The Compound and Friends - Six Lessons from Pandemic Summer, Josh's Vaccine Trade, What Are Your Thoughts with Michael Batnick

Episode Date: August 27, 2020

Josh spoke at the Riskalyze Fearless Week virtual conference and relayed the six biggest lessons he learned during Pandemic Summer. Some are business lessons and some are personal - but for Josh, business has always been personal. Plus, Michael Batnick returns for an all new edition of What Are Your Thoughts - Josh put a trade on he wants to be talked out of, Apple has added almost three quarters of a trillion dollars in market cap over 56 trading sessions, how to survive an investment idea you're too early to, why market crashes, recessions and recoveries speeding up makes sense and a lot more! Leave us a rating and review, they go a long way! Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

What did you learn during pandemic summer? What are the events that will stick with you forever? What mistakes did you make? What were some of the great decisions you made that you're already proud of? When your children or your grandchildren ask you about this period of time, what are the things you think will stick with you? What lessons will you remember as being the big takeaways? Earlier this month, I did a talk for my friends at Riskalyze as part of their Fearless Week

virtual conference. I hate virtual conferences, and I say no to 99% of them. If I wouldn't sit through one, why would I want to speak at one? But Aaron Klein and Dan Bolton didn't just stick me on a conference panel or propose another fireside chat where I sit there and go through the last 20 years of my career. Instead, they said, JB, you could do whatever you want with your session. So I said, all right, no slides, no self-aggrandizement, no bullshit. I had six things in mind. I wanted to talk to the advisors who are going to be watching this session about six lessons I learned during pandemic summer. from the heart. And I wanted to say, honestly say how I felt about everything that's been going on. As you're listening to this, I'm in Maine for the first time with my family on a trip I've always wanted to take. We're going to end the summer with a bang and a lobster or two, but I have an awesome show here for you. We're starting with my entire talk that I gave at Fearless Week, made public for the first time.

Six lessons I learned from pandemic summer. And then Michael Batnett comes back. We get into a vaccine trade idea I had. Some remarkable stuff about Apple's recent run. How you can survive being way too early to an investment idea. Why Twitter follower accounts don't mean anything. And a lot more. So let's do the disclaimer. We'll get right into it. Dunk and hit it. Welcome to the Compound Show with downtown Josh Brown. Josh is the CEO of Ritholtz Wealth

Management. All opinions expressed by Josh or any podcast guest are solely their 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 investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Hello, Riskalyzers. I am a fellow Riskalyzer. My name is Downtown Josh Brown. I've been a client of Aaron Klein and Company since I think 2012. So we have used Riskalyze to build our registered investment advisory firm, as I'm sure many of you watching right now have used it to build your practice or your firm. And it's really just been a remarkable partnership between us and Riskalyze.

And it's really just been a remarkable partnership between us and Riskalyze. So when Aaron reached out to tell me about the virtual Riskalyze Summit, I suppose is what it's being called, I said, of course. How could I not? I love talking to my fellow Riskalyzers in the advisor community. So here we are. I'm going to do six things that I learned from the pandemic. And some of the stuff is professional. Some of it is personal. I hope I make some points that are interesting to you. I hope that there are some things I say that you agree with, but there will probably be some things I say that you might disagree with. And that's okay too. I think one of the main things that I want to get across here is what I learned. One of the main things is that the world doesn time, I want you to tell me what is going to go on with the economy in 2020 so I can better figure out my clients' asset allocation or my investing strategy or what kind of guidance I'm giving people about what's going to go on in 2020. The time traveler you, okay? So let's say the time traveler Josh Brown comes back and visits the December 2019 Josh Brown and says, well, here's what's going to happen. The world is going to come to an end in March. They are going

to shut down the entire global economy, everywhere from China to India to Europe, all over the United States. Any business seeing customers face-to-face, whether it's a restaurant, seeing customers face to face, whether it's a restaurant, a movie theater, an amusement park, a dry cleaner, a delicatessen, a pizzeria, they're all going to have to close. Nobody can come and nobody can show up for work. On top of that, we're going to have thousands of people every day get infected with a virus that's caused that shutdown. And we're not going to have any way to really treat these people for a few months because the doctors will be unfamiliar enough with the disease that it'll just be trial and error. And there are going to be major US cities and major cities around the world that

have too many patients, not enough hospital beds. So the army is going to be called in to turn hotels, convention centers, and college dorms into medical facilities to try to save people's lives. On top of that, kids aren't going to school, obviously. So even if parents have a job they can show up to, they won't be able to unless they could figure out someone to watch their kids. And school is going to take to watch their kids. And school's going to take place on the internet. And teachers really have never had any practice doing that. So it's going to be kind of a mess. So that's what's going to happen. And it's going to happen in March. Like all of that is going to take place within a three week period of time.

And no professional sports and nobody getting on an airplane and just literally an end of world as we know, end of life as we know it scenario. So go ahead and formulate any market opinion you want, but that's what's going to happen. And then the time traveler, Josh, snaps his fingers and disappears. In 2019, Josh is sitting there like, oh, shit. I guess I'm not sure what to invest in. It sounds like I should probably sell everything and sit in cash and maybe make a will. I don't know. That sounds pretty terrifying.

