially. If you weren't in the big tech stocks in the first quarter, you did very well. Q1, 2021 was the second best quarter in history for value. Really? In terms of the value growth spread? Yep. HML returns. Correct. Kenny French using his data. Thoughts. Any thoughts? I guess a lot of people would say it's about time. It's a long time coming. And a lot of people would also say, like, it's going to continue. And this is just the beginning. That's what a lot of value investors would say. If you look at the stock market right now, the physical world is outperforming the digital world bigly. And what I mean is look at the stocks that are doing well, at least today. It's Tuesday. You have homebuilder. transfers, transports, industrials, materials. Those stocks look very strong. What looks like shit, Teledoc, DocuSign, Zoom, Peloton, anything that benefited from low rates, I guess, but especially growth, certainly stay at home, technology, that has completely flipped on its head. And don't you think that, so if 2020 was the year that reminded us that, oh yeah,

digital is huge in our lives and it's going to be huge in our lives forever. 2021 is the year that's reminding us that, oh, wait, the physical world still matters a lot because we're having shortages in everything these days. And so like the physical world still matters a lot. We can't just live in the Ethereum gas and gas fee world or whatever where you want to buy your moments and stuff. Teledoc cut in half. That's surprising. I actually scheduled a doctor's appointment for two weeks. And she said, do you want to come in or do you want to do virtual? What do you think I said? Virtual. Of course. Yes, I would choose that any day of the week. So I said the other day on Twitter, Peloton is the

hardest post-pandemic stock I could think of. So it's down 40. Well, because Peloton is hardware and software. So that's a tweeter. So it's off 44%. And as someone who likes the product, I think the product is great. I'm still going to continue to use it. By the way, you know my new secret power is a Peloton? You know how you have the dial you turn to change the resistance? Yes. Okay. So you go from a resistance of 50 to 80. Well, hold on, hold on. You dial it up to 80? When I do the hills sometimes, yeah.

Holy cow. Get on my level. I mean, it's not very long, but okay, so you dial. Hold on. I'm not over that. The highest I go when I'm pushing is 65. Okay, so I have one where I go to 100 for like 30 seconds. Stop it.

My mind is honestly blown. This is when you come out of the bike and you're climbing. So it's like you're going up a mountain. Sorry. But my superpower is I now have the ability when I'm turning that crank to hit it Exactly. Remember like when you used to pay for gas and you'd have like $20.15 and you'd try to do it exactly. I have the ability to turn the resistance on my Peloton. So I go exactly from 50 to 80 and I stop at 80 on the dot. You know the Von Bergen, the gift. I don't believe you. That's what I'm going to throw in here. All right. I'm just saying, why would I brag about this? This is like my ability to listen to podcasts at two times. I can just do it. Sorry. Sorry. Sorry. Sorry. So as much as I love the like exercise equipment is notoriously fadish. It's all fads that come in and out of style. And so that's why. Well, it's hard for me to think that.

Sir, sir, it's different this time. Okay, you're a believer that this is, all right. I think this could be a situation where you have a great product and I don't know how well the stocks can do. That's why it's my too hard pile. That's all I'm saying. Well, let me ask you this. Don't you think that they're going to do other things other than just the bicycle and the, did they

even release the, drawing a blank? What's the, oh, the treadmill. Did they even come out with that? Yeah, they came out with it. It's, I don't know, $4,000 or something. But anyway, it's hard for me to, I think they're going to get more competition and think about all the other brands. Nordic track and all these other things that have gone out of style over the years.

That's fair. No offense. You're still kind of new to the exercise game. I've been in this for a couple decades, and I've seen the things come and go. I honestly don't think. I think I might have gotten over 70 once. My mind is absolutely blown that you've done 100. I'm going to try and push it tomorrow, but good Lord, Ben.

Let me see those thighs. Stand up. Do the climbing ones. Those are the good one. All right. Okay. Okay. So this is, you mentioned Charlie Longer earlier.

This is from Robin Hood. By the way, we saw somebody tweet this statement without like a link. And honestly, I thought it was fake, but I wasn't positive. I'm like 55% sure this is fake. I sent it to you and I said, is this real? This is from Robin Hood's blog. If the last year has taught us anything, it is that people are tired of the Warren Buffets and Charlie Mungers of the world acting like they are the only oracles of investing.

