Animal Spirits Podcast - Worst Call Ever? (EP.113)

Episode Date: November 20, 2019

On this week's show we discuss our initial thoughts on Disney+, staying bearish on Netflix since 2002, tech adoption, Google checking accounts, Armageddon calls, the social media era, influencer fraud, new customers from free trades, measurables in advertising, home prices vs. interest rates vs. William Shatner 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 by Halo Investing. Go to Haloinvesting.com for more information. And make sure to check out our talk your book from Monday where we talked to co-founder Jason Barcema about the structured products market, which was, I think, kind of eye-opening for the two of us, correct? And I think we would love to hear some feedback from, especially advisors on that stuff and see what they think about not only the platform, but about structured products in general. So again, Haloinvesting.com. I'm kind of surprised that we haven't gotten that much email. I guess it's still very early. recording this at 11 o'clock on Monday morning. So it's only been about two hours. But I suspect that we will get plenty of feedback from advisors on this. Yes. Interesting topic, nonetheless. And I am extremely bullish on what Halo investing is doing to the marketplace. Again, every structure product is different. Obviously, buyer beware, but just what they're doing to make the market more efficient and cut out the lack of transparency, or I guess make this more transparent,

it can only be a good thing, I think. Yes, this seems to be the way that lots of things in the market are going these days, and they seem to be on the right trend. Again, if you're an advisor, go to haloinvesting.com 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 Batnick and Ben Carlson work for Ritt Holtz Wealth Management. All opinions expressed by Michael and Ben or any podcast guests are solely their own

opinions and do not reflect the opinion of Ritthold's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. All right. Here's a take. It's time to break up Disney. Quote from an article by Matt Stoller. When Disney negotiated the rights to show Star Wars, the less Jedi with movie theaters, it gave the theaters a set of top secret terms that numerous theater owners say are the most onerous they have ever seen, including giving Disney 65% of ticket revenue from the film, which is a new high for the Hollywood studio.

Let me ask you this. So what? This is a hot, hot, hot take. What would you do to break them up? Would you say like, okay, Disney gets the first one, some other studio gets the sequel, some other studio gets the second sequel, and then the 15th sequel goes to an independent. How did that anyway? Guardians of the Galaxy must be spin-off.

It's getting too powerful. But here's another quote. By selling below costs, which is what Disney may be doing, the corporation is reducing aggregate wealth to acquire market power. It's simply impossible to compete with someone who is willing to gain revenue by paying a dollar for 50 cents. I understand the arguments. I think I understand them for monopolies. Does this really seem like one of them? Not really, but don't you think that this is going to be something with all the market power that so many of these big companies have gotten, that the whole pound the table to break up big company X is just going to continue to get more fierce

as we go on. All these big companies are going to start hearing this for a long time until something happens, I think. Disney is one that, this was a scalding hot take, I think, break up Disney. I had never heard of this. It feels like it's been a long week. I don't know about you. It feels like it's been a long week. November 12th was just last week. Disney Plus is not even enough for a week. That was such an old person thing to say right there. But don't you think? This week is just flying by, man. So what are your thoughts, Mandalorian? Have you watched both episodes? I watched the first one last night. I'm interested. I'll watch it for sure. It was pretty good, I thought. Wow, that was boring. Okay. It was pretty good. You're interested.

I'm one episode and I'm not sold and I'm not anti-sold. I'm just, I'm open mind and I'm going into it. Get off the fence and come on in because this thing is awesome. And I really like that they're doing the one episode at a time as opposed to, I kind of just assumed that it was going to be the whole library, but I much prefer it this way. Build a little bit of anticipation. First episode was good. Second was great. I'm all in. Okay. Can I just take a little victory lap here real quick, 10 million subscribers in the first day for Disney Plus. How many of them are going to cancel? That's what everyone keeps saying is like how many they're going to stick around.

And obviously, they're going to have to... You can't take any more victory laps after saying that the Irishman was not going to be great. I don't know. You're in the penalty box for the... Anyway, 10 million people signed up. For the rest of 2019, you're in the penalty box. I walked that one back. I haven't seen yet, so I'm still delaying on that one because I can't trust your first instincts on a movie.

So what do you think about Disney Plus? So far, I think it's great for parents, especially. I think to keep adults and maybe younger people, they're going to have to continue to put out more scripted stuff like The Mandalorian to keep people interested because they don't have a ton of that yet, more originals. They have time to work into that. I think it's so incredible. Have you gone through the Disney Through the Decades Collection? It is amazing. I mean, my kids are just overwhelmed.

Did you hear what I said? Yeah, I did. It's crazy. Well, I asked you a question. You didn't answer. Did you go through Disney through the decades, sir? I don't know. I said the other day my favorite category so far is Disney movies.

Excuse me. Brutely murdered. Am I speaking the same language as you? There was a collection Disney through the decades. Have you seen it? No, I didn't see it. Okay. Relax.

Relax, man. Take it easy. No. I am fired up. This app is so freaking awesome. It goes to, look, 1920s to the 1930s. It's got everything in here. The original Steamboat Willie, it's fantastic.

It is really cool, but I'm saying eventually people are going to get sick of the old stuff and want something newer. So for now, it's going to work. And I'm sure they have a lot of stuff planned. And I do like the idea that they're not letting people binge right away and then cancel, which is probably the thought process behind that. I think you're right. There's going to need to be more original stuff.

