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- [00:00]
A
Today's Animal Spirits is brought to you by our friends on Y Charts. Michael. Last week, Josh Brown, our very own, teamed up with Y Charts CEO Sean Brown to look at the biggest strategies for the market for advisors in 2025. They looked at direct indexing, alternative investments, rate hikes, behavioral finance, how it all shapes and impacts client portfolios, and then the takeaways. You need to stay ahead of the curve. You can rewatch that webinar, which I'm putting, I'd like put it out there to community. Time for a new word for webinar. It sounds like something from the 1990s.
- [00:34]
B
Yeah, that's such a good point.
- [00:35]
A
Right? We need a new term for webinar, but you can watch the replay link in the show notes plus 20% off your initial subscription if you have not ever subscribed to YCharts before. New customers only. Check out the link in the Show Notes and also hit YCharts.com to learn more.
- [00:52]
B
Today's show is also brought to you by Fabric Ben I started my career at an insurance company. I was talking to Joe Fami yesterday, my boy Joe F, about my origin story. And like so many others who joined the life insurance industry as an agent. Not a great experience, not something you're really dying to go into. There's no career at college. Hey, here's how you become a life insurance agent, where you know how productivity is a residue of everything that's left over. That's who we were, right? If you got nothing to do, you could do this. But that doesn't mean that people don't need life insurance. Life insurance is a very important thing. My wife's father passed away without life insurance was devastating for their family. So selling whole life insurance to people that don't need it, not good. Getting yourself term life insurance because you do need it is a very good thing. And now there's a very easy way that you could do it with fabric.
- [01:48]
A
And especially people now with the Internet. People want things to be easy. And I remember when I got my life insurance, when I had my we had our first daughter. I had to go to an office, sit at a big round table, sign a bunch of papers. Fabric makes it easy for you because you can do the whole thing on their app or online. It could be done in as little as 10 minutes. Fabric by Gerber Life is term life insurance. You can do it right from your couch, online and on your schedule. You could be covered in under 10 minutes. No health exam required. It's very easy if you go through the process. You just give them some general information. It's not that hard. Join the thousands of parents Trust Fabric to help protect their family. Apply today in just minutes@meetfabric.com spirits that's meetfabric.com spirits m e e t fabric.com Spirits policies issued by Western Southern Life Insurance Company not available in certain states. Prices subject to underwriting and health questions. Meetfabric.com spirits to learn more welcome to.
- [02:45]
B
Animal Spirits, a show about markets, life and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Welcome to Animal Smirks with Michael and Ben. I am here in Las Vegas, one of my favorite cities in the world and also one of the most loathsome. It's both exhilarating and depressing.
- [03:27]
A
It's a love hate on the extremes. There's no middle ground for Vegas. You hate coming, people love it or hate it.
- [03:31]
B
You love leaving. It's very depressing and everything in between. But I love it. I love the grime, I love the people, I love the cigarette smoke. I love the depression. I love it all. I'm here at the Fontainebleau. It's massive. And I'm walking around looking a lot of paintings, a lot of not, you know, expensive painting, but a lot of rooms to furnish. Every time I'm in a hotel like this, I'm just thinking, how does this place ever turn a profit? And we had this conversation actually, when we were at the hotel in Houston, that beautiful hotel in Houston, which I'm sure actually is doing quite fine. But this place, man, I'd love to see the numbers on it. I just, I don't know how this works.
- [04:12]
A
It's all the extra up fees that they charge you, right? Here's the price, but here's the actual what you're actually paying. They get you on the fees. I think that's it.
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B
That's the fees.
- [04:21]
A
Yep. Gotta be the fee. Just like it's like doordash. So last week we were talking about Jason Zweig had the story about people losing their whole retirement fund. So I wrote a blog post kind of talking about this. And I wrote about the four types of investment mistakes and how there's Annoying mistakes, like investing in an underperforming fund. Like, yeah, if you invested in an active fund that underperformed the S and P by 2% over the last five years, you'd be kicking yourself. But you were invested. There's the self inflicted mistakes, like paying high fees over trading. There's painful mistakes like selling at the bottom of a bear market or buying at the top, those kind of things. And then there's the end game mistakes, which is like fraud and scam. And I put this on Twitter. And then a million people wrote their own additions to what I was writing. They said, hey, number five, it's this. And a bunch of people wrote this in, which was good. Write in. Like writing in a write in ballot for the election. Someone wrote, five, buying an Audi.
- [05:08]
B
Ooh.
- [05:09]
A
And I thought that was great. It was. The people want to hear the story about what happened with your car because we didn't get to it last week and I've never heard the story. So I got to hear what happened. I can't believe you didn't go to another dealership and get a completely different.
- [05:21]
B
Car brand because you don't know the false story, my friend.
- [05:25]
A
Let's hear it.
- [05:25]
B
Sit back, relax, and enjoy the story. All right, so for those of you who are unfamiliar with my trials and tribulations with Audi, it started so I had a 2019 Q7, and we were thrilled. I never thought that I would be able to afford such a vehicle and was smiling ear to ear driving it off the lot.
- [05:43]
A
I drove a Q5 for a few years. It's a smooth ride.
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B
The Q5 is a better ride, but we have a lot of trunk space. We've got a dog and another dog on the way. And we pack the car when we go upstate. So we needed the trunk space, so we got the Q7. And there was just always one problem after another. The engine would leak, we got the oil change, and then the light would come back on three weeks later. And during the height of the pandemic in November 2021, I had the option to buy out my car, by the way, which I recently learned the sticker buyout price was 33,000. And I checked my price. I'm like, well, why'd I pay 51 to buy it out? What? So I flipped that all over again. You don't know this part, but I flipped that all over again. They're like, well, because that was a buyout price. You still have two months on the leash and then the list and that. And then you get the warranty plus the taxes. I'm like, all right, whatever. I don't even care at this point. So. All right, so. So I bought it out. And the reason why I bought it.
- [06:37]
A
Basically bought it in September 1929.
- [06:39]
B
Yeah. The reason why I did was because in November 2021, with all the supply chain issues, I either take my monthly payment from $900 a month up to $1300 a month for the. For the new car. That sounded awful. Or I buy the car and I take my payment down from. From 900 down to 800. So I didn't really think that much about it. What I should have thought was, hey, my wife's putting 20,000 miles a year on the car. And so what ultimately happened was the value of the car plummeted relative to how much I owe it. But along the way, the engine problems kept happening. I would get an oil change, the light would come back on, and they didn't give me a loaner car. And so I had to get a loaner car from Enterprise one time. And then when I called Audi of America to complain, they're like, oh, that's a horrible. We're so sorry. Submit the bill for reimbursement. I submitted the bill. They rejected the claim. I'm like, this is just.
- [07:26]
A
Having car problems when you have kids is a huge pain in the ass. Like, it upends your whole life.
- [07:31]
B
So. And then there's a few other things in between where I'm like, I'm driving. I'm like, guys, I need to get the car fixed. But they don't have a loaner car. So now I'm driving a car that I own, that I'm already underwater on, that keeps getting worse. So finally, they give us a loaner car, they fix the engine, the light goes back on three days later. It's like comedy at this point. You know what I mean? So I'm like, keep the car. They're like, do you want us to do a full exam of the engine? Like, what do we mean, do I want you. I thought that's just. That's what you were doing. I thought that's what you did last time.
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A
I thought they just plug it into computer and it does like, diagnostics for everything. I thought you did that already.
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B
I'm like, am I taking crazy pills? Why do I keep coming back here? So over the summer, they gave us a loan, a car, a Q5 in August, and I hadn't heard from them since October. So I called him. I'm like, guys and mama Says, shouldn't we be calling? I'm like, I don't.
- [08:26]
A
Four months later.
- [08:26]
B
Yeah. I'm like, take the car. I don't want it. I don't want it because at this point, I have a warranty that expires at 100,000 miles. I've got 82,000 miles. It's a ticking time bomb. Like, keep the car. I don't want it. So they call me, like, guys, don't you think it's weird I'm in customer service? Don't you think it's weird, given our history? You know, I'm not a. I'm a. You know, I'm a disgruntled customer that you would keep me abreast along the way. So I'm sorry, Mr. B, we've been really busy. I'm like, whatever. Just. What? What. What's going on? There's metal in the engine. Of course there is. So. So now what?
- [08:57]
A
Isn't the engine made out of metal?
- [08:58]
B
Sure. Oh, sure. So. So. So now what we have to do if I'm on a full diagnostics and see if the warranty will cover it. So then I got the call two weeks ago and.
- [09:08]
A
Wait, didn't you pay for a warranty, too?
- [09:10]
B
Yeah, I pay for the warranty, man.
- [09:12]
A
Thank you. Should have taken the higher car payment in 2021.