Yeah, have they seen George underscore random guy underscore scam guy 69? At Robin Hood, we're not going to sit back while they disparage everyday people for taking control of their financial lives. Come on, man. on. Come on. That's, yeah, that's a little. Honestly, Warren Buffett has done more to educate investors than anyone maybe besides Bogle. But as far as like being the greatest investor of all time, the fact that he has shared so much over the years is like a testament. And he's always pushed for people to invest in index funds. And give me a break, Robin Hood. Here's another example.

I'm not sure how I feel about Robin Hood. I like some aspects, some aspects I don't. This is an example. I'm like, hey, come on. We can have a love hate. Okay, here's why Robin Hood is, like, walking around, like, with the biggest belt buckle in the bar. This is from Nate Drossi. Robin Hood, Q1 payment for her flows. Wait, hold on. Say that.

What was that thing you just said? The biggest belt buckle in the bar? Is that a thing people say? Isn't that, like, a thing if you're in Texas, have the biggest belt buckle, you're, like, the biggest badass at the bar? I don't know. I feel like they're walking out their chest puffed out because they're doing so well. That's what I'm trying to say. Anyway, sorry, that analogy.

Sorry, that was my coup de grave of the week. What are we in San Antonio? Yeah. Their payment for order flow for all of 20, $687 million. For the first quarter, $331 million. Okay, if they want to democratize investing, I'm sorry, I'm always a little too harsh in Ramadanhood, probably, but give some of that money to your investors. Say like, hey, you're going to get like a company match from us. We're making so much money right now. Here's some for you. We're going to like match every deposit you make with a 1% match or something. Like, I don't know. Like, I think they could double down and really like secure their place.

I think with their numbers they're doing, they're going to be bigger than. every other big brokerage financial firm there is when they come public and event i don't know man what do you mean you mean market cap yeah they're going to be bigger than all these places charles schwab they're they're going to be bigger than them eventually aren't they they're 40 billion how big is sure allegedly 130 billion okay mark this down 18 to 24 months robin hood is bigger than charles schwab no no nope put it on the books i bet when they come public they're going to be 7075 billion market cap 18 to 24 months they're bigger than charles swab timestamp it. Nope. Okay, listen to this. They sent me this survey and asked a bunch of questions. I put one in

here. How likely you do is the following features have offered to you? A crypto high yield savings account where you earn up to 8% exchange for locking up your crypto for a year. I'm only on that. Where you earn up to 5% for having certain cryptocurrencies in your account. A cryptocurrency retirement fund such as a 401k or IRA can invest in crypto tax free. Listen, this whole survey was about crypto. They're doubling down here. You're bullish on them because I sent you a survey? I'm saying they're doubling on a crypto. I think they're going to. I think they're going to. to, here's another easy one. They're going to be bigger than Coinbase. Okay. Robin Hood is bigger than Coinbase, probably when they come public. I don't think so. No way, dude.

They were talking about a valuation of $40 billion. They're not getting to $80 at their IPO. Okay. Coinbase is currently $55.5.8 billion. When Robin Hood comes public, they're bigger than Coinbase is bigger. I thought Coinbase is bigger. I've just to come to it. Robin Hood is going to be huge. You're throwing timestamps everywhere. Be careful. I'm putting it out there. I think the stuff they're doing and as much money as they're making, they are going to to be enormous if they can stay out of their own way, which sometimes they still can't. There was an article last week. Robinon has a customer service problem. A mental health therapist, oh, in your neck of the woods, Lake Orion, Michigan. Is that near you?

Other side of the state. Okay. Was notified on February 4th that his account was frozen, this from the Wall Street Journal, following weeks of back and forth with Robin over some bank transfers that went awry. He watched his portfolio plunged value while Robinon repeatedly missed the one to three-day window in which it told him to expect a response. He could have sold shares, but his proceeds would have been trapped at rob it until his account was restored. So here's what he said. At this point, I've sought more professional help on the matter, and I am losing sleep. I am looking to borrow money from friends and family. So not good. So what are they doing as a result of some of this customer service stuff? They're hiring 40 financial advisors,

not to like do financial planning, but like literally for like operational and stuff like this. I just read the headline. I didn't read it. So it said they're snapping up financial advisors. So they're just helping people get through issues like this. To be clear, Roberton is not an investment advisor and does not offer financial advice, a spokesperson said. These recruits will not be used to provide financial advice via the customer service. They said, quote, we are increasing our FINRA registered financial professional headcount to support our customers with their brokerage account related issues. So this is definitely to beef up for their IPO. Probably.

