All In on US Stocks (EP.392)

Summary

Animal Spirits Podcast – Episode 392: All In on US Stocks

Released on December 25, 2024

Hosts: Michael Batnick and Ben Carlson
Description: Animal Spirits explores the intersections of markets, life, and investing. Hosted by Michael Batnick and Ben Carlson, the show delves into what they're reading, writing, listening to, and watching, providing insightful discussions every Wednesday morning.

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1. Correction from Previous Episode [02:25 – 04:14]

Michael and Ben begin the episode by addressing a mistake from their last show. Michael states:

"We took a stroll down my memory lane and told my story with David Rosenberg. And one of the things that we said on the podcast was... the quote was untrue."

They clarify that their previous statement about Ben potentially losing 60% of his money based on a shared chart was misinterpreted. The hosts emphasize the importance of accurately conveying information and introduce an upcoming podcast episode with David Rosenberg to set the record straight.

2. Market Dynamics and Federal Reserve Policies [04:14 – 12:26]

The discussion shifts to recent market shifts and Federal Reserve (Fed) policies. Michael reflects on the complexity of interpreting analysts' actions versus their public statements:

"There is a big difference between what you see people say... and what their actual strategy is."

Ben adds:

"The big worry is the Fed is not going to cut as many times in 2025 as people would have assumed... Every time that's happened during this cycle, that's been a good thing because... the economy remains strong."

They analyze the implications of the Fed's stance on interest rates, with Ben arguing that a reluctance to cut rates indicates economic strength. Michael counters by noting the recent downturn after the Fed's latest press conference, highlighting market volatility.

3. Diversification vs. Concentration in US Stocks [12:26 – 24:31]

Ben shares insights from Torsten Slack of Apollo, who expresses concern over the potential for the Fed to raise rates in 2025 amidst factors like lower taxes and immigration restrictions. He draws parallels to the 2022 market environment, emphasizing the importance of diversification:

"Global diversification worked, right? If you didn't go to extremes, you got almost 6% after inflation."

However, Michael points out the persistent outperformance of US stocks over the past decade, questioning the effectiveness of global diversification in the current market:

"I started 12 years ago and I've seen nothing but US outperformance. Why would I not put all my money here?"

Ben agrees but maintains a balanced approach:

"I'm still a diversified investor because I think the one true thing about all market environments forever is that they're always in forever cyclical."

4. Retail Investor Behavior and Market Addiction [26:06 – 28:36]

Michael highlights a concerning trend reported by the Wall Street Journal about increasing addiction to stock trading, likening it to crack cocaine:

"At Gamblers Anonymous... one man called options a crack cocaine of the stock market."

Ben concurs, discussing the cultural factors exacerbated by the internet and social isolation:

"With the Internet age, there's going to be a way to do this somehow, some way."

They contemplate potential solutions, such as brokerage-imposed trading limits, but recognize the challenges in addressing this issue:

"What happens when the Internet in your house is down... There's no way to stop this."

5. Technological Innovations and Their Impact [48:30 – 49:05]

The hosts discuss the advancements in self-driving technology, citing a statistic about Waymo vehicles:

"After 25.3 million autonomous miles driven, Waymo vehicles have an 88% reduction in property damage claims and a 92% reduction in bodily injury claims compared to human drivers per mile driven."

Michael marvels at the safety improvements, while Ben expresses skepticism about widespread acceptance:

"I still think in America, we're going to fight it."

6. Housing Market Concerns [40:40 – 42:02]

Ben presents a chart illustrating the aging of US housing stocks, pointing out that many homes are becoming outdated and require significant renovations:

"The average age of US Housing units has been in negative territory for six consecutive quarters... falling prices SAP profitability."

Michael adds that this trend will burden younger generations with higher housing costs and the necessity of costly renovations to meet modern standards.

7. Private Credit and Investment Fees [42:02 – 44:32]

Jason Zweig's comparison of private credit to corporate bonds and high-yield investments sparks a discussion on the sustainability of high fees in private credit funds. Ben questions the viability:

"How do you get 12% returns when you're paying 4% in fees and the company is paying 16% to borrow money?"

Michael concurs, expressing skepticism about the long-term success of such investment vehicles due to high fees and opacity.

8. Retirement Strategies and Investment Philosophy [44:32 – 46:49]

The conversation shifts to personal retirement plans. Michael shares his strategy of maintaining a healthy mix of index funds and minimizing active trading:

"I just don't see it... I just don't see it."

Ben emphasizes simplicity in his portfolio, favoring a mix of stocks, fixed income, and liquid cash reserves. They agree on the importance of diversification and caution against overconfidence in any single investment strategy.

9. Listener Interactions: Automotive Advice and Parenting [46:49 – 51:05]

Emails from listeners prompt a debate on whether to give young drivers new or used cars. Ben argues for new vehicles equipped with advanced safety features:

"New cars have safety features that are crucial to young drivers... So it's counterintuitive."

Michael counters by sharing his experience of learning conservative driving with older cars lacking modern safety aids. They acknowledge the balance between safety and fostering responsible driving habits.

10. Holiday Greetings and Pop Culture Tidbits [51:05 – End]

Wrapping up, the hosts share personal anecdotes about holiday movie preferences, technological frustrations with smart devices, and family activities. They conclude with heartfelt holiday wishes:

"We know you have a lot of options to listen to, right?... From Ben and I and Duncan and the whole team, thank you."

"Merry Christmas. Happy holidays. See you next time."

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Notable Quotes:

• [03:27] Michael: "We took a stroll down my memory lane and told my story with David Rosenberg... the quote was untrue."

• [04:16] Ben: "The big worry is the Fed is not going to cut as many times in 2025... because the economy remains strong."

• [07:05] Ben: "The big worry is the Fed is not going to cut as many times in 2025 as people would have assumed."

• [12:08] Michael: "How high inflation would have to be for the Fed to start to raise rates again."

• [26:06] Ben: "At Gamblers Anonymous... one man called options a crack cocaine of the stock market."

• [48:30] Ben: "I still think in America, we're going to fight it."

• [51:05] Ben: "New cars have safety features that are crucial to young drivers."

---

Conclusion:

In this episode of Animal Spirits, Michael Batnick and Ben Carlson delve deep into the nuances of US stock market concentration, the evolving landscape of investment strategies, the troubling rise of market addiction, and the implications of technological advancements on everyday life. Balancing humor with insightful analysis, the hosts provide listeners with a comprehensive overview of the current financial environment and its broader societal impacts.

Transcript

[A]

Today's show is brought to you by our friends at Y chart. As we wind down the year. This is reflection season, Ben, is it not?

[B]

It is. You think about getting sentimental where you.

[A]

Came from, where you might be going. I am getting a little sentimental towards Y charts, one of our longest. Probably our longest not. Probably not, Grandma. Potential, our longest sponsor here at Animal Spirits. And I am still very much a daily power user. I log on, the market opens. What's going on? I've got my screens, you've got yours. Yours are boring, mine are not. But I use it for. For everything. So if you have heard us over the years talk about wise choices. So you know what?

[B]

Let's.

[A]

Let's see what's all about. Go there, tell them we sent you. And if you're a new user, you get 20% off. Off a free subscription. A new subscription. Excuse me. Excuse me. Ben, It's a little foggy over here. It's the time of the year where people start to slow down. My brain just melted a little bit.

[B]

That's okay. That's what widecharts is for. You don't have to think they do the charts for you.

[A]

Damn, you're good. All right, go to ycharts.com and tell them we sent you.

[B]

Today's Animal Spirits is brought to you by Fabric. On today's show, we're talking about the importance of keeping your children safe. That's one of our topics. Everyone wants to provide the best for them. That's what fabric is here for, right? You're providing for your financial future by protecting your kids through life insurance. One of the first things I did when I had my daughter on the way, I think I got it before she was even born. Term life insurance policy.

[A]

Good for you. I'm not going to lie. I think it took me. I think it took me a year or two.

[B]

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[A]

This podcast is for informational purposes only.

[B]

And should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.

[A]

Welcome to Animal Spirits with Michael and Ben. We have to issue a retraction or in salad Governelli terms, a traction. Last week on Animal Spirits, we took a I strolled down my memory lane and told my story with David Rosenberg. And one of the things that we said on the podcast was, I'm going to quote you, Ben. Ben said if you would have listened to what he did, you would have lost 60% of your money or something like that. Some ridiculous amount of money. And that quote was untrue. And it was based on a note that we had shared, a chart that we had shared and shame on you, Ben and me for that really the, for that, really the fine print and actually describing what the chart said. So here's what the chart said. Let me, yeah, let me quote the source.

