Inflation or Price Gouging? (EP.374)

24:17I did a liberal arts college and there was no finance degree. So I did a piecemeal and I was like two or three economics courses away from a minor. And my guidance counselor was like, hey, if you're coming back for an extra semester at the end, just get your economics minor. Can't hurt. So I did it. I would like a refund from home college because I didn't learn anything in my economics courses to get my minor that is applicable to the real world. You were a minor in economics. Yes. I was a major. I think so. I'm the authority here, just for the record. That's fair. I also got a minor in accounting though, and a major in business management.

24:49So I was just, I was stacked, man. Look at me now. But I think back to the stuff that I learned in my econ classes in college, and I learned how to draw some supply and demand charts. None of what I learned in college and economics courses is applicable to the real world and anything that's happened in the last 20 years. Yeah, I got to be honest. I don't think I remember a single thing from economics other than, yeah, the graphs, the lines, nothing. I remember there was a lot of econometrics formulas that didn't make sense at the time. Yes, but it's also true that no one is – I learned nothing.

25:27I think that's what I'm trying to say. I learned nothing. No one is incentivized to provide the right context on this stuff. And so the stuff with the election going on now, I know we're going to talk about price gouging and tariffs and incentivizing people to buy their first house and stuff. And the economists get all up in arms whenever these politicians talk about this stuff like price gouging. And here's the thing, though. The average person, more than the average person, does not understand how inflation works. And they like hearing this stuff. It makes them feel good. Like they just want to have this like sounding board or this something to like someone to blame.

26:03And so when politicians say price gouging, even if economists say this is ridiculous, it doesn't make any sense. That's what the average voter wants to hear. So yeah, people are giving them what they want to hear. So Robert Reich, who's one of these people, says food company – he tweeted, food company profit increases since inflation peaked. And he lists Cheesecake Factory, Chipotle, blah, blah, blah. And how much do they collectively spend on stock buybacks? They use inflation as a cover to get rich. So Ben, I threw this chart in the dock of Kroger and Albertson, two publicly traded supermarkets, grocery stores.

26:38What do you call them? Grocery stores or supermarkets? Interchangeable? I'm a grocery store guy. Okay.

26:45and for listeners, not viewers, for listeners, the revenue line is so far ahead of the income line. I guess I could have also shown margins, but look how funny this is. So Kroger did$150 billion in revenue in the last 12 months. $150 billion. Their net income was$2 billion. Right. Albertson did$80 billion in revenue and their net income was$1 billion. One over 80, two over 150. Does that sound like they're price gouging? But the thing is, people get the most angry about grocery store prices. So what do the politicians do? They talk about grocery store price gouging. So this is the thing that, because people don't get like, I think there's some people who legitimately think, well, if inflation is going down, prices have to go back to lower, right?

27:33People legitimately think this. And that's the problem is no one understands how this stuff works. Grocery stores are like a public utility. I mean, their margins are, how do they even say in business? What a shitty business. I always wonder how much excess food those, like how they manage the inventory of those places. How much food has to go to waste every week at a grocery store? I don't know, six months ago we spoke about the prepared section. Like, there's so much food there. How much of it gets thrown in the garbage? Yes. I don't understand how any food businesses survive. Restaurants, grocery stores, I don't get it.

28:09We got a bunch of burger emails last week. We did get a lot of burger. And it seems like the resounding theme is the fat. When you have to cook on a griddle, like a flat surface, because it keeps the fat there and the fat doesn't drip down, like on a grill. And then excess salt. That seems to be the biggest way people explain why burgers are so much better at restaurants. So like butter, fat, salt. There was, yeah, a bunch of emails. And there was two main things. The point that you just made about the griddles, which by the way, I bought a griddle. So thank you listeners. You put it on top of your grill, put it on top of the barbecue.