And guess what? They have enough money to hire more people, obviously. But that's the problem with a lot of these FinTech platforms is they don't even have a 1-800 number on their websites or their apps. You cannot get someone on the phone, like a lot of these places. I agree that's a huge, huge problem. So last week, I don't know if we spoke about this on Spaces or on the podcast. U.S. podcasting revenue just broke a billion dollars. Twitter did a billion dollars in the most recent quarter.

What did Facebook do? 90? Something massive. Yeah. Anyway, this blew my mind. So Verizon is selling AOL, Yahoo, Yahoo, Finance, all those properties. All right. Yahoo Finance.

Yahoo Mail, TechCrunch, and Engadgett. I don't know who Engadget is. Guess how much revenue they generated in 2020? Billion dollars. Seven. Wow. That is a ton of money. Yahoo Finance and Yahoo Mail did $7 billion of revenue in 2020.

Podcasting just broke a billion for context. And so if Twitter did a billion in the quarter, let's say, annualize that, they're a little more than half of what these Yahoo entities made. I mean, Twitter is still tiny financially relative. totally speaking. So they did announce today. I sent this to you that they're going to allow people to charge for spaces in the future. If you want to do a live audio event, you could charge people to come on your spaces. That's cool. By the way, you and I were on locker room on draft night. Not a bad idea. So locker room is, I guess, Spotify owns them now, and it's a way to have

sports conversations of live audio. So you could follow your favorite Twitter or Instagram or whatever sports personalities, and they could live watch a game and talk about the game instead of listening to do the announcer or something like that. Let's say you're a next fan. there are national TV. You don't want to watch MSG, and you don't want to listen to whoever's calling the game, Van Gundy and Mark Jackson. So if you wanted to listen to like Stephen A, for example, I'm sure that he's going to be on this. So that's the idea is that you could listen to like more local people. I like it. It's good idea. All right, some wild crypto numbers. Where is this from? The FT maybe. Institutional assets on Coinbase rose from $45 billion to $122 billion over the first

quarter alone. That's nuts. Can you imagine if they would have Dogecoin on their platform? Do they? They probably do, no? No, they don't. They don't? No, that's what Robin Hood's going to take them over. Robinon has been delayed from Doge. They allowed the dumbest finance thing ever. So Goldman surveyed 300 of its clients in March, 61% to expect their digital asset holdings to increase. The CME said that Bitcoin futures revenue was higher in the first quarter than all of last year. Wow. It's happening. It feels different this time. How so?

Just adoption? The adoption, it's not just like this crazy idea people are thinking about. It feels a little realer this time around for sure. I don't know what that means, but it does. You wrote a book, Ben, called Don't Fall for It. And this is like a perfect environment for scams. Investors globally have lost more than $16 billion in crypto-related scams and frauds. And that's only what's been reported.

Crypto is the perfect asset for scams and frauds. You have people who don't understand anything about what it means. You have this unbelievable narrative. It's a new technology and innovation. It's really difficult to understand for the lay person. And a lot of people want to pretend like they understand, even though they probably don't. So yeah, this area is just ripe for scams and hucksters and charlotons. And this is going to get way, way worse, especially with all the new stuff that's coming out, all the new cryptos that come out, it seems like on a weekly basis. There's an exchange called Luno. I think they're based in London. in. They did a survey and found that 55% of their clients had no other investments. What meaning crypto is it? Yes. Wow. Okay. That's all the money off the sidelines, I guess. I mean, if you're a 21-year-old person, why would you invest in stocks? So 60-40 for 20-year-old person is 60% Doge, 40% Tesla. So Tesla is your stock. That's it. But seriously, if I'm a young person and I'm just coming to the market and I'm learning about everything

that's going on. I'm not buying Apple. I'm buying Doge. I don't know. I'd probably buy a Target date fund still, but that's just me. That's true. So what is Doge up today? I mean... I don't want to talk about it. Fine, fine, fine, fine. I'm kidding. I'm just joking. Okay. Oh, because you're salty about Doge is up 40% right now. Unbelievable. All right. Here's the... Still the dumbest bull market ever, sorry. That's okay. It's morph into it. It's gone from the most hated to the most dumb. By the way, Doge is bigger than Coinbase. All right. Here's a... Oh, my God. Dude, Doge has a market cap of $73 billion. Oh, God.