[B]

We didn't explain it enough.

[A]

Let me quote the source. We measured the impact on an investor deciding to shift the dollar from equities to diversified government, mortgage backed and corporate bonds after reading the post. 2010 Comments to be clear, this isn't about whether the Armageddonist at some point became more optimistic. This chart is about the opportunity loss for investors that acted upon seeing their comments at the time. So when you read that, you're like, oh, that's not exactly what I thought this chart was showing. But it's a good lesson and there's a lot of lessons in here. One of the ones for me and by the way, we did a podcast with David Rosenberg so that we can set the record straight and he can scold us a little bit and explain some of the calls that he's made over the years and put some proper context around this.

[B]

But let him set the record straight. In his words.

[A]

One of the takeaways for me is that there is a big difference between what you see, or there can be a big difference between what you see people say in publications, whether it's tv, radio, newspaper, whatever, and what they're actually doing or what their actual strategy is. Because, you know, you see something and you sort of forget about it. Right? And you forget about the fact that in this case this person is publishing daily and you see them here and there. And there could be a wide disconnect when you, before you make decisions based on what you see somebody saying, understand that there's. There could be a big difference between what they're saying and what they're actually doing.

[B]

Yeah. And it's a lot the same thing with people who go on CNBC and say, we think this is going to happen or a bear market or recession or a bull market, whatever it is. And their portfolio could be positioned totally different than what they're saying.

[A]

Well, also they. Or they change their mind.

[B]

Yes, exactly.

[A]

And they're not necessarily coming back on every time they change their mind.

[B]

Yes, agreed.

[A]

Anyhow, so we did a podcast with David Rosenberg that should be dropping at some point this week. All right. This is a big week, Ben. It is the holiday season. It's Christmas season. It's a great season. You said your favorite. Too cold for me to be my favorite time of the year.

[B]

But I don't even mind the cold weather because we're playing outside. I hate winter after the Christmas and New Year's season.

[A]

You hate when the snow turns brown.

[B]

Yes, but I love it's. We've, we've had a decent amount of snow here. It looks immaculate. See, like I've been to warm weather climates around the holidays and I just don't think that Christmas lights look the same when you're in nice weather. Like Christmas lights are on a palm tree. It looks pretty, but it's not the same without the snow.

[A]

Agreed.

[B]

Right.

[A]

Are you hating on Christmas in California?

[B]

No, no, no. Trust me, by the time January something comes up, I'm ready to move to California and get out of Michigan. But in December with the white snow and the Christmas lights, that's a vibe you can't. That's unmatched.

[A]

All right, so there has been. Speaking of vibes, there's been a big vibe change in the market over the last week. Has there not? Or from the left. From last anal spurts to this one.

[B]

A little vibe change. Don't you think there's one. One bad day?

[A]

No, I don't think that. I think that last week we were talking about everybody is too optimistic and there was a million signs of froth, a lack of wall of worry and, and now, you know, a week later, we're dealing with like 13 straight down days for the, for the DAO. Remember last week I was talking about a lot of the internal damage and you were like, what are you talking about? No offense by the Way again, another credit to my Y charts. Screens being better than yours. I'm actually in the market.

[B]

One of us.

[A]

You're on the market.

[B]

One of us finished off the show last week saying that market needs a comeuppance. We need a quick little slap on the wrist to remind people what risk is. And we got that.

[A]

Okay.

[B]

This is a healthy situation.

[A]

All right? So anyway, let's not move the goalpost. What I was saying is that the things have done changed. Football.

[B]

I'm moving the goalpost. You're spiking the football.

[A]

I'm not spiking any football. I'm just saying things have changed over the last week, have they not? Why are you. Things have changed.

[B]

Yeah. In a good. Again. We had a little air pocket there and I don't even think the reason mattered. People said the Fed because they're not going to cut rates. I think it was just that people were looking for an excuse and I think it was a good, healthy thing to happen.

[A]

Yeah.

[B]

Stock market's still up 26% this year or something.

[A]

So I feel like there's. I'm more to the side of. You're the side of like nothing matters. Everything is a fit the narrative type of thing, then it doesn't matter. And I'm more like, well, some things matter. So you might be right that this is insignificant.

[B]

So my point is that the. So the big worry is the Fed is not going to cut as many times in 2025 as people would have assumed. And every time that's happened during this cycle, that's been a good thing because the reason they're not cutting is because the economy remains strong. So in my mind, this is a positive development, not a negative. If the Fed was going to say we have to cut eight times next year because the economy's slowing, that's a bad news to me. So that's. I'm, I'm looking at it as. So that. Not saying it doesn't matter. I'm saying it does matter. But it's a good thing. And the market selling. I, I think that was just an excuse. That's my, that's my point here.

[A]

I, I fully agree with you there before. So we. So when was the Fed presser? It was last Wednesday. And selling accelerated. Powell might have lost the narrative or, or lost control a little bit. At least that's what the narrative was. But before that, or maybe that morning, my dad sent me a screenshot of the newspaper in the New York Post. That's where my dad gets his financial news from this.

[B]

Looks like it's from 2008.

[A]

It does, but remember I said newspapers, physical newspapers are going to die with the boomers. Credit to my dad. He already made the shift. My dad's already reading on the iPad.

[B]

Oh, he didn't cut this out for you and send it to. I can send it.

[A]

No, it's a screenshot. Your dad still sends you physical newspaper clippings.

[B]

He's, he's definitely made the shift to the iPad.

[A]

Although you know what, my dad will bring over physical newspaper clippings. So I guess he's 50. 50. Anyway, this was a dower Dow again. This is before, I think this was Wednesday morning. So before the, the wheels fell off, so to speak. Worst skid since 78 on rate fear. And so the Dow has had a, what, like a 12 day losing streak, one of the longest on record. Okay, that happened.

[B]

And what's the, what's the sell off though? What's the drawdown? Oh, it's 5%. Five or 6%. Yeah.

[A]

Yeah, it's not bad.

[B]

So it was, it was a very orderly sell off.

[A]

You could say that.

[B]

Right. Here's from Tor. So again, I think the Fed not hiking the fact that they keep pushing rate hike because remember the rate cutting was going to be. What were you supposed to have in 2024? Six or eight, maybe? Yeah, was originally. And then it got pushed out and pushed out. So I think the fact that they keep pushing it out for a stronger than expected economy, to me that remains a good thing. Now the other side would be. No, no, no, no. It's. If it's inflation coming back, then it's a bad thing. Torsten Slack from Apollo says the strong economy combined with potential for lower taxes, higher tariffs and restrictions on immigration has increased the risk that the Fed will have to hike rates in 2025. We see a 40% probability that the Fed will raise interest rates in 2025. For investors, it is starting to look similar to 2022 too. High inflation, rising rates and falling stock prices. I don't think you can make the 2222 comparison because rates were so much lower back then. You have a much bigger cushion now and a margin of safety. But I don't think that's, you know, can we just lay this out here? Can we come up with a new term for bingo card? Because I think that's played out to me. I'm sick of the bingo. Like no one actually plays bingo. Let's be honest.

[A]

All right, so what do you suggest?

[B]

I'm looking for Suggestions here. I'm sick of using. No one saw this on their bingo card.

[A]

Okay, okay, I can get behind that. It's enough already. I agree, but we need to come up with a replacement term.

[B]

Okay, I. I'm just putting it out there. We'll have a brainstorming session. But I don't know. I. I don't see. I think something would seriously have to be wrong for there to be rate hikes.

[A]

Oh, yeah. If you. How about this? How about this? If you knew that there were rate hikes next year, what would you say that does to the stock market? Because I would say that would be a very bad thing.

[B]

Yes. I think you would have like an air pocket.

[A]

Yeah.

[B]

Whoosh. Like, it would be. It would not be good. Yeah, I would say bear market, like 10 to 15%. Correction minimum, probably.

[A]

I'd say 15 to 20.

[B]

Especially for how well things have gone the last couple years. I don't think people. Yes, it would be Sell now because.

[A]

Think about what would have to happen for them to raise rates.

[B]

Yes, Inflation would have to really accelerate. I mean, that's the thing in the. Like I said a couple weeks ago, the volatility of inflation, that's the thing that has been sucked out. And it's so funny to me. People keep saying, like, the Fed is not at target yet. The inflation is 2.6 or 2.7. Like, I don't know, horseshoes and hand grenades. Close enough.