28:45Okay. Um, I still think you're not going to make a good, it's good of a burger as might be a little better, but I'm pretty confident in my burger abilities. But the other one also say it's a lot of it is the meat, like the kind of meat you buy, like the content of fat in the meat. Yes. So in grocery stores, when you buy a package of whatever, you know, be for seven bucks or whatever, however much it costs, it's just the quality is not there. Now, if you go to a butcher, a proper butcher, and get some real ground beef, then you cook them with gas. Right. If you just go get the cheapest ground beef you can find at the grocery store, that probably is part of it too.

29:19Right. All right. This is from Jeffrey Patak at Morningstar. From ARC's inception in October 2014 through January of 2024, the date of its most recent AMI report, the fund has collected$363 million in fees cumulative. Over this period, the fund has lost$7.5 billion cumulative. So he plots the fees versus the cumulative investment lost. Now, this is the kind of thing that you can't really blame on the manager because all the money came in right as the performance peaked. And that's why there's so much money lost. But this really is a textbook star portfolio manager run that Cathie Wood had. Yeah.

29:59You have this huge spike in performance. I looked, the assets peaked at$28 billion or so. It's still a little less than$6 billion in that fund, which seems like a lot to me, considering how poor the performance has been. People are still sticking with it. Remember, there was a lot of talk about Cathie Wood at the time because she was a star manager. And there was a lot of people that were predicting this, and they were labeled as haters. Right. In this case, what they were saying at the time was, It was fair. Everything we read, you wrote about Jerry Tsai in your book. Yeah. Like he was the 1960s guy, right?

30:42There's people in the internet bubble. There was the, who was it? Ken Huebner and all these people. It's the same thing. I pulled the John Hussman one. Remember, he was the one from the crisis in 2008. Going back to the inception of Hussman's Strategic Growth Fund, this inception, which is like 2000, this is like two plus decades, the fund is up a grand total of 6.9%. Nothing? What? I said, oh, not nice. Well, the S &P is up 500 % in that time frame as well. I mean, the crazy thing is look at the spread. So in the first, I don't know, decade plus of the existence of this fund, he smoked the S &P.

31:25Right. And he did good not only in the mid-2000s, but I think the fund was down 9 % in 2008, one of the few funds that did well. And the S &P was down 37%. So tons of money comes in and he hasn't gone out of the perma-bear mindset since then. He had$7 billion at the peak. There's still$300-something million in here. And I think the majority of the money is his that he's made from fee revenue in this fund. I think he's probably walked away with a couple hundred million dollars in this fund that has literally not made anyone money in its history. Yeah, tough. This is just the way the business works sometimes, I guess.

32:03Yeah. All right. From the Daily Mail, getting back to my Midwest hedge. The Daily Mail? Daily Mail. It's a UK. Why are they writing about the Midwest or Midwestern real estate? That's a good question. They have a lot more ads in UK paper websites than we do. Just plastered of ads. All right. Florida condo owners are slashing prices up to 40 % as they strive to dodge massive incoming repair costs. Remember that condo building that fell? Was that Miami or where was it? The condo building totally collapsed on itself. So they're saying a lot of these older units, because that happened, they're really cracking down on them, making sure they have enough repairs.

32:40And a lot of the HOA fees, they just haven't set aside enough money to cover these. And so they're saying some units are just selling for way below asking because they know the HOA fees are going to be jacked up to fix these old condos. So they say an estimated 360 ,000 property owners in South Florida alone may not be able to afford the repairs reported by the new law to fix these condos up. Like this is, I don't know. I keep hearing stories about these costs where insurance costs rising, HOA costs rising. I don't see how this stuff gets any better short of government intervention somehow. And I don't know why the government would step in and help condo owners.

33:22Yeah, if you're hit with one of these, it's devastating. Yeah. So the point is that people are trying to get out of them now to avoid having to pay extra fees, but that people are having to take that into account for the price. So having slashing it big time. All right. Remember our 10 ,000 baby boomers are turning every day stat? I think, I think, I think you had to like fact check that you're like, is that true? It sounds implausible, but it was true. It is true. So this is from John Burns. There are 13 ,000 Americans reaching prime home buying age every day for the next decade. Now, this is Americans turning 35.

