The Compound and Friends - Fat Privilege

Episode Date: January 20, 2023

On episode 77 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Doug Boneparth and Phil Huber to discuss alts, bonds over stocks, the probability of a recession, ETF flows, Schwab's double downgrade, why Bill Ackman cares about Sam Bankman-Fried, Einhorn's turnaround, who's going to buy WWE, rising interest rates, and much more! This episode is sponsored by Tropical Bros. Tropical Bros just released their new 2023 gear, 10 new Hawaiian shirts and 10 new polos, visit: https://tropicalbros.com/ and use code "Spirits20" for 20% off your order! Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. 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/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Let's go Eagles, baby! I have a friend who's a wrestling fan, so I bought him a shirt. It came up on my Instagram. And it came like a week ago, I was like, f***, I should've bought one for Phil. It was just like, a bunch of little guys. Like little, like, figurine guys. Okay. I probably already had this. My favorite figure growing up, and I never really had a lot of them. In fact, I don't think I had any of them. Go on, guys. It was, uh, was, uh, uh...

F***. Um... Chick Snakes? No, I'm not even gonna give you any clues. You're talking about the little, like, f***. Chick the Snake. No, I'm not even going to give any clues. You're talking about the little, like, Hasbro ones? Yeah, yeah. The little ones? What was it? Oh, John Gonzalez.

Oh, yeah. He was around for, like, a year. Yeah. He came and went. The fact that he actually got a figure is pretty remarkable. Yeah. I think he was there for, like, less than a year. He was great.

I don't know why the other day I went down, like, another... You know, how about this? I've got a bone to bone to pick went down the rabbit hole. I'm going apart No, I fucking went on Wikipedia for 30 seconds. Would you learn? Texas tornado. Oh, yeah. What's the Vaughn Vaughn? Eric? Yeah, but I are paying like they're making a movie about them with Zac Efron is playing that's how I found out about one of the Well, Texas tornado, right? He's playing the tornado. I think this is his name Because there's like four there were like four it's a really tragic like family story. They all killed themselves except for one Yeah, either kill themselves or got killed somehow or yeah, so Texas tornadoes daughter is still alive. I think she was a wrestler. Yeah

So what is going so who's gonna buy? Actually, let's not step on the content. It's in the doc. I have a theory don't Shut your mouth. Obviously Trump. Is that Wedding Crashers? Shut your mouth? It's definitely a Will Ferrell something. I don't know what.

No. Old school. Which part? What part? Yeah. Shut your mouth. No. No.

Step Brothers when they're in the interview. Oh, yeah? Yeah. You should shut your mouth. No, no. Stepbrothers, when they're in the interview. Oh, yeah. Yeah! I think I can weigh in on the whole. I got it. I got it. Let's go. I like when he's in the back.

Pan. He's in the back of the car when he's driving. I do that to Hazel. I do that to my kid all the time. I'm like, pan, pan, pan. Pan. This is so great. When he's in the backseat of the car and he's like,

where are you going to sit? Shut your mouth. I needed someone to do that. Shut your mouth. Shut your mouth. I think he's in the backseat of the car and he's like, where are you going to sit? I needed someone to... Wait, shut your mouth. Shut your mouth. I think he's had enough. Shut your mouth for one second. I needed someone to... Wait, shut your mouth.

Shut your mouth. He's just coming off stupid. You know? I love when the mom tells Will Ferrell that Robert, their new husband, went to Johns Hopkins. He used to smoke weed with Johnny Hopkins. And who? What was the other guy's name?

Johnny Hopkins. He had another name. Sloan Ketter. Yeah, Sloan Ketter. So I watched Anchorman on the plane this weekend for some of the long time. It's still f***ing... Couldn't do it.

It can never... It's a contrarian take, right? That's very contrarian and wrong. Is there a right-left on his name? He's not... Just couldn't get it. And then the second one was just got off Yeah, I don't know what it was about

Although the Brink character Steve Kroll's character was not funny at all objectively not funny I love lamp was not funny at the time. I agree The movies not really fun. The movie is not really funny I almost felt the same way about Talladega Nights, and then I watch a bunch more times, and I'm like, okay, this is funny. Well, I feel like comedies need to be rewatched. John, my levels.

Like, multiple times. Yeah, you're going to miss some layers. Step Brothers gets funnier to me. Yeah, that's just money all day long, from the jump. Put my mic on! Dewey Cox? No, that's one of the...

Is that a comedy? Oh, yeah's one of the- That's one of my favorite movies of all time. Is that a comedy? Oh yeah. Blades of Glory isn't underrated. Is that Coen Brothers who did- I didn't love Blades of- It's not lovable, but underrated. What was the basketball one?

Semi-fro. I didn't like that either. It's a lion! Terrible. Yeah, that's bad. It's a big fat XL. Can- You guys, I think I have- Hello? I think I have-

Hello? Something- Hello? I'm identifying as fat privilege. I am a shareholder. Explain. Do you measure that in your cholesterol? No, if big people groan, you just gotta let it slide.

No, I started picking up on this. Like, today's an example. I went to lunch with Chris and Jay. Went to Croton. It just sounds like a fat meal. No, it's not. I had a crouton. No, he had a cheeseburger with bacon.

It's a pub. Okay. It's right there. I had a salad for lunch, not to brag. All right, shut the fuck up. This is important to me. Sorry. So I started picking up on this.

Today's a great example. Like I sit down. We go to the restaurant. It's a table for four. There's three of us. The two of them just automatically slide into the booth, and I sit by myself. Like there's – it's like an automatic assumption that like – The waiter takes the fourth chair away to give you more space to –

Give the big fella the space that he needs. Yes. It's like subconsciously happening in both their brains. They didn't talk about it. They weren't like, who wants to sit there? They just both slide into a booth. It's assumed. I also noticed like on airlines, I sit down.

There's like no question that I'm taking both armrests. Yes. Whoever the person is next to me, whether I know them or not, they don't even attempt. Well, they don't want you to eat- Are you an aisle or window guy? I'm an aisle guy. Well, they don't want you to eat them. Come on, dick. He's not

that funny. I don't mean it like people are being deferential to me. They don't want to lose their arm. No, they just don't even attempt. It's like unsaid, like alright, this guy's getting this arm rest, period. No, because they think when you look at their arm, it's turning into the meat emoji with the bone. Right.

Well, is there a such thing as fat privilege? Well, I had a big man experience over the weekend. Maybe. When I sat down to my seat at the Vikings Giants game. Well, that's in Minnesota. A very big man. You wouldn't get fat privilege there. Everyone's skinny there.

A very big man sat next to me, and I'm like, he's like 6'6", 2'8". I'm like, ugh. What did he do? Daniel Jones' dad. I thought you were going to say ugh. What did he do? Daniel Jones' dad. I thought you were going to say he ate you. It was literally Daniel Jones' dad. Batnick sat next to Daniel Jones' dad the entire game. No, only the first half.

But I want to say that I think I made the— Did you talk to him? Yeah, I did. I think I made the game for him. But he's not fat. He's tall. No, he's huge. He's a huge hulking man.

He's not fat. 6'7", dude. You could be 3'30". Oh, so maybe I have tall man privilege. I have tall privilege. You're not that tall. Big privilege. You're husky.

That? Yeah, big privilege. That'd be your wrestling name. Is that the show name? Here comes big privilege. I have bald privilege. I was in. Yeah, that's it.

I took COVID for a haircut the other day. And the barber goes, are you next? And I took off my hat. I said, I'm good. What did he say? I was wearing a winter hat. He couldn't tell. Okay.

Just trying to be polite. Bald privilege is like, you know, there are certain restaurants you go to and they ask you to remove your hat if you do it.

And they're like, no, actually. It's okay. Go back. We'll make an exception for you. Put it back. They bring out some linguine. Put this on your hat.

John, my thing now is completely off. I can't hear myself. Can you guys hear me? Can I hear myself? I'm good. I think I'm off. Mike, can you do me a favor? I'm off.

I can hear you. The only thing I really didn't digest was the Einhorn. Like, what's the one bullet point on that? He had a great day. 5,100 basis points of alpha. Who did he quote in the letter? I hate that. Mark Twain or Churchill?

I hate that it said like that. Barbara Walters. I know. No, I'm kidding. I know. That's what it said. He had a great

Barbara Walters quote. Oh, that's how you guys are saying it. Oh, okay. Here's my favorite quote in the article. Let's not do the content. Stop.

I'm not stepping on anything. I'm not stepping on anything. Turn that shit down. So he said, the last number of years reminds us of our favorite baseball scene from the Field of Dreams. So he said, the last number of years reminds us of our favorite baseball scene for the Field of Dreams.

So Shoeless Joe says, the first two were high and tight, so where do you think the next one's going to be? Archie Graham said, well, either low and away or in my ear. He's not going to want to

load the bases, so look low and away. Right. But watch out for your ear. Remember that line? I've never seen Field of Dreams. Like anything. I know.

I can't believe I submitted admitted that on a podcast. What? Get out of here. It's bad. You lose your- That is shocking. You're a child of the 90s. I'm taking your man card away.

My wife- I'll watch it on the flight home. My wife's older man crushes Costner because of that. You ever notice all Doug's stories start with my wife? He's very loyal. Do you have your own- She works with the firm now. That's right. Shout out to Heather. We're going to get into that, very loyal do you have your own she works she works with the firm now that's right

shout out to Heather we're gonna get into that actually you guys got your own walk we do here's the quote he closed the letter with do your homework

choose your battles don't whine and don't be the one who complains about everything fight the big fight Barbara Walters that's a good quote yeah

it's not bad apropos rest in peace I didn't realize she was so cool. R.I.P. Well, she just passed, so it's like timely. Yeah. I kind of like that.

Doug, how was Davos? Did you influence anyone? I was one of the snipers. You know who's there? Our friend of the show, Alison Trager, is in Davos. Okay. I think Bloomberg sent her. Yeah, she's an economist.

She belongs there. Like, of everyone I her yeah she's in cannabis she belongs there like of everyone I know she's the person are we at peak billionaire like are we at the verge of just not giving a fuck anymore you know what they did

at Davos that I thought was kind of cool and like very strange they celebrated the 50th anniversary of hip hop I don't know how

no they had they had like a sponsored thing and they like really did it. Did Kanye perform? Jesus. Do you want to know what I celebrated yesterday? Kanye's typed in for it.

The 40th anniversary of the Chicken McNugget. Really? Free six pieces if you got the app. It's 40 years. Are the Chicken McNuggets 40 years old? The nugget itself? Yeah, you got vintage nugget. Bring out, wait, let's nugget. Bring out the 80...

Bring out the 83. Bring out the 82 nuggets. You eat your kids' nuggets? Do I eat them? No, Hazel eats her sister's. It's a fight. We do chicken dynos. I usually end up eating half done. No, that's the Purdue. I'm talking about the one in the McDonald's. Yeah, like the real deal.

They're getting that tonight. Burger King chicken fries. Never did it. No. Burger King. There's not a lot of meat in there. I don't think I've had Burger King in 20 years. Who wants Burger King? Nobody.

I stand by my assumption there's something very shady going on with our Burger King. If you're eating Burger King, you're in an airport. No. There's a lot of Wendy's in airports. There's a McDonald's spillover. Our Burger King in Merrick is right next to McDonald's. The only traffic is when McDonald's is too full. Dude, McDonald's has a drive-thru in my town

that's backed up onto the main road. They have to reroute traffic around this McDonald's. What is going on? My airport guilty pleasure is McDonald's breakfast. It's the best breakfast. It's like the only time I allow myself a breakfast burrito. Breakfast burrito? Burrito at McDonald's?

Oh, they're so good. No McGriddle? No. I'm a McGriddle guy. The pancakes soaked in syrup. Sausage, egg, and cheese McMuffin. Pure play. It's all good.