Here's the good side. We talk all about maybe Robin Hood, at least Buffett said, taking advantage of people's instinct to gamble. So there was an article in the journal about TikTokers giving financial advice. And one of the quotes is from a 30- The headline is just perfect. It was just read the headline. TikTok is the place to go for financial advice if you're a young adult.

No, it is not. Please do not go to TikTok for financial advice. Now, wait. Kim, a 30-year-old footwear company sales director in California, said, I have no idea why I bought what I bought. They just said buy Ethereum, so I did. It feels kind of stupid saying that, but I find myself getting influenced on TikTok all the time. Okay, it's easy to take this out of context and say this is the dumbest thing ever,

blah, blah, blah. She invested 100 bucks. Okay, big freaking deal. And you know what? I think that there are probably, there are a lot of people that are doing very, very dumb things and being irresponsible. But don't you think that a lot more people are learning and even if it sounds ridiculous? I do think it is. Don't you think there's a lot of people that are just betting money that they

could afford to lose? I guess the pros outweigh the cons in terms of people actually opening up an investment account, a brokerage account. That's a good thing. That's a good place to start. Yeah, I'll say that that's somewhere where the pros outweigh the cons for me. I just don't know how a lot of these people ever learn how to invest wisely if this is what they're doing. I don't know. That is the concern. That is the primary concern is that if you come to the market through the lens of this is a casino, can you shake that? Can you grow out of that? Because if you think it's a casino and then you lose 70% of your money, you go, see, this thing is rigged against me. I'm never coming back. But I guess that happens to people all the time no matter what. So I guess who knows. Okay. From sentiment trader, I'm curious of your thoughts on this. So far in 2021, most trading systems using technical indicators have lost money. As a group, they have lagged the S&P 500's buy and hold return by 16%. Tied for the worst performance in 25 years. So he's basically saying this is an awful year for technical analysis. The technical analysis people on Twitter, the CMTs, if you will, we're not happy with this one, I don't think.

This was an interesting time because I swear to you, Ben, I had this as a draft and I didn't tweet because it's not a good tweet, but I was going to tweet something like the best time to buy is when you desperately want to sell. And what I meant was it seems like more and more we're seeing false breakdowns, where you have like horizontal support potentially, where let's just say that a stock bounce at one level, it rallied, and then it failed and that it sold off and then it broke that previous level, like it broke, quote, support. That oftentimes has been a false breakout where it breaks below what people think is a key level, and then it rallies. So I think- Can we have Duncan pull that clip and put it on our animal spirits TikTok? We

started TikTok now and just use that one. Michael explains technical analysis. What is a false breakdown? Yes. I would think that technicians would say you can't quantify what we do. It's more art than science. You can't plug this into a machine. That said, I think that they do plug it into machine. And the reason why I think this has gotten harder and why false breakdowns are more prevalent is because literally the renaissance of the world and probably people much smaller than them are gaming this. They're saying, okay, this is where potential people are going to place their stops. This is where people have their stops at support. And they're gunning for those numbers. And that's not like conspiracy theory. That's absolutely happening. So people have learned this is where

people are going to do stuff or they have done stuff in the past. I'm going to front run it. Exactly. So I do think that it's gotten a lot harder. That just seems like the nature of markets. If I would have just followed my own advice, I'd be a millionaire. All right. Another one from George Perks. This is the best quarter for wage growth since at least 2001. So this is a good thing for wages going up. Here's something I want to getting back to the financial literacy stuff. I just tweeted this and I want to get your thoughts. So the personal savings rate, and this is jacked up for a lot of reasons from the pandemic. It shopped over 30 percent. and then it came down. Now it's up to like 21% again. A lot of it is people getting more money. But it's funny. So many of us have preached for years. Like people just need to learn more and we need to

teach financial literacy in school. And I still kind of believe that. But don't you think the way you help people improve their finances is to give them more money? And I'm not saying like the government needs to just hand out money every year to people. But guess what? If people earn more money, some of that will go into savings and paying down a credit card debt and investing. And I think that's one of the things the last year has proven to us is that, no, we don't all lead to read Thinking Fast and Slow, but Daniel Kahneman. That's not going to help people. Like, as great as that book was and as awesome it is for us to study about behavioral psychology and as interesting as it is, that stuff is not going to help 99% of the people improve their