Maybe the most terrifying prediction about the coming year that I've ever heard. Maybe the most terrifying prediction about the coming year that I've ever heard. I don't think anyone's ever delivered anything quite like that in a chief strategist note. Well, then 2019, Josh gets to live that reality and find himself in August of 2020. And every prediction that he would have made about the stock market during an episode like the one time traveler Josh described would have been completely wrong, would have been completely wrong. In fact, the worst possible place to have been in 2020, with a couple of exceptions, would have been all cash because the world doesn't work the way you expect it to. And even if you have the inputs, even if you have all of the variables for the economy and politics, geopolitics and whatever, that doesn't necessarily

tell you what the reaction will be in stocks and bonds and commodities. So let me fast forward. Commodities are working, not just gold and silver, lumber, building houses again, anything that goes into building a home, copper is going up. You've got a scenario now where bonds have done well this year and stocks at the same time. So there's this idea, people call it the permanent portfolio, but what we're basically talking about is a 25% allocation each to cash, gold, stocks, and treasury bonds. That portfolio, just a quarter in each, right? You could do that with four ETFs these days. That portfolio just finished at the end of July,

its best 90-day period of all time. So there has never been a better time to have a diversified portfolio than this year. Actually, cash in that equation, the 25% of that portfolio was cash, would have been a drag, would have cost you money. Oh my God, what do you mean? What do you mean? 15 to 17 million people out of work and cash is the loser? How could that be? Because the world doesn't work the way you think it's supposed to work. Never did. Never did. And this episode that we've all lived through, Riskalyzers, is proof positive that no matter what you think is coming in the future, you need to have a durable portfolio that can work in any environment. You can't make a bet

on one environment. Even if a time traveling version of yourself came from the future and gave you the inputs ahead of time, you still wouldn't know. Because what are the other variables? Well, what is the Fed going to do about it? We now know the Fed, not just the US Fed, central banks all over the world, were ready to offset every dollar and then some of demand that would have been gone. Every dollar and then some. There are people, I think 30% of people, now making more than they did when they were working every day. Couldn't have predicted that. How about the political response? The Treasury sending money directly into taxpayers' bank

accounts. Never happened before. We're doing it now. It's UBI. We're doing universal basic income. And the Trump administration is the one that's pulling it off. It's amazing. You never could have predicted it, okay? Especially if you listen to people's political rhetoric.

Because it's the Trump administration whose job it is to keep the wheels from falling off. So now they're a UBI administration. Amazing. Unpredictable, right? Unimaginable. Okay. Then think about what's driving the stock market. We've got, let's call it 30 or 40 stocks who have cracked the code for how to make money in an environment where everyone is at home using the internet all day to do their work and do their school and shop and buy groceries and keep their households running. It would have been very, very tough to make this prediction in December if I had given you the economic situation. But what's happened in the stock market makes it clear that there were companies that were ready for this, even if they never expected it. They were set up. Cloud computing, software as a service, cybersecurity, video services,

and then all the entertainment stuff, Netflix, Disney. So we are just in this remarkable time where we've had this reaffirmation about the power of capitalism, right? Risk finds a way. And companies that were willing to take a risk to build these services have been amply rewarded. And now we've got five stocks that make up 25% of the US stock market. And it just so happens, all five of those stocks were among the biggest companies already before the pandemic hit. And the pandemic is an accelerator of the trends that made them

the biggest companies in the index. You would part with many things before you would part with your iPhone. I think we all agree on that. You would give up on many services before you would give up on Amazon Prime right now, right? Or Amazon Web Services if you're running a business in the cloud. And then go down the list, Microsoft, Facebook, the ability to stay connected to people you love. So that's what's happened this year. And I don't think that many people, if I had given them this information in advance, would have been able to predict the reaction in the stock market. And if you could, then you're smarter than me. Congratulations. The good news is most Americans have exposure who are invested, have exposure to these

mega trends. They already did. If they owned index funds, again, these were already the biggest weights. And all that's gone on this year, with the exception of a huge short-term bear market at the end of March into the beginning of April, all that's gone on this year is adoption that would have already taken place a year from now, three, five years from now, just got accelerated. There are now people in their 70s and 80s who are buying groceries online. They may have never adopted it. They may have finished their lives having never ordered things from Target on the web. But now they have the apps on their phone and it's all happening.

So this is the world that we're in and I don't foresee it changing very much. So this is the second thing I want to talk about. Work as we know it has been fundamentally altered forever. I'm a business owner. Redholts Wealth Management, the firm that I am the CEO of, has 32 employees. We built the firm remotely. I never had everyone all in one place. I've got employees thousands of miles away from the day we hired them. We meet people in person, and then we pull the

trigger on hiring them if we like them. And we're not sitting next to them watching what they do. Everyone in my firm is responsible to get a certain amount of work done every day, take care of their clients, participate in certain meetings, whether they do that sitting five feet away from me or 3000 miles away from me, really doesn't matter. And we've known that as a firm for years now, it comes down to hiring the right people. I don't think that works with every employee. I think it's got to be the right, the right people that you're bringing on. And then more, more important than the right people, the incentives, they have to want to do what you expect them to do, or they're going to find ways not to do it. And if they're remote, it's doubly so, right? It's doubly so. But I do think when I say

permanently altered, fundamentally altered, I think a veil has been lifted. And I think all of the things that I'm saying to you now have become apparent to both employers and employees. And the work-life balance of the future will not go back. Too many people have come to the realization, hey, you know what? I'm just as good at my job not commuting as I am when I have to go to the office five days a week. I'm just as good at it. And my relationships with my coworkers haven't changed. Yes, I miss happy hour. Yes, I miss water cooler conversation. So what? It's not the job. The job, professional job can take place, at least the majority of it in a virtual way, then I'm not going back. So I do think people miss the office. And I think people will return to an office. But are you going to have everybody every day? Forget about the virus. Let's say I made it disappear. Let's say that gone, no virus. Here's the vaccine. Everybody gets one. Now what? How many people are going back to 45 minutes to an hour commute? That's my commute's an hour 10.