I tried watching, or I did watch the Imagineering Project, which is, I believe, a six-part series on the history of the theme parks. And the first one was not exactly exhilarating, but if you're into it, it was enjoyable. I think I'm going to keep going. The biggest upset for my family was Dumbo was the winner, the new live-action Dumbo with Colin. Farrell and Michael Keaton and Danny DeVito. My kids loved it. We watched that all week.

Oh, really? Was it a movie that I'd sit down and watch by myself? No, but the kids, it had a lot of theatrics and colors and elephants. What about Lady and the Tramp? The new one? We tried that one. They quite get into it, but I'm sure that's on the horizon. We couldn't get over Dumbo because it had elephants in it. So for my two and a half year olds and a five year old, Dumbo ruled the week, which was big upset in our house. So Market Watch got pretty much canceled last week. Looks like they deleted this tweet. They tweeted out a calculation. to see if you would instead, instead of buying Netflix or Disney or Hulu, if you would put that money and save it and invest it over 30 or 40 years, this is a true cost. This was a little spend shaming

to the extreme, I would say, because yeah, great, you don't have this stuff, but then you miss out on all the good podcast content that we put out. So what's the point, right? Here's a new take for you. So 10 million people signed up on the first day. You see a lot of stuff historically about these technologies that it takes forever for them to be adopted. Electricity took decades and decades in the phone and all the stuff in the past where it was like technology, people kind of dip their toe in the water and took a while for it to reach mass appeal, even though it was obviously going to be huge like airplanes and that sort of stuff. That's been like the historical take. Don't you think that's completely done now? I mean, Facebook ramped up to billions of people in

under a decade. Disney Plus can sign up 10 million subscribers a day. Uber went from being nothing to overnight having hundreds of millions of customers. Don't you think those days of technology you taking a while to be picked up by the masses is kind of over, where these things get picked up in a massive numbers so quickly now because of social media in the internet. That sort of stuff's not going to slip through the cracks anymore. TikTok hit a billion users faster than anybody else, I believe. I think there was a chart floating around. We'll try to find. Yeah. So these things just happens so quickly. Well, you're right. So I was standing next to Nick, Majuli, who tweeted something, we weren't sure if it was funny or not. He tweeted something on whatever the other day. And we were

talking about whether it was a good tweet and whatever, whatever. And he said, if this doesn't do well in the first minutes, I'm deleting it. And I was like, you're only going to give it a minute. And he tweeted it. And we're standing there. We're standing there. Nothing. Refresh. Nothing. And in 25 seconds, he deleted it. I was like, whoa, that was pretty quick, no? When is hitting the refresh button ever led to a better outcome? Yeah, that'll do it. So we looked at the analytics. He was like, I don't know. whatever, 400 impressions, one like. When you know, you know. So, yes, things have gotten a lot quicker these days. Did you see the article from Eugene Way about social media and cancel culture

and IPOs, people IPOing? Yes, it was very good. So he's a former Amazon executive. Is that correct? Yeah. He was on Patrick O'Shauny's podcast in the past. I thought this was so, so good. So let's just read a few of these and discuss. One way to understand the impact of these public social networks on humanity is to think of this as an era in which humans, humans took their personal thoughts and lives public at scale. Billions of humans IPOed, whether we were ready for it or not, explaining why the concept of a personal brand became such a pervasive metaphor. Thoughts.

I love the idea of personal IPOs, but isn't it crazy that the whole world was able to the IPO, but not we work? Right? Hey-oh. So this is to the point that Nick just did. So when you tweet something, this is it. Quote, that dread we feel when our thoughts and selves are traded as public goods is the unease that comes from rendering their personal transaction.

So I thought he talked about cancel culture in this story, too, about how easy it is for people to say something that they probably shouldn't have and then the whole internet can jump down their throats and make them lose their job or whatever. Isn't it interesting the other way that there's just so much stuff being consumed these days that the NBA story, which I thought was like one of the biggest business sports crossover stories in a long, long time, basically just went away. That was a huge, huge story. And I thought that thing was going to have some legs. And it did for a couple weeks. And now it just gets replaced immediately. So it's almost like we have this cancel culture, but we also have this, we forget about it pretty quickly culture, where something happens and then we move on and it's on to the next thing really, really fast. That's a good point. So we cancel very quickly. We move on very quickly. But that's what happened to Marker Watch. I believe they deleted that tweet. Somebody said it to us and I couldn't see it because they just got ratio to the Stone Age.

Yes. People sent it to us to comment on it. And I probably made some snide tweet about if you just stopped eating and paying for shelter, you could retire at age 150 or something. I don't know. know. This is it. Here's the quote. The Twitter, what's happening? Trompbox is like a command line with the power to, among other things, obliterate your life. Yes. So the strategy is never tweet, right? Is that the idea? Well, his point is like brands and people in the public eye have all sorts of training on what to say, what not to say, went to smile, when not to smile. Now everybody has that ability to be in the public eye, for lack of a better word, without any training at all. And it goes really, really poorly for some people. Yes, other people can really leverage it to their advantage, and so it's kind of the, yeah,

I guess it's a double-edged sword, as with most things. But isn't it funny when you interact with someone who isn't in the Twitter world at all? Yeah, you can't explain it. It sounds ridiculous. Yes, it's impossible to explain as ridiculous, and there's a lot of stuff that just completely goes unnoticed by people who aren't paying attention to this stuff all the time that we think is the biggest news ever. And again, it's stuff that goes away in an hour or whatever.