[A]

Damn it. I forgot to grab this clip. Remember we had this way back machine? Did I put this in here because I was thinking about, like, how high rates would have to be or. I'm sorry. Yeah. How high inflation would have to be for the Fed to start to raise rates again.

[B]

Oh, okay. That's a good. So what do you think? Like 4%, maybe 4 or 5%.

[A]

So I was reminded of. Somebody sent us this clip. I'm looking for it. Yeah, I didn't put it in here. So when we spoke to David Rosenberg, he's like, I'm sure you guys have had plenty of bad calls in your career, and this is one of them. Somebody was listening to our podcast from years ago. We'll find this for next week. And I said something like, I don't see rates ever going back above 3% or something like that.

[B]

We were definitely on the. We had a lot of conversations about what if rates don't rise? And I think our reasoning was.

[A]

Which sound. It was the market.

[B]

No, but the reason was the. We've taken on trillions of dollars in debt. There's no way they can raise rates and make it worse for the debt. But then I guess the inflation obviously outweighed that. But that I think that reasoning made sense.

[A]

So yeah, that would not be good anyhow. Kevin Gordon tweeted Stunning the number of FOMC participants saying there are upside risk to Corp PCE inflation rose to 15 in the December SEP, largest jump ever from meeting to meeting. So that's not exactly comforting.

[B]

On the other hand, how many times has the Fed officials been wrong this cycle predicting rates, inflation, unemployment? They've been wrong. They've been just as wrong as everyone else when they put these, these forecasts out. They're never right. They're literally never right.

[A]

So chart kid Matt looked at the internals of the market and he said we are seeing a capitulatory bear market, low type oversold sold readings in the middle of a strong bull market. Which in my view is very bullish. Right. To have like this sort of a violent shakeout in a bull market is definitely needed, healthy, all that good stuff. So there was Madison chart showing the percentage of S&P 500 members with an RSI below 30, which is the technical level for being oversold. And we got up to 31% most recently, which is where you were at near the bottom in 2022. Now the difference between now and 2022 obviously is that 2022 was you were already in a bear market.

[B]

That's my point about cycles happening faster. This is we had the Japan shakeout earlier this year where The Vix spiked to 50 or whatever it was in a single day. This is the thing that is different about markets now is that we see these things happen on like a one to two day basis. That would have taken six months in the past or something.

[A]

Yes. And then the day after one day last week you had a huge, huge advance where a lot of like the internals started to snap back the other way. Sentiment Trader tweeted or daily chart tweeted via Sentiment Trader so the via via what a roller coaster ride. The S&P 500 has swung from its worst breath day in months to its best within three sessions. Not many losses looking at over the next three to six months. So the wipeout followed by the wipe in as my wax on wax off version of market analysis has been pretty good. By the way, speaking of wax on wax off, they're making a new a new Karate Kid with Ralph Macchio and Jackie Chan. A movie.

[B]

I did see that.

[A]

They are beating this. They're good. This is going to Be the next three to five years. Which is just movies for our generation. Remakes of 80s and 90s movies. And I guess I'm, I guess it's better than nonstop superhero movies. I'll take it.

[B]

Wasn't the thing at like 25 of the top 25 movies this year were all remakes essentially or sequels.

[A]

There's no more ideas. I mean that's not true. That's not true. There's a lot of new.

[B]

I mean didn't they just make like six seasons of the Karate Kid TV show as well?

[A]

Right. So they're really cashing in. I'm not seeing this movie. I have no interest.

[B]

No, no. I, I, I didn't really go Beyond Karate Kid 2. I think that was it for me. The one is still a classic.

[A]

One is a classic.

[B]

Two is pretty good. Three was, was two.

[A]

The guy with the ponytail.

[B]

I believe so.

[A]

He was good. Like fake Steven Seagal.

[B]

Just Johnny Lawrence is one of the best 80s bad guys ever though.

[A]

Yeah.

[B]

Body bag Johnny.

[A]

Yeah. All right. We got an email. This is definitely not me asking for direct investment advice. Why not put every dollar into a schwab personalized index. That is the S&P 500 minus Apple, Nvidia and Tesla. So it's just a normal index but minus these three stocks. And anyone could see are overvalued.

[B]

So they're asking the direct indexing thing which allows you to pick and choose. It's funny, they said they actually asked Perplexity about this. So the, the worry is these big stocks are have run up too much. They're overvalued. I want out of them, but I want the S and P. This is, this is almost one of the problems with these types of. And this type of customization is just going to grow in popularity in the years ahead.

[A]

What's the problem with this?

[B]

What's the problem with it? Trying to guess these individual components and assume that like all three of these stocks are going to fall at the same time but the rest of the market's going to be okay. Wouldn't. This is getting too cute for me. Why wouldn't you just buy an equal weight?

[A]

Yeah.

[B]

Or buy a mid cap or some something to underweight these instead of trying to pick and choose the names and what says it's kind of like the yield curve. The yield curve does not move for the same maturities at the same direction. What's to say that Apple, Nvidia and Tesla are all going to fall at the same time? It could be one of them because of an earnings event. It could be none of that. You know, I think it trying to get too cute with this thing. And then what happens? If these three are the only ones that go up and you do this, then what do you do? Put it back in. Wait. I think it's just again, this level of customization I think is going to continue to grow my thing. A lot of the ETF people are very anti direct indexing. And you and I have worked with this stuff for a long time and know that it's probably a better tool for financial advisors and wealth management firms that it is for individuals.

[A]

Yeah, I agree with that.

[B]

So it's never going to be as big as ETFs, but for wealth managers, there's a lot of different things you can do with it. All right. I tweeted this out the other day. I said, In 20 years of managing money, I've never seen more dismal sentiment for international stocks, value stocks, or valuations in general. And I am a big believer that sentiment is never a timing indicator. Because everyone told me you could have said the same thing for the last five to seven years. That's true. But I think that in the last three to six months, the dam has broken. And I've never had more conversations on this. I've never heard from more people about this before. I just think people have finally thrown their hands up and said, all right, fine, I'm done with this stuff, I can't do it anymore. And I don't really blame people because of the cycle we've been in for 12, 15 years now. And constantly hearing international stocks are cheaper, their dividend yields are higher. Why on anything besides tech, I completely get it. I guess I. I wonder if part of my thinking on this is, is shaped by the fact that I came up in the early to mid 2000s for my career and no one wanted to own US stocks because we had a lost decade. And emerging markets were amazing and European stocks did better and small caps did better and value did better. And I remember in the early to mid 2010s, the whole idea was the US economy stinks. We had this new normal and no one was predicting that the US was going to be the biggest, baddest economy again and that US tech stocks were going to take off. It was brics. People wanted to invest in all these other countries because that's where the growth is going to come from, right? Everyone wanted emerging markets coming out of the great financial crisis. No one was doubling and tripling down the US like they are now. But on the other side of that, you and I have always talked about that Peter Bernstein story Against the Gods, where he says, from the 1800s to the 1950s, there was this signal that worked every time. And it was, I wrote about this this week and it was when bond yields are approaching or above stock yields, that's a sell signal for the stock market because in the past people had to be compensated to invest in the stock market because they thought it was too risky. So dividend yields were higher than bond yields forever. And anytime it even touched, it was actually a great sell signal. Bond yields slightly went above stock yields in like August of 1929, like two months before the top. So it was a great sell signal. And people would sell stocks until dividend yields got higher than bond yields and then they'd buy them again. Right. And this was like a wonderful signal back in the day. And all of a sudden in like 1957, 1959, it stopped working. Bond yields went above stock yields. And Peter Bernstein writes about how that seeing this relationship that was ironclad in the markets flip forever totally changed his view of using the past to think about the future. And so I guess what I'm saying in this long winded diatribe here is that it would be foolish of me to say because there's been cycles in the past would mean that like they have to come back in the future because some, some things change for the good and the different this time forever. So I wouldn't want to ever say like, no, the, you know, US tech stocks can't be the new thing because what if, what if large cap growth is just the new small cap value and that's the premium. Right. Whatever the premium small cap value had in the past, large cap growth has now fair, I guess, on both sides.

[A]

So. Yeah, where are you landing? Right in the middle.

[B]

I'm still a diversified investor because I think the one true thing about all market environments forever is that they're always in forever cyclical. But it'd be stupid to say that maybe technology has changed things forever.

[A]

Yeah.

[B]

So I wouldn't be pounding the table on either end here, but I'm with you, man.

[A]

I'm pounding the middle because I echo everything you just said. I believe in diversification, believe in global diversification. I believe that this is what diversification is. There's always something that you're like, why am I doing this? That's what it means. But I'm also sympathetic to the idea that maybe it's different this time. Famous last Words, and that maybe these structural changes in our culture, in our markets, render historical analogs completely useless.

[B]

Yes, it does worry me how confident people are that US stocks are the only game in town. And what scenario could we possibly see that stocks outside the US could outperform that kind of stuff?

[A]

Well, so that's a question that, I mean, that keeps coming to our inbox. Yes, I think we got a few of these this weekend. Could you imagine a scenario in which US doesn't continue to outperform? And again, not a timing thing, because the fundamental or the valuation discrepancies have been widening for the entire decade. And we could have had this conversation every step of the way. So, yeah, it's hard.

[B]

We don't know if you're looking for a catalyst. It's two things. It's the US government messing up policy somehow and the dollar finally falling over. Because if you look at the dollar going back to the 70s, it's up and it's down, it's up and it's down. And it basically has gone nowhere in the last 50 years. But we've been in a hard charging upcycle. So the dollar being strong. And the other one is just the AI bubble, if it is a bubble popping, because the whole thing is European companies and these, they don't have as much tech exposure. So if, if there was an AI bubble and it popped and these companies all got dinged 50 or 60%, I'm not saying European stocks wouldn't fall too, but they're not going to fall as much.

[A]

So how about this? To that point, Kevin Gorda tweeted, The 10 largest stocks in the S&P 500 now represent 39.9% of the index's market cap. So 40% for the top 10 stocks. Is now the time where you want to go all in on this? I don't know, you know, could this be 50%?

[B]

Because a lot of people are going on. And Colin Roche had a good piece that discipline Funds where he said, no, no, no, global diversification is working. So he looked at the returns going back to the 1970s. He looked at these are real returns after inflation for all you inflation people. And he said US stocks done 6.6% per year after inflation. Foreign stocks have done 4.3% all world, combining them, whatever the market caps were, has done five and a half percent. And his whole point is global diversification worked, right? If you didn't go to extremes, you got almost 6% after inflation, would you have done better going all into the U.S. of course you would have looking back on it now. But the point is that you had your yin and yang and it, it worked out pretty good being in an all world portfolio for that 50 year period.

[A]

Yeah, but charts like this and I, I don't disagree with Colin but I'm just saying charts like this don't change anybody's mind. Like right, like oh true.

[B]

Yes.

[A]

I, I, I don't care, I don't care if you started 55 years ago with, with what the returns of dollar look like. Look, I started 12 years ago and I've seen nothing but US outperformance. Why would I not put all my money here?

[B]

The funny thing is, is my tweet going kind of viral for that a bun I, I, it was probably pretty even. I, I scrolled through the responses before it started getting, you know, psychos like usual. But it was a lot of people saying yes, this is true. I'm worried about US valuations, diversification still rules versus other people saying no, you're an idiot. Technology has changed. It was a pretty even there wasn't like all right, one more thing. I had Die Hard on again last night because I watched holiday movies over the holidays and Die Hard was a screaming sell signal for Japanese stocks. How did no one think of this at the time? It was came out in 1988 and Holly MacLaine works for a Japanese company. Like how was this not a screening sell signal for Japanese stocks? What were they doing back then?

[A]

Well, they were not podcasting.

[B]

Where were all the anecdotes? We would have been all over this, right?

[A]

Yeah. If the Internet existed, I'm sure people would have been throwing out heaters.

[B]

I still can't believe that Bruce Willis is 32 when he filmed Die Hard. He looks so old. 32 years old. He looks like he's 55. I, I explain. Is it just sunscreen? What is it that made people look so old back in the day? Did everyone just smoke in sunscreen? No sunscreen and he was 32.

[A]

That's unbelievable.

[B]

32. Yes. It's hard to believe, right? Yeah. All right. This is a great piece from Gun John at the Wall Street Journal. More men are addicted to the crack cocaine of the stock market. Did you read this piece?

[A]

I did.

[B]

This is fantastic. So she said. At Gamblers Anonymous in the Murray Hill neighborhood of Manhattan, one man called options a crack cocaine of the stock market. Another said he faced hundreds of thousands of dollars in trading losses. One young man brought his mom and girlfriend to celebrate one year since his last bet. So she's going to these Gamblers Anonymous meetings and saying most of them are. More of them are now people who have become addicted to the stock market. So Pennsylvania's gambling hotline has fielded more calls tied to gambling in stocks and crypto since 2021 than it did in the prior six years combined. This other place in New York, 10% of patients are seeking help for addictions tied to trading. Before 2020, there was no such patience.

[A]

Is there a solution here? How do we help these people?

[B]

I don't think there's a solution because I think that what people have said in America resoundingly is, if I want to blow myself up, I'm going to do it. Just let me do it. And I think this. Getting back to the cultural thing, I think this is just a cultural thing we have. I don't think there's any way to stop this.

[A]

What if. What if the brokerages said, you can't trade more? You can't do more than 100 trades a month?

[B]

Oh, that would not be a bet. I mean, that's a lot now, I guess, but.

[A]

I guess. But to your point, Ben, there were people say, well, that. What do you mean?

[B]

Yeah.

[A]

Why are you going to restrict how much I want to trade?

[B]

Yeah, I'm responsible. I can do it. So they said, listen to this. New patients often suffer from withdrawal symptoms, including severe anxiety and depression when they first stop trading. Some start fidgeting repeatedly tapping their fingers against the table, itching to place a trade. They talk about this one guy who's, like, sneaking away in his house all the time to place trades, and it's.

[A]

It's sad. Yeah. And it's. It's going to get worse, I guess.

[B]

The thing is, with the Internet age, there's going to be a way to do this somehow, some way. And I think. I don't know what the. The answer is to stop it. It doesn't. It's not all that surprising, I guess, but you're going to see stories like this about sports betting and everything else in the year, in the years ahead.

[A]

So to that point, if they're going to find a way, let's just say that one app was going to say, okay, we're setting the limit. Well, the other app would say, all right, our doors are open. Come on in.

[B]

Yes, right.

[A]

So the idea that we can, like, somehow eliminate this, because it is horrible. It's really sad. There are people who are destroying their lives and not in any way to make light of this at all or to poo poo It. But this exists for gambling, this exists for alcohol, this exists for all sorts of things. And I don't know how you. I don't know how you police addictive behavior like it's an illness and maybe just groups like this are the answer. I really don't know.

[B]

Yeah. And again, unfortunately, with the Internet and the information age being what it is, they're probably going to be more addicted people falling down these rabbit holes, unfortunately, just because the access is easier.

[A]

So Gungeon and her colleagues wrote another piece in the Journal. So this is on the COVID of the Journal today, the physical, it says crypto cult fuels microstrategy rise. By the way, I don't actually think physical newspapers are going to die ever.

[B]

Because I know. Are you going back to them here?

[A]

But, but I do think that it's in secular decline. Like the print as a percentage of overall reading is in secular decline. You know what I mean?

[B]

Oh yeah, for sure.

[A]

So that's. So anyway, so okay, so we're talking about MicroStrategy, the dollar.

[B]

There's going to be a paper at some point that's going to go, no, we're not, we're not printing physical. There's going to be a big story in the coming decades of one of the huge papers saying we're not printing anymore. It's all, if you want it, get it online. That's going to happen.

[A]

Maybe the dollar. Yeah, probably the dollar value of micro strategy shares changing hands at one point in November topped every other US stock and ETF except Nvidia. Look at this chart. They have a chart of micro strategy options, volume daily and the call options went from whatever zero to infinity, basically. And Peter Atwater was quoted, I thought this was good. During times of uncertainty, you see the popularity of cults figures who demonstrate a sense of absolute clear control and direction that people just naturally fall behind. Talk about Mike Michael Sailor there. Social media is a fixture of these investing groups which have mushroomed into a hub of nearly non stop chatter. In MicroStrategy Den, a chat room on the gaming platform discord, more than 4,000 members chat about micro strategy. Lunce is one of about 23,000 members in the Quote Irresponsibly long MicroStrategy group. On Twitter, I've been told there's another quote from somebody. I've been told, you find your tribe there. He said, I can't talk about MicroStrategy to anybody. I can't talk about Bitcoin without anyone saying it's a Ponzi. So yeah, this is the other part.

[B]

Of it is that you have the ability to put all these people together.

[A]

Right.

[B]

And they see one person or a couple people who have done well with this and they hop on the herd mentality and then you have all these addicts together.

[A]

Yeah. And the other part of it is not to call everybody in here an addict, but the other part of this is that the isolation and the social loneliness and all that sort of stuff. People find their tribes on the Internet and it's so easy to rally around a figure or character. Like Michael Saylor. Right?

[B]

Yeah.

[A]

When you saw like he's like a magnet for attention.

[B]

AMC and Gamestop and. Yeah, Yes. I don't want to get like too deep with this, but part of this is like, I think religion filled this void for a lot of people in the past and now they're looking, they're looking for their own religion and they're finding it on the Internet.

[A]

Yeah, totally.

[B]

Right. Like this is, this is church for some people.

[A]

Yeah. All right. Switching from retail to strategists from redmac. Strategists have never chased the market higher or harder with targets than today. So they've got a chart showing the percentage change in strategist forecasts against the S and P and it's been the highest 12 month change ever. So if you remember coming into 2023, I'm pretty sure consensus on the market for this year was negative.

[B]

It was very low. The S and P was tiny return.

[A]

Actually I think it was like 4600 coming into the year where the S and P was ish and that's where Stretch thought it would end the year. So going into 24, I don't know what the average target is. Is it 7,000? Whatever. It is a hard about face. So I'm very curious to see if in a year from now are we going to be like, well, obviously the market wasn't going to perform well. Like look, look how everybody was chasing and performing and you know. Or is it going to be. Yeah, they were right. I don't know.

[B]

It does really seem like it was an everyone in the boat thing the last three or four months, like and ever, you know. And yes, that's why I think a, a slight, even like a slight down year in 2025. People be like, what?

[A]

How about this? I would say consensus bulls are usually right, but when you have like this type of thing where it's like everyone turning from bearish to bullish, that's different.

[B]

Yes. That is like the one concerning thing that's like.

[A]

That's a. For me, that's a yellow. That's a yellow light. Speaking of traffic light.

[B]

Wait, do you speed up when you see a yellow light, though?

[A]

It depends. So with Waze, you see where the, where the. What are the lights with cameras called lights. You have those in Michigan, right?

[B]

At the lights? No. That'll give you a ticket. Yeah, no, we don't have those.

[A]

Oh, really? Huh. So we have them all over the place.

[B]

Unless I'm totally mistaken. I've never seen.

[A]

No, no, you must, because if you know about it. So we have them all over the place here. So there are cameras on lights so that if you go through a red light or a yellow to red, you're going to get a ticket in the mail. So I tend to. So Waze shows you where those lights are, which is kind of magic.

[B]

Oh, that is. I mean, Waze does the same thing. Remember when you were younger, everyone had a friend who had the. What was it called that could detect cops on your car?

[A]

Oh, yeah. I don't know. I didn't have it.

[B]

But everyone had a friend who had that, and I feel like it never really worked. But Waze tells you when a cop is coming too. Yeah, when you're on the highway.

[A]

Yeah. So anyhow, I was thinking about traffic. I am not to brag, a pretty good traffic merger in the car.

[B]

Okay.

[A]

I'm not one of those jackasses that goes all the way to the front, but I don't wait in line for. I don't. I'm not at the end of the line. But I respectfully, when I see an. When I see my, My shot, I take it, you know?

[B]

Yeah. The people who go all the way to the front, like, I think it should be real.

[A]

Those are real. Those are illegal.

[B]

I think it should be legal to hit them.

[A]

Scum of the earth.

[B]

Yes.

[A]

No offense if that's you, but. Come on, do better.

[B]

No offense.

[A]

Yeah, offense, but with, with walking traffic, I'm terrible. I, I, I always bump into people. No, you go. No, you go. I, I, I.

[B]

It's rules of the road. You stay to the right and. Right. It's like, it's.

[A]

Is it, is it that simple?

[B]

Yes. Walking traffic is rules of the road. If people don't get that. Like, if you go to a mall and you try to walk on the left side. No, of course.

[A]

I mean, I don't, I don't walk against traffic. Come on. I'm not a psycho, but. Oh, so you just go to the right?

[B]

Of course. It's rules of the road.

[A]

All right, I'm going to try it next time. I'll report back. Okay. We spoke a couple of weeks ago about why inflation is necessary and a great alternative to prices falling. So there's an article, the lesser of two evils. There's another article in the Journal about China. Prices won't stop falling in China and Beijing is grasping for solutions. Here we go. Chinese leaders this week pledged to do more to stimulate the economy, including by cutting interest rates and boosting government borrowing. But pressure is building on Beijing to take even more forceful action to prevent a downward spiral of deflation that becomes self reinforcing, potentially landing China in a longer term recession. China's GDP deflator, a broader gauge of price levels across the economy, has been in negative territory for six consecutive quarters of the longest stretch since the 1990s. Here's a coup de graben. The fear is that deflation is becoming ingrained in China as falling prices SAP profitability. Companies could postpone investment or shed workers, leading more people to cut back on spending. Others might put off purchases because they think prices will drop even more. Here's a quote from Penelope prime, founding director of China Research center in Atlanta based think she said it becomes a vicious cycle and that's it. So nobody likes inflation, nobody likes high inflation, but it's a necessary, I don't want to say evil, it's just, it's a thing.

[B]

Doesn't it seem like China is like the yin to our yang when it comes to the economy and the markets and such? Yeah, like we. The US is an outlier in so many ways, but China is an outlier. Like in the opposite direction?

[A]

Very much so, yeah.

[B]

It's all right. Very confounding.

[A]

Benedict Evans does a big presentation every year exploring the macro and strategic trends in tech. And this year he called it AI eats the world or for 2025. And I pulled out two charts that are pretty wild and the whole thing is worth thumbing through. They showed he shows the quarterly investment for, for Apple, the R D before the iPhone launch compared with Meta Reality's lab's operating loss for the last eight quarters.

[B]

Okay.

[A]

And to the structural point that we made earlier about US Tech. And is it really so, so, so different this time? Meaning like the, the way that these companies work, the way that markets have responded to it, does it render historical comparisons completely useless? And this is a really good chart showing that to be the case. Again, it's comparing Apple's R and D before the iPhone came out. Which was, you know, zero, basically, compared to Meta's Reality Labs operating losses.

[B]

Okay.

[A]

Just completely apples and oranges.

[B]

Right. Pun intended here.

[A]

Yes. There was like a before and after.

[B]

Yes. The amount of money that these companies are pouring into stuff that is. It's kind of funny. The 2010s were like this thing where these companies don't have to invest in anything and everything is so efficient, but these companies are spending tons of money.

[A]

On this stuff now because they could afford to. And no sector in the history of mankind has produced these sort of profits, sustainable profits, where they've been able to do these sort of things that just continue to make their remote wider and.

[B]

Wider and wider and potentially fail along the way and still be fine.

[A]

Yeah, right.

[B]

Like, Facebook had a huge stumble when they first changed their name to Meta, and their stock got dinged, but it didn't really matter. They. They could ride out the storm.

[A]

Right. So one of the big themes with AI is job displacement. And of course, there will be, you know, lots of new job creation. But that's part of the worry, as always, when there's a new technology that. That comes to market. He has a chart showing the elevator attendance in the United States. And there used to be almost 100,000 people worked in an elevator as an elevator attendant. So before, I guess you could just push the button to go where you wanted to be, somebody had to manually get you or take you where you were going, whatever floor you're going, which is a wild concept.

[B]

You think that was mostly at the fancy places, or is that obviously.

[A]

I don't know. I guess probably not.

[B]

Yeah. This is going to happen here, too.

[A]

But what a wild chart. Right? So in 1900, it was 20,000. It went all the way up to 100,000. It was like a real industry.

[B]

Yeah.

[A]

Dare I say sector elevator attendance. I was thinking about this. I'm watching 1923. So I bailed on Yellowstone, as you know, after the third season. Credit to me, good decision. But I saw a Preview for the second season of 1923. So you and Josh both said 1923 was worth watching. So I am watching it. And there's one scene, I don't know if you remember this, where refrigerators and laundry machines, the first iteration, comes to wherever they are. And to see that was really kind of cool.

[B]

It was very. Yes, right.

[A]

Because their reaction was like, why do we need this? And the guy's like, well, so you have time to do other things. He's like, what other things?

[B]

Yeah. Yes. And now that's all we have is other things to do. Right, Right. We feel nothing.

[A]

It's nothing. But other things, that's all. It's like we complain about so many things because we have so much time to complain.

[B]

Yes. In the past, when you were working for 12 hours a day on the farm, you didn't have time to complain about stuff.

[A]

Yeah, right.

[B]

Can you imagine, like, tweeting on your break from the farm? No. What did they do? They rested.

[A]

Yeah.

[B]

All right, Joey Politano, this is on Blue Sky. What's the. What are we calling it again?

[A]

Ski.

[B]

Skying. Skiing.

[A]

Ski.

[B]

All right. He has a chart of America's aging housing stocks. The average age of US Housing units. He said it's the oldest it's ever been and just keeps getting older. We don't have enough homes in this country, and too much of what we do have is dated and decaying. I think that the transition from. We've talked about this in recent weeks. Baby boomers in their houses in the years ahead are going to be passing them along to the next generation or selling them. It's going to be a way more expensive proposition for people than they realize because a lot of these houses are going to need to be updated to suit the taste of younger people. And I'm seeing this already in neighborhoods around where I live. It's like an old 50s or 60s house, kind of like a flat ranch or whatever. And you see all the brand. They try to make like a modern farmhouse, you know, with the white and the black, and then they put the brown post on it and stuff. And it's like an older house, but it's been updated to fit today, and it's total renovation. I think you're just going to see a ton of that in the years ahead. And buying a house is going to be way more expensive than people think because it's buying the house and renovating it to get it up to HGTV standards. Right. This is going to be a big thing because we just don't build enough new housing in this country.

[A]

Yeah. So what are the implications of this, do you think?

[B]

Again, younger people getting screwed because they're going to be paying higher prices for housing that they're not going to like, and then they're gonna have to pay more money to have it renovated.

[A]

How?

[B]

Debt, I guess. Right. All right. Jason Zweig did a story about private credit, and he kind of compared private credit to owning corporate bonds or high yield. And just saying how much of a party this is. And you and I have been getting all Kinds of emails all the time about this stuff. So he compares the total annual expenses of private credit funds to high yield bond ETFs and he shows that in 2023, the average yield, the average expense for a private credit fund was 4.12%. And that's including, I guess they take some 20% of the profits or whatever. And I just don't see how the math works for private credit with 4% fees and borrowing rates of, I don't know, 15, 17% for some of these companies. Because you're promising yields to people of 10 to 12%. How does that math work for both the companies that are borrowing at such high rates? I don't see how it all shakes out. I don't see how you get 12% returns when you're paying 4% in fees and then that means the company's paying 16% to borrow money. How does this work? It seems to me the bottleneck here Is companies borrowing 16% can't possibly continue to pay rates that high.

[A]

Yeah, I agree.

[B]

I mean part of this is probably just leverage, I guess is, is like the, the, that's the difference.

[A]

Well, I, I think it is my view, and this is like an hour long conversation, that private investment coming in a big way. So Jason's right. There is going to be a tidal wave. And I think we're in the first inning of that tidal wave.

[B]

It's early. Yeah, it's early still.

[A]

So I think, I think you could look at this through a skeptical eye, which is warranted, fully warranted, because there's a lot of opacity in here and high fees, which are guaranteed. So certainly you should look at this with a skeptical eye, like why are they coming to market? What are these things actually do, all that sort of stuff. But I also do think that the tidal wave is going to force competition and fees are going to come down probably fairly significantly in the next 10 years.

[B]

That's fair. And then the other side of it would be not to say like, oh, this is a bubble. It would be to say these returns are going to come down. You can't promise these high returns anymore. That's not going to last.

[A]

So I think they're coming for your 401k, which actually probably makes sense, right? These are long duration instruments, illiquid. Probably makes sense if you're going to own them, to own them in a retirement account that you're not going to touch anyway.

[B]

So yeah, yeah, these are coming for baby boomers too, who want to have some more perceived safety in their retirement funds and they see a yield. That's all they need to see. 10%. Sign me up.

[A]

Exactly. All right, this is interesting. I'm a 45 year old male. I'm sorry, I am a 45 year old married. I'm 40. This guy was 45. He wants to retire in 10 years. All right, I should have just said that. All right, I want to know what your retirement plans are. Will you guys just put your nest here in some safe 60, 40 mix? Incentive. Forget it. Do you plan on picking stocks in your retirement? I definitely don't plan on picking stocks in my retirement. My plan is to retire as early as possible and just go to my favorite diner every morning and research small caps to invest with a couple of bucks and keep the rest in a healthy mix of index funds. Please share with us what you guys imagine your retirement would be like. All right, so I kind of misread this. At first I thought he meant like, what do you guys plan on doing in the future? Like work wise? Not necessarily. How do you plan on managing your money in retirement? Which is. He's more asking the latter, I think. So my retirement money is. It's index funds. Right. I'm not trading my retirement account, although I do have a SEP ira, which that's where my stocks are. So. But I don't think I'm going to be 65 years old or 70 or whenever I retire, actively trading stocks or like actively being like super active in my portfolio. I just don't see it.

[B]

No, my portfolio will be as simple as possible. It'll be, yeah, a mix of stocks and some fixed income and some liquid cash reserves.

[A]

Also, I'm very bad at predicting how my future self will feel. At 70, I might. I might be like, I still got it. Or now I can actually focus on picking stocks. Now I actually have time to focus on becoming the next Warren Buffett or the next Paul Tudor Jones. So I don't know. I would say that's probably not going to happen. But I've also learned my lesson over the years that I'm very bad at predicting how I'm going to feel in the future.

[B]

The only thing that I can say is that I will probably have a higher allocation to equities than most retirees. I think my risk tolerance will still remain relatively high.

[A]

I also don't know. I am also pretty sure that you're just going to be in a target day fund. Let's be real.

[B]

You know, I don't actually own any for as much as you Talk about I don't own any Target Day. Well, okay, that's a lie. I own Target Day funds for my kids. 529 plans. How's that?

[A]

And also maybe some tokenized real estate. Who knows?

[B]

Yes, you'll be. You'll. What are you talking about? You'll be having one of those big ski masks on and you'll be trading stocks, like, pushing stuff around.

[A]

I might be. So, Ben, Carry on was the top show, the top movie of the year for Netflix.

[B]

That's crazy, right? So it was the biggest, I think. Yeah.

[A]

Well, you know why? Because Hitman was so good, but not quite as maybe like, universal appeal as Carry on, which was just pure silliness, fun. So I watched Carry on and it was a rip. Warren. Good time and incredibly silly. Robin walked in and she's like, why is he running like that? And I'm like, because he was a. He ran track in high school, that's why.

[B]

That's true. Yes. They had to mention that part.

[A]

So to me, it was like. Remember the movie Phone Booth with Colin Farrell?

[B]

Oh, yeah.

[A]

It was like phone booth in the air. It was like phone booth in the airport. Yes, it was good, fun kind of.

[B]

Movie that's been done, but just in a different place. So Lucas Shaw had this survey where he asked different people in Hollywood, like, where, if you were going to sell a show to a streaming service, where would it be? And it was Netflix over all else, obviously. Netflix was number one by a huge margin. HBO Max is the next one. Apple TV was actually the third one. And I wonder if that's because they know they'll get a lot of money from Apple. But that, but, but I mean, if that. If Carry on had come out on a. On Hulu or something. There's no way it's as big as it is.

[A]

No, you're right. You know, it would have been. It would have been seen by nobody.

[B]

It was. It's Netflix is the thing.

[A]

Yeah, it's Netflix. You're right. All right. Jeff Dean tweeted. After 25.3 million autonomous miles driven, Waymo vehicles have an 88% reduction in property damage claims and a 92% reduction in bodily injury claims compared to human drivers per mile driven.

[B]

This is one of those things that the evidence is going to just be so resoundingly clear that these things are safer than human drivers. And I still think in America, we're going to fight it.

[A]

It seems like this is. I wonder if this is, like, under discussed, underappreciated, or maybe it's just because you and I are not in an area where this exists. I'm sure people in San Francisco are like, yeah, what do you mean?

[B]

Like, right.

