The Compound and Friends - Ultra High Net Worth

Episode Date: July 9, 2021

On this week's episode of The Compound & Friends, Michael Batnick, Jason Snipe, and Downtown Josh Brown discuss: retail investors, dissatisfied advisors, CapGemini's ultra high net worth survey, underrated stocks, payment for order flow, the Knicks, stadium naming rights, and more! This episode is brought to you by Masterworks. Visit https://www.masterworks.io/compound to skip the 10,000 person waitlist. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

It's a real professional operation we got here, bro. I'm telling you. I love it. We just started. Like, we started. This is, I think, the fifth show. This is sixth already? Yeah.

We're getting better. We're getting a little better each week. So. It's all good. That's all you can hope for, right? Exactly. I got a take. Be sure you silence your phones and computers. Oh, yeah. So we don't have things going off. They can go off. I got to take. Be sure you silence your phones and computers.

Oh, yeah. So we don't have things going off. They can go off. I don't care. You know I don't care about that stuff. I know you do. I know you do. I would prefer them not going off.

Wait till I tell you in like three weeks that I want to start patching phone calls through to the show. Oh, boy. Mike doesn't know the plan yet, but that's definitely a thing that's going to happen alright bye where are they going? home Kobe soon unless it was cancelled

why is it outdoors? yeah this morning he was so bad I told him Kobe do better I swear to god is that a twitter thing? I just told him, Kobe, do better. No. I swear to God. Like Twitter? Yeah.

Like Twitter? Is that a Twitter thing? Yeah. I just told him to do better. He was so bad this morning. Like when somebody posts something that's wrong and somebody corrects them and they're like, do better. You ever seen that before? No, but when he was leaving, I was like, Kobe, come give me a hug.

So he gave me a hug and I looked at him and I said, do better. What did he do? How old is he? I don't think. Four? Four? I don't think. Four? He doesn't know what you're talking about. He's like, what does better mean? What do you want me to do?

All right, Dad. Talk to you later. Yeah. Take me to Disney World. Kiss my ass. How are you into the city? Rail? He drove.

No, I drove, man. How was it? It was perfect, actually. He flew in. Yeah. I don't really feel it. He's really not that far. 90 minutes or not even.

It took me. Yeah. About 90 minutes. I see. Bang out some phone calls. Yep. Calls. That's the thing that's like nice about like commuting every so often.

It's like, yeah, you haven't had a long time, like a long time, a long time. You don't get that at home or even in the office. Yeah. Without a doubt.

Yeah. So yeah, I looked forward to it. Sometimes I take the train back and forth. I don't even get out of the. Yeah. So yeah, I looked forward to it. Sometimes I take the train back and forth. I don't even get out of the train. I just want, I just want to be, I just want to be alone.

I just ride the train. You gave Jason homework, made him watch tenant. I fucking boycotted that movie. I'm saving it though. You boycotted it. I'm out. Yeah.

I'm out. I love Christopher Nolan. I love Christopher Nolan. Oh, can you rewind that? I didn't catch that. Dude, I have no idea what's going on in this movie. I got a bones pick with Chris Nolan.

Yeah, me too. I think he's doing this on purpose now at this point. I haven't even seen the movie. Wait, what was the other one? What do you mean the other one? His other ones? No, what was the one that was also a mindfuck? Oh, Inception.

Inception. Interstellar. I still couldn't explain Inception. I love Inception. Interstellar was the dad. That was McConaughey. And then he, like, the daughter ages while he's gone. Yeah, I love that movie.

I saw it on an airplane. Inception? Yeah. No, Interstellar. Interstellar. Was that a Dolan fan too? Yeah, because it got, I kind of think some people gave it bad reviews or whatever, so I skipped it, but I saw it on an airplane, and I was blown away.

Probably because my expectations were so low, but I really liked that movie. Probably because you were on an airplane, and the alternative was staring at your lap. Movies are like 25% better on the airplane. I don't think I've ever watched movies. It's because you're focused. Exactly. That's it. Nothing else to do.

I've never watched a movie on an airplane and not had a good time. Never. Really? I love movie airplanes. Yeah, airplane movies. Airplane movies. But no, because that's the point. At home, HBO Max is nice, but you're on your couch.

You're just checking your phone. That's why I love going to the movie theaters. No doubt. Even though it's a dying model. Because you can't be an asshole and have your phone open with the light and everybody's trying to watch. The experience is better. So much better.

I have to rewind movies because I have my laptop in front of me when I'm watching them. Not even a phone. I did that yesterday. Like a computer in front of the screen. I did that yesterday with Loki. I rewinded it like a few times. I was like, ah, I just zoned out. I can't watch that show.

I tried. It got bad. Never got good? Well, it got bad. When was it good? Yeah, it started slow for me. I liked episode two with Owen Wilson. It started bad and then got worse. Hold on. What show is this? Loki, a Disney show. Isn't that good?

All right. We're in business? John is our George Lucas. 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

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skip their wait list by going to masterworks.io slash compound today. Welcome back to the Compound and Friends. My name is Downtown Josh Brown, here with Michael Batnick as always. Duncan is in the house. John's in the house. And our friend Jason Snipe from Odyssey Advisors, not Odyssey Partners, Odyssey Advisors. You got it, man. All right. We're so happy to have you here today. We have a ton of stuff we're going to get into today. We're going to do some economic stuff. We're going to do some financial advisor, biz, insider stuff. We're going to get into today. We're going to do some economic stuff. We're going to do some

financial advisor, biz, insider stuff. We're going to talk about retail investors, so much more. We'll get into some Knicks and NBA stuff. And hopefully you guys have as much fun listening as we have recording the show each week. Thank you guys so much for all the comments, all the five-star ratings. If you haven't done that yet, I don't really know what your story is. Are you so busy? Give us a rating. Give us a review. It goes a long way on the podcast apps.

Jason Drove here from Philadelphia. Yes, sir. Awesome. How many times did you have to stop? No traffic whatsoever. No traffic, no stops. Appreciate you giving me the opportunity for some alone time.

Dude. You know what I mean? So what did you do? Who'd you talk to? The wrong people. Were you calling in I mean? So what did you do? Who'd you talk to? The wrong people. Were you calling in radio shows? Did you call the fan? Long time listener,

first time caller. That's right. Mike listens to podcasts when he's commuting. You right? Yeah. Okay. I set up phone calls

and I find the time flies. Really? So, yeah. So you organize even your drives alone time. I used to do a double commute. And I guess let's first set this up. You're on Fast Money, right?

You got it. So I was doing Fast Money halftime report. And prior to the pandemic, I was doing two commutes a day each way. Wow. So I had to set my day up that way. Okay. I get it. So I would take a train into manhattan work for

two hours then get into a car service go to new jersey then do the show get back in the car service come back to manhattan then go back to long island so i do that mike step michael tell you i'm not exaggerating a lot i think i was doing that i think i was doing that three days a week, but I don't do that anymore. I paid my dues. And in pandemic America, we could do TV from anywhere. All right, let's get into this first thing because I thought this was really interesting. Retail investors power the world. There's a Wall Street Journal article to that effect and basically record cash inflows. Individual investors plowed $28 billion into the

U.S. stock market just in June alone. And that seems to just keep going and going and going. What'd you guys take away from this? I mean, my thoughts are, man, it's environment. This is an environment. Rates are super low. People are home. They have nothing else to do. Still. Still. 15 months later. We're talking about returning people to work in the fourth quarter of this year. All right.

So 20 months. Dude, makes a lot of sense to me. I think it's great for the market. I love it. 10 million new brokerage accounts opened in the first half of this year. There were 10 million in all of 2020. So if you thought the meme stock thing was coming to an end, it might be just starting. I thought 2020 was the year of the retail investor, but apparently it's 2021. I'm curious to hear, why do you love it? Because I feel like

that's a take that's not so common. So I love it in terms of just engagement, right? So even talking to people, talking to family, cousins, uncles, people I went to school with that had no interest in this six months ago, 18 months ago. I love it from that perspective. There's other issues I understand, but for me, that's what I like. What's the first thing they ask you about or tell you about? Probably a trade they're doing. Right. Okay. What is AMC? Why is it going down? Why is it soaring? What is this stock I just put $50,000 into? Can you explain?

What is an option? You know what this is? You know what this has disrupted though? The shoeshine boy indicator. Remember, I did a post in June of 2020. I was in my office and literally my plumber came into my office and he saw that I had some charts on my screen. And he said, you trade? So I just said to him, I said, all right, what do you got?

Show me, show me your phone. So he took out his phone and he goes, what do you say? I have $100,000 in the market and I have no freaking clue what I'm doing. It was something along those lines. He now has a million. And it was all the exact. Still no clue.

