The Compound and Friends - Bogle in the Streets, Batnick in the Sheets

Episode Date: October 1, 2021

On this week's episode of The Compound & Friends, Michael Batnick, Dan Egan, and Downtown Josh Brown discuss: economic growth after Delta, excessive bubble talk, the Betterment platform, when investors freak out, Beijing's behavioral finance, fractional shares and direct indexing, target date funds, what offices are good for, live-streaming Ray-bans, and more! This episode is brought to you by Liftoff. Invest for your future at liftoffinvest.com and grow your wealth by teaming up with a Ritholtz expert. Liftoff® is an automated investment advisory service that is powered by Betterment. Liftoff® is a wholly owned entity of Ritholtz Wealth Management LLC. Ritholtz Wealth Management is a Registered Investment Advisor who receives fees from clients who invest in their Liftoff proprietary portfolios, which are not necessarily discussed in the commentary. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

My dog's 14. That's crazy. It's got diabetes. It's blind. And other than that, it's as happy as can be. It's like the happiest, like delirious, demented retiree you've ever met. The dog is demented? Yeah. How can you tell? It just, it doesn't know what's going on. It's surprised by things all the time. What kind of dog is it? Oh, his name is Alpha. Beta. Beta. Come on, that was close. Your dog is named Beta. It's got to be on brand. Yeah, yeah, yeah. As soon as Alpha left my mouth, I said, wait a minute not right it's theta it's the gamma squeeze so you're saying that beta isn't smart so the deal is that when we got him i had to have a like i'm the alpha conversation right like you look deep into his eyes and just let him know that's that's pretty

good who uh kramer names his dog after stock symbols. Are you kidding me? His dog is named NVIDIA. I know. His iguana is Taiwan Semiconductors. Look at you. All right. Guys, how are we doing?

You know how you call your wife Sprinkles? I call Robin Berkshire Hathaway. That's like Michael. Thank you. Well done. Listen, while you're here, feel free to engage in a game of Simon. It's all good. How does that game work?

I don't remember that game. When was the last time you played with him? Oh, gosh. No, you have to turn it on. No, I can't turn anything on anymore. I'm married. Oh, I see. Got it.

Nailed it. Dan, you know what I got? Somebody got Kobe as a gift, or maybe the baby. I can't remember. Nightbr. I'm married. Oh, I see. Got it. Nailed it. Dan, you know what I got? Somebody got Kobe as a gift or maybe the baby. I can't remember. Night brights. Remember those things? Yes. Yes.

Absolutely. At night. Yeah. I remember the commercials. Night bright. Yeah, I have one. I'm going to come over and play with that. Who plays with it?

I don't know. I haven't seen it yet. It just sits in the house? It's just there. I'm so jealous of all the stuff kids have these days that is just straight up cool. Like the shoes that light up when you jump on them or Heies you can just like skate around on your sneaks those are cool like jewish parents don't put their kids how about the shoes with the wheels in them why not come on too much how could that not be a calamity when i went up with wheels why don't you just put a

banana peel on the bottom of your shoe you will not see you will not see those uh in most jewish households people are complaining about inflation all the time there's actually deflation in kids toys so when we were children the yeah what were what were the hot wheels like the the little tiny cars that were like you could they have a gas pedal those were like 400 growing up do you know you don't know what i'm talking about no what am i talking no what is it oh are you talking about like you can fit in them as a kid actually yeah yeah yeah the little things that kids ride oh what do you yeah they're not hot wheels no i'm sorry i know i'm sorry i know what you're talking about it's like a replica of a car but kid size and they could drive them when i was a kid that was out of the budget that was yeah that was probably like fortune i think i got one

for like 90 bucks you guys are too young to remember uh silver spoons you ever see that shows donka trucks what are these things called so go ahead you ever see the show silver spoon i remember it right it was um it's from the early 80s like it's definitely before white guy no it's like a little kid who's like richie rich basically he has everything okay yeah oh duncan power wheels there it is thank you duncan so he would ride around in like a little lamborghini or something in his house yeah and as kids when you were like six years old you would watch it on tv and be like i would kill somebody for this absolutely now they're like under a hundred dollars everything yep right okay this lambo this lambo is expensive but like look it's expensive it's expensive. It's $675 for this Lambo.

No joke. That kid is definitely into crypto. On the East River, there are parents walking around, and they just don't have to push their kids in like buggies or scooters. They just like ride up and down the river on those things. Until the kid drives it over the railing into the river. Then it turns into the chitty-chitty bang-bang. Okay, the Bentley's only $240.

Imagine getting your kid a Bentley Power Y power yo what a douche move what does that say about you the parent if your kid's driving around in a replica bentley i guess it's cute i don't know fisher price not not for me i had a pedal uh mercedes did you it's like a pedal one yeah what do you mean a pedal one like a bicycle nothing Nothing powered. You actually pumped these little pedals. That's very off-brand for you, Duncan. I'm surprised it wasn't like a Vette

or something with a Hemi in it. Okay, I might have lied. These Power Wheels, I'm looking at like $300, but they were $300 when we were a kid. That's because you're looking at the proper name brand ones. You need to look at the cheap Chinese knockoffs. Yeah, I think I got more from China. Yeah. Although, is there a shortage of power wheels?

There's no semiconductors in them right now. You can't get one. You can't get one. My kid actually has a Tesla version of that. It's self-driving. I'm just going to Tesla, so I don't know if you're kidding or not. They really make them. John, what's up?

Coming in with three claps. Here we go. Here we go. This is my favorite part every week. I honestly, whoa, that's loud. Turn it down. Welcome to The Compound and Friends. All opinions expressed by me, Michael Batnick, and our castmates are solely our own opinions

and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Today's show is brought to you by Liftoff. We, meaning Ritholtz Wealth Management, partnered with Betterment to run an asset management solution

for portfolios of all sizes. And on today's show, we have Dan Egan. Dan is the VP of Behavioral Finance and Investments at Betterment. The investments might be automated, but investors on the platformlaimers to learn more. Yo, Compounded Friends is literally the best podcast in all of investing. I have proof of this. I started getting emails from people who don't listen to financial and or investing content at all. And they're saying people are sending it to them.

Like it's starting to go. Many people are saying. No, I'm telling you. I've heard. I'm telling you. This is all going on. Shout out to all our listeners. And if this is your first time listening to the show, you're in for a treat.

We have a very, very special friend this week, Dan Egan. Dan, what is your title again at Betterment? I always forget. It's because it's ridiculous. Director of Behavioral Finance and Investing. You're a portfolio manager, though. yeah i just i place trades all day wouldn't you rather be called the pm of like the betterment executive portfolio manager or something no okay so it's director of behavioral let's say yeah director of behavioral finance and investing yeah yeah but you're not

like bullshit you're a phd no i'm not you're not no you have to call me master i'm a master you have you have a master's master i didn't do the four years i just did the two good enough what are you busy it's a it's a pandemic i want to do a double phd by now is there a doctor on the plane and i'm like not yet all right listen you are you are as real deal as it gets in terms of behavioral stuff we're going to talk a lot about that today. But the first investing-related thing I wanted to get to, I almost feel like it's the elephant in the room. We have to get to it. Are they going to catch this Brian Laundrie guy or what?

Use all of your skills as like a behavioral scientist. Like what's going to happen with this? I have no idea. He doesn't even know. I know, but like Brian Laundrie. No, he doesn't know what you're talking about. Is somebody stealing laundry from your office? The guy that probably killed his wife in the national park He doesn't even know. I know, but like Brian. No, he doesn't know what you're talking about. The guy that probably killed his wife in the national park

and then fled into the Everglades or wherever he is in Florida. No idea? None. Do you watch like anything, any news at all? Dan's been in the woods. Behavioral tip number one. Don't watch. Be very careful about choosing what info you consume and avoid.

He's been in the woods. Okay, I have to be honest with you. I don't watch the news at all. You're missing like a really good one. Like this, this guy. This is drama. This is, this is like a YouTube guy. Netflix is already in production.

They have to be. This is like a guy that does camping videos on YouTube. Wait, wait, wait. Is this, did they go in in a van? Yes. All right. You do know. I saw, I saw, I saw a tweet about it.

All right. So basically, the girl was found dead. It's horrible. She's from Long Island. Yep. But there's a twist. The guy went home, refused to talk to the police, and then his family kind of covered for him while he disappeared.

So he's just gone. He's in national parks, which nobody should ever go to a national park, but he's in a national park right now. Horrible take. Horrible take. And hiding from man hunters and Dog the Bounty Hunter is now involved. I'm not even making this up. All right. That's amazing.

But pause. Pause. Josh is an endorsement. Yeah. So that's on brand. Yellowstone is a gorgeous place. Bryce and Zion. I mean, what are you even talking about?

Just contextually. Hear what he just said? If I ever am worried about allegedly having committed manslaughter, I would totally go to National Park. Where are you going to go? Yeah, nobody goes to those things. Who would ever find you? What are you talking about? Well, he's not in Yellowstone, Mike.

He's in, like, this shithole in western Florida that nobody would literally go into. It's only people running from the law. I'm saying, he's not a Grand Tetons. He's like in a swamp with snakes and alligators and probably like plutonium that they bury there. I'm just saying, he's

in like one of these very, very remote nature preserves. Not botanical gardens. How do we know where he is? They're like on his dog. You should follow him

on Twitter. We're not going to spend more time. What are we doing? You should really catch you should really catch up on this story, though, because I feel like it's

it's getting it's getting really wild. Anyway, I think he's dead already. That's my take. I know a lot of people are curious. Dead already?

Yeah, I think I think he's dead. I think they're looking for a ghost. An alligator caught him? No, I think he's dead already. That's my take. I know a lot of people are curious. Dead already? Yeah, I think he's dead. I think they're looking for a ghost. An alligator caught him? No, I think he probably starved to death. It's been going on for two weeks. It started on September 7th. It's October. It's October.

All right, let's move on. This is where somebody, like, a new Netflix series drops, and one person watches, like, three-fifths of it the first night, and then they're talking to you about it the next day. You're like, I watched one. What are you you i cannot tear my eyes away from what's going on with this i don't know why but i'm not alone the whole country except for except for you and me john are you paying attention to any of this i'm not on this a little duncan you know all about this duncan just turned his hat around like sylvester stallone and over the wait are they

gonna find this what do you think what's your take? I mean, I heard someone saying that sounded reasonable that they think that he was throwing people off the trail, but he's not really in that park, but he went somewhere else, but parked his car there to make people think that's the last place he was. I think he's in the metaverse, like Lawnmower Man. Possible.