[A]

This is a thing that it's not that it's not even that new anymore. It's been here for a year or whatever it is. But I think like this is an example of like something that's so wild and incredible that just is under celebrated. Right. Like we move on. Like oh yeah, of course there's self driving cars, right?

[B]

Yeah, it is. It's kind of a miracle.

[A]

Yeah, it's a miracle.

[B]

Yeah. All right. Had to pause the podcast, send this immediately. You always buy the new. So last week we talked about someone asked us would you, would you give your son or daughter when they turn 16 your old car or buy them a new vehicle? And we said no, you always give them the hand me down. You were pretty clear on this. Someone said you always buy the new driver, the new car. New cars have safety features that are crucial to young drivers. When they don't have the experience of an older driver, they need all the braking, blind spot, lane assist, all those safety features. A car comes, you want your child to have a million airbags, not just the one that popped out of the steering wheel. So it's counterintuitive. You always get your car, your young person, the new vehicle. And obviously this is, that's obviously right.

[A]

Of course it's right.

[B]

Yeah, it's obviously right, but it's obviously wrong. Let me tell you. There's, there's never been another generation when this has been the thing. Growing up, did you ever have friends who got new cars? Maybe there was like we had one rich girl in our high school got a new car. Everyone else got beaters. I, I said I drove the 89 Honda Accord. We had huge massive snowstorms when I grew up and guess what? I learned to drive way more conservatively. I didn't have anti lock brakes. I would hit my brakes, you know, I. And so guess what I there. So there are studies that show that analog breaks actually increased the prevalence of it saved like fender benders, but it increased the prevalence of single car mess ups. Like have you ever been in a snowstorm before and you see a massive truck or SUV just fly by you?

[A]

Yes.

[B]

And you go oh my God. What? And then like three miles down you see them in a ditch somewhere.

[A]

Yeah. So I think it's, it's made drivers more brazen. You're absolutely right.

[B]

Yeah. So sometimes the safety features, obviously if you're A parent, you look at this, you go, of course I'd get my child the car with all the safety features. But also, what if all those safety features make them drive like an idiot? So I can see.

[A]

Ridiculous.

[B]

But, but isn't. But isn't this how no parent, no.

[A]

Parent is doing second level thinking with their child safety, but is just buying?

[B]

Isn't this how luxuries become necessities though? Like people say, like, I can't afford to live anymore and there's people who should be doing better off financially that aren't because of this kind of line of thinking. Right. It's. But, yeah, but are you going to tell a parent no? Don't make your child as safe as possible? Of course not.

[A]

Here's another email that we got in cars that I will. I will bend the knee to your car. Advice to give the old car to your 16 year old and buy a new car for yourself is spot on. However, Michael said putting too much money. $10,000 on a car is way too much. If you put down that much money and get car gets, total money is gone. In my opinion, this is just false and terrible advice. This is what insurance is for. If you total the car off the lot, you'd get the 10k from insurance and the insurance company would pay the bank the rest. The bank would never lend you the money without getting properly insured. Okay. So I guess it makes sense.

[B]

Well, how about this though? Yeah, I guess it's six of one half dozen together. Like you're putting a big amount of money into a depreciating asset. But either way, you're gonna be spending more on the month. You know, I don't know.

[A]

By the way, speaking of emails, I want to do better for the audience. So last week I got a little bit salty with somebody in the inbox who said that I was so frothy and all that sort of stuff. And I want to say this, our inbox is a safe space. Okay? So if you, if I, or Ben, let's be real, probably me, if I say something that you don't like and you want to let us know in the inbox, I will not air that in public. Okay? If you have a gripe with something I say, I will keep that between you.

[B]

Add this to the Michael email etiquette list.

[A]

I will keep that between you and me. I should not have, I should not have gone defensive on the podcast. So I apologize. Hand up. I will do better. I will never bring your dirty lunch to the air, but I do reserve the Right. To change my mind.

[B]

Okay, this is like the opposite of Festivus. This is like the mea culpa. Festivus is when we air our grievances.

[A]

Well, I'm trying to do better. Listen, I'm trying to grow. Trying to do better. Okay, Ben, if you just get 1% better each day. Compound, Twitter thread, et cetera, motivation, hashtags.

[B]

Hashtag Marcus Aurelius.

[A]

All right, this. You know when you see something, you're like, oh, yeah. Why doesn't that exist? Somebody tweeted. Apple is developing a smart doorbell with advanced facial recognition that would let you into your house using face id. Duh. Why the heck doesn't the ring just let you in when it sees you? Why can't you just do this?

[B]

Because you have a key. I don't know. Is it really necessary?

[A]

Oh, it's necessary. So I have a keypad on my door.

[B]

Yeah, we have a keypad in our garage, too.

[A]

Yeah, but why do I have to go, boop, boop, boop, boop. Wait, did I just give it away what my code is? No. Why can't I just see your face and open the door and the door unlock?

[B]

I don't know. Because what happens when the Internet in your house is down and you can't get in your house anymore because you don't have a key?

[A]

There's an override.

[B]

Okay. It seems like a cool feature, but it also seems like it's way too complex.

[A]

How?

[B]

I don't know. Is it necessary?

[A]

Is it necessary that I drink my own urine?

[B]

Can't go. You're doing the dice thing too much.

[A]

No, but it's sterile, and I like the taste.

[B]

All right. You know, it's the kind of thing that you. Here's the thing, though. It's the kind of thing where you'd use, like, you have friends come over and you'd show them, like, look at how cool this is. And you probably never would use it.

[A]

What do you mean? You just literally look right in on it.

[B]

I don't. Maybe it's because I.

[A]

You thought. You thought Apple, the Apple wallet was too complicated at first.

[B]

Sorry. Maybe. Maybe it's because you turned your garage into a mudroom. So I have a garage. So I just go. I hit the door on my garage door, and I go into my garage, and I walk into my house through the garage, so I. I never use my front door for anything, so I.

[A]

Can'T get into my garage. It's. This is so annoying. When they built the mud room, you know, there's like the motor on the garage, by the way, that isn't necessary that I drink my own urine. I, I, that's from Dodge. It's a line from Dodgeball. Okay? So if you're like, what the hell did Michael just say? It's a line from Dodgeball. So when they built the mud room, the wall backs up against the motor of my garage. And so there's an app on my phone that lets you open your garage door on your phone. Right. I'm sure you have one too. Sure, most listeners have one. But in order to reset it, you have to, like, like, scan the QR code on the back of your motor. And I can't get to the motor because it's pressed up against the wall. So I don't, I don't know what to do.

[B]

See, this is the problem with technology.

[A]

It's so annoying.

[B]

If you just had the old garage that you could just lift up on your own, you'd be fine.

[A]

And so yesterday, Robin was getting annoyed because the kids were out playing in the snow, and they come in and they take all their dirty clothes off right in the front door. And she's like, this is what the mudroom is for. But we can't get in. Cause the garage. You're an idiot. And I was like, I am. I don't know.

[B]

So you, so you have the mud and you can't use it. You just gotta make your garage door. Just put a door on it. Like, don't take the garage door off. Put like a regular door that you walk through.

[A]

You know how much garage doors cost? They're like a fortune.

[B]

Really? I don't know.

[A]

They're like, I think they're like a couple thousand dollars.

[B]

I'm saying just put a regular door on there.

[A]

We just put a regular door.

[B]

Have someone come and put a door, wall it out. Door.

[A]

Like, cut a hole in my garage?

[B]

Yeah, yeah.

[A]

Why not? Right.

[B]

Well, but then how, if you can't open it anyway?

[A]

That's a good point.

[B]

Just put a door on there. Like, it's another door to your house, and that's your side door to your mudroom.

[A]

But that's weird to just have a door in your garage. All right, let's move on.

[B]

All right. From the New York Times. Friend sent me this. I. We had a little Christmas gathering this weekend, and I got a bunch of beer. And I'm not, I'm not a beer snob. I get the common man beverages. I had a four pack of Guinness. You know those Guinness draft ones?

[A]

Yeah.

[B]

And it has the little nitrous thing in it and it pours great. So we were drinking them and my friend said, oh, you got to split the G on this. And I said, what's split the G mean? And apparently if you go get a Guinness now it's this, it's this hot Instagram thing, TikTok thing. But obviously I'm middle aged and don't know these things. It's a big thing. Guinness took off this year because there's a thing where, you know, you get a Guinness at a, at a bar and they have, they give you the Guinness glass and it says Guinness on the top. And the point is, and so the Guinness, it's probably a third of the way down or so, which is far and away the best draft beer you can get in a bar, right? Like you look the coolest if you're holding a Guinness.

[A]

It's true.

[B]

There's no cooler beer to hold than a Guinness.

[A]

That's true.

[B]

And so what you try to do is on your first sip, you gulp it down all the way to where it says Guinness and you have to get where the middle of the G is. So if you do that, you win a free beer.

[A]

Oh, I like that.

[B]

We gotta try it. New York, when I come in a couple weeks. Okay, so they say that. Apparently. So it says you can spot some Guinness in some unexpected places across New York City, including Mexican restaurants, diners and natural wine bars. It is the fastest growing import beer in the country based on bar, restaurant and brewery sales over the last year, according to Nielsen. The numbers are completely bananas right now, says Oren McGonagall. Oh man, that guy owns an Irish bar, huh? Owner of The Dubliner, a two year old pub in Boston. In 2023, his bar sold more Guinness than any other bar or restaurant in the city. Purchasing volume of the stout is up 60%, 63% to meet rocketing demand. Here's the, here's the great thing about Guinness. It's basically like a Miller Light, 4.2% alcohol. It's about the same, same strength as Bud Light and it has 125 calories lighter than Medello.

[A]

The counterpoint, there are people drinking multiple Guinnesses. Gini. Because I can only have one, it.

[B]

Is hard to drink more than one. But yeah, you get it at a bar and you have to chug it down to split the G. And guess what? Guess who did it on the first try.

[A]

Sean.

[B]

This guy nailed it. Sean would probably do that.

[A]

Happy birthday, Sean. By the way, I took my kids to get a haircut this weekend. And I saw some poor balding bastard get the Michael treatment with the mirror. And I started getting cold sweats just for him. And I'm thinking, like, I want to say to the Barb, like, come on, stop doing that. He knows. He knows.

[B]

Yeah. Or just hold the mirror way further back like it's like a rear view mirror.

[A]

I'm pretty sure full headed men don't get the mirror treatment. Just saying.

[B]

No, no. Every time they got to show me the back that it's like straight or whatever.

[A]

All right, fine. Maybe. Right. But. But for the. But for the balds, how about you just. How about you just take a pause?

[B]

Yeah.

[A]

Don't jump back. Yeah. Has there ever been a history in the history of a time in the history of Baldom where somebody said, hey, wait, mind holding the mirror to the back of my head?

[B]

Right. Yeah. I want to see the different angle of it.

[A]

No, no bald has ever asked for that.

[B]

Do you remember the infomercials in like the 1990s of that Ron Pope heel guy who would do the spray stuff on his hair to cover a bald spot? It was literally like hairspray or a spray paint. And he would just paint his hair and be like, see, you can't see the bald spot anymore.

[A]

So I bought what was. I bought a Rogaine back in the day.

[B]

How long do you stick to it for?

[A]

I did it like three. Three days.

[B]

It was like, there's no way a for effort.

[A]

There's no way. Plus it like stunk and it like matted your hair down. This is the worst product ever.

[B]

Okay. Gotta use a blow dryer to fluff that hair up.

[A]

You use a blow dryer, obviously.

[B]

Oh, yeah, I use a blow dryer.

[A]

Yeah.

[B]

Kind of wet looking hair. All right, recommendations? I watched the first episode of no good deed on your recommendation. Excellent cast. There's probably like 10 people that I've seen other shows and movies before. The quality of Netflix shows is still a little lacking in some.

[A]

It's on hbo.

[B]

Yeah, it's not hbo, but just from the first episode. It's about real estate, which is interesting because it's very timely. So here's. Here's my financial lessons from this show. Even though it's about, like there's something mysterious going on and all these other stories coming together. We'll see if I stick with it. But here's some of the financial lessons. Number one, don't be house poor. Right? Ray Romano is house poor. He can't. He has no money. Besides what's tied up in his house. Number two, you need diversification, right? They have. They have one asset, financial asset. Their house. They. They're stuck, right? Number three, he needs a home equity line of credit, right? Dennis Leary gets out of jail. He needs 80 grand and he's extorting him. He has no way to get 80 grand. Guess where you get it from? Home equity line of credit on the house you own, right? He has no heloc. Number three, there's a lack of housing supply. There's this one house everyone wants, right? All 10 of these people want to buy this one house because there's a lack of housing supply, right? And finally, there's the one couple where the wife is pregnant and they have to take help from the mother in law to buy a home because they can't afford the daycare versus the mortgage payment, right? This is where young people get hurt again. So there's a lot of financial lessons in this show.

[A]

There really are. I think about it through that lens. So I finished.

[B]

Of course I did.

[A]

We'd finished the show last night and it was like a. I'd say a B minus.

[B]

So do I stick with it?

[A]

You don't have to.

[B]

Okay. I kind of get that feeling. One more thing. I would like there to be a Christmas pop culture hall of fame. All right, so do it. So take the lead. So I think you have to vote it because there's. There's holiday classic movies in T and music that has just already been inducted into the hall of fame. Like, we know what the classics are. So when new stuff comes along, someone has to vote. Like, is this a classic or not? Right. Because I'm nominating the ringer. Did a story about how the Holdovers is already a classic. And I tend to agree.

[A]

Come on. Really?

[B]

It's a very. I watched it again this weekend. Man. It's a very good movie. I know. It's slow.

[A]

That is. That is like the definition of not a rewatchable.

[B]

I rewatched like three times. I really like that movie. So, like, 1994 was a. Was a great year because the Santa Claus came out with Tim Allen and All I Want for Christmas is yous by Mariah Carey.

[A]

I thought you were saying, like Pulp Fiction and.

[B]

Yeah, so those.

[A]

Those Shawshank.

[B]

Those are. Those. Those are an immediate entrance into the hall of Fame. Right. It's funny. My two daughters are working on a dance that they learned on YouTube for all they Want for Christmas is yous. And that's all they've been Doing for the last two days is working on the dance moves to the song. It's very cute, but I nominate from the 2010s underneath the tree by Kelly Clarkson that goes into the hall of fame.

[A]

I never saw that.

[B]

No, it's a song. Oh, but, like, there's a new. There's a song from the last couple years by Blake Shelton and Gwen Stefani. It's kind of catchy. But that one. Eh, no, you didn't make it. Sorry. Not in the hall of Fame. Okay, so that's my idea. Christmas hall of Fame. Every five years, we hold a vote.

[A]

All right. Make it so.

[B]

Okay.

[A]

Wait, did you tell me that you're watching Landman?

[B]

I did get into it. We're two episodes in. Okay, good call. I like it.

[A]

Just wait until you get more into it. The first two are, like, not even that great relative to.

[B]

I've always been a fan of Billy Bob. I feel like he always kind of plays the same cantankerous character, but in a good way.

[A]

It's fantastic. I took Logan to see Sonic 3. My kids are becoming cinephiles. They love going to the movie theater.

[B]

My kids do, too. My wife takes them all the time on pranks and stuff.

[A]

And what, you still won't go? Why? Are you boycotting? No, no, no, I'm boycotting the theater.

[B]

No, a lot of time, like, if there's a break, like on Christmas break, like today, they're going to see Mufasa. But I'm working.

[A]

Okay. Sonic 3. Quite good.

[B]

Okay. Sonic 2, I thought was a little. Eh.

[A]

I didn't see the first or the second, but the third one was pretty good.

[B]

But how did you know what was going on if you didn't see the first two?

[A]

I mean, it's not, you know.

[B]

Is Jim Carrey the bad guy again? Because he's been the bad guy in all three movies. It seems like it's got to kind of run its course eventually.

[A]

He's the bad guy twice. He plays himself and his grandfather. Okay, that was good. Okay, listen, everyone. 2025 was a good year. I hope it was a good year for you, too.

[B]

You mean 2024?

[A]

Yes, that's exactly what it meant. I hope 2025 for everyone is as. As good, if not better than the last 12 months. We know you have a lot of options to listen to, right? As somebody who listens to a lot of podcasts, I can't listen to every podcast that I want to listen to, and neither can you. So the fact that you chose to ride with us means a lot. So from Ben and I and Duncan and the whole team, thank you.

[B]

This is kind of like Ocean's eleven. Like, did you practice that today in the mirror or.

[A]

No. How was it?

[B]

Very good. What does Brad pit say? Yeah, very good. We appreciate it. Merry Christmas. Happy holidays. See you next time.