He bought Kodak. Really? still no clue he bought Kodak really but my point is at any other prior point in history a professional investor would have seen that and been like I'm out I'm going to cash that was like it was a year ago

it was like 40% ago you know why it doesn't work because when you have 10 million new brokerage accounts opened everyone's a shoeshine boy if the indicator is everywhere it's not the indicator anymore. So what's interesting is that these people like, yeah, some of them are just purely speculating gambling, but a lot of them are doing real work and they're finding new stocks. Like for example, the journal was saying that individual investors in the last two weeks sent these stocks soaring.

I've never heard of these stocks. Maybe you guys have. Alfie, Marin Software, Iconics Corp soaring 100% or more intraday. Have you guys heard of these stocks? Never. Never heard of them in my life. Never. No idea. So the thing, like, it's so quick.

Like, Rob Hood has become, like, TikTok'd. Yeah. Where the speed at which information travels. Yeah, we had message boards in the 90s. I wasn't around then to be trading, but it's not like this. This is the holy shit stat. Strategists with Bank of America estimate that if the pace of inflows continues at the same clip for the remainder of the year, equity funds will take in more money in 2021 than in the previous 20 years combined. John, throw this chart up.

That's insane. It's nuts, right? Do we have that? No, but the question is like where. John, throw this chart up. That's insane. It's nuts, right? I mean, insane. Do we have that? No, but the question is like, where is this money coming from? Right. I don't understand. Well, I think some comes from the bond market,

although there have been bond market inflows too. But bond markets are getting tons of inflows. Well, it's coming from the Fed. But what does that mean though? The money supply exploded. It has to go somewhere. It's not going to go in garbage bags. It's not going to go under the supply exploded it has to go somewhere it's not gonna go in garbage bags like it's not gonna go under under the mattress it has to go somewhere people are people were made liquid and they're doing something with it i know but but these

numbers are just gigantic though um that's a powerful number but now it's not all going to robin hood and i think this is like maybe an important point. So while that, so Robinhood is $80 billion in assets, which is a lot, right. For a firm that was started a few years ago. But it's also 5.4 trillion still parked in funds that are in that ETFs or index funds. It's not like all of the money coming into the market is speculation. And I think I heard you and Ben talking about this. Like Robinhood's impressive, but Vanguard is now over $7.5 trillion or something. Yeah.

So it's hard to say retail investors are doing this or retail investors are doing that. They're doing a lot. Yeah. They're doing all that. And I think that there's also people that are putting the bulk of their money every two weeks in their 401k into these index funds, and also having a lot of fun playing the stock market on the side. Like there's people that are doing both.

How do you guys think it's affecting the industry as a whole? I don't know. I feel like it's so early, it's hard to tell. And a lot of it's going where it was already going. Like BlackRock and Vanguard just keep getting bigger. Well, I think that these people are,

I don't know if they're impacting the industry, but certain parts of the industry they are. Like what they're doing with some of these meme stocks and targeting the short sellers, like the game, if you were playing that game, this is a game changer. Like there's no doubt about it. Short and small and medium. You can't go on stage and be

vocal with your shorts the way that you used to. So go ahead. How do you think it's affecting or impacting the future of advice? These are not advised people. I get it. Yeah. I get it. But maybe they would have been at some point.

Or they someday will be when the fun is over. So to me, that's the biggest question is if you enter the market through the prism of, okay, this is a casino, can you unlearn that behavior? And I think you can, but it's going to be a long time before we know the answer to that question. What was your, what was your first experience trading or were you trading or investing when you first like got involved investing, but is that because of your profession? Yeah. I think it was just the way we grew up in the business. Yeah. And the profession, of course. Right. So I, so you did not grew up in the business. Yeah, and the profession, of course. Absolutely. So you did not start off in the advisory profession.

You started off trading. Yeah, so I started trading. Your own personal accounts. Yeah, one time I was trading options. I was trading. Mike kept a trading journal. I did, I did. And he saved it.

It's hilarious. It's amazing. So thank God I did that. And the reason why I did that, I can't remember why. That's awesome. But what it did was it made me be accountable to myself. Yeah. Cause I couldn't like, you can't, it's the best way to learn. It's easy to bullshit yourself. It's really easy. It's actually hard to be honest with yourself. Right. But you, did you do it for that reason or just turned into, Oh, this is the tool. It turned into that. And I was going through my notes, like updating my priors and what I wrote down like six months

previously, it always looked silly. Everything I wrote looked really silly. Humbling, man. But I was having fun. I started trading, I think in like 2010. I had a temp job at Citibank. And the first thing that I bought was FAZ, the triple levered inverse bank ETF. Because I was shorting the banks. A lot of people start with like two shares of Disney, I was shorting the banks. A lot of people start with like two shares of Disney. I was short. I was shorting the banks with leverage after they, after they fell 90%. And the move was by FAS, the triple bull, but I didn't know what I was doing. So I was just

taking bathroom breaks, going on my phone. And, uh, what was Citigroup paying you to do? That's a good question. It's funny. I was telling the story today. I was the jackass who was looking at compliance videos and making sure that the videos were appropriate. I don't know. It was the worst thing ever.

You were in compliance? You were trading the FAC on Jandrum Bricks? I never put the irony of that together. I don't know if that was compliant, but I was temp. I wasn't on it. Oh, so they didn't have to get duplicate statements. Like, can you imagine?

I was shorting city during my bathroom breaks. It'd be really great if Michael took down city with his E-Trade account. Dude, don't joke. I had a hundred bucks, but it was levered three times. Jason, what was your first trade or investment? First trade or investment. Do you remember? Did you keep a journal?

I did not keep a journal. Me either. It was probably an ETF. Okay. It wasn't as interesting as yours. All right. So you were doing it right from day one. I think so.

If I was 20 years old, I would be such a junkie right now. I'd be all over Robin Hood all day. So the thing is like I think people are under the illusion, and I was, but I think I had this like lipo moment last week. That could be wrong, but Robin Hood is the most powerful drug in the world. Like in terms of like social media, like we think Twitter has hacked our brains. drug in the world. Like in terms of like social media, like we think Twitter has hacked our brains. Like Robinhood is so addictive that I don't think people are going to get unaddicted just because the sun comes out. Why do you think that is? Which part? Why is it so addictive? All the flashing lights, just the ease, the user interface is so nice. And you see, like you see

literally your money intraday. Yeah. I think they said the average Robinhood user, I don't want to make this up, but do they check their phone seven times a day? I mean, or they have an 84% monthly active user, like 84% of their users, maybe daily, whatever it is. I don't know. I'm bumbling the numbers, but it is addictive. Don't you think that, all right, but so we had a one year period where the S&P went up 75% and 96% of stocks had positive gains. Of course people are checking their phone. It's like a f***ing ATM machine.

You're right about that. I don't think that that is going to be, I don't think they'll be as addicted if the market gets boring. But the thing is, it's not going to get boring. Why? The market might get boring, but there's always meme stocks.

2014, stocks went down. Stocks were flat. The index. There's always shit moving. Always. I guess they will always gravitate toward whatever is hot. And whatever. If something's not moving,

legitimately, they can move markets. They can move stocks. I agree. So I don't think it's going away. Are you talking to any like Robin Hood-esque investors right now? I'm not, man. Okay. They're not coming to you and you're not finding them?

Not at all, man. It's interesting, super interesting to me, man, just how it's evolved and how it's developed. And again, just like I mentioned earlier, I think it's totally indicative of the environment we're in. 100%. I don't want to have opinions that are- Perfect timing for the business.

Definitely. Jason Zweig did this piece where Josh was just talking about like there were – 96% of stocks were up from March to March. So it was the perfect environment for this at-home. That ain't going to happen again. It's not going to happen again. I don't want to be too strong with my opinions because it's just – I mean maybe this goes away. Maybe this is a fad. I just don't think it is.

Yeah. I agree, man. Now, it doesn't have to end badly either. It could end with 20 million people getting the speculation out of their systems or realizing they're not cut out for it. Like some people are cut out

for it. That happened to me. Most people are not going to be profitable, consistently profitable traders. Right. Like that's just Right, right. We know this empirically. Right. So the happy ending though, rather than like, you know how people always say, we know this empirically. So the happy ending though, people are always like, oh, this is going to end badly. This is going to end in tears.

What if people gradually start to realize, all right, that was fun, but actually I want to focus on my career now or do something different than stare at my phone all day and I'm going to start allocating my money more long term. Couldn't that be the way this ends? It could be, man. I mean, what do you guys think if markets shift, right? We're in a drawdown. What happens? Do you think there's a flood out of these Robinhood accounts? Hasn't been yet. I don't

think so. I mean, we haven't seen a major. They're going to go. They're going to start shorting or they're going to buy the bearish ETFs. You think that's how it plays out? I don't think a bear market is going to wipe them out. I really don't. Maybe I'm being naive, but I just think that they're going to continue to trade whatever's moving either direction. All right. Now, what if you hear from a Robinhood person, as I have, and they say, no, I get it. This is not my real money, though.