He's an NFT. I think they'll find him. This is the new, who is the white Bronco guy? OJ? This is the new, like, the only girl watching this. Did you new, who is the white Bronco guy? OJ? This is the new like. Did you just say who is the white Bronco guy? All right, Josh, no more pop culture topics for Dan. It's not pop culture, it's a murder.

Who is the white Bronco guy? All right, let's talk. Oh, he's not even. Yeah, let's talk investing. Let's talk investing. All right. I want to start with this. Delta is fading away.

Maybe not forever, but cases are down significantly. All over America, in Europe, cases started falling precipitously two months ago. The predictions were right. It faded there. It's fading here. Hopefully, there's not like a new creative way to kill us on the way, right? So everywhere that happens, what we're seeing is a ramp back up in the economy, which actually may not be a great thing because I think it's inhibiting the Fed's ability to do what it wants to do, the inflation data. No, it is a great thing.

You mean it might not be a great thing for the stock market? Not great for – no. The fact that the economy is ripping right back up in these places is making it harder, not easier. For who? up in these places is making it harder, not easier. For who? I think for the Fed to do what they want to do without all the pressure of people screaming, like, stop the stimulus already, and I'm one of those people, because inflation is following all of this economic growth.

I'm confused. Doesn't this make it easier for them to taper? Yeah, but they obviously, for some reason, they want to do this on their timeline, and they don't want to be pushed into it. So look, I'm not saying that they're going to make the wrong decision. I'm just saying nobody who has a voice in the stock market believes that they'll make the right decision on the timing. Ben Carlson does. What does Ben say?

You know Ben believes in the Fed. He believes in the full faith. He's a Fed believer? Oh, yeah. Quote, COVID-19 cases are likely to continue falling according to projections for c from cdc if they do households could tap into a record 142 trillion in net worth and ramp up spending on in-person services economists say consumer spending is the biggest driver of u.s economic growth all of this that whole sentence was nonsense was complete bunk what do we do with

it's not going to be 142 trillion in net worth spent on anything, right? It's just, and all economists say that people will spend money for the economy. What was he on? No shit. Anyway. Um, what are we saying here? What are we saying? 142 trillion sounds like a lot of money. Is it a lot? It's like a lot. It's like a lot, a lot of money for household net worth. Yeah, it's a lot. So hold on, but this is the good point, right? Like I saw multiple things and I've seen this in some of our data. You know, like, you can't go out and spend money, you're going to sit at home, maybe everyone's you get a little bit more takeout. But like, everybody's balance sheets at a like household perspective, not everybody's a lot of people's balance sheets. They're super healthy. They just couldn't spend money. They're the best

ever. Yeah. So like, yes, they're going to want to undo that they're going to go out and splurge, we're going to see some really high vacation spending, all that sort of stuff, which is good because the service economy needs to get back into it. But that's just, you know, like money going from A to B, a little bit redistributionist in a good way. But we're also going to see the balance sheets get worse, right? Why would the balance sheets get worse? Because people just start spending it down. Yeah. OK.

Yeah. But worse, but the economy is better. Like, isn't that kind of what we want? Yes. OK. Less inequality. And if the money is moving around in the economy more quickly, that velocity of money, then the balance sheets matter less. What matters more is that GDP is still growing, right?

I mean from my perspective. Yeah. I mean we've been in an incredible – I don't know how to put it, like ramp in asset values both because of monetary policy and because people are just like saving money. They're getting stimulus checks. They get the stimulus checks. They put it into the stock market. If the people who have been left out get involved because all of the asset values that have inflated or been – that are going higher, that money is not getting spent. If you're a billionaire, how much money – there's a limit to how much money you could spend. So the rest of the country that is now being paid $18 an hour, they can get the economy going.

Well, so listen to these – I mean to me, this sounds crazy. So listen to these. I mean, to me, this sounds crazy. Federal Reserve reported Thursday the net worth of U.S. households was $134 trillion in the second quarter, up from $128.4 trillion in the first quarter. That figure stood at $110 trillion in the fourth quarter of 2019. So percentage-wise, it's like a very big jump, and the total household picture seems to be way better. Home values. I was going to say stock seems to be way better. Home values. I was going to say stock market real estate. Yeah.

Home values are up 20%. Stock market's up 100%. And I would put money on that the house values affects more people than the stock market. Yeah. Affects people's behavior or affects people's numbers? Balance sheets because more people are likely to just go out and buy the houses. It's going to ramp up how much they're worth. And it's the cheapest form of leverage.

Like leverage in your house is way cheaper than leverage in the stock market. Okay. But cash is up too. A humongous amount. Take stocks out, take real estate out. The amount of cash and cash equivalents on household balance sheets rose to 16 and a half trillion in Q2. That's up from 12.7 trillion pre-pandemic.

That's stimulus, right? Is that a 40% increase? I'm not going to math. That's scary to me because like- What the hell is that? If you're just holding money in cash, you're losing about 1.8% a year to inflation, right? Yes. Like that's just a straight 1.7% loss, almost certain. Okay.

That's scary. So what do you do with, if you have 40% more cash now than you had in 2019, what do you do with it besides play with tokens on the internet? Like what else can you really do? How much can you actually spend? Like if you're not going to change your house, I guess, which would be the biggest purchase you would make. And we know a lot of people did. that to me is the most interesting thing and that i think goes a long way to explaining why there's no yield for anybody yeah because there's just too much need and desire for too much money too much money chasing too hard so how does this how does this

reverse it's not gonna be permanent we not going to sit with cash balances that large in households forever. So what's the thing that changes that? No clue, right? No idea. What do you think? There was a story recently about Zillow. They sold $450 million in bonds for stocks that they bought but haven't sold yet. I'm sorry, houses that they bought but haven't sold yet.

It was way, way, way, way, way oversubscribed. They're selling another $700 million worth of debt. People are so starved for yield. So I think the interest rates are not just low because of the Fed keeping overnight rates where they are, although that obviously has a huge effect on it. But there is so much money, maybe that's coming from the Fed. There's so much money that the overwhelming demand, there's not enough bonds. There's too much money, not enough bonds. Wait, Zillow is selling bonds to back the value of all that real estate they bought? Because now they're just buying your house at the click of a button, right?

Yeah, iBuying. They're flippant now. They're flipping now. All right, so in August, Zillow raised $450 million from a bond backed by Holmes. It's bought but not yet sold. It's like a securitized loan. The offering led by Credit Suisse was modeled on the loan facilities that car dealerships use to finance floor models.

We spoke about this last week, I think. Coinbase. Coinbase raised money at 4% for 10 years. Yeah. Right. If you can't raise money now. As a corporate. What did Royal Caribbean raise money at?

11? If you can't raise money now, there's something meant like seriously wrong with you. So this, I think this is going to be a story that stays with us for the rest of our investing careers. I mean, forever is a long time, but. Is it going to unravel though? Like how does, like I know how 2008 unraveled, right? There was leverage in the house market. Like that came down. The defaults in 2008 were, were the thing that caused the unraveling. All of a sudden, people thought they had a certain yield coming to them on a certain instrument that was valued somewhere.

Eventually, the values were all lies. And then when people actually started to sell, you saw what the real values were, which kicked off a panic. But so where are the cockroaches today? And there are no defaults. I know that could change. I know that could change. Like we can't have a recession. That could all unwind.

But right now, even below investment grade companies aren't, there's no defaults anywhere. Like companies' balance sheets are as healthy as the consumer. Something will end this, right? Something always comes along and knocks the economy into a recession. Maybe stocks fall and take us into a recession, as Josh was talking about last week. But I don't know where it's coming from. It would be ironic if the full reopening of the economy caused people to drain money from their stock market accounts to use, like to actually do things in the real world. And that that was the thing that triggered a lot more selling. Like, I think the stock market is going to be the cause of the next recession.

But there's two key numbers for me on the flip side of it in terms of um cash interest rates one percent and two percent okay so cash like even if people hold cash cash accounts aren't really interesting at one percent but like people like fine i'll do that you know whatever at two percent if once if we see cash interest rates at two percent people are going to flee the stock market because they're like two percent yeah maybe two percent two. I just don't want more. 2 is the walkaway number for a lot of investors. That's interesting. Right? Like if I can maintain the real value of it, I don't need gains. You go from 2% risk-free

to what, like, I saw somebody yesterday say- It's 45 right now. High yield is 45. No, but what's like US equity, expected returns in US equity? 4 to 6. Exactly. So you get four to six with what? Like 12% to 15% vol? Or 2% with 0% vol?

With no vol. So I took – I had money at Marcus. At 2%, I was very happy to have money at Marcus. It's all gone. I'm not leaving my money at 30 basis points. So the Fed thing is right. The Fed is the thing that like could decouple it quickly. Wait.

Why aren't we talking about the fact that Mike fell for a teaser loan rate? Like more should be said about this subject before we following fed funds rates they were at two percent okay so you were getting two percent from marcus no jerome powell he rugged me he did rug you you so you transferred money in and then that just slowly got chopped or one day they just chopped it no it happens in increments but it just kept happening and also i was like i was like can't – you're forcing my hand. Thank you, Jerome. Yeah, but they have such a cool user interface. I have to take risk now.

I'm not leaving my money earning a negative return. Exactly. Exactly. So that's like – that's the Fed's job. It works good on the way down. This is where Goldman screwed up. They should have been on the phone with him before he even could have that realization. So, Dan, you're right.

Like I don't – where is the level? There is a level where at some point people were like, all right, I'm back. Yep. But I think that there might be so much demand for paper that that might put a cap on how rates, how high rates can get. Could you imagine what would be going on in the economy for rates to get back to 2%? We'd have to be the mother of all inflation scares and the Fed like emergency raising rates. But I feel like rates are decoupled from the economy.

I don't think the economy drives rates anymore. But like how would a bank be offering a 2% rate unless like overnight all of a sudden Fed funds rates had to move up for some reason? Well, they would only offer it if it was commensurate with Fed funds rates because they would then loan out at 5%, which they're not doing. So, yeah. Listen, it's hard to, because they would then loan out at 5%, which they're not doing. So, yeah. Listen, it's hard to picture always what would send this into reverse. Well, how about this? But when you hear $142 trillion in net worth in U.S. households, it's hard to imagine the economy not at least being decent. So that's what I was going to say.

For, I think, a long time. It's hard. And it's hard to get too, too, too bearish on the stock market if the economy is really doing well. Can stocks fall 20% when the economy is doing fine? Of course they can. It has. Yeah, of course.