finances. What is it going to help them improve their finances is someone paying them more money. Yes. That's what they need. You know what's interesting is that it seems like MMT has won. Everybody is coming to the understanding that maybe we could spend more money than we thought, that the constraints are not how much money can we spend. It's inflation. I think that most people are getting there. Certainly policymakers are getting there. And yet, Biden still wants to pay for the infrastructure. He still wants to be revenue neutral. He still wants to tax the rich to pay for that. I mean, that's obviously just a political thing, but I just thought that's kind of interesting. Why not just say wealth inequality is out of control? We need to bring it in. And so this is

something, another thing Munger said, we've kind of stuck on Charlie Munger a lot, which is crazy. The guy's 97 years old. You listened to the whole Berkshire Hathaway meeting. I didn't really listen to it, but I did. So Howard Stern talks about his dad, like still has the timber in his voice, or actually he lost it. But when old men lose that, And Buffett has lost it. Buffett sounds like an old man, and he is. Munger does not sound 97. It's incredible. Basically, he said, by accident, Bernie Sanders on the wealth inequality stuff, one, he said, with everything boomed up so high and interest rate so low, what's going to happen is the millennial generation is going to have a hell of a time getting rich compared to our

generation. He was basically saying, having that gap between the rich and the poor in the millennial generation is going to be harder because valuations are so high, housing is high, bond yields are low. It's going to be harder for young people to get as rich as people in their generation did. And I'm at least glad he's admitting that because I tend to agree with him. I think there's probably more opportunity for people to get Uber rich in something like technology or something like that really fast these days. But as a whole, I agree that it's going to be harder to see that separation as we saw in the older generations. Scott Galloway said, it's never been easier to become a billionaire. It's never been hard to become a millionaire. I think that's probably true.

And unfortunately, I kind of agree with him that. But that's nice that at least this is the other stuff But Munger and Buffett have admitted over the years. Like, they hit this stuff at the perfect time. If they were 30 years old right now coming up and starting their partnership, would they have as easy at a time as they did back starting this in the 50s and 60s and 70s? Like, of course not. But they admitted, which is nice, right? I appreciate that. Here's a nice chart from Lizanne Sonders showing the consumer confidence of people in the $125,000 income bracket minus people on the lower end at $24,000. And this is a breakout.

You see this chart, Ben? Where are you at? I lost you. It's running the Georgia's chart. Oh, okay. Oh, so it's saying people the low-rend of the income scale, which is funny because all the free market people that really hate the Fed and government spending and have been talking about the inflation truth of people have been talking about how inflation is going to hurt and all this government spending is going to hurt the people on the low

of the income scale. Guess what? They're the ones benefiting the most right now. They're making more money. They are the reason that the personal sales. savings rate is up so much right now. So Darden, which owns Olive Garden and Longhorn Steakhouse, never been to Longhorn Steakhouse. Yeah, we have one kind of by our house. And on the outside, it looks very fancy. We're like, oh, this is like a sweet. This is like right when we got married

early 20s. We don't buy our house. It looks like this nice, sleek modern steakouts. Then you go in and it looks like a country western bar. You're like, wait a minute. This is like a bait and switch. Not that there's anything wrong with that kind of place, but this is not what we're expecting when we went in. I feel like you don't like Applebee's, never been to a Longhorn. You're just not a big chain guy, I guess. I don't think they have Longhorn here. Okay. It might be a Midwest thing. I don't know. Or so. Anyway, they're raising wages to attract restaurant workers. Amazon is giving out raises to more than 500,000 workers. I mentioned Chick-fil-A last week being closed for breakfast. This weekend, we were in Northern Michigan. My kids for lunch wanted Taco Bell. Go to Taco Bell. They like

the little cheesy roll-ups there. Taco Bell was closed for lunch because they didn't have staff. Okay. Drive down the street to go to Subway. Subway was closed because they didn't have enough staff on the same day. All these places are going to have to jack up their wages, I think, to get people to come back. Well, you know what you've done, Ben? By the way, hold on, stick with this. So, 42% of surveyed companies told the National Federation of Independent Business that they have at least one open position that has proved hard to fill. So I think that people will come back to market as the economy reopens. Their stimmies run out, etc. I think they'll come back. But what you've done from all your chick-fil-aing,

