Finally, a Slowdown (EP.333)

24:58Okay. Anyway, those interest rates also told me, those low interest rates told me that there's going to be low inflation and low real growth in the future. So I projected that growth for these companies for the long term. I also pushed the growth rate down to reflect those same views. So the same low inflation that pushed down interest rates and also when my growth rates were low, my pricing power was lower. The effects, in a sense, offset. That's why my valuations don't change dramatically. And that's why I'm not surprised the market hasn't imploded because if you left everything as is and kept the cash flow as you had two years ago and you raised the discount rate by two or three or four percent, which is what we have.

25:27stocks should be down 40 or 50 % and they're not. And that's what a lot of people said. Like, if you just take interest rates in a vacuum, the stock market should be crashing. Right? But he said the reason for this is that companies are flexible. They're adaptable as inflation comes through. Guess what they do? They pass that inflation on to US customers. And the companies that are better suited to do that are more protected against inflation. That's the thing people don't realize. It's like, yes, in a vacuum, if rates rise, discounted cash flows and all this stuff, but they don't take into account the fact that companies can actually raise rates.

25:53And I When companies in the 80s got to like seven or eight times PE, like the whole stock market as a whole, and companies trading for two times earnings or something, that was really before that they were very good at capital allocation and they could buy back their stocks. If something like that happened now where inflation got to 10%, 12%, 15%, companies would be like buying back stocks and like hand over fist, right? Their capital allocation decisions. I think companies are so much better than they were. So he's saying that like, listen, if inflation and growth are low, I'm going to make pricing power for companies is lower.

26:23But if inflation and growth is higher, then the pricing power is going to go up and it sort of offsets one another. I think that's what people don't realize is that these companies can adapt to the marketplace as it is. I was thinking about the why you guys always bullish comment, which, again, I've repeatedly said is not true. But companies are like not manipulating is the wrong word, but they are aggressively working to send the stock higher, right? Like to make the business more productive, send the stock higher. So there was a bias for companies to push their own stock up. It doesn't even make sense.

26:56Here's where I'm going with this. A lot of people that are listening to the show make quite a bit of money, more money than they ever thought possible. And yet, they might not be satisfied because of the very simple reason that we all move the goalposts. If I make$100 ,000, I'd be so happy. You get to$100 ,000. If I make$200 ,000, I'd be so happy. And there is almost not a number. Now, for most people, right? Like for people that aren't making millions of dollars, there's almost not a number where you're content because you always want more. And that is what drives the stock market higher. It's people's insatiable appetite for more, not just for the sake of consuming more, but I want more.

27:38I want more. I want more. And that is a permanent fixture in our society today. More, more, more, more, more. where like, it's a little bit sad for the individual, but for everyone, it's fantastic. I would also argue that the stock market and corporation like corporate America is still one of the most sane institutions that we have. Like in terms of like, they, like the blinders are on, they don't let other outside stuff and political forces like corporations, that's what, that's their sole goal. Their eyes on the ball. So when I said that they're working to manipulate their stock price higher, obviously I don't mean literally manipulate, But they let people go.

28:18All they care about. They cut costs. They raise prices. Whatever. They do what they have to do to protect their margins. And American companies in the aggregate are really, really good at that. So it's not blindingly bearish or saying that we can't bear markets or you can't have even a lost decade. But give it enough time and the trend is up and to the right. Zoom out and off and it's up and to the right. And if you think that's not the case, good luck to you. So a bunch of people sent us this Wall Street Journal article, The Economy is Great, Why Are Americans in Such a Rotten Mood? Animal Spirits was obviously on this one a little early.

28:52Greg Ip wrote this. He had a few things that touched on that we haven't touched on yet. So I just wanted to get them real quick. We promise we won't talk about this every episode. He said some 69 % of respondents to Wall Street Journal survey in August said the country's headed in the wrong direction. Ooh, not nice. He said one of the things that we haven't mentioned that a few people said to us was political polarization, right? Saying that, like, and I think a lot of people said it wasn't the pandemic, it was 2016 got this going. And I think that that's probably true. More than half of Republicans and Democrats rated their personal situation as excellent or good in August.

29:23But only 5 % of Republicans said the economy as a whole was good compared to 58 % of Democrats. So that's another thing like, I'm doing great. Everyone else, they're terrible. But he said the other thing is, I suspect a lot of pessimism about the economy is referred pain. Just as one part of your body can hurt because of an injury to another, pessimism about the economy may reflect dissatisfaction with a country as a whole. Lately, there's been a lot to be dissatisfied, political and cultural conflicts, intolerance, pandemic, border, mass shootings, crime, all that stuff. And that's the social media aspect.

29:53You made some good points about the net worth and stuff not impacting you. Someone said on YouTube, most people don't calculate their net worth ever and don't know it. So you were talking about not moving the needle when your net worth goes up. Most people probably didn't know what it was before and don't know what it is now. So people who saw an improvement, they probably have no idea. I'm a finance guy, right? This is what we do for a living. I have no idea what my net worth is. Okay. Really? Truly? Honestly, I actually have a spreadsheet. I know my, uh, yeah. Okay. Of course you do. Um, all right.

30:29Sort of survey of the week. This is interesting. That'd be a Duncan. Put that in the, in the YouTube survey. How do you know what your net worth is right now? Yeah. I'd be good. All right. Consumers. This is from Daily Chartbook. Consumer sentiment is lagging both consumer confidence and FinTwit sentiment. This is from Goldman Sachs. I didn't know they had a FinTwit sentiment. Yeah, but this just goes to our whole point. Surveys are bullshit. Yeah. These are three sentiment indicators that ostensibly should say the same thing. Yes. True. What was the book? Our favorite anti-survey book, Everybody Lies?

31:11Oh, that was great. That was great. That book really nailed it. And why is consumer sentiment rolling over? You saw gas prices are down like 35 days in a row? Yes. So I put this in here under inflation. This is from GasBuddy. $2.99 a gallon is the most commonly seen gas price in the United States today. The first time we hit$2.99 a gallon was in 2006. 2006, gas prices have gone nowhere. Adjust that for inflation and gas prices are probably down 40 % in an inflation-adjusted basis. No one talks about it when they're low. All right. CNBC, the average credit score in the U.S. just hit an all-time high of 718 in October.

31:53718 falls under the good category. This may come as a surprise given high prices, rising rates, and U.S. credit card debt topping$1 trillion. FICO said the report that strong job market, slowing inflation, and removal of medical debt have helped boost scores. I guess that's the medical debt thing, probably. The average credit score is at an all-time high and nobody's happy. Shocker. Hold on. I mean, I'm kidding, not kidding, but average credit score, these are quantitative measures, right? We're not moving the goalposts. Right. And again, they have changed the way that they reflect it. Some people might quibble with that, but yes, this is not someone looking at it and deciding you have a good score or a bad score.

32:33Is there like a shadow credit score agency? Oh, like shadow stats? You know, there's like a group that says like, well, CPI, the way it was calculated, was changed in the 1980s. That's true. Good point. Tyler Cohen, a study from University of Minnesota in Brookings suggests that income volatility has been mostly declining for the us seven decades, and especially the last four, whatever volatility risk remains, they used to be much worse. Basically saying that since the 50s for women and 80s for men, and this holds across demographic groups, gender, age, earnings, and cohort, income volatility, the change in your income has slowed.

33:10And I think this is another point to why people unhappy is just the change in the economy has screwed with people, things happening faster. People would rather probably get a slow stair step up rather than a huge increase if it comes with lower prices, that sort of thing. There's a book that I read. Oh, man. I'll find it. I'll bring it up next week. But it's basically about how relatively good we have it. And it's not to say that people aren't suffering because that's always the case. But how relatively good society has it that we've almost ran out of things to really complain about? Yes. In terms of like, you know, like infant mortality, like that's, that's gone for the most part.

33:56And so now we just complain about everything. Yes. I think it's actually a sign of progress. If you have more time to complain about like, yes, that was the gist of the book. I think it's, I think it's a sign of like, that's the other one is people always say like every generation before them is like, is snowflakes or wimps or whatever. Like that's the way it should be. That's a sign of progress. If the each generation is getting softer and softer because you're progressing. So let's talk about the soft generation. Did you see the viral TikTok video of the girl who was crying about her commute and everything like that?

34:27Yes. It had the internet life cycle pretty quickly of people hating on her at first. And then the backlash came in and said, no, no, no, she makes some good points. So I don't know where we are now in the discourse. But the only thing I really, I really agree with her on is the commute thing. My first job, we had an office that was an hour and 15 minutes from my apartment. And the reason that I had an apartment that far away is because the office was going to be moving. By the time I got to work there, my first job and the office, new office wasn't done yet. So I had for like the first four months of the job, had to drive an hour and 15 minutes there and an hour, 15 minutes back in heavy, heavy suburban Detroit traffic.

35:04And I wanted to like rip my steering wheel off and beat myself in the face with it at least once a week. So, so this is what social media has done to our society. Cause unfortunately social media, the followers, that's like the scorecard, right? So the, the, the absolute quickest way to gain a following, it's not, it's not to share your ideas, right? Like look how smart, follow me. It's to shit on a group of people. Yes. It's dunking on another's ideas. That's, that's the whole game. And it's, it's, It's really pretty awful, but it is what it is. And my first reaction to this person was, well, of course people are going to do what they do, was, yeah, life is hard.

35:45And the transition from young adulthood to adulthood or college, it's fucking hard. It's really, really hard. And I don't think like her complaining is, yeah, it went vile for whatever obvious reasons, but I don't know. I felt a little bit of compassion. It's hard. I don't think people realize in the older generation that like the fact that we didn't have social media and camera phones and stuff, if you had these same feelings as her, you would go like, like cry on the shoulder of your friend, your roommate or your parents in the past. But she happened to do it to the whole internet. Yeah. Right.

36:21Because that's the way that these kids these days express themselves. You know what else? I would be okay with going from nine to four. Does anything really happen in the last hour of the day for the average worker? I know people think like young people are screwed because they're not going to be going to the office anymore and they're not going to be able to move up. I think the fact that the pandemic happened for young people and you have the potential opportunity to work remotely, I think that their life satisfaction is going to be so much greater if they have that opportunity to do that. I think they're going to be so much happier in the end because of the pandemic and the fact that they could work remotely.

36:55I certainly am. Yeah, a lot of people are. Okay. And I think what I just said is definitely what's causing a lot of the bifurcated feelings, right? It's like people that are lucky enough like us to be able to work remotely. Yes. And a lot of the world just isn't. Some people aren't that lucky, yeah. And that's unfortunate, but that's the reality of the situation. Okay. Yeah. We already mentioned gas prices, 35 straight days, 43 of the past 45 days. Not so bad. Oh, so just things normalizing, right? Are we firmly, we're post-COVID, right? That's in the rearview mirror? Yes. Okay. Remember a lot of the inflation was due to supply chain issues?

37:37Remember how often we used to pay attention to the shipping containers and stuff? Supply chain was a topic in the dock, was it not? Oh, yeah, that's right. We deleted it finally. We deleted it. So here's a great chart from Bloomberg. Fewer than 10 % of firms report slowing delivery times. So it went all the way up. And not only did it, I mean, it went all the way back down. Like all the way back down. We are back to pre-pandemic numbers in terms of delivery times. Don't you think that normalization is part of the reason for the economic boom we had as well? Like a lot of this stuff just, it smoothed out and there was so much pent-up demand.

38:15That's why we had this weird burp. It's like an economic burp, right? That like it finally got released. speaking of economic burp somebody said like never mind I don't want to butcher the quote I don't want to butcher the quote well fine I'll say it I feel like Charlie Munger said this it might have been Elon Musk oh no no no no no no I think it was from the House of Usher ideas are like farts I didn't hear this one does that ring a bell? no I've watched an episode of it I'm intrigued okay my wife gave up after it was too scary for her She would never be able to watch any of your horror movies.

38:53No. My horror movies go hard. That's what I'm saying. She would never be able to do it. She gets too scared from those movies. All right. So Jeff Weniger tweeted, Bye-bye, Tina. Hello, Tammy. What's the story here? There are money market yields. That's a stretch. There are money market yields? So Eric Belchuna said, I can't overstate how much 5 % plus yields in money markets have changed behavior flows this year. they act like a giant vacuum cleaner,$1 trillion in counting. That makes sense. It does make sense. I totally get it. It does make sense. So Bank of America, allocations to cash and T-bails is the highest since February 2010.

39:34And again, it makes sense. But my point is, and I feel fairly strongly about this, that this money will not be well served over the long term. The money's not coming out. I could be wrong. I don't, no, I don't buy that. I think like if we get a new bull market, this is going to be cash on the sidelines. People are going to chase out of money markets into stocks. Okay, so you disagree with me that the money is going to stay in money markets, but you agree with me that it's going to do so in a way that is not - Suboptimal. It's going to come in late. Right, exactly. People are going to become addicted to the cash and by the time it's too late, then they're going to move out.

40:15And yes. There was a great chart, a great article by Robin Wigglesworth, I believe, in the Financial Times. And they were looking at just the rise of specialized ETFs. And there's a chart showing months relative to ETF launch date, cumulative alpha. And the more specialized the ETF, the wider the distribution of returns and the worse the performance relative to the market. And I think part of the reason why is just timing, that these specialized ETFs tend to happen after the boom, right? So let's just say that weed stocks had an incredible run. Then you would see weed stock ETFs hit the market.

40:59So it's more of a timing thing. You do like the good back test. You set it out there. Yeah, it is also a timing-based thing. Speaking of specialized ETFs, covered call ETFs. This is from Bank of America. $55 billion of flows in the past five years. And I think that this is, I think that this will continue. How much of this do you think is advisor-driven chase? Because I feel like, I don't mean to like throw shade to other advisors, but I feel like advisors are really, really bad at this stuff in terms of like, we're going to go all in on commodities after the 2000s happened and then they crash.

41:38And we're going to go all in on black swan funds. And we're going to go all in on liquid alts. and we're going to go on uncovered calls. Don't you think that advisors as a group are always a little behind on this stuff? Yeah, but I don't think that's the case with covered call strategies. But if we do get a bull market in the next few years and covered calls, they're going to lag. That's the nature of these strategies. Are advisors going to sit around and wait in them? This is wishful thinking. I think that the people that are buying these strategies are doing so appropriately and understand the trade-offs that they're making, that they will not capture as much as the upside and they will not capture as much as the downside.

42:18That's pretty straightforward how these things work. I think you give people way too much credit, but it's possible. I am optimistic that advisors that are allocating to these strategies, because I think this is 90 % advisor driven, right, with most ETF flows. I think that I'm going to take the optimistic view that people are buying this and understand exactly what they're doing it for. Okay. So here's a good tweak from, so SBF, guilty on all counts, seven counts, 115 years maximum sentence. I don't know anything about trials or anything about anything. Doesn't it seem like it happened really fast?

42:53Really fast, really fast. I thought this would be like a, I don't know. I just assumed wrongly that it was going to take a few months. It was fast that he got convicted on all counts. Justice was served here, I think, right? Justice was served. Did you hear my joke? I'm sorry. More like effective ultra prison. Oh, that was a good one. That was a good one. So Joe Weisenthal tweeted. Actually, so you tweeted a gif of Chris Farley and Adam Sandler, right? Yes. Eh? Eh? Did you know that Jim Farley's cousin? Scroll down. Scroll all the way down. I put this in random. Jim Farley's cousin is the CEO of Ford?

43:34Oh, I did hear that. Yeah, Chris Farley's cousin. Look at this picture of him. Yeah. Wow. It does look just like him. Holy shit. That looks, that's a Farley. That is a Farley. So, all right. So Joe Wiesethal tweeted. Sorry, before we get into this, Jay Moore was on the David Spade Find the Wall podcast recently. I haven't heard that name in a while. What happened to him? He kind of went off the deep end and he got clean, but he's, he's married. He's married to Jeannie Buss, the owner of the Lakers. Oh, I think somebody told me, maybe you told me about that. But he was telling old Farley stories from SNL days.

44:06And it was just, I can't even repeat them here. They're amazing. So worth a listen. So Weisenthal tweeted, all the people who said Sam Bankman-Free would never be charged because of his political donations. Probably one of the clearest examples of what is a very common phenomenon, where the savvy people who want, quote, the real story tend to be the biggest dupes who fall for the dumbest ideas. Well said. Way to go, Joe. Well said. So anyway, crypto's alive, I guess. $300 million went into crypto funds last week. Biggest inflow in almost 18 months. Hope they didn't steal it from the Bitcoin ETF.

44:40What did you say it's going to get? $100 billion? That was a bit rich, huh? Okay. Put that on your 10 surprises for 2024. I'd like to dial that down. Okay. All right. As of end of August, when the latest data was released, Case-Shiller National Home Price Index hit another new all-time high, which is just crazy. with rates at 8%. Here's the thing. Everyone is looking for an exotic way to hedge inflation, right? Well, it's going to be Bitcoin or it's going to be tips or it's going to be some other weird alt, right? It was just buying a house. That was the best hedge all along for inflation, right?

45:17And I think that's the way it was in the 70s too. You could try to figure out a second derivative of inflation. If this works, then this. Well, hang on. It's the simplest thing. The house, that was it. It's not a good way to hedge your portfolio, but it is definitely a way to hedge your actual life. Yeah. Like if you, yeah, for no doubt about it. That's a, that's a great point. So yeah. So, so unbelievable. An all time high. If rates come down even a little bit, watch out. Not only are home prices not going to fall, they're going to skyrocket again. It's going to get worse. Mortgage rates went from eight to seven and a half in a blink of an eye when bond rates fell.

45:52So what sort of activity pickup are we going to see this week? Probably a lot. I mean, if you, Let's say you locked in an 8 % rate last week. Would you just say, throw my paperwork out, I'm not taking it? You'd threaten to walk, wouldn't you? Yeah. I don't know what else you would do. Redfin. Almost a third of homes for sale are new construction. The highest you have any third quarter on record. Kind of wild, huh? It makes sense. And I think that has to slow down at some point, too, doesn't it? I don't know. Do you see this Realtor Commission thing? I did. A federal jury in Missouri found the NAR, National Association of Realtors, and large brokers have conspired to keep costs artificially high and awarded$1.8 billion in damages.

46:33Basically, they said, like, forcing the seller to pay the buyer's realtor commissions is illegal, right? So in a report released ahead of the verdict, a real estate industry analyst predicted that lawsuits could lead to a 30 % reduction in the$100 billion that Americans pay in real estate commissions each year and push well over half of the almost 1.6 million agents out of the industry. If sellers are banned from paying buyers agents, then buyers could be forced to come up with additional cash or go without an agent. I imagine this is the kind of thing that could be negotiated. I don't know how long it'll take for this to make an impact, but Bloomberg had a story saying Zillow and Redfin tanked.

47:09Zillow fell like 7 % when this happened. And my initial thing was, why wouldn't this be good for Zillow if people are not using a realtor anymore? And so I listened to the call on Corder, and Rich Barton said, like, of course he's going to say, What else is he going to say? But he was saying that apparently international markets, it's more like a classified thing. And he's saying in this scenario, Zillow would be the odds-on favorite to come to the leading digital listings marketplace given our brand, traffic, engagement, and our unique focus on solving movers' real pains, blah, blah, blah. This makes sense to me.

47:40Like if realtors aren't as big of a deal and they can't have as much sway in the industry, doesn't that make Zillow like the leading player here? Because everything's going to go through that. As shareholders, we sure hope so, eh? I don't know. It makes, but I, do you still own Zillow? I do. Uh, and this is the, this is the thing about like, I've been bullish on the real estate industry for like last three years. And I have bought Zillow and have nothing but lost money. This is why owning a house is the best thing. I can't believe a hundred billion dollars go to real estate commissions every year, but that almost seems like a fake number.

48:13A hundred billion. What? But do you really think this is going to change things? Doesn't, doesn't this just get negotiated behind the scenes somewhere or something? I just don't know. So I'll believe it when I see it kind of thing. All right, let's do some quarter stuff. So Sam Rowe tweeted from Tom Lee, of the 399 companies that have reported so far, which is 80 % of the S &P, 82 % are beating estimates. And those that beat are beating by a median of 7%. I feel like this is every quarter though. Is it not? No, that's high. That's really high. Okay. The beats are usually not that high. Not just percentage.

48:51I think the percentage is normally like in the low 70s. One of the areas that, because we've been talking a lot about people say, adjust it for inflation. I feel like earnings are the one place where they never adjust for inflation. And don't you think that falling inflation is actually going to make things look worse because they always look at earnings on a nominal basis? And obviously it depends on the margins. But don't you think that rising inflation has actually helped because these companies have pricing power to pass things through? Or do you think that falling inflation is going to help even more because they're not going to lower their prices?

49:19Yeah, I think the prices are staying. So I think falling inflation is going to help their margins. So you know what doesn't matter in the short-term valuations? You know what does matter? Expectations. Yes. Right? Like there could be, there could be, the S &P could be traded at 13 times earnings. And if, if earnings are below estimates, stocks can get killed. Conversely, S &P could be traded at 28 times earnings. And if you beat expectations, the stocks are going to go up. Better or worse, not good or bad. That's, that's exactly right. So, Bank of America, remember waiting for a better entry point?

49:51S &P 500 consensus long-term growth expectations are near all-time lows, excluding the magnificent seven. The probability of a positive surprise in higher beta stocks is high in our view. That's the Vita. So this is a chart showing bullish versus bearish and expectations. That's it. Yep. Expectations. All right. There's a great chart from Quarter. Not that this would be on my radar at all, but they're showing the beauty war, comparing the last five quarters growth rates of L 'Oreal versus Estee Lauder. And Estee Lauder, again, for reasons that are beyond me, is just, it's negative. There's a lot of apostrophes and lines and stuff on these companies.

50:30Yeah, I don't, not a specialist in the beauty industry, but Charlie Buffett was on. Heyo. Charlie Munger was on the Acquire podcast. What a get, huh? I listened to that. That was in my recommendations. It was great. So Charlie was saying, they were asking why he can never convince Warren to buy Costco and what about Nike? And Buffett was just, Charlie said, Buffett just doesn't like, just doesn't really like retail. Like it's just people's tastes and, you know, and I just thought seeing this, I was just reminded of the two things. All right. So there's a definite theme emerging from earnings season.

51:12And I think this speaks to a lot of, you know, people are happy. No, they're not. Yes, they are. There's winners and losers. There's winners and losers always, but in the economy and certainly in corporate America. So Caesars, which is a stock that I own, demand trends remain healthy during the third quarter. Did you buy this because you're going to Vegas this weekend? There we go. With occupancy increasing to 96.6 % versus 93.6 % in the prior year. But then you have Canada Goose, which is a luxury brand. This is from Transcript. Our outlook for the second half has come under pressure. As a result, we saw early momentum gathered in Q4 begin to slow noticeably in September.

51:51So again, Estee Loewater, another one. Organic net sales declined 11%, primarily driven by expected pressures in the company's Asia travel retail business. Apple, terrible in China. What's Apple doing today? I know the stock market's strong, but Apple, big miss in China. Oh, Apple, fourth consecutive quarter of year-over-year revenue declines. How about that? Your paper bearish trade worked out. You've been paper bear on Apple for a while. I mean, stock's doing fine, right? It's down 1%. Stock's doing fine. Pool. The pool CEO. New pool construction is likely to finish down with units down 30 % in 2023.

52:29Suggesting consumer hesitation on these more discussion items. Yeah, pockets, right? Pockets. Like, of course pools are down. Was 2020 not the biggest boom in pool construction ever in the country's history? My brother and his family put a pool in. There was so much pulled forward, and there was waiting lists, and I'm sure they've worked a lot of that out. So a mixed economy is my takeaway. All right. We talked a lot about the net worth stuff before, but the Wall Street Journal had a piece on this that was interesting. And they said, never mind the 1%. The mini-millionaires are where the wealth is growing the fastest.

53:04What's a mini-millionaire? They generally earn between$150 ,000 and$250 ,000 a year. They wouldn't typically be considered rich, but upper middle class. Obviously, that depends where they live, they say. They've seen bigger wealth gains over the past three years in the top 10 % of families. Indeed, the biggest wealth gains - Sorry, remember people got mad at me for saying that$200 ,000 a year in income is not rich? Yes. That was a lot of inflation points ago. I wonder what people would say today. Mini millionaire. And just to reiterate, I think it's good living, but sorry, not rich. Depending on where you live.

53:33How about that? Depending on where you live. The biggest wealth gains between 2019 and 2022 were among the approximately 13 million families in the 80th to 90th percentile. Their median wealth jumped 69%, adjusted for inflation, to$747 ,000. Over 90 % of these families reported owning stocks. 80 % or 7 % owned their home. They benefited from low rates, obviously. This is interesting, though. It's like, how did these people become mini-millionaires? Many people got there by pursuing college degrees, steadily building retirement accounts, and purchasing homes. For the most part, they became wealthy slowly and were well positioned when the pandemic era stimulus program boosted asset values.

54:0616 million Americans now, just over 12%, have wealth exceeding a million dollars, up from 9.8 million. Say that one more time. There's now 16 million American families, over 12%, that have wealth exceeding a million dollars. That includes your home. Huh. Up from 9.8 million. 8 million are multimillionaires, over 2 million. But I love how they say that these people, how do they become wealthy? They slowly saved in their retirement plans. They bought a house and they got a college degree. Like remember the whole thing about the dream scenario of one job and owning one car and buying a house. Like it's still there, right?

54:42Remember I spoke about earlier in the show, moving your own goalposts? Yes. I saw a clip. I'll try and find this for the doc. I saw a clip of Scott Galloway and another entrepreneur talking about their money and security. Did you see this? Yes. I don't know if there's a producer. Somebody came on the podcast and was like, are you just like with us and basically like pretending that you have money and security issues so that you're like, yo, he's one of us. He gets us. Or is it reality? And I think it's earnest. I think that Galloway in particular definitely has a lot of neuroses, as he called it.

55:20And I believe it's genuine. But the other guy sold his company in his young 30s, early 30s for 20 million. He walked away with$20 million. And he said he still has a number and he's not there yet. And I think for every one of us, that is so unfathomable, so beyond unfathomable. But this is a constant recurring story. Do you think that the people that get rich are insane people. No, they're human beings. And it happens so much more frequently than feels comfortable to admit. Right. Like, I'm pretty sure that if that was me, I would feel very, I'm pretty sure that I would be like, no, I'm good. But I don't know.

56:04I don't think the people that are saying that are crazy. Right. And again, it's like bad individually and good for the society. Yes. It's sad that we can't feel comfortable that we're always, that we're never satisfied, but that's what drives the economy. Yes. Good. Right or wrong. Good or bad. That's why Apple's going to 3 trillion or was it 3 trillion or whatever it is. Uh, somebody emailed us like, uh, we spoke about like, we talked about the average American or I don't think we talk about the average American that much, but Ben, you met, you had a comment last week. Like what's, who's the median American?

56:37And I think you, did you mention Kansas or what did you say? Yeah. I just had, I had guessed. Yes. Uh, well actually if the United States map was a scale and every person had equal weight, the center of the population is a place where the scale would balance. Based on data from the 2020 census, the current center of the population is near Hartfield, Missouri. So not too far off. All right. I'll take it. The more you know. All right. So I spoke last week. It seems like everybody who has a sub stack is turning on a paid option, which I'm trying to support. I love the idea that people are able to make money this way, but it's gone too far.

57:15Chamath is launching a page sub stack. Now, you know, if you're good at something, why give it away for you? But come on, is this guy a billionaire? He's doing paid newsletter? Am I going crazy? Chamath tweeted, learn with me. I'm often asked how I quickly synthesize information and form opinions. The value to me of doing this can be summarized as follows. Be more informed about technology, markets, and the economy. Improve my situational awareness about trends and competitors. Have a clearer picture of how a company or sector is doing over another. Make better decisions. And then whatever, it's like a 4 ,000 word tweet.

57:47And then he's, you know, subscribed to my paid newsletter. I hope he gives the proceeds to people who bought his SPACs. How's that? I hate dunking on people. And especially like, you know, I don't begrudge anybody making money, but. That's a bit much. That's a bit much. I don't have much as far as recommendations go. I was going to, I was going to recommend Munger on Acquired is why I listened to it last night. You told me it's worth listening to. He's almost, he's going to be a hundred in January. I thought the best parts of it were he repeatedly said what we did is very hard it's not easy he's like that's the thing that pisses me off about people today that try to say that I made a bunch of money and it's easy and here's how you can do it too he said repeatedly it is not easy what we did and then they asked him let's say you and Warren Buffett were 30 years old again today and I've heard people go over this if Buffett and Munger were 30 today and they were just starting out could they do it again and a lot of people said of course they could those guys are so smart and Munger said no we couldn't that shocked me didn't it shock you yeah like could you could you do that again and he said no we he's like listen we're smart but we timed it perfectly we got lucky things were never he said things were never like super easy back then but they were way easier than they are now and i just love the fact that he kept saying over and over again this is hard what we did is hard and it is so i i just appreciate it i hate the people who hit it big and either win the lottery somehow or just through hard work make a bunch of money and they try to make it sound like it's easy And I totally agree that it's just, it's not, and luck is involved.

59:13And yes, it was, he's still pretty darn whip smart for being that old. Is he not? There's some parts where you couldn't tell what he was saying, but it was highly recommended. Super impressive. Yes. Anything else? No horror movies for you this week? I saw a VHS one that was bad. I've been watching it. I think I've seen most of those VHS movies, which are crazy frightening. I found a bad one. I think it was 99. Not good. What have I been watching? You know, I've been, I don't know. I feel like I've been, have I been out a lot? I haven't, what did I do this week? I don't know, man. Where the hell is time going?

59:46It's November. It's snowing in the Midwest. Middle-aged thing to say. Where's the time gone? Email us. How is it November already? Passage of time. The older you get, the passage, like, the passage of time freaks people out more than anything as they get older. Like, can you believe that we're closer now to this date than people who were at this date to that date? No, I can't. That always gets people. Like, we're closer to, yeah. The passage of time is undefeated. I can't. I can't. It's going too fast. Animal Spirits at thecompoundnews.com.

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