33:56Say that one more time. 13 ,000 Americans reaching prime home buying age every day for the next decade. So this is Americans that are turning 35. It's pretty crazy, right? Yeah. So look at the chart here. So this is getting back to my bullish thesis on housing, if there is one. That's it. Right there. Yeah. Right? Now, the question is, how do they afford them? So Jeremy Greenfield from Sherwood News, which is a really good new site. We've got some friends who write for them and edit them, and it's really nice looking. It kind of looks like The Ringer. Have you seen this? Yeah, it's good stuff.

34:34So he wrote a piece that apparently was inspired by our takes on animal spirits, which I don't remember having this take, but I'm going to take credit for it anyway. And he called and wanted to talk to us about, I think I said boomers should help their kids out. Boomers control$78 trillion in wealth. If they have the means, they should be helping their kids out now with a home. And so he put in his article, according to the National Association of Realtors, 12 % of buyers this year are getting help with a down payment, up from 9 % last year. That's actually low to me. I thought it would be higher than that.

35:05So it's not that many people getting help with a down payment. I thought it would be more like, I don't know, 30 or 40%. This is what we should be doing with the inheritance, right? It should come now for young people who need help. Which, he asked me, what's the downside of this? And I said, well, obviously not every family can afford this. Some people aren't going to be able to get help from their parents because their parents aren't financially well enough to do it. So it furthers the gap between the haves and the have-nots, unfortunately. Yeah. But I don't know what the alternative is. Because you have the$25 ,000 incentive for first-time homebuyers.

35:38which everyone I saw immediately everyone goes well that'll just jack up prices by$25 ,000 which is not just not how things work well yeah that's making a lot of assumptions yes that every every buyer is a first-time homebuyer yes I didn't get that either but I I don't know what the other alternative is to help first-time homebuyers out short of mortgage rates falling a lot I just think if you're on the tail end of being a millennial if you're a younger millennial older gen z and you missed the first wave, I think your whole life you're going to be spending higher costs on things that you'd want.

36:13Is that fair? Yeah.

36:17All right, so mortgage rates are coming down. Refinancing index jumped by 34.5 % last week. That was the largest increase since March 2020. Now, of course, it's off a low base, but nevertheless, activity is picking up. It's getting there. Someone in the comments last week said, these guys act like it's free to tap your home equity. And then the crying emoji. Still never use it in my life. Probably never will, but I get the point of it. And I don't think, because we talk about the HELOC boom coming, I don't think it's free money, but I do think it's very flexible money. Because, so, we're doing some renovations right now.

36:50We're redoing, like, a screened porch. What else are we doing? Getting a mudroom? No mudroom. We could use a way bigger mudroom. Our mudroom is very tiny. Your mudroom is, like, three times the size of ours. Hold on. This whole time? Hmm. You had a mudroom this whole time? Of course I did. I'm in the Midwest. It's pretty small though. Your mudroom is like three times the size of my mudroom. Ours is way too tiny. We said if we would have to do it again. How have you been in the mudroom closet this whole time? Shame on you. I'll send a picture of the mudroom so Duncan can put it on YouTube. It's much smaller than yours.

37:21We'd want a bigger mudroom. So we're doing some work and I'm using the home equity line of credit to write checks for this stuff because it's easy and it's flexible enough to move other money around. and I'll pay it off in like a year. Even if rates are high, I don't care because I'm not paying that much in interest cost. I don't think we ever said home equity was free. What are you talking about? And the other thing is the great thing about it is for people, I mean, if you think about it, a mortgage isn't free either, but how many people could afford to pay cash for their house? Very few people.

37:50So a mortgage gives you the ability to buy something now that you couldn't in the future. In a home equity line of credit, if you do a huge home renovation, that's six figures or something, you have 10 years to use that HELOC and then 15 years, that's interest only for 10 years, and 15 years from the end of that to pay it off. So it's essentially another mortgage that you can have. It gives you flexibility. That's the whole point. Leverage, baby.