there was an article. I haven't read it. But the TLDR is, we're running long. poultry. Okay. Winnie the poo meme. Regular one, chicken. Guy with the eye thing. Poultry. I saw that. There's shortages of everything. I saw one that was, there's shortages of chlorine for pools for the summer. It's everything. The supply chains are all. And I said this to Scott on Friday show. Everything is over subscribed. And I don't see what. So, okay, here's the housing thing. Back to that. So this is millennial share of housing. And this is from, I don't, I don't know, this core logic. 2014, it was 33% of all sales purchases.

2020, 54%. Millennials are coming to take over the housing market. This is still coming and I think it's still happening. Didn't we just speak about this? It was like 42%. I don't know. The numbers ramped up in a big way. Yeah, it went from, well, yeah, 42% 2017.

And baby boomers have, of course, gone lower. Gen X has actually moved a little bit lower too, which is interesting. Did you talk about this largest age cohort? No. Go for it. I did put it in here. Go ahead. Okay. So there's a chart showing the largest age cohort enters the peak of first-time home buyer wave, and it's people a little bit younger than me, 28, 29, actually a lot younger than me. Somebody asked me how old I was. I forgot I'm 36. I said 35.

Oh, well, no, whatever. I mean, does it really matter after you turn 30? Does it even matter? How old are you? I'd say after you turn 35. Okay. By the way, my wife this weekend, already, it's May, started plotting out my 40th birthday for the summer. Shoot me in the face. I don't know. Am I really, anyway? Ben, you peddle 100 on the Pelotan. You have nothing to complain about. I'm actually in cognitive decline because I called the doctor today and they asked me for my primary physician and I told them Dr. Silverman and they looked at him up. They're like, what's his first name? I did the first name. Where is he? Rockville Center. They're like, ah, we're not fine. I gave him the completely wrong name. I think I'm losing it. I've got like 10 good years left. Okay. I just made up the last name. My thing with names, I still get this. I meet someone. Hi, what's your name? Say the name. Three seconds later. I got nothing. Please out of my head. All right. Another shortage.

thing. Wall Street Journal article. Hold on. Before we go there, somebody emailed us to clarify, because we talked about the all-cash offers last week. We were like, we were stupefied. Yeah, by the way, we got like 30 different theories on this. I feel like everyone thinks they have the one theory, but there's like 30 different ones that you guys don't know what the all-cash offers is. It's this, and all them are different. Here's what's really happening, and then they tell us something completely different from someone else. I like this one. Wanted to shut some light on the all-cash offers. Most of the time, that just means someone is waiving the financing contingency, not actually paying cash.

If an individual a couple knows that they won't have an issue getting a mortgage on the property, then it strengthens the offer. This is similar to waiving an inspection, which means you can't negotiate after an inspection, we can still get out of the contract that you find too many issues and no longer want the property. Waving appraisal is the same thing. Appraisal still occurs but could potentially cost you more cash up front if the home appraises for less than the sale price. What do you think?

Does that make sense to you? I don't know. Someone's probably going to write us in and tell us that doesn't make sense, but That just seems like faulty marketing if you're saying all cash, right? Well, it's not literally a briefcase of cash. I don't think the buyer is coming with the 100% check either. I think this is right. True.

Okay. We talked about this before how you tried to get a home equity line of credit from, I think, Wells Fargo. This is the Wall Street Journal. They suspended the origination of new Helox after April 2020 and haven't determined when they're going to do it again. Similar thing with JP Morgan. But what are they doing? I have no, there's so much equity. But here's the thing.

So people think. Dude, blockchain fixes this. I'm sorry. I mean, this is dinosaur behavior. We talked about lumber last week in the fact that home builders and lumber producers are still so scarred from 2008. This is the same thing. The banks saw what happened in 2008, so they pulled back and they still haven't let it go yet. Think about how much equity people have in their homes now after the real estate market is just going bananas.

