All-Time Highs Should Feel Better Than This

25:00I do think that most people have a, have an evolution of investing where they understand like, Oh, when I was younger, I thought X, Y, Z, and now I understand the truth. Um, so I am bullish on investors learning the right lessons over time. It does happen. You mature, you different things come into your life and you have more responsibilities and you have more money. And yes, more, less time, less time for speculation, less self-delusion that you're going to do it. Yes. But there always have to be some losers in the market. Like that's an unfortunate reality that there's always going to be people who make mistakes.

25:28And some people never learn their lesson. We know this. Of course, of course. But yes, you're right. More people than not probably do learn their lesson over time. But I think this is a lesson people are going to have to learn that this eventually there's going to be a scenario where just the best, biggest stocks that you know and own, you can't just own those and it's easy. It's been too easy. That's the thing. All right. It was jobs day today, I guess. man.

25:54How's your dog like in the new neighborhood? She's patrolling. What's out there?

26:03Do you ever just go to the dog like, what are you doing? Like when your dog barks at something that's irrational or like, do you ever just look at the dog and go, what are you doing? Why are you doing this? I do this to my dog all the time. What are you thinking? So I have a boxer and large dogs are not prone to like barking that much. Now, there's a dog outside the window that she's barking at. But thank God she's not a chronic barker. But of course, yes, it's like, stop, stop, stop, stop. Watch this. Enough! My dog, for whatever reason, watches TV. So we're trying to watch a movie or TV. If another dog shows up on TV, she'll like watch it like she's looking out the window.

26:43And she thinks she sees, and she goes crazy if she sees a dog on TV. Wow. All right, let's talk about the labor market. We got some data today, and it's funny. I put the unemployment rate data from Whitecharts in here. It shows the unemployment rate by month. Look at the October. It's just blank, which is kind of funny. But you'll notice every single month the unemployment rate is going up, and it's gone up 50 basis points since June. So 4.1, 4.2, 4.3, 4.4. Skip a month, 4.6. On an absolute basis, the unemployment rate is still very low. It's obviously going in the wrong direction. Matt Bosler tweeted this this morning.

27:19He had another one that is kind of pushing the recessionary bounds. U.S. unemployment rate at 4.6 % is up half a percentage point over the last five months. In 77 years of data, the number of times that's occurred outside of a recession can be counted on one hand. And it's like the 1950s, 1980s, and hasn't happened since 2003. Sometimes I think we take these things too far. I saw multiple people on Twitter today post the unemployment rate out to three decimal points, right, to show how far we had because we're rounding up to 4.6. It's really 4.5746 or whatever. that's a little too granular for me for a word I don't like to use here's the thing I still don't know why granular is a word that is like in your box in your penalty box I used to work with a guy who used it to sound smart and there's certain words people use to sound smart and that's one of them that's always triggered me for some reason he used it all the time and it used to just grind that should grind your gears because granular is not a daily word no, would use it all the time I probably use it once a quarter, tops.

28:19Yeah, because someone uses that word and you go, ah, that's a smart person, yeah. So here's the thing. The labor market obviously continues to deteriorate. You can't say it's in a strong place. Stock and bond markets don't care at all. Spreads are still low. Bond markets, you'd think if the bond market was really concerned about the labor market, yields would be falling more. I guess maybe you'd say, well, yields are lower than they would be because of all the tariff inflation stuff. So it is. but the stock market, again, is an all-time highs. Financial markets do not care about the labor market yet.

28:51That's correct. Just when are they going to care? What would it take?

29:01That is a good question. I think the market will care about the labor market when it's worried that it's going to show up in earnings, but I don't think it's worried about that at all.

29:16Yeah, again, because it's happening on the margin. But the opposite is true. I think that the labor market is not in a great place because companies are being slow to hire because they're waiting to see what AI is going to be able to do for them. I guess you could also say, listen, the fact that corporations are laying people off and we're not in a recession means better profit margins for them. That's why the stock market doesn't care. I mean, that works to a point, obviously. Yeah. All right. There was a piece - I also, hold on, one last thing to this. I also think that the consumer is fine not to beat this dead horse right into the ground, right?

29:52The K-shaped conversation, but in the aggregate, okay? In the aggregate, because I'm looking at, and I don't know that the stock market is always a source of truth here, but I think in this case, I'm going to lean on it. Ally Financial. Ally is a large automotive lender and a large percentage of their clients or subprime borrowers. capital one, pure consumer exposure. Look at this. I mean, the stock is at an all-time high. I'm not like, obviously American Express is the luxury client that's at an all-time high too, but just capital one and ally is good enough for me. If the consumer in the aggregate, not segments of the consumer, but in the aggregate was deteriorating, this stock would not be at an all-time high.

30:41Duh. So can I give you something that's the opposite of the K-shaped? It's a K upside down. I don't know what that is. It's a K. Backwards K? All right. So there's this piece for the center. Ks are symmetrical. So an upside down K is a K. Oh, backwards K. No, that's still the same thing. Center for Retirement Research at Boston College wrote a piece about inflation. And they say, listen, just because inflation is low and this is the point everyone's been making, let's look at cumulative. And they did this chart that shows all these different categories since 2020. and it shows total inflation is up 25 % cumulatively.

31:13But if you look at food and beverages are up a little more, 26. Housing is up 28. And transportation is up 37. So those are the big things people focus on. And so the fact that those three items are up more than the average, people don't look at, well, education is only up 4 % or recreation is up 16 or medical care is up 11. A one-way ticket. Apparel's up 13, right? A one-way peak ticket into New York City from the Long Island Railroad is$14. Okay, what would it have been before the pandemic? I have no baseline for this. Eight, seven or eight. Okay. It's crazy. It's unbelievable how expensive it is.

31:52So do you pay every time or do you pay for a monthly? I pay one way because I'm only in once a week. Okay. And, but$14 for a one-way peak ticket. So how much does a monthly pass cost for the train if you're taking it every day? That's a great question. Like$500? I have no... It used to cost... I don't remember. It's been so long since I bought a monthly ticket. It used to be like$200-something. So peak is$1 ,450. How do we get a monthly ticket? Yeah, but the good news is... A monthly, let's see. The December monthly ticket is no longer available. You can buy the January monthly ticket on or after December 25th.