I don't want to hate myself. All good, dude. So Shake Shack does pure play. Shake Shack does breakfast at JFK. It's the S&P 500 breakfast. It's really good. It's really, really good. It's the best restaurant in America.

And I've been to a lot of good restaurants. I never even thought McDonald's was a restaurant, but I guess you're right. It is the best. It is. There's nothing on the menu I don't like.

It's America's favorite restaurant. One french fry will send you back to being seven years old so fast. Just whiff it. Yeah. It's America's

favorite restaurant. Love it or hate it. Yep. What's second? It's the best. Oh, Chabal? it. Yep. What's second to the best? Chipotle. Taco Bell. Taco Bell's amazing too. There was a time when there were more Subways than any other chain.

They're like the least revenue of any fast food chain though. Subway is going to go public. Did you know that? What's the ticker? This is Reuters. S-Y? Gross. G-R-O-S. F-F-L.

Remember the $5 footlongs? Sandwich chain Subway is exploring a sale of its business. This is Reuters. The sale could value the sandwich chain at more than $10 billion. The process is in early stage. Could attract potential corporate buyers and private equity firms.

Oh, maybe it's not an IPO. That doesn't need to be a problem. 37,000 restaurants in 100 countries. The world's largest quick service restaurant. I take Umbridge. They're not restaurants. Those are stores. You know what?

It should be a vending machine. Why does it even have to be a person? Yeah, robot. Assemble it. Let's not call them sandwich artists a person? Yeah, robot. Assemble it. Let's not call them sandwich artists. They taste like a robot. Put them together. No, you should just press keys on the thing,

and a robot just makes the sandwich and drops it to the bottom. Southwest sauce? I haven't had it in 10 years, but it is good. Have you had a Wawa hoagie? Oh, yeah. Overrated. What is Wawa? I kind of agree.

Yeah, what's a Wawa? Overrated. Jersey gas station slash sub. No, I like Wawa. It's better than Wawa, right? If you're like one of these people that's from Delaware, you think Wawa is like the greatest thing ever. It's South Jersey.

I like it. They don't have it in flyover country, by the way. No. It's on the way from Atlantic City. Anyone in the Philly area. We had one in Maryland. I went to school in Maryland, and they didn't have like regular delis like we know of conventionally,

but the school is filled with New York, New Jersey kids. They don't have a boar's head. It's like, what the hell is wrong with this place? So you would go to Wawa to get a sub, and it was like, okay. That's fine. It's fine. No big deal, but Subway is not that far behind. No, but the thing is, Wawa, you could get egg sandwiches any time.

Breakfast sandwiches any time. Yeah, it's just good. The donuts and all that stuff. It's good. We used to buy cold cuts at the supermarket in Maryland at Giant. And the turkey was, I kid you not, it was like coagulated turkey broth

that they made into a ball and then sliced. I mean, I'm sure it's not like that now. This is the 90s. But I remember like- How turned on are our listeners right now? No, I'm sure it's not like that now. This is the 90s. But I remember like – How turned on are our listeners right now? No, I remember talking to somebody in New York and just being like, this place is like Mad Max times. I don't know how these people are living this way. How hard would it be to send a boar's head truck down here once a week?

So Publix got boar's head and you had those Pub Subs. Wait, Pub – Like Florida. Yeah, they got boar's head because half of Florida is New Yorkers, and we don't put up with anything else. And then you had the public subs with the Boar's Head. I would switch supermarkets if the supermarkets stopped carrying Boar's Head cold cuts. Yeah, that's right.

But that's why I have fat privilege. All right, how are we doing, guys? Big privilege. Are we ready to rock and roll? Hold on, what episode is this? 74. 74? 71? 74? Let's go. 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 Tropical Bros. If you're watching the YouTube, you might notice that I've got this snazzy, stylish, comfortable teal quarter zip. Who's Tropical Bros? Who's Tropical Bros?

They make the best Hawaiian shirts in the world. They're breathable. They're just lovely and delightful. And, got news, for Animal Spirits fans, we might, we have,

we might be cooking up an Animal Spirits Tropical Bros collab. Might be a new well-designed in the works. There just might be. If you are interested in picking up one of these stylish shirts, quarter zips, Hawaiian shirts, go to Tropical tropicalbros.com. Cop out of France 77.

Whoa, big crowd in the house today. Very excited for today's episode. Two returning fan favorites. Guys, I wrote introductions for you. Somebody wrote these. Phil Huber is the CIO of Savant Wealth Management, a multi-billion dollar wealth management firm, and author of The Allocator's Edge.

Welcome back to the show, Phil. Thanks for having me, Dan. Thrilled to have you. Tell everybody where your accent is from. It's very exotic. That would be Chicago suburb. Atta boy. Say bags.

Can you say the word bags? Bags. There you go. No, don't say it like I say it. Say it like you say it. Bags. From Chicago. Bigs.

What? Bags. Bags. All right. Doug Bonaparte is the president and founder of Bonafide Wealth. Not from Chicago. Doug, where are you from? I'm a Florida man.

Say bags. Yeah, but where do you really live? I live in Jersey now. That's right. Doug is from New Jersey. He's an independent RIA focused on serving high net worth millennials and author of The Millennial Money Fix. Welcome back, Doug. Thank you.

All right. Still got more applause than you. I don't know why. Netflix is going to report earnings today, and we're going to get that as we're taping. Are you going to do your typical reaction to it? Well, I'm a shareholder, so I as we're taping. Are you going to do your typical reaction to it? Well, I'm a shareholder, so I'm definitely going to react.

Are you in the stock now? I might overreact, yeah. Okay, what are you looking for? I don't really... I mean, not that I... This is not the... Price go up. This is not the quarter

I'm focused on. This is not the quarter you're focused on. What are you focused on, the next three to five years? Last quarter? I'm a long-term investor. No, I mean,

we're going to get preliminary results of their rollout for the ad services and Latin America and other things. The expectation is that they'll add 4.5 million subs, which would be an acceleration over 2.5 million subs or something. If the stock just went on a great run, I would be very unsurprised if it fell 9% right after earnings.

Very unsurprised. Wednesday is in their top three shows of all time. I don't get into it. Very good. Loved it. Awesome. The Adam family thing, is it good't get into it. Very good. Loved it. Awesome. Adam's family thing? Is it good?

Yeah, it's so good. What's his name? Tim Burton? Yeah. Is involved. He did it. That's his wheelhouse. And the little girl that plays the main character

is an incredible actress. Is it more comedy or drama? No, it's everything. It's horror. It's comedy. It's Jenna Ortega. She's amazing. She's got like, it's everything. It's horror. It's comedy. It's Jenna Ortega. She's amazing. She's got like 100 billion Instagram followers.

She's huge. Yeah, yeah. And then they went viral. There was an episode where she does this like prom dance or something. The Wednesday dance. The Wednesday dance. She's a screamer. It's a throwback.

It's a throwback to. It's cool. It's a throwback to. The show is not a kid's show, but the main characters are teenagers, but it's cool. You can take my word for it. I don't usually like stuff like that. All right. The big thing that happened this week, guys, is that bad news became bad news.

That's my big takeaway. We had weaker than expected economic data on a lot of fronts, and stocks are no longer cheering weaker data, like thinking that the Fed will pause now. Like stocks don't like bad news. The narrative. The way it should be. I feel like that's how it should be. It feels good that bad news is bad news again. Last year was weird.

Last year was like, oh, man, I hope the unemployment number misses or something. It was a bizarro world. It was a bizarro world for 12 months. So it's not that anymore. Retail sales were weak. Manufacturing was weak. Manufacturing is weak. PMI was weak. And stocks went down, went down, went down.

Does that get the Fed's attention? No. No. Not weak enough. The stock market for the last two days? No, I don't think so. Oh, you mean the data that came in? The data itself.

I don't think they're looking at retail sales necessarily. PPI, obviously, sure. Let's quote Nicholas and Jessica Rave from Datatrack. They said, the takeaway from yesterday, take a too low VIX. By the way, VIX was like 18 yesterday. So you take a too low VIX and an outside move in the 10-year, stirring weak retail sales and a growing belief the Fed needs to pivot and soon, and you get today. The only question that matters now is what happens tomorrow and the next week, month, year. A potential other thing that's going on because the market is well off the lows.

Stocks were down like over 1% today and they're down 30 basis points as of 3 o'clock. Our friend Chris Sidial, who does a lot of like market structure, volatility stuff, put out a tweet yesterday. Oh, no, today. What is dropping the market? Is it real recession fears or the OPEX dynamic we spoke about last year? 61% of 1,000 votes in or the OPEX dynamic we spoke about last year? 61% of 1,000 votes in a regular OPEX dynamic. Let's stipulate that a lot of his voters are probably market

structure people and know a lot more about the shit than we do. Well, it's a good thing you brought in two market microstructure experts today. Yeah, let's go deep on this. Hold on, just real quick. So Chris did a paper last year and showed over a three-year period, our backtest shows a 15% loss from buying the S&P 500 during OPEX. So we're in one of those weird periods of time where – OPEX for the listeners. Options expiration. Which is at the third week of – the third Friday.

So there's some funky market dynamics. And guess what? If the market is up 4% over the next week, well, then we could probably safely say it was market structure dynamics. Yeah. I would say hard no. Well, we'll find out. I would say the amount of people reacting to market structure dynamics is very small versus the amount of people that are now fearing a recession

and carrying out that fear in terms of what they're doing with their portfolios. It's not retail, though. It's like positioning shit, but on a very grand scale. And maybe the options market coincides with that. Maybe it doesn't. But I don't know. I feel like people, I think the recession meme is picking up steam again. And I don't know.

I mean, if we continue to get bad data and the Fed pauses, maybe there'll be a huge stock market rally. But then what? So Lizanne tweeted yesterday, or today, even though retail sales lost momentum heading into the end of 2022, they increased by 7.2% throughout the entire year, which was the strongest nominal annual gain since 2004.

So what are you telling people when they ask you what you think of the market, what you think of the economy? Yeah, so as you well know, we're not tactical market allocators. We're strategic long-term allocators. All right, get the f**k out. Yeah, you don't want me here.

So the recession thing, it's like the most anticipated recession of all time. Yeah. Everybody's talking about it. I think there was— For over a year. Campbell Harvey, the father of the inverted yield curve research, even he said, despite it having a perfect track record of predicting recessions, he's not buying that this time

is going to necessarily have the same outcome. Because in his view, if it becomes this signal that everyone's paying attention to, then people start managing risk around it by making changes to their spending or if you're a corporation, what you're investing in. So it's almost like all the preparation and anticipation

will probably, you would think, lessen the eventual outcome, whatever that may be. But so I think, you know, again, it's last year was a really weird year in so many ways. I think it really surprised people that took it on the chin with a big chunk of their fixed income portfolio. You know, that the response now is not to ditch that part of your portfolio. And it's probably surprising coming from a guy who wrote an alternatives book that- Let me ask you a question. So do you get specific questions about what types of alts you're including in allocations and whether or not you think they'll help offset a potential recession?

Are people using alts purely as a way to hedge that possibility? Or are there other reasons for alts in your portfolio? For us, it's mainly looking for different sources of diversification that can be complementary to stocks and bonds. It's now the time to get into chicken nuggets. Yes. So if you look at like, without getting into specifics, there was a lot of different types of alternatives and that's a very broad universe, but there's things that held up relatively

well last year, either with like minimal losses or in some cases gains, like managed futures had a phenomenal year. You know, trend following strategies have, there's a lot of research supporting that they tend to do well in inflationary periods. You have something like, you know, anything with floating rate as opposed to fixed. So like things like direct lending did, did well. So there's a lot of different diversifiers out there that can help in years like last year. You probably shouldn't try to time them. And that tends to be what the industry does. Let me ask you about that. Isn't the worst time to allocate to a specific type of alt right after it just had a great year? Like don't, alts don't trend the way asset classes trend. Alts tend to produce big performance and then mean revert. Or do I have that wrong? It depends because there's so many different asset classes and

strategies. I would say what is common is that you see a year like something like managed futures. We'll stick with that example. Let's stick with that because I think most of our listeners are like aware of like AQR. They have a managed futures fund that did really well last year after a lot of tough years. And there's a lot of different managed futures funds and ETFs, et cetera. and they all did pretty well last year. The challenge is they had a rough 2010s. And so people that allocated to the space post-GFC probably gave up on it in the midst of the bull market of the 2010s and then didn't stick around long enough to reap the benefits. Right, of course. So you have to spend the time on education both as the advisor, understanding where does this go in a portfolio?

How do I size it? How do I properly set expectations with clients? That third one is really good. And then you've got to translate that to your end client in a very simple way, which can be really challenging because these are complex strategies and asset classes. So I would say for advisors interested in alternatives, you've got to be prepared to do the work. You've got to go into it knowing that you're introducing more complexity. You're introducing things that people aren't used to owning. And you can have a really poor experience if you're trying to time them.

So maybe I'm overstating this and maybe I'm not being fair. But like my opinion, most advisors, they look at managed futures as a category last year, went up, what, 35% or something? Crazy number? Yeah. All right. So that looks great in a back test. And if I'm trying to win business from a client who is unhappy with how their advisor did last year, the easiest thing for me to do is bake in a managed futures allocation. That makes my back test look better of the portfolio I'm selling a client in January 2023 as the solution

to why they weren't happy last year. But we know, like, if you do that, you'll win the business and you'll probably disappoint the client. Is that overstated? Is that fair? I think that's fair. For me, it's find within the broad universe of alternatives. Find the things that you truly have conviction that there is some intuitive risk premium that you're earning over time that you think can be dependable to be uncorrelated or lowly correlated to stocks and bonds.

And just be prepared to hold it through challenging periods. Like there is no silver bullet investment that's going to work in all environments. And the same goes for stocks and bonds. I saw that last year. That's investments. What are you telling Ruby and Hazel with these alts? Listen, their NFT portfolio is down bad, guys. Like, my kids don't trust me with their investments anymore.

Rightfully so. Okay. So, isn't the hardest part about being an advisor and utilizing alts, isn't the hardest part, like, explaining and then re-explaining to clients why you own it through a period where it's not performing? Oh, yeah, 100%. Okay. And then the second hardest part is we preach diversification,

but if you buy like five different alts and they all work against each other, like what is the end result for the portfolio? Like you want to not push and pull your own performance. Absolutely. And I would say like you've got to really understand what's under the hood. But, like, when you look at, like, I'll just, for example, use the different kind of core alt asset classes that we utilize at Savant. We have, you know, direct lending.

We have real assets, catastrophe reinsurance, managed futures, et cetera. None of those things have anything to do with each other. And so I don't view those as, like, one's going to do well and be offset by the other one going the other direction. They're different asset classes. They're not correlated. They're not inversely correlated. Yeah, I think if you were to like – but what happens is if you look at the universe of like say multi-strategy, like liquid alt mutual funds, a lot of them have a lot of market beta despite having alt in the label.

So those tend to be the ones that people prefer when markets are going up and they look great because they're going up at the same time as stocks and bonds. Yeah. Hey, look at this alt. It also went up. Exactly. But it's a double-edged sword because then the truly uncorrelated stuff, like you talk about the stuff Cliff and AQR do, that gets really tough to hold because investors often lack the intuition around explaining performance. Well, it's also like in a managed futures fund, you could be short like cotton or sugar. And imagine explaining that to a client that sugar was a big drag on performance. Like what?

My short sugar position. When I think we're like hardwired to want explanations for performance. Yeah, of course. We want to be able to explain like, okay, if stocks were down today, I want my alt to be up, but it's not always going to be up.

And it can be a frustrating experience. And so, but that's what uncorrelation is. And also now there now the need for alternatives has diminished when it's staring us right in the face. It's treasury bills, right? You could finally earn some yield in cash or cash equivalents or short-term bonds. So everyone's all over this trade. There was an article in the journal, Bonds Over Stocks, that people are finally allocating to stocks. We heard that from Schwab. They said that their client allocations to fixed income was up 66% year over year. And there's this great chart in the journal,

and it makes our job a lot easier, showing the amount of allocation that you need to have in bonds to own a 6.5% yield. Bonds are like the new thing. I think they're misusing the word yield there. I think that's a 6.5% expected return.

Wait, what is this? Just expected return to get to a 6.5% bogey. That's what they're really saying. Right. And yield should be replaced with expected return. In 2015, it was impossible, right? We know that we were pushed out of the risk spectrum. 80-20 was the new 60-40.

And now, 60-40 is the new 60-40. We're back. This almost looks like 40-60. I mean, when you hear bonds have had their worst year in a century, how are you not like, hmm, maybe I should buy? Treasury bonds just had their worst year ever.

In a century, like if you're into scooping up discounts and discounted assets, how is this? I think people are going to get bored with this now that the yields have come. The 10-year is what? 3.3 now? 3.3.

It depends what the stock market does. If stocks go up 10% in the first quarter of the year, out of odds, it's the stocks. This is a prime last-year play. You want to go back and scoop up those bonds, and they're probably less attractive now. As a signifier of the new zeitgeist, our friends at Public you know Public?

Yeah. The online – okay. I work with them. So Public just launched. This was this week. They're great. Yeah. So Brooke sent me this.

Shout to Brooke. Shout to Public. They have three million members. This is their press release. Began rolling out treasury accounts. Treasury accounts are a new type allowing members, that's what they call their clients, to invest their cash in US treasury bills

that are automatically reinvested at maturity and can be sold at any time. Publix treasury accounts offer members similar flexibility to a high yield savings account, but are currently offering even higher yields. So basically, not a lot of people understand this, but it's very hard to directly buy treasury bills in a brokerage account.

And they, so they, I would guess, the typical public member is a young investor. 20-something. So they're marketing treasury bonds to young investors. And that's when you know, this is the hot trade of the year, right? It is though. Well, I think it's-

Last year was NFTs. To me, it's a no-brainer. So now it's gone full circle. There's some great cash management services out there for folks that want to keep just true FDIC cash. I know what you're going to say. Yeah, there's groups like Flourish and Stonecastle that are getting – I don't know what these are. What's Flourish?

They basically allow you to – they work with different partner banks to – Do you know them? Yeah, Flourish, Stonecastle, they're the two main ones in the space. So they can get you the highest yield without having to split. Without moving your money around a bunch, you have one account, but they're depositing it

at all these different partner banks and getting these locked-in rates. Not locked-in, it's going to fluctuate over time, but right now you can get, you know, call 3.5% to 4% of just FDIC-covered cash. No, they're 4.15 on the first $250,000 on an individual account. Is it a bank account or a brokerage account? It's a high-yield savings account.

High-yield savings account. Just like Mark competes with Marcus, competes with Amex and Ally. So the thing is when you have an account – let's just use Marcus as an example. When they get to critical mass or scale, they can just like stop competing, right? Because like people, it's inertia, people don't move. So what companies like Flourish will do is they'll basically work with all these different banks and they'll do it for you behind the scenes. They'll do it. They'll jack out the FDIC insurance. Well, the point being like, like not everybody cares that much about FDIC coverage on all their

shorter term holdings. So to be able to do something like what Public's doing is, okay, maybe you got your emergency savings in cash and then go a step above that for your second tier of liquidity and get a little extra yield. I think that's a really smart idea. So people are very sensitive to differences in yield, and they will go through a lot of this extra effort. I'm way too lazy for any of that.

No, I don't think so. People don't move. You don't think people move? No, they don't. They don't. You know how I know that? Because there's trillions of dollars in savings accounts. That don't think so. People don't move. You don't think people move? No, they don't. You know how I know that? Because there's trillions of dollars in savings accounts. That's how I know. People don't move.

It never ceases to amaze me. I was just on the phone with a client yesterday. They're telling me how much cash they have. I'm like, that's in a high-yield savings. I don't care which

high-yield savings account. I don't care if it's three, four, whatever. And they're like, nah, sitting in... Getting 10 basis points. Right, 0.1. That's the huge opportunity. Rather than like, nah, sitting in. Getting 10 basis points. 0.1. That's the huge opportunity.

Rather than trying to squeeze out an extra 5, 10 basis points. There's trillions of dollars. That's a waste of time, especially because these rates are going to move all the time. Just find a place where you're not getting zero. And the bank, wherever you're doing this, they're going to change their mind multiple times about how much yield they want to bleed out

versus keep for themselves. Yes. Right. Like no one's always going to be the highest yield provider. No, and that's why, like just find a provider you like and that gets you materially more than you're getting in your brokerage account just sitting in like in sweep cash and you'll be in a much better. It's called yield chasing.

It's almost like the fire movement people. Like oh, we're going to cheat you and switch banks every day. It's like, look out, it's time. No, like tell their friends that I'm getting 4.11. Yeah, that's insanity. You know, just. you're going to switch banks every day. It's like, tell their friends, I'm getting 4.11. Yeah, that's insanity. You know,

just time for that. Make sure you're not getting zero and then, yeah, just get the leading digit. Well, I'm getting 4.12 and I'd be like,

well, your wife's probably cheating on you while you're doing that shit. Let's fight. Your wife's with her trainer right now. I don't know if you know. Where is the line though? There has to be a line,

right? There's no line. Here's the line. We're going, we don't need a line. You get 2%, but the differences aren There has to be a line, right? There's no line. Here's the line. We're going. We don't need a line. You get 2%. But the differences aren't going to be that big. It's going to be like 10 to 20 basis points.

But some of them tier it. So like on the – and we're talking big sums of money. But first $250,000, you get the $415,000. But then on the next dollar after that, it drops to $25,000. So there you're going to – There's a limit to what they can – Yeah, there you'll open up a different account with a different registration instead of joint like individual

or you'll go check out the other competitor. So I was watching CNBC the other day and they had like the Bank of America fund strategy survey and updates on there.

And it said, contrarian play by US stocks. I said, wow. It's a bold move, guys. Wow. Now it's a contrarian play. So John,

throw up this chart if you don't mind. This is wild. The net percentage of asset allocators that say they are overweight U.S. equities collapsed. Like, collapsed. How do you read this? Negative 40. Negative 39.

Net percentage say they are overweight U.S. equities. This is the fund manager survey. This is an awful chart. Well, the scale is weird. Look at the prior periods in the early 2000s. That was the last big stretch of non-US outperformance. This looks like one of these charts that

you will look back on and be like, yeah, that was the time to buy stocks. Or is this something that economics is going to put in? No, this is not a chart crime. There's nothing criminal about it. Portfolio strategists prefer bonds now too. Like they're in on the same trade as everyone else. Yeah. So economists are not budging.

So we had spoken about the possibility of a soft landing, like increasing Larry Summers was on it this week. Bullard was on it. Economists are still not budging at all. Now they see a probability of a recession at 61%. It was 63% in October. So new data, but same pessimism.

Can I ask you a question? Isn't this in your best interest career-wise to just predict recession? And if it doesn't happen, nobody would be mad at you? That's what I do. Happens all the time. If you go the other way and you say no recession and there is one-

Yeah, imagine being an economist. No one's mad. Imagine being an economist and missing this recession if we get one? Yeah, this is an economist. No one's a second asshole. Imagine being an economist and missing this recession if we get one? Yeah, this is the one that you have to foresee if you're in that business. There's two problems here. Number one, any time that I'm like actually have conviction on something, I'm wrong. So that's how I know.

Do you have conviction that this is going to be a recession? I have stated in client meetings that if we're not already in one, we're hitting one. And I literally say what you said. Nobody – and if I'm wrong, nobody is going to be mad at me. stated in client meetings that if we're not already in one, we're hitting one. And I literally say what you said. Nobody – and if I'm wrong, nobody is going to be mad at me. Yeah, what's the difference? You were being cautious. Smart dog. I feel that way.

Good dog. It's such a – No, no, no. But that's – right. So the – Why would you not set that expectation? The risk is in the other direction. No, recession.

Don't worry about recession. And then there's a recession. You've lied to me. You said there was not going to be a recession. And I'm down. Therefore, you're an idiot. You're the reason I'm down. Is there the chance that this is,

if it manifests, is it going to be more of a localized recession where like right now, all the layoffs seem to be happening in tech, but it's not really affecting other parts of the job market? It's going to. And it's going to happen all at once.

It's not going to be this gradual. Will it happen to everything everywhere? No. One month, all of a sudden, we're going to get shocked finally to the downside by a non-farm payroll report. I don't know if that's in August or if that's in February, but that's how it's going to work. It's not going to be, oh, it's gradually trickling. I just don't think so. What's the relative measure there?

Like use 08 as your benchmark? No, one of these months, they're going to be calling for $150,000, and it's going to be negative $100,000, and that's when it's going to be game on. You might be right. I disagree. And they're going to be shrieking at the Fed on FinTwit all day. Stop. Yeah. All right.

So speaking of screaming at the Fed, so inflation data is rolling over bigly across the board. However – well, not across the board actually because the chart that I'm showing, I think it's from the the Fed. So inflation data is rolling over, bigly, across the board. However, well, not across the board actually, because the chart that I'm showing, I think it's from the Cleveland Fed. Median CPI has not peaked yet. Or maybe it has. So we have corn purple rolling. Cleveland Fed hasn't won a championship in so long.

Green is just headline, and then median is just median. We need more variations of CPI. What is this? You've never seen this? The median CPI? Where's eggs? What's the significance of median?

It's not overweight any one area. Oh, they're taking all of the components and equal weighting them? Oh, that's smart. Yeah. So services, which is what they're worried about, still has not peaked. It's still going up. So goods has collapsed. Energy has collapsed.

But everything else is still kind of rising. Except for eggs. Except for – no. Eggs. I can't have any hog eggs. You don't want to get on it? No. Why is that – I'm not up to date on – why is the egg thing like a running joke?

Because people are like genuinely upset about egg prices. Eggs are cool. No, you and Ben were talking about eggs on Animal Spirits. Because everyone's talking about it. Yeah, it became. It turns into like a meme.

It was like toilet paper in the beginning of the show. It became a meme. Here's my only opinion on eggs. Keep your celery out of my egg salad. What? Oh, egg salad.

I was going to say, who eats celery with eggs? Right? Egg salad is just kind of gross. No, egg salad's great. Well, he's not Jewish, so he doesn't. Yeah.

I'll go either way. As a kid, I would never want that in my egg salad. Yeah, Excel is great. Well, he's not Jewish, so he doesn't— Yeah. I'll go either way. As a kid, I would never want that in my Excel. Yeah, that's right. I've grown up. Now I'm old. I've grown up. I can take a crunch. I don't like—

No chicken salad, no potato salad, no egg salad. No tuna fish? No. Sorry to interrupt your lunch order, guys. Yeah. Fed officials have signaled they don't expect to cut rates this year. Economists disagree. 51% expect the Fed to start cutting this year, although that is down from 60% in the last survey.

Markets are pricing in interest rate cuts this year. Pull this table up. I'm okay with this. So Q1 2024 is when the most people expect for their first break. I don't think they're going to race this year. They're just not going to do it. I think absent a financial crisis, I'd be surprised if they do.

Because they want damage. But why do they not want us off the heroine of QE and zero interest rate? Why do they not want it? Do they want us off? That's what they want more than anything, I would think. They want to be able to have the U.S. economy grow

in an environment where rates are 3, 4. They need to destroy the economy to make sure that inflation is dead. They need to slay the dragon. I'm trying to give them a reason to do it. I think the dragon's dead. My issue is that there's a history of them doing a complete 180 out of nowhere.

May of 2022, last year, literally, Powell said, we are not actively considering a 75 basis point rate hike. Then we got four of them right after that. They were telling us they weren't going to do 70... Will the facts change, sir? Everyone's anchoring so much that they're saying now that they're not going to stop.

That's why they're forecasting. They're not going to stop until they do stop. Their own forecasts are worthless. They've said as much. They know they are. They want 80 all the time. So get enough bullets in the chamber while you can. And can I just say for the record for anyone who's watched this on YouTube, I know this hat is ridiculous.

It's a flat brim hat. I know I'm embarrassing you. Oh, no, we're not doing flat brims anymore. What do you mean? I never wear this. No, but nobody else is now. That's over. I stopped four years ago. You have to put a curve in your bill, sir. But you can't curve this.

We're just no longer doing that. Good. They were so dumb. No, you can curve it. Flat brims are so dumb. Not right now. We're doing something. Do you remember those devices that you put the brim in? Yeah. Yeah. I did that in Little League. There's brim in? Yeah. Yeah. Yeah. I did that in Little League. There's a curver?

Yeah. Yeah. It was a rubber band, right? Yeah. You didn't want to be the kid in the Little League team with the flat brim. No. No, we're not doing flat brims anymore. Okay.

What's this from Ben Johnson, Mike? I don't know. Oh, here we go. This is a good one. All right. So Ben Johnson is, I don't know, he's an investment analyst. He's a VTF guy. He had a VTF research at Morningstar. Ben Johnson is, I don't know, he's an investment analyst. He's a ETF guy. Head of ETF research at Morningstar. I'm not sure his exact title.

Sounds like you're pretty sure. Ben, correct me if I'm wrong. Ben's a great guy. I love Ben. All right. So he had a great chart. Year end, 22 numbers are in. Mutual funds had $958 billion in outflows.

ETFs had $589 billion in inflows. What the hell is this? Tax, loss, harvesting. That $1.55 trillion swing in favor of ETFs is the largest ever. So there were people, to Phil's point, that were stuck in mutual funds for the reasons that he just stated. Oh, they had big gains for years. And so now they switched out of their funds and into the ETFs. They were waiting to switch when it wasn't going to create a big tax break. Has anybody been more right about this than Eric Balchunas?

Like people are saying that like the bear market was going to be like a boon for active. It's just – it's been the exact opposite. No, and the same thing happened in 08 or 09. That was the initial wave of like ETF adoption. Okay, so the reaction – how perverse is this? The reaction to a bear market is even more money out of mutual funds, even more money into ETFs. is even more money out of mutual funds, even more money into ETFs.

But theoretically, the bear market is precisely the moment when they should be taking it in flows because that's when their strategy starts to work. And it has been. After Stonewall. The challenge there is the lines are blurred though.

There are a lot of index mutual funds and like quasi-index mutual funds. And there's now more and more active strategy-based ETFs. So it's hard to just look at like ETF, like the wrapper. Yeah, but we could guess that the index mutual funds were probably not the most liquidated category. People are not, no, it's not Vanguard index funds.

I wonder too, like they don't break this out by equities versus fixed income, but like fixed income for a long time was hanging in there in terms of flows going into active relative to equities versus fixed income, but like fixed income for a long time was hanging in there in terms of flows going into active relative to equities. And a lot of big, you know, core plus funds underperformed the ag last year. And so maybe you're seeing-

Well, guess what? It makes sense to be an active theoretically when you need to like outperform an index that's yielding one and a half percent. Now this would be the environment for active fixed income managers to demonstrate their value over the next, you know. Can I tell you something?

And not to name names. I looked at the biggest active fixed income mutual funds in the world. Like, they're doing 2% a year for the last 10 years. Well, it's tough. I mean, what's the point? Now, there might actually be a point. So, like… I like an active manager.

This is no disrespect, but the benchmark is doing nothing either. Yeah, I'm sure. I'm actually struggling with that a little bit. I've,

I for a long time have always been, you know, okay with an active manager on the fixed income space. I thought there was opportunities for them to actually outperform there.

In which direction? Like take less credit risk or take more credit risk? Well, if you examine like what, most, most active funds over time, this is generalization, but they've basically taken less duration risk,

more credit risk is how they've added up. That's the trade. That's been the trade for so long. Yeah. And so. Which is fine because theoretically they should know which credit risk to take. Right.

Like that's what you should, you should not be paying them to try to outguess what the Fed's going to do. Yeah. It should really be like, these are – these securities we think are less risky than the market is pricing them at. And that should be where the alpha comes from. Absolutely. So that has been the case?

Yeah. Okay. So if – all right. But let's say there's probably not as much fixed income in this chart. It's probably mostly equities. No, no, no, no, no. What? No, because there were charts earlier in the year, there was massive outflows out of active

bondage funds. But again, and some of that could go the other direction. So you think that's a big factor? Yes, I do. There could also be situations where sometimes people want to swap back into the things that they lost harvested once they get past the wash sale period. So maybe they have a bond fund they like that's active, but they went into BND or something like that, and then they're going to swap back out.

If you left a fund and now are in an ETF, I don't think there's any going back. So you sell DoubleLine in December, or you sell PIMCO, or whatever. Go into Vanguard bond, aggregate bond, go into BND,

30 days, 31 days, buy it back. Yeah, you avoid the wash sale. I'm with you. If you like the manager still, you go back. Nobody's doing that. The idea of taxes, harvesting, and bonds is very weird. I can get whatever I want.

People aren't used to taxes, harvesting, and bonds. There are no losses in bonds. Yeah, like the losses were always so minimal. And to your point about like the 10-year period of like 2% returns, like there's a lot of endpoint buys there. Like when you're measuring a 10-year period that just saw 15 percent decline, that's going to have a huge impact on that long-term number. I am known for my endpoint bias.

I think that's been well-established. The bet is duration and there's ETFs out there that can do whatever you want. What do you mean by that? Say more. Figuring out the guess around the Fed. You know, when are rates going to, you know, either stop going up and come down? Yeah, if we knew, it would make our lives a lot easier. Well, it's a bet.

You know, but my point is there's a fixed income ETF to do almost anything you want it to do. But if you want an active manager, yeah, you can go for it. Oh, right. They have like the – they have the target yield. They have target date. Ultra short, mega short. You know, it's all out there. It's been sliced and diced in every way.

You can get whatever you want. So why would you ever go back to the fund wrapper? Well, because you want somebody else to do the backboard. Not a lot of advisors want to make all those decisions on their own. Unless you want active management. And if you're saying, hey, I want active, you got to go for the fund. If your financial advisor has really strong views on timing the interest rate market, I feel like maybe you should consider getting a consultation somewhere else, right?

Just a thought. Well, let me play devil's advocate on that. I'm a certified financial planner. And also, I can predict. No. And I also hate tweeting at the Fed. I can predict central bank activities five years from now. What if you took the Fed. I could predict central bank activities five years from now. What if you took the Fed at their word in the beginning of 2022? You know, Jerome Powell saying, we're going to hike up rates.

Yeah, yeah. You took them at his word. I took them at his word. And I'm like, okay, let's kind of maybe lower. That was a great bet. Maybe lower duration. Well, no, no, no. They were late to the game virtually the entire time.

I bet you we lowered duration before you did. Listen. Badnik? No, Badnik was on that shit. I'm telling you. Listen. Something, something, your wife, you know? Yeah, yeah.

Got it. You shouldn't be trying to outguess an institution that they themselves don't know what they're going to be doing three months from now. No, but I'm skating to where the puck is going. Oh, that's what you're supposed to be doing. But, Phil, to your point, even if I did make that call, but I have a problem now. Not to brag. Not to brag.

But I got to get it right now, the other way around. And that's really hard. While we're on the interest rate discussion, today, double downgrade for Charles Schwab. That's a good call. This is very rare. Bank of America Securities,

which is what we used to call Merrill Lynch, double downgraded Schwab. Double downgrade is like you cut your rating and you punch the CEO in the face. You never heard it? No, it's like you go from buy, you skip neutral, you go right to sell. Dickfold. What was the rationale?

B of A Securities on Thursday announced a rare double downgrade. It's like a triple Lindy. A rare double downgrade of Charles Schwab as the online broker stock fell sharply for the second straight day after its quarterly results. B of A cut its rating to underperform from buy, skipping the neutral rating, and slashed its price target to 75 from 92. Let me tell you the reason why. I know what you just asked me. the reason why i know what you just asked me because about 60 percent of schwab's revenue stems from interest rate sensitive fee streams analyst craig sigenthaler said quote it's arguably

the biggest beneficiary of higher interest rates across diversified financials end quote but the company now faces balance sheet shrinkage as clients take part in cash sorting by pulling deposits out of Schwab and putting money into higher yielding money market funds and bond funds. Schwab was in the pool. Let me finish this. Slower interest rate hikes by the US Federal Reserve will also translate to, quote, a declining tailwind for Schwab. So basically they're saying that clients are going to start shopping for higher rates and that puts 60% of Schwab's revenue, I guess, in jeopardy.

Don't think that makes sense? Again, I'm a bad candidate to answer this question because I just don't know people who are aggressively shopping for higher rates. No, no, no, no, no. That's not what they're saying. They're going to take money out of their sweep account and put it into money market funds or high-yield stocks. Don't you

think the people that were going to do that have already done that? You think they're going to en masse, all of a sudden, start being like, I don't like the interest rate on this Schwab fund. We're the ones to do that. There's such inertia there. That's my opinion. They have to be informed of their options. Yeah, but this guy didn't cut into a neutral. This guy went to a that. There's such inertia there. That's my opinion. They have to be informed of their options.

Yeah, but this guy didn't cut it to a neutral. This guy went to a sell. Maybe he's just a dick. Or underperformed, which means sell. I don't know. My feeling is that

people don't just all of a sudden all do that at once. So what are we talking about here? I don't know. He's right. You got to be in on the know. Someone's got to tip you

off the fact, hey, you got this cash sitting in your sweep account. Now you got to be in on the know. Someone's got to tip you off the fact, hey, you've got this cash sitting in your sweep account. Now you've got to go over to the Fidelity Money Market Fund or the Schwab Fund and go get your 3.5%. So we're one of the advisory firms that actively is sweeping cash. But that's not every firm. No. It should be. It's the right thing to do.

I think most advisors are. Is that now table stakes? To be very aggressively managing client cash balances? I don't want to be ever in the position where there's a big chunk of change sitting in a sweep account getting zilch, you know, and I can go get four on my market. That's just an easy, immediate value-add opportunity. 100%. If a client ever asks you and you didn't do it, you look really bad. If a client's ever like, what is my cash order?

And you're like zero and they go, why? The only, I is not a bad, there's a bad defense is we were, we're, how's your, your way for enough to put the money to work. That's not a defense. That's how you buy it,

but you can't do that for a year. Right. Right. Right. You know what I mean? Like you can't be like, and even if you're waiting, you can still park it in like a money market fund.

That can turn into a bad look. That's the other thing. It's not a CD. It's a money market fund. There's liquidity. You could buy and sell that same day if you needed to. All right. I thought that was interesting.

The rare double downgrade. Can we do some SBF stuff? Doug is a – Has Titus linked to him on abnormal returns? His sub stack is lit. Doug is a Bitcoin billionaire. I don't know if a lot of people know that. No, you're a Bitcoin – you own Bitcoin.

You're not a Bitcoin guy. I'm an early adopter and I own Bitcoin. Okay. Is it early enough that the wipeout didn't like take all of your gains? 2013. Oh, you're fine. I'm good. What are you owning it? 50 cents? $300. Okay. You're fine this week.

But I mine it. Put respect on it. I mined it. I didn't buy it. Fair enough. It's cool. Nerd stuff. Did you mine it using clean energy? We use it on Yeah. Fair enough. It's cool. Nerd stuff. Did you mind using clean energy? We use Xbox. I put my kids on a giant hamster wheel. All right. So there was this whole tweet thread from Bill Ackman about like why he was – he wasn't sticking up for SBF.

He was just like, hey, let's not condemn this guy. He's innocent until proven guilty. And then he doubled down on it. And I think a lot of people were like, dude, what is wrong with you? What is there to gain from it? Well, he came out with his explanation and I read the whole thing

and I thought it was pretty good. We're not going to scroll through all the tweets. Why did we pull up this one in particular? Because why not? No, all the way up. Other way. Other way. No, it's not oh my

god this is quite the many have expressed surprise about my interest in the ftx situation and my openness to the possibility that sbf may be telling the truth as i have no economic interest or relationship with any of the parties perhaps some background and then he tells this great story. 20 years ago, he was like putting out – he was selling MBIA, which was like a mortgage bond situation. And he was basically – made the case that they were engaged in fraudulent activity. And he got his – he got his ass kicked by Elliot Spitzer. And they investigated him and he was telling a story about how like

because he was in the newspapers like people were pulling their kids away from his kids at school so he's just like I know what it's like

to be wrongly accused of something and maybe maybe he's being correctly accused but like that's what that's what court is for

I thought this was reasonable he's just I agree I haven't read the whole thing I'm sure no he's just saying like like rule of law type shit. Yeah. He's not saying that's Samsonism.

I just don't know. Why go out of your way? Why hang your hat on this one then? Why was this your moment to use your story as a way to say, hey, let the justice system work? That's the one thing I would say. Well, for the content. Everyone's in the content business. It's not just thirst, man.

It was pure thirst. Or if he comments on some like alleged criminal that no one's ever heard of bill got thirsty that day went to twitter and and now he's shows sbf you know to tell this story hold on it is often years before a case is finally decided the accused are owed the presumption of innocence during this period. And from a personal perspective, it sucks. You are treated like a crook. I remember the other parents pulling their children away from me and my daughter at nursery school drop off when the Spitzer news about me dropped. I will never forget.

And I was lucky as I had the resources to hire good lawyers and defend myself. The way that story ended is that MBIA was a fraud. And defend myself. The way that story ended is that MBIA like was a fraud. And I think he – I don't think Spitzer apologized to him. But somebody apologized to him that was investigating him or something. But these are apples and oranges. That's almost like you got AG and professionals.

Like you're going to apply that to SPF and all the stuff we got out of this. Absolutely. That party is off. You're right. Why? I mean it's just apples to bananas. Who wrote this? You know how there were people who supported Dahmer in jail? Gives me those.

Was that you? Yeah. It's weird that he chose this one because this kid very obviously created a hedge fund and then allowed the hedge fund to suck all the money out of it. I'm tired of being gaslit. You know, like stop it. This one's like obvious. Yes.

Stop it. You think O'Leary is sending letters to SBF? He's worse on this. Fan mail? He's worse on this. Why? Kevin's not defending SBF anymore. Not anymore.

Kevin's saying I got robbed. Up front. At the beginning. At the beginning, I didn't like it. At the beginning, so did Scaramucci. I think there was like a shock. At the beginning. At the beginning, I didn't like it. At the beginning, so did Scaramucci. I think there was like a shock because this is not like an internet scam with the Nigerian prince. They hung out with this kid.

Scaramucci just did a whole podcast with Ted Seides. Oh, I got to listen to that. This week where he talked about the whole situation at very great length and detail. It was actually like a good interview. So I think they were in shock because they went on like business trips with this young man they went to like dubai all over the place so after after made off after 2020 to 2022 if there's any lesson i've learned it stop being shocked at crazy shit that's going but nobody thinks that they're in business with bernie made off you would not you would never do business with anyone again if your baseline expectation was I'm in business with somebody who theoretically could steal $50 billion. It's impossible to imagine.

You want to be shocked over how much money you just got defrauded out of. By all means, yeah, I'd be in shock too. I can't relate to that. So on that note, sure. I don't think anyone, even the people that are saying he has the right to a trial, blah, blah, blah. I don't think anyone thinks he's innocent. Didn't they indict him today? Did you just ask for the check?

Another water. Oh, all right. We have 5,000. I was trying to be discreet. But I think they indicted him for defrauding FTX investors today. Who? Sam. Oh, good.

No shit. Yeah, no shit. This is my favorite story of 2022. David Einhorn had a huge comeback last year. And maybe not like making as much money as he probably used to make because his fund has shrunk. But I love that this happened. And I want to go through this a little bit with you guys.

What was his 2020 and 2021 like? Horrible. Everything's horrible. Well, no, I think in 21 he made money, but like- 2015 was when he started talking about the bubble basket and then fan mag became a thing. A little bit early. I think his peak was 2014

and then it all started to go wrong in 2015. Last year, Greenlight Capital did 42% gross of fees and 36% net of fees for 2022, which is amazing. One of their best years ever. And I just want to read a couple of things from this and then hear what you guys think. I like the formatting of this in the doc.

The real story of the year is 51 points of alpha. I hit 52, not to brag. To put that into context, in our worst year, 2018, we had negative 29 points of alpha. In 2001, our prior best alpha year, we had 43 points of alpha. Phil, can you explain when they say points of alpha, what they're really saying and why that's so important for the end investors in hedge funds? Yeah, I mean, that's why a lot of investors are seeking out hedge funds. They want better than market performance, especially from a long, short equity type fund that should over time outperform the market. And so that's very important to them. And so that's

what they're measuring is just how much did they deliver relative to what the S&P is. If you're an institutional investor- Why would you pay two and 20 to a stock picker if you didn't think you were going to get some material degree? But if you're an institutional investor or a family office and you allocated to David Einhorn and in 2021 he just bought the Qs on triple leverage, you still made a lot of money. Do you really care that it wasn't alpha? Does that really matter? Yeah, because if you're paying a lot of money, you shouldn't be overpaying for beta.

Right. So the returns aren't necessarily the returns in the eyes of the end client? I'm sure there are some that sort of just look at it that way. Others are going to – if you're paying a decent amount of money for some kind of investment, you want to make sure that what you're getting is not something that you could acquire very cheaply elsewhere. Without paying the 20%. Yeah. Okay. This is David. 2022 was an exceptionally good year, in many ways our best ever,

and is most comparable to 2001, the year after the last tech bubble popped. Before going into the glorious details, let us simply say, we are probably not as smart as we appeared in 2022, but we are probably not as dumb as we appeared in 2018 either. The market environment, as we have been highlighting, turned extremely favorable for our strategy in a period that immediately followed one that was extremely unfavorable for our strategy. That's the most legit performance explanation from any fund manager I've ever read. Yeah, and I think with something like long-short equity, in addition to just how they're doing relative to a benchmark like the S&P, you've got to understand what are their intentional or unintentional factor exposures to it.

Because ideally, if it's true alpha, it should be coming from security selection. If they're just overweighting value stocks, you can go buy a value ETF. You know what I mean? So it's not about just like – alpha is not just like my return minus what the S&P did. Right. You have to kind of neutralize some of those other things. It's the source of the return and the way the return was earned. Right.

And there are people that pay very close attention to that. And that's what real – real alpha is very, very rare. There's been a lot of research on this. There's tons of competitions in the, in the hedge fund world. A lot of alpha was made in the early days and then it got, a lot of strategies got kind of arbed away. So there's still some valuable hedge fund type strategies. It's just the, the, the like kind of pure alpha, it can be very fleeting. Um, and it can be all over the place. Like you're no one's, no one's getting it year in, year out. So I think it's a very tough space to allocate to. So AUM for Greenlight in 2014 was 12 billion,

which I think was the peak. It's 1.4 billion right now. 1.4? It's one of the most incredible. Oh, wow. That's why I love this story so much. Think about what this guy has been through. I want to read this really quickly.

We are grateful to those of you who have stuck with us. We are pleased to be able to reward you with a good year in what for most was a difficult environment. We have learned a lot in this period and hope to continue to reward you. However, most did not stick with us and understandably so. The results for a sustained period were unattractive. For us, it was challenging to remain disciplined. Some have called us stubborn by refusing to make investments that didn't make sense to us. Many investors that have historically had a value bent either adapted, retired, or went out of business. Value investing as an industry is unlikely to ever fully recover. The outflows into passive

and other strategies were debilitating. Perspectively, we think this is a positive for our strategy. We face much less competition. But here's the thing, and I'm happy for him too and his investors. By the way, he said he's cumulatively earned $5.2 billion. By the way, 36% net of fees. Which is incredible. $5.2 billion cumulatively. How do you stick with that performance since 2015?

It was horrible. And all credit to him. He never shut down and started up another one. Well, nobody stuck with it. Because if the fund is 1.4, how much of that is his money? It's over. It's high watermark finally. Which is a bit surprising because a lot of hedge funds just converted into family offices.

Just shut it down. But the brain damage to stick with that year after year after year, that is a long time. How about his employees who stuck with him? That takes balls. Like how do you explain no performance, no carry? Right. Like you have a wife. You have kids.

If you work there, let's assume you live in Manhattan. Your kids are at Horace Mann or some ridiculous place and the expectation is Ivy League. You know what it costs to keep a car in Manhattan? Like so think about the guts that it took. If he has people that stuck with him through this whole period,

they should be like, he should be forever grateful. Big cash bonuses. I hope they got a nice investment. So here's the question. So here's the question. Like $11 billion left and understandably,

and he even says understandably, would you take any of them back if you're a green light? Would you take these? Anyone that left, would you take their money back? Yeah, everyone gets a second chance. Really? You'd feel that way?

I mean, if you're trying to grow the business. I know you wouldn't. Oh, no. Okay. Oh, I would be stapling the fucking Q1 letter or Q4 letter. I would be stapling it to the front of their house. Broad brush. You know, there's a lot of stories and reasons and friends.

You call me a broad brush. You're the broadest brush. Go on. It's a title for the show. Yeah. So somebody was like, hey, David, congratulations. Sorry I gave up on you. You really are the GOAT.

I'm sure there are plenty of examples. Here's $300 million. Yeah. Maybe give him a different share class that locks him up for like five years. Yeah. He should have like a share class for cowards. Yeah. Maybe give him a different share class that locks him up for like five years. Yeah, he should have like a share class for cowards. Yeah, C class. C class. Yeah.

No. I don't think I would take even a dollar of a bath. From anyone, no matter how heartwarming or – not heartwarming, but no matter the story. What's the story? You bailed on me. I have to pay tuition at Horace Mann. That's not the people pulling money on you. I know, but I would imagine you wouldn't say no to everything.

You know what he should have done? Tell me. Here's my advice for a billionaire. Instead of flirting with maybe buying the Mets, he should have just bought an insurance company. And I know they started an insurance subsidiary or something. Should have actually bought

like a property cash when he was at 14 or 12 billion. Also, a lot of that 14 billion dollars or whatever was institutional money. It's not just like high net worth investors. No, most of it is probably institutional.

Well, any institution, I mean, they're like everybody, notorious for bad hiring, firing decisions. So, to your point, easier to like have those feelings about an institution than individuals. I think if you had lived through that as the manager, you might feel differently about letting people back in. I know it's business, not personal, but everything's personal.

Yeah. So anyway. All right. Let's talk about wrestling. WWE is up for sale. You're like a wrestling fanatic. Yeah. Is that overstating it? No, it's probably understating it understating it say more go on look behind you you have a Goldberg action figure that I brought here last time I was on the show it's part of the set now

uh no it's been a big part of my life did you bring that here because it's the only Jewish wrestler that's what I gave to Ben okay I think I got you John Cena because of the hip-hop uh connection we'll take it uh yeah I mean since I was a little kid just like big part of my life i was always fanatical about it but yeah it was like the news so vincent man kind of wrestled his way uh back into the company yeah i don't know if you saw that like he left pretty uh stock the stock collapsed he came back he's 77 years old no well stock's been ripping but yeah it was time for him to go away. And there was, you know, like external reasons as to why they kind of forced him out.

He had like a Me Too thing going on or something? A lot of NBA stuff. It was hush money. They don't like that. Yeah, to several women. But he is still the largest shareholder. So he worked his way back into the company and intentionally with the idea of looking to sell it or somewhere. So I don't believe that he'll go away.

I think anyone he sells it to, the contingency is going to be like, I'm not leaving though. Right, and that's the worry is that he's going to sell it to probably the wrong bidder who was willing to put him back in charge when no one really wants him. He's going to sell it to somebody in Saudi Arabia. That was the rumor last week. But Nick Khan,

the CEO, was on Bill Simonson. Yeah, that got debuffed. But that was... My heart almost dropped when I was on Twitter last week and I saw that they might

be selling to the Saudi... I thought that was actually what's going on here. But the Saudis, if they buy it, they don't care about him hooking up with girls and signing NDA.

They don't care. They bring back the from the creative point of view as a fan i worry about the creative like the creative improved improved after he left um triple a triple h was his son-in-law was in charge the product got a lot better and it was it was like kind of those things like like vince mcmahon like total visionary was creative genius i think he lost a step or two in recent years. He's an older guy. So how did he get back in if things were getting better? Well, he said, I'm back.

I'm back. This is my company. So I think the most natural. He basically stated he was coming in to help them with their rights renegotiations and to look for a strategic. Sorry, when did he leave? Six months ago. Yeah, about six months ago. So I think the obvious buyer potentially is Amazon.

I think the most obvious is Comcast. I mean, all of their content is on Peacock. So they have a big relationship there. Monday Night Raw is on USA, which is owned by Comcast as well. But there's plenty of potential. But I said Amazon because they're obviously very active with the NFL right now. And there's such a huge premium for live entertainment. Yeah, and I think it's a very unique form

of entertainment that's really hard to compete with. And you have such a loyal fan base. I think it's a very, very valuable piece of intellectual property, much like Marvel or Star Wars or whatever it is. You know who competes with WWE? Trump rallies. Same energy. Same fans. I dispute that.

Okay. I knew you would. What's the market cap? No, if you put a Trump rally on up against, what's WWE's biggest event? SummerSlam? WrestleMania. WrestleMania. You know this, come on. I'm pretty sure you would hurt the ratings. No.

No. You don't think so? I don't think so. Absolutely not. I'll just go back and shut the fuck up now. Kids love this shit. I took my kid a few years ago to a WWE event at Barclays. Awesome.

Holy shit, it was incredible. Yeah. Yeah. And I didn't know any of the—all the wrestlers—like, my wrestlers are all dead and in jail. But, like, the fanaticism in the crowd was amazing. There are no sporting events where people are this nuts. Right. And there's such value to that brand.

Maybe college football. To have all that content history that you can go back and archive and watch the old – It's just a very rich content library. A lot of great merchandises and saying – I do worry, though, that any buyer is going to, over time, mess too much with the product. How big of a business is this? I was going to say, just to give us a sense of the scope of this versus like the NBA. So the Phoenix Suns, which are

like a definitely mid to top tier franchise, just in terms of proximity to the West Coast and the city. The Suns just sold for $4 billion. Obviously the Suns are one team, one out of 30 teams. The WWE has a

market cap of 6.6. That seems undervalued. But I don't know what the financials are. Is it? I think they had their best year ever. They did. In 2022. And what's awesome-

They do a billion dollars in annual revenue? Is that the number? I think it might be. Sounds right. So the Phoenix Suns are not doing a billion dollars a year. And like any sport, there's an off-season. Wrestling is year-round. There is no off-season.

And so as a fan, there's no waiting for the next season to come back. It's annual. Do they still do the Divas show? No, they do not. Oh, okay. You like lady wrestlers? No, I'm saying, like, is that— That show is great.

You're going to get him in trouble at home. Yeah, no. No, I watched it with Heather. Who else could be a buyer? It's not going to be Apple. It's not going to be Disney. You know, Disney was rumored, actually. I think it would make sense. Their content's probably a tad raunchy

for the more family-friendly stuff. There are a lot of private equity firms that are big enough to do this. People are saying Endeavor might be interested. I would love nothing more than to see The Rock. I'd like to see The Rock and one of his PE partners. Ari Emanuel owns UFC. This would be a natural thing to slide in next to it. Yeah, they've been rumored.

Are they big enough? I guess they could borrow some money. They could borrow money. They could get backing to do it. For anything to work, you have to keep the wrestling people in charge you can't put like normal tv like hollywood entertainment people in charge of the content the creative because they don't understand the business and they would they would ruin it what

would they why they would like do too much playing up storylines and not enough of the actual sport it's just it's just such a different dynamic than like like producing a you know a sitcom or a drama on tv it's just like you've got fans there that are this source of feedback every night. So like things change on the fly, like plans change in terms of which wrestlers are getting pushed or pushed up or down based on crowd response and all these things.

You throwing your hat in the ring? You think you could do it for the job? Why do I, wait, why do I feel like it's the same, the same people on top as were on top 10 years ago. Like Roman Reigns, Brock Lesnar. I've been hearing these same names for maybe 15 years. The ones that become the megastars, they do stay at the top for a while. Like Cena was on top forever, but he's pretty much gone now.

He'll come back like once a year, maybe something like that. He's a legitimate movie star now. Yeah, he's going the rock path. Roman Reigns is top he's, he's going, he's going the rock path. Roman Reigns is top guy now, but even him, he's starting to scale back. I could see him go on the Hollywood route at some point. And so,

but then you've got other guys that are probably not going anywhere anytime soon. Like, like Cody Rhodes or Seth Rollins or other names that are maybe not quite household, but they're kind of at the top of the card for fans. Yeah. Okay.

Uh, it'd be cool if the rock found a way to buy this. So he's – that would be my favorite thing. Amazing, right? What a great story that would be. There's a rumor he's coming back for one more match at this year's WrestleMania in April. Dude, he should unveil – It's at SoFi Stadium.

He should show up with like private equity guys in the ring and like sign the deal. Well, well, well. Let me break in with Netflix. Up 8%. Are you winning? On news of acquiring. Where is it? It's up 8%. What'd they do? Give it to me break in with Netflix. Up 8%. Are you winning? On news of acquiring. Where is it? It's up 8%.

What'd they do? Give it to me in points, please. Stop. Netflix. In bips. Can I have that in dollars? Anyway, carry on. Let me see what's going on here.

All right. What is this Unify by CAIA? Tell us why you're excited about this. Yeah, thanks. So my reason, my primary reason initially for coming to New York this week, in addition to the podcast with you guys. 7 million new paid subs versus 4 million estimated. Huge upside surprise.

That's down to 1,400. This is important. So in addition to doing the podcast yesterday, I'm part of an advisory council for this new program put on by the CAIA Association, which is C-A-I-A, which stands for Chartered Alternative Investment Analyst. It's a big designation, much like the CFA or the CFP. Is there wrestling? There's no wrestling involved. That's one of the downsides of it.

So the traditional CAIA designation, very intense, a lot of time and hours you'd have to go into getting it. More for the true analyst type of person. For a financial advisor, they're building a program that's more geared towards client-facing advisors who want to become more competent in the world of alternatives, especially if they're using them in client portfolios. They want to teach them just enough to be dangerous. Yeah, exactly. Get them a nice foundational piece of knowledge base. And then, so the way they're structuring it, there'll be like a foundational certificate you can obtain, as well as these micro-credentials they're building on specific topics with an alternative.

So a couple of the micro-credentials are getting close to launching one this quarter, one next quarter. First one will be digital assets, then private debt. So really cool group to be a part of. So that's called Unify? Unify, U-N-I-F-I. Really cool program. The full program should be available kind of end of this year, beginning of next year. But they're going to start with these micro-credentials early this year. So you see financial advisors going out for this credential primarily?

I think this will be something that a lot, especially larger advisory firms that are allocating to alts and their models, they're going to want their army of advisors to be equipped to have these conversations. So I could see big RAs putting their whole roster of advisors through this program as a training and development exercise. You should use me and Doug as guinea pigs. Absolutely. Tell us which one we should go for. I'll do it for free CE. It's a really great group. Which one we should go for? I'll do it for free.