I live in Long Island traveling to Midtown Manhattan. How many people are going back to 45 minutes to an hour commute? That's my commute's an hour 10. I live in Long Island, travel into Midtown Manhattan. How many people going back to that five days a week? How many employers are going to ask for that? So this is going to have an impact not only on you, on the company you work for or the company you own, but on your clients because they are either employers or employees. And now that the veil has been lifted and everyone sees the truth about how much time is wasted getting back and forth to a physical location and how much screwing around people do on a daily basis versus how much actual work. Now that like everyone has figured this out all at once,

work. Now that everyone has figured this out all at once, it would be very hard for me to imagine us going back to the 1950s where the alarm clock goes off at 7 a.m., you get to your job by 9, you leave at 5, five days a week, and then the parrot squawks and Fred Flintstone slides down the back of the dinosaur. It's quitting time. It's over. It's not coming back. All right. Here's the third thing I want to get into. It's a little bit personal to me. Leadership means making decisions that may be unpopular at first, but will be better understood over time or will be better understood by the people who need to understand it over time. As some of you might know, about 1300 registered investment advisory firms applied for low interest rate loans through the PPP program.

And my firm was one of them. And that was a decision that my partners and I arrived at late March, when it became apparent that we could be looking at millions of people sick and potentially millions of people dead in the United States and over a year before a vaccine would arrive. And just this, the potential for us to go back to the Stone Age as an economy. And I have, like many growing firms, many large growing firms, I have employees who are not revenue generators. That doesn't make them any less valuable to us. In fact, they are the glue that keeps all the revenue producing advisors able to do what they do. So these people are very important to our business professionally. And then personally, these people are very important to me as a leader of the firm and an owner of the firm.

I feel a very real responsibility. So the payroll protection program was designed to help companies bridge the gap between when the economy would reopen and then, which was an unknown, bridge the gap and not just let go of people because of a short-term hit to profitability or very real economic concerns over the long term about the size of a firm's payroll. And it applied to employees who were making under $100,000. So we're not talking about rescuing high-flying investment bankers or hedge fund managers. This is really about rank and file everyday employees at small businesses, or hedge fund managers. This is really about rank and file everyday employees at small businesses, midsize businesses. And so we are a small business. And I just looked at the

situation and I said, I don't know how bad this is going to get. I'm not a virus expert, not an epidemiologist. I don't know how long this is going to go on for. I don't know what's going to happen to the economy. But everything I'm hearing sounds terrible and getting worse at that time. Just a black hole of illness, death, hospitalizations, questions about what to do. And I just said, if I don't take a loan now and I need one in six months and I haven't done it, I'll never forgive myself. If I end up in a situation where I have to tell people, and again, not high flying billionaire people, if I have to tell the people who've entrusted me with their careers, that I have to let them go in the middle of a pandemic and recession,

I will never forgive myself. And one area in which I had failed as a leader was arranging financing for contingencies like this in advance. So we have no credit facility with banks. We always thought the responsible thing was don't spend more than you make as a business and pay off all your bills. So that's what we've done for almost seven years. We didn't foresee a scenario where I would have to have credit lines or whatever with banks. I always said, no, we run the business very conservatively. Turns out I had it backwards. I was wrong. The conservative thing to have done would have been to have a line of credit ready for an emergency like this. And I just, I failed. I didn't know better.

Nobody had ever told me to go and do that. I just, I had never been given that advice or that guidance. And I didn't, it didn't occur to me. I thought we were being conservative. We were being the opposite. We were risking our future by not having these things in place. Not that we could have predicted coronavirus, but for any reason, we probably should have had a line of credit established. So we didn't. So we called our bank. They explained how it worked. We're a partnership. We're an LLC. So basically, any debt that we take on flows through to the owners. So basically, me and Barry would be on the hook for the money, which was fine because running this firm is the bed of my life.

Why wouldn't I do that, right? wouldn't I do that? Right? So if it came down to me going into debt, but being able to assure all of my employees, you guys are going to be fine. That was an obvious move for me to make at that point. So we did it. We applied. We meet all the criteria, obviously. We're a small business, have no private equity, capital, have no outside shareholders. We're in good shape financially, but the attestation is for economic uncertainty. So we did it. And I thought that that was leadership. I still do. But at that time, I said, you know what? I got to do this because I have to plan for a worst case scenario. That's my job as the employer. So I did it. And almost 10% of the industry did the same thing that we

did. 1,300 firms, I think there were 13,000 or 14,000 RIAs. So everyone was thinking the same way. Some firms didn't need to. I think what's interesting is a lot of the larger firms applied, but because size has nothing to do with it, the larger you are, the more employees you have to protect on your payroll. So we saw a lot of firms like ours that had many employees who are in a capacity where they themselves don't generate revenue. And they knew that they wanted to protect their employees. And so that's what they did. That's what we did.

And when we filed and told everyone in our regulatory filing, hey, we borrowed under this program. It's our debt. Nobody else is paying it. We're paying it. We're paying it. But due to economic uncertainty related to the pandemic, we thought that we had to do it. There was a mixed reaction. And there were a lot of people that without even understanding the issue and without even putting themselves into my shoes, there were a lot of people that just like, oh, it's that guy from TV. I hate him anyway. Just like flipped out over it. And then

there were people that raised legitimate issues. I spoke to a lot of people that raised legitimate issues and like critics. I spoke to them and I tried to understand it from their perspective. And they made good points too. But I think leadership means you make a decision like that, you recognize the possibility that it will be unpopular. But then you also say, you know, I might just have to live through this unpopular decision because I'd rather do this than do nothing and risk having to fire people. And I think that would be worse. So the good news is the world did not fall apart. The economic uncertainty still exists. The stock market recovered, but that's not the economy. There are still many parts of the economy that are under severe strain and millions of people who are under severe strain.