Was it last week or two weeks ago? We were talking about Jason Zweig's question, who is the worst investor ever, obviously unanswerable. But this might be one of the worst calls ever. So Michael Pocter is well known for his bearish view on Netflix, and I'm reading the book Netflix, which is very, very good. I highly recommend it. And I read this in the book, and I was like, wait, what? He called it, so this is in 2002, I believe, or 2003, he called Netflix a rental Ponzi. So there was an article in Business Insider earlier in the year. I give more credit to being bearish on them back then before streaming was anything, but staying bearish through now, that's just like you just don't know when to quit.

I mean, shouldn't your analyst credentials be revoked at that point if you've been that wrong for so long? The title of this article on Business Insider, a leaked email shows a Wedbush executive urged the firm to drop Netflix coverage because its analyst call has been wrong for years. So, Ben, to your point about being revoked, he said this. I can't believe he said this. Well, here's some of the data. He downgraded the stock in 2012 on the belief that Netflix would attract competition from its suppliers like Disney.

Shares were trading between 7 and 13 then. Now they're at $305. And one of the reasons that he's been bearish is because of the cash burn, which has been a story, an issue of the entire run-up. And here's a quote from him, which is really just, wow. Instead of being a broken record, we like to think of our bare thesis as more of a broken clock. we're bound to be right over time end quote that's almost like using that analogy that people use against themselves for being right wow i've never heard that used as this is spinning a positive way we're going to be a broken record that level of hubris i don't know what else to call it just wow

the funny thing is though with these bearish calls as long as you're not investing people's money it seems like no one really cares it's easy to like dunk on this stuff but it shouldn't be up to the clients who are paying for this research to say like listen we're not money anymore for this. However, Counterpoint, he could potentially be doing really good analysis and have a terrible conclusion. That's a stretch for this one. I'm sure some analysts who have the wrong call can do that, but I don't know. Okay, I was trying to give him the benefit of the doubt. Okay, so Google is coming out with checking accounts, apparently. And this seems like a toe in the water type of thing for tech companies because they're partnering up with Citigroup

and some other local banks. A lot of people kind of were not liking this because, you know, they don't want tech companies to get into other stuff because they already have monopolies and other places. Don't you think the best places for tech companies to get into are things like finance and healthcare, where we're just in dire need of innovation? Well, you think that. And tell me why? Well, I mean, when's the last time you got something new and exciting from your bank that made your life easier? That's a great point. I would love to see Amazon and Google, even if they don't ever become widely used, if they just push for some more efficiency and better innovation in the space for the current providers. That's what I'd like to see. I would love to

see Google and Amazon get into this stuff and make it easier for people to bank, even if it just ends up being a few young people who don't have a ton of money. Well, they are. They're working with City and a credit unit at Sanford. So we'll say. But it looks like that is definitely in the future plans. Speaking of terrible investors, probably should have said this earlier, J.P. Morgan actually named names. And Josh and I were talking about this on video. This seems very, late cycle and out of character? So they called it the Armageddonist comments 2010 to 2016. And they talked about the people who made some Uber, Uber bearish calls. Did you read these quotes? I didn't read these quotes. So Rubini and David Rosenberg and Gunlock and they put the dates on these

quotes too. Jeff Gunlock in August 2011 said it seems suicidal to buy a broad base basket of stocks or economically sensitive commodities or emerging market stocks, all of which are very leveraged economic growth. Sell everything. Nothing looks good. Gunlock. So, I mean, this is a tough look. And some of these people, some of them are investors, some of them are prognosticators that make these calls all the time. So last week, we got a little bit of some pushback because we kind of called out Ray Dalio for some of these comments. And I think, can I just interject just real quick? Sorry to cut you off. Not sorry. David Stockman.

Sorry, not sorry. When the latest, when the latest bubble pops, there will be nothing to stop the collapse. If this sounds like advice to get out of the markets and hide out in cash, it is. That was from 2013. There's a lot of these that are, when you read the dates on them, they just seem laughable. At the time, I'm sure a lot of people believe these. And that's the point. It's not to like dunk on people. I think my big point of this, and we got a lot of flack from the Dalio stuff, but I think listening to it, we probably were a little harsh on him. Obviously, he's like one of the top investing minds in the last 40 years. He runs $140 billion or something. He has an unbelievable track record. But my main point that I didn't make was a lot of these investors and

prognosticators these days, they put out these, especially I think in the last 10 years, it's really ramped up since the crisis. What they say doesn't match how they invest. And so I think a lot of these people say, I looked back and I shared with you, Dahlio first started making the 1937 comparisons in 2015. So four years ago, he started talking about this stuff. And if he had his portfolio positioned for a 1937 back then, guess what? They wouldn't be doing so well and they would have lost a lot of clients. And obviously he doesn't position his portfolios for macro calls because his all-weather portfolio is designed to sustain any economic environment. It's diversified. So I think a lot of the times these macro

people make these bold calls and it ends up being a good marketing strategy because they sound really intelligent and they're not really investing the way that they're talking. That was my main point about Dalio, not that he's lost his touch as an investor. I think a lot of the stuff that these people say and write these days is not stuff that would have been put out 10 or 15 years ago. And they saw what happened in the notoriety you can get from calling the next crisis from 2008. And they said, why don't we just put some of the stuff out there? And if we win, we win big. And if we lose, guess what? There's this huge pile of dead bodies that been calling for this stuff for the past 10 years anyway. No one's going to remember. I hope that Augustine