I'm sorry, but if people think things are crazy now and in a mania, what happens when people are allowed to tap the equity in their homes and take this cash out and do stuff with it? this just seems like another piece of cash on the sidelines and a leg higher in something, doesn't it? Like, if people actually, these are the biggest banks in the country, I'm sure people are going elsewhere and they're refinancing for cashing out or something, but the fact that they're not letting people take their home equity out right now, like, this is crazy. That's a good point. This is more cash on the sideline. Like, things could still get way, way crazier. All right. I'm calling for Cape 40. It's already at 37. We're going to break through the tech

bubble. That's where I'm at. What was the high then? Forty two? Forty-four maybe. But, I mean, unless earnings just go crazy because the economy goes nuts. But I think Cape 45 or 50 is within our sites. Another time time stamp. Three times am for me. I don't know. Why not? I don't know.

So we spoke with Collectible about the PSA grading company, bought an AI company, I guess, to help, like, speed up the process. By the way, if you say AI, it means nothing to me, but the fact that they're doing it, like, I'm like, ooh, interesting, right? Like that. So there was an article advice somebody sent to us. Pokemon cards are selling for hundreds of thousands of dollars. Did you read this article?

I did. So there was a quote in here. The reality is that we recently received more cards in three days than we did during the previous three months. Okay, someone, after we talked about collectible, someone sent me this picture from Target. This is a sign on their store to ensure the safety of all guests and team members and their fair distribution of high demand items, all MLB, NBA, NFL, and Pokemon, cards will only be sold on Friday at 8 a.m. at a. on a first come for a serve basis. What the heck?

So, okay, remember you asked Azaret collectible, what are the shit coins of cards? Pokemon is the doge. Pokemon is the doge of trading cards. Oh, that's good. That's it, right? That has to be it. All right, let's do some listener questions. All right.

Hey, guys, wanted to hear your thoughts on the best place to put A, saved money for a down payment and or B, money after the sale of the house. All right. before I finish this, someone who is in FinTech, call Michael and I. We're going to start a company that is exclusively saving for a down payment. This is far none the biggest question we get from every single. Maybe it's because of the age of our listeners, but we get this question more than any other question. What's the name of our FinTech going to be? Well, we got nothing. Duncan, put the crickets in. Both options would need to be used in the next one to three years. And I know you normally recommend not investing the stock market for such short timeline, but I'm worried with the current housing market. My savings rate will be unable to keep up with the growth and housing prices or the cost of building. given very low savings interest rates, would you consider putting savings in money market account, T-bills, bond funds, or even some portion in stocks? So the idea is, if housing is ramping up at 8 to 10% a year, your savings rate is not going to be able to. This is really tough. The thing is, I still think that the risks are asymmetric. If you make 8% of the market or even 13% cool,

but if you lose it, you're shit out of luck. What do you do? Yeah. Honestly, maybe the easiest thing would be if you're that worried is to up your savings rate a little bit to it. I don't know that people can just do that. I'm saying you shift from saving something else. Maybe if housing is your number one goal and you know that the down payment is going to go up, I can't think of anything else. What about this? What if you understand the risk in the stock market, but you want to invest it anyway? And you say, okay, if I lose 22% at the time that I buy a house, then so be it, then I have a smaller down payment. I'll just get a bigger mortgage. Or you do 25% in stock, a small number not the whole thing something like that maybe interested in investing in venture funds but

have no idea how to find good ones it seems like the best ones are closed or require seven to eight figure checks have any good resources if you're an individual investing in a venture fund you're pretty much out of luck even the biggest institutions sometimes cannot get into the best of breed venture funds so if you don't have a friend who works in venture or know someone that's going to be a tough, tough space. Now, you could do something like AngelList if you're a credited investor. Yeah. I mean, that's probably your best bet for startups. But this is the thing that always kind of irks me about the venture industry is that they all pretend like they're contrarians. But then if you look at like who's helping them start their venture funds, it's all like

other venture founders and startup people that invest in them and like have access to those funds. So it's really a relationship business. Like you have to know someone to get in there. And even so my old endowment that I worked at, we were a billion plus dollar fund. But the best of the best venture funds, we could not get into even at that size. It's all about having relationships getting in. So if you're an individual, you're out of luck. So I don't know. There is no way to really match the venture risk profiles there.

Doge. Pretty much. I guess you could say crypto is kind of like a late stage. Maybe that's it. But yeah, if you're an individual trying to get into a venture, I think you're out of luck. All right. Recommendations. So one and only one thing this week.