Of course. Many times. They can do it. You know, there's no laws governing that. But can they fall 30%, 40%? Probably not with a really strong economy, unless stocks falling drags the economy down lower. Or they could fall, but very quickly V and be right.

They'd be right back. Yeah. be done lower or they could fall but very quickly v and be right they'll be right back yeah um i wanted to ask you about what's going on on the betterment platform because you guys have do you have 700 000 client accounts yep okay i was reading about you this week we'll get to that in a minute uh 700 000 client accounts is an amazing sample isn't that crazy to figure out a lot about investors attitudes toward almost everything under the sun, just watching what they're doing. So I asked you like what's some of the stuff that you're seeing on the platform given that we have volatility back in the market. VIX hit 20-something this week. What are you seeing going on?

Before Dan answers, let me just – sorry to cut you off or cut in. I am very bullish on Betterment customers. I am very bullish on behavioral, not integrity, on behavior. Go ahead. Well, you know his answer to my question is not going to be our clients are acting like Muppets, obviously. No, I expect him to tell us the data. What's the data say? So I'm going to probably have to fire myself because I have no substantial work left to do in this area. So we had, yeah, like we had March, April, 2020, right? And that was like, that was the setup for the behavioral mistake, right?

Scary, global pandemic, like real reasons to freak out personally, lives at risk, you know, like what's, and I can't say that we sailed through it perfectly, but like we would get an A if not an A plus. Clients either just straight up stayed the course or they actually deposited through that. In the case where people needed to take money out of emergency funds, we saw a lot of outflows specifically for that. And then we saw inflows when stimulus checks and everything came in for other people.

How many people went to 100 percent cash? Very. stimulus checks and everything came in for other people. How many people went to 100% cash? Very, very. All right. So if you take 1,000 Betterment clients, six of them did something during, like changed something of any form between March and April of 2020. Applause. Applause. Out of 1,000?

Out of 1,000. That's basically zero. I'm not done. I mean. It gets better. I'm not done. Those six people all went long. TQQQ. Three of them

would have decreased risk, meaning like lower their allocation or, you know, like went to cash in some form. They might have even kept it on the platform, but like they went to cash in some way. Two out of those like went the opposite way. They went bullish. They either deposited, they increased their risk level, whatever it was. Not me, by the way. And then one out of those six took money out in some fashion because they needed it. You're talking about unexpectedly, emergency fund, blah, blah, blah.

So home run, home run. Six out of 1,000 and only three out of 1,000 are the ones that I need to worry about. 994 out of 1,000 clients. Yeah, dude. That's awesome. 994 out of 1,000 yeah dude that's awesome 994 out of a thousand clients just whatever they were doing not bad that's amazing that's amazing let me just let me just ask one and many of these people are on autopilot contributing yep because our clients on your

platform are like set up that way yep so i mean that's that so michael and ben have this argument every other week on animal spirits. It's still riveting. I don't mean to say it like it's redundant, but are investors getting smarter? And where do you fall on that? I think Ben is saying no. You're saying yes? No, it's the opposite.

Ben is saying yes, they are. And you're like, for now. I just think that, and I want to get people- Well, Dan is here to say you're wrong. I want to get people to benefit of the doubt. No, but I'm bullish. I'm bullish on Betterment customers. I just think that we would have seen different behavior

had we not V-bottomed, had we made a lower high, had this lasted more than 30 days. I agree with you. Like the recovery, it was paralyzing. It happened too fast to react. Same thing with the recovery. So if this lasted six or seven months i think it would have we would have seen a little bit different behavior but i still

think by and large it would have been a magnificent behavior i say one thing to you though we didn't really v fully we had a huge bounce off the bottom from march 23rd into april but i don't think we got back to those levels until like oct, November. Am I right or wrong? I think it was like August. But listen, I don't want to split hairs. Okay. Because even on the way up, I was bearish on the way up. Like I definitely, even when we were 20% off the lows, I was like.

I remember you started a newsletter and everything. I bought gold bars. But I think that it happened so quick. The fall and the recovery happened so quick. It did. But to be clear, that's clear, that's the dangerous scenario. So here's the thing that's hard about the whole market timing thing. If you sell out and then things are crappy for a while, actually, you made a good decision.

It's when you sell out and then things rally back. That's when you crystallized your losses and you missed out on the gains. So that's why I was saying, actually, this was the worst case scenario and we sailed through it. And it's an area where it's like people freaked out and then it was crappy for two years. They feel vindicated. Yeah, fair enough. So let me ask you this, because I've always thought, and maybe you have some data or anecdotes to confirm this, that if somebody sells on the way down, let's say they sell at $10, whatever the security is, they are not buying back in at a lumber higher than where they sold it's hard like that is really hard so they sell out of 10 it goes to 9 and then 11 so if it goes to 9 their worst fears are confirmed right and if it goes to 11 they're like well i'm doing something else and if they go to 11

they're like yeah but i sold out of 10 i can't buy it back at 11 yeah because they're anchoring i think like that is one of the hardest things is to put is to buy back higher than where you sold so i want to like i think you touched on something which is really important, which is are investors getting smarter or whatever? And the answer is no. They're humans, right? So that's my – Oh, and it was never about intelligence. It's about emotion.

Well, hold on. It's about churches and casinos. OK. What we have done in financial services is that now there are a lot more churches that you can go to with your family on Sunday. Like Betterment? Like Betterment. Like you guys. Like Vanguard was like in my mind like the first church, right?

It's like boring is sexy. Oh, dude. Low cost is cool. It's a cathedral to rational, emotionless investing. So there's still casinos out there. There's still stuff. And the same person will go to church on Sunday and they were like at the casino on Saturday night. They'll have their brokerage, theirin i did that whatever yeah right but like

at the same time the church is there they're going in they're doing like the smart responsible thing they're like yeah retirement's important my kids college education is important i got a line on those and i'm gonna have some fun on the side too but like the churches are there and so that's why they seem smart i love that i love that analogy now what about the church on the strip in Vegas that marries drunk people at 2 in the morning? There are some bingo games in some churches that just like the stakes are serious. Yeah, yeah. OK. So by that way of thinking, when we talk about investors monolithically as though investors are doing this, investors are doing that, you could have a very rational, calm investor who also basically says, with

10% of my money, I'm on Robinhood. With 90% of my money, I'm in my 401k and I'm at Fidelity. I am. And that's like – There's a lot of people like that. How does a behavioral person look at that? It's like Bogle on the streets. Yeah, yeah, yeah.

I don't know how to finish that. Batnick in the sheets. Bogle on the streets, Batnick in the sheets. I'm going to bomb. That's like my whole thing. Dude, this man is spinning and is great. Let's not even – let's not even. How does a behavioral person then look at that?

Because I feel like a lot of the models that people create or a lot of people's worldview is shaped on this idea that everybody is one or the other. We're on that spectrum but more toward one side. What if there's this duplicity, this, this, uh, what am I trying to say? What if there's like multiple versions of the same person? You can't really model that. Yeah, no, we're all like, we're different people in different contexts. Yes. You know, like, and one of the things, and like, this is the thing we,

we now can build the tools that we use to invest. We can build the things that we're like, how should I think about this? And like am I building a thing that reflects the best me, the me that I want to be? So it's like is it goal-based? Does it look at a portfolio rather than an individual security level? And I think that's the breakdown is like people are going to want to go to the casinos for the excitement and everything, but they also know that like actually most of their lives are going to be done on the like more serious, more boring, but like also like they're happy that it's taken care of well.

Is there somebody inside of Betterment at all the board meetings and stuff who's like, you know, we could kind of like build a little casino on the side. Right, because it's great for attracting new users and let them blow themselves up and be like, hey, you look like you can use some help, fella. Like with an email blast, like you're down 25% a month trading options for free. Yep. But maybe we could pull the rest of that cash over before you blow the rest of that shit

up. Like, wouldn't that be a great CAC, a customer acquisition project? Here's what I want to do. I want to build the good Robinhood. It exists. It's called public. No, that's just like watching your friends, right? You know public?

I've seen TikTok. They're trying to be like the angelic Robinhood. They don't do payment for order. Free trading, but no list of hot stocks, no prompts to get. They don't do payment for order. Free trading, but no list of hot stocks, no prompts to get. That's the problem. Literally, their business model is tips. I want a brokerage that I'm going to set up,

which is going to be like, I only make money when you sell at a game. That's how I make money. I take, I don't know, 20 bips, 25 bips when you make a game. I'm going to want people to hold for longer because stuff goes up on average. And what's the carry?

I don't even know. 30%. How much of their gain do you want? Half of 50 bips of any gain. People don't know how much. When you say my work's done here, people listening to this, most people listening to have no idea like how much work you've actually done well let me set on the user interface side so let me help please let me help with an alley-oop so one of the reasons why i think investor behavior has gotten better even

though we haven't gotten more emotionally intelligent is because of some of the work that people like you have done it's too kind no it's the truth so if people want to sell how many thousands of betterment customers probably went to go from 80-20 down to 70-30? And you said, well, actually, if you do that, you're going to pay $14,000 in capital gains. Are you sure you want to do this? And to be clear, Dan is not calling the person up old school like Wolf of Wall Street and talking them out of trades. This is built into your technology. So the technology, the nudges have made us better investors.

Maybe I'll buy that. Actually, I'd definitely buy that. Yeah, yeah. I mean, like, and to be fair- Now compliment yourself. Tell everybody what you've done. And what else? No red, green on the screen?

Yep. The IRS helps with it because it's not like we're charging you for selling out right now. It's the IRS. They want those cap gains. Okay, so let's explain this. So I have my money at Betterment.

COVID shit hits. Tom Hanks. Oh, my, so let's explain this. So I'm a, I'm a, I have my money at Betterment, COVID shit hits, Tom Hanks. Oh my God. I go to sell something pops up on my screen when I'm in your site and says, are you sure you want to do this? You'll be generating a capital gain of $7,000. And then give us the stat. How many people see that prompt and say, ah, I'm not going to sell. So if you do exactly that. So one of the key things that was important to us is like market timing is different than like, I need the money to go pay rent. So first thing, we're going to split it up by withdrawals versus allocation changes. So if you go in to do that allocation change, that, oh, s***, I'm going from 100. Am I allowed to curse on this show? Okay. I'm going from 100% stocks to 0% stocks. We're not really going to use any of this anyway, so don't worry

about it. Go ahead. This is the rehearsal. Yeah. You go from 100% stocks to 0% stocks. We're not really going to use any of this anyway, so don't worry about it. Go ahead. This is the rehearsal. Yeah, yeah. You go from 100% stocks to 0% stocks. If you do that and you see a tax burden of, I think it's like more than 50 bucks, the odds that you're going to go through with that is like 6%. Oh my God. 94% of the time people are like, no, thank you. I mean, this is like, this this is it this is holy grail shit two two more things happen right so part of that's like i try and um encourage us to flash up the fact that it's short term right like i just want you to be long term just don't don't pay

short-term cap gains so in that case it's still like you know like six percent you you change it over to say this is all long term and it goes up a little bit i think it goes up to like 90 percent 85 percent don't go through there so like like 6% to 15% go through. People will keep playing this game where instead of going from 100% stocks to 0% stocks, they go from 100% to 50%. And they're like, crap, now it's like two grand. That's better. Okay. They go from 100% and they say, what about 80%? You're showing them the results based on that toggling. We can calculate it ahead of time. This is a preview. But that's so much better.