Jesmer is listening because he made a comment on YouTube that I think Ben is losing it. He's not making any solid points recently. And you know what, Augustine, if you're listening, that was a solid point. Good job, Ben. And if I can, I would like to apologize for yelling at you about the Disney through the decades. But I was asking you a question. You were filibustering for no reason in my defense. It was a very straightforward question. Okay. And I got so hot... The first inner episode apology I've ever gotten. That's nice. Well, I got so hot and bothered that I didn't even get to make the point. Or maybe I did. I can't remember at this point. They have Disney through the decades, literally on the app. The 40s, the 50s, the 60s. It's

tremendous. All right. Let's move on. I can't believe a genius actually thought of that. Let's show them in chronological order. Hey, asshole, you didn't do it. You know what? I take my apology back. Give that guy a Nobel right now, whoever came up with that. Okay.

But yeah, we're going to put these in the show notes. You should go through and read some of these comments because they are quite hilarious because you have hindsight bias. Comments have gotten out of control, and I really like the fact that people think I'm angry, I guess, so I don't really get a lot of unsolicited comments. but you got one yesterday that was just absolutely incredible. What did you get? I mean, the worst emails and comments by far are from the grammar police, especially if it's a blog post, because guess what? If we're writing a blog, occasionally there's going to be problems in there,

right? There's going to be things you miss. And if you want to tell me you messed up, that's great, but don't like try to dunk on me for spelling their wrong or your. But someone sent me bullet points of things that were wrong. What's the subject of the email? The subject of the email was money blogger needs editor. And they went through and listed four points about using words wrong and trying to edit different things and the fact that the piece was too long. And it was for Morgan Housel. So someone sent me editing tips from Morgan Housel's blog, which Morgan is one of the best writers on finance that there is. And the guy said that he couldn't find Morgan's email, so he sent it to me. I don't care about edits for my own stuff. I surely don't care about edits for

other people's stuff. This was, this was truly incredible. These are the people that write Yelp reviews. You always say, like, who are these people that write Yelp reviews? It's people who comment on the internet. So if you see a typo and anything I do, please just email Ben. Send me all your hate for Michael. I don't care. Oh, matter of fact. Oh, no, this is not the chart I was talking about with the TikTok, although I do believe that that chart was floating out there. Look at this chart, Ben. More younger members of Generation Z use TikTok than Facebook. I don't think that's necessarily surprising. But if you look down, I guess it stops at age 38. Facebook is most popular. That's shocking. Is this a survey? People 22 to 26 use Facebook more than Instagram. You got got by a survey of

2200 people. Can't believe that. You just wrote a piece last week saying all surveys are bullshit. And you got got by a survey. You know what I was thinking about? Is the market the ultimate survey? And if so, how come that's always right? But I guess, A, it's not always right. And B, It's not a survey because there's money on the line. It is not a survey. Did you just have an argument with yourself and then figure it out on your own? Well, speak of why it's not always right. So Schwab on the announcement that they are making trades free, the stock fell 17% the week after this announcement just got killed. It's now 28% off the lows, higher than the announcement. And it's at the highest level since July. So they also said, this was a CNBC piece. They added 142,000. new brokerage accounts in October, a whopping 31% more than the number of new accounts added in September. So they're saying, adding this free trading thing led to a huge jump in new accounts, which is kind of surprising to me. And I'm guessing it might have been surprising to them,

or they probably said, why didn't we do this earlier? If we're going to get new accounts and we can charge them in other ways, I'm sure it was kind of surprising to them, because you'd think that the line between zero and whatever it was three or four 95 is not that much, but obviously it was enough to get people to jump around. I guess the question is, are these the kind of clients that are going to stick for them, or are they the ones that will jump if someone pays them to make stock trades or whatever the next leg down is going to be? I think these are Robin Hood users? Or were these people with cash on the sidelines just coming in hot? Yeah, maybe it was all Bill Gates' money that he's waiting to put into the market. Oh, man. Nailed it. Influencer Nation, 86% of young

Americans wants to become one. This comes from a Bloomberg article. This is fantastic. What a survey this is no less than 86% of people ages 13 to 38 are willing to try out influencing according to a survey from morning consult you don't just try out influencing you either what does that mean i'm just gonna give a shot yeah okay so instead of becoming astronauts people these days want to become an influencer exactly so in influencing news take it then okay you probably have more of a shot of being an influencer than an astronaut so i guess that's not a bad idea. So court's had a piece. Just reading the headline alone in the picture of this guy, the new Wolf of Wall Street is an influencer who sells gold to Republican seniors. So he is a

musician, startup founder, and gold salesman, and he likes to wear a red leather jacket a la Michael Jackson. This is so good. This piece is very good. I think I tweeted out this morning, I think the biggest bull market of the next 20 or 30 years could be old people getting taken advantage over in their retirement. Because, so maybe this is just, Go ahead. Plug your book. Plug your book. No, confirmation bias in my part because I studied this stuff for so long.

You're going to give me crap about plugging my book? Come on. There's a joke. It's just, this is like the one constant over every financial period in history is just people being taken advantage of with their finances. And if we have the 10,000 baby boomers retiring everything single day or what is it, 6,000, someone told us it really is, this is not going away. So what does this guy do?

So it's called metals.com, which, That probably had to be a hard one to get, right? Yeah, he definitely paid a lot for that. This is so great. So this guy, Luke Asher, if that's even his real name, maybe it is. He's like the Adam Newman of Gold and Silver. He said, Asher's online philosophical musings often refer to the Omerter Cortex, which its website says is a, quote, code of consciousness and a group of consciousness pirates.

What an asshole. Consciousness pirates. It says they sell overpriced gold and silver coins to seniors using high pressure or sales system. How do you sell overpriced gold and silver? Do you sell it for more than it's worth? Is that what they're doing? Well, metals.com does use machine learning and AB testing to determine the best price for metals. This is so good. We're not really a golden silver company. We're a technology company said the spokesperson who said his name was David Rubenstein. And I read that I'm like, huh? Later in the article, it says everyone

uses their real name said the person who said his name was David Rubinstein. Quartz was not able to confirm that a person named David Rubinstein works for the company. Because David Rubenstein is a private equity guy for the Carlisle group, right? So this is obviously a made-up name. Is this David Rubenstein side hustle? Yeah, metals.com. So, anyway, I don't know. So it sounds like they're using politics to motivate people to get to buy gold and silver.

I mean, that's... It's too easy. Unfortunately, it almost is too easy. And I'm sure that they're getting a lot of people, they're praying on fears. And they're talking about a collapse in the system and getting people to buy this stuff. Two quotes. If someone says they're liberal. rule or they don't like Hannity, you just hang up. I don't know what your religious beliefs are,

but I'm Christian. Did you know that there are 700 references to gold and silver in the Bible? Whoa, that's like the original Google trends. People use those Google trend graphs these days to talk about when there's going to be a crash or a huge uptick in the market. Bible references are the new one of that. According to the lawsuit, Metals.com did $58 million from July 2017 to July 2018. Fifty-eight million dollars. So there is an enormous market of people who want to be lied to and preyed on. I guess who want to be lied to is a little bit harsh on the victims. These people are terrible. And so it says he has more than 233,000 followers on Instagram where he posts a mix of typical influencer fare like sunsets and exotic locales side by side with portraits of him

in front of a raging fire. One in which he wields a military-style weapon is captioned. Our thoughts, if directed and aligned in the right frequency, are like this RPG. missile. He's literally holding a missile launcher in this picture. I am fired up then. Wow. Okay. This makes me want to wake up at 3.30 tomorrow. The thing is, I don't know that there really is a way to protect people from stuff like this, short of trying to shut down every fraud in the country. Unfortunately, I think this is the stuff that it's always going to be able to get through one way or another. And I don't know that there's a way to stop it. There was an article that I read last week that I tweeted about talking about marketing and how it's sort of imprecise and what marketers

are selling. So let me just read you the lead. I thought this was, oh, maybe this wasn't the lead. But Eric Schmidt is talking to Mel Carmerson. Mel Carmeson was an executive at Viacom. And I believe serious later. Schmidt said, our business is highly measurable. We know that if you spend X dollars on ads, you'll get Y dollars in revenues. At Google, Schmidt maintained, you pay only for what works. Carmesan was horrified. He was an old-fashioned advertising man. And where he came from, a Super Bowl ad cost $3 million. Why? Because that's how much it costs. What does it yield? Who knows? I'm selling $25 billion of advertising a year, Karmeson said. Why would I want anyone to know what works and what doesn't? Leaning on the table, hands folded. He gazed at his host and told them, you're fucking with the magic. Right. This was an interesting article because it basically said it's impossible to gauge internet marketing or if it is possible, then it's not nearly as effective as some would have you believe. But don't you think this is the kind of thing like branding where you don't really know where the value is coming from. Like, trying to quantify it is almost impossible.

I 100% believe that. Places that have new product certainly need to advertise. I don't know. If Wendy's comes out with a new burger or whatever, like they need to be on social media advertising. I don't really know where I'm going with this. But one of the points of the post was that a lot of what they're measuring is not being measured properly because they're targeting people who already would have been buyers of the product. So somebody sent this to me. Somebody quote tweeted me and said, I went online and bought a pair of dress shoes from Macy's app. A few minutes later, I see ads to buy shoes from Macy's. A struggling retail company is wasting money to lure me into buying something I bought from them a few minutes back. I know that's anecdotal, but... So this means we really don't

have to worry about the robots and AI taking over the world because it's too dumb to do so. You bought shoes here. Have some more shoes. But I think that marketing is the ultimate you're selling a story. Yes, definitely. And they know you better than you know yourselves. Marketing and advertising and salespeople figured out the whole behavioral finance, behavioral psychology thing decades and decades before the finance world did. They had this stuff figured out. You pull those strings in human nature and that's how you get people to act and react. I'll take the other side a little bit in the sense that right now I'm wearing this NBA jam sweatshirt. And this came to me on Instagram. I have no idea where this company is, but they saw my spending habits. They saw a

what have I on Instagram and their marketing dollars are working. So I think that, like, if they weren't marketing, I would never would have bought this. I don't know who the person is who runs the Instagram advertising, but they know what they're doing, unless they're just listening in. They're nailing it. So I guess that flies directly in the face of what this article was saying. But anyway, this is like a 4,000 word article. So there's a lot of nuance. I do recommend you read it if you're interested, but not black and wet, I guess. Did you see Bill Shatner dunk on random guy. His Twitter handle is random guy. Okay. About buying house. Okay. Read this and then I got the other side of this. How about I'll read the tweet? You read the quote tweet. Okay. So here's just a guy on the internet.

The median mortgage rate in 85 was 12% and the median home value was 85k, which is 200k in today's money. The median home price today is 315K. Things are more expensive than ever. Have you been to the grocery store lately? And then Bill Shatner said, okay, math, whiz, at $85,000 30 year mortgage with 12% interest in 1985, actually total cost was $315,000. A $315,000 30-year mortgage today at 3.8% is $525,000 in 1985 is equivalent in purchasing power to about $751,000 in 2019, so it's cheaper today to buy a home, a medium-priced home. Here's why Bill Shatner is wrong about this. Whoa. Well, okay, technically he's right in the numbers, but those 12% interest rates in 1985 did not last, and you could refinance all the way down as rates fell. You didn't have

that total cost if you were sitting there the whole time. Wait, let me ask you a question. Can you quote tweet a quote tweet? Should I try to dunk on Bill Shadner? Is that what you're trying to say? I get what he's trying to say. And I wrote about this a few weeks ago, actually. I look at the average rates by decade. So in the 1980s, a 30-year mortgage averaged almost 13%, which is crazy. The 90s it was 8%. 2000s it was 6.3%. And then the 2010 so far is a little over 4%. And if you took the median sale price in 1985, which he says it was like $82,000, your average 30-year mortgage was 12.3%. Your monthly payment would have been $875.74. The average median sale price today is $310,000 and at a 4% mortgage, it's about a 1475 monthly payment. So

it is like almost double the amount of payment, but the fact that it's that close with the fact that housing prices are up six times, but your monthly payment is up less than, not, not even double. So that's actually not that bad of a deal. So my point is, the fact that rates are lower today is a wonderful thing for homebuyers. It's actually made it more affordable in a lot of ways that people probably don't understand. Maybe I do side with Mr. Star Trek here. Do you think the shit tweeting and trawling has accelerated with the advent of 280 characters? This tweet is like a book. It's so long, right? Like it used to be 140 characters. Do you remember when people were going to riot when it went to 280?

Yeah. Honestly, I like it. I like having more. I like it, too. People wanted to riot. And then they got mad because we went from, what did it used to be? It was a square avatar and then it went to a circle. Yes.

Well, and it went from hearts to what did it used to be? Oh, it used to be stars. Stars, yeah, that's right. Stars to hearts. And every time, it's just something for people to get mad at. But that's pretty good math for Shetner. I'll give them credit on that. But it's, you could really.

refinance all the way down, so it wouldn't have been as bad as he said it would. Listen, for the captain of the spaceship, that's not bad. Okay. Can we do the William Shatner Giff where they nodded each other, you know? All right, a couple five-hour workdays and four-day workweek stories. The Wall Street Journal had a piece about a small tech consulting firm who decided to reduce the work date of five hours from the standard eight and left salaries and vacation times exactly the same. And so people would work from 8 a.m. to 1 p.m. every day. And so they had to 25-hour work we can set of 40. And what they did was they basically discouraged small talk.

They banned social media and they had people keep their phones and their backpacks and company emails are checked just twice a day. Most meetings only lasted 15 minutes. That's one good idea. Banned small talk. I am all for banning small talk. I think that's great. I have zero small talk. You know what the best part about working in an office by myself is? I never have to do small talk ever. It's amazing. Well, I work. There's about, I don't know, a dozen people in this office. My door's closed at all times. Okay, but here's the thing. Would you rather have this, if you're in a cube job somewhere and you kind of like it, not really, would you rather have the ability to work from eight to one and have this stuff banned or have the freedom to do all

this stuff and screw around a little bit during the day and still work a full day? Listen, that's a bit extreme. I like having the option to open the door and say hello to people. I'm saying like if you take a five-minute break to check social media and check your email and all this stuff. and take an internet break. We'd rather have that option or work fewer hours. I'd rather work eight hours and only work five hours with three hours dedicated to TweetDeck. Okay, another one. Microsoft tested out a four-day work week in Japan and found as a result, employers were not only happier, but significantly more productive. So they gave people off Fridays and didn't decrease their pay at all, boosted productivity by 40%. And the company said it plans to also keep vacations the same. The question is,

unless you're a CEO of like a huge major company or running your own business, should there ever be anyone working 80, 90 hours a week? Don't you think if you're like an investment banking and you're pulling these all-nighters and stuff, isn't it just a complete waste of time? Doesn't anyone ever need to work that much? It's like virtue signaling for the office. Yeah, some people think you have to like put in your lumps to do that. That just seems such a dumb thing to have to go through.