But fortunately, our business is not in that category. We've performed. We've kept all of our clients on an even keel. We've brought on new clients. By and large, we've done a very good job navigating through something that's very unprecedented. And so the moment we were able to, knowing that we'd be able to look out for our employees, we made alternative arrangements for financing and we paid back all of the loan that we took from the bank. So it was quite a learning experience for me as somebody who's never owned a business before and has never been the CEO of anything before. I learned a lot about the industry. I learned a lot about what it means

to really own a business. I learned a lot about what it means to be a leader and taking the good and the bad that comes along with that. And I learned a lot about myself. And I think that if I can do everything all over again, if I had the same information then that I did, I probably would make the same choice again, even if I knew what the reaction from some people would be. Now that's, that's a tough thing to do, but, um, and I'm not, I'm not a martyr. I'm not a hero. There are people who are heroes, um, in, in this age and time.

And those are people who are serving on the front lines fighting this virus. I'm just a guy trying to do what I think is right. And when new information comes in, adjust and adapt. And I'm going to keep trying to do that. And if people disagree with something that I've decided to do, and it's a disagreement that's reasonable and not just, oh, I hate that guy, I'm willing to listen because I don't have the whole world figured out. All right. Let's talk about social media very quickly. Lesson four, social media is whatever you make of it. I was probably a social media addict a few years back. And over the last couple of years, I have slowly dialed back how much of my own satisfaction and personal happiness

I was willing to put in the hands of other people. There was a time when I needed the endorphin rush of, oh, I tweeted a link to my article and X number of people liked it. How come more people liked my article two days ago than this one? What's wrong with me? That's a really toxic situation to find oneself in. And I think it's a really easy situation that you could find yourself in if you're not aware. And I definitely spent a lot of time unaware of how important the opinions of other people were to me at that time. And I think now with the benefit of hindsight, looking back, I think I let that period of my life go on way longer than I should have.

So I've made some very big changes. I left two-way participation on social media in Memorial Day weekend. And my original plan was to take the summer off, come back for Labor Day. But I don't think I'm going to do that. I think I'm done forever because I don't miss it. And I miss the people. And I miss my interactions with friends of mine and colleagues and people I've learned from all over the country. I definitely miss that. But I don't miss it enough to want to wade back into all the ugliness and nastiness and bitterness and anonymous attacks and people who hate themselves. And it's just it, the balance,

it wasn't worth it for me anymore. So I definitely miss people that I used to interact with. The good news is, I still talk to everyone, pretty much that like I knew in real life. And we talk on text or we talk on FaceTime. And I can pick up the phone and get anyone on the phone I want to that I'm friends with, because they're my real friend. And my two-way participation in social media doesn't require me to have to sit there and be a magnet for people that either hate me personally, who have never met me, or hate financial advisors, or hate anyone that's been successful, or just lash out at the nearest target in front of them because you're having a bad day. I don't need to put myself there for those other things that were the benefits.

I did that analysis. So I think that it's probably my fault. I stayed around too long. And I think I made myself a lightning rod. And I made myself somebody that like people had a strong opinion about because for years, I just never shut up. And I just like my opinions don't need to be tweeted into people's phones 24 hours a day, seven days a week. Nobody needs that much exposure to my opinions and my face. So I think it's on me and I've learned a lot. And I think the lesson is that social media is what you make of it. You have a choice of how much or how little of yourself you want to put out there every day. And you have to moderate that based on what makes you happy and based on what makes it effective for you if you're using it for business, right? And that's universal.

It's nothing to do with financial advice industry. That's just, everyone's got to make that decision in every walk of life. And there are some people that really don't care about the reaction that others have to them. And I understand that, but that's not me. I do care. I get upset when people get mad at me that don't even know me. And so I don't want to produce that emotion in people. I don't want to be a lightning rod, or I don't want to be like a target for someone's disaffectation with life. And then they just, you know what, I'm sick of you. I'm sick of hearing from you. I get it. And so I shut my mouth on social platforms, still put out my content. I mean, the podcast has more

listeners than ever. It's blowing up this summer. Our YouTube channel is almost 50,000 subscribers. I love it. And people can leave comments, but I'm not required to respond or react or mix it up. So for me, it's the best of both worlds. And as much of it as I miss making jokes, joking around with people, learning from people, I have many other ways to accomplish those things. So I would just say if you find yourself unduly influenced by the reaction that you're getting on social media, and either it's making you too happy or too sad, maybe do less, maybe do less, maybe give up on some of the platforms that you used to that you used to use and see what

happens. And you might not miss it. Or you might grow out of it. Or you might from a distance, look back and say, oh my God, what was I doing? The last two points I want to make are very quick ones. The fifth thing I learned from this year, knowing who your real friends are is gold. And being a real friend feels better than having a real friend. So here's what I mean by that. When you disappear from social media, and you find yourself being yelled at on the internet by people, and you just decide, I'm done for the summer. I'm just going to run my business, raise my kids and live my life. You still will hear from people that you no longer can retweet. You no longer can link to

or promote their stuff. Like they're just people that genuinely care and they want to talk to you and they want to be in your life and they don't want anything from you other than friendship. And you will find out very quickly who your friends are because we all have a thousand fake friends online, but we don't have that many in real life. Right. So I think that was really great to learn that. And I think it's gold. Now I know who my people are and there's nothing, it's not to say that somebody that doesn't end up being your real friend, that they've done something wrong. Let's just be honest with ourselves. How many acquaintances can you have? And then how many of those acquaintances can you really count on? Or do you want to count on? And the number just shrinks the more you think about it. So being able to separate that out. And when you can't do anything for anyone, right? People that used to be like, yo, I just wrote this blog post, retweeted for me. Can you help me get on your TV show? All that shit. When you no longer can do that for people, and you stop hearing from the people that had been asking you, that's okay. You're not useful anymore in their eyes.