I'll do it for free CE. It's a really great group. A lot of the like kind of heads of alternatives type roles that your big asset managers like BlackRock and Vanguard and JP Morgan, et cetera. So sharp people. We're helping design the curriculum and the content and really excited to see what that looks like.

All right, let's do some business. What is Kaya's annual marketing budget? I don't know. All right, make some phone calls. You guys should unveil this at Future Proof. Cool. Let me talk to the kind of folks and see if we can do something. That'd be awesome.

So we launched Future Proof this week. You guys going to come? Yeah. My whole family's coming. Are you in? Oh, nice. Really? I'll be in.

I'm going to leave myself in Cliff. I'm going to leave the kids at home. Okay. But we're coming. Bring in numbers this time. It is going to be even better than the last one. I mean, how sick was Big Boy? Were you there for the concert?

Didn't you call him Mr. Boy? I called him Mr. Boy. Oh, Mike. That's not fine. We got to meet him backstage, and we do pictures. He's like- He was a man. Put his finger up.

He's like, one sec. And he tells this guy, pass me my stunner shades. And I was like, oh, my God. This is the greatest moment of my life. Michael goes, thank you, Mr. Boy. It was very nice to meet you. It was great. It's going to be even better next year. Michael was like, Mr. Boy, this is the greatest moment of my life. Michael goes, thank you, Mr. Boy. It was very nice to meet you. It was great. It's going to be even better next year. Michael was like, Mr. Boy, what tunes are you going to play for us?

Stop it. I know the hits. I know the hits. What jams? Who are we getting this year? Can we say who we want? No, let's not. No, let's not do that. So it's going to be, everything's going to be like last year, but better. And bigger. And bigger.

Huskier. Huskier. Huskier, you might even say. Future-proof 2023, if you work in fintech, financial advice, wealth management, asset management, really anywhere in the industry, and you're not there, I don't really know, like, do you even exist? Right? Like, that's how I'm positioning this. So I hope our listeners who are professionals make sure that uh they get registered because it's gonna be amazing and uh i think i think one of the big things we're gonna do this year is like give people space that they

can like answer emails and work like like somewhere you could plug a laptop in and not have to go back to your hotel room like somewhere you could so're going to build some stuff like that. Good catch. Yeah. Just like basic stuff that we learned from last year. More clarity on who's speaking when. If that was your biggest issue. For it to have been a first-time event like that, it was an absolute smashing success.

It was awesome. You guys all crushed it. We had Matt Middleton here this morning just going over plans for it. Like you have to understand. I grew up in the wealth management profession. And I, from a very young age, would go to conferences and literally be mean mugged by like 70 and 80-year-olds. Like pissed I was even in the same room. Yeah, how dare you ask a question.

Were you sneaking into panels when you were 10 years old? How dare you? Were you sneaking into smart beta panels? Yeah. No, I'd have a – like this is before – He was like almost famous. Listen. I would be on a laptop like typing up notes or doing something,

and people were like, could you stop typing? Like before you bring laptops in. I was a college kid, and I told you to your face when we were there. I said, look around. We were having drinks. Look around the room. Everyone was like younger than me. And I just thought that's how I, that's how you know. You thought you were the millennial advisor. Dude, I had Gen Z advisors. They were like, I'm just like, who, you know, like, wait,

what's the oldest Gen Z? We had advisors in their twenties. Yeah. Like 24, 25 year olds saying, Hey, I'm just like, where did, and it was just – It's the coolest thing. We had advisors who were born right around the time I got my Series 7. I think just conceptualizing that for me was really cool. Cliff is freaking out to go. He forwarded me every email that came out yesterday. I'm like, Cliff, settle down, buddy. We're going.

It's all good. Clips, settle down, buddy. We're going. It's all good. Let's do this thing about inflation impacting 92% of millennials' home buying plans. So, Doug, you're the millennial expert. You're known for being the advisor to millennials. I'm a relatable millennial guy. Tell us what's going on.

Yeah. So, rising rates ain't helping matters when it comes to buying homes. You know, what I'm seeing is not a lot of price action on the downside. So now, if it wasn't hard before, it's even harder now. So it's just been very frustrating. But aren't you bidding against less other buyers? Yeah, but the inventory hasn't really, you know, and I'm primarily talking about like prime markets,

like outside major cities and forgive my geographic bias to like the New York area or outside, you know, Miami or LA and stuff like that is typically where, where my clients are. So, um, it just haven't really seen opportunities for people to come into the housing market and feel like they're either getting a deal relative to how crazy things were a year or two ago. It just hasn't gotten materially easier to buy a house or put 10% down. You can't even do that. Right. So the financing cost is up, but the price is not down enough to offset that? Right. So you still have big down payments to make. You still have to come up with a shit ton of cash on arguably still overpriced residential real estate. It just hasn't gotten – whether it's gotten harder is one thing.

It just hasn't gotten easier. And everybody wants it to be easier. A thousand millennials looking to buy a home were polled. Yeah. Looking to buy a home in the next year specifically. Yeah. More than 9 in 10, 92%, say inflation has impacted their home buying plans. You had no shit.

More than 1 in 4, 28% delaying their home search due to it. So, yeah, I guess that's just the reality of life. It just sucks. Yeah. It just sucks. There's not a lot you can say about it. Well, the good news is rent is going up. So, there you go.

Yeah, like we bought our first home in 20 late 2018 I just feel so like thankful and fortunate like I didn't have to when 2018 yeah

2016 you just like don't control the timing of your life when you're doing this when you bought your house when 2018

when did you buy your house oh wow a year later so here's what I do I talk to young people about this issue and I sit them down and I say

none of this is true by the way no I do I do I will talk to young people about this issue, and I sit them down, and I say— None of this is true, by the way. No, I do. I do. I will sit them down on my knee, and I will— He crowds them out with his elbows. And I will say, Jaden— Tristan. Just understand, like, as bad as things seem right now, it could always be worse.

You could be Duncan. Duncan is renting an airbnb all of his earthly possessions have been soaked i heard this last week i'm so sorry to hear that so i so i just say sorry duncan understand that there are levels there are levels what are we doing now what is what's your story yeah i mean i was just gonna say luckily our personal property is mostly okay it was just stuff on the ground got messed up. So like what? Like furniture? And rugs.

And yeah, not much furniture, actually. But it's more just the pain of having to be out of it. Did the rug tie the room together? Yeah, the rug really tied the room together, dude. But yeah, the remediation costs is the craziest part. But why do you have to bear those costs? It's our insurance, technically. But our renter's insurance is capped.

And yeah, they're wanting $17,000 to move our stuff out. That's insurance fraud. Are you going to go back or are you just going to find a different rental? I'll do it myself before I do that. Before you do what? Pay that much. I'll move the place out myself. Right, but you're not going to go back to that building? I'm supposed to. They're not letting us out of our lease.

You've got to be kidding me. Do you have an attorney? No. Do I seem like someone who has an attorney? John, are you giving him any advice? Yeah, as much as I can. Are you telling him to get a lawyer? How many people do you need to hear this from? Dude, let's get this sorted out off the air.

All right, we're going to fix it, Duncan. We're going to fix your situation. They can't do this to you and then take advantage of you after the fact. I might actually pro bono come back to legal work just to take this case. Wasn't Barry a lawyer? Yeah, Barry was a lawyer. You know what? I got a lawyer for you. My cousin Barry.

Better call Barry. My cousin Barry. Barry's going to insert himself in this situation. And I promise you'll be happy with the resolution. I guarantee it. So Reed Hastings is stepping down. He's going to become chairman. He's been doing this for a long time.

Smart move. Ted Sarandos is staying in as co-CEO. And the COO is becoming co-CEO. Wait, they're going to have a new CEO? Well, Ted Sarandos and Reed Hastings are both co-CEO. Wow. Reed Hastings is becoming chairman and somebody stepping in. How do you feel about this as a long-term shareholder?

I feel good. I feel good. You'll be out tomorrow. How much you up percentage-wise? 50? 40, 50? 50%? Look at you.

I sold it early. No big deal. I blew it out last week. I let my winners ride yeah I like to I like to make sure I get rid of my winners

very quickly you need to trade alright we're gonna do favorites did you guys have fun today blast are we gonna do it for real now or yeah

hold on hold on wait a minute say this for us Rodia I thought I'd get like a jack can I start now you know I listen every week Michael you're going first.

So last week on the show, I think we spoke about Domino's delivery pizza. Ivan has... Doug is shaking his head aggressively. No, I love it. So Ivan had Domino's in... I guess since he got kicked out of college, which was a long time ago.

And I was in Minnesota over the weekend and I was so excited to get Jimmy John's. I'm a big Jimmy John's guy. It was close, like 8.30. I don't know what that is. It's just a great sandwich place. It's a sub shop.

You don't know what Jimmy John's is? No. They don't have them out here. And so the only thing that was open was Domino's and I was all in. See, that's fat. That's fat privilege right there.

You don't know what Jimmy John's is? Why would I know? I'm from Long Island. I assumed it was a national chain. No, it's fat. That's fat privilege right there. You don't know what Jimmy Chart? Why would I know? I'm from Long Island. I assumed it was a national chain. No, it's not. Okay. So anyway, so we got Domino's. It took two hours to get delivered.

I fell asleep. My friend has a wake me to get Domino's, and it was disgusting. I thought you were going to say it was good. I always liked Domino's. You guys are right. It's good. No, honestly, I'm going to say this was an outlier because I am on Team Domino's. I f*** with Domino's. You guys are right. It's good. No, honestly, I'm going to say this was an outlier because I am on team Domino's.

I f*** with Domino's. This was terrible. It was really bad. Domino's tech. I'm really sorry you had to go through that experience. Thin crust,

it was horrible. Oh, thin crust is your first mistake. Thin crust is the way to go. Thin crust with pepperoni. I'm not a thin crust guy. Oh, good. And we got cheesy bread.

Hello. When I want cheesy bread, I want the sticks. I want the sticks. I want the sticks with the cheese melted on top. Yeah. Sauce on the side to gunk.

This came with a f***ing vat of sauce with the cheese on top. It was disgusting. Oh, that's terrible. Sorry for your loss. But anyway, it's my least favorite.

Maybe if you ordered correctly. So I know everyone put this in the doc, but let's just take a second and talk about The Last of Us. And I kind of thought that they were going like Walking Dead.

This was f***ing dark. It was awesome. It was so good. Super dark. No, I don't even know what it is. Watch it on the plane home. Do you have HBO Max?

Yeah. All right, watch The Last of Us on the way home. It's going to be a grand slam. Everything they do is- I have not gotten it out of my head. It's amazing.

Give me more now. You know what I did? Everything they do. I went back and watched the first Walking Dead to compare the two. How to back and watched the first Walking Dead to compare the two. How to stack up. The first Walking Dead, the first half hour of the first episode was great.

But then it started to get like cheesy a little bit. This like every frame of the show was like really well done. No, because they're professionals. It's HBO. It's HBO. Complex did a side-by-side of the game and the episode. What's the game called? What do you mean?

Is the game called The Last of Us? It's called The Last of Us. Oh, I didn't know that. It's based on the game. There were some scenes that they were filmed exactly like the game. Yeah, it was when he was on the couch. Oh, yeah? It was identical.

It was so cool. So even the first scene in 1968 was incredibly written, right? Where they're just talking about the fungi or whatever. Yeah, yeah. So good. So we won't spoil it for anyone, but the girl is awesome. Game of Thrones. Right.

She was the girl in the last couple seasons of Game of Thrones that was the last to represent her house. Yep. And she was a total badass. She's the best. She's a really good actress, it turns out. Not just good in that role. And what's the guy's name? Is it Pablo Pascal?

Yeah. Pedro. Pedro Pascal. Pedro Pascal. Pedro Pascal. Mondo. The way that they messed with him to be older and younger, like the flashback, like holy moly. Anyway, it's like apocalypse stuff.