32:32All right, so sorry. I can't find out. But the good news is you still have to own a car. So that makes it all worth it. Right, because, yeah, and cars are cheap. But, so, listen. Man, you should have seen the waffling I was doing this week about my car, Ben. The back and forth. It's out of control. It is heating up. When do you have to make a decision? It is heating up. My car is due in April. My lease is up in April. Okay, you've got some time then. Get your car broker to work. But this piece also looked at the wages. And, again, overall wages have grown two percentage points faster cumulatively.

33:02but look at the, it's still crazy to me that the lowest quartile had by far the biggest increase in this period. So 30 % versus 25 % and the highest actually fell behind inflation. The highest quartile was only a 24 % versus 25%. If you, if you could pull the audience, if you could ask every American and let's just throw away the electoral college, just number of votes, majority wins, majority rules, would you prefer where you are today in terms of your income and the inflation? Or would you rather go back to 2019? Handily, not even close, we go back to 2019 prices. If we could just reset, not even close.

33:45But would people be happy going back to those wages? That's the thing. Would it be, With the loss aversion. Yes, I'm saying your wages go backwards and the prices go backwards. I think people would say that, but if you actually did it to them, they'd go, oh, they'd be shocked that their wages are gone down. I think that's the problem is that it's whatever the loss aversion is, that's the thing that hurts more. Well, that's a different conversation. You might be right about that, but I just say if you just take a vote, if you ask people, stay where you are today or roll prices back, your wages and the inflation roll back.

34:15I think the majority of this country votes to roll it back. You know, I've been thinking as obviously technology is going to become a bigger part of our lives and there's going to be robots and there's going to be self-driving cars and AI is going to do God knows what. You know the movie The Village? Sure do. I saw, did I sit in the theater with my dad? Yeah. A hundred percent. Yeah, my wife and I saw it in the theater. I think we were still dating at the time. And credit to her, she predicted the ending before I did. But do you think - That's one of my, you know, I don't know if that's a weakness of mine, like predicting the ending.

34:42But I don't do that in my brain. I don't try and predict the end. Okay, I constantly try to predict what's going to happen. That's all I do. So I'm watching that, the Shiv Roy kidnapping show on Peacock. I'm sure your wife watched this. It seems like a Robin show. She did watch it. All Our Fall. Okay. And the whole time, all I'm trying to do is guess who did it. Because I know that in the first five or six episodes, they're going to show me the person and make me think it's them, but it's not them. I know it's not them. I don't get invested because I know it's not them. So I got to think who's the person they're not trying to.

35:08So anyway. You know, I'm blessed with the burden of not, I don't think I had. Okay. I don't think I had. But do you, getting back to the village thing, Like it's these people who live in modern times, but they decide to go live like it's the olden days. Do you think you could ever see someone like that? Say like, listen, we're going to go back to when it like it was the Amish. Like, do you think people would want to do that? I think there's going to be people who are going to go. You don't think that some because you see all this nostalgia for the old. I would love to give people that experience.

35:31Hey, for a month, you're going to live like it was pre pre internet days and see how you like it. The technology that you had back then. Would people actually like it better? We can't survive in the modern world because everybody else is using today's technology. Yeah, but I'm going to create our own little town though, right? Okay, like in the Truman Show. Or like in the Village. Yeah, it would be like a reality show. Yeah. All right. Let's talk about AI a little bit. I feel like OpenAI is an obvious short. And the evidence keeps mounting that this is, there's a difference between a good business and a good product.

36:01Let me ask you a question. If OpenAI were public and it's down 40%, do you press the short? I think at this point you might. Because I think Google's going to eat their lunch. because OpenAI, I think it's a good product, not a good business. Why aren't they selling ads yet? Like, what are they? So listen to this. This is from the Wall Street Journal. OpenAI is already doling out far more stock-based compensation than other tech companies, owing to an intense talent war that is waging with its competitors. The company expects to spend$6 billion this year on such costs, almost half of its projected revenue.

36:29Repeat that. Half of the revenue is going to employee stock options. Don't care. I don't think this is a well-run business, and I think this is an obvious short. Tell me I'm wrong. Okay, I won't tell you you're wrong. Let's just consider the other part of this. There are so many parallels to earlier businesses. Facebook can't monetize social. Netflix can't do this. You're evaluating the business of a baby business. It's foolish. They're in building mode. They're not in the monetization at all ends mode. I can guarantee you they don't know what their business is yet. and the open AI business, whatever it's going to be, does not exist today.

37:10But guess who does? Google does. Meta does. Like these companies already know, listen, we're going to sell ads up the ass on this stuff. We don't care. Why are they doing that? They're going to be. There's no, of course they're going to be. They're right now, they're trying to build the best product in the market and they're winning. Yes, Gemini is growing a lot, but ChatGPT is still totally dominant in terms of the number. I saw Shkreli posted a tweet this morning, actually, that I saw. about the number of minutes on ChatGPT versus Gemini. And you know what? I don't need to guess. Let me just, because this is important.

37:40So percent, 55 billion minutes spent on AI sites this month, last month, 64 % ChatGPT, 15 % Gemini. Now Gemini grew 391 % year over year, massive, catching up. ChatGPT only grew 54%. So ChatGPT has 64%. It's 64%. So first mover advantage gets them locked into a lot of people. Yeah, so I think, listen, I understand it's the obligations of open AI look insane. The business model today looks insane. But I just, I'm not getting involved in those discussions of the revenue today, the business today. It's so early to judge. It's not fully formed. Give it a minute. I just wonder how long the market will give it though.

38:25It's already down 40 % in my brain. I don't know. All right. Okay, so another one. Like, AI adoption rates by corporate customers are slowing. Don't care. It's so early. This to me is utter noise. Utter noise. Alex Kantrowitz in his Substack wrote, Enterprise AI is the fastest growing software category in history. Expected to bring in$37.5 billion next year, up from almost zero in 2022. This is going to be a$100 billion category. That is pretty nuts. It is. It's funny. So I've said a few times, and you always get mad at me. I said, like, people in Bitcoin and gold were right for the wrong reasons, right?