I saw Copeland. You ever say it? Is that Stallone? I'm going to get that. Dude, it has the best cast. Ray Leota. It is the best cast ever. Sylvester Stallone, Kytel, Ray Leota, and Bobby D.

Okay? Those are the four like bigies. And then you have Janine Garofalo, Robert Patrick from T2, Rappaport, and then a million that guy. Like everybody from Casino and Goodfels is in this movie. So I remember seeing it back in like early 2000s, late 90s, and I probably remember it being kind of a, that was pretty good, good, not great. That's my recollection of it. Exactly. Good, not great.

So for me, that shakes out to like, I don't know, 6-8, somewhere in that range. Maybe 6-8 to a 7-1, depending on your taste. But this should have been great. It should have been great. And it was pretty good. I enjoyed it. You know, there's like the meme or the audio when De Niro says to Stallone, you blew it! Oh, yeah.

That's from this movie. Okay. That's all you got this week? That's all I got. It's a light content week. Okay, I went back to the movie theaters before you did. You did? I went to a movie theater Friday night.

What did you say? Driving. My daughter's school put it on, and they rented out the whole drive-in theater. They did a drive-in in the parking lot of the movie theater, and you could just go in for concessions. This does not count. This does not count. It was at a movie theater. I'm just saying.

I saw trolls at a drive-in. But this is the kind of stuff I think that movie theaters have to do. They need to make it a special event to get people to come back. I don't think people like myself are going to come back unless we saw Ryan in the Last Dragon, which is the Disney one. Whatever. It was a Disney movie. It was okay. I might doubt have liked a little more than I did.

Handmaid's Tale is back on Hulu. Fourth season, they released the first three episodes, and then they do one a week after this. I think this is the best show no one talks about. Okay, it's funny you mention that because my wife and I started watching that this week, but I made it one episode and I bailed, not because I don't think it's like quality,

but I just, I don't know, I just don't think it's for me. The first season is a tough watch because just the dystopian nature of it. You have to, like, get over that, but I think it's probably one of the best shows on TV Every season isn't good. That's a good binge. Back to your thing about the fact that 90s movies were so much better than the day.

I watched Goodwill Hunting last week. Oh, it's so good. So that came out in, I don't know, 98-98. So that's probably, I don't know, top 50 movie of the 90s maybe, maybe top 75. That's a great movie. If that came out in the last 10 or 15 years, that's probably the best movie, eight out of 15 years for the movies that we, like, that just shows how much better movies are anyway.

And I started reading The Tao of Bill Murray. I can remember who this is by. I think Amazon recommended this to me. It's just crazy stories about Bill Murray throughout his life and how crazy his personal life is. And this gets back to the roommate theory. You would not want to live with Bill Murray. Bill Murray has the greatest stories ever of the crazy crap he does and crashing parties and crashing weddings. And random people on the street will be smoking a cigarette and Bill Murray will walk up and take a puff of their cigarette and give it back to him and say, don't worry, no one will ever believe you.

Like there's a million stories like that. Like great stories. But he is also a huge jerk. he shows up to every movie set late he never reads the scripts he tries to like go off on his own he basically is just the most talented individual ever and like got by on that his whole life

so many people love him and hate him at the same time so he's the guy that you'd not want to be a roommate with but the stories of him are just there's a ton of legendary stories there was one where a person walked up to him memorable harold ramis the guy who did groundhog day and was egon and ghostbusters he told the story that someone walked up to bill murray in new york

and said, hey, can I take a picture? And Bill said, no, I'm going to bite your nose. And he said, in the middle of Times Square, Bill Murray wrestled this guy to the ground and bit his nose. And then whispered in his ear, no one will ever believe you. And got him walked away. Wait, like, bit his nose to like, he was bleeding? Pre-cell phone. Like, he didn't bite his nose off. I think, yeah, no, he was like messing around. Pre-cell phone camera days. But there's so many stories like that where he's just, he's just on another level of out there. How many times do you think the person who's got a nose bit has told that story? right yes yes i'm milton right they got so many miles out of that one every time they go out to dinner

okay friday masterworks scott lynn second time we've talked to him we hit him right off the bat with a question about art versus nfts you have a bigger portfolio than i do oh not to brag not to brag all right i'm going to hang them up on my office once i bail out of the script animal spirits pod at gmail dot com and we'll talk to you then Thank you. Thank you. Thank you. Thank you.