38:16So across the street from my office complex, I live in kind of a more retail area, like where I live, or where my, sorry, my office is. It's office complexes. There's a bowling alley across the street, which for someone else, I've never gone bowling in the middle of the day. I feel like I should just to up my game. I don't think we've ever gone bowling together, have we? Didn't we bowl? Oh, wait, you weren't... Good team building exercise. No, you weren't there. We bowled that future-proof retreat in Colorado Springs. We had a great time. So, but on the street that leads to my office complex, there's a lot of duplexes and apartments.

38:53And there was this one little piece of woods that was sitting there. And in the last year, they completely knocked all the woods down. They built up an apartment. It's not that big. It's probably 15 to 20 units. Who built it? Blackstone? Probably. And so there's a website on it. And it's almost done. They've been working on it. It looks pretty nice. And I looked at it, and I wanted to see, like, okay, how much are these? Because it's one bed, one bath, and two bed, two baths. I pulled it up on the website. Two bed, two baths starting at$15.85. One bed, one bath starting at$13.95. And I thought for a brand new apartment, not the greatest place you'd want to live as a young person, but it's not bad.

39:32So in 2007, when my wife and I were renting our first place after we got married, we rented for like six months downtown. Then we got a house. And it was$1 ,000 for our place in 2007. So I did inflation adjusted 2007 to$1 ,000 till today. Now you're inflation adjusting. Yes. So that's$1 ,550. So that's essentially the same price. and we had a two bed, two bath. And that's the same price as they're charging at this place. That's not bad. My first apartment was in Astoria. Rent inflation in Grand Rapids is not out of control. $2 ,000 for my first apartment in Astoria. One bed, one bath. Nice place?

40:10Pretty nice. What would it go for now?

40:15Let me check. I'm going to guess... I'm just happy to see they're building more apartments, though. I'm going to guess$4 ,000. Okay. Let's see. no units available. I don't know. Four grand. Everything's so expensive these days. Not apartments, Grand Rapids. Yeah, it's true. Move to the Midwest. All right. Some great quarter stuff. Hilton, CEO. We sit around this very table with all of our senior team, including head of sales and his team, and they feel very good. There's no sense of sort of slowing on demand and pricing and the group demand. All right, Hilton, stock looks healthy. Almost at an all-time high.

41:01What's that? Their stock looks good. However, they did say something that we continue to hear. The lower sort of half of consumers, maybe even the lower three quarters. I mean, you can read the data. It's all out there. The bank accounts, the checking accounts, pull the money coming out of COVID. They spent all that money. Now they're borrowing, blah, blah, blah. so yeah lower income consumer is continues to get pinched we're hearing that from most companies my only bone to pick with hilton i got a hilton amex like a year ago two years ago maybe and i did it for the signup bonus because i get a hundred thousand points or whatever those points just don't go anywhere now anymore no it used to be like i think if you have a credit card sitting on those points is a worthless exercise i think you use them as fast as you can get the cash back, go on a trip right away.

41:49Don't sit on those points because they just keep, that's the highest inflation rate there is right now. Credit card points. Worst inflation hedge ever. Credit card points. Yes. They're constantly going down in value. It used to be like you could get a good two or three nights at one of these places, and now it's like you barely get one night with like 200 ,000 points. It's crazy. And like at like the courtyard in, not even like at like the nice ones. Yes. I got a story for you before I get into this thing. When I lived, I did a summer abroad in Vienna when I was in college. Now, it sounds way more glamorous than it was.

42:22It essentially cost the same amount as getting two classes, so I got eight credits for going there in the summer. And the way that they kept expenses down, and like 40 or 50 people, and they did this every year for 40 or 50 years, they've done this program. You live in Vienna, but you live with a host family. And so I lived with this family in Vienna, and it was way on the outskirts of town. So I would have to take a, I'd have to walk through a park to a bus stop. I'd take the bus stop to the subway stop. Then I'd take the subway into the city to get to our classes, which is right across from the opera house.