- [09:16]
B
No shit. Well, that's where this all landed. We'll try to get there. So. So I. So the transmission blew, so the Warranty covered that $12,000. So they said, all right, we've got good news and we've got bad news. The good news is the engine is busted. There's metal in it, and that's. That's been the source of your problem this whole time. Wonderful. Thanks for telling me. The bad news is that you're above your warranty limit and we're not going to pay for the whole thing. I'm like, okay, awesome.
- [09:46]
A
I did not realize that there were warranty limits.
- [09:49]
B
I guess there's something called fine print. I'm not reading the fine print. And there's more bad news. Oh, yeah, what's that? You're over your limit. The warranty is gone. There's no more warranty. I'm like, how much does it cost to fix the engine? Like, well, it costs Audi 24,000. We're going to cover 17. I'm like, now, mind you, I owe $27,000 on the car. The blue book value for a good car is 15. I'm like, no, no, no, no, no, no, no, no, no, no, I'm not spending $7,000 lighting that money on fire in order to drive a car that has been busted six ways to Sunday without a warranty. I'm out, right? So I call my car broker. I'm explaining the situation, like, get me some quotes on this car and that car. And the quotes come back because I've got negative $12,000 in equity to be rolled into. The quotes come back disastrous. So I. So I get a call from Audi, the sales guy. He's like, Mr. Batnick, I know you don't want to hear this. So now I have three terrible doors to choose from. Like, all right, what can you do for me? So the thing has been, in reality, So I owe $27,000 to the bank. In reality, after the engine trouble, the car's worth, I don't know, 7,000, 8,000. There's no way in the world I'm writing a check to the bank for $20,000 to just light the money on fire. Out of principle, I'm not doing that. So Audi was willing to give me $14,000 for the vehicle to roll it into a new Q7. So they had me by the. You know what? I had no choice. I can't believe it. But it was either take $8,000 or $7,000 from someplace else or take $14,000.
- [11:31]
A
Did you try to negotiate at all and say, hey, for the trouble you've given me, give me 20 for this thing?
- [11:36]
B
Of course.
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A
Okay.
- [11:37]
B
They're like, sir, it's worth it. It's worth like eight. Like, this is gonna go to auction. It's probably gonna get junked. Like, we're gonna give you 14 because for your troubles, right?
- [11:46]
A
If we put this on the street with the doors open and the windows open and the keys in the car, no one would steal it.
- [11:51]
B
So, all right, so that was the story that I was gonna tell last week. And then here comes the punchline. We get the car on Sunday. On Monday, Robin sends me a photo from the brand new car. The check engine light came on.
- [12:09]
A
That could be a world record.
- [12:11]
B
I'm like, yeah, I'm being punk. This has to be a joke. And the long and the short of it is, I think I believe it was just a computer glitch. But to say that I was about to lose my mind was an understatement. So anyway, we're back in a Q7. We had no choice. It was either do that or get whatever. If we got a BMW or something would have been catastrophically more expensive because.
- [12:38]
A
I guess Financial lesson here is what?
- [12:41]
B
Well, the financial lesson is. Listen, the truth. The reality is I got a bad car. It happens. You know what I mean? Like, it's bad luck. Yeah, it was bad luck. So. But, yeah, no, I will never be buying a German car ever again.
- [12:53]
A
Except for the one you just bought.
- [12:55]
B
Now, for the people who were like, well, renting a car is always a waste money. Listen, I don't care, okay? There's a financial decision that I like to make. I am a leaser. I don't care if I am not optimizing my spreadsheet. I like the flexibility.
- [13:08]
A
I think you talk me to never buying the warranty, though, because it sounds like you got screwed on the warranty, too.
- [13:12]
B
I know the warranty saved my life. I mean, there was a $12,000 transmission that was covered and other damages. So the whole thing was. Was not a great experience. Needless to say. Needless to say. Now my wife's thrilled.
- [13:25]
A
Tell your wife to buy a Honda Accord.
- [13:27]
B
My wife's thrilled because she loves the car, okay?
- [13:30]
A
So she's great. Happy to get a new one.
- [13:31]
B
She's. She's thrilled. So I'm not. Also, who cares about my Jeep, that piece of garbage? So I spoke to the other broker, and by the way, I'm like, hey, hey. And while I have you, can I. Can I. Can I get out of the sheep? He's like, oh. He's like, what? You have the EV regular? He's like, dude, no. He's like, there have been so many rebates. There's so many mechanical issues. He's like, you are in that. I said he was. When's your lease up? I said, April 26th. He said, I'll talk to you on April 26th. He's like, There is nothing you did to get out of that car.
- [14:02]
A
You're the worst car picker in the world. Like, you're. You're like a stock picker who, like, only picks bad stocks. That's you. With cars.
- [14:09]
B
Somebody made a comment that Michael can't be a man of the people because he has a ticket broker. I will have, you know, person and a car broker person who in the comments is that both the car broker and the ticket broker came from recommendations of you find listeners. So thank you.
- [14:29]
A
Well, the car broker came from animal spirits. Listener. I didn't know that.
- [14:32]
B
No, not true. That's not true. The car broker came from my step brother. That's not true. The ticket broker. So anyway, that's my story with the car. Good times.
- [14:40]
A
Speaking of People who make bad decisions. I want to talk about the Bears throwing in the towel but I want to start with this for the year and then we're going to get into that. So The S&P 500 is up 29% I wrote this last week. Worst peak to trough drawdown this year was 8% 56 new all time highs. This is as I tweet my tweet last week I think there's been another one or two. So it's 5758. So it's like one out of every four trading days this year has been a new all time high. There have been just three down days of 2% or worse. I think there's only one 3% down day. This has been easily the best year since 2017 in terms of volatility but also one of the least volatile years. This is one of the like this is the kind of stock market you want to see as an investor. Like this has been a relatively easy year for everyone.
- [15:22]
B
You think there was one brief period of volatility, the yen begetting but other than that it has been the sailing bend has been smooth. I was looking to find. I was talking to FAMI yesterday about thinking about next year and I said listen, we had a 20% up here in 2023 with a 29 up here in 2024. I do not want a 30% up here in 2025. And I'm talking about all the reasons why about how this sort of ascent can set us up for something really nasty on the other side as the. As the eventual expectations aren't met. And I put a caveat out of that with I said however I would love a 30% up year if, if it's driven by margin expansion and earnings growth. If that happens I would love a 30% year. But I guess the point I was making I was like if we get a blow off top of multiple expansion, that's what I do not want.
- [16:23]
A
My most high conviction bet for next year if I gave a forecast would be that regardless of where the year ends up, we're going to have a 10% or more correction. Like we just we. I would put that at like 85%.
- [16:34]
B
Well how. What percent of years do have a 10% correction? Let's use that as a baseline.
- [16:37]
A
Two thirds of all years have peaked a trough drawdown of at least 10%. So it's already a pretty high number. I would put it way. I would say like 85, 90% that we are going to have.
- [16:46]
B
So 90 side but I would say if you. If you. If we were to set some sort of odds align at 80%, would you take the over, the under? I think I would agree with you. I think I'd take the over regardless.
- [16:57]
A
Of where we finish. So people are always looking for reasons for a top. We've talked about the top calls for a while now. David Rosenberg, who is an economist, put out a memo basically saying, all right, that's it. I'm throwing in the towel. I've been wrong for the past two years. I've been saying, this is too frothy, it's a bubble. And maybe I need to rethink things. And everyone.
- [17:17]
B
Can I. Can I give an intro to this?
- [17:20]
A
Yes.
- [17:21]
B
All right. So I have a complicated personal relationship with David Rosenberg that I don't think you know about. In 2008, when I was absolutely lost in my life, I met an advisor at Wells Fargo who was of the Bearish Band. Now, Listen, it was 2008 who wasn't bearish, but even coming out of it, he was very much a gold guy, a Dave Rosenberg guy. And this gentleman who changed my life because he got me really. You know, he made me fall in love with the markets by sending me breakfast with Dave and Ed Yardeni stuff. And so I knew Dave Rosenberg before I knew a lot of people on Wall street, and I was reading his stuff.
- [18:08]
A
I think that's when I started reading him, too, back then at some point.
- [18:10]
B
Yeah, yeah. And so I really fell in love with his writing. And again, none of it meant anything to me. It might as well have been Greek. But I. I was like, wow, this is a thing that exists in the world that people write and do this. And then in 2012, at Barry's first big picture conference, and now 2012, we were still chopping our way through. There was double dip fears, there was the Eurozone contagion, all that sort of stuff. We were definitely not out of the woods. And Rosenberg had been steadfastly bearish the whole time. And I discovered that Barry and Rosie had. Were friendly. They ran in similar circles. It's a small world, obviously. And after Barry's Big Picture event, I was. And I had only been with Josh and Barry for three months at this point. You know, I was very, very green. I was at a dinner table and Rosie was sitting two or three seats down from me. And I could not believe that I was at this dinner. Right. Like, given where I was back then, I could not believe that I found myself in this situation. A guy that I had Looked up to. And I remember he leaned over to Barry and said, who is this kid? He's electric. Talking about me. And that gave me, like, that brought tears to my eyes at the time. I couldn't. I remember telling, like, my dad trying to explain anyway what this. Who this guy was and what that meant.
- [19:37]
A
Big shot in the arm, like a.
- [19:39]
B
Huge, huge shot of confidence. So I owe a huge debt of. Not that he would know this, obviously, but I owe a huge debt of gratitude to David Rosenberg for multiple reasons. Okay. That being said.
- [19:54]
A
That being said, he got bearish going into the 2008 crash and never got out of that piece.
- [19:58]
B
Yeah. So that being said, Dave Rosenberg, and this is not personal. Okay. Has been incredibly bearish and incredibly vocal and incredibly wrong and incredibly stubborn this entire time, to the point that there have been people who said this bull market won't end until Rosenberg. I think Ben Hunt tweeted that until David Rosenberg capitulates. All right, so that's. So that's some of the background.
- [20:25]
A
Dave has been one of those prominent. Who did the Armageddonist thing. Was it David Kelly or Michael Semblance of JP Morgan? I have the chart here, and it shows it was.
- [20:33]
B
I'm pretty sure it was Semblance.
- [20:34]
A
Okay. So he did the biggest perma Bears. And if you would have listened to their pronouncements about the stock market, how you would have done. And Rosenberg is almost near the bottom. Like you would have. If you would have listened to what he did, you would have lost 60% of your money in this or something like that. Some ridiculous amount of money. So he. To your point, he hasn't just been bearish last couple years. He's been bearish since the 2008 crisis.
- [20:52]
B
So let's. So let's. So let's. I want to read some of his stuff and then we can riff on it. He said. One can reasonably debate. This is in this paper. We'll look to this. One can reasonably debate whether the stock market has risen exponentially. But there is no arguing that the surge in the S&P 500 these past years has been nothing short of extraordinary. And it has clearly gone much further than I thought it would, especially in these past 12 months. And so at this point, it is worth the time and effort to discuss and interpret the message from the market. Tip the hat to the bulls, who have, after all, been on the right side of the trade, by the way, truly credit to him. Right. That's the magnanimous thing to do and provide some rational behind this powerful surge. But this is not some attempt at a mea culpa or a throwing in of any towel as much as the lament of a bear who has come to grips with the premise that while the market has definitely been exuberant, it may not actually be altogether that irrational. So here's what he said. What is the market telling us, in other words, especially since this bull face has now lasted long enough that those of us who have been on the wrong side of the trade need to take a different tack. This is not about throwing in the towel as much as trying to get a grip on what is going on beyond just calling this a bubble every single day, which has been. There must be more than that to what we've been seeing over the past two plus years. So he says the market apparently two.
- [22:08]
A
Plus years means 15 years, but yeah, but okay, whatever.
- [22:11]
B
Let's. Let's not nitpick. The market clearly continues to anticipate in price and a future boom in productivity that will lead to a secular shift in the trend line for corporate profitability. It may be wrong, but that is the bet and it does not look as though Mr. Market is about to fold. As I'm in Vegas, that's a good thing.
- [22:27]
A
We're going to get into this. That secular shift has already happened. That's why we're here.
- [22:30]
B
I know. Not at least until we actually do get an earnings recession or those AI related and total related orders don't end up getting filled and we find out that the TAM was far too inflated. It doesn't seem as though we are at that point yet, but we'll need to keep a firm eye on the supply demand backdrop for AI. Just as everyone should have been doing the fiber optics doing for fiber optics and telecom equipment of all kinds in the Internet media in the late 90s. I've gained a greater appreciation that it is going to take a whole lot to upset this albacard and trigger a fundamental reevaluation of what AI will exert on productivity growth and profitability in the future.
- [23:07]
A
It's also true that AI is a story of the past 18 months and you also had 14 years before that of rising margins, rising profits, rising tech boom. You can't just say that this is all AI.
- [23:19]
B
So Ben, read this last point.
- [23:22]
A
Okay, I hate to ever use the term new era or it's different this time, but we do not have a large sample size of data points historically on such major inflection points on the technology curve. But when they do occur, what you do find is that, that we have our hands, what we have in our hands today, which once again is an investment community lengthening their investment horizons and rendering classic valuation metrics obsolete. That's the major point. Once we ever do revert to a backdrop where investors shorten their timelines to what has been the norm of the past, which will mark the end of this technology super cycle, the gig will be up.
- [23:51]
B
So let me say one other thing as we sort of reflect on where we've come from and where we might be going. So our friend Brian Jacobs at Aptus Capital wrote about the Cape ratio, and he said, beware Cape Crusaders, limitations of Shiller's ratio and modern market valuation. And he shows the projected returns of the S&P 500 based on the Cape model and the realized returns. And of course, the realized returns are much higher than the returns that you and I and many others had spent talking about.
- [24:25]
A
Way higher. And they basically never converge.
- [24:28]
B
So I want to take a bit of a victory lap, but with a big caveat here. I think that you and I and Josh and certainly many others on Twitter who write about this stuff had been pushing back against a Cape ratio. And we did that for a long time. And for those of you who are unfamiliar with what is a Cape ratio? It stands for the cyclically adjusted price to earnings ratio. And it was created by Robert Shiller. And what it does is it looks at not just the last 12 months, or not just projected forward 12 months earnings, but really over a true cycle, what does the last 10 years look like of earnings? Adjust it for inflation, smooth it out a little bit, and that'll give you a fair gauge of whether we're high or low, trading rich or poor, which.
- [25:19]
A
Sounds reasonable because it takes out the outliers, essentially.
- [25:22]
B
Oh, it sounds very reasonable. And so if you look at the entire history, we're overvalued. And we have been overvalued for like 98% of the last 25 years. And one of the point that I had made back in 2017 was, wait a minute, wait just a minute. Yes, we have the full 100 year sample size and we're looking at the data, the average over that entire period. But what if you were to look at the average in real time? Right. What if you were to look at the average in 1928-1950 and then what if you looked at it again and from 1920 to 1960 and you did that? So the average Cape ratio in real time, and when you did that, when you do that, you don't Just have a. You don't just have an average line that goes straight, right? You have an average line that is moving. And the average line had been moving up until the. Right. Since 1980. And so I wrote many blog posts, and when I did do this, Ben, I had a bit of. A bit of trepidation as I pushed send. Because, listen, I'm a. I'm a Queen's College graduate, right? I have no PhD, no MBA.
- [26:20]
A
It was a lot of smart people who were talking about the Cape ratio.
- [26:23]
B
Yeah. So the Cape ratio was invented by a little man named Robert Shiller. And Robert Shiller won the Nobel Prize in 2013. And you had all these academics, luminaries, giants of the investing industry talking about the Cape ratio and why the market was going to not do very well. And here you have this bald asshole saying, not so fast. And in 2018, research affiliates, Rob Arnott wrote a post, and by the way, nothing but love for Rob. Still a big fan of his. So this is not hate to him.
- [26:55]
A
We've interviewed him in the past, right?
- [26:57]
B
Yes. And we're going to interview him again next year. So not only do I not have hate for Rob, but I have so much respect for Rob that when he mentioned me in this article in 2018, I might have cried like it was.
- [27:09]
A
A badge of honor. Huh?
- [27:10]
B
It was a big deal for me. So research affiliates, God knows how much money they manage. Is it a hundred? Is it a hundred? Is it in the hundreds? Is it 80 billion? I don't know. They manage gazillions of dollars. Rob Barnard is a pioneer, a luminary of China in this industry. So they wrote.
- [27:24]
A
They wrote the line from Curb is having said that.
- [27:28]
B
Having said that. So in 2018, they wrote a post, cape Skeptics Arguments. And the title was Cape Fear, why the Cape Naysayers are Wrong. And in it, Ben, they quoted me. They quoted me, Michael Batna.
- [27:43]
A
Not just in the bulk, in the words of the body of the. They actually broke you out.
- [27:52]
B
They bolded me. I wasn't in the footnotes. And then they quoted me. And here's the quote, Ben, that I wrote in 2017. Comparing the CAPE ratio from 1960 to today is like comparing Oscar Robertson to Russell Westbrook. Same game. But things have changed. And how right we were, Ben. And I think the point that we have been making for this entire time and not to get mad, because I'm thrilled that they're coming around and that Dave Rosenberg is finally realizing, is that the companies, the fundamentals, the metrics of the markets of the inputs that they were looking at. They had been comparing it with history. And we were like, context matters here. Hello. This is different. Like I said, you're comparing Oscar Robertson to now John Morant. What are we doing? What are we doing?