Do not get that? You know why that will never end? because the elder statesman will always have the mentality. I did it. You should do it. Yes, time to go through. Although it seems like the young generations are kind of trying to break some of these traditions. Hopefully they do that. You and I have both read a lot of these behavioral books, psychology books. Not to brag. Not to brag. Yeah, huge humble brag. I've read a lot about, got a lot of rich mahogany books. Leatherbound. How many books have you read the marshmallow test in, though? It's got to be in almost as many of them that mentioned system one in systems.

too. Do you know that our ancestors were on the Serengeti and with the lion? Yes, exactly. So they talk about this well-known study, and I think it's been debunked about 12 times, but if the kids delayed gratitude by not eating the marshmallow, they had better lives and they were richer and they had better jobs, whatever. I never realized this. The original results were based on studies that included fewer than 90 children all enrolled in a preschool on Stanford's campus. Wait, I thought you're about to say that this was actually a survey of what little kids thought they would do with the marshmallow. I mean, it basically could be a survey because the sample size was so small.

They basically picked a bunch of kids at the time that were all pretty similar. So they tried to do, researchers redid this and they had 900 children this time and they tried to make it more representative of the population in terms of race, ethnicity, parents, background, income. And they actually found that the biggest thing that determined whether a child could hold out for a second marshmallow is shaped largely by their economic background. And they found that kids who come from households who are bedroom educated and have more money, it's easier for them to delay gratification because experience tells them that the adults have

enough resources to eventually keep the pantry stock. So it doesn't really matter if you have to delay a little bit. You know it's coming eventually, whereas kids in lower income households don't have that luxury. So it's kind of like, I'm going to take this food now because it's here and I might not get it later. So it kind of debunked the whole delay of gratification thing altogether. Well, this sounds like something that was in the footnotes that is actually important. I think that everything you said is valid. However, I still believe that people that can delay instant gratification are better off. Oh, yes. Agreed. So I'm standing with the marshmallow test. I agree. It can't be debunked in my mind. Maybe the study was flawed, but the idea still holds. I just don't think you can pick that up in someone at age five and that's going to determine the rest of their life. Age six? Yeah. I have a five-year-old right now. I don't think my daughter would pass. a marshmallow test. I'll just put it that way. I don't know if I'd pass a marshmallow test. Hell no. You shared this Tom Hanks link, which I tweeted this morning.

Man, what a guy, huh? If there was a story about putting inside the Me Too stuff, but anything that like a scandal coming out about something they did, if it was a celebrity, wouldn't Tom Hanks be the most surprising one if it happened to someone? How do you explain his son? Is it Chet Hayes? Colin Hanks, right? Oh, you mean the son that's a rapper? The rapper. Yeah. That's just going against having rich parents probably, I guess. I don't know. He ate seven marshmallows at age five. Yes. I mean, this was obvious.

But this was a great story. Let me read this quote. The author said it isn't being a parent not for any of us. And then Tom Hanks said, and this is just great. Somewhere along the line, I figured out the only thing really, I think, eventually a parent can do is say, I love you. There's something you can do wrong. You cannot hurt my feelings. I hope you will forgive me on occasion.

And what do you need me to do? You offer up that to them. I will do anything I can possibly do in order to keep you safe. That's it. Offer that up and then just love them. And then... I got something on my eye real quick there. Yeah.

And then the author wrote, he looked at me for my next question. And when he saw my face, he said, okay, go ahead. I'm right here for you, Taffy. It's good to cry. It's good to talk. That quote is incredible. I don't think if you gave me like four hours, I could even write that. And he just said that.

Yeah. They should hand that out to new parents at the hospital. It's perfect. This is how you be a parent. That's all you need to. to know. Pretty much is. Okay. Survey time. This is like the fourth survey. Okay. One more. 2019 hedge funds made up 33% of institutional investors allocations to alternatives, a 7% drop from 2018. And the big winner was private equity, which went from

18% to 25. So they basically, institutional investors have their asset allocation. They've gone from, they took all their money from 7% of their hedge fund allocation and put it into private equity. Obviously, something of a performance chase. I actually think that this isn't that bad in terms of some of the other stuff that institutionalists do, because even if they get some crappy private equity, don't you think expected returns using your term in a vacuum should always be higher in private equity than hedge funds? Because they're long only. And with leverage? Yeah, in hedge funds, you're technically not getting a beta of one regardless because you have something that's hedged. So expected return.

should be higher in private equity, all else equal. This is a huge performance chase, but I think it's actually probably not the worst thing you could do in terms of that tradeoff. Now, people will say, well, you're going to get out of hedge funds right before the market crashes. That's the risks you take, I suppose. All right, listener questions. I work for Amazon, and I'm worried about my Amazon holding, making up more than 20% of my portfolio. I consider companies like Amazon, Alphabet, Berkshire, et cetera, not as a single company, but a portfolio of companies with diversified revenue streams. Does the conventional wisdom still remain that you should limit your stock holding to a smaller percentage of your portfolio, or should we be looking at these

companies differently? Is it different this time? This person has levered up at Amazon, which is amazing. That's been a great thing. It's been one of the absolute best stocks in the world. 20% is a lot, a lot, a lot, a lot. And I understand the reasoning that the business is diversified and it has multiple revenue streams, and that's all well and good. But just because a business is diversified does not mean that its stock cannot get absolutely destroyed. Right. And I think the fact that you also tie your employment to that company makes it double the amount of risk. I don't think that you... Well, how's this to an extreme? The SCP 500 is very diversified. There's 500 different businesses and all of them are diversified, but so what? It could still lose 60% or

more. Yeah, it's hard to say like, well, Berkshire Hathaway should be like an index fund. There's no way because you still have that whole single company risk that something could go wrong at the overall company. What if Bezos passes away and they don't have a good plan B. I'm sure they do. Bezos gets hit by bus. You have this key me on risk and Amazon goes down 20% in a day. That's always a risk with a single company. The other thing, I don't think that there is a hard and fast rule for the percentage you should have in it, but have your own personal rule where you're going to rebalance, especially if a company like Amazon is such a big part. So if it's 20, pick 20, it's 10, pick 10, and then rebalance when it gets over that and maybe buy some more when it goes under that.