I'm fine with somebody going from 80-20. Oh, if I overestimate my risk tolerance, I go from 80-20 to 60-40, that's fine. But to go from 80-20 to 0-100, that's not good. So I've had a longstanding beef with behavioral finance because quote-unquote it doesn't help anybody, right? It's always just like, oh, you're dumb. Not you're dumb, but you can't behave.

You can't control yourself. Whatever, we all know that., oh, you're you're you're not you're dumb, but you can't behave. You can't control yourself. Whatever. We all know that you're an ape. You're a lizard. We know that. But having solutions is like that's what I'm there for. Yeah, you're doing more. Right.

You're doing more than theory. You're actually putting the nudges into the system and then calculating how much aggravation and pain you're saving people when they're about to act and you're intervening. Now, what's funny is- I just want to be absolutely clear. I am not paying them. They're just saying this of their own free will.

No, but I want people to- There's no guns. First of all, we're clients of, I guess we're clients or partners. I don't know what the legal is, but we have Liftoff, which we built and it's on the Betterment platform. So you're doing that for our liftoff clients too.

And for my kids. And right. I have my own money on it. I just think it's, honestly, I'm not saying like they should hand you an economics prize. However, they are giving prizes out to people who are writing books about this and

you're literally like building it. And I don't feel like you've gotten your flowers to the extent that you should. So hopefully a lot of very influential people listen to this podcast. Hopefully that'll change. One of the people who work- And you're not alone.

There's a whole troop of people working on this like you are. It's one of the nice things is that internally we have like customer feedback things. You know, like one of the other things we have is this investing journal. You go to do a transaction. You can write down like,

what, you know, like, sorry, I forgot my wife's birthday. You know, like gotta take the money things we have is this investing journal. You go to do a transaction. You can write down like what – you know, like sorry, I forgot my wife's birthday. You know, like got to take the money. And every once in a while, somebody will send me just like one that they wrote in where it's like, oh, thank God I saved up enough. You know, like I'm taking my wife out for her 10-year anniversary, whatever it is. So people send me these and like I am like Scrooge McDuck in the gold coins when you get those things because you're like, we did it. Yeah. Like we built all the stuff we said we were going to do. We did.

So now what's funny is you're popping that thing up. Like, are you sure you want to sell? When you go through like that thing on Robin Hood, it's like I might want to change my allocation. They're like, have you seen crypto? Yeah. They can't wait for you to make that sale. They have plans for you. They're like, why sell it when you could f***ing short it?

Yeah. Here's how much you could potentially make if, right. So I just think, I think it's nice that there's somebody working on high-tech stuff for the market and not pretending that they're about democratization of finance, but like literally trying to make the end investor's results better. What's nice about it too, I have no idea if people work at Robinhood, but like I love being able to go and like, yeah, you should use this.

Like it's good, it's safe, it's responsible, it looks nice. No, just listen, Robinhood's in a different business than you. That's the church versus casino thing writ large. Let's talk about bubbles because I feel like there's once again, just a new like outcropping of people screaming bubble.

It makes sense to me. There is a lot of bubble-ish behavior. I find that not all of it is in the stock market this time, which we can get into. This is Jeremy Grantham who – Michael, is this his 15th bubble call in 12 years? What did you say? 2010, have cash, wait for stocks to fall. I mean he's been consistent so yeah all right those are some headlines what do we got oh this is great 20 uh 2011 grantham sees most global

equities as ranging from unattractive to very unattractive valuing the snp at no more than 950 where is it now 4 000 something uh grantham 2012 warns 2013 will be a dangerous year. 2013 is one of the best years for the stock market in history. 2014, big stock bubble and badly in 2016. Remarkable. He could see two years ahead. Actually, we rallied in 2016. 2015, GMO found that Grantham says market's ripe for major – so it's a Martingale strategy.

What you're doing is you double down, double down, double down. One day there will be a crash. This will end. And he's been calling for it since 2010. So we nailed it. I understand that the media wants to hear from him because he's one of the smartest people. And he's an amazing interview. And I've listened to like probably 15 podcasts of people interviewing him.

And you really get a sense of like how thoughtful he is it just unfortunately has not been applicable to anything for any investor in a long time a fair thing i think to say here and i've heard a number of uh people say this one way or the other like um i think adam butler said it recently he was like at some point they changed the rules of the game and yeah either i don't know if that's like TARP or like monetary policy. But like is it fair? Is it fair to say that like they changed the rules of the game? 100%.

They did. So throw your – so stop using the same playbook from before they did that. You've seen the chart of growth stocks versus cyclical stocks over time. And they went like this. So the structure of the market is so, so, so different today. The entire playbook is different. And I forget who says this, but Ben likes this quote. It might be Ben Thompson, that there are people who are experts at an earlier version of the world.

And that makes them so much worse because they know how the game used to play, but the rules are different. So Grantham is very, very thoughtful. He said this to Barron's in 2015, 2016 maybe. So he's very, very thoughtful. He said this to Barron's in 2015, 2016, maybe. So he's very self-aware. He said, I consider myself a bubble historian and one who's eager to see one form and break. I have come to believe, however, very reluctantly that we bubble historians have been a bit brainwashed by our own exposure in the last 30 years to four of the biggest bubbles ever. Japanese tech, whatever, whatever. So he goes, for bubble historians eager to see pins used on bubbles and spoiled by the prevalence of bubbles in the last 30 years, it is tempting to see them too often. So kudos to him, but he said that five years ago, and he's still doing it.

This is what he said this week. Grantham said U.S. stocks are in a magnificent bubble, which is crazier than 1929. Who talks like that? But he said the market is like a vampire that is hard to kill and will just shrug off bad news. That's sour grapes.

He said meme stocks, SPACs, and cryptocurrencies were a sign of market craziness. Okay, I agree. But those have all, we've seen blow-offs in all of those things. But Apple, like the greatest company of all time, is trading like 23, 24 times earnings. There's bubbles all over the place,

but the overall stock market- No, wait, it's better than that. Wait, wait, wait. And then he goes, I swear this is true. This has been, he said this, who did he say this to? Who cares? CNBC.

This has been crazier by a substantial margin than 1929 and 2000, in my opinion, Grantham City thinks the S&P 500 is likely to decline 10%. Shut up. 10%? Just for context, 1929, the sell-off was 90%.

2000, the NASDAQ went down 95%. Did it? Was it that big in 2000? I think so. It went 89, 95, something like that. Tech stocks fell 80%. Tech stocks. Okay.

Berkshire Hathaway didn't. The NASDAQ fell 80%. Yep. Like the dot-coms did. But just this idea of evoking 2009, 2000, he missed 87 in here. I find that to be like disrespectful to the regular audience who has no clue the context that Michael just shared, doesn't know who this guy is, but just says, wow, that's the smartest guy I've ever heard speak in my life. And he's saying it's 1929. Earnings are at an all-time high.

So there's that. Now, can we be trading at an expected multiple to earnings? Sure. But like the Facebooks of the world, these sort of companies change the rules of the game. If you could get to a billion dollars in revenue, and I'm making that number up with 11 employees, like that is fundamentally different. And that is the structure of the market that we're in right now, where it's, it's 25% of the market are these magnificent companies that have no precedent precedents in history. Then the 1970s, 1980s, you know, there was good companies,

but not like this. They were just money-minting machines. Or are we wrong? Are we overstating how great today's companies are, and are we understating the possibility of mean reversion to earlier earnings valuations? No, because nobody's saying that. I never say that markets can't mean revert, but he's been saying his bearish thesis, and I hate to be so sound disrespectful because I do respect the man.

Dude, this guy's going to kill you. His bearish thesis has been like operating margins mean reverting. He said that was like one of the most powerful metrics of mean reversion in the market was operating margins. And they haven't because the makeup of the stock market- Apple's margins are expanding. It's hilarious. The makeup of these companies is so different than what he grew up with. What do you do? What do you do? Like, what do you do with this? I know you don't pay attention to it, but like, what do you do with this conundrum that based on everything we knew up

until 1990, things worked a certain way. And for the last 30 years, they just haven't. And you have so many people waiting for them to go back to that old paradigm. So, I mean, that's progress, right? Yes. That's hot. Thank you. Do you remember what infant mortality was 100 years ago? Yeah. 100 years ago. Yeah, we're going to mean revert back to that. I hope not, right? That's progress. So companies are better at being companies now.

But how about companies being able to lose hundreds of millions of dollars a year with unlimited funding until they scaled up to a billion users? That's a big part of our market right now, whether it's Uber or Tesla. That's the part where the rules have changed. Because the Fed, I'm not pointing fingers, because we have cheap money, that has fundamentally changed the playing field. Now, it doesn't have to be this way forever, but to not acknowledge that the market today is different than the market was 30, 40 years ago. It's like, come on, what are we doing here? You have to evolve a little bit.

Yeah. The Fed, the Fed inflation expectations purely on its own. Like the Fed actually is good as its job. It seems like like we haven't seen 8% plus inflation. Like that's different. The other thing that I don't know about, although I'm curious about it, is the whole like public versus private market thing. Right.

Like it's blurry now. Yeah. It's the same thing. Like, market thing right like the world it's blurry now yeah it's the same thing like i mean like we're one of them now like what's what a billion dollar company everyone's a unicorn yeah okay so they turned they turned unicorn what four or five years ago that was fortune in 2015 so that was special unicorn cover a billion dollar private company every private company every private company there were 40 there were 40 companies that had private market valuations north of a billion. Now there's probably 1,000. You guys raised money at a $1.3 billion valuation, which – I mean, by the way, like where's my soundboard?

I think I lost it. That's pretty impressive. And when were you founded? Ten years ago? So it was founded in 2010. I joined in 2013. That's when the real growth started. That's when the hockey stick started.