My real money is in my 401k and my IRA and I'm just having fun. That's a good point. People will have the rights to what they want to do. I'm all for that. I think the market can be a lot of fun. It is a lot of fun. So that's why I feel like on balance this is a positive. I know Ben doesn't feel that way anymore.

I just think that like it's very messy. On balance, more brokerage accounts, the better. Even if people are doing crazy shit in there. Right. Right. I want to talk about advice. And when did you, when did you, you founded your firm?

2018. Wow. All right. Still has that new firm smell. That's it, brother. All right. So you're seven people. You're in the suburbs of Philadelphia

or you're in the city? Yeah, right. We're like 20 minutes west of the city. So, yeah, suburbs. Mayor of Easttown? You got it. Alright, so let's pull this thing up from, I guess this is J.D. Power and Associates, but it's not about luxury SUVs.

Right? Who did this study? Yep. Financial advisor satisfaction. J.D. Power and Associates, but it's not about luxury SUVs, right? Who did this study? Yep. All right. Financial Advisor Satisfaction Study. Right. All right. So the headline, this is designed to make you click, but the headline at Financial Advisor Magazine, 34% of wire house advisors say their firm stumbled during the pandemic.

I would say 100% of firms stumbled during the pandemic. Without a doubt. In some way. Without a doubt. It's not a wire house thing. We had to do this overnight. Right. So-

How do we communicate with clients? How are you- Everything. How do we work in this decentralized environment? Okay. So first of all, the wire houses get picked on a lot. I'm not going to like pile on. But 34% of wire house advisors reported reduced levels of support for the home office.

Yeah, because nobody was in the home office. 29% cited disruption of business services. Again, because support people working out of their kitchens. Like what, you know, what else could you. Yeah, I was thinking like, okay, so 66% of respondents were like, please? That doesn't sound – 34% doesn't sound like a lot. Right. Doesn't sound terrible to me. All right.

The study rankings show the firms with the highest overall satisfaction among employee advisors. Edward Jones, that's – I mean it's a little bit cultish over there. The Edward Jones people love Edward Jones. I think they would have been number one no matter what. Followed by Raymond James. Congrats to Raymond James. Stiefel, which I don't really know anybody who's, do you know any, any Stiefel people? I don't know any. Yeah. That sounds like they bought somebody else and that's why they have so many advisors. And then the bottom three, Merrill Lynch, UBS and Wells Fargo. Surprised by any of that? Unbelievable. Not at all. Can you imagine being an advisor and Wells Fargo. Surprised by any of that? Unbelievable. Not at all. Can you imagine being an advisor at Wells Fargo right now?

Yikes. All right. So what I was basically going to say was if you're still an advisor, and this is not to pick on Wells Fargo, but they've had like a five-year stretch of just horrific headline risk. I'm thinking either A, your client base is majorly tied in with the banking side and they're just not portable relationships, which we see all the time.

B, you're too old for this shit. You're not looking to start a new firm. You're not looking to negotiate a new deal, make all your clients sign ACAT forms. Or C, you're young. You don't know any better. Or you're somebody's nephew and they took you into their team or the training program.

And when your parents hear the words Wells Fargo, they're like, ooh, my son. So I think that's a lot of the reason why people would say I'm unsatisfied, but I'm not leaving. You know, what was interesting to me about this is a lot of times surveys are bullshit and people don't really say what they mean. And it just sort of like hollow. But in this case,

it matters because they found that from 2018 through 2021, 18% of advisors working for firms with the lowest overall advisor satisfaction score switched firms compared with just a switch rate of just 5% among the firms with the highest score. It's a humongous spread. I think it's definitely B, man. I think just from even thinking about my personal career and how we've transitioned from IBD space to the RIA space, it's amazing how many people have reservations of going independent, right?

And that have been in the business. What does the reservation come from if you're an about advisors if you're if you're at an ibd your clients already think you're running your own firm and you almost are got it so what are the reservations then like just the hassle the hassle of it the hassle of it you know having to run your shop completely all that comes with that i think is challenging for people and especially if you've been in the business 25 30 years you got it why do you want to go through that now? Compliance, payroll. Compliance, payroll.

Everything. Everything. If you're a corner office guy, every time an advisor leaves, the clients are shoveled onto your desk. That's a tough situation to walk away from. Yeah. The other thing is you might owe money back if you took a big check to go there. Right. Nobody wants to tell their spouse, hey, remember that check we got?

I actually have to cut a third of it as a new check and send it back. Exactly. Wait, why? The other thing I would say too is succession, man. I think there's a lot of folks in this business that are retiring, trying to figure out, let me figure out who am i sending this business to who's going to take over my book or how about this there's a lot of people that should be retiring but they're not right well that's that's what i've seen like the 70 year

old advisor who's been telling the person under them they're about to retire for 20 years and they just don't and then by the time they're like going to retire for 20 years and they just don't. And then by the time they're like going to retire because they, they broke their hip or something, then all of a sudden the clients in the book are like passing away. Right. So it's like, if you, if you worked in that situation under that person for decade,

and then it's like, all right, it's my turn. And there's no new clients coming in. That's a tough, that's a tough situation. No one went to leave. Yep.

Yeah. JD power said, this is the last thing on this. The average annual production of advisors leaving their firms. So this is like the fees they generate or the commissions they generate $800,000. And 63% of investors said they would follow their advisor if he or she left the firm that's not a good number that's not at all i'm shocked by that 63 percent so 37 percent

of advisors clients are like i'm staying with the bank i'm staying with the bank wow it's got to be for banking reasons yeah well i was gonna say that can't be the right number for an IBD because the client has no relationship to Commonwealth. You got it. Or even some aspects of Raymond James, I think is more like a corporate RIA. Yeah. I don't think the client's staying in that situation. No way.

That's absolutely a bet. That's an environment deal. Do you ever have to call somebody whose clients left? No. I did that for 10 years. I swear to God. I did. Did you?

Yeah, MassMitchell. They were called orphans. Very nice. That's right. Yeah. Beautiful. Yeah. Well, these were insurance policies?

Yeah. That left? Orphan program. Yep. Okay. I did a- You can imagine how lucrative that was. I'm being sarcastic.

We would have, we would have, I shouldn't say advisors. We would have brokers leave the firm and i was like a co-branch manager so they would hand me like 100 accounts they'd be like we assign these by the end of the day before so-and-so calls them from whatever firm he bounced to and even like even before i could even look up, there was a line out my door. It was a line of brokers waiting for their new accounts to be reassigned to them. Those days were not a lot of fun if you were in charge of reassigning. But 63% is a bad number. Wait, are we jumping from survey to survey? Is that what we're about to do?

Yeah, Michael hates surveys. I love surveys. Let's get into this new one. This is a good one. Do you believe this one? No. Okay. Capgemini Ultra High Net Worth Survey.

The biggest wealthiest liars in the world. Capgemini's 2021 Global High Net Worth Insight Survey. They interviewed 2,900 high net worth individuals across 26 major wealth markets. North America, Latin America, Europe, Asia Pacific. So first things first, during the pandemic, 520,000 people got up to $25 million or more in assets, which is what they consider ultra high net worth. And that grew 2.5% during the pandemic year. We're not surprised by this. If you had assets, you made money. You got way wealthier than if you didn't. This was the part that I was surprised by. Millennials make up 47% of ultra high net worth people now. And they

haven't, if you're above that 25 million, they have an average net worth of 164 million which is a higher average than gen x that's because zuckerberg's worth 4 trillion he's skewing the numbers exactly no but that is what that is right that's technology ipos right we could agree that's probably the biggest source of not farmers um a lot of it could be inheritance though too or i don't know possibly not to get up not to get 25 million yeah very few people are inheriting at that rate that's got to be like stock market wealth creation right i feel like right uh surprising though man so surprising so you have to build a business though to speak with this generation and one of the things i wanted to ask you was i don't feel that most of the firms that

that we quote unquote compete with have any idea how to talk to was, I don't feel that most of the firms that we quote unquote compete with have any idea how to talk to this demographic. They weren't built to do it. So do you feel like advisors are better off building something from scratch than trying to shift an existing wealth management firm to talk to the 73 million millennials that are now basically running the markets and the economy? Yeah. I mean, for me, obviously I'm biased. I think bootstrapping is the best way to do it, right?

And I'm on the tip end, I guess, of being a millennial, 40 years old. So for me- You're not a millennial. You're not a millennial. No offense. All right. I'm a tweener. I tell people I am, but I'm not.

You're a tweener. No, I guess you are. Yeah, yeah. When does it start? I think it starts in 81. Yeah, I think'm not. You're a tweener. I guess you are. Yeah, yeah. When does it start? I think it starts in 81. Yeah, I think you are. You're the oldest. You are the oldest millennial.