39:08And they were - I just think it's - No, but I'm saying you can apply this to stock market investors, too. We were all right for the wrong reasons. No one predicted AI was going to come in 2022 and change the game so much. Like, we didn't. So I'm saying everyone is like that. So Gavin Baker was on Patrick's podcast. And I understood, I don't know, 15 % of the conversation, like, resonated with me. me, right? Gavin is talking. When they start talking about the different types of chips and the GPUs and the TPUs. No idea. No idea. But a few things resonated with us that we pulled out. So Patrick asked him, like, how do you, like, take me to your office.

39:45Like, what are you actually doing with these things? And Gavin said, I think the first thing is you have to use it for yourself. And I would just say, I'm amazed at how many famous investors are reaching really definitive of conclusions about AI based on the free tier. The free tier is like you're dealing with a 10-year-old. So I was paying$20 a month for ChatGPT, like the whatever, right? The whatever version to pay to unlock it. And I said, hey, wait a minute. That's such a good point. It didn't even occur to me to pay$200 a month. So I'm curious, what does$200 a month get you? And the first query that I typed in, I laughed at how it's apples and oranges.

40:21The$20 a month version is magic. This is like a whole other universe. It's night and day between the$20 and the$200 version. Now, am I suggesting in any universe that the$200 version is going to be mass adopted? Of course not. Who needs to pay$200 a month to ChachiBT? The$20 a month version is just - Do you know that's a big difference? Oh my God. Okay. You would not believe. Just try it and cancel it. like you would not believe how unbelievably better it is than the$20 version. So like we're making decisions and discussions around like what it is today. I can't imagine what this is going to be in six months and 12 months and 24 months.

41:05Like all of the change is coming. It's going to change everything. The$200 model will be the$20 model at some point. Yeah, probably. As things get better. Yeah. That was his point. I mean, obviously we have to talk about the data centers in space. He'd talk about this. And this is a thing everyone pulled out. And this is the clip everyone watched. And it's one of those things where it sounds either brilliant or idiotic. And there's no middle ground, right? It's like, of course you put data centers in space. You can cool them easier because it's cooler up there. And you harness the power of the sun.

41:35And other people go, no, no, no. How are you going to take care of these things if something breaks? You have to fly up there every time. And how are you going to get them there? Not knowing anything, there'll be data centers in space. And then the next day there was a... What do you think? Will there be data centers in space? I do. So the next day, there was a story in the Wall Street Journal saying Bezos and Musk raced to bring data centers to space. I don't know, man. I mean, what happens if something goes wrong? That's not your concern. I don't know what the cost is. I think we can probably improve the technology enough on Earth where we don't have to send them in space.

42:06Listen, that's my thought process. Don't you think they've thought of that? What happens if something breaks? Yeah, but I'm trying to think this through a cost-benefit analysis. In the next 10 years, we have data centers in space. I'd say probably not. 15 or 20 years? Sure. All right, so 10 years, you're in line on the sand. Yeah, I'll take the under on that. I think there'll be data centers in space. Okay, I just, it seems, I can't even imagine that we have the, or what the cost would be and we have the capabilities to do that. I mean, SpaceX is going public. What the hell do I know? SpaceX is going public.

42:35I think that knowing nothing about the company, other than that Elon Musk is somebody that gets shit done, why won't there be data centers in space? It's space, I don't know. There's a lot of stuff that happens there. No, I know. Dude, I know. The knee-jerk reaction is LOLOL, like LOL. I get it. But I don't know. Why not? Yeah, but on the other hand, the theory makes sense. Like, oh, yeah, I get it. Yeah. You're cool. You just turn it. The sun's that way. You just turn the other side. You just turn your back to the sun, right? You're good. All right, here's another one that we took out of the article, the podcast.

43:11Talk about Taiwan Semi. Gavin said, a big problem in the world right now is that Taiwan Semi, by the way, this is, we've done this in the past where we talked really fast about people that we know in the industry that we take for granted that, I don't know Gavin personally, but that everybody listening knows them. Patrick O'Shaughnessy, our friend, has a great podcast called Invest Like the Best. He had this guest on this week, Gavin Baker. Gavin Baker is a technology investor. So that's who we're talking about. And if you miss out on stuff we talk about, We have show notes on our blogs. Go there.

43:42There's links to everything. So Gavin said, a big problem in the world right now is that Taiwan Semi is not expanding capacity as fast as their customers want. Skip ahead a little bit. So I think Taiwan Semi is in the process of making a mistake, but they're just so paranoid about an overbuild and they're so skeptical. They're the guys who met with Sam Altman and laughed and said, he's a podcast bro. He has no idea what he's talking about. They're terrified of an overbuild. So it may be that Taiwan Semi single-handedly that their caution is the governor. So I think it's phenomenal that investors are the governor, that Taiwan Semi is like, everybody understands that a bubble that gets out of hand eventually pops and there's collateral damage all over the place.

44:25We have some healthy bubble bottlenecks right now. Yeah. Great way to put it. I, yes, I, uh, I like it. so wait so are you going to continue paying$200 a month for chat gpt or not um i haven't had as much time as i would like to play around with it but like um so all these audiobooks that i'm listening to like i'm using it all the time and so for the old for the$20 one versus the new one not that i need this but the answers that it gives me like tell me about the the the movies that this producer made or whatever like it gives you like immediately like not just like um the name like a list, but it gives you the list by decade.

45:04It gives you the tiles of all the movies that you could like scroll through. Like it's just like next level. That makes sense. Do I need to pay $200 a month for that? Right. Probably not. Probably not. Like I said, it's, it's going to, you're going to get that eventually anyway, probably 12 months. That's what's going to be the$20 year. All right. Mike Simonson has a great housing outlook for 2026 tons of good charts. I pulled a few here. He's for compass intelligence. Now he says, listen, home prices are probably going to be flat in 2026. I think that's probably the baseline most people are using.

45:34Like, we're just going to have another, and he looked at affordability. So this is price to income ratio. And it's funny, it never got down to the affordable level, like home prices at three to four times income, but it's severely unaffordable now. And he's saying, like, it's just going to continue to go about, it's going to get into less affordable territory if housing prices stay normal and incomes keep rising. But look at this, this is home price change year over year. And he shows the top 20 names in the Case-Shiller index. So all of them had huge gains, obviously. And now they're all, many of them are going into negative territory.

46:06Miami, Tampa, Seattle, San Francisco, San Diego. These are minor losses. Dallas. But some of them are starting to see down prices, which is not bad. Okay. This is the crazy one though. So he shows healthy home equity cushion for homeowners. 86 % of borrowers have at least 30 % of equity in their home. You can see how this has changed since 2013. In 2013, barely anyone had any equity. And now the vast majority of people have a ton of equity in their house. And the negative equity is essentially zero, which was actually like 15 % in 2013. This is the consumer backstop. Even if it's illiquid and it's not, like, this is a backstop of some sort for people, for a large number of people in this country.

46:57Absent a financial crisis, yes. Right. Yes, for sure. Financial crisis. I was looking at some houses in my neighborhood yesterday because two houses hit the market. Not a lot of houses are. Two houses on the water. So I'm looking. I'm looking. I'm like just on Zill. I haven't looked at Zill in a while. So there's a house in my neighborhood that has, that just, the price just got lowered by 25K. It's now 1 ,050 ,000. I don't know what it started at. 1 ,050 ,000 for this house still sounds crazy, but whatever, that's the world that we live in. It is just under 3 ,000 square feet. It's a fine house.

47:37It's been on the market for 200 and, cause I was like, wait, this house is still for sale. it's been on the market for 229 days wow that's a long time to have to wait through that if you bought a new house and are sitting on two mortgages or just waiting to sell your house to buy a new home now this this i think this was like a a flip i think this is like an investor that put money into this um so they need to lower the price yeah but like this i mean obviously we're in a different environment than 23 and 22 and but yeah the housing market is still soft and obviously people aren't going to get the prices they want sometimes.

48:14I still get the Marco Island houses just because I checked Zillow once when I was there. And every time it's price reduction, price reduction, price reduction. I think in places like that, like I did get an email from someone the other day saying, Hey, I'm thinking about moving from a cold place in Utah to Florida and putting in a little ball offer. It's like, it's about time. You know, as much as, uh, so we got our first fall, our first snowfall this week. I know Michigan has snowier winters than we do. As much as I hate the bitter cold, and I guess bitter is a relative word. To me, bitter cold is like 20 and below, below 20 degrees, right?

48:49That's bitter cold. Where you walk outside and it hurts. Oh, yeah. Right? We've had that for the last two weeks. It's been like 12, 12 degrees. But I like the suffering. I think it's part of the whole thing. Like, I like getting to the other side of it. I love when it starts to thaw out. And I have like a mental calendar, like summer to fall, all that sort of stuff. Now I'm hating the winter more and more as I get older because that's the circle of life. Everybody likes the cold a little bit less each year. At a certain point in my life, I'm sure I will be done with the cold like every other Long Island Jew who moves south.

49:22But for now, I still enjoy the pain. It's supposed to be us reaching middle age at the same time. I find myself liking the winter more and more. Oh, really? I take my dog for a walk every day and it's freezing out. And I bundle up and I put my long johns on. I put my big boots on. I make my son come with me too. Hey, put your snow pants on. Put your coat on. You're coming with me. And we take the dog for a walk and it's freezing. We can see our breath. And something about it is invigorating. Being out in that type of weather. Good for you. Am I a bad dog? I don't walk my dog enough. My dog, if I don't take my dog for a walk every day, she goes by the door and barks.

49:54She barks at me until I take her for a walk. Okay. Once a day, I have to take her. And yeah, the kids, do you think they take her for a walk? No, it's me. And they wonder why the dog likes me the most. They say, you're always mean to her. Why does she like you so much? I'm the one who takes her for a walk. That's right. let's talk about Semblis a little bit. Hold on, before we get to Semblis, this just popped in my brain. I walked downstairs this morning and Ru was laying on Kobe very, very sweet. But I walked downstairs, I said, are you watching Blank Check again? He was watching Blank Check again.

50:25That's one of his rewatchables. All right, so Michael Semblis from JP Morgan had a 50-page piece. I guess he does a deep dive in alternatives every year. And he did this one on private markets with his most recent piece. and I think the biggest one for me, there's a ton of charts here that we can pull, is just that - What's your single biggest takeaway? He looks at the speed of monetization of these buyout funds. How quickly are they turning their investments into money for their investors? And it is slowing considerably. And it says the median percentage of value remaining to total. And it's going up and up and up.

51:01And it right now, from the like the, you know, even the 2016 vintage, it's like there's still, it's only been, they've only monetized 30 % of it. And in the past, this was, it was a complete opposite. You were monetizing 70 % of it by this point. So 10 years into a fund and you've only gotten 30 % of your money back. That to me is the biggest thing that these come, these are, they're sitting on such longer investments in these private markets and they're not having exits. So the investors have to be getting worried about this. Like what, where's my money? Come on. Yeah. Well, onto the wealth channel.

51:36I mean, it's no mystery. Like part of the reason why they're looking for our pockets is because institutional investors are, they're allocated already. This is a great line in here. I didn't realize that this was so obvious. Like when I read it, I was like, oh yeah, duh. But I just had never seen it put this way. Since accredited investor thresholds aren't indexed to inflation, the share of qualifying households rose from 1.8 % in 1983 to 22 % in 2022 and is on track to 30 % by 2030. It is kind of funny how the government indexes some things to inflation, but not other things. This would be one that you'd think they would, but I guess it just allows more investors to invest in this.

52:18I'm sure the private investment managers love this. Yeah. The monetization stuff is incredible. So what, what changes this? What makes it so there's more exits, there's more IPOs, there's more MNA going on. There's, why aren't we seeing it? When is it going to happen? What's going to cause it? Cause we've had a boom in speculation this decade. Don't you think that that boom would include IPOs? Why hasn't it? I think my knee jerk reaction, I have to think more critically about this and would love to hear people who know have a better answer. Maybe I think the reason why it's a pool of capital is so much bigger.

52:54It's a lot easier for money to come back to investors when the pool of money is $200 billion. When it's$3.1 trillion, I'm making up both numbers. Not a scarce resource anymore. There's just too much money maybe here. There's so much demand for, there's so much more trading going on in the equity markets by retail investors. And I know the IPOs aren't going crazy when companies do come public, but don't you think there's demand by investors to try something new? I just don't understand why there's not a new IPO on Robinhood once a month. IPOs are also a much, much, much, much smaller segment of exits than M &A.

53:38Like, I don't know if it's 10 to 1, but maybe even more than that, actually. Most of the time, it's M &A. To me, another big takeaway, and I knew this, but venture is just a waste of time. Um, fourth quartile venture managers have been a money pit destroying substantial value relative to the equity market every year since the late 1990s. Listen, if you can get into, so they have a chart here, the top 5 % versus the top quartile. Yeah. If you can get into the top 5 % of venture funds and we know who they are, right. It's that they, they persist because they have access to the networks and all that sort of good stuff.

54:11I would give them all my money. They wouldn't take it. But other than that, it's a waste of time. It just is. It is crazy because the thought process used to be, if you're not in the top quartile, you're out of luck. But even the top quartile numbers here are coming way down and do not look very good at all. That's surprising to me. But look at the chart of US buyout performance versus the S &P 500. Buyout's still okay. It's still a good asset class. Even the median fund has barely underperformed the index. It's not bad considering how hard it's been to outform the index. Yeah, you're right. It makes sense that the returns would be way worse in venture than it would in private equity.

54:52Because those are more mature companies and they put some leverage on it, right? You think you get that sort of equity return. And the number of legitimate... Oh, the manager earlier from T. R. Price, he has a weird last name that's escaping me, said that the number of imposter companies... Like there are too many imposter companies in venture. and buy out when the average EBITDA is whatever, you know,$250 million. Like those are real companies, right? And if you buy with some leverage, yeah, you're going to perform fine. And that's basically what happens. All right. I want to talk about reading.

55:25I think if I had to say one thing that helped me in my career early on more than anything else, it'd be reading. Have you seen this chart from the FT flying around? No. Percentage of US teenagers who read in their leisure time. And it go, it basically, it goes from almost every day was 35 % or so in the 1980s. Now it's down to 15%. Hardly ever went from 15 % to almost 50%. Now, I do want to take a little umbrage with this chart. I don't... Did you have a lot of friends who were reading their leisure time? No. I guess you could say, listen, I mean, I was reading Sports Illustrated in my leisure time.

55:56I was not reading books. No. I don't think I had one friend in high school who read books on their leisure time. I didn't start reading my leisure time until I was 25 years old. Probably. That's probably pretty similar for me too. But how do you square this with the fact that people are probably reading more stuff than they've ever read in their entire lives. It's just not books anymore. That's what I was going to say. It's emails, it's newsletters. It's, I mean, obviously, here's my way of thinking about this because I'm having a tough time squaring this with the fact that every, I talk to a lot of college kids.

56:24They reach out for career advice. I'm always happy to take those conversations. These kids are 10 times more knowledgeable and prepared than I was. They know the industry. They know the kind of company they want to work for. They know the markets. When I graduated, these are like juniors in college. I knew none of that. I remember I was in a class and someone asked, how many people want to work in investment banking? And I, someone, like half of us put our hand up like, yeah, that's like the best money. And then the teacher goes, what do you, what is it, what do investment bankers do? And one guy in the class knew it.

56:49All of us are like, hands slowly down. Now, almost every kid knows that because it's easier to research these things. So I do, the reading was like, had the biggest impact on me more than anything early in my career. It's how I, it's how I caught up and I learned what the markets were and history and all this stuff. But I do think that with podcasts and newsletters. And if you want to, there's more opportunity than ever to know what's going on. I just think it's probably like inequality. There's different ways of learning these days. Yes. I just think the extremes, if you're someone who just gets caught in the slop of, I just watched TikTok all day and I scroll through social media and I doom scroll and all this stuff.

57:27Yeah, your brain is probably turning into mush. But if you take advantage of the information, it's so much better than it was in the past. I just think that the inequality of learners is probably going to be wider than it was in the past even. That's my thinking. All right, the New York Times had this piece. Streamers are raising prices at an astonishing rate. Here's how much more you're paying. And they go through all these lists of every streamer. And I was looking for a table and I didn't have one. So guess what I did? I put it into Chad GPT or Gemini, can't remember which one, and looked at the price.

57:57Disney went from$15.99 to$18.99. Macs went from$16.99 to$18.40. And all these raised their prices by two or three bucks. And if you look at since they first started, it's way, way higher. Do you think it really matters, though? What do you mean? Are people going to give up because they keep raising prices? Like some of these? Funny you should ask. Bloomberg has a chart showing a rare subscriber increase. U.S. pay TV customers rise for the first time since 2017. That's surprising, right? I mean, does YouTube TV count or not? Because that's what I use now. I feel like that to me is like basic cable now.

58:37Is USPay TV, is YouTube in here? I don't think so. Okay. I mean, I did the thing where I bundled Max and Hulu and Disney together and that made it a little cheaper for, I think it's like$29.99 a month. But I'm one of the people, I'm never going to get any of these. I'm locked in forever. We spoke about the Netflix Paramount Warner Brothers saga. Josh and I are talking to Bill Cohen from Puck. Were you going to ask him about unscripted? He was in there a little bit. He was in the book. He broke the article open. He wrote the article for Vanity Fair in 2015. So yeah, I can't wait to talk to him.

59:18So we're going to talk a lot about the story. Him and Bellany at Puck and Julie Alexander, they've been great on all the reports. So a lot of speculation. Oh, I bought Netflix last week. I don't know if I said this on the show. I did too. I could, down 30%. every time Netflix crashes, it's a wonderful buying opportunity. Maybe it falls for her. Here's, can I make a pitch to you real quick? Sure. I think Google should buy Warner Brothers. They have, if people, because people in Hollywood are freaking out about this. That would be blocked. Whoever buys them, then you could have HBO as a tile on YouTube TV.

59:50Wouldn't that save the studio more than any of these other options? What do you mean, you mean save the theaters? Well, people are worried about what this means to Hollywood workers. Whatever, if it's Netflix or Paramount, A lot of people are going to lose jobs. Wouldn't Google keep a studio? No, no, no, no. Netflix is not going to be cost-cutting. The synergies that are coming from Netflix are coming from Netflix not paying HBO a licensing fee. Oh, come on. That's the stuff they say. They're going to cut costs. You kidding me? No, they're not. No, they're not. No, they're not. Netflix is not firing everybody.

1:00:21They don't have a studio. What are you talking about? Netflix is not firing. Netflix is not going to axe people the way that Paramount will. Paramount has a studio. The duplicative roles are all gone. Netflix has got this far without having a studio, though. No, no, no, dude. Netflix is not going to whack Warner Brothers Studio. They're not going to whack HBO. All right. I don't believe that, but... They're not going to. I don't believe you. All right. I think Google should buy them. I think that makes sense if you want to keep this stuff going. That would never pass muster. There's no way that YouTube would be allowed to buy anything else.

1:00:56Yeah, I guess so. That would be blocked in a second. um anywho hold on what else was in here uh so somebody emailed us cause we were talking about like what like Netflix is really trying to Netflix is is at war with the theater and I mean it's not war like they won already right um and so what Sarando said just to rehash it in case people are not following this what Sarando said and this is the part that Ben you should rightfully maybe not believe that they're going to keep the number of movies coming to the theater but what he's really going to do is he's going to narrow the window. So if movies were in the theaters for 40 days, he's going to narrow the window to 15, effectively squeezing movie theaters because if you have to wait only 15 days, you're going to wait and you're just going to see it at home.

1:01:41And then it's going to be just in the big markets. And then, yeah, that's what happens. Anyway, somebody said, hey, a listener emailed us, Netflix owns the Egyptian theater in Hollywood. And go to this website. This is actually pretty cool. So it just shows Netflix stuff. So you could see a bunch of Netflix movies in the theater. I don't know why you would want to see Jay Kelly in the theater, but you could. A House of Dynamite in theater. Whew. That would piss me off if I went to the theaters for that one. Oof. Yeah. But I thought this was interesting because I didn't, like you could watch the Stranger Things finale in the theater.

1:02:15That'd be kind of cool to see in the theater. That's kind of cool. So I love that there's, that they're doing this, even if it's on a small scale. That is kind of cool. I want to, speaking of like, I don't know if this is innovation, but just people like going to comedy shows because it's better to laugh with people. It's good to have some shared experiences. I laugh way harder at a live comedy show than I would watching it on Netflix. Of course, you would chuckle at home. Maybe if it was an amazing joke, you would laugh. But laughter is contagious as your feelings. So I saw The Shining at IMAX.

1:02:50By the way, I bought a ticket for myself Robin goes are you seriously going to see that on Friday it's our anniversary I was like oh yeah you went to see a movie by yourself on your anniversary well my anniversary was technically on Sunday or was it Saturday it was Saturday no Sunday so I said I said no no no you know what F this you're coming with me it's my anniversary you're coming with me she never comes to the movies with me ever like the last thing we saw was A Star Is Born so I said we'll do dinner it's 7 o 'clock theater we'll do an early dinner we'll go and Kobe we found out that Kobe has a basketball game like on Tuesday they announced a basketball game on Friday so I'm like oh each chicken is like 30 bucks so I'm like alright whatever and then I'm thinking to myself you know what like Shining is an IMAX like for one day like I really I really want to see this movie on a big screen so I'm like alright I'll go to the 931 so now I spent$90 on The Shining so The Shining came out in 1980 five years before I was born I did not see it in the theater Ben it was packed there was at least 200 people there and guess what it was amazing holy cow seeing that in imax versus watching that on your laptop or your i mean forget about it what a great experience i have i take umbrage of this because people said this about one one what's the what's the one battle after another one battle you have to see it in imax like i'm sorry if you need a caveat for why a movie is better or worse because like I don't like caveats for movies what a horse shit take you don't think that there's a distinction between watching something at home yes watching an iMac but you can't turn a you can't turn a bad movie good because you saw it in iMac that's all I'm saying okay of course all right caveats 100 so I want to hear it now you hated one battle after another like no let's wait till recommendations I got more just but but Ben but Ben the scene where the roads went like this that was cool but yeah I'd need three hours for that all right so A million people emailed us about cheap TVs, and someone says, you two employee in their partnerships team, I hear about this a lot.

1:04:50There's basically a hidden revenue model where TV manufacturers get paid by Roku, Google, Netflix, and others for preloading the app, having the app on the button, all this stuff. So it's basically a revenue stream. I would have thought the cost would have outweighed that, but obviously the streamers, that's why you get cheap TV. And that's my point of why Netflix should give you TVs, right? Yeah, maybe. Maybe one day. All right, so that was the story. It's being subsidized for us. It's basically subsidized. On your remote now, you have Disney Plus and Hulu. You have the buttons, and you have preloaded with stuff, and the tiles are probably closer.

1:05:22You pay for it. So all this stuff is just, we're being subsidized by the technology companies. Thank you, Amazon. This is a good thing. All right, email. When the topic of cars come up on the show, I think you both mentioned at various times that you both are leasing at least one of the cars in your family. I was wondering if you could both talk about your rationale behind choosing to lease versus buy. Leasing is often considered a cardinal sin among personal finance people. All right, here's my answer. I'm not a personal finance person. Boom. I don't care. You know what, honestly, my biggest reason is?

1:05:52Having little kids, you destroy your cars. And I am perfectly fine not owning for a while. I think when we're older, probably we will start owning again. But I love the fact that I'm leasing it and my kids are destroying someone else's vehicle. For me, variety is the spice of life. So I love every three years that I get to buy a new car or lease a new car. I also like the fact that the technology is improving so much in cars. It gets better. So I think now is a great time to lease because every three years you get better self-driving capabilities and better sensors and better technology. Ben is more of a spreadsheet guy when it comes to finance than I am.

1:06:25I don't care if leasing costs me an extra$2 ,500 per lease. I just don't care. Like I enjoy if whatever it costs me, I like that I have the option. Well, no, it costs you less, but it just costs you more in the long run if you were to buy it and then own it for 10 years. Leasing is more expensive, right? No. Over time. The monthly payments and leases are way cheaper. Oh, really? No, I'm just saying like versus the alternative of buying. You're obviously not a personal finance guy. The owning gets you when you pay the car off in four years or three years, and then you own it after that and you make no payment.

1:06:55That's where owning works out. So buying and holding or buying and owning over the long term is cheaper. You know, here's the other reason that I like leasing. I hate paying for car repairs and dealing with that because I've had some lemons in the past. I love the fact that you buy a new car and it's fine for three years and then you turn it back in and you don't have to deal with a ton of repairs and such. And I've had so many cars break down on me over the years. And I saw my dad buy so many crappy clunker cars. Yeah. Make it break down immediately. We got another question that I haven't thought about.

1:07:23We can say this for next week. What's one blindingly obvious improvement to a business that you like a public business that you can't believe they haven't done? I haven't thought about this. We could save it for next week. This person saying like, why is I'm sending me like physical mail? Like they're wasting like$50 million a year on that, making that. That is really dumb. I don't know what the calculus is in that? Why you still receive so many? I think maybe for financial stuff, it's regulatory. Okay. All right, recommendations. What do you have, Ben? You go first. I'm going to go last. So last week, we spoke about Sandler and Clooney.

1:07:53And here's a take. I'm bullish on more of this. You know how some, maybe you see it in the NBA, like players in their later career are coming together. Like, oh, we're boys. Let's play together. So Billy Bob and Sam Elliott, for example, you've never seen them on the screen together. Have you? I don't know. Maybe you have. How good are they as a duo in Landman? Are you kidding me? Billy Bob is fantastic in that show. There's some parts about that show that are just a tiny bit cringe, but his performance, he's so good in that. I think it's really remarkable that Taylor Sheridan is able. Now, I'm pretty sure that he's a very bright guy, that he's self-aware that it's intentional cringe.

1:08:30But the fact that they're able to do intentional cringe, that's not so over the top, like it's hard to watch. But like the stupid music and the dumb lines, like that they're able to thread, that he's able to thread that needle. My wife said the other day, I hope that they don't make the wife in that show go over the top like Beth in Yellowstone. Like she was like a character. She already has, no? I think she hasn't, I mean, she's always been a little over the top, but she hasn't quite crossed the line yet for me. But Billy Bob is so good in that show. Okay. All right. So yeah, The Shining was amazing in IMAX.

1:09:03And guess what? it's a good movie at home. Now, I haven't seen The Shining. I don't know that I've ever watched it start to finish. I know I've seen the entire movie, but I don't think in one sitting. So there are two parts in particular that stood out to me that I forgot. One, the music is the horror. The music was so freaking scary, even from the opening credits. So two things. Number one, I didn't realize that when Danny is on the tricycle riding around the house. So there's one part. There's three different times where he rides around the house. And one time, he goes from the wood floor to the carpet, to the wood floor, to the carpet.

1:09:43So it's like smooth. Oh, yeah. And it plays so well. But they have – so the contraption, the technology for that is called a Steadicam. Like how are they able to even shoot that? That's like the full body vest that they put on. So obviously if you had somebody just with like a handheld camera running, it would be shaking the whole time. So it's like it's a contraption they put onto their body and they put it on and they're able to capture it that way. That's how they did the shot with like Rocky running. Oh, yeah. You know what I mean? Where it's like, all right. The last part is when Jack Nicholson is banging down the door with an axe.

1:10:22So the camera like goes back with him. It goes back and forth. and back and forth. So when he's swinging it backwards, the camera sharply rotates. So I put on YouTube, like, how did they shoot that scene? And it's like a selfie stick. The camera was on a selfie stick. So when he goes back, it goes this way. He like jerks it both ways. Kubrick did. It's almost more impressive than they did it back then. See, I watched that a couple of years ago for the first time. And I'm more of a one floor with Cuckoo's Nest guy versus The Shining. But I can appreciate like what The Shining was and did. It's just not my thing.

1:10:51Okay. All right. So last, so that brings me to this. as I've been mentioning on the show I've been very into like old Hollywood books these days the Diller and the Eisner and the Paramount stuff so I was talking to our colleague La Rosa Dan La Rosa and it must have been in reference to this but he goes you ever hear of Bob Evans and I'm like is that a client like who are you he goes the head of Paramount I was like yeah yeah oh yeah okay what are you talking yeah he was on this show about the making of The Godfather so he said Bob Evans had a great book called The Kid Stays in the Picture. Read that.

1:11:26So boom, listen to it this week. Unbelievable. How do I listen to it so fast? It's only, it's six hours. It's down to three at two X speed. And it took me an hour to shuffle my driveway. So I banged it up there. So there's one part in the book. Actually, you know what book kicked off my audio book stuff? I just sort of bring it full circle. It was take the gun, leave the cannoli. Or did I get that backwards? Leave the gun, take the cannoli. The Making of the Godfather was the first audio book that I listened to over the summer to get me into this. Yeah, Bob Evans, you're right, that's old Hollywood.

1:11:58That book is amazing. I loved it. Great stories. So Bob Evans ran Paramount, and in the book, Bob Evans is trying to cast one of his movies. I think it might have been Love Story. And he sees a kid in the corner. He goes, I want him. And they're like, who? Like, him. And the producer or whoever he was talking to, he's like, or the casting director, he's like, no, no, no, no, no, he's an extra. He's like, that's not an actor. And he goes, I want him. It was Jack Nicholson. Right. The stories about him and Nicholson being friends, and also the fact that Steve McQueen stole his wife. Unbelievable.

1:12:32And then, okay, so lastly, so I started watching The Offer this week. Okay. It's a little long, but I like it. And the guy playing Bob Evans is really good. All right. So the new Knives Out movie came out. It's the third one. Did you watch it yet? It's called Wake Up Dead Man. Not yet, but I'm very excited. And please, please, please, no spoilers. No, I won't do any spoilers. So the first one I think is one of the best movies of the past 10 years. I'd give like an 8.5. The second one I didn't care for as much. It was entertaining, just not as good. And I'd give that like a 6.8 or something. Is it better than that?

1:13:03Yes. This is probably more like a 7.5. I really enjoyed it. It was fun. It had more of the DNA of the first one. Okay. And the cast is amazing. Daniel Craig, of course. Josh O 'Connor, who's in the Challengers movie with Zendaya. He plays a priest. he's really great i really like him glenn close was in it josh brolin mila kunis jeremy renner whoa um andrew scott carrie washington jeffrey wright thomas hayden church the cast is unbelievable i didn't say no cast spoilers but i did hear it's an amazing cast but i was specifically avoiding the cast but okay wow that's incredible but it's i really enjoyed it and the way that they tie in a bow at the end and i love daniel craig in this part i i had a lot of fun it was very i just said one last so getting back to the like i'm not a prediction person i feel like you can't watch knives out without predicting because that's like the whole point of the movie yes right like yes and it's it's the way that they do it the whole telling the story at the end is great um i watch train dreams on netflix this is joel edgerton and what is this i've never heard of that so i would love to come up with a better word than this because i don't use this word this was a beautiful film it was so good it's just about a guy who grew up who worked as a logger and built train tracks in like the early 20th century.

1:14:12And he falls in love and he loses someone. And this movie should win all the awards. I don't know if you would like it. I can't tell. It's just a very like kind of small compact movie that has a lot of emotions. It's a little melancholy. Is it 90 minutes? It's probably 110. It's not long. It's like an hour 45. I can't believe how good it was for Netflix. All right, now I want to get to one battle after another. So I think it's okay to have strong opinions about movies. So Quentin Tarantino went on a podcast recently, and he just slaughtered Paul Dano in There Will Be Blood. And he said he's just a weak, weak, uninteresting guy, the weakest f***ing actor in SAG, and he went to town on this guy.

1:14:53Okay? And everyone came to Paul Dano's defense. And I like Paul Dano. I think he's great in that. I like Paul Dano. I think he's great. But if you read Quentin Tarantino's book Cinema Speculation, or whatever it's called, he takes a baseball bat to like all these classic movies and says like that was a terrible choice this scene sucked that actor shouldn't have been in it that actress was terrible like he he does not hold back and I think we need more of that I don't think we have enough of that today and so here's what I'd say one battle after another it sucked it absolutely sucked finally a take there was no point to it the plot like listen it's gonna win some awards because it was good acting it was a it was good cinematography right the scene at the end with the bumps like oh that was cool I didn't need to go to IMAX to see that It sucked.

1:15:35It wasted a good performance with Leonardo DiCaprio. Benicio Del Toro was a zero. Sean Penn was in a different movie. I don't understand the meaning of the movie. The best character was gone in 30 minutes. The mom at the beginning, she was the best character in the movie, but she was a very flawed character, and I didn't understand why she was a revolutionary but then left her family to not do the revolution anymore. It didn't make any sense. This movie sucked. I love it. I think people who say it's a masterpiece are crazy, and guess what? that's their opinion they could have it i love it that's that's why i thought it's the most overhyped movie of this decade and it sucked i love it but i understand why some people liked it how's that that's my personal opinion just like tarantino doesn't like paul dano but i do wow okay so i liked it more than you did but i love the take um we mentioned we opened the show ben talking about the sliding narratives and the twists and the turns and one of the reasons why i love i just thought about this why like i really love reading movie reading the books about like movies and what almost happened with, I love trades in the NBA that almost happened.

1:16:37Like, I love the fact that Tim Duncan almost went to Orlando and thinking about the implications of what could have happened with the world that almost did, but didn't. In Barry Diller's book, he talks about like almost buying a large stake as Duncan going nuts. He said, we need to make that a social clip of Ben going nuts. I love that Barry Diller almost invested in AOL early, but didn't because somebody thought the price is too high. But like, had he bought 25 % of AOL, the AOL Time Warner merger probably doesn't happen. And then like literally who knows what happens from there? Right? Like all the casting, what ifs, like I love it.

1:17:12It is fun. I love that. That's what, but I think it's okay to have strong opinions. And I feel like the people in the movie industry now, like the people who talk about movies, they just want to call everything a masterpiece because they're too scared to say what it really is. And I'm with Quentin Tarantino. Sometimes you have to give your opinions, even if people don't agree with them. Well, it's, you know, it's so interesting because there's also like, if you, if you went into that movie without any, without any outside interference, like literally, if you just said, I'm going to watch this movie, you don't know that Paul Thomas directed it.

1:17:42You don't know that the artists love it. You just say, I'm going to watch this movie. Your opinion would be different, right? But your opinion is colored by the opinions of others. So like, that's sort of how I felt about like, uh, sinners. And I was like, afraid to push back because like, I get it. is like, there's a lot of great stuff, but like - Yeah, I love, I like Sinners way more than that. No, no, no, I like Sinners. I like Sinners plenty, but the over-the-top - It wasn't a masterpiece. Yeah, the over-the-top reaction to Sinners, to one battle after another, to all of these masterpieces.

1:18:07Like, not everything's a masterpiece. And you're right, those are different, because I like Sinners way more than like one battle after another. But it is interesting how the opinions of others shape our opinions. And I'm sure it was better in the theater, but going to see it in the theater doesn't make that movie better to me. I can't imagine watching that at home. You gotta watch it again. And no, but dude, come on. On a 70-inch TV with my soundbar, I know the movie theater's better, but it's not that much worse. Anyway, that's my thought. I'm sure the film people will be after me, but bring it.

1:18:37All right. Animal Spirits at the compound news.com. We will be here the next two weeks. We're going to make it happen somehow, some way. Yeah. We'll be with you for the holidays. Animal Spirits at the compound news.com. Thank you for listening. Thank you to the production team. We'll see you next time.

1:18:56Thank you.