Yep. The thing that's in my mind that I like is I'm very proud of is that so the last valuation when we raised, it was like $800 million. And I don't know how long ago it was. And I am not like actually a financial person. So please tell me if I'm doing this wrong. We raised $60 million in equity this time at a 1.3. By the way, we never got a phone call.

I don't know if you meant to. I didn't get a phone call. Did you call the home phone, not the office? Okay. Go on. And like, so if that's a, what is that? A $500 million valuation change with only $60 million of new money flowing in. Right.

$440 million of value growth over that time. Like, that's pretty cool. Not nothing. You're making something. You're growing. It's not nothing. Right. Okay.

So you're $32 billion in assets. And I was happy to read that the thing that everyone seems to be the most bullish on is the B2B business. 100%. Which is us. Yep. And 401Ks. Before we transition, just one list that I just want to throw in here.

There was 45 unicorns in 2014 when this whole thing began. 45. There's 800 today. Yeah. Well, listen. I look at the behavioral thing that we were just talking about as one of the changes of the rules of the game. How so? as one of the changes of the rules of the game.

How so? I wrote a post about this that I frequently reference because I still think it answers a lot of the riddle about why we have V-shaped recoveries and why we have such strength in disparate sectors when the market's trending. Yeah, look, if you have- Permanent bid, yeah. That was a good one.

Well, if you think about who's managing money now and how they're doing it, they're allocating. Oh, the relentless bid. I'm sorry. The relentless bid. When the market is – it won't be permanent. That was 2014. Yeah, dude.

So if we're saying that investors are getting smarter, let's throw that out. Let's say advisors are getting strategically smarter about allocating. More effective. It's not brokers who are using volatility to trade more. It's advisors who are using volatility to take money out of treasuries and stuff it into stocks as soon as they can. Everybody's dealing with the same puzzle. We have clients in their 60s who might live to 100 and bonds are not yielding enough to get them there. That's another way that the game has changed.

You used to be able to do that with a 50-50 portfolio. We cannot do that. We can't do it. So why are we still surprised that every correction is met with a V-shaped bottom when we know financial advisors and sites like Betterment and firms like Vanguard, they are going to V that bottom every chance they get because they just have that much more money to put in stocks. By the way, in 2014, when you wrote this, this was a brilliant piece, but there was definitely – there was definitely people like – sounds topic. Absolutely. I hope they faded me.

How'd life work out? Yeah, I remember getting a lot of people were angry about that. Oh, so you're saying the market will never go down? I should have said yes. That's what I'm saying. I would have been right. But you're 100% right. We should keep moving.

I think we've done enough on Grantham. Shout to Grantham, by the way. It's not easy. And I don't think that my predictions about the future will be any better. We have this paper about when do investors freak out. You want to set this up, Mike? Yeah. So admittedly, I apologize.

I didn't do my homework. I didn't read this, but I'll just pull a quote. Just make it up. We already know this. Investors who are male or above the age of 45 or married or have more dependents or who self-identify as having excellent, this is the coup de grace, or who self-identify as having excellent investment experience or knowledge tend to freak out with greater frequency because of course they do. I am an expert. I know what happens next. Let me panic before everybody else does. And then I'll get back in.

Dude, if I didn't see this abstract and you just asked me, describe the demographic of the person most likely to freak out about a falling stock market. That is exactly what I would have said. I would have said 45, 50 years old, married, dependents, and somebody who thinks they know what they're talking about because we that is the person we talk to these people yeah and that's me

by the way I'm 44 I'm not so far away but I totally understand it because that's the person with the most to lose yes absolutely why wouldn't that person

it almost would be inhuman so we're not making fun of these people no if you have that much on the line and that many people relying on you, yes, you will panic.

It's so – like when you're whatever, 25 to 30, right, and you're still building up your asset base, every dip is a buying up. You're like, yes. Not even noise. You know, like your bravery is not like really meaningful because you're like, well, I got 30 years. But also you're working. You're at your job. Or on the weekends, you're like well i got 30 years but also you're working yeah you're at your job or on the weekends you're drunk and getting laid you're not like and sitting with the phone in front of you every second on on the stock if you do right you say you got 10 grand and it goes down 30 you lost three grand right now if you're like pre-retiree and you've got 100 and

that's supposed to last you through the next 30 years and you see that go terrifying that that will keep you up because you don't know how low it's gonna go yeah uh china wants investors to sweat out this evergrande thing i thought this was interesting from a behavioral point of view um i thought this was about ariana grande i got it i have no idea it's no but you must know about evergrande it's something about like chinese homeownership or something? Yes. No. Yeah, he makes Ben look like Paris Hilton. I know. I love it. I love it.

Right. Ben is super plugged in compared to you. So this is the biggest – Ben asked Michael – Ben and Michael run a financial podcast. Ben asked Michael how to use Apple Pay on the show. No, he described what Apple Pay is and he's like, this should exist. I was like, it does. It's called Apple Pay.

Right. So China has this ever grand financial crisis, whatever, Tempest in a teapot. It's the second largest property company. And they can't pay their debt. They can't pay their debt. It's kind of a big story. So what Beijing wants to do is like kind of contain this explosion, but in a very slow, controlled way to introduce risk and fear into their investing populace

so that they don't have an even bigger bubble later. I'm telling you, they should get jobs at Betterment, these guys. They have figured this out. So you know what's ironic about this is that this has been the biggest story in Western democracy probably over the last – at least financial over the last week or two. And it's probably never again. So this is a quote from The New York Times. democracy probably over the last, at least financial, over the last week or two. And it's probably never again. So this is a quote from the New York Times.

Censorship of the press and social media makes it hard for the general public to know about the extent of Evergrande's troubles and for Evergrande homebuyers and investors to organize. Imagine people in China don't even know what's happening. They don't have finance Twitter. They literally don't. And the newspapers are all state-owned enterprises. So are they even reporting on this? Probably not. They're saying it's a good thing.

This is for the New York Times. Quote, the Chinese government doesn't want to move in yet, like to rescue everybody, because it hopes Evergrande's struggles will show other Chinese companies that they need to be disciplined in their finances, say people with knowledge of the deliberations. Are they going to make it very public? Like when this, who goes, do you guys – during 2008, it was Bear Stearns? Yes. Layman.

Like they had to let a couple of big ones die to make that point. They let Bear Stearns die. Everybody else got religion. Stan O'Neill sold Merrill Lynch. Washington – like the ones that didn't do Chapter 11 quickly found a dance partner. Yeah. The only guy who thought he was too smart for everyone in the room was Dick Fould. And Washington – like the ones that didn't do Chapter 11 quickly found a dance partner. The only guy who thought he was too smart for everyone in the room was Dick Folt. He played poker and lost.

Like they called this bluff. They basically said there's nothing for you. He's like, yeah, all right. Like he kept trying to plug the gap thinking either the economy would turn around or they would come to him with this amazing rescue package. And it didn't happen. And they probably said to him behind the scenes more than once. I'm sure I read this somewhere or I'm making it up either way. But they probably were like, no, seriously, last chance.

And he was like, LOL. He was like, LOL is the second biggest bankruptcy in history or the largest bankruptcy in history. Anyway, do you think this is going to work? Do you think the Chinese investing public or the people that run these financial companies are going to get some religion watching this Evergrande thing as a slow bleed or not really?

You know, it's one of those like, who's the guy, dude? There's like the no-knowns, the no-none-knowns, the unknown. Rumsfeld. Rumsfeld. Like, I know I don't understand China. I have no idea.

Right. From a behavioral perspective, do you think this kind of thing will introduce the right lesson to everybody else in the game or it doesn't work that way? Does China really work that – I don't think they're big on sort of like individualism and like personal financial responsibility. That's not the way they think about it. They're like kind of communist in their ways. A little bit. They're slightly authoritarian. But it looks like they don't want to just put an end to this thing either.

So the government is still going to provide a guarantee for much of Evergrande's activities. But the investors are going to have to sweat. I guess if nobody knows that there are problems, they're not really sweating that much. What are we doing next? Where are we going? Some news in our industry? Fract what all right so fidelity is going to open advisor access to fractional shares does this matter aside from what it's a podcast so you gotta actually answer what's the berkshire thing like berkshire a is the like i don't know is it like thirteen hundred dollars a share now all right so cool it's like three hundred three

hundred thousand berkshire b is is a tenth there you go so maybe it works for those things but i A is the like, I don't know, is it like $1,300 a share now? No. It's like $300,000. Berkshire B is a tenth. There you go. So maybe it works for those things. But I mean, I don't know. It's good for portfolio. If you're doing, actually, maybe this is it. This is like a combo direct indexing type play, right?

Yes. Because like, I don't like, most stocks trade between $30 and $120. So fractional shares isn't really doing that much in the big scheme of things unless you're coming in with a $100,000 portfolio. And now you can slice and dice the S&P 500 and whatever you want and not even worry about it. Right. You can buy 400 stocks with $100,000 and not sit with a calculator. Yep. Okay. So I agree with you. They have a pilot program that's allowing them to do fractional shares. Six advisory firms. We are not one of them.

But it does look like this is a predecessor to maybe them having their own custom indexing platform. I mean, that's that looks I don't think they're trying to go further down market with just being able to put in 30 bucks towards two shares. So, OK, so Schwab announced this yesterday, towards two shares. So Schwab announced this yesterday, the day before. They are piloting a direct indexing program. Who's this for? Advisors, blah, blah, blah, blah, blah.

But the strategies that are going to be available, it's only taxable accounts, which makes sense. It's only US equities, which I guess makes sense from an implementation standpoint and cost effective. But it's only the Russell 1000, the S&P 600, and an ESG type of style of investing. But this is, I mean, it's coming. This is must, like from your perspective, this is must have for large advisory firms. Yeah. I think like we're going to head there and it's going to be hard to say, no, you're not,

you know, it's like a, you know, like you want the whopper your way, you know, like they're going to whopperify indices where it's like, oh, I want to overweight my solar and I want to be able to underweight this. Oh, and by the way, I'm bringing in 20 positions from the old advisor that have embedded tax that I would prefer to not sell. That's the benefit. I mean, it's a huge benefit. But this is back to active management. I like, I don't know, a thousand financial advisors, but so what, creating 50,000 different versions of an index. It's not indexed.

My response to that is if you – let's just say that you do the S&P 500 and you want to tilt whatever. You want to exclude that, exclude this, include that, whatever. That's kind of equivalent in my mind at least to not going from 100% stocks down to zero in a crash. So if you're dialing the needle a little bit and you introduce a little bit of tracking error, oh, that's active. Who gives a shit? So what? As long as you're investing, you're fine.

It is like 100% a different experience to start with nothing and start adding individual stocks than to start with a thousand and be like, I'd like to remove five of them, please. That's such a great point. There's two different ways to approach it.

John, throw this chart up. Also, how about the halo effect of if you build this portfolio, it's yours and you're more likely to stick with it. Yep. So this is ETF AUM versus direct indexing AUM from 2015 to 2020. And I'm sure the number is much bigger by now. 30% CAGR in direct indexing from 2015 to today. I don't know if that can continue forever. In fact, it can't. That's going to it's going to snowball to trillions of dollars. But this is this has got legs.

It's only $350 billion. It's so tiny. All right. So we have to talk about our friend with this other chart. Oh, it's on the bottom. Evolution of direct indexing. Oh, that's the one you're looking at. The 350.

So we have to talk about our friend Patrick O'Shaughnessy. And Jim. And Jim. Both. So both, I suppose, overs's the one you're looking at. The 350. So we have talked about our friend Patrick O'Shaughnessy. And Jim. And Jim. Both, I suppose, oversaw the sale of the family business. We are clients of O'Shaughnessy Asset Management. We're friends with both Patrick and Jim and we're fans of. Come on. You got to push the button for that too.

Yeah. Come on. I mean, that's like as big. That's huge. Huge. You don't know the number. It's been two, three years since Patrick started Canvas? It was 2019.

I was wildly bullish on Canvas when I saw it, but not wildly bullish enough because I did not anticipate a two-year sale. Kudos to them. If they're competing with Vanguard and BlackRock, they need capital. So they did it. They're kicking ass and they're going to continue to do so. So BlackRock bought Asperio? Aperio.

Aperio? Yeah. OK. Fine. Morgan Stanley bought the parent company of Parametric. They bought Eaton Vance. Vanguard bought Just Invest. Vanguard bought like a technology solution.

So like everybody is gearing up and the O'Shaughnessy mafia probably looked at each other and said, let's get some more capital. And let's really go at this business. So that's cool from their standpoint. And I think for their clients, if they really commit to like continuing to invest there, they can take on these giants because they have a huge fan base, you know, of their products. They just got the like, I don't know how to put it, the dynamism, like two, three years to get to the point where you're one of the leading kind of like providers. And it didn't exist.

It's not a matter of like- Arguably, they helped kick off the craze. Oh, 100% they did. 100% they did. Because Parametric's been around for three decades. So it's a period. Yeah. So, well, the damn bursting was commission a hundred percent. They did a hundred percent. Parametric has been around for three decades. So, so it's a period. Yeah. So, so well, well, well, the, the, the damn bursting was

commission-free trading. Yeah. Because when we were setting this up with them, I can't tell you how many hours and hours and hours of back and forth with, with, between us and the custodians of how this is going to work. We were negotiating fees and then all of a sudden, boom, this made this viable for everybody. So thank you, Robin Hood. Yeah. Yeah. As I'm looking, Patrick O'Shaughnessy just tweeted from a Maserati dealership. So I don't know if that's a good omen or not. Shout out to Patrick. He really, I mean, he really built this thing from nowhere with his team. And we like all the people over there.

We went over it a little bit. What do you think of Direct Index? We're huge fans. Yeah? Yeah, huge. What's the coolest use case? We'll give you a few. For one, it's tax loss harvesting, right?

So that's like the obvious one. Bread and butter. It's the obvious use case. In March of 2020, we were harvesting the shit out of these losses, carrying them forward, still tracking the index. Harvesting the shit out of these losses. We actually told clients that. Number two is, guess what?

A lot of our clients have embedded gains. Whether it's SPY, VOO, or whatever iteration of the S&P 500 index, or they have Apple or Microsoft or whatever it is. And instead of us putting that into a separate account and be like, we're not going to bill you on this, now we can build a portfolio around that. Not only can we do that, we can exclude similar securities that trade similarly, and we can create a glide path. If you've got $5 million in gains- You can create a glide path? We can create a glide path to get that position down over time with tax parameters. Say we want to take $50,000 in gains this year, we can adjust it on the fly. Dude, that's sick.

That's pretty hot. We can't do that manually. We were doing it, but to say that it was suboptimal, I mean, come on. So the things that we're able to do with this platform when i saw it the first time i came back and i was like holy shit i just saw the future and i see a lot of stuff he honestly never gets excited i never get excited about fintech he's like he's the opposite he's like oh he's like yeah whatever and but i remember when you came back and you dragged me back up there with you we went to stanford like three months later yeah and i was similarly blown away uh well it's almost it almost now is with all these mergers and acquisitions it's becoming self-fulfilling

because blackrock vanguard morgan stanley they're not going to spend all this money and then not develop this and i feel like if they develop it, they're going to push a lot of assets into it because there's got to be an ROI. What a crazy cycle where people were trading individual stocks, huge spreads. Let's go back to like the 1970s, whatever it is. And then we're like, oh, we can create mutual funds. Oh, now we can create ETFs. Oh, computers have just undone the entire thing.

And we're back to like you're trading fractions of a share. Pretty soon it's going to be on a blockchain. It's not dissimilar. I just told Michael I bought a Fire Stick finally. And I'm like watching all these things unbundled now. It's the same thing I was. I swear for a second.

I thought you meant like a stick to start fires. Like a caveman. Dan's a woodsman. Those I don't buy. I just knock those off trees. But like I'm watching the Showtime app on the Fire Stick. I have Showtime on my cable package. It's a great analogy.

It's the same thing. We're delivering the same portfolio experience in a better chassis. That's all we're doing. Yep. Now, the other aspect to this though that I find interesting is that you think about some of these companies

that are coming from out of nowhere into like technology relevance like no offense to uh franklin templeton their avatar is like literally black and white picture of ben franklin yeah now they're gonna have to put them in a supreme sweatshirt or they're gonna have to put them in sunglasses or something it's like it's like yeah they're gonna have to mint him as an NFT. But so now they're going to be a player in this space. And I think Morgan Stanley likes to have that image of being tech centric.

So a lot of what's going on here is not just about product, but about image. And nothing wrong with that, by the way. But you're going to this new generation. They do want things custom tailored to them. And even if the ETF is fine, But you're going to this new generation. They do want things custom tailored to them. And even if the ETF is fine, it may not be fine for a wealth manager at Morgan Stanley who's trying to close a prospect. And he's like, I custom tailored this portfolio for you. And you know what?

This is a low margin business for a lot of these big companies. So I don't know how – listen, who cares? BlackRock doesn't care about margins. Like they have trillions of dollars. But this is – in terms of like for the customer, it's not like you're paying up for these products. No. They're equivalent roughly to ETFs in many cases. Yeah, it's not an upsell.

It's not, oh, you should pay us extra for custom indexing. It's like, hey, we're giving you the beta, but we're unbundling it from the fund. Do ETFs – this is such a ridiculous question. Do ETFs exist in 100 years? No. 100 years? No. Does anything exist?

I don't know. That's a tough question. We've all been uploaded. 30 years? 10 years. No, 10 can, yeah. Do you think there's this thing like direct indexing for bonds? It's coming.

It's coming? 100%. That's the thing? Well, what they're doing – they're using bond ETFs now. Yeah. Because who cares? The yield is – Fair.

The yield is zero. Yeah, fair enough. Nobody needs an unbundled – But it's coming. ETFs now. Yeah. Because who cares? The yield is zero. Nobody needs an unbundled... But it's coming. Zero percent rate. Why? All right. Hold on. Why... Shout out to the O'Shaughnessy boys.

Very proud of you guys. Congrats. And congrats to Franklin. Great acquisition. New look Franklin why is Peter Malouk tweeting about target date funds at 8 o'clock in the morning and why are you arguing with him first of all I love these tweets on

I know you like them it's not personal no it's not at all actually I like literally never ever ever look how John formatted these tweets you are a gem sir I never one of my superpowers is like not giving shit about people's opinions. Maybe that sounds really dickish. I don't mean it that way.

But I just – I generally don't care about – if I – Wait. Stop. Could you imagine he tweeted that? One of my superpowers. I heard it. It sounds ridiculous coming out of my face. Buried.

No. My point is when I see an opinion I disagree with, I don't get triggered. Yeah, yeah, yeah. Except in this case. I'm not triggered at all. I'm genuinely curious because – This is a CFP, yeah, yeah. Except in this case. I'm not triggered at all. I'm genuinely curious. This is a CFP, right? Probably.

Who? I thought- Peter Malouk, he owns Creative Planning. It's one of the biggest RAs in the country. Yes, he's a registered advisor. He still works- Okay, so he's not just some- He's legit.

I have deep respect for him. So I was genuinely curious why he said that- Can I just read his tweet? Go ahead. Okay. Target date funds are popular investment vehicles in 401k plans. That's what we call in the business the setup. That's unfortunate because they're a terrible choice for most people.

That's the turn. Don't choose funds tied to your age unless there are limited options. Instead, choose a portfolio or a few funds aligned with your goals. And Batnick's like, okay, but why? No, because I was just, I genuinely wanted to hear his opinion. So somebody had a great reply talking about, depending on your risk tolerance and all that.

And my whole point was, I understand a professional trying to recommend something better than a TDF. But what Peter said was, like for most people, they're a terrible choice. And my point is, if you're not a financial professional, and maybe even if you are,

they're a fantastic choice. What else are you supposed to do? If he would have said suboptimal instead of terrible. Exactly. There would be no conversation. That's why I had to. That's what Twitter does though. So Peter said with 15 minutes to an hour of education,

they could do better. And I actually thought this was really interesting. Somebody said an hour of education would lead to materially worse returns for someone with no investment knowledge. And I thought that was- Why are you nodding to that? That nailed it. Nailed it. So explain, Dan. The curse of like, what is it? It's like- No, it's a little. Climbing Mount Stupid.

Yeah. Yeah. You know, like it's that constant thing of like, you don't know how much you don't know. And I have a friend what's man stupid so you get a little bit up and you think you're at the top yeah exactly okay and then you like crash down the other side and you like you start up by saying you know you don't know then you learn a little bit and you're like no i know stuff now and then like you're really wise when you're like i know how much i don't actually know about this anymore right so i think that's true because the like i have a i have a good friend and wonderful person, dumpster fire financially and got involved in Robinhood and like –

Is that John Stein? He didn't get the whole like T plus T to clearing time type thing and like ended up getting overdrafted from his bank account. And so it was this whole like – it wasn't strictly speaking like he chose bad stocks or whatever. He just got into a system that he didn't understand, but he thought he did. OK. He thought he was comfortable and confident trading inside of it. Right. And he got like he messed himself up. Of course. So I think that's absolutely right, that it's very easy to spend a little bit of time in finance and get comfortable with terms and jargon and what you do and how the app works and think that you're good to go. Because like that's true of a lot of stuff.

Facebook, Twitter. Yeah, et cetera. But like the potential for downside, the stuff you don't understand, it's just it's different. There were so many things in that. It was like, you know, number one, most people don't choose target date funds. Right. I think it's like 80 percent of people get defaulted to that. Well, he's saying that.

Yeah. He's saying it's a terrible choice that you're being defaulted to. There's like – you have – if you're defaulting somebody, the only information you have about them is usually like their age. So I think here's what Peter is saying and I do agree with this. If you are in – and the Vanguard target date funds, I mean they're dirt cheap. There are a couple of basis points. The 2040 funds, so that's assuming I, that you're going to be retiring in 20 years from now.

So call it you're 40 years old. They're recommending 20% bonds. And I think it's a fair criticism that if somebody is going to be retiring, not dying in 20 years, right? They still have ostensibly another 50 years of their life left. Why do they need to own 20% of their portfolio in bonds that are yielded 1.3%? And I think that's a fair criticism, but I still think they're a better option. Nobody would be saying that though

if the stock market wasn't up 12% a year over the last 10 years. And yields weren't like 1.5. Nobody would be saying, why do they need to own 20% in bonds? Think about how insane that statement would have been. Like even if you made it 10 years ago, why would I own 20% in bonds?

What are you saying? I should be 100% stocks? Like a lot of this is the context of the world that we just are in. A hundred percent. I do think it is correct, but I think this is a great, like perfect is the enemy of the good, right? Like the thing that jumped out to me is, all right, so target date fund is just a single fund. And if you actually have a traditional and a Roth 401k and a traditional and a Roth IRA and your spouse's account, you can do some pretty slick stuff with like asset tax location. The stuff that we did on it, this was impressive to me,

it was like you end up with 30% more spendable money in retirement if you do that by putting different asset classes in different accounts. You know, like the Roth is tax-free. When bonds used to have a yield. Yeah. So the same asset, like no opinion about what the right asset allocation is, but where you hold them, if you can split it up and do smart stuff with it, you end up with more money. So I think that – but that's optimization, right? That's like level 10 wizardry of like I'm going to do some pretty impressive stuff and you'll end up with more money in 30 years when you're taking money out of the traditionals, the RMDs, et cetera. in 30 years when you're taking money out of the traditionals, the RMDs, etc.

But like, yeah. Am I going to say don't invest in a target date fund until you understand asset tax location? Yeah. Absolutely not. The expectation should not be that most people are going to even if they spent that hour educating themselves, okay, where do they begin?

Yeah, exactly. Can you imagine where they're going to educate themselves on MarketWatch? They're at least 95 percent – Seeking alpha. They're at least 95 percent towards perfect in my opinion. Yeah. All right. So this is the money quote.

We can end it. But he's saying pick – this is somebody replying to you guys, to you and Peter. OK. Quote, pick a target date fund and max your 401K contributions and leave it alone is the highest EV advice for 99% of people in the workforce. It's the highest electric vehicle advice. What is he saying? It's good. What does EV mean in that context? We don't know. Expected value.

I just want to end this with a quote from Peter and let him go out on good terms with this one. Oh no, you're done. No, no, no. Hang on. Hang on. Who else you want to fuck with this week? He said, okay, Peter said, the advice here is simply to do what is likely to create the best outcome. He said, 401k investing is better than not investing.

Start now is better than waiting. Low cost is better than high cost. Risk-based model is better than target day fund. Okay, whatever. We can quibble with that. But by and large, we agree. We mostly agree. Well, we agree on all the important aspects of that.

And nobody should 100% agree on everything with everyone. I agree. Yeah, we agree on all the important aspects of that. And nobody should 100% agree on everything with everyone. I agree. Yeah. You agree with that? I agree with that. I don't agree with that. You disagree? Good.

So that's how it should be. What is your office good for? Well, you're in my office. What do you think? So offices are fantastic. Yeah. Not the things that anybody thinks they're great for. All right.

I want to hear this. Oh, let's start. I don't get more work done in the office. I don't like code better. I don't work better. I don't like write better, but I enjoy speaking. Like when you, this, I keep coming back to like, when you have to have an uncomfortable conversation with a colleague, like it is so much better if you can grab a beer with

them after work. It is like, if you want to just be like, oh yeah, I forgot. I wanted to ask you something. I hate writing up a Slack message you know to do that so they're great for building up like i don't know what you want to call it the camaraderie the community building thing it's like yeah like you're all humans you're not just avatar do you see this there was i think it was a matt levine thing where like on some call one dude pretended to be another dude by using like he was just talking about that to michael yeah it was ozzy media yeah the founder was impersonating a youtube executive and the

audience the intended audience was goldman sachs bankers that were about to write them a huge check right he was pretending that youtube was really excited about yesterday i called josh i pretended to be barry so like i i joked so over the past year i think betterment's like hired more than 50 of people remote not new york city right like wisconsin and there's part of me that's like all for all i could know like you know like you're presenting on the screen as like an old person you could be young i don't know maybe it's just like cgi or something but like being back in the office and being able to be like hello three dimensional human being who's like a real person. Do you want to grab a coffee?

Are you in five days a week? Two. Okay. Yeah, but you already admitted to me. You've been in the office, but you're escaping your house like I am. Yes. Okay. Which is also a great use case for offices. Yes.

That we don't talk enough about. I love coming in one day a week. I really do. I enjoy it. I love being home. Did that sound forced? The little, like, I love it. Dude, she's not listening to any of your podcasts. Yeah, I know that. But I also, I love being home. I love being home.

I'm so much more, I get so much more work done at home. The focused work, the home, the like, you know, like just zoning in, not having distractions, it's fantastic. All right, so this is from The Atlantic. A survey of more than 1000 hiring managers implies that ready for this 40.7 million Americans expect, this is what the workers expect to

be working remotely by 2026 or almost 28% of respondents, according to a report by online freelance company Upwork. All right. So they're interviewing freelancers. I don't know if that's good i don't know that's a good sample never survey i told you never so no they're hot they're they're surveying hiring managers i i think that this this this this obviously covid was like a watershed moment but it's but in particular for the office i i i don't think it's i'm very confident it's never going back to five days a week for 100 of the population what is that never ever. So are we all going to be in a WeWork? More than half of my employees are remote, and I think it's fine.

I understand that things are getting lost in translation. I understand that it's not the same when you could fist bump somebody and have a conversation with them versus set up a Zoom. I agree with all of that, but I still think the pros outweigh the cons. I have extremely talented people who would never have moved to New York to work for me. Absolutely. And I have amazing clients who even two years ago

probably would not have become clients if they hadn't gotten used to doing so many other things online. And so I feel like that is outweighing the stuff that you're talking about, which I agree is important, but I don't think I would want it back. It is important, but it doesn't have to be all or nothing. So Derek Thompson wrote a piece in The Atlantic where he was talking about the study that was done on Microsoft employees.

And what they found was that communication outside of groups declined. That makes sense, obviously, but communications within teams became more densely connected. So I think that it's gotten smaller and there's some dangers to that. So it's not all good or all bad, but I think on balance, it's better than bad. It's better than, yeah. So what are you, 400 people now? Yeah, I think less than that. I think like 350, but I'm not sure.

And how many of them are meant to be in that office of yours in Manhattan? Can't be more than 100, right? Oh, yeah, yeah, no. I think the capacity there is probably like 200, 250. Okay. But I think the number of people, we had colleagues move from New York City to everywhere. Wait, were you employee like seven or five or something? 20.

What's the number that it gets to where you don't know everyone's name in the company? Oh, we were there years ago. No, I know. But what is that number? I'm curious. Yeah, it probably is like Dunbar's number is 125 that's the way that was like that famous number that's a study so robin dunbar did this study of social groups and like the maximum size of cohesive social groups and this was actually for the military that's why you have like i don't know what we're gonna call platoons yeah squadrons whatever yeah um we're very military and it's like because because when – all right. So like there's five of us in this room.

There's you and me. There's you and him, you and him. It's basically like the number of connections. I need to know what you know about him. And so the number of people you can actually keep track of their relationships – You do not want to know what I know about him. It goes up, right? So –

I mean, right? So 125 is like the max where you actually keep track of people because you're like, hello, stranger. I have no idea whether or not you know Mike. Do you know John? Even if you work in the same space, you're not going to interact with more than 20 people in a day unless you're hosting a meeting, right? So I could definitely see that being an issue. I just – my take on this is, yes, we're losing something. Yeah, so much more also we're gaining something so much more and that it'll be hard to remember what things were like

five years of this so you get but the thing to do is to invest in kind of like team building you know like let's all go spend a week in tahoe and have an incredible time and isn't that a much more meaningful interaction than oh i had coffee with this guy. Yeah. Like, we stayed in a hotel room together. It got weird. That's, to me, you'll have more memory of that. Last thing before favorites I want to do, are you going to get a pair of these? You're like a sci-fi guy,

so I wanted to ask you about this. Yeah, what is it? Facebook Ray-Bans. Do we have a picture for this? I purposely didn't click on this link. I want it to be explained. What the hell is this? Wait, Google Glass.

You're a Ray-Ban guy. Are those your Ray-Bans? Those are almost exactly what my – That's what you wear. I wear the boyfriend sunglasses. They're like the largest lens size Ray-Bans. They look a little bit like this. But there's no camera on it.

These are Ray-Ban collaboration with Facebook and basically you could live stream to the internet what you're seeing. I am so out. If you want to see an example of this, you know John Steinberg from Cheddar? Founder of Cheddar. Can we throw a video up? Do we have a video of this? It's on his Instagram.

I don't know if we could do that. We should get these and record a Compound and Friends episode wearing them. What? Yeah, or not. I saw this Instagram thing that John posed. He's like, I guess he's on vacation playing tennis, and I guess he has a pair of these.

So you're watching the video on his Instagram is him hitting tennis balls back and forth across the net with somebody, but you're seeing it from his perspective like it's you. Like you're the one playing tennis. Does that make sense? It does. I just don't understand why anybody would want to do it um so it's like first person video like where it could be you don't let your mind go there i know but i know but don't it didn't until just now okay and now and now it's stuck there so you could see the world through someone

else's eyes literally and this is very creepy to me. Isn't this the third time? We had Google Glass. That was a flop. How'd that go? We had Snapchat Glasses, which I think were the same thing as this. Spectacles. Spectacles.