I don't know if you're into that genre. But it's zombies. I'd probably like it. My wife would hate it. My wife said I'm out. Heather can't get enough. Oh, Sprinkles is watching it. Yeah.

It's so fucking good. But it'sinkles is watching it. It's so f***ing good. But it's zombies, but it's not like zombie porn. It's not only zombies. No, it's not. No, it's not traditional zombies. Got to stop. I'm getting too excited. It's like a fungus parasite that just makes people crazy.

They don't look like walking dead zombies. It's not like that. Dude, I got friends recalling shit. You had me a fun guy. I got friends recalling shit from the game and they're like, when's this gonna, it's getting-

I'm a fun guy. Awesome. So I think all around, we're all in on The Last of Us. I was all in from the trailer. They said it's the second biggest HBO premiere of all time. Did you see that?

Yeah, it's smash hit. It's smash hit. Yeah. It's not crazy because people love End of all time. Did you see that? Yeah, it's smash hit. It's smash hit. Yeah. It's not crazy because people love End of the World. The biggest- As like a subject matter. People will-

They'll always give it a shot. If that's the plot, I'm in. The best takeaway I saw in an article was like, this has now set the tone for video game to movie here on out.

You're going to see more of that. I disagree. Historically. It's impossible. It doesn't work. Although the new Super Mario Brothers looks very good. Set the tone of how to do it right and blow it out of the water. You'll see a lot more.

HBO can only do so much, and everyone else is going to f*** it up. It's Mario, by the way. That was my favorite. I would just add to that. So I am a Gen Xer. U2 is putting out some new music. They're taking 40 of their best songs

and redoing them. They're basically like, when we wrote these songs, we were in our 20s. We were young men. And now these songs have different meaning to us. And they want money. Changing the lyrics?

They want money. No, not changing the lyrics. They redid Pride in the Name of Love. And they put that on Spotify and Apple Music. So what's different? One song. Go listen to it. Okay.

I'll be honest with you. Not a huge YouTube fan. Are they going to put this on our phones without us saying anything? Saw them twice. Yeah, they're going to insert it directly into your AirPods. I can tell you. You tell Bono went on a rant for like 15 minutes. He's one of the greatest bands of all time, honestly.

I'm not here to say. I get it. You know what else he's doing? Not my thing. all time honestly I'm not here to say I get it you know what else he's doing he's doing I might have to go to this in April he's at the Beacon Theater

11 nights doing like he has a book coming out in March so he's doing like what Springsteen did like a one man show play some music

tell some stories I might have to go Heather said that Springsteen that'll be hardcore Gen X like that'll be hardcore Gen X like that'll be

the whole audience will be 100% yeah yeah alright Doug hey we need your favorite

what do you got oh let's talk about The Last of Us again I would I would I want to something blew my mind

my friend showed me this thing called Crisp Crisp.ai with a K with a K. With a K. How do you spell it? K-R-I-S-P That's what it's called, but it's Crisp.ai

It's a piece of software. It's a plug-in for like Zoom or any video conferencing software you got. If you clap, the clap's gone. Any background noise, any echo, gone. It's witchcraft. We don't need Duncan anymore. Don't need Duncan, he's gone. We'll noise, any echo, gone. It's witchcraft. So we don't need Duncan anymore.

Don't need Duncan. He's gone. Okay. We'll just put the shit on Zoom? It's free. Yeah, yeah. Okay. Love it.

Wait, I want to say, it just gets rid of background noise. That's all it does. What else does it do? Echoes, background. If your kids are having like a blast in the background. Smacks your kids. Gone.

So this is a work from home app. This is, no. If you do Zoom or any video conferencing, whether you're in the office or at home, and you don't, I don't know why you would not have this. Does it work as well as the auto-generated backgrounds on Zoom?

It's flawless so far. I don't know what to tell you other than go try it out. It's free. I have no skin in the game. Does it call you when you're having a bad day? He's going to cut this out of the episode. It tells you how many minutes you have. Yeah, Doug, you're wasting your breath.

This isn't going to make sense. Sorry, it's gone. We're done. Wait, no. I read about this. I'm curious. Does it learn your voice? Do you have to train it to your voice?

Is that how it works? It took point one. Otherwise, how does it know? Point one, I don't know, dude. I don't know. We'll call you on your birthday. I don't know how it does this, but it does it. And the last thing I say is I'm an electric guy.

I know. No one's listened to techno. Nobody listened to techno. I do. It's a great Eminem reference. Yeah, it was good. Fred again's latest album, Actual Life. Wait, what is Fred?

I know a lot about music. What is Fred again? He's an artist. He's an electro artist. He's like Moby? No, not even. I'm kidding. Yeah, yeah.

And now he's shown up on everyone from Skrillex. When do you listen to this shit when you're dancing around like by yourself all I listen to is Rattata no seriously workout music for you BPM, Mint, Spotify

yeah working out no I listen to it all day there's certain types of EDM I can listen to like when I'm like just working yeah there you go

we can't do that you just hate that I don't think you think that you get this whole pinched I don't think you think that you can't you can't play that. All right. I don't think you picked that. We need to get this whole pinched. I don't think you did. God, you can't play copyright music on my podcast? Why?

We're hooking them up. If you're a 90s kid and you were listening to like Crystal Method or like Paul Oakenfold in high school, your friends made fun of you because you weren't listening to hip hop. Oakenfold I was listening to. Yeah, yeah, yeah. Paul Van Dyke, you know. You have any references that are not 25 years old though like who else Rufus DeSole

Rufus DeSole is my favorite Rufus DeSole who do you listen to that's current oh man I'll listen to anyone from Tiesto to Audien I mean

you saw that oh the White Lotus the White Lotus you shared it on Instagram that was super cool that was amazing I know to name drop

like Tiesto, like the biggest of the big, but the guy just keeps crushing and crushing. So Ben just slacked me. Here's a tweet for you. I predict Reed Hastings will come back

to Netflix as CEO. Oh, wow. That's good. He just hit that five minutes ago. Not bad. Not bad. Anyways,

Fred again. Is he confident in that assertion? All right. We'll check out Fred again's latest album, Actual Life 3, when we're making TikToks. Yeah. All right. It'll work. Fred again's latest album, Actual Life 3, when we're making TikToks.

Yeah. All right. It'll work. Phil, what do you got? I got a few things. TV show. My wife and I found this the other week. Mother at Raw?

Weird title. It's called The Sex Lives of College Girls. Oh, my wife bought that. It's not a porno. It's on HBO. Oh, then I'm out. It's freaking hilarious. Mindy Kaling's the creator.

She's not in it, but it's like these four girls that room together in this small private— It's comedy. Yeah, comedy. Like, laugh out loud, funny, love it. I didn't realize—I think it came out in 2021 maybe. But yeah, we're just really enjoying that. What is that on? HBO.

Okay. So I said I'm a Netflix shareholder. None of this HBO recommendations. I started on the way out here. I'm almost done with it it's called Unreasonable Hospitality if you like Danny Meyer's book Setting the Table like this is the guy that ran front of the house for 11 Madison Park okay and so it's just really about that restaurant how they became like number one in the world and using this like approach to hospitality the food

was very high quality but I think there's a lot of really cool lessons you can learn in any business around hospitality and just surprising people to the upside. And this like all the shared need we all have of like feeling like we're like we're being taken care of. Yeah. And just going like a little bit going above and beyond and just like wowing people with like attention. There's so many parallels to the restaurant business and our business.

And there's so many cool stories and the anecdotes in there there about things they've done for customers and all that stuff. So I should finish on the plane ride home tomorrow. Is that a new book? Yeah, I think it just came out. Oh, okay. So really, really good. Enjoying it. And then podcast if you're an advisor.

11 Madison Park in its day I think was the number one restaurant in New York. Yeah. Yes. Okay. And they went vegan now or something? Nobody goes there anymore for some reason? Yeah, I don't know. And I don't know if he's involved in it anymore. Duncan's smiling ear to ear. Yes. Okay. And they went vegan now or something? Nobody goes there anymore for some reason? Yeah, I don't know. And I don't know if he's involved in it anymore.

Duncan's smiling here today. What? Vegan. Well, no, I think they're considered to be the best vegan restaurant in the world now, right? Yeah. Okay. Have you been?

I haven't been. It's $300 a person. When's your birthday? August 27th. Okay. I'll keep that in mind. Take them. All right.

If it's still in business. Okay. Okay. Yeah, one podcast I've been enjoying is called Alt Goes Mainstream. It's hosted by Michael Sidgemore. He's a venture guy. He does a lot in like the kind of alternative investment like technology space. But he's had some really cool guests like CEO of Carta, CEO of Franklin Templeton, founder of iCapital. Oh, very cool.

I would listen to that. If you're interested in learning more about like alternatives, obviously you go buy my book, the allocator's edge, but also listen to this podcast. You know, you see what this guy just snuck in a book. No,

it's all right. No, say it again. What's your book? The allocator's edge. Oh, we're pumping stuff? Modern guides to alternative investments and the future of diversification.

Okay. Yeah, we're pumping stuff. What do you got? I have my new sub stack. Tell us all about it. This is the top. Oh, that's great name. It's a good one. I can't believe that wasn't taken. What do you got? I have my new sub stack. Tell us all about it. This is the top. Oh, that's a great name.

It's a good one. I can't believe that wasn't taken. I know, right? Yeah. You know who used to make that joke all the time? You're doing good. Linzen. Yeah.

Every time, he'd be like this. I remember when we got our office space here. We're both schlemiels. In January 2018. Schlemiels. He's like, this is the top. Yeah. The day we moved into our office.

That's why he brings me on this podcast. Why did you name your sub stack, this is the top. The day we moved into our office. That's why he brings me on his podcast. Why did you name your sub stack, this is the top? Because you find yourself saying that, and it's just one of those things where you have to question, like, does it get better? This might be the top of sub stack. Yeah. No offense.

It's all down here. I've read Doug's first couple of posts on it, and they're great. So I'm glad to see you back in the room. All right, I'm all in. I'm going to subscribe. Cool. How often are you writing? Weekly.

Okay. You think you stick that? in. I'm going to subscribe. Cool. How often are you writing? Weekly. Okay. You think you stick that? I did it 80 times before COVID. Dude, I haven't written a blog post in three weeks. I don't know what's wrong with me. You're a goat. You're fine. You can afford to do that.

I don't think I know how to write anymore. Yeah, you do. You know what goes on? That's a true story. It's going to happen to you. Oh, no. I'm like too entangled in so many things. It's already happened.

I write one sentence and I'm like, who's going to get pissed off that I do business with? That's where I am. Isn't that sad? But I'm lucky. I haven't. What I need to do is quit this stupid confirm and get back to writing.

Yeah. Just be a full-time writer. I can't say anything anymore. It's a longer conversation. We don't have to have it now. But that's where I am. And so I just like gave up. You'll be fine.

Will I? Do you want to write for just like gave up. You'll be fine. Will I? Do you want to write for This Is The Top? It'd be great. I want to write pseudonymously for This Is The Top. Just don't tell anyone it's me. Dude, let's go. And say what I really want to say. Go for it.

All right. All right. Listen, we've said it all, right? What would you say? Good show? Great show. Michael, was this good for you? Here's the music.

Are you already listening to the Netflix conference call? He's buying more shares than I was. Hey, amazing job. Phil Huber, Doug Bonaparte, two of my all-time favorite people I've ever met in this industry. Not to overstate. Thank you so much. We love you.

You're both menches and smart and funny, and we love you guys. Thank you so much for coming. Everybody follow Phil. Everybody follow Doug. Check out their recommendations. Amazing job this week Duncan. Great job John. Great job Nicole. Sean

well done in the doc. Hey everybody we will see you next week. Alright now let's get warmed up. Yeah here we go. I knew I was winning. There it is. Thank you. Thank you. Thank you. Congratulations.