You don't think so? Nope. I think it's good in theory, but I mean, people don't behave that way. Okay, so I'm saying behave that way. That's the way you should behave. There you go. There is Ben who exercises telling everybody else what to do. I've seen this a hundred times.

Okay, he should go on the whole 30 for Amazon. All right. What recommendations do you got? I got a lot today. So Matt Damon talked me into downsizing. He was on the Bill Simmons podcast last week. Great interview. Wait.

Downsizing what? The movie is called Downsizing. Oh. Did you see it? I watched it. It was on Amazon Prime. It's one of those movies where the concept is better than the actual plot. It's this idea that people, they figured out how to shrink people to be like five inches tall.

And it was the idea that the world is becoming overpopulated and it's bad for the environment. So if we can shrink people. And also people who didn't have any money saved, this was a way for them to save money because it was way cheaper. And they could build like this huge scale mansion for some of those five inches tall. So that part of it was pretty interesting, but then the plot was kind of weird. But it was interesting enough where I stayed for the whole two-hour-long movie, even though it wasn't that great. I guess the critics really panned it.

It wasn't that great. He was on Bill Simmons, and he told the story about how Phil Jackson told him he was sitting at courtside. And Phil Jackson turned to him and told him to sit down and shut the fuck up. Yeah, him and Mark Walker's game. Yeah, that's awesome. Yeah, he was a great interview. I definitely understood that. I finished Euphoria.

I don't know if I could ever really recommend that to someone. I thought some of the sensationalist stuff that did in the show was. unnecessary, but it was still, I explained it to you like it was a horror movie where you don't feel like it's real. That was my biggest worry going into it, like having kids and watching this, seeing all the crazy stuff kids do. In terms of like the way they shot it and the acting and the music, it was an amazing show from that perspective. I liked it way more than I thought I would. As a film critic, you can really appreciate it. Yes, it was beautiful cinema. I read Stillness as the Key by Ryan Holiday, pretty quick read. Somehow he tows like,

a line between stoicism and really good stories and anecdotes. Because I feel like the stoicism stuff, if you've read it, don't you think the first time you read that stuff, you go, oh, my gosh, this is mind-blowing. And then you read it again and you go, oh, I roll. This is obvious. And so there's a lot of the stoicism stuff in there that's kind of like, it's a little fortune cookie-ish, I think. Not a fan of stoicism.

Can I go on the record? No, that's okay. But he has enough good stories and anecdotes that kind of makes up for that part of it. So it's a quick read the stoicism stuff and you're over it. Probably don't read this if you're a huge Stoic fan. I know there's a lot of people out there who are. It's another good one of his. The stuff on JFK and Churchill was very good.

You're hedging because you're going to get a hate mail. I want to say what I have to say. I think the idea of focus on what you can control, to your point, it's obvious. And nobody would say that that's not a good idea. My beef with Stoics and fan of it, and I'm not saying that Ryan does this, is it's incredibly hard to practice in real life. Yes. When you're really upset, it's incredibly difficult to take five deep breaths and to focus on the bigger picture and you only live once and life is short. Think about Aristotle.

I mean, listen, it's much better than going off the rails. Like, don't get me wrong. My point is it's really hard to do. It's hard to practice. And finally, we finished Jack Ryan second season. I liked it. It kind of made me think if it was made today, would Jason Bourne be a Netflix series instead of a three-part, four-part movie? And I think it's almost definitely that it would.

I don't know if it would have made it better. but Jack Ryan kind of made me think of that. I liked second season too, so that's all I got. I really enjoyed the big picture podcast on the Ringer Network. They talk about movies, and I like it. Okay, never listen to that one. Okay, it's very good. The Spotify CEO was on Patrick's podcast, and they spoke about Luminary,

and I haven't really thought about Luminary, which leads me to believe that it's probably not doing very well. Have you ever talked to anyone who actually uses it? I'm sure there are people, but I don't know anyone who does. Same. I FaceTime with Robin the other day And with Robin and Kobe She said, tell Daddy what you just said

He goes, Mommy have hair I have hair You don't have hair Oh, ouch He's going to be a YouTube commenter someday It was pretty good Wow, that's pretty funny Finally, I finished a short history

Of nearly everything It took me like, I don't know, a month That took me a long, long time And I highlighted the crap out of it but I don't think I'm a science person. I know I'm not a science person. There. Chemistry and biology does nothing for me.

I was awful at science. Me too. So there was parts of it that I had a real hard time with. If you are even remotely interested in science, it's a must read. So I still enjoyed it. The Einstein chapter was, I thought, pretty amazing. There was still a lot of it that I enjoyed, but when I finished it, I was like, whof, felt like a real weight off my shoulders. And now I'm reading Netflix.

I'm happy to move on to Greener Path. investors. All right, Animal Spiritspot at gmail.com. Thank you for listening. We'll see you next