Put some respect on their name. Yeah, this is the third version. I don't know. What's different? What's different is this is going to live stream that video to your audience. Oh, it's live streaming? Yes. So like the next.

It's not. Dude, it's not uh it's not a gopro it's like literally press a button or do something on your phone and what you're seeing is being broadcast to all your followers on instagram or facebook i think i'm really out on this idea i can think of two use cases like police concerts and police oh concerts i didn't think about that but for concerts you could just hold up your phone. I guess it's easier for the – That's the thing, yeah.

But you're going to wear sunglasses. And then it has speaker – it has microphones to pick up the sound too. This could get very dangerous. I mean unless someone is like, wait, why – it's great that we're having this meeting about illegal activity. Why is there a red light? No, there should be a red light when it's recording. Yes. But I saw somebody.

They said it's really easy to disconnect that. Like there is a red light that goes on when it's recording. But like if you know what you're doing, you go in with a little thing and you just tick it off. How about just don't show up to our drug deal with sunglasses on. And I won't have to assume you're streaming me to Facebook. Like that would be good enough. All right. So you're not in.

You're out. Oh, like completely out. You think you're out? I'm way out. Oh, like completely out. You think you're out? I'm way out. I have another sci-fi question for you related. But let's do favorites. Michael, you're up first. What do you mean sci-fi related question?

I have another sci-fi related question later on. Okay. I just finished Squid Game. What is that? You know about Squid Game? No. Show me. It is.

Oh, I saw an ad for this. How do we describe this? It's the Hunger games mixed with what country you said uh hunger games and you also snow piercer and black mirror yeah was that it uh korea it's the number one show on netflix right now it might be it might be the most streamed show on netflix of all time watch with subtitles or with subtitles subtitles so i'm not really going to recommend this to the average audience person like if you if you're going to watch this, you've probably already watched this. It's incredibly disturbing and violent, but that being said, it is so well directed, produced, written.

This was a monster, monster show. Why is it called Squid Game? Do they work for Goldman Sachs? The name of the show? Yeah. The name of the show is not necessarily relevant, but I was just, I was blown away by the production of what they accomplished here. Okay. We that it's on netflix it's on that's the number one show on netflix they didn't put that in front of me yet oh it's the number one well what's good about the what's good about the show if like if you want to dabble like if you watch the first episode and you hate it like stop right there you know it's one of those so it's not you gotta do that you gotta have a stop loss well you know i love shows like that where you don't have to commit you know after one episode of whether it's your cup of tea or not. And this is definitely that.

What have you brought us today for favorites? It's not one I've done yet, but I'm super hype about. Foundation. Okay. The Foundation series. That's what I was going to ask you. I've not seen it yet, but Dave Nade gave it a proper thumbs up. Oh, yeah.

I'm in that dangerous territory where I kind of don't want to watch it in case they mess it up. So that's exactly what I wanted to ask you about because I just saw the promo for it on Apple TV. Promo looks good. And what else did he – he wrote iRobot is like what he's famous for and this. This is like his Lord of the Rings, right? Yes, absolutely. What's it like? It's a series.

What's like the 30-second version? What's it about? What's his name? Ben Hunt. His company is named after – it's called It's a series. What's like the 30 second version? What's it about? What's his name? Ben Hunt. His company is named after it. It's called Second Foundation. Okay. All right.

So 30 second thing. Galactic civilization, men can travel through space, et cetera, but it's hard. So it's based on a true story. Yeah, exactly. In the future. Okay. I'm from there. It will come to pass.

But civilizations just fall under their own weight, like fall of the Roman Empire but at a galactic level. OK. And so this is happening and you're about to enter into like a dark age. You know, like just civilization goes away. You lose all of the knowledge of it. And so there's a foundation that's bent to say like can we put it off? Can we make that dark age as short as possible? And it's the story of the people trying to do that at a civilizational level.

And I'm not going to ruin it, but in the second book, there's a real plot twist. Imagine everything goes away, but the only thing left from modern pop culture is Blind Melon. That would work for me. The first album. Not so much the second album. I think I'm in for this. You look excited for Foundation. You look fired up for this.

I actually have never seen this. No idea? Yeah, this is the first time I'm seeing this. You want to run out of here right now and watch the trailer? Yeah, it sounds interesting. They've got capes. I love capes. Like hoodies. Is anybody good in this? It's like Reese Witherspoon. I've not seen anything. I've just heard good things. Alright, they'll screw it up. Oh, do you have

high hopes for Dune? Yes, I do. The trailer's looking good. I guarantee, I guarantee, I give my personal guarantee that's a can't miss. You know why? It has the best director in the world. His name is Denis Villeneuve. Not to brag.

It's not going to be the best movie of the fall, though. Who said that they thought it was going to be the best movie of like a year or something? Michael, I'm so excited about this. No, I'm positive. It's not going to be better than the Jay-Z cowboy movie. Just stop it right now. With Idris Elba. It definitely won't be better than that.

Dune will be the best movie of the year. You excited? I mean, you than that. Dune will be the best movie of the year. You excited? I mean, you must be a Dune guy. But the original movie is like a budget of $12. It looks like shit. Yeah, it looks rubbish. Yeah. Okay.

It's hard. Dune's hard. Dune, the whole story is super hard. It's hard to bring to the screen, which is why they waited 30 years in between. Timothee Chalamet, Zendaya, Jason Momoa, Oscar Isaac, Batista, guy, you know that guy that guy, that guy Javier Bardem, a lot of that guys, Josh Brolin's in this it's a can't miss the other thing I haven't seen yet but I'm hyped

about, I don't know if you guys have seen the Star Wars Visions it's like famous anime directors doing like stand alone cartoon episodes I saw two of them. What'd you think?

I was kind of like multitasking. I just had it on, but it looks really cool. Like visually, it's sick. That's what I like is when they bring in like people to have a different take on something that exists, right? It works. It works in this case. If you're like a Star Wars person,

or if you're an anime person, ideally if you're both, it hits. Like it's, you know, I don't think it's like for casual viewers, but they definitely know their audience. I want to talk about No Sudden Move and then we'll get out of here. Worth watching?

Did you watch it? I watched 15 minutes and I fell asleep. No, I shouldn't have watched it, but I want to commit to it. How many edibles deep were you? No, yeah, I was late. I want to commit. What about you?

You see this yet? No. You have HBO Max app? This is the new Soderbergh movie. It's Benicio, so. Let me tell you. Let me tell you. This is the best cast in any movie I've seen since like an Ocean's Eleven.

And it's Soderbergh. Yeah. So, of course. Just listen to the names. Okay. Don Cheadle. All right. Benicio Del Toro.

David Harbour, who's from Stranger Things. Amy Simons, I guess, is good. I don't know who that is. Jon Hamm from Mad Men. Ray Liotta. Kieran Culkin, the best person from Succession. Brendan Fraser. He's back.

Dude, he's back. He's back. He's great in this. And the girl from Uncut Gems, Julia Fox. Heck yeah. Everybody in this is a murderer. Yep. Everybody.

So they shot, it's supposed to be like a 1950s film and it takes place then. It's a gangster movie. But they shot it with like cinematic techniques from the era.

And you can really see it if you're watching. But it's in color. It's not in black and white. But other than that, it feels like a noir from the 50s. And it's scripted that way.

And it's Soderbergh. And it's just, it's so, it's so good. I don't want to say anything about what it's scripted that way and it's Soderbergh and it's just – it's so good. I don't want to say anything about what it's about. I'll watch it tonight. You should just really like get into it. No gummies. Just sit and – just trust me. I do have a new favorite there.

All right. I thought you were going to say, well, I brought gummies. I was going to say turn off the cameras. For weeknights, I want like a beer at the end of work. But I do not want alcohol because it just i'm too old i'm over 40 now you look at alcohol you get hung over uh bravis bravis i'm not how b-r-a-v-u-s does like really good non-alcoholic beers they've got a blood orange ipa it's like fantastic does it have the calories though it's no they're lower they're like 50 to

70 calories per 12 ounce so it's not not as much. They're still there though. You said you, how old are you? 40. And that's where you are. I'm still drinking 9% beers. So I'm a no for that. Yeah.

You've arrived at this place a little bit too early. I got to be honest with you. Damn. We got next time we do this, we got it. We got to have plans to go out for academic years. That looks good. All right.

So, so check out all our favorites and I guess we'll post links to some of this or we won't but you guys will be able to find all this stuff did you have fun today absolutely this is dope right this is good yeah it's good to see you we're in a room together this is awesome I know dude thanks for coming by

thanks for coming by we had a blast Duncan did you learn something today yeah I learned some stuff and also I agree with you about the movie, No Sudden Move. It was good. Oh, you liked it? Yeah. So where were you just now?

Yeah. Chime in. I was learning what you guys taught. As a cinema person, or what are... No, you're not a cinema person. I'm a film person. You are a film person. Film.

What did I not say right, or what did I miss that made it really cool? No, I think you're right. I think it was my favorite Soderbergh since uh informant maybe which i liked a lot years ago yeah that was a great one he definitely made this one as one of his crowd pleasers this wasn't one of his art films uh well i thought he kind of walked the line right yeah because he's he's kind of got that noir fuel yeah and yeah i thought it was good. It was some good Soderbergh. All right, John killed it this week. Thank you.

Welcome back. How was Portugal? Good? It was wonderful. I probably should have asked you at the top of the show. We'll talk more about that another time. Duncan, thank you. Great job.

Where do you want people to follow your stuff? You want people to follow you on Twitter? Yeah, Daniel underscore Egan on Twitter. All right, at Daniel underscore Egan on Twitter. Alright, at Daniel underscore Egan on Twitter and needless to say, if you don't know what to do with your money and you haven't checked out Betterment yet or our version of Betterment called Liftoff or whatever,

it's a nice option. It's not going to be as exhilarating as trading through quad witching or whatever, but it gets the job done. You guys are doing a great job. Congrats on the money raise. Thank you very much.

Absolutely, man. Mike, you good? Very good. Any parting words for the audience? I'm great. All right. Have a good weekend. Guys, if you want to see video clips from the show,

go to youtube.com slash the compound RWM. Check out idontshop.com for the latest in financial blogger fashion. Look for Animal Spirits every Monday and Wednesday your favorite podcast, my favorite podcast and we will be back next week, see you then alright take us out of here those have no THC in them

we're almost out of outfits we have a dump truck we have a dump It's a dump truck full. We have a dump truck. We have a dump truck. A toy dump truck full of outfits. Dan, this is great. That was great, right? That was fun.

We're going to record now.