42:54Beautiful. But every day I'd walk. You know, Leonard Cohen once said there's a concert hall in Vienna. Did you go to that one? I did. Beautiful. Knocked down in World War II and they rebuilt it. Went to a few operas there. I took an opera class for my music credit. So every day I'd walk through the park in Vienna and I'd see these old people walking around walking their dogs, feeding the ducks, whatever. Beautiful park. And I thought, you know, you'd walk past someone and I'm a, I'm a head nod kind of guy. Like, yeah, kind of like a good morning. Hello. And every day walking by these people in the park, I'd get nothing, no head nod, no smile, no nothing.

43:26And my professor of opera at the school, he's this old guy. He spent, he did half his time in Vienna and half his time in, in New Jersey. Cause he taught at Princeton. He bald but high hair, like the Larry David. And I asked him, I said, what's going on? How come no one will give me a head nod? This is, I don't get it. I'm just trying to be nice. And he said, the people in Vienna don't like the minor intricacies. Like they don't like the little, hey, how's it going? They would rather sit down and get to know you. That's a cultural thing. Those are my type of people. Yeah, which I probably should be fine with as a not big small talk guy.

44:04But oh, okay, so it's a cultural thing. For some reason, that story has always stuck with me. And I think you have to understand the cultural things to understand people. And I say this as a lead-in to sleepaway camps in New York. Okay, because I feel like a lot of people outside of New York probably don't get them. So Doug Bonaparte tweeted that his daughter was away at sleepaway camp for seven weeks. And apparently he got a bunch of crap for people on Twitter. He'd be like, how could you send your daughter away for that long? And then Heather Bonaparte did this whole thing where she wrote about it.

44:33And like, listen, this is our family. This is our thing. This is a tradition. If you don't like it, cool. and I think it's a I love the internet yes it is judging your decisions for kids but like you grew up in this world you did it I'm sure maybe your parents I don't know how far it goes back but so you remember you were talking a couple weeks ago looking for one for Kobe and I tell people in Michigan about it sometimes and I told my brother about it and he's like well has anyone ever thought about just like renting a house in the Hamptons instead of paying for this for the summer and my whole thing is like I get from the outside it might not make sense but from the inside if everyone is doing it, can you imagine telling your kid, yeah, sorry, all your friends are going away, but you can't go away.

45:13Like it's, so it's, it's a cultural thing. And if you're not part of it, you don't understand it. Is that fair? Yeah. I actually, I met, I met, uh, Doug and Heather's daughter in camp this summer. Oh, really? We were visiting sleepaway camps. I told Doug that I was going to be there. He said, say hi. So I did. Um, yes, it is a, it is a cultural thing. And I went to sleepaway camp from like eight to 17, 16. I was wondering how long you do it. So you do it till almost the end of high school. We were waiters. We got fired, all of us, on the last day of camp, believe it or not. They make you work at camp?

45:50No, they don't make you do anything. But if you want to, you could be a waiter there. That's like the last - So you could go to camp and still make some money somehow. Correct. Okay. So unless you get fired, in which case you make no money. But yeah, best summers of my life. some of my best friends there. It's a whole thing. For people that sound like, wait, it sounds psychotic. These kids learn how to become people. They learn how to socialize. They learn how to fend for themselves. They learn how to be independent. It's great for networking. And later in life, when kids go to college, it's always like a friend of a camp friend or a camp friend that you're rooming with.

46:31It's a big networking advantage for sure. They have the time of their lives. And the thing is, we essentially piecemeal camps. I think, so our daughter did a week's sleep away this summer. That was the longest she did is a week. But we also did all these little basketball and football and soccer camps and, I don't know, add it all together and it's still probably not as much as you pay for this camp because that's going away and that's a long time and food and all these things. But you have to do something with your kids, right? I guess, sure, some people just let their kids sit around all day and do nothing and play outside.

46:59But, yeah. Anyway, I'm sticking up for the New York summer camp scