A Once in a Lifetime Investment Opportunity (EP.385)

25:39Yeah, but you just read this guy accounts for 20 to 40, 25 to 40 % of the liquidity. Like this guy is literally moving the market. Very fair, very fair, of course. Okay, so over the years, I think we've, the financial blogosphere has put some arguments to bed. It's like we've written enough or talked enough about this. We don't need to have this discussion anymore. Index funds is the big one. We all used to write about index funds a lot. Nothing is ever put to bed. Nothing is ever put to bed. Okay, true. There's always new people coming along. But I feel like you've tried to put the CAPE ratio into bed.

26:09The fact that it's not very useful a million times. I think the last piece that I think I wrote about that was like, was it 2018? Like, I'm not writing about this anymore. But I think we can put politics and investing don't mix to bed. Like if my point is on putting something to bed, it's like there's enough information and talking points out there where if you still don't believe this, then that's on you. Okay. I think, I think that the politics, yeah, I think, I think that has the highest approval rating of everything that we would say is like put to bed among, amongst financial professionals, whatever your political affiliation is.

26:41I think most people would say, Hey, listen, this is, this is not the thing. Barry's been, Barry's been writing about politics and investing don't mix since when he was at the Washington Post. I put all my blog posts in here that I've written over the years. And there was like 10 of them. Sean can link to them in the show notes. But yeah, my point is like, if you're going to say, here's five stocks to pick if Trump wins or Harris wins in five talks, that line of thinking, if you're still doing that, then that's on you. Well, well, well, well, well, well, well. No, no, no. Not necessarily. Because the companies, we showed this chart last week, the companies that would be most impacted by Trump tariffs that have been going down in anticipation of a Trump victory, that's legitimate, as opposed to saying the market's going to do this or that.

27:24Here's the thing. Politicians talk a lot, and they don't always follow through, and that's the hard part about trying to tie policy to investing. I could give you the headlines for a year from now about what the policies are, and you still might be right. So it's possible that the markets are over-discounting a Trump victory and what his actual tariff policies would do. Yeah, that's fair. Yeah, that's my point. It's really hard to do. J.P. Morgan had a good one here about Like the economy and markets tend to fare well under all government configurations. Good chart. We've done a whole bunch of charts.

27:52I'm sure we'll go through some more on our live stream at the compound too. But that's my whole point is that like if you're still – if you're saying the economy is bad because a Democrat or Republican is in office, I'm going to sit out this market and I'm not going to invest. And that's on you. That's my point. But the other thing is in defense of those people who feel that way, they feel that way because it's their emotions talking. Right? I think that most people would intuitively understand if you show them the data that the president doesn't really impact the economy over the long run. But people get emotional.

28:24So this is from Greg Ibb at the Wall Street Journal. Here's the headline. The next president inherits a remarkable economy. The high quality of recent economic growth should put a wind at the back of the White House's next occupant. The contrarian in me kind of wants to short this opinion and just say that whoever is in the White House in the next four years is probably going to face some challenging economic times at some point. Yeah. It almost seems like things have been so good that taking the other side of this would be relatively easy. That's it? I'm trying to, yeah, I have nothing else to say.

29:02Yeah. Okay. Look at this. So this is real GDP per capita from Ernie Tedeschi. They show the projection. By the way, great name. It just sounds good. That isn't, yeah. That sounds like a movie character name, right? Come on, Tedeschi, get over here. Get in my office. Sounds like a broadcaster name, like CBS Anchor from the 80s. Yeah. So they show GDP per capita is, and they did the trend line from January 2020, what the projection was at the time. Obviously, back then, they didn't know anything that would happen from there, but they say it's 3.2 % above pre-pandemic expectations. The real GDP per capita.

29:40So that's inflation adjusted, which is just wild to me. So I think the way that I look at it is the president is kind of like parenting. It's way easier for them to screw something up than make it phenomenal. Right? Like, I don't think you can't make your kid be the greatest person in the world. You could help them be a better person. But I think it's way easier as a parent to screw up your child than it is to make them the best person in the world. I think that's the way that the president works for the economy. It's way easier to throw a monkey wrench into the economy and screw things up than it is for them to make it unbelievable.

30:16Fair? Yeah, I agree. Do you think about your parents differently now that you're a parent? Oh, all the time. I think about this. I remember my dad when he was the same age as me, and it changes my whole worldview of them. Yeah. I think about that all the time. Same. Yes. Like, eh, they were okay. Yeah. The passage of time still remains undefeated. All right. I want to talk about Twitter real quick. I feel like back in the day, Twitter replies, there's always been trolls on Twitter, but back in the day, the trolls that we used to get were, you know, now show Japan. They weren't psychotic, the replies, right?

30:56They were, the people might have been like a little bit psychotic, but the replies themselves were just trolly, not terrible, right? Today, now, the replies are just so psychotic. And I don't know if they're all bots or what, but this one definitely had me laughing. This is like, so I posted something last week, and I said, listen, unemployment rate is 4%. Inflation rate is 2.4%. Ten years at four-something percent. Real GDP growth is close to three. If there is such a thing as a sweet spot for the economy, we're basically in it right now. No predictions about the future. Nothing about politics there.