That's okay. Probably better off. So I thought that was a really great lesson for me to, I guess, relearn. I probably should have known that already. And then being a real friend feels better than having a real friend. This is not obvious, but it's something I've learned.

I'm in a position to do things for people and help them for no other reason than I want to when I get satisfaction. So friends that are starting not-for-profits to teach students finance or friends who are launching advisor communities and want me to come on and help them talk to their group, whatever. I'm saying yes to stuff like that where I can make an impact and it feels great within reason. I can't do everything. But saying yes to stuff like that where I can make an impact and it feels great. Within reason, I can't do everything. But saying yes to stuff where I get nothing out of it financially, I'm just, I'm giving up my time because I like the cause.

The feeling I get from doing that and being a friend to someone who needs me is so much better than the feeling I get when someone does something for me. And I know a lot of people have figured this out before I have. So I know it's not profound, but it was meaningful to me. The last thing, listen to me, stay married. Stay married. This situation that we're in is trying many people's marriages. And you can understand why.

You can absolutely understand why. It's not natural for two people to be on top of each other seven days a week. And then having the kids not in school, not in the summer camp, we're not meant to live this way. Modern life was not meant to be lived on top of each other like this. It's very, very hard. Now, if you're in a marriage where everyone's cool with it and, all right, that's great. Good for you. Don't tell me about it. I don't want to hear it. So I'm in a situation where I've basically invaded my wife's life. She, for 12 years, was accustomed to waking up and I was already on the train on the way into Manhattan and I would get home at six o'clock. And she had the day to take care of the kids,

home at six o'clock. And she had the day to take care of the kids, take care of the house, do things that she needed to do for herself. She pays the bills and she runs a lot of the household and it worked great for 12 years. And then all of a sudden it stopped. And now there's this situation where she wakes up and you know, I'm already cooking, eating, leaving dishes everywhere. I try, but you know, I'm distracted. I'm reading, I'm listening to podcasts, whatever. I'm already cooking, eating, leaving dishes everywhere. I try, but you know, I'm distracted. I'm reading, I'm listening to podcasts, whatever. I'm giving Zoom meetings to my employees. I'm picking up the phone to talk to the clients of my advisors. I got stuff going on.

So I'm not like a model tenant in my own home. Monday through Friday, I'm a pain in the ass. Imagine being her and waking up and you used to have this like the sanctity of your pain in the ass. Imagine being her and waking up. And you used to have this like, the sanctity of your home during the day, the kids were at school, husband's at work, wife's at work. And now that doesn't exist anymore. And I really feel that I have not taken that seriously enough. I've taken that situation that she's living through for granted. Like, oh, what's the big deal? Everyone's working from home. What do you want from me? This is the way the world is. I think I have to put more effort into giving her back her sanity and her space. She's got both kids home. They need

to be driven somewhere every 15 seconds. They need to be fed three meals a day in the house or something picked up. Then they have friends come over or they have to go to a friend's house. Then there's the sports and the activities that have reopened up, thank God. But that all involves driving and coordinating schedules. And then there's me, six foot two, 250 pound blonde minotaur sitting in the middle of the labyrinth that is our home, literally booming voice, recording a TV show from her living room. Like think, think about, um, I need, you don't need to think about this. The effect of me being in the middle of the house, recording television shows, running a company, conducting zoom meetings, like walking around the house with these on, on the phone with clients

all day long. And then just, you know, making messes just generally, every room I'm in gets disheveled when I'm done with it. It's unbelievable how much I've taken that situation for granted. And it's bad. And if you do that in your own relationship, it's not going to lead to anything good. So I have learned this lesson. I'm in the process of figuring out alternative workspaces. While I can't get into Manhattan five days a week, it's not feasible. That's not a good enough excuse to be on top of everyone every day of the week. So this is a huge lesson for me. And I hope I haven't learned it too late.

But I would just tell you one of the most catastrophic thing you'll see clients go through is divorce and separation. And I don't even want to talk about the emotional family aspects of that. I want to talk about the financial aspects of that. It's disastrous. I don't care what asset allocation you have. I don't care what your portfolio strategy is. If that happens, it's a disaster. And even if it's for the better in the long run, it's still a disaster short term, intermediate term.

And this is one of those things where it doesn't matter how rich you are. Actually, the more money involved, the worse, right? So a lot of problems in life, even health, like, oh, so-and-so's sick. Money's no object. We're wealthy. We'll get the best doctors, the best care. We'll do it in home, whatever. Like many things in life can be fixed with money. This is one of those things where money actually makes it worse. So my sixth lesson for Corona times is do what you have to do. Fix your relationship. Don't cause problems that aren't there before this pandemic. Make it through and stay married. All right. That's it for me.

I've been talking for 36 minutes uninterrupted, but I wanted to come to you guys from my heart. No slides, no promotion. This is how I feel. I hope it was meaningful. And I want to say thank you to Riskalyze, Aaron Klein for all the amazing tools they've built that have allowed us to run our business during these incredibly difficult circumstances. It's meant a lot to us and we love all you guys. All right. Bye-bye. Hey guys, it's Downtown Josh Brown. I'm here with Michael Batnick. We're here to play yet another edition of What Are Your Thoughts? Michael doesn't know what I'm going to ask him about, and I don't know what's on his mind. So we're going to find out together.

Stick around. Let's have some fun. All right, Mike, I want to start with Nick Majuli's post. Follower is not a follower. He's basically like saying, I don't first of all i don't know how he got to 60 000 twitter followers it's pretty impressive but he's saying it's like you don't get that much from it like people no matter how many thousands of followers you have it's really the same amount of people clicking on your content or retweeting your links do you see it that way

um i found that i found that hard to believe that he showed a blog post that somebody with 100,000 followers retweeted or linked to, and the spike was barely visible. So I wonder, I mean, I'm not questioning his data. But fine, that aside, I see the main point. Like you have your readers and whether you're 10,000 followers or 50,000 followers, that doesn't necessarily translate to a bigger audience. It translates to a bigger Twitter audience, but it doesn't translate to more actual fans. The way it was explained to me is that followers is like a vanity metric and it's useful for, let's say, getting yourself booked on CNN or something like that. But engagement is like your real followership. And even like the engagement on your tweets or how many people actually subscribe to your blog or how many listens on your podcast, that stuff – you can't fake engagement.

So you could buy followers. You can't fake engagement. So you could buy followers. You can't really convince people to actually click on something you've written and read the entire thing. That's real engagement and it's much harder to fake. But people pay much less attention to it because it stuff are getting wise to that number like followers used to be or probably still is currency. But maybe it's just currency for your ego more than like actual. Oh, yeah. Dollars. Advertisers. It's no different than the Web where somebody would be like, oh, I have a million page views today on this article. Really?

How many people read to the bottom? How many people take action on a hyperlink that's buried in between two paragraphs? How many of these people are reading it intently enough to actually see an ad? That's a whole different metric. Well, I think the gist of the article was cut the bullshit. Not everybody can have a side hustle. There are not four steps you need to take with the fifth one being bro down. Like it's just this notion of all these VCs on Twitter telling everybody what they need to do with their lives to improve their situation is just tired and it's just nonsensical.

I think my big takeaway from what he was saying was that if you do something good, it's going to get read. And it has nothing to do with if you have 30,000 followers or 60,000 followers. If you do something that, if you phone it in, like if you put up a post that it's apparent that you didn't put a lot of effort into, people just aren't going to, they're just not going to click it. It doesn't matter how many followers you have. So like Al Tucher's post this week, last week, which was just flawless, perfect, got like a bazillion views because it was such high quality. Is that what you're saying?

Yes, that's exactly what I'm saying. That's exactly what I'm saying. All right, what do you got? All right, so I am a fan and a follower of Corey Hofstein's. He has a season three Floating with Models podcast. And the last episode was with Cliff Asness. And it was really great because Cliff has been on a million podcast stages and you've seen, it's the same questions over and over.

Um, but Corey really went deep. What do they always ask? What do they always ask Cliff? What's the same question that he always has to answer? Talk about, uh, the quant quant quake your start of the business is valued just the same stuff like yeah just the same stuff yeah yeah okay so anyhow one of the things that cliff said was being right and surviving are not always the same thing and i thought about uh like john paulson example, he shut down his gold fund, like

probably, I'm guessing, I've lost track of time. Is it a year ago? Maybe not even. Like right before this epic gold run. And so he couldn't survive. He was right. Eventually, he couldn't survive. So this is something that investors battle with all the time is I'm not

wrong. I'm early. How, if you are so sure that you're right, but the market is telling you you're wrong, how do you survive? You survive by becoming a family office. I'm not even joking. Why the f**k? Stop it. Why the f**k? Stop it. Hold on. Retail, retail, retail. Stop with the F-bombs. Two things. Why would you become a billionaire hedge fund manager only to keep on answering to people? Like if your game is long term, you want to beat the market and you know that in a lifetime, there's probably only two or three, if you're lucky, extraordinary opportunities and that's capitalized them. You're probably going to have

to look wrong for a while before they actually pay off. And that's just the nature of the beast. Then, like, I just never understood this. Why not just go do that? And a lot of them have. Forget about Paulson. I'm talking about people watching this. What could they do? How could they survive? People watching this, if they're managing other people's money, or if they're managing their people's money or if they're managing their own. Or their own. Oh, just shut your mouth.

If you have conviction, then don't back yourself into a corner publicly about what you're like. Don't pound on the table and try to get other people to listen to you. The number one thing, the number one thing that I have learned by being hardcore in the public eye with investment opinions is you can't care how many other people agree or disagree with you. You can't. You cannot get triggered by other people having the opposite point of view in investing because guess what? There's only one referee. The referee is time. And so it doesn't matter if you are right and I'm wrong. Time is going to decide what the truth is.

And so how do you survive? Well, number one, shut up and stop fighting with people. And if someone disagrees with you, say, okay, you might end up being right. That's okay. I'm not mad about it. I don't care that i'm a bull and you're a bit who gives a shit that's how you do it no yeah i mean i would say that that that is very good and use technical and use technical analysis don't talk to friends and

family about what stocks you're buying because that just adds unneeded uh you could talk about it pressure oh don't like don't fall in love with your own opinions because especially publicly, because then you can't change them. People, people fall in love with their own ideas. So what I think you can do is just position sizing. Don't put yourself in a position where something has to work or you're, or you're F. I'm taking my second technology L in the last year. I'm taking my second technology L in the last year.

First was Twitter, which I probably, I was invested for seven years. You sold, did you sell near the bottom? Honestly, I think I made a few hundred dollars between like, no, I averaged down, whatever. But I think I got out of it like break even. Any other tech stock I would have bought, any other, I would have probably made 4X on that dollar. So I just did that with Slack. I'm walking away with like a buck or two in gains after holding it from the IPO, defending it, arguing with people about Microsoft. It's such a waste of energy. I was wrong. That's it. I could have bought almost any other software company and had 100% gain since March. Instead, I held on to this and it's flat and I'm wrong. And arguing with people publicly about it only makes

it worse because you don't want to back down. It's not even about money. It becomes about, like, it's about ego. It's toxic. Can't do it. All right. This is what I want to ask you. about ego. It's toxic. Can't do it. All right. This is what I want to ask you. Speaking of, I put on like a vaccine YOLO trade a little bit. I wouldn't recommend this to anyone else. I bought Simon Property Group. Talk me out of it. Oh, it looks okay. I mean, do you have a stop in or are you just- You have it up in front of you? Where are you out? I think probably $60 looks like it's been support.

And I would basically say the market has completely thrown in the towel on this name if it breaks below 60. That's like- Yeah. So, all right. So talk me out of it though. And you're getting paid to wait. Dividend yield of 7.5%. I think the dividend yield is solid. I think it's solid. I'm not going to talk you out of it. The chart looks good. Let me ask you another question. If it works, what's your out on the upside?

Maybe never. Where are you taking profits? It's a REIT. I'll just hold it for the distribution. I own it in a tax-free account. I acknowledge that this company had problems before COVID. But I just – this was $230 in 2019. So you're trying to get married? No. You're trying to get married to the stock no but i

could potentially fall in love um i'm not in love with it now i my stop is less than uh 10 away i told you but i would just say like uh clearly the malls are challenged but not the a malls and i know this isn't like due diligence but every time I drive past the Meadowbrook entrance for Roosevelt Field, there's a line of people backed up to get in there and there's no construction. That's like pure people returning to the mall. I know anyone can make that observation.

Forget about fundamentals. I think so. You're swiping left or right. I don't know what the kids do these days, but I wouldn't get hitched. I would take profits at 80 if it gets there. Just me. What's the significance of 80? I't know just why not now got something now is a vaccine is a vaccine uh a week before the election approved not distributed just the

fda five days before the election with trump holding a gun on the guy's head says we're approving uh the the p the Pfizer Biontix or whichever one gets their first. The plasma. No, that's a treatment. Vaccine. We get a vaccine FDA approval. What does this stock do? It was 230. It's gone. By the way, this is not a YOLO trade. The YOLO trade would have been weekly calls, sir. Yeah, no, I don't. It's a YOLO trade for me because I very rarely will be in something that I don't like long-term just because I think what could happen short-term. All right, we'll see what happens. I'm sure I'll get better.

Was that a generational buying opportunity? So let me give you the numbers. The S&P 500 would have to fall 36% to get to the March lows. The NASDAQ 100 would have to fall 42%. Are we ever going to see those numbers ever again? By the way, it certainly didn't feel like a generational buying opportunity at the time. Let's get that out of the way. Stay to be obvious. Are we ever going to see those levels ever again? I read somewhere that the NASDAQ is up every year except for two over the last 25 years. Is that true? Does that sound like a thing that could be true? 25 years? Yeah. So 2000, 2001, and 2002. No? It was down in 2002. I think it bottomed in October of 2002. It might have been up on the year. I know. Okay. 2008, it definitely went down.

2008. I think it was down once in the last few years. 18. Anyway, whatever. It's had a sick run, obviously. It's almost like Australia never having a recession for 30 years. I think they had one this year. It's an unbelievable record. So I don't know.

I do think it's a generational bottom because it just seems to me that even if we have a resurgence this fall, we're not going to have like a crash. I do think there will be very severe correction, but I think some stocks will be treated differently than others. In that moment, everything went down. And that's a really hard situation to perpetuate for long. You very rarely have market events where everything just goes down indiscriminately that much, like 30% in a waterfall like that is going to be tough, especially now that people have learned to differentiate the impact of the health crisis on different types of companies.

I don't know. Do you see it that way? Well, I think that even if we do get a second wave, the reaction is not going to be as severe to the downside as it was the first time because we've been there. Okay. So we're on the same page on that. All right. So I listened to you and Ben talk about his concept that I guess he wrote this for Fortune or for Bloomberg that crashes and recoveries are going to be faster in the future and that we need to detach ourselves from –

I'm a seller. This notion that bear markets have to go on for years. You don't think that's reasonable? No. The data is against you though. Recent data, yeah. Well, I mean, why wouldn't we rate recent data more highly? Why wouldn't we look at recent data as an exponential moving average?

So take the last 10 bear markets and they seem to be shortening in length, not severity, not severity in length, in length of time. We are processing the business cycle faster. A lot of that is because the Fed has become more activist. These are undeniable things. So why would a bear market in the future take longer for the public to react to both negatively and then positively. I just don't think that bear markets are going to be measured in days and months forever. I think it might take a while for that to change. But this idea that you don't think that we can have a 30% decline and then not hit new highs for seven or eight years, do you think that's- Oh, no, no, no, no, no. I do, but you're still not technically in that bear market,

are you? If you recover somewhat, you're saying a 30% decline and then stay down? No, we could recover half of it. I'm just saying, I don't think that, I just think that that's like the stability leads to instability argument. I don't think that's a permanent feature. I don't buy that for a second. I concede that there's no reason we couldn't have a two or five-year period of no returns whatsoever. That's happened within my career. I've seen that already. So what exactly are you – so what are you saying? I think the recession part of it, I think the Fed reacts quicker and more boldly.

reacts quicker and more boldly. And every time we react to, every time the powers that be react to a recession or a market crash or whatever, they seem to be doing it bigger, better, faster, and with more determination. And that makes sense. It's because they're learning what tools do what. Shouldn't they get better at responding to recession?

So I think- They have, it's undeniable. Yeah, so I don't think we need to go through seven-year depressions anymore. I think we just have to have regular bear markets, regular recessions. But I think investors have become more conditioned to see the other side of them.

So what ends up happening is they end up buying stocks sooner than they would in a normal recession, especially given we now have this caste system where people in the top 10% are barely even affected by recessions. And so they're the ones doing the buying of the stocks. So they're the ones telling their financial advisor, yeah, I get it. Everything's going to suck. They shut down the economy. Buy some Disney anyway, because I think two years from now, I'm going to take my family there and everything will be okay. That's not regular people doing that. But until we get a 20% and bounce and then don't make new highs, and then we fall again, it takes a while for that psychology to change. So yeah, right now they've been conditioned to

buy every dip. I don't think that's permanent though. So this is more than a dip though, Mike. This is a crash. And we have data from Vanguard saying that no, people didn't even budge. At Vanguard, they're well-behaved investors. And they're not a good example of every investor, but look what the other type of investor did. They threw themselves whole hog into day trading on the backside of a 30%, 16-day, 30% bear market. You know what the general public did? They didn't say, oh, stocks are for assholes. I'm out. They said, I want more in than I've been for 12 years. They funded day trading accounts and they just went absolutely hog wild. And it's not just kids. I know grown ass men doing this shit all day long now on their phones trading.

So I do think the investor mentality is bring on the recession. I can't wait to trade it. Right now. That's not permanent. That's all I'm saying. I agree with you. Right now, that's what it is, obviously. All right.

Yesterday, I wrote a post called King Apple and the distance between the biggest stock in the S&P 500, which is Apple, and the second biggest stock, which is Amazon or Microsoft, is now 30%. So Apple is 30% bigger than Amazon. That spread – I almost feel like my data is wrong because it's so on the button. That spread has gotten to 30% where it is today three three previous times, and every other time that came down sharply. How did it come down? The second stock catching up or Apple catching down? So I only looked at Apple.

One time Apple came down hard. It fell 35%. The other two times didn't mean anything. So I don't think that this necessarily means anything for Apple. But if you just look at like the – so this is a crazy stat. So since over the last 56 sessions, Apple has added $760 billion in market cap in 56 sessions. Now, granted, it's from the lows, and I'm going to cherry pick another data point. But in January 2019, which is not that long ago,

Apple's market cap was $700 billion. So it added more in market cap, and I'm having fun with data, it added more market cap over the last 56 days than it added more in market cap, and I'm having fun with data. It added more market cap over the last 56 days than it did for its entire value in 2019. That's extraordinary. And I guess the question becomes, where did that money come? Where did the $760 billion incremental dollars now comprise in Apple's market cap? I'll tell you. It came from Berkshire Hathaway. Well, multiple expansion. So the PE ratio forward and backwards is going vertical.

So now it's 38 times trailing 12. Yeah. And what was it at the time, 15? I'm just eyeballing it. The last few years, it traded as low as around 10 or 12 and as high as 20. Yeah. When it was 12 times earnings and you backed out the cash on its balance sheet, which was much less than it is now, but still a lot. I think it was like in real life, like eight times earnings. By the way, I feel like that argument was like in 2013 and people were like, yeah, back out the cash, back out the cash. It's not cheap.

LOL, who's laughing now? Right. That's when like David Einhorn was buying it and he's just like, I don't understand. This company's eight times earnings and every one of you has an iPhone in your pocket. What's wrong? We found out what was wrong.

People had to wake up. 37 times earnings. Yeah. I sold 20% of my Apple and 20% of my Nvidia. And I didn't do it as a call on the price of either stock. They just had gone up so much that they became huge parts of my IRA. First of all, I'm hugely exposed to Apple through the firm, through my retirement account, through every index fund I own. So it's not like I'm really walking away from Apple,

but I have like single position in Apple and Nvidia. Nvidia is up, I don't know, 700% the last five years. Apple's up 400% in the last three years. And they just, they ballooned relative to every other individual stock I own. So I had to sell a fifth of both. And I almost felt nauseous selling it. They're both breaking above 500 on the same day. 500 per share. It's really an extraordinary thing to watch. Where's Microsoft relative to Amazon?

Are they neck and neck? In terms of what? Market cap. Amazon and Microsoft are both 1.6. Okay. Amazon's 1.65. Microsoft's 1.62. So they're the same size.

They could change places in one day. Yeah. Listen, it's an extraordinary time. But if you look at this chart, the distance between the biggest and the second biggest has been really tight going back to 2019. Like the leaders have been neck and neck and Apple just took off. Yeah. I guess what's the,

like, what do you do about this? You're not going to short one by the other. Cause you don't know what, cause you don't know that the number two is going to stay number two. In the case of Amazon, I think it's likely that it could, but you just,

you don't know. By the way, Google and Apple were fighting for the top spot as recently as 16 and 17, and Google's almost not even in the conversation anymore. It just quietly makes a fortune every quarter, but it doesn't seem to be in the conversation. Google's not even $1.1 trillion. Yeah. They don't even talk about it anymore. It's just this tiny trillion-dollar market cap. All right. Let us know what you guys think.

We love your feedback. We love when you jump in the mix. Go ahead and leave us a comment. Leave us a like. We'd love the likes. Subscribe to the channel if you have not already. Michael and I will be back next Tuesday. Thanks for listening. Check us out at the compound news.com for daily investing and

market insights. You can watch all of our videos at youtube.com slash the compound RWM. Talk to you next week.