- [28:41]
A
These people were experts on an earlier version of the world. So Brian in his piece shows the market weights of Facebook, Amazon, Google, Apple, Nvidia, and Microsoft 10 years ago versus today. And he's showing they're so much bigger. Like, these were tiny. Nvidia was a fraction of a tiny fraction of the market back then, and now they're a huge piece. So his point is saying, why should we, why should we care about what the earnings were 10 years ago if these companies are so much bigger now and more profitable? Here's some, here's some other stats. Kind of back up last. The last conversation. We bet on this. Here's an interesting one. So Pranav guy, who's a guy at Calc Bench, who did this for us a few years ago, and he actually followed up and he said, five years ago, for you and Michael, I created this thing where I showed net income by the top 25 companies in the S and P every year. And he showed that the top 25 companies in the S&P now make up 49% of net income. And that's been pretty stable for the past ten years or so. But guess what percentage of the market cap those top 25 make? 49%. They make up 49% of the market cap and 49% of the income. It's a relationship.
- [29:48]
B
But, Ben, I thought it was all monetary policy.
- [29:51]
A
So these companies are bigger. And that's not to say these companies are going to stay on top forever.
- [29:55]
B
They probably won't. So with all of that being said, with all of that being said, how do I feel about, you know, this continuing indefinitely? Listen, we just had a up 20% year and up 30% year. I can't play God. I can't determine where the market goes. But if I had it my way, you know what I would, you know what I would love go into my head.
- [30:18]
A
Market feels a little rich here.
- [30:22]
B
What if, you know, it'd be, you know, it'd be wonderful if I could do the puppet master thing. Let's have earnings outpace multiples next year. Let's have earnings go up more than the multiples do. Let's have earnings grow 13% and the market grow 9.
- [30:39]
A
That's happened before where earnings grow more than the market.
- [30:41]
B
Now, given that we are in the midst of a revolution. I would say that is probably highly unlikely. If earnings grow 30%, the multiple is going to go up even further still. But yeah, no, this was a weekend that I had a lot of introspection and a lot of reflection on when we were writing this stuff. I don't know about you, man, but I pressed send and I went like, to your point.
- [31:05]
A
It was some very smart, very well educated academics and practitioners and investors. And yeah, we were writing this stuff in like 2015, saying, hey, listen, maybe the Cape stuff is wrong. And yeah, I feel pretty vindicated. But we were just saying you have to provide context here. You can't just look at this number. The markets are not that easy. You can't look at one variable and say, that's it, time to get out. Markets overvalued. It doesn't work like that.
- [31:29]
B
Yeah. So there we go. All right, Ben, there's a great chart from Jeffrey Patak showing. Here's a timeline of. Here's a time lapse, excuse me, of net assets in single Stock Leveraged long ETFs broken down by reference. Stock aggregate net assets have risen 12 times over the past 12 months. I would love to know where these trades are being executed.
- [31:56]
A
And this chart only goes back to 2022, because these are obviously relatively new. You couldn't do this in the past, right? Or just no one did. So the growth here is just insane. So Nvidia accounts for almost $8 billion, MicroStrategy is almost 5, and Tesla is over 4. So those three single stock ETFs that are leveraged count for 85% of all assets. Holy smokes.
- [32:18]
B
And look at this next chart.
- [32:20]
A
And the crypto ones obviously, right? Like Bitcoin leverage is going to be here next, don't you think?
- [32:25]
B
Well, MicroStrategy is in here.
- [32:27]
A
Well, so MicroStrategy is already there.
- [32:29]
B
Assets. And this in Bloomberg. Assets and leveraged long ETFs divided by assets and leveraged short products. And look at that ratio. That is who.
- [32:40]
A
Let me say, whenever, whenever the top does come in the, in the, in the market, the floor falls out from the market. The top. The stuff will be really easy for people to point to, see. But in the real time, they've been pointing it out for years and years and it's not that easy.
- [32:53]
B
Yeah. And another theme of the conversation that we keep having, investors rush into US equities. This is from the FT. 140 billion monthly net inflows after the election. You know, this is like, remember that commercial back in the day, how many licks does it take to get to the center of a Tootsie Pop? I don't know why I thought about that. But like, I guess with the bad analogy I'm trying to use is like, where's this money coming from? That's the worst analogy I've ever used. But how?
- [33:21]
A
I guess I can't believe that. How bad it dwarfs 2021. I would have assumed 2021 would be like the height of speculative mania and everyone's just got more money now. I don't know. We still haven't got a good answer on this. I would love for someone to provide a good answer on this. Where is the money coming from?
- [33:39]
B
Yeah, I don't know. Somebody tell me. Damn it.
- [33:42]
A
So, I mean, here's the simple explanation is, let's see, inflation is up 25% since 2020. Wages are also up 25%. So people have more money to invest. But that doesn't account for why it's so much bigger now, though. That's not like a 20% increase. It's like a twofold increase.
- [34:01]
B
Yeah. So Robin is looking to get into sports betting. Shocker. Who could believe that? Why wouldn't they?
- [34:13]
A
Yeah, I guess that makes sense. Are they too late or is it still not too late for that sort of stuff?
- [34:17]
B
No, but they've got the users. I think people would like to consolidate. So, by the way, I'll just do.
- [34:22]
A
All my degenerate stuff on one app. I don't need all these different apps.
- [34:24]
B
I asked earlier. The time lapse of single stock leverage, long ETFs, how much of that do you think is in Robinhood? I'm guessing that they're definitely punching above their weight class in terms of total AUM on the platform versus total AUM and leverage stuff.
- [34:37]
A
Yeah, that makes sense. Okay, new Mobuson piece out from Morgan Stanley.
- [34:43]
B
I did not read this yet. I plan to read it.
- [34:45]
A
Totally obvious, but he had some great charts in here. This one stuck out to me more than I don't. People talk about the concentration of indexing and how much money is in the top 10 holdings. And actually since 2010, it's gone up, but not much from 25 to 30%. But he shows the average. Sorry, this is top 10 holdings, but for active managers have actually got more concentrated. Active managers went from 30% concentration in the top 10 to 40, whereas indexing went from 25% to 30. So it's kind of funny to think that people are so worried about concentration and indexing when it's even worse in active management, which makes sense that we keep talking about.
- [35:18]
B
It's like they're the ones setting the prices. Of course it's higher in active.
- [35:22]
A
Yes. And they have to be. They have no choice. Oh, here's another one. Back to our where's the money coming from? This is from Ed Yardeni. The three month moving average of foreign private purchases of US stocks at an all time high in September. Historically, foreigners have been poor timers of the US Stock market tending to chase rallies and blow off tops. But look at this number. It's another one that's just off the charts compared to history in terms of money. The last three months we've had a huge.
- [35:46]
B
This is another, another answer that we've gotten from listeners is overseas investors. And listen, certainly part of it, certainly part of the story. All right, financial optimism improved in November. What are we looking at here? This is a percentage of households seeing better financial situation in one year. This is from the Federal Reserve bank of New York survey of consumer expectations. And.
- [36:10]
A
It was up like 30% in.
- [36:12]
B
You might laugh and say, how is it? It's so crazy that we live in a country where people's moods are determined by who's in the White House, whether it's people that you want in the White House or people you don't want in the White House. But that's the way it is. So right now people are really excited about who's in the White House. And does it matter? I think it does. I think the way that people feel about who's in the White House and how it's going to impact the economy, whether they turn out to be right or wrong, I think it matters and could be self fulfilling because if they're feeling better and they're more likely to spend and they're more likely to invest and take on new projects, I think that in and of itself can move the needle. Speak of my ticket broker who again was introduced to me. I did not find my ticket broker. So thank you listeners. My ticket broker said, hey. He's like, hey, this is not a political comment. So I'm just letting you know I've been slammed since the election. People are spending a lot more, way more money on tickets.
- [37:12]
A
How about this for an explanation?
- [37:14]
B
You laugh, but that's actually happening. Yeah, he wasn't trying to be funny.
- [37:24]
A
How about this for an explanation here? There's just lots of rich people in the world. This is from ubs. They do this global wealth report every year and they say let's See the percent of adults in the lowest wealth band, they look at below 10,000 USD, this is globally, and 10 to 100. And then above a million, they show the percentage in that lower 10,000 band has basically been cut in half from 75% in 2000 to 39.5% now. There's more millionaires. 1.5% of the adult population is millionaires around the world. 22 million of them are in the US so 38% of all millionaires in the globe reside in the United States. China is second with 6 million, and that's double the number of the UK, which is in the third. So 22 million millionaires out of 260 million adults in the U.S. so that's 8% of all adults in the U.S. are millionaires.
- [38:16]
B
Say that one more time.
- [38:17]
A
8% of all adults in the US are millionaires now nearly 1 in 10. So it's 1 in 12, I guess higher or lower than you would have assumed. And we're by far the most out of any country.
- [38:28]
B
And how. I'm sorry, how is millionaire defined?
- [38:31]
A
Oh, I don't know if it includes home equity or not. That's a good question. I didn't really look. But globally, 1.5% of the population is worth a million or more.
- [38:41]
B
16% is, because if you include primary residency, I would guess it's a lot higher than 8%.
- [38:49]
A
Yeah, true. Because isn't like 5% of all houses are worth a million. But you take the equity into account. But the crazy thing here is that it's something like 75% of people are worth 100,000 or less globally.
- [39:03]
B
75%.
- [39:04]
A
Yes. 75% of the global population is worth $100,000 or less. 40% is worth 10,000 or less.
- [39:10]
B
You could hear that and get upset about the inequality and stuff. I see that as an opportunity. Like what happens not if, but hopefully when these people are lifted up and.
- [39:24]
A
These numbers are showing that it's already improving. The last 20 years seen a big improvement?
- [39:28]
B
Well, the amount of people living in absolute global poverty is collapsing. Right, Right.
- [39:32]
A
Yeah.
- [39:32]
B
So I listened to a bunch of the.
- [39:35]
A
Yeah, so to your point, the trend here matters more than the absolute numbers.
- [39:39]
B
Yeah. Anyway, getting back to the percentage of millionaires in the United States, that's interesting. I would. Of investable assets. Yeah, maybe 10% sounds about right. I don't know. But I was listening to. I listened to Bezos and Sam Altman and Alex Cooper and Ken Griffin and there's so much negativity out there for reasons you know are obvious. We need to get into that now. But I was really, I found it really encouraging and inspiring to listen to some of these like business people about some of the projects that they're working on and ways in which they're inspired to create value. And you know, people are for people who rail against billionaires. Jeff Bezos was like, Yeah, I have $200 billion worth of Amazon stock. Guess how much Amazon's worth? $2 trillion. Which means that I've created $1.8 trillion in wealth for other people.
- [40:40]
A
I don't think people realize how cool it's going to be when we have a bunch of self driving cars and AI acting like your personal assistant. I don't think people have prepared themselves for that reality yet.
- [40:49]
B
Yeah. So I found myself feeling pretty inspired by what the future is going to look like. Chart Kit just sent me this over. I asked him to update this when the data came out. So we've got the small Business Optimism index and the Small Business Uncertainty Index. And the Small Business Uncertainty index was spiking into the election and it's a little bit hard to see but it's pulled back pretty dramatically since. But you've got the small business optimism just roaring. And again, like this matters the way that people feel. You don't think the way people feel now. You don't think.
- [41:22]
A
So did it matter to the economy the last two or three years though when people were thought the economy was dreadful and the spending was off the charts?
- [41:30]
B
No, no. But I don't, but I don't think that. I don't think the two things could be. I don't think opposites need to be equal if that makes or if I'm explaining right. But I don't think, I don't think what you just said disproves what I'm saying. Just because people had been spending doesn't mean that now they're going to not spend even more. I think they are going to spend even more. And I know that my ticket broker thing is very anecdotal, but I do think that it matters. I think sentiment matters for how people feel and how people spend. I definitely do.
- [41:55]
A
I don't think people have another level to go to unless we everyone just. Maybe this is, well, okay, maybe this is the point where people just tap into debt. But people have been spending so much already that I don't know where does the rest of the money come from. The raises aren't going up, the people aren't going to be able to change jobs anymore. Get These massive raises.
- [42:16]
B
We'll see, we'll see, we'll see. So, okay, I put a new segment in here, Ben.
- [42:22]
A
Okay?
- [42:22]
B
It's called the Way Back Machine. Click on this link.
- [42:27]
A
Okay?
- [42:28]
B
Somebody made this for us. And it's charts from Animal Spirits over the years. You click on it, it says, get a random chart.
- [42:41]
A
Holy cow.
- [42:42]
B
And you hit it again, you get another random chart. So.
- [42:45]
A
And it shows what episode it was on.
- [42:47]
B
Yeah. So, Ben, I saw one. I saw one. And I clicked on my.
- [42:52]
A
I did not see this. This is amazing.
- [42:54]
B
Thank you, Dylan. Shout out to Dylan. So I grabbed the chart and maybe we'll make this a segment. Maybe we won't. I don't know. But like, charts from 2018 that seem either quaint or funny or outdated. Or earlier.
- [43:07]
A
Oh, my God. Carnival and Royal Caribbean, when they went to like 2 times price to earnings in 2021. Can you imagine if we would have bought them back then?
- [43:17]
B
Okay, so anyhow, so I grabbed a chart. This looks like it's from Ned Davis, doesn't it?
- [43:21]
A
Yeah, it is Ned Davis.
- [43:22]
B
It's the weights of the top five and bottom half of stocks of the s and P500. So, by the way, actually. Hey, hey, wait a minute. This is my chart. This is my pie chart.
- [43:33]
A
That's your pie chart. That's true.
- [43:34]
B
I just thought about it. This is my pie chart. Because remember when you're like, holy shit, the top five stocks are equal to the bottom 50% of stocks in the market.
- [43:48]
A
Oh, wait, but this was in 2018.
- [43:50]
B
Exactly, bro. Al, how quaint. What do you think this chart looks like today? The top five stocks are probably equal to the bottom 65% of stocks.
- [44:00]
A
Yeah. Just kept going.
- [44:02]
B
There were so many people. Guys, not all of you were investing in 2018. A lot of you were. I can't tell you how many people, probably ourselves included, if we're being Honest, who in 2018 thought this was unsustainable, Right?
- [44:19]
A
This can't go on anymore.
- [44:21]
B
And it's legitimately seven years ago. So maybe we'll make this a recurring segment, maybe we won't, but either way. I just thought this was interesting. We got an email from a listener. I would love to hear you guys discuss how what can cause prices to stop going up and if we are lucky, maybe even to go down one day. Thanks, Signed. Another Average American getting a standard 3% annual raise and crushed by inflation.
- [44:47]
A
All right, here's how I'll answer this. I'm not going to talk about prices going down because prices in certain Areas will go down. Prices in most areas will not, unless the economy does really crappy. But look at the last 18 months of inflation here. The standard deviation of this is nil, right? This is. My son is watching some soccer show on YouTube lately. So he uses the word, the word nil all the time. Anytime we go to watch a game, he'll say nil like he picked it up. So anyway, we've been under, I don't know, three and a half percent for the last well over a year. And look at how this is the good news is that the volatility of inflation has been taken out. That's what you want to see. Because that makes it easier for businesses to plan. It makes it easier for consumers to plan, it makes it easier for investors to plan. This is what you want to see. You don't want to see the huge spikes we had and then come back in and then go up. Like you want to see more stability in prices. This is what the volatility of inflation, obviously the higher prices hurt people, but it was the volatility that really scared people, too. And seeing the massive spikes, we've taken that out, which I think is a good sign. How's that? That's what you want to see.
- [45:53]
B
All right, but how do prices. What can cause prices to stop going up? All right, so here's the answer. Nothing.
- [46:00]
A
The economy slowing, people losing their jobs.
- [46:03]
B
Yeah, I thought about writing a post about this months ago. I just never got around to it, and I don't know if I ever will. Why inflation exists and why it will never go away. We all run businesses, right? And we all want to make more money. And one, there's a few levers, a few hours you can make money, right? Like add more services, add different services. But the easiest and the least offensive way is to just raise prices a little bit every year, Right? You just raise prices a little bit every year. The person that does your sprinkler service, they charge you $90 to turn off your sprinklers, to drain your pipes, whatever they need to do. And if they charge you $95 next year, what are you going to do?
- [46:48]
A
Don't you pay for that in New York?
- [46:50]
B
Pay for one in New York to.
- [46:52]
A
Get your sprinklers turned off like that, you pay 90 bucks.
- [46:54]
B
Well, whatever the number is.
- [46:56]
A
Okay, probably 50 here. That's a New York premium there.
- [46:59]
B
Whatever it is. My point is, the people that you do business with on a daily basis, the companies that you work with on a daily basis, they raise their prices. Every year. Why? Because that's how they make more money. They can.
- [47:10]
A
As long as the pie keeps growing, the prices will get higher. I've always said inflation is a lesser of two evils. Deflation sounds great until you realize it would mean fewer jobs and your wages would go down.
- [47:20]
B
No, no, no, no, no. It's horrendous. People delay consumption because why would you buy something today if you know it's be cheaper tomorrow? And that's, that's called the spiral. And that's what nukes an economy. Okay, so you never want that.
- [47:32]
A
Yeah.
- [47:33]
B
So that's an oversimplified version of why inflation exists, why it always exists, and why it will never not exist. And the best way to protect yourself from inflation is to own assets. Right? I think that that's been the lesson, or one of the key lessons. But no, prices will not go down.
- [47:48]
A
Ben's three best hedges against inflation are.
- [47:51]
B
Pizza.
- [47:52]
A
A good job, right? Because your wages can rise over time. A 30 year fixed rate mortgage in a house, because a home is a great hedge against inflation. And stocks, for the long run, those are the three best hedges against inflation.
- [48:04]
B
What about pizza?
- [48:05]
A
Pizza's pretty good too. Little Caesar is still 5.55 for a hot and ready.
- [48:10]
B
I can't wait till Little Caesars jabs it up your ass.
- [48:13]
A
It's my kids. My kids favorite pizza is Little Caesars. We want to try to get them like the good Vitale's Italian place in town here. And all they want is Little Caesars. All right. We talked a couple weeks ago about how the bitcoiners had won. I think it's worth talking about the 100,000 mark. It's a number. Whatever. Some people don't care about big round numbers. I do. It was 15,000 ish in November 2022, and now it's 100,000. And that was a severe crypto winter that we went through. And the fact that it's back here is just. I think it's just take a step back and say how amazing it is that this. It just keeps coming back.
- [48:46]
B
Dude. I said this a couple of weeks ago. I can't believe these guys did it. I can't believe they actually willed it into existence. It seems so unlikely. We were laughing. Eric Balchunas tweeted. King of the Hill. The US spot ETFs have just passed Satoshi. And the total bitcoin held now hold more than 1.1 million more than anyone in the world. And they're not even a year old. Literally. Baby. Still Mind blowing. So US ETFs own more Bitcoin than anybody. Ben, what is this chart? Michael's favorite bitcoin story.
- [49:18]
A
Okay, so your favorite bitcoin story is just that, the supply and demand. You've said that a million times. And it says behind bitcoin's reality is a simple fact. Supplies are limited. So they show how the bitcoin supply will change over the time till it's. And it's already been like 19 million out of the 21 million have been mined or whatever created, whatever you call it. And so their whole point is like the supply and demand, as you always talk about. And they show the estimated distribution of supply. And 70% of individuals own Bitcoin. Satoshi owns 4.6%, ETFs own, 5.9%. 7.5% has been lost. So that's what, 150 billion has been lost or something. I got a question for you. So Satoshi, whoever they are, and I can't believe it, has never come out yet. I know HBO tried to do a doc on it or someone tried to do a doc and it sounded like it wasn't really that great. The funny thing is that the answer would probably not be. Would be pretty underwhelming. It would probably be just some nerd that no one's ever heard of.
- [50:10]
B
Be very underwhelming.
- [50:11]
A
So here's my question. Satoshi has never, as far as I'm concerned, never moved bitcoin anywhere, never sold any. Right. Never done anything with it. And I don't know if they're an altruistic person and maybe they just own a bunch of other bitcoin and they've got so rich it didn't matter. Like they just mined some or they have some and it doesn't matter. What should satoshi do with their bitcoin? If they're altruistic and they're going to never do anything with it, should they destroy it? So it's worth 95. Let's say they're not going to do anything with it ever, whoever he or she is, should they? Or whoever they are. So it's worth 95 billion. They have 1.1 million bitcoins. What if they held a lotto and said anyone who has an income, $50,000 or less, put your name in the lottery. We're gonna give you one bitcoin from Satoshi. How much goodwill would that engender to the rest of the world? As far as crypto goes, is that a good plan or what should I be on The PR team for Satoshi. You get one Bitcoin. Come on, that's pretty good.
- [51:06]
B
There was.
- [51:07]
A
There was a. Toshi.
- [51:10]
B
There was a crash at a hundred thousand. Crash. There was a gigantic liquidation. Largest amount of liquid. So Crypto McKenna tweeted. Largest amount of liquidation since FTX. Insolvency on BTC. Now, spot buyers stepping in, hoovering up the liquidation cascade. Thanks for playing.
- [51:24]
A
That's because everyone was following me out of the trade.
- [51:26]
B
Yeah, exactly. But. But here's. Here's the last thing that I want to say about bitcoin. You're right. I do feel a bit of vindication here too. I was never. I'm not a bitcoin guy. In terms of the story, the maxi, the this, the that, the fixing poverty. I never believed any of that bullshit. Um, but I did believe that they believed. And I did believe that the story would resonate. And I did believe that demand would outstrip supply. And therefore I bought it. Cause I thought it would go up. Like I. So I feel pretty, Pretty good about that. This is very much a Michael Victory Lap podcast. I'm due for a kick in the ass. Although maybe it's just balancing out the Audi and my missing my flight, so maybe I'm even. But I do want to say this.
- [52:08]
A
Short of the supply and demand thing is if you find a financial asset with a religious fervor behind it, buy it. Don't ask questions.
- [52:17]
B
I do want to say this. The point that Eric made about Blackrock or about spot ETFs being the biggest holder of bitcoin, our friend Tyrone retweeted the top 10 Bitcoin holders and he said BlackRock, Fidelity, MicroStrategy, and the US government among the top 10. Just as Satoshi intended. So, Ben, you skeeted. Bitcoin really is proof that you don't have to be right to make money. Everything bitcoin people have ever predicted has been wrong, except the price going up. It's actually kind of amazing. I say this with no shade either. It's impressive. I don't know if everything predicted is wrong, but. Point taken for the most part. But here's. I think Jack said it, no offense, a little bit better than you did. Jack said a thing about bitcoin? Jack Rains over at bluesky. A thing about bitcoin that I found annoying is that the original argument for it, a decentralized currency that can't be manipulated, is effectively dead. The price went up because one, it's broadly accessible on exchanges, and two, people just bought it. It's categorically useless as a currency and it's entirely centralized at this point. You buy it on coinbase or Robinhood. BlackRock has an ETF, et cetera. Its accessibility was great for the price. And I think digital gold is the best description at this point. I realize it's in vogue to parade around when your asset goes up. Just annoying seeing the I told you back in 2014 post when the stuff people said in 2014 was totally off base. You can get rich being right for the wrong reasons, but don't act like a psychic. And Jack's totally right. They were right. Credit to them. But like, but truly, let's not forget that all of this self sovereign custody, it's outside the system and this and that, who gives a shit? It was a good story. Eventually the story won, but the story that they told is not a story that effectively.
- [53:53]
A
Yeah, and people realize that like if we want this to get big, as big as we want it, the mainstream has to be part of it and maybe the government does, or whoever. Someone asked us a question about the regulatory environment with Bitcoin or crypto and what it actually means to be deregulated. I don't think we have to get into all that. But my hope here is that there's always a pendulum of like the regulatory framework. And so leading up to the financial, great financial crisis, there was this period of massive deregulation. And then the crisis hit and people said, oh my gosh, that was so stupid. There was no rules in place. Now we gotta add way more rules. And obviously the pendulum swung way too far back in that direction. And now people say, like, why are there so many rules against everything? I just hope if we are entering the other way of the pendulum swinging, that it's not just crypto. Because I don't know what crypto deregulation would really do besides make a bunch of rich crypto people even richer. I hope if we do get a deregulation environment that most of it is in the real estate segment, that's the place that can actually do some good. Where we need to have the most deregulation is building more apartments and houses. Can we agree on that?
- [54:59]
B
Amen, brother.
- [55:01]
A
Because look at this from the Washington Post. In 1972, when the U.S. population was just over 200 million, nearly 2.4 million new homes were built. Last year, only 1.4 million homes were added for a population of 335 million. Realistically, we need at least 2 million new homes to be built each year. We're not Even close to that. And you can see it's crazy that the bubble in the 2000, like, we were building a ton of homes, and then the crash hit, and the amount of homes we built went nowhere. And so it is one of these things where people want to blame the fed for lowering rates and all this stuff for what happened, and the baby boomers for buying cheap homes in the 80s or whatever it is. But part of the reason that housing prices are so high right now is just because we didn't build enough homes. And part of that reason is because we built too many in the early 2000s. And it's just like the law of unintended consequences. Like, you can't. Sometimes there's no one to blame but just the environment. And it was lucky unlucky.
- [55:53]
B
Yeah.
- [55:54]
A
All right. I've got a real estate thing. My kids like to drive around every year and look at the Christmas lights. There's one house. There's this older gentleman who's a widower, and his kids go crazy and put like, it's like, bigger than Clark Griswold's house in Christmas vacation almost. They do so many lights. So we like to drive around through this house, look at it, and then drive to these other houses. And we noticed a shocking lack of Christmas lights this year in most of the neighborhoods we drive through. And I also noticed this in Halloween that we went to this neighborhood across the street from us that's kind of kiddie cornered our neighborhood that has a lot of houses close together. So my kids were thinking in their head, oh, at Halloween, we can hit all these houses up in score because some of their friends live there. But there was a shockingly few number of families living in this neighborhood. It was like an older neighborhood. And the funny thing is, most of the houses, the lights were off, and it was older baby boomers with no kids that lived in these homes. And I was kind of surprised. It was like, I don't know, 70% of the households who were giving out candy were baby boomers and no kids in their house. And my thought was, oh, this is a neighborhood that young families should be living in. It seems like a neighborhood where families should be living in, but it's no. It's baby boomers who've been in these houses for 30 years or whatever. And I guess it shouldn't be surprising since they own so many houses. But that also kind of explains the whole situation of the housing market that these people who've been in these houses forever have just stayed in them. And it hasn't allowed younger people to move into them because there are no houses for. No new houses to move into. Anyway, I know this is glaringly obvious, and I'm not trying to blame baby boomers, but I think the lack of Christmas lights has older people going, ech, do we need to do that anymore? Right. So I have another Christmas light thing. I have a question for you. Now, I've been called a hater on this podcast before. This is not hating, but this is just a little shade. What do you feel about people who pay to have their Christmas lights hung for them?
- [57:38]
B
You hate Thanksgiving?
- [57:40]
A
No, no, no, no. I don't hate Thanksgiving. I enjoy the family. I just don't like Thanksgiving dinner. Okay, I think I'll tell you my answer.
- [57:51]
B
I'll tell you my answer. As somebody who has never hung a Christmas light, I have never thought about people that pay to hang their Christmas lights. So I'll give the mic back to you.
- [58:02]
A
Okay. So I think if you have a family, you have to hang them yourself because I had my first ever Clark and Rusty Griswold moment with my son. But you've never. Still never seen Christmas vacation.
- [58:12]
B
No, I have. I have. Is that the original. Yeah, right.
- [58:15]
A
No, Christmas vacation is the. That's the second or third one. It goes vacation, European vacation, Christmas vacation. So I had the whole idea of myself, it was 20 degrees, and my son and I are out, and I'm doing the thing around the tree where you have to do the lights really close together around the tree, you know, wrap all the way around. It takes forever, and my son is helping me, and there was a huge knot in the lights. And honestly, it was a great Clark and Rusty moment for me that I really enjoyed. And I thought, I'm alfing my neighbors who are having someone hang the lights for them by having this moment right now. Will I eventually someday pay for someone to do it? Probably when the kids are out of the house or something. But I'm anti having someone else hang your lights for you if you have the ability. How's that? And I'm a big fan of outsourcing, but I think that's a moment you have to do.
- [59:00]
B
You know, how about I don't think you have to have that stand. You don't need to have that stand. If somebody wants to pay to have your Christmas lights, you don't have to be. You don't have to be anti that.
- [59:09]
A
Am I being judgy? Yes.
- [59:13]
B
Okay, Ben, so I miss last week we spoke about missing an airplane, and you said it's exhilarating running through the airport. What the is wrong with you? It's not exhilarating.
- [59:22]
A
Yeah. Running through a flight. We barely made it.
- [59:25]
B
So.
- [59:25]
A
Okay, what happened with you?
- [59:27]
B
Let me tell the full story. And this might be tmi, but you know what? I'm a TMI guy, okay? So I'm a creature of habit when it comes to my morning routine. Let me just say I go to the bathroom early in the morning, okay? So the last time, the last time I took a car to JFK airport. I see the Uber and it says an hour 10 minutes. Like, what the. I live 25 minutes from JFK. It should not take an hour 10 minutes. It did take an hour 10 minutes because there was massive construction. And by minute 45, I felt. I felt the grind gears on my stomach and I'm like, okay, what time did you leave?
- [60:12]
A
What time is the flight? I need to know this information.
- [60:15]
B
I'm setting the stage, okay? And I had one of those horrendous experiences where you need a bathroom. There's not a bathroom, if you get my drift. So last night I took an Imodium before I went to sleep to avoid the same thing potentially happening.
- [60:37]
A
What an old man move.
- [60:39]
B
You asked me what time I left, what time my flight was. My flight was at 7:30. So I left my house at 5:45, which should put me there at say, because I checked the traffic, put me there at around 6:36:35. Okay? My stomach is nice and settled. No big deal. I'm feeling pretty good about the situation. I'm calm, cool, and collected. One other piece of information that's important for the purposes of the story. Normally I pack in a normal size carry on, right? Can go either way. You could probably check, but you could either put it in this in the upper case, or you can. At the very worst, you could check it at the gate. Okay? For whatever reason, Ben, I don't know, I decided, you know what? Let me give myself multiple clothing options. Let me pack large. So I packed a large suitcase. I never pack a large suitcase. I'm here for two nights. I packed a large suitcase, not thinking anything of it. So jfk, the traffic is horrendous because they're redoing the airport. So avoid JFK like the plague if you can. So I'm getting to the exit. I'm getting to the Delta terminal, and a pretty good time. And as we're about to pull off, there's a police car blocking departing flights. This is annoying, but I'm like, I'm still good. It's 6:35. So I have to turn around, go the other way. I get to the airport, I go to the bathroom. I go to the line. They're like, sir, you have to check your luggage. And I go to the greg socket at the. I go to the desk and she says, there's a 45 minute cutoff. What time's your flight? I look, my flight's at 7:30. Great, it's 6:45. She goes, yes. No, sir, it's 6:45. There's a 45 minute cutoff. You can't. You had to be here at 6:44. So I said, but. But it was 6:44.
- [62:35]
A
But are you kidding me?
- [62:37]
B
She said, it's six. No, it's 6:45. That 6:45 is a Cardiff. I'm like. I'm like, please, it's. It's 6:45. Like, I was here at 6:44. She goes, sir, it's in the system. There's nothing I can do. Go downstairs and get a later flight. And I'm like, I'm doing one of these. You got to be kidding me. What? So had I just gone straight to the desk instead of stopping to use the bathroom? Had I just packed a normal suitcase instead of the large one? You know, it's really frustrating. I'm steaming mad. I'm kicking the floor. I'm not making a scene. Cause I'm not a scene maker. But I'm just so upset and annoyed and. Cause I want, you know, I like to get out early and spend the day where I'm going. So listen, it's not. It's not the end of the world. It's one of those things where in the moment you're really frustrated, but I.
- [63:30]
A
Can'T believe she didn't look the other way.
- [63:32]
B
I had a ton of work to do in the airport, so. But here's the kicker. So I was in Comfort Plus. I get to the. So he's like, I'm sorry, man. I know. I know you're frustrated, but I don't want. I was able to get you another Comforts plus seat for the next flight. It says seat assigned that gate. I get to the gate, sure enough, I'm an E29, which is a middle row. So I said to the lady behind the camera, I'm like, listen, I had a really rough morning. I've been here for five hours. Do you mind if I just board with zone four? Not necessarily to go to four. Could just board with zone four. Just So I could get settled. She said, sir, go to the back of the line. And so I called Delta this morning to explain the situation, and I am not. I'm really not the type of person. I don't yell at customer service people. If my room isn't ready at the hotel, check in. Like, I don't berate these people, and I didn't berate this person on Delta. But I was just like. I'm like, listen, you're in the customer service business. I'm in the customer service business. I'm not asking for a lot. Can you just refund?
- [64:32]
A
That's your go to move. That's the second time you've used it.
- [64:34]
B
I am. I am. I'm like, can you just give me the difference? At first, I asked for a full refund. She's like. She's like, did you make your flight? Like, yeah, I made my flight. She's like, sir, just give me an e credit of the difference between what I paid for the comfort plus, and what the seat would have cost to be in the back in the middle. And she said, sir, I'm sorry, I can't help you. If you'd like to write a formal request. I'm like, you really can't help me. I'm like, we spend a lot of money on Delta. Between my family and my business, we spent. I'm not. I'm not being unreasonable. Can you just say. And I'm like. And can you just say, hey, I'm sorry you had a lousy experience. Like, they were like, there's no empathy. I'm like, I'm not looking for a lot. Just, hey, that's. That really sucks. I'm sorry. I understand you're frustrated. Here's what you have to do. We'll take care. All I want is, like, a $200 credit. I'm not being crazy person. It's just. It's so frustrating when you feel like, you know, you did nothing wrong. And I understand I was late, but come on. So I can't.
- [65:38]
A
Yeah, that's frustrating. I did the thing where I ran up to the gate in Newark once, and the gate was literally closing. And I said, that's me. And they said, nope, nothing we can do once the door's closed, Nothing. And so I said, what's it? I'm gonna look the other way.
- [65:54]
B
Once the doors close, the doors close. But if experiences like that where you feel like not only did you get shitlocked, but, like, people are just, like, not even empathetic or just, like, not nice to try and do anything to remedy the situation. And all I want.
- [66:08]
A
In their defense, they're dealing with jerks all day, I'm sure. I'm sure they're dealing with jerks all day. So they're definitely. They're.
- [66:14]
B
I'm sure they. I'm sure they are. I was. In my. And in my defense, I was not a jerk. So.
- [66:19]
A
Okay. All right, let's do some recommendations. Any good airplane movies to calm you down?
- [66:25]
B
So let me first say this. TVs are back for me. I'm enjoying several episodes or several shows. So I was sick all weekend. Robin was thrilled with that, that I was not able to fulfill my fatherly duties. So what did I do? I watched a lot of television. I binge watched a show start to finish. Haven't done that in since before we had kids. A show called Black Doves. It is a spy show on Netflix and it is a British spy show and it's only six episodes long. And there was a good payoff. The first episode was like, yeah, this could be a little bit wonky. No?
- [67:06]
A
Oh, Keira Knightley.
- [67:07]
B
Yeah, Keira Knightley. High quality. They landed the plane. There will probably be a season two. Don't care if there is or there isn't. It was good. It was. It was. Again, six episodes I'm in. Worth watching. Now, that's a wreck. Here's a pound the table wreck of a similar view.
- [67:23]
A
I'm a little. I'm a little. I'm a little hurt that you did Black Doves before you did Slow Horses, but keep going.
- [67:28]
B
Well, but here's the thing. Slow Horses is four seasons.
- [67:33]
A
True.
- [67:34]
B
So that's a commitment. I will do Slow Horses. That was a good one. This is a pound the table one. And the show is called the Agency. And I'm watching it on Paramount plus through Showtime. Now, Ben, my wife is. She likes the type of shows like Law and Order where when you close your eyes and you just listen, it literally sounds like the person is reading the script. Because let's be honest, these type of shows like Law and Order and a lot of the shows on Netflix are for mass consumption. And so they have to explain to you every single detail. They have to hold the audience's hand. I know that you're watching the Agency, too. It's with Jeffrey Wright, Richard Gere, Michael Fassbender. They don't tell you shit. Like, this is a sophisticated show. It is movie quality.
- [68:18]
A
This is a put your phone down while you're watching it show.
- [68:21]
B
Yes. And I can't tell you. Well, I probably could tell you maybe Succession for me, maybe Homeland before that. A put your phone down type of show. I would say it's that good. Would you agree?
- [68:33]
A
Yes. This reminds me a little of Homeland. I pound the table on this too. I think the second episode and especially the last, like 20 minutes were just on a heater and it might be one of the best episodes of television this year. The second episode was amazing. Like, the first one definitely drew me in the second episode, I was like, okay, this show is amazing. It's really good.
- [68:50]
B
Yeah, the third. And the third one was great too. So that is a Michael and Ben, pound the table. I've got. I've got two more. I think we spoke about this semi recently. I don't say this just as an IMAX shareholder, but Interstellar got rereleased into imax. Now I haven't, I haven't seen the numbers. I don't know what sort of business it did, but more of this, please. Right. Like, I would love to see some of these phenomenal movies back in the theater. Why aren't they doing that? It seems like such low hanging fruit.
- [69:17]
A
I agree. Although I say Interstellar, like, didn't get a lot of accolades when it came out. I feel like. I feel like it's one of those slow burn movies.
- [69:24]
B
People did not love it when it came out. People didn't like it so much. I saw it on an airplane and I cried. I watched it on an airplane because that's how little.
- [69:32]
A
It's a good movie. But people have to, people have to pump the brakes saying it's, It's. It's Nolan's best movie, though. Like that. That's totally.
- [69:41]
B
Take it up with. Take it up with Ramp. Ramp. If you're listening, slide into our DMs.
- [69:45]
A
I really like Interstellar. There's no way it's. It's in Nolan's best movie. Even in the conversation for me. Sorry.
- [69:52]
B
Oh, it's in the conversation. No, I'm, I'm sorry. Okay. So the Ringer did a top 50 movie airplane list and oh, yeah, we.
- [70:04]
A
Got a lot of hits on this.
- [70:06]
B
Ben, am I annoyed that they stole our material? Hardly. I am absolutely flattered.
- [70:13]
A
Very well done.
- [70:15]
B
Is there a chance that people at the Ringer have never heard us discuss our airplane movies? Yeah, there's a chance. Do I think there's a stronger than 50, 50 chance that they heard us and, and inspire them? I'll pat myself on the back and you that. Yes, because we have Been speaking about airplane movies forever. And we, in fact, did a list at Future Proof. So their list was good. There were some curious choices, but they had the number one right choice, which all credit to Michael Antonelli. It's Ocean's Eleven, so they're right. He's right. Credit to us. Credit to them. That was good list. All right, so I did watch. I did watch because I was able to do five hours of work at the airport. I knocked out a lot of stuff I had to do. So I actually did watch some movies on the airplane. I watched three. Two are worth recommending. One was Blink Twice, which. Boy, if that's not an airplane movie, I don't know what is. Have you seen it?
- [71:03]
A
Never heard of it.
- [71:04]
B
Blink Twice is with Channing Tatum.
- [71:07]
A
Okay. I've never heard of this movie.
- [71:10]
B
It's in the same ilk of Eat the Rich. You know, of the rich. People are abusing their power.
- [71:16]
A
Ah, okay.
- [71:18]
B
Watch it. It's good. The other one was a stalker thriller, which is my type of genre. What's that Jake Gyllenhaal movie? Nightcrawler. God, I love that one. So this one is called Skincare. With. Is it Elizabeth Banks? I think it's Elizabeth Banks also, you know, so Blink Twice and Skincare, both a buck 40. So skincare was a very good airplane movie. Probably not a couch movie, but it's an airplane movie. As we're landing, Ben, as we're getting ready to land, I turned on Deadpool versus Wolverine. I hate those movies. Even. Even the first six minutes, just the whole blinking into the camera, wink, wink. It's so cheesy. It's the worst of Ryan Reynolds. And I know you're a Ryan Reynolds, Stan, and I like Ryan Reynolds. I had Ryan Reynolds stock way back in the day from Van Wilder.
- [72:13]
A
See, I think it's the best of Ryan Reynolds. This is where we differ. I think it's the best of him.
- [72:16]
B
I hate it. I think it's, like the most unfunny. I can't. It just. It gives me douche chills. I hate it.
- [72:22]
A
My thought process, though, watching this is Ryan Reynolds could write a sitcom if he wanted to. He could write, like, a show like the Office, and it would be so funny and witty. He's probably. I think he should move to TV instead of movies from now on. That's my take. My other TV show that I'm watching besides the Agency, I sometimes like to do two shows at once. Like a book if I. In between shows or books. So I started the Agency. I also started say Nothing on Hulu, which is a story about like the IRA Irish Republic army back in the day. And it's really, really good. So far. Two episodes in, I'm into it. Beetlejuice. Beetlejuice I watched on hbo. I for some reason really liked the original.
- [72:59]
B
No, the.
- [73:00]
A
No, the original sequel was just, ugh. I love the original. The sequel was unnecessary. I love Michael Keaton. But here's the thing. So we had these, this string of weird movies in the 90s. My son and I started watching Edward Scissorhands the other day. And then there's like Joe versus Volcano. There's Beetlejuice. Here's the thing. In the 90s, you could get away with not being self aware and just making a weird, non self aware movie. But now the. And like, one of the reasons the original Beetlejuice is so good is because it's so charmingly has a lack of self awareness and it's just charmingly weird. And the new one is all self aware. Like it's aware that it's weird and it's.
- [73:33]
B
Stop winking at the camera. Let me just say, try Landman. Landman. It's not for. It's. It's. There's a little bit of substance there.
- [73:44]
A
All right, well, I don't think. I think I'm done with Taylor Sheridan shows. I tried. We're still watching Yellowstone, but finally I got a take here. Home Alone is the greatest family movie of all time. Okay? I tried to come up with a list. There's wizard of Oz, there's Willy Wonka, there's E.T. some people put Elf on the list. Princess Bride, Sandlot. My kids watch Home Alone every year. My oldest daughter, who's 10, she's already watched Home Alone three times this year. My kids love it. I still find enjoyment out of it. It's the greatest family movie of all time, hands down.
- [74:15]
B
I think that's the right take. I'm with you there. I think I spoke about this on the pod, but I showed my boys ET for the first time and the nostalgia completely broke me. And I was. I'm about to cry thinking about it. I was hysterically crying, like showing that to my kids. It just.
- [74:36]
A
You're a big SAP, man. ET Well, I have, I have a.
- [74:39]
B
Complicated relationship with my child and my mom's dead. My parents got divorced when I was young. It's a whole thing.
- [74:45]
A
Okay?
- [74:45]
B
But I. Holy. Holy shit. That, like, brought me back to when I was there. Watching them watch that movie, like, was a pinnacle for me.
- [74:54]
A
Yes, going Back to the 80s is an interesting time. I agree. We enjoyed ET too, but home Alone. We watch it every year.
- [75:00]
B
Home Alone.
- [75:02]
A
Yep. That's all I got.
- [75:03]
B
Sorry for all the complaining and all the backpacking for this episode, but I had fun doing it, so I hope you had fun listening.
- [75:10]
A
Hey, I'm in customer service. You're in customer service.
- [75:16]
B
Listen, I was a busboy. I know exactly what it's like.
- [75:21]
A
Animalspiritshecompoundnews.com we always appreciate your emails. Thanks to Duncan and everyone on the production team because we went very long today, but Michael had a lot of stories to tell, so it it had to be done. See you next.