31:31I just said, if you looked at just those sets of numbers, you would say, oh, yeah, that's an economy that's humming along and it's in a perfect place. Right? If you had to pick those numbers, could you pick better numbers than that? Not much, right? Did you know this was going to go viral? Probably, right? You knew this was provocative. Not like this. I didn't think it like this, though. I was just looking at the data. And here's the numbers. I didn't make any projections one way or another. Yeah, but you knew how it would be received. Yeah, but the sad part is that it shouldn't be received the way it is, though.

32:02Yeah, no, I agree. Literally just data. Somebody responded to you, just try to order a breakfast sandwich and have it delivered. Can't leave work. It was$33. Inflation might not be down. The breakfast place was three blocks from me. And so you did this meme. I replied to him with the private taxi from our burrito meme, which we talked about a couple weeks ago, which is a perfect response, right? Usually I look at the responses for maybe five minutes. And if it goes viral like this, I mute the conversation because I know it's going to get bad. And then a bunch of other people jumped in and said, wait a minute.

32:34I live in New York. There's no way you got a breakfast sandwich for$33. You know what's funny? This guy was replying to everybody. Right? So I kept following the thread because I was interested. And eventually far enough down the thread, somebody goes, show me that order. I don't believe you. And he posted the order. and this is just chef's kiss, coup de gras, the whole shebang bang. He said, forgot that I was going to get hash browns. So the burrito was$16.50. He ordered hash browns, which was eight bucks, which is still, it's expensive, but it's not what he was claiming. This total is$24.50.

33:12And then the delivery fee, the service fee, the tax and the driver tip. Yeah, we've been on this DoorDash is crazy expensive for years now, But it's just, it's amazing. This person was just complaining and complaining and complaining. And then he's like, oh, I forgot. I ordered hash browns too. And this is the internet. This is the internet. It's cool to complain. When did it become cool to complain? It is the internet. It's like everything is just Yelp. I just - Well, but that's social media, right? You reward virality is for the negative. And so that's, it's funny. We've been trained by the algorithm to become more negative because the dopamine hit from having people respond to you reinforces like a death loop of negativity.

33:57It rewards bad behavior, rewards negativity. I just can't believe the amount of people who have just have the brain worms of, I don't trust the data. I don't trust the experts. I don't trust anything. I don't trust anything. It's brain worms from social media. Yeah, it is tough. Anyway, Bill McBride. I posted a chart last week of inflation by decade, comparing like 2020s up to now versus the 2010s. And Bill McBride did this by decade going back to 1970. And the shocking one to me is a couple of them. If you look at the 2020s so far, it's not that far off the trend line from the 1990s inflation, which is pretty surprising.

34:37But the other one is look at how high inflation was in the 80s. The 1980s blew the 2000s out of the water, like way above where it is. And then it kept going up. It's just funny to me how people look at the 80s as this like economic time of nirvana. And inflation was really high in the 80s, but I guess it just wasn't as high as it was in the 70s. You know, it's funny. Like if there was social media, like obviously the general population, if you adjust for social media, was way more unhappy about inflation in the 1980s. They just didn't have, they couldn't broadcast it to the world that we couldn't all in real time commiserate.

35:14Yeah, so the sentiment indicators maybe were a little not as bad as they... All right, good news on the inflation fund. My auto insurance fell this past six months. Progressive sent me a thing, a lower rate, great benefits just for you. And yeah, 4%. My policy rate was down. I remember a lot of people said, Ben, if you keep switching your policy rate, they're just going to jack it up next time. Guess what? Didn't happen. I have deflation in my auto insurance. How do you like them apples? I love those apples. A lot of people have been telling us about the climate stuff with insurance. You know, you guys aren't talking enough about the litigation.

35:48And there was actually an episode of Al Dots last week talking about how the litigation in Florida is so bad that all the insurance companies keep getting sued. And that's part of the reason that the costs are so much higher. And I guess they're making changes to that. So worth a listen if you haven't listened to that one yet. Did you catch that one? I did not, but I will. Somebody emailed us. This is sort of random, but you guys can forever cross off running out of oil from your list of things to worry about. I work for a major truck manufacturer And at a conference today, they said 15 years ago, we made 30 million gallons a year of renewable diesel because people had extra soybean oil they didn't know what to do with.

36:19This year, they made 6 billion gallons. Whoa. And we could within a decade scale up to the 100 billion we need to run every truck, tractor, train, boat, and airplane in America. The only reason we don't bother is because traditional oil is so cheap and available. You've seen the meme before about like investor guy says we're running out of natural resources. And then it points an arrow and it says some in middle of America finds a reserve of this resource of this resource. And we have plentiful for decades to come. And it just keeps going in a circle. Okay. That's I guess that's this meme. Okay.

36:54We got us. We got an email with the subject line. The deficit doesn't matter. So this person said, I've been listening to the pod for three and a half years. And Michael is always beating the strong when he can. I'd love to hear your thesis on why you hold this to be true rather than taking it as fact every time. 90 % of my portfolio is in crypto and crypto-related equity.

37:13I'm just, so he said, while Bitcoin's cycle-based performance can be attributed to a variety of things like global liquidity, easy monetary policies, following equities, ripping, etc., the core long-term thesis is that money printing does matter. Frankly, I'm just curious how charts like this could possibly be a nothing burger. And he shows a federal debt. total public debt. He's talking about Paul Trudor Jones. Maybe you don't agree with the USD's death spiral narrative, but to claim that the deficit will continue to have no impact on the economy and assets is a strong take. Okay. So I don't think that it doesn't matter.

37:47I guess I don't think that I know enough about, like honestly, about how the economy works and how deficits work and how it functions and all that sort of stuff. I guess my thing, if I could boil it down is that if you were to zoom in on this chart of total public debt, which is up to the right, at any point in time in 1970, in 1980, in 1940, in 1870, like at any point in time, if you were to zoom in in real time and look backwards, you'd be at the high point, right? So if you had a chart from 1950 to 1970, you'd be like, oh my God, this is unsustainable. And then from 1970 to 1990, and then to today, and I understand the steepness accelerated my point is if this is your reason for being an extreme position like this president's with crypto which obviously has worked out okay um and that's been a bad posture is if you use this as a reason to be negative on u.s equities or or to be like a doom and gloomer or a bear like the debt the debt the people have been saying this since the beginning of time that's my point so i'm not smart enough to say this doesn't matter because i frankly don't know and i think most people that that uses as a rhythm to be bearish, definitely don't know if I don't know.

39:01So what's the thesis here? Like, what's the catalyst? Like, that people are going to reject our treasuries? And if you show this, you have to adjust. Show assets. Like, show assets against liabilities. Show the total pie of wealth. If this is your chart, and this is the hill that you die on, and the debt is going to take us down, you're missing everything else. There was a magazine cover in 1973, and it had Uncle Sam with his hands out and his pocket's empty and it said, is the U.S. going broke? And to your point, that's, I think it's okay to say I'm not comfortable with the size of the U.S. debt, but also I don't think it's going to lead to a calamity because here's the things we have going for us in our favor.

39:42We can literally print our own currency. And if there is a strike against treasuries, guess what Japan did? They started buying their own bonds. 80 % of the government bonds in Japan are being bought by them. You think the treasury wouldn't do that if we needed to borrow money? Of course they would. And then, so I think the biggest constraint we have is just inflation. That's the biggest risk. It's not, I don't think there's going to be some end of days where people just decide we're not buying treasuries anymore because what's the alternative? Yeah. And it's weird in that what you just said, we'll piss some people, we'll piss people off in this camp.

40:15Yeah. You see, they're just going to buy our debt and it's just going to get worse. And then, then it's just the day of reckoning is going to be even worse. Yeah. No, but it'll be fine. No, no, no. you can't compare the U.S. budget to a household budget because we can literally print our own currency a household cannot do that although well I'm printing my own currency through HELOC loan does that count it does you know when Happy Gilmore hits the ball off uh Jaws the guy in gold and James Bond hits it off his foot and shooter says you gotta play the field as lies this is the world that you live in you don't live in an alternate universe where the debt is not what it is this is the field.

40:50Guess what? The debt's going to be higher in the future, but I don't, my whole thing is not that the debt isn't, like, you can't say you never worry about it. Of course you can worry about it, but I don't think it's going to be this reckoning where all of a sudden there's going to come a time and everyone's going to wise up and go, oh, time for the world to come to an end. I don't think that's going to happen. I'm talking to Colin Roche and ask the compound next week, and I'm going to ask him all these kind of questions. He knows this stuff better than I am. He knows a lot better than I am. I'm not saying it doesn't matter.

41:13I'm just saying, like, if that's your thing and, like, it's enough. Let's move on. New topic for the week in the Google Doc. See what I did here? I'm fighting against negativity. See my new topic here? Right under AI. Good news of the week. Okay, what is it? Good news of the week. Cost of college is going down. This is from thehill.com. This is surprising. The college board found in-state tuition for public universities down to$11 ,610 a year compared to$12 ,140 a decade ago. College has come down over the past decade. This is crazy. After grant aid is applied, the average student would pay$2 ,480, a decrease from a little more than$4 ,100 in 2014 to 2015.

41:55So the sticker price you see is not what you pay. Ron Lieber wrote a good book about this. For private schools, the net price is a little over$16 ,000, down from$19 ,000 back in 2006. So this is the average of what people actually pay, not the sticker prices, but what they pay after all aid is taken into account. way lower than you thought correct based on some of the numbers you see i don't trust it you don't trust it they're literally taking the numbers from the colleges i'm only teasing that's wild i know all right crypto i got a crypt i got a crypto question for you so over the last year bitcoin is destroying ethereum i think i ran this last week so probably not up to date but bitcoin over the last year bitcoin was up like 110 10%, Ethereum's up 46%.

42:41You know what else is destroying Ethereum? Solana, killing it, price-wise. So I looked at the market cap of this. I think the market cap of Bitcoin to ETH is like 80-20. Mm-hmm. And that's probably the long-term average-ish, and it's been going down. Is this surprising to you? Because to me, it is. Because I remember in 2017 and 2020, and it's like, listen, Ethereum is the HTTP of crypto, and you can literally buy the internet, and it's programmable contracts, and it's better than Bitcoin. And look where we are. Bitcoin is still king. Yeah. So ETH is still like four and a half times the size of Solana in terms of like market cap.

43:22But in terms of performance, I don't know enough about the space to talk intelligently, but Solana's killing ETH in terms of performance this year. I'm surprised that this is the case, that Bitcoin is still like the king of the hill here. Well, Bitcoin is dominating flows. I don't think there's much there's, you know, compared to Bitcoin, ETH flows are anemic. And I think that the Bitcoin rally is probably part Trump-related in terms of him being less hard on the regulatory side. Nah, it's risk-on. I'm putting that in a risk-on camp. I don't think this has anything. No, dude, no, no, you're wrong.

43:56Bitcoin is a risk-on asset and the stock market is rocking this year. Listen to me. You're out of your depth. Bitcoin have been acting like shit all year. The regulatory stuff has never mattered for crypto. Ever. Bitcoin, listen. Besides the ETF, that's it. There was a point this year when the Nasdaq was up 30 % and Bitcoin was flat, zero. It's not a risk-on thing. If this was a risk-on thing, Bitcoin would not have sucked shit all year. I think the regulatory stuff is a sideshow for crypto. People in crypto make a big deal out of it, but I don't think it's that big of a deal. It doesn't matter if it is or it isn't.

44:26That's a perception. Like, there was monster flows last week, I think, positioning for a Trump win. listen I don't know what it's hard to know why Bitcoin moves the way it does I'm just telling you that if it was merely a risk on thing Bitcoin would not have been sucking wind all year while the NASDAQ was going vertical it's not been sucking wind all year it's been going crazy this year listen I follow it closer than you do no offense it's up 110 % over the last year that's sucking wind 110 % alright you're going to make me do this going to Y charts See, you're believing into the narrative. Dude, I'm not.

45:07Everyone is a prisoner of narratives these days. Bitcoin has gone sideways from March until now. Like, it's gone sideways for seven months. Because it went up so much at the beginning of the year. But the NASDAQ was ripping. It was a risk-on market, and Bitcoin was going sideways to down. It's not going up because it's risk-on. All right, that makes no sense to me. Agree to disagree here. No, I'm right. It was up so much. It was up so much. It had a great run into the ETF, but for March now, it went sideways. How much is the stock market up over the same time? All right. You're making a little minutiae detail here.

45:45I'm not. I'm not. Bitcoin, okay, how about this? Dude, you can't say nothing matters. Sometimes things matter. Bitcoin - Yeah, 100 % return matters. Overlay a chart of Bitcoin, of DJT, and of Polymarket, and they all are moving the same direction. If you think that all three lines move in the same direction as a coincidence, then you're delusional. Okay. Crypto people think that it matters, but why was it up so much in the first two months of the year? The move of the goalpost. Well, because the ETF flows. That's why. Okay. So I would say the ETF flows matter more than what people think about politics.

46:19How's that? No. You can't just— The reason it went sideways is because all the ETF flows got sucked up early, and then there was nothing after that. Not every narrative is bullshit. Okay. Yeah, but you're looking at very, this is a toss-up election, and you're saying that that's causing Bitcoin to move? It's perception. All right. The prediction market— I'm saying Bitcoin will do fine under a Democrat or Republican. That's what I'm saying. Okay, complete non sequitur. I am not talking about anything other than Bitcoin, DJT, and the prediction market are all moving in the same direction over the last couple of weeks.

46:56So I'm not grasping at straws here. That's what's happening. Yeah, but over the last couple of weeks. That's a ton in the last year. Yes, yes. The election's tomorrow, dude. All right. We're arguing past each other. New highs again. New all-time highs for housing. Case-Shiller Home Price Index. Are we good now? That's our first fight we've had in a while. I'm over it. Can we wake up? All right. Don't go to bed mad at me. So I feel like every time I post about housing prices at all-time highs, someone must be like, dude, Dude, you can't think that having housing prices at all-time highs is a good thing.

47:30How is that possible? Little sun there? Duncan must love this. Yeah, I'm in the dark. You're in the light. We are the angel and the devil right now. Hold on. I have to put the air on. It's boiling here. The sun is blasting on my face. I can see, like, the lines of sun. All right. So every time I talk about housing prices being at all-time highs being a good thing, because I think that's better than the alternative, people say, no, no, you can't look at that as a good thing. Obviously, people buying homes, it's bad for them. And I agree, but it's kind of like the lesser of two evils thing. I remember living through the housing crash last time.

48:06That was not good for anyone. That took the economy down. And I think housing prices being at all-time highs, while not fun for people buying houses, is way better than the alternative of housing prices being down 30%. How's that? Yeah, I mean, not to, now I'm afraid to push back, but who's saying prices down 30 % are better than prices at ultimate highs? People who want to buy a house are saying that. Duncan's probably saying that. Okay, good one from Axios on the age of homebuyers. And they look at repeat buyers, all buyers, and first-time buyers going back to the early 2000s. and repeat buyers has gone from roughly 40 years old to 61 now on average.

48:51The average age of all buyers has gone from mid-30s to 56, and first-time buyers has gone from 30 years old to 38 years old. All of these are moving up. I guess, is this just boomers swallowing everything and young people being pushed out further and further? Well, the repeat buyers, I mean, that makes a lot of sense, right? Yes, they have tons of equity. Yeah. They're moving for retirement, whatever it is. The first-time buyers. That makes sense to me, too. It's gone up a lot in the last couple of years. Yeah, this is. That you'd have to be more established to have a little more money to buy.

49:28Life is more expensive than it used to be. And you know one of the reasons why? Like, sort of, this isn't really true, but like, I'm sort of afraid to say this, but. everyone has everything. When everyone has everything, everything's expensive. And of course not everyone has everything. But my point is like a lot of people, they have a house, they have two cars, they want to go on vacation. They want to do this. And if you want to do everything, everything's really expensive. So it makes sense that it's, people are getting married later in life, that it's, you're getting a house later in life because it's, everything's expensive.

50:09Here, here. All right, Ben. You're going to love this. This is an article from Pensions and Investments. KKR sets its sights on 401k plans via target date funds. KKR reported$624 billion in AUM, up 18 % year over year. They managed$14 billion in its K-series suite of products, which were designed for individual investors, up from$5 billion a year ago. And next, they want to get into target date funds. Thoughts? Honestly, if you're going to invest in private equity in a retail channel, this is probably the best way to do it because it's in a retirement plan that should be illiquid and you can match it off with other…

50:57So, I actually don't hate this if you're really wanting to invest in private equity. Yeah. You thought I was going to hate it. The time horizon works. Well, I just thought you were going to hit the target date aspect of it. I thought that was sacred to you. probably not necessary, but if people are going to want it, that would seem to be actually a reasonable way to do it. We're going to put 5 % private equity in all these target date funds. I guess it kind of makes sense. So PitchBook puts out a weekly link, a weekly email on all stuff happening like private credit markets and the leverage loan market.

51:31So I thought this was interesting. In a sign of today's bullish credit market times, the ranks of US leverage loan weakest link, which is a harbinger of default activity, just hit a two-year low. But as PitchBook LCD's Rochelle Kacouris explains, this ostensibly cheery news is largely a result of the proliferation of the liability management exercises by distressed issuers. As well, private credit lenders, which have the reputation of being less averse to risk than Wall Street banks have stepped in to meet the refinancing needs of challenged debt issuers. So this is a very, very interesting story, right?

52:16So it's like, oh, wow, the weakest links is at a two-year low in terms of like who might default. But it's because these private credit companies, the Apollos of the world, the KKRs of the world, are working more closely with their borrowers to make sure that they don't default as opposed to the bank loans, which is syndicated. And it's sort of every man and woman for themselves. So let's just get what we can. So again, this is another area where I don't have enough expertise to say, this is good, this is bad. Maybe it's in the middle. The financial companies would say, this is a good thing because look what we can do.

52:48We have the ability to change things if they're not going our way. Yeah, so the ability to like work with a company in periods of distress and be flexible with the covenants and whatever and get them through is probably a good thing. I think the, I see the other side of it, which would be like, whoa, whoa, whoa, whoa, whoa. This is going to end badly. You're propping up these zombie companies. Like, so I see that. So I don't know. I don't know. Do we have a private credit index yet that we can look to? Like, here's the index of private credit. Here's the average across all. That's what I want to see.

53:19I want an index of private credit. I don't know. These loans are just so, they're just so infrequently traded. That's the thing. There's not enough information. That's, that's, I guess that's, they're private. All right, Bane. It's quarter season, and I listened to the MicroStrategy call, and it was wild. You were slacking us about this the other day, and credit to you for listening to this, because I would have done it. Yeah. I was watching Sunday Night Football on mute, listening to Michael said, and Robin's like, what are you listening to? I was like, go upstairs.

53:52So, all right. So the company, the actual software business, which is really a sideshow, lost$18.5 million in the most recent quarter, which, again, totally irrelevant. I just thought it was interesting. So in their deck, they show the Bitcoin holdings since they implemented the strategy in the third quarter of 2020. It went from$38 ,000 up to$250 ,000 Bitcoin today. Kind of wild. But here's the thing, Ben. They call this intelligent leverage. And they talk about like, they call it like a, is it a Bitcoin yield? Is that what they call it? So they say that the total Bitcoin has increased 33 % year over year, while diluted shares outstanding was only up 13%.

54:42So they're issuing shares to buy more Bitcoin, more shares, more Bitcoin, more shares, more Bitcoin. So they say our track record, this is from Andrew Kang, who's a CFO. He said, our track record of using equity debt and excess cash to acquire Bitcoin as part of our treasury operations has resulted in value creation for our shareholders and establishes the foundation to execute on our 21-21 capital plan, which is$21 billion in debt and equity. And that's because it's Hitchhiker's Guide to the Galaxy, the number 42, whatever, to buy more Bitcoin. So our objective continues to be to accumulate Bitcoin holdings at a faster rate than we issue shares.

55:22And we have demonstrated a solid track record of doing so. To assess our performance in achieving this strategic objective, we introduced a new key performance indicator last quarter, which we refer to as BTC yield. We define BTC yield as a period-to-period percentage change in the ratio of our total Bitcoin holdings to our assumed diluted shares outstanding. We use this KPI to help assess the achievement of our strategic objective and to evaluate capital allocation decisions. If we increase our total Bitcoin holdings over a given period at a faster pace than we increase our assumed donated shares outstanding, we achieve a positive BTC yield.

56:02And I'm listening to this and I'm thinking like - This is very galaxy brain. The John Reilly, like what in the world are they f***ing talking about? However. For their credit, their stock is going nuts. However, listen, it's working. Okay, so I'm confused. I don't get it. Maybe you don't get it. And not to be too results oriented. But in this case, I have to tip my cap because they had a plan and they executed the plan and it f***ing worked. So MicroStrategy, over the last four years, annualized is up 105%. 5%. Bitcoin's up 53%. Max 7, 28%, 14 % for the S &P 500. Some more slides from the deck.

56:47It's beaten every company in the S &P 500 since they adopted their Bitcoin strategy by a lot. In 2020, yeah. It's up almost 2 ,000%. So Michael Saylor said, the more capital we gather, the more powerful we become, and the more we enrich our own shareholders, it's totally counterintuitive because everybody else in the world thinks if you sell equity, you dilute the shareholders. That's true if you don't have a use of proceeds that grows faster and yields more than the S &P 500. The cost of capital is the S &P 500. Later, he says, MicroStrategy has pioneered this by combining capital markets activity with Bitcoin as a treasury reserve asset with the embrace of BTC yield.

57:29And the BTC yield shows that, in fact, we acquired the capital in a manner that was accretive to our shareholders as opposed to dilutive. And that means when we're actually engaging in capital markets activity, we're doing it in an accretive velocity fashion. So it's just, it sounds like a pyramid, a Ponzi on top of a pyramid. It works until it doesn't. It works until Bitcoin crashes, right? So this is, all right, here's the final word for Michael Saylor for me. He said, Bitcoin is growing 50%. We don't know what it will do in the future. But my personal long-term view is over 21 years, Bitcoin is going to grow 29 % AOR.

58:12So that would mean, I did some math here, Ben. That would mean that Bitcoin will be at$14 million a coin. And it would have a 281, and I know there's like coins coming to market. So this is not exact. $281 trillion market cap, which sounds like a lot of money. Sounds like, is that more than all the assets in the world? Here's a stance for you. I don't believe this prediction. There you go. There you go. I'm willing to go out on a limb and say that. I'm guessing that's not going to happen. Yeah, just really fascinating. Like, the largest ATM equity issuance in the history of capital markets is being used by Michael Settler to buy Bitcoin.

58:54I would think if Bitcoin grows at 10 % per year over the next 21 years, you should be pretty happy. If it just equates long-term stock market averages, I think that would be happy as a crypto person. It's wild. Really, really fascinating. All right, Ben, somebody sent us this Primerica Household Budget Index, which is a monthly index illustrating the purchasing power of middle-income households with income between $30 ,000 and$130 ,000, which seems like a very wide range. But the chart that we're looking at shows that anything over$100 ,000 means that households may have extra money left over at the end of the month that can be applied to things like entertainment, savings, or debt reduction.

59:32and the trend is higher, which is a good thing since 2014, up and to the right. In 2022, we went all the way down to 86 % because things were so expensive. Now we've rebounded. And in August, 102%, which is a good thing. It's interesting it was so low in 2015. That doesn't make any sense to me. I guess people are still recovering from the crisis. Ben, somebody emailed us this photo from their baseball field. And it says, reminders from your child. I'm a kid. It's just a game. My coach is a volunteer. The officials are human. No college scholarships will be handed out today. I love it. We have signs like this in a lot of our fields and everyone ignores them.

1:00:17You read the sign and you go, oh, that's great. I'm going to post it on Instagram. Then you yell the ref, right? It's got to be so humiliating for the spouse of these maniacs. Yes. I always think of that too. Aren't they embarrassed? Like, do these people go home the next day or that either like, that was, I... I think people think they're right. It's like they assume it's a comment section on the internet. Like, I let them have it. That was my right. All right, here's one from Gary Rogers, 73 years old in our comments. One year's time is 173rd. That relationship is what causes us to feel that time is speeding up as we age.

1:00:50Duh. It's a short year. Your life each year is a shorter percentage of your overall lifetime. That's what makes it feel like it's going faster. Are you doing the Zach Galifianakis right now? Think about it. I am. You've lived long enough, and then each successive year is a shorter and shorter period of relative time in your whole life. That's why it feels like it's going faster. Okay. It's hard for my brain to process. There's a lot of fog up there. Okay. So somebody emailed us. There's a homeowner checklist email that goes out every week. Because last week I spoke about, like, I don't know that there's all these filters.

1:01:24How many? So many filters. So I subscribe to this. It's like a weekly reminder like, hey, dumbass, you got to do this. Okay. Let me know what I got to do. If you're like me and you're home challenged, for lack of a better phrase, this is for you. All right. This is why I think you just buy a new house because then you don't have to worry about any stuff for like seven years. It's fine. All right. Our dog is teething because she's a puppy. She's like four years, four months old. and I'm not going to name any names, but my wife was watching her yesterday and let her out of her sight for a little bit and she's chewing on stuff because she's teething and she ate a cord that hooks up our modem to the Ethernet thing.

1:02:08Totally ate through the cord, Internet and Hollow House goes out and it's like a weird data cord where it's not an Ethernet cord, but it's kind of like a phone jack thing. I didn't even know we had this and I couldn't find it anywhere. I went to Best Buy, I went to Ace Hardware, Radio Shack doesn't exist anymore, went to Walmart, no one had it. So this is last night at like five at night. We're like, crap, we have no internet. So I bought it on Amazon. Overnight delivery. It was here by four in the morning. We ordered it at 6 p.m. It's at our house by four in the morning. Plug in the wall. We have internet again in the morning.

1:02:39Amazon delivery is incredible. I ordered something yesterday. They're same day delivery for stuff now. Do you want to know why people complain so much? We have so much convenience in our life that if anything ever rocks the boat and makes our lives inconvenient, we can't believe it. We're up in arms. Yes. This is the whole thing. Things are so good that we have the luxury. Complaining is a luxury. Yes, it is. All right. So Friday night, I go to crack on a bottle of wine. I'm going to put Sideways on. Every couple of years, I watch Sideways. Have a little glass of red wine. I'm a big red wine guy now.

1:03:12By the way, by the way, who's that guy from Washington that sent us a case of wine that has great wine? Yeah, Foolhardy Venters. I'm on their wine club. And once a quarter, they send me a case of wine. I need to get on that. That's great wine. What's it called? It's so good. Fool Hardy. Fool Hardy Vinters. Vinters. My favorite red wine right now. I drink it all the time. So I'm going to, I messed up. I did the cork thing, and I didn't put it in far enough, and I go to Poland and I accidentally did this, and the wine cork breaks. And there's two-thirds of it came off, one-third of it's still in there.

1:03:40And I'm trying to get, the teeth won't get it. The teeth just won't get it, and it's getting down and down and down. And now it's halfway down the stem of the bottle. I'm like, oh, crap. And so I go get a screwdriver and I'm slowly but surely tapping it and tapping it and tapping it and as you know To push it in? Yeah, I'm trying to get it out. That's when I'm trying to push it in because I can't get out Yeah And I push it and I push it and finally I give it a good hit and there's pressure So the thing just literally explodes Out the top, whine everywhere, in my face, on my shirt, up on the cupboards, all over the wall And I'm sure there's a way I could google this Like, but someone has to have a good, one of our listeners has to have a good way to get the cork out if it gets stuck in there.

1:04:20What's the trick? There has to be a trick. I don't know. But one time in my waiting days, this couple brought their own bottle and it was an expensive bottle. And I messed up the, I did what you did. And I was, I panicked. I remember it. I was getting very sweaty. I was very nervous. I was like, oh my God. Oh my God. Oh my God. I was like, guys, guys, guys. I was like, somebody's coming here. I broke the cork. Were they mad? Broke the cork. I don't remember. You know what I got good at as not just a waiter, but being in the service industry for a long time? Caddy, Cabana Boy, valet parker, waiter.

1:04:54The list goes on. And smiling at people's bad jokes. Ha, ha, ha, ha, ha. Right? That makes sense. Yeah. You got to get used to it. I was at the bagel place today, the bagel store today. And this is what I call a counter small talk. So the guy behind the counter, obviously this person is a regular, goes, hey, how you doing? and everything good? And the guy goes, I'll settle for status quo. Ew. It was just like, what? That's a cousin of living the dream. Yeah. Right? Yeah. There's a lot of people out there like that. Like they have those little things and it's just so uncomfortable. Like, huh, yeah.

1:05:34Nailed it. Ben, I have a bone to pick with people who say goodbye but don't hang up their phone. Okay. Who like they just assume that you're going to hang up. Grant, for example, is guilty of that. I'm pretty sure that happened to you and I last week. I think my phone is in my pocket. I have my AirPods in. And I look back and there's like six minutes. I think neither of us hung up. No, no, no. It was a standoff. No, no, no, no, no. I hang up. I press end. Are you sure? Because I know there's people out there like you who I have no tolerance for those sort of people. You press buy, you hang up.

1:06:05But if the phone is in your bag or in your pocket or something and you're carrying stuff, like sometimes it's hard to do. I guess, could you say Siri hang up for me or something? No, no. If your phone is unreachable, you say to the person, hey, bye. Do you mind hanging up because my phone's out of reach? That's what you say. Because why would you just assume that the other person's going to hang up? It's like the you get the sponge, you know? It's a standoff. I don't know. I'm fine with that. All right, how about this? If we're ever on the phone, you don't need to ask me though. That's the thing.

1:06:36I hang up. All right, I swear last week that did not happen. Duncan asked who talks on the phone in 2024. for. We're old. We still talk on the phone. I talk on the phone. Alright, Ben. I'm going to start with recommendations. Okay. I saw... Oh, before we get to what I saw. So, Tom Cruise is running it back. A Days of Thunder sequel. I got to tell you. Days of Thunder is not a good movie. Yeah, you're not going to... You might be surprised about this. I'm not a fan of Days of Thunder. It was just Top Gun on wheels and it was okay. It wasn't like one of my favorites. It's way down the list of Tom Cruise movies for me.

1:07:09Yeah, it's not a good movie. There was an article in Sherwood about horror, about Jason Blum. And over the past decade, the horror movie genre has doubled. It's taken to the box office, now raking about a billion dollars in ticket sales each year. The Cape ratio of horror movies has to be like 36 right now. I feel like I'm shining, man. I'm winning, right? They're making movies for me. Yeah, all the time. So Blum said, and I think there's a lot of truth to this. He said, horror is the one thing that doesn't work as well on streaming. If you're not forced to sit and stare at a horror movie, it's never a scare.

1:07:43Horror gets people to the theaters. That makes sense to me. It's just a better experience at a theater with a horror movie. And it's also, it's cheap. Like, you don't need to pay actors, like brand name actors to be in it. In the article, they actually went into the psychology, which I spoke about last year. Like, why do I like this shit so much? Am I demented? Yes, I am. So anyway, okay. I went to the theater this week and I saw what is probably my favorite movie of the year that I think should be nominated for Best Picture. Okay. The movie is – it's a Neon movie. Neon did long legs. Neon is like an A24 competitor.

1:08:20The movie is called Enora and it was amazing. Okay. It felt like Uncut Gems a little bit. it's been described as an uncut gems, which I thought about in the theater. I didn't think about the other part, the pretty woman part. Uncut gems and pretty woman crossover. It's also somehow laugh out loud funny. So the premise of the story is Mikey Madison, who was in Scream and what else was she in? She's been in, I can't, what else was she in? Whatever. She plays a stripper and a Russian kid comes into the strip club and he starts paying her to be his girlfriend, to be an escort, his girlfriend. And he's a son of a Russian oligarch.

1:09:02And so he's living the life by himself in a mansion in Brooklyn and she's his girlfriend. And the Russians come to annul the marriage and it was so good. Okay. I've never heard of it. I can't possibly raise the bar high enough like then you would be disappointed. But it's not a horror movie. Not a horror movie. No. Okay. I told you, I'm worried that my son is going to be falling down the Michael rabbit hole of movies as opposed to the Ben because he went as Ghostface for Halloween from Scream. He hasn't seen any of the Screams, right? You can't show him that. No, but I'm going to eventually. He loves that stuff.

1:09:42So what is the right age? So how old is George? You see? He's seven. Six? Seven? I'm more liberal about the movies than my wife is sometimes. Like, I don't, I think it's fine. you know what they said in Tarantino in Tarantino's book I can't remember the exact quote but his parents brought him to movies very young and he was seeing very adult movies and I think one of the times he asked his parents like are you sure I should be watching these movies and they said I would rather have you watch movies than the news and I think that because the movies aren't real is what they said so yeah but I do remember like seeing Freddy at a young age like it really rocked me like I don't know if I don't know if in a good way like it's I remember being scared so I was very proud of my son the other day because I can't remember what action movie we were watching, but every action movie, like especially Indiana Jones, you dive under the wall before it comes down on you to crush you or the door before it shuts.

1:10:31Every action movie has that scene where you dive under and you, oh, you just made it. And we see a scene where these guys are running for something and he goes, oh, they're going to make it. They always make it in action movies. I'm like, oh, he figured it out. That's pretty good, man. All right. I'm still watching Disclaimer, which I still think you should not watch. But we're on the, we just watched the penultimate, not second to last episode. Is that the Sasha Baron Cohen show? Yes, with Cate Blanchett. And it's a roller coaster show in that it's very frustrating and very annoying, but I really want to know what happens.

1:11:02So I'm like, I hate myself for watching it half the time. The other time it's like, oh, this is actually pretty good, but I need to watch the end now because I got to see what happens because there's some twist or something coming. All right, we've been watching 90s movies with our kids. It was Mrs. Doubtfire last week, I think we said. League of Their Own this week. All the kids absolutely loved it. And my wife and I both said, God, they really just don't make movies like this anymore. No, no. Feel good, family movie, but both people can like it. Gina Davis has to be on the all-time underrated list.

1:11:32She is just fantastic in that movie. I kind of looked it up, and it said once she hit her 40s, she stopped getting roles, which I don't know why. I think, well, you know, it's Hollywood. Like her... This, yeah. She had Meg Ryan and Julia Roberts and Sandra Bullock. She had a lot of competition. Do you remember the Long Kiss Good Night? Oh, I love that. with Samuel L. Jackson. I saw that one in the theater. Okay, so I saw it once. I remember seeing it at my dad's house, at my dad's apartment, actually. And I haven't seen it in 20 years. No, God, we're all f***ing 30 years. Underrated action movie.

1:12:02Really good. I just, I don't, this is not a hot take by any means because it's very, a lot of people have it. Like, there's no better actor in a decade than Tom Hanks was in the 90s. He is so unbelievably good in The League of Their Own. You almost, like, forget how good he was back in the day. Yeah. Go. All right. Tune in next week if the world doesn't come to an end from the election. I told you I'm shorting vol. Hopefully I'm wrong about that. Why would you say that? I was driving by a street corner the other day and a guy had a huge sign and all it said was vote for decency. There was no names.

1:12:44It was just vote for decency. You know what? That's something I can get behind. How's that? I hope people are decent to each other. Remember, Chicago, November 13th. If you're around, check out our live Animal Spirits. AdvisorUnlock.com for more financial advisor stuff. Thanks to the production team as always. Animal Spirits pod at gmail.com. No. Is that it? No. AnimalSpirits at the compoundnews.com. That's it. Goodbye.

1:13:19You