They call it geriatric millennials. I'm the baldest millennial. All right. So you built a firm from scratch in the last four years, three years. You got it. So what did you do differently that maybe other wealth management firms in the area aren't doing? You know what, man?

I think just thinking about our firm, highly related, and I think that all this stuff is cliche stuff, right? Highly relational, you know, client-centric, all these different things. But, you know, I think it's been about the way we've done it in a boutique manner, right? So our relationships are everything.

That's a heartbeat of our firm. I think it's a heartbeat of a lot of firms, but it's never been a volume play for us, right? So it's like, man, look, if we're going to take on XYZ, we need to have capacity to do that. And obviously we're in the embryonic stages of that. So volume, we tried to trim that down. You have to be more selective. Exactly. But is that selective in terms of like the assets

of the potential client or more like what you could do for that client over a lifetime? I think it's a combination of a lot of different things. I think it's the person, it's the asset level, it's the relationship, it's the dynamic between them and our staff, right? You know, is this somebody that energizes the entire

group? If they don't, it's probably not going to work, man. I like that. I like that idea. We, we hadn't learned that the hard way, but we, we did learn that, you know, not all client relationships are created equal and you want to prioritize for the ones that you think are going to go the distance. It's too much effort to onboard someone that you know is not going to be happy in three months. You're going through too much up front. Let me ask you guys this for a sec. Let me nitpick for a second. Do we think that – this is a bad exercise.

I was going to say $25 million net worth. People that have at least 25 probably on average have way more than that. I would agree. Because 164 million on average. Is that what it is? Is that what it was? Yeah. That's what they said it was. For millennials.

Those are family offices at that point. Right. I think like, I think for the most part. All right. So, so let's just say, let's just use $200 million as a number.

We'll use that. So your net worth. Right. Exactly. So $200 million, if there's 520,000 people that have that, that's $100 trillion in assets. The global total assets just blew my mind.

$430 trillion. Yeah, but they're not saying that. That's so much money. They're not saying that all those people have 164, 200 million assets. They're saying it's like an average. So that's what I'm saying. I'm doing the average. Right.

I'm saying if 520,000 people on average have $200 million, that's 100 trillion. That's 25% of the global worth, global net worth. I guess that sounds about right. 520,000 people is 0.01% of the population. Well, that's all those,

that's all those like that Oxford thing that comes out every year, how like the wealthiest 1% own more than the bottom 50. You got it. I mean, this is bad on steroids. This is 0.01% of the population owning potentially 20 to 25% of total assets.

Percentage of women in the overall client pool. So this is not ultra high net worth. This is just high net worth. What's high net worth? Probably, I'm guessing 5 million plus. I'm just making that up. I didn't actually read the fine print. Percentage of women in the overall client pool is rising through both inheritance and increasing female entrepreneurship.

In the U.S., there were 114% more women entrepreneurs than 20 years ago. And 40% of U.S. businesses are women-owned. So I would just say, like, they caught up really fast. That's major. Like, hundreds of years of history where they couldn't even get a bank loan. Right. And then in the last two decades, they caught up really fast and it's not stopping.

This is the big story from here. And the journalist did a piece on this last week about the wealth, the wealth transfer, $70 trillion in wealth is going from the boomers to our generation. Right. By that, by 68 trillion by 20 to our generation. Right. By 68 trillion by 2042. Yeah. Major. The next two decades.

This has never happened before. That sort of wealth transfer has never happened before. Right. It's glacial, so you don't see it. It's not like an event that happens. It happens every day a little bit, but it's still so big. You know the stat 10,000 baby boomers are retiring every day? Yeah. This is morbid, but at some point it's going to be 10,000 baby boomers are dying every

day. It's crazy. Somebody's keeping that stat. I mean, I don't like hearing it. My parents are boomers. I'm definitely not looking forward to hearing those headlines. So how do you prepare for that? As an advisor? As a firm? Well, I guess before the firm, advisor as a firm well what about and as well i guess before the firm like as a family right those are hard conversations to have no so nobody's having those conversations what all right this is one of the highest functions of a financial advisor in america in 2021 talking to the already wealthy is what are your plans like when do you plan to let your family know what you have what you likely will have where it, where it is, what you hope they do with it? Nobody is having these conversations from what I hear and say.

Advisory firms are facilitating these conversations, but to your point, they're so uncomfortable and they're so hard to strike up because nobody wants to think about it's also hard for the advisor to have that conversation that's like the most personal thing like we know everything about our clients financial lives but this is like a step beyond that no doubt um i think probably as an advisor though if if the client brings that up to you it's a big icebreaker no doubt so i think one of the things that we've done is really started to acclimate the kids into the conversation, man. I think it's been huge. It's actually, we beta tested it

with some of our really strong- Adult children. Exactly. Young adult children. Just starting to get them involved. Not the five-year-olds. You got it. Right.

So how do you do that? Dude, we're upfront about it, man. Like, what is your legacy plan? What's the strategy? What are you guys going to do? You know, let's start talking about it before we have to talk about it. Right. And just being really proactive with it. But it's gone well, man. I think it's, it's, it's important. That's why I was curious. Like, what are you guys doing? What, I mean, I just think it's so

important, this whole wealth transfer. I mean, you, you know, the numbers. Yeah. Well, estate planning is obviously a big part of what advisors do, but like, I feel like some of this stuff is even a step beyond the estate planning. Cause we could say like, okay, where's the money going? But then like facilitating that conversation so that the kids aren't like blindsided by this when it happens to be ready. One of the things that I hear when I jump on calls with our advisors who are talking to wealthy families is a lot of times, this is just the nature of stock market stuff. It's the husband who initiated the contact with us, but then the husband dragging the wife onto a first or second call just to like make sure she's in the loop. We get that way more than the reverse and probably it'll

always be that way. But then by the third or fourth conversation we see that the women are taking over and in most cases fortunately because here's more a lot of this money will flow first to widows who in heterosexual couples tend to be younger and also tend to live longer than their husbands researchers estimate that about half of women over 65 outlive their husbands by 15 years.

That's a lot of time. It's like another lifetime. If you've not learned anything about finance until your husband passes, that's a lot of time on average to be managing money. In a report last year, McKinsey, a consultancy, reckoned that much of boomers' wealth would be managed by women by 2030.

It's like nine years from now. I could definitely see that being by 2030. It's like nine years from now. I could definitely see that being the case. Yeah. So, uh, 2030, well, it's 2020 LGBT.

Uh, I thought this was interesting. I don't think the traditional wealth management industry is really prepared for this in any way whatsoever. Traditional family structures are evolving. Even, even on our conversation today, we're talking about husbands and wives,

uh, an increase in single families, cohabitation arrangements, and same-sex marriage. In 2019, LGBT adults globally held combined buying power of approximately $3.7 trillion. I don't know where that stack comes from, like how they got that number, but

that's going to be a big part of wealth management, whether people are ready for it or not. Planning is evolving, man. That's what it says to me. You have to be prepared for this. We're going to see more of it. These trends are not changing, not going backwards. And doing planning for same-sex couples is not exactly the same thing as doing planning for, I don't want to say traditional, but for heterosexual couples. It's not quite the same thing as doing planning for, I don't want to say traditional, but for heterosexual couples. It's not quite the same thing. And I know that there's an accreditation that advisors can get

to be able to speak to those issues authoritatively. My partner, Chris, has that. All right. 57% of high net worth individuals say they would prefer an advisor that matches their socio-demographic profiles as they expect them to better understand their needs. This is the big one to me. What is? Diversity. Diversity, because our industry historically looks like me. That's not what wealth is going to look like. I feel like everyone's trying to address it, but they're really, how should I say this? The student body coming out of financial planning programs

has to shift in order for this to work. So, I mean, what do you think about that? Dude, so important, man. I mean, you have to be really intentional about the diversity piece. We're serving a different client, right? And I mean, the stats just said it, right? So I think for us, I mean, look, this is my city. I grew up in this town.

What was great about it for me, always coming downstairs and all the different languages you heard, all the different types of people, different perspective. I think naturally as human, it's kind of human nature to be tribal, right? We roll with our crew, what's familiar, what we know. But dude, it's probably the worst way to go, right? And thinking about the future and where we're going to be. So the wire houses had this concept and they were smart. They knew this intuitively that older, wealthier people, which was their bread and butter, probably were more likely to do business with people who look like them or their sons or grandsons. And that's how they recruited for years and years. And that shifted, of course,

they're not doing that anymore, but that had gone on for so long that the industry looks the way it does. And we can point to things where there's progress, but we're probably going to be playing catch up in our industry, I would guess, forever. Oh, wow. Yeah. I mean, you got to tap new wells, right? There are tons of minority groups that are not even terribly familiar with the industry, right? That just need to, you know, they think about maybe investment banking or whatever, but like wealth management. What is wealth management? Yeah. If you're not at a college with a financial planning program, it's unlikely that anyone would even speak those words to you. You got it. And when you think of Wall Street,

you think of trading or banking. Right. So I agree. There are some professors and some programs that I've spoken with over the years that are doing a pretty good job with this stuff. Like they're speaking financial planning language to kids in school.

But even like a 20-year-old learning these concepts, it's going to be so long before they can actually be an advisor onboarding wealthy families as clients. Like something has to take place in the interim. And how do you do it? How do you train a 22-year-old to talk to a $5 million household? Mentorship, man. It's like years. Years. It will take time, but mentorship is key.

I've had some really great mentors throughout my career. That's just – I mean, you know. You guys know. Who is your biggest mentor in this area that really showed you how the business works? Yeah. I mean, it's two managers, two people in particular. I mean, one was my first manager when I was with Medlife. You know, he was great. I mean, just teaching me the business, but also look like me and help me understand, all right, this is how potentially you might need to navigate. That was critical. Yeah. You know, because I, again, when you're

looking at diverse candidates and minorities, their experience might be different than yours. And how they're attacking the marketplace, what they're doing, who they're talking to, who their ideal client is. So that was super helpful. You got to see that up front. You got to see that up close. Real life, real opportunity. So I think the mentorship is key. That's key to help grow from there.

We're going to do a hard turn into some stock shit. You mentioned that you just hired an analyst. How do you guys go about looking for stocks, selecting stocks, talking to clients about stocks? What's that like at Odyssey? It's fun. Fun and a lot of work, as you guys know. We've used outside research partners.

We just started developing our own research. We started working with FactSet and kind of building our stuff out. But it's been difficult, man, because it's hard to, and I was talking to Mike about this earlier, it's hard to do your own independent research, advise clients, continue to market, build your brand, and run a business all at the same time. So honestly, it's this hiring of this analyst is the first step in that kind of research direction. Like, hey, look, this is, you're going to own this and you're going to help us build our enterprise portfolios and build it out from here. So what kind of strategies do you need to bring

in-house versus use outside? Like, what are you thinking of doing as you build it in a proprietary way? Yeah, so we have like thematic strategies that we have put in place. So for us, it's like, okay, let's pull in everything that we're getting, all the information that we're doing, and internally in our investment committee

really make decisions on, hey, this is what makes sense for our moderate portfolio. This makes sense for our tactical portfolio or our aggressive or whatever that is. And that's how we're starting to build it out. You know, but the vision ultimately is this is something that they run entirely. The analyst team, they're running it, you know, just like we've leveraged analysts in the past, you know, as partners. So you want to be the front end handling the relationships, bringing on new clients, and then have the portfolios be managed internally where it makes sense. You got it.

Right. So we're doing a mix of internal and external. Got it. And it depends on the asset class, right? All right. So we have some stocks here that are underrated underfollowed uh just some stuff that i thought was interesting so i see pen and uh and target in the who's one of those those are both mine okay so i just want to talk about pen gaming was so this is portnoy stock

had one of the craziest years i've ever seen of any stock in 2020. It did. This thing at one point was down 80% on the year. And it finished up 240%. I think it was one of the best performing stocks in the Russell 1000. And the reason why I say it's under-followed or under-discussed right now is it's in a pretty massive drawdown. I think it's down 50% from its recent high.

I thought that was notable. So if you bought it in the spring of 2020, you're still up a lot? Oh, a ton, ton, ton. But if you bought it in the spring of 2020, you're still up a lot. Oh, a ton, ton, ton. But if you bought it at the beginning of this year,

you could be down big. It's in a, yeah, it's in a 47% drop. The stock was a hundred. I don't know. I don't listen. I don't know what's going on,

but I was listening to a podcast the other day. And, um, obviously one of the big things that they do is, is sports betting. Yeah. And that's a commodity and it's a great business. There's a ton of competition.

Uh, fan duels giving 30 to 1 odds of your first free bet. They'll give you up to $150. You bet $5, you win $150. Just goes to show how lucrative this business model is. If they're willing to give you 30 to 1 odds and have you win,

that tells you how badly they, how much they'll pay to acquire a customer. So anyway, the competition is obviously coming in. Wait until I said, this is not my take. Wait until Robinhood puts sports betting on the app. Oh my God. I mean, is that, do they know that? Transformative.

No, no, it's just speculation, but why wouldn't they? Yeah. So now in my portfolio, I'm diversified. I have stocks. There you go. I have crypto. I have prop bets on NHL games. There you go.

So, all right. So sports betting is an asset class. Robin Hood's going to – that makes sense. Do you run into people that ask you about playing like the gaming theme, speaking of thematic, or not really? Not a ton, man. Not a ton. I mean, we had a couple of inquiries on draft games early in the year. That was a hot one. Super hot. Yeah, super hot. Did that one fall off a cliff? Not as bad, man. Not a ton. I mean, we had a couple of inquiries on DraftKings early in the year.

That was a hot one. Super hot. Yeah, super hot. Did that one fall off a cliff? Not as bad, but yeah, it's pretty bad. Yeah, it's bad though. The other one I want to talk about is Target. We've got, I guess, back to schools coming up or maybe not schools out, but- Dude, this stock looks like a cloud computing stock.

So- Look at the long-term chart of Target. Target had a market cap. I'm looking at the long-term chart of Target. Target had a market cap. I'm looking at a five-year chart. In 2017, it was a market cap of $27 billion. It's up to $123 billion. And John, throw up this chart of like all the cash flow and revenue and stuff.

And you would never like, five years ago was not a long time ago, but you would never think that a company like Target. This is all e-commerce. Can do what they just did. I mean, just if you knew nothing and you're just looking at like these charts are going up. We're looking at net income.

We're looking at revenue. We're looking at free cashflow. I mean, this business is absolutely on fire. They also had a once in a lifetime, once in a century moment to prove themselves as on the channel. And they did. And they did. They did a great job.

I can't tell you how many times a week my wife says to me, go do a Target pickup. Where she orders on her phone. I just go to the parking lot. They bring it to your car. Look at them compared to Walmart this year. They're on their heels. I mean, Walmart's still way bigger. But if you look at Target compared to Walmart, the charts are—

Yeah, no doubt. So yeah, I feel like every day, Target's making a new high. Are you guys in any of these e-commerce stocks? I own Walmart. I just actually unloaded it recently. Okay. They had a sick year last year though, right?

They did, man. They did. So Target is, I mean, Target. Everyone knows Target. It's a sleepy sort of- No, but what's crazy is that- It's a 40%- Yeah, it's a 40%.

Because they're getting, I'm making up a number, but just hypothetically, they're getting five times the credit for every dollar of e-commerce than they were getting for every dollar of regular foot traffic in the stores. That money they're making is the same money

but worth multiples on Wall Street. So Walmart's down 3% this year. Exactly. What did Target do last year? What was their return? I don't have it right here, but I don't know what they did in 2020

yeah i'm gonna guess i'll tell you right now i'm gonna i'm gonna get this year man thanks y charts i'm gonna guess oh 2020 40 which is pretty modest um but this stock doubled in 2019 like they were already kicking ass yeah on omni channel going into the pandemic it's an amazing transformation uh i threw or Oracle in the dock. I honestly, Jason, I think this is like the most underrated technology story in the NASDAQ right now. You following this at all?

I am, man. I am. Are you in it? I'm not in it. I'm not in it either. I want to jump off a roof. All right. Oracle's RSI is like off the charts

relative to its peer group. This is one of the strongest stocks of all technology. Basically, this is like a company that's going from selling big enterprise licenses to the cloud and taking on Amazon, taking on Google, taking on Microsoft, but not just a Me Too. There are important points of differentiation where a Fortune 500 company would choose Oracle to run their cloud business. This stock seems to go up every week.

It's funny. We spoke last week with McMurtry about legacy companies having trouble adapting, integrating technology. But Oracle was like a legacy tech play. That's exactly what it was. You're exactly right. And so they did it.

All right, here's Oracle's last report. For the full fiscal year, Oracle totaled $40.48 billion in sales, only up 3.6% from the previous year. But over the last eight years, they never grew. That's what made it a legacy tech play um so revenue declined the year before by one percent by one percent the year before that um sales declined four times in the last six years think about what's going on while

oracle sales are declining aws with amazon with microsoft So this stock basically was left for dead. The growth rate for 2021 fiscal year is the second best for Oracle since the end of 2012. So you can see that in the chart that there's a comeback happening. Earnings increased. A lot of the gains came from share repurchases. They bought back $20 billion in stock last year. They bought back $76 billion in the last three years.

So it's a combination of shrinking the float, which is boosting earnings, and then throwing themselves into cloud. And on the last conference call, they're like, expect huge investments. So I think this is easily going to a hundred bucks. What are your thoughts on Oracle? I like it, man. I mean, I'm mad that I missed this one. And I really like, because the one that I put in the doc was CRM, man. I really like, I like SaaS. I like SaaS. And I think that, you know, obviously all the news and the flurry was about the Slack deal. Yeah.

You know. Oh, Salesforce. Yeah, on Salesforce. And, you know, it looks like that will happen, will be completed at the end of this month. I think that's major. What does adding Slack do for Salesforce? So we use Slack and we use Salesforce. What's my experience going to be like now?

Probably won't change. But I do think, so when I'm thinking about the themes you know the hybrid economy is a major theme for me you know going into this next quarter and i think and you might have mentioned this the other day just on adoption versus demand yeah you know what that story is i might have been screaming about that yesterday but i but but but it's it's an important point man because i think um adoption is still not there completely. I think there's a lot of room on that runway. And I think CRM is one of the companies that could take advantage of it.

So when you own this for clients, like you've been buying it for years, you're in this a long time. You'll still buy it for like a new client that comes in tomorrow. You'll give them their allocation to it. I would. How do you make the decision to stop when a stock has just gone too far? Because I always struggled with that. It's a good question, man. I think for us at this point, and again, we're early stage.

We're still trying to figure out this model. But I think obviously we're not trying to time the market. We're ultimately trying to see what's the average cost in, you know, and evaluating that and looking at our trades, you know, but thankfully we haven't had to make that decision yet. Okay. But it's coming. You haven't had a stock that went up so much that you still want to hold it for some clients, but not add it for new clients. Right. Well, let me say, let me correct that. NVIDIA is one of them. Yeah. How do you buy that?

You can't right now. But how do you sell it? I deal with that all the time. Yeah. Like I can't buy it because I just watched it go up 1,000%, 1,200%. Exactly. But I'm definitely not selling it. Yeah.

Now adding the tax thing for clients, that's just my own problem. But now, think about a client's tax situation. That also has to – it shouldn't factor into your analysis of the stock. But in wealth management, it has to factor into the advice that we're giving. So that's – to me, that's very tough. Hopefully, you have some losses in some meme stocks. To me, that's very tough. Hopefully, you have some losses and some meme stocks.

By the way, AMC very quickly cut in half from a tie, I think, right? Pretty easy. Pretty close? Let me pull it up. What happened today? It bounced today. Did it? Not cut in half.

Sorry. It was 72 and it's 47. It's flat today. Everybody's fine, ladies and gentlemen. AMC is fine. Calm down. All right. So do we have any others in there? Nope. Nope. Nothing else on stocks. All right. We're going to have to go into this Robin Hood thing on payment for order flow. I think this is fascinating. The new SEC chairman

is looking at, or director, Gary Gensler uh who's now running the sec is gonna rethink payment for order flow uh who's your who's your custodian by the way schwab okay so your trades are free now for clients you got it ours too and schwab gets payment for order flow you know what i say good for them it should cost something we're doing thousands of trades a month with schwab should they do that for free right i don't even i don't think my clients want them doing that for free so i'd rather some citadel pay them than me pay them and if you tell me that's costing me a penny every time i buy apple who gives a shit fine this is a non-issue right in my opinion are we going back to trading costs?

No. No? There's no way. No. How would we do that? How would we do that? How would we do that? Like, what brokerage firm would be able to say,

this is a better deal for you now. We're going to go back to $5 a trade. Yeah, right. Investors would be like, what? Good luck. All right. So why are they reopening this wound? Is it just about the way Robinhood has conducted itself

that's making them rethink the whole business model? Absolutely. Okay. Absolutely. Because there is an incentive here for Robinhood to push more and more client activity in areas where the payment for order flow is higher. And the only reason it would be higher

is because it's a shittier trade for the end client. We all understand that. But these clients are self-directed. Nobody has it, right? is because it's a shittier trade for the end client. We all understand that. But these clients are self-directed. Nobody has a gun to their head to do the trades that they're doing or the activity. So if we're just saying that Robinhood is mind-f***ing them into doing these trades, I don't think payment for order flow is the way to solve that. So I don't know.

What do you think about that? Yeah. I don't think – I think it's a mute issue, honestly. So I don't know. What do you think about that? Yeah, I don't think, I think it's a mute issue, honestly. I think it goes nowhere. Because I don't know what their alternative is in order to kind of move forward in a way that makes sense. This looks like a weird PR move for the SEC.

Like they're dotting their I's and crossing their T's. How funny would it be? Robinhood goes public, and the next day, we are now voiding the possibility of payment for order flow we've decided that it's it's it this is something that china would be able to do i guess what they just did to their uh what they just did to dd uh they said no more app you can't even download the app in china the day after they went public it's amazing all right i don't think this is going to

come i don't think anything's going to come of this. In my research for this conversation, though, I didn't realize this. I don't know why. Maybe a lot of people did, and I'm just behind. Fidelity doesn't do payment for order flow. And we use them as custodian. Well, I guess that's because probably, unlike the other custodians,

most of their money comes from the asset management business. Right. Do we think that Charles Schwab's asset management business is materially smaller than Fidelity's? Yes. Fidelity's fund families? Yeah. They're a 401k business.

It's just massive. We have assets at Fidelity and they had to cut commissions to zero also just to keep up with what's going on, but they are not taking payment for order flow, which leads me to wonder, how are they planning to make money? Fidelity does just fine.

I'm sure they're fine. Maybe they get more on margin interest or a stock loan or some of these other businesses. I mean, I'm saying they're asset management businesses. What is the contra fund? What are they, custody, do you know? Half a billion dollars in fees. I'm making that up.

Right, so Robinhood, 80% of their revenue comes from payment for order flow. That honestly sounds light. I thought it was more than that. More than 80%? Yeah. That's a lot of money though. It's billions of dollars. We learned.

How much? A billion dollars? A billion dollars in revenue almost in 2020. So that's a billion dollars that like five high frequency trading firms are paying them in exchange for access to their customers' orders. But again, that seems okay to me. If you're a Robinhood client buying eight shares of Tesla, who cares?

Who cares? If you really saw up in arms about it, take your eight shares to Schwab and direct your orders to the New York Stock Exchange. Yeah, I'm with you on that. So I don't think anything will come of this. I don't think we're going back. Historically, when a major breakthrough in finance takes place,

you very rarely have the whole system revert to whatever it was before. So I wouldn't worry too much about this. All right, Knicks, championship next year? Or bust. Championship or bust. All right, let me set this up. So you're a Knicks fan? No doubt.

Okay, but you're in Sixers land. Yeah me set this up. So you're a Knicks fan? No doubt. But you're in Sixers land? Yeah, Sixers land. Let's start with the Knicks. I shared this article from Berman in the Post. I feel like he's trolling us all. This is wishful thinking. New York is now emerging as a primetime destination for the Stars.

Whether it's true or not, I love it. It's definitely not true. Mark Berman does not speak for the Knicks as far as I'm concerned destination for the Stars. Whether it's true or not, I love it. It's definitely not true. I mean, it might be- Mark Berman does not speak for the Knicks as far as I'm concerned. Not even close. It might come true. I don't know.

All right, what do we think the Knicks should do? First things first. Like, let's say you're Leon Rose. You looked at how the season went. We got demolished by the Hawks. We should have. We're not as deep. We're not as good.

We don't have a superstar shooter. Okay, so now what do you do? You got $60 million in cap space, give or take. Yeah. You have picks. Yeah. Yeah. I think you got to – we got to get a superstar in here, man.

We got – I love – I love the idea of trying to get Dame. Dame Lillard here. Oh, man. How do we do it? But isn't this what we always do? We always do this. This is Scott Amato, Carmelo. No, no, no.

We did this one time with Melo and it didn't turn out well. Right. And I was not happy when we got Melo. Dame is so much better than Melo. But don't give up the ranch for him. But we're going to have to. And honestly, the ranch isn't that great.

Let's be honest. I mean, I'm an RJ Barrett fan, but we got to- You're willing to let him go. We have to. Listen. The ranch is fan favorite. Barrett fan, but we got to- You'd be willing to let him go. We have to. Listen. The ranch is fan favorite. Here's how you know we got to do this.

Put yourself in the Blazers. Imagine you're a Blazers fan. Yeah. And you traded Dame and you got back R.J. Barrett, it'll be top in a few first round picks. Are you happy or are you livid? Yeah. How pissed would you be?

It's a good point. So my initial reaction was like, oh man, we're going to give R.J., quickly, and three picks, and swaps. But then flip it and say, what would you do if you were a Blazers fan? You'd be so angry. Well, let me ask you this. Where are the Blazers going? With Dame?

Nowhere. Right now. Nowhere. So the contrary argument to that is, are you okay with rebuilding right now? And it's a new coach? It is a new coach. Chauncey? Chauncey.

Okay. So does he wants to, does he want to start from scratch or does he think he's coaching Damian Lillard next year? In Dame's defense, the Blazers have gotten balanced by the Lakers and the Warriors

the past like five years. So they've gotten balanced by the champions. What are they going to do? But I agree with you. I think the Knicks, we need a superstar. They have to wait out

LeBron's retirement and hope Klay doesn't come back. Like that, to me, that's like a better strategy than blowing up the team. But all right. So let's think about it this way. Let's say you're Dame.

Why wouldn't you do this? If he offers on the table, why wouldn't you? I think you have to. I think he has to. He's 30 years old? 31. 31. This is it. This is it, man.

This is the biggest contract you'll ever sign if it works out here. And they'll build a team around you. And it's New York. I also think if the Knicks... As much as I'd be sorry to give away all those draft picks and RJ and whatever, you also got to think he would attract another free agent.

If he comes, somebody else is coming. The climate has changed at the garden. No doubt about it. Thibs. No doubt about it. I think it's completely changed, man.

And I think people like, I guess, I don't know who ends up staying on the team, but I think people look at the guys we have and they say, I would play with those guys. Well, there's a lot of turnover in the roster. Nerlens and Berks and Reggie Bullock,

they're all unrestricted free agents. Derek Rose. D. Rose. Taj. Did a phenomenal job this year. So the team is probably going to look different next year because Nerlens is going to get paid. I think Burks and Bullock are going to get paid. We're not going to sign all of them.

What do we do with Mitch Robinson? Can he play a full season? Nope. Or even close to it? No. Probably not, right? Nope. Taj came up big, though.

I wasn't even mad about it. We're talking about Taj Gibson. I hear everybody X-ing out of this podcast. All right, last thing. What if we send Obi Toppin to Portland and he turns out to just be an incredible player? He's not going to be.

You don't think he has... No. You see him hitting threes? He played good in the playoffs. He played a lot better in the playoffs. He plays not going to be. You don't think he has? No. You see him hitting threes? He played good in the playoffs. He played a lot better in the playoffs. He plays five minutes a game. How the do you know? He could be... I'm not saying he will be. I'm saying he could be amazing.

No, he can't be amazing. You don't think so? He might be able to be solid. Yeah, but he's not amazing. Yeah, maybe not. He looks lost. Listen, he's not even that young. He's like a 22-year-old rookie. Yeah, that's right. I'm not super excited about him He's like a 22-year-old rookie. So I don't know. Yeah, that's right.

I'm not super excited about him. He's a four-year guy. The reason why we're talking about this, well, we're Knicks fans, but this surprised me. Somebody tweeted during the game that the Suns Arena does not, I don't even know what they call it.

There's no sponsor. Yeah. And this is like big business. They lost their sponsor. I was surprised to learn that Madison Square Garden is the only arena in basketball, other than this one, that's not named. Yeah. So is this a Darren Revelle tweet? Front Office Sports.

All right. Phoenix Suns Arena does not currently have a naming rights sponsor. The value and equivalent of advertising companies are missing out on during the NBA finals, 7.75 million per game. That's via Apex Marketing, Darren Revell. I like Darren. I don't know who Apex Marketing is. How do they know this number? Well, they probably know what the going rate is for these commercials. So every time they mention the name of the stadium. So there's been research done on this. Why, why would a company spend $20 million a year to slap their name on an arena? And it's hard to quantify exactly this.

They've looked at like, but they've looked at stock performance. And I don't think companies are any better or worse off for doing this, but maybe it's probably a vanity play. It's a vanity play. I can think of five companies that went bankrupt while their name was on top of a stadium.

But you know, it's actually like Staples, for example, like Staples Center. Yeah. How's that going? Did Staples file – Staples is not financially healthy. I think a private equity firm bought it already, like for a bargain. I'm not sure what happened with Staples. So I guess I understand from like state – insurance is a commodity. You have brand recognition there.

But like SoFi, for example? SoFi is paying big money. But if you're SoFi, first the venture capitalists gave you like a billion dollars and then the SPAC transaction to come public. Their only job right now is brand awareness. They're spending so much money on commercials. Yeah, yeah. So that's just like added to the pile of branding shit they're doing. So that's just like added to the pile of branding shit they're doing.

The Suns had a casino as their sponsor, Talking Stick Casino, which was a Native American casino. And the deal ran out during the season and they didn't re-up. Mid-season? No, mid-2020. What's going on in Phoenix, man? So casino probably not doing well. That's it, you know. Yeah, probably not. You guys want to give us $20 million?

Nah. And by the way, the Suns weren't really the Suns last year. They were good. They weren't final Suns. Well, speaking of that, like what are the Suns going to do? Because they don't spend money like that.

What do you mean? Not at all. Like, well, with Chris Paul, like all of a sudden, like this guy, it's funny. He's 36. Two years ago,

he had the worst contract in the NBA, and now he's going to get another big fat contract. You think so? I do. At 36? I do. How many years? Two for 60.

Wow. Three for 80. I don't know. Three sounds crazy. He also has like a sterling reputation among all the front offices. Like he's a, isn't he the president of the Players Association? Yeah, he's like the president of the players association? He's like the boss of the league.

Yep. Right. All right. So the NBA, every single arena has a spot, corporate sponsor. Except for the garden. Except for the garden.

Same with the NHL, except for the garden, the Rangers play there. Miami's looking for a new, for a new, what's called sponsor. Yeah. Oklahoma city needs a new one because Chesapeake energy went under. So yeah called? Sponsor. Yeah. Oklahoma City needs a new one

because Chesapeake Energy went under. Sad story. Yeah. I'm sure they'll have no trouble finding another natural gas company. It's somewhere in Oklahoma. I feel like they'll run into one. The new thing they built in San Francisco

for the Warriors is J.P. Morgan. I think Miami got FTX to sponsor, or not sponsor, to take the naming rights. Who? The crypto exchange, FTX. Oh, they did that? I think Miami got FTX to sponsor, or not sponsor, to take the naming rights. The crypto exchange, FTX. Oh, they did that? I think so. I think it was a five-year deal. Really? I think so. Well, interesting. It's crypto, so it's almost like, name a number, who cares?

Here it is. Miami Heat is thrilled to announce it's entered into a long-term partnership, yeah, with FTX, a cryptocurrency exchange. There are 10 baseball stadiums without naming rights. $135 million. Whoa. I mean, that makes sense to me. Wait, what was that?

There are 10 Major League Baseball venues with no naming rights deal, but they're the old ones that are like really famous. Nobody cares about baseball. Yeah, exactly. Russillo and Simmons are talking about it today. I don't even know. How about this?

I don't even know the guy's name. There's a player on the Angels who is like the best home run hitter in the league and he also the starting pitcher yeah i'm a sports fan i don't even know this guy's name he's japanese babe ruth like like baseball is cooked this would have been such big big news duncan looks triggered by this 15 years ago why no i mean yeah he's been in the news a lot lately you've got to know the you know the new babe ruth no i know's been in the news a lot lately. You've got to know the new Babe Ruth. No, I know he's in the news, but I'm saying

I see the new Babe Ruth. I think he's pitching a meeting. He's leading the league in home runs, I believe. He's on pace for 60, I think. I'm saying, if this was something like that, this would have been front headlines of USA Today stuff. No doubt. If young people

cared about it. Nobody cares about baseball. It can't be saved. I don't think it'd be saved. Could. If young people cared about it. Nobody cares about baseball though. It can't be saved. I don't think it'd be saved. Could this guy make people care about it? No. Because I remember after the player strike in 94, nobody cared about baseball.

And then in 98, Sosa and McGuire went off. They should allow steroids again and meth if necessary. Like whatever they have to do. Wrigley doesn't take any corporate money. Wrigley Field is Wrigley Field. I'm sure they've had offers of, I don't know, $100 million thrown at them every year. They don't do it. Yankee Stadium, like, I don't think.

You don't need to do it. That brand is so strong. Yeah, I was going to say, the Yankee business is bigger than most companies that would sponsor it. Anyway, so, all right, let's go into Soapbox. strong. Yeah, I was going to say, the Yankee business is bigger than most companies that would sponsor it. Anyway. All right, let's go into Soapbox. What's something you

think everyone should be paying more attention to or less attention to? I just wanted to use this opportunity to say that Tenet is the worst movie that I've seen in a long time, but I wanted to see if either of you guys could explain it to me. This is the new-ish Christopher Nolan movie, and I feel really bad. It turns out Jason watched it just to try to explain it to me. How'd it new-ish Christopher Nolan movie and I feel really bad. It turns out Jason watched

it just to try to explain it to me. How'd it go? It was tough, man. It was challenging. Subtitles? It felt like a book report. Subtitles? I didn't do subtitles. You didn't need subtitles for this movie. I heard you needed subtitles. Why? Nobody was speaking another language.

Just like the... I heard that it was hard to understand. It was. Because it was like a play on the, I heard that it was hard to understand. It was. Because it was like a play on the future and the past all at the same time. So, I mean, the way I took it, I mean, typical, it wasn't obviously the typical action thriller. Yeah. Right? The protagonist, you know.

I think there was some deeper meaning, which I was trying to serve for. I think, man. I couldn't even find the un-deep meaning. Forget about the deeper meaning. Go ahead. But if I think about the play on the future and the play on the past and kind of the way the movie

ended, I think there was something about a deeper meaning for me on accountability for your actions. What you're doing and how is that impacting think there was something about a deeper meaning for me on accountability for your actions okay what you're doing and how is that impacting the future and the future of others right that's what i was answering back in exactly in that movie because i did i'd love back to the future yeah that was like one of my favorite movies man as a kid you know and i'm a big back you're a big back to the future guy right i have to revisit it i was a kid. I haven't seen it in 20 years.

Probably more, actually. Yeah. So why couldn't they just make that then? Why do they have to do this? But it was tough. But that's my takeaway, man. It was just kind of like on accountability. With the cars driving backwards?

Backwards. I don't understand. They're coming back from time? Well, it's going back. Yeah, it was crazy. It was tough. It was tough. It was tough.

Christopher Nolan is one of my favorite directors, but I boycotted this movie because all the reviews were exactly what you said. Like, it's incomprehensible. And when it came out, you know what? I wanted to turn my brain off. I didn't want, like, homework during the pandemic. So I've never seen this movie and I made a vow to myself

I never will. I will never see it. I don't think I'm going to. I have no interest. I really don't. Wow. It's unanimous. Like, nobody likes that you will. I don't think I'm going to. I have no interest. I really don't. Wow. It's unanimous. Like, nobody likes it. Like, I like science fiction. Like, I watch- I love science fiction.

I'm not watching this shit. And I'll watch almost any action movie. I don't care how stupid it is. I've watched every Jason Statham movie. I don't care. But I just, I couldn't get- I got through it, but I don't know how I got through it. It was tough.

Michael Soapbox, what do you got? So I'm recycling my, but I don't know how I got through it. It was tough. Michael Soapbox, what do you got? So I'm recycling my takes. I apologize. But I think this Substack thing is an interesting opportunity for young journalists. And what I mean by that is, so Matthew Klein from Barron's left to start his own Substack. Chad Ford from the NBA, I guess, I don't know where he was at, ESPN, covers the draft, left to start his own sub stack. I think that there's going to be an opportunity for young people inside of the Journal and Barron's and these companies to step in and fill the void of some of the established people leaving to start their own sub stack. Do the economics, though, allow for there to be that many successful people doing – like how many people would you pay a subscription to to read their shit?

I can't think of more than 10 i need a lot same but there are people that are that are going for it so how many you paying for any sub stacks now i feel like i'm getting a lot for free i'm not i'm not paying for anything i'm not i'm still paying for the for uh all the journalist stuff but I'm not paying for any sub stacks. Where's your, when is your sub stack dropping next week? Dude, take, take my advice. Do WordPress.

If you're going to start, if you're going to start, if you're going to start writing, you want as many people reading you as possible. You don't want people reading you for a dollar a week or whatever. All right. I, I guess I love sub stack and I've,

I follow like there are some that i follow that i just will never miss um shout out to packy but but i never miss his i never miss mark rubenstein uh i never miss uh bern hobart is awesome i don't know what who am i missing you probably read a lot more than i do those are the yeah are those the big three? Sure. All right. We'll leave that as a recommendation. Jason, do you have anything as a soapbox for us today? I don't see it in the doc. Yeah, man. I mean, for me, I was kind of just thinking about the markets

and what I anticipated the second half looking like and what sectors I like. For me, I'm focused on consumer behavior. I'm really interested to see when this thing opens up for real, how does the consumer respond? They've had a lot of money. There's a lot of pent-up demand. That's all the discussion in media, right? What are they

going to do with the money? And how do they respond? You're going to subscribe to Substacks. Out the ass. 50 Substacks a person. You bought five cars. You got the house house where's the money going now what's the next thing that everyone's the next thing isn't it obvious though what is it i think travel besides that i mean that's to me that's a big deal that is a big i think people's

travel budgets what they would normally spend they're gonna like double i mean they're gonna have no choice because i know what airline I know what flights cost these days but I don't know I think that part's obvious do they go back to football games I don't know I'm going to football I don't even like going to football

I'm going to one game Eli's being inducted into the ring of honor I'm going to that game football games suck not only do they suck but relative to the experience at home with Red Zone, it's so much better to watch football at home.

Dude, also, the Meadowlands. You have to park five miles away. It's a pain in the butt. It's one of the worst, I would say, NFL experiences is driving to New Jersey from Long Island where we live. Maybe it's not so bad if you live in Jersey.

Not great, Bob. Not great. All right, Bob. Not great. All right, favorites. So I actually have something nice to say after I just trashed a tenant. You guys ever see the site BioPharmaDive? It's sick. This is how I get all my...

I'm not... So people that follow me, they know that I don't claim any expertise about biotech or healthcare or pharmaceutical or any of that shit. But I love this site. I don't know when it started. It seems new-ish. It's like Axios, but like all healthcare stuff. So big recommendation, biopharmadive.com. Sign up for the daily email email and i think you learn something new every day about these stocks uh pretty pretty good site i don't know would you follow anything specific for

uh for this sector or not really not really man no it's it's worth it yeah um there were a record number of biotech ipos in the first half of this year. I think like riding on the coattails of all the vaccines. Now, all of a sudden there's a lot of institutional interest. The last one on this for me, you see this thing on HBO max, let him go. I saw it that it was on HBO max. I did not watch it, which I'm not sure why I didn't watch it. I love Kevin Costner. We'll discuss, go watch it.

You see this yet? You like revenge movies? I do, man. Love revenge movies. All right. So this yet? You like revenge movies? I do, man. Love revenge movies. I like the thrillers. All right. So this is a revenge movie. Really? Yeah.

Check it out, man. They mess with Kevin Costner, and they don't know what they have coming to them. So it's... Look at this score on Rotten... I know you don't like Rotten... That's good. Do you watch Yellowstone?

I never watched it, yeah. Great show. All right. I'll go sour. I went sour on. All right, I'll go sour. I went sour on Loki. Or Loki went sour on me. This is favorites. So you're unfavoriting Loki?

I'm unfavoriting it. The good news is there's only six episodes. So this is the third Marvel series that Disney's done on Disney+. I thought WandaVision was great. Did not care for Captain America and the Winter Soldier. And Loki, I was pretty bullish, but it's like a C- for me. So, I don't know. I might be jumping off.

Mike's watching all these shows with your seven-year-old son. I tried Loki. I watched two episodes. It's terrible. Done. See you later. I really like the actor. What's that guy's name? He's always good in the movies. Jason, what do you got? Dude, huge podcast fan.

We Study Billionaires, my favorite. It's a huge podcast. Love it, dude. Be honest with you, man. This whole Bitcoin kind of scream over the last several years, man. I took a master – well, I didn't take – I listened to a master class that they were doing. Phenomenal. On We Study Billionaires?

On We Study Billionaires. Okay. Phenomenal. It was like a month ago. Oh, man, dude. So shout out to them, man. They're doing a great job. They have fantastic guests, man.

It's just great. I don't think I've ever listened to an episode of that, but it's always like in the top three for investing podcasts. Yeah, it's awesome. Okay, Duncan, have you listened to that yet? No? No, I've never heard it, but I've seen it on the charts. That's your homework assignment.

Listen to that. Tell me if I should listen to it. All right, did you have fun today? Great, man. It was a blast. It's like 500 degrees in here. Why is the door closed? Are people loud out there? Yeah, we got a full house here today.

Yeah, we do. All right. Crew is in town. Dude, thanks for coming by. We loved having you. I think we learned a lot about what the Knicks should or shouldn't do. It sounds like we're in agreement. Do the thing for Dame.

Even if it doesn't work out, nobody's going to be mad. All right. I want to plug idoneshop.com. Those of you who are watching this on YouTube, you can see my lovely Compound shirt. All that stuff is available, Animal Spirit stuff as well. Watch us on YouTube if you're not currently subscribed. YouTube.com slash the compound R-W-M. If you love podcasts,

remember there's a new episode of animal spirits coming out this week as well. And the gold mine where we take our favorite blog posts and create the audio version. You could check out either of those podcasts. Thanks to Jason round of applause. Appreciate you guys to have a sound effect for round of applause. I'll have that next Jason. I'll have that next time you call my promise.

All right. Thanks guys. We'll talk to you next Friday. Is that clapping? sound effect for a round of applause. Jason, I'll have that next time you call my promise. Alright, thanks guys. We'll talk to you next Friday. Is that clapping? Oh, there it goes. Good job, Duncan. Well done, Duncan. Alright. So that was a good dress rehearsal.

Yes, sir. Can we take a quick break? Yes, sir. Can we take a quick break? Man, it's been a long time. Thanks again to our sponsor, Masterworks. Go to masterworks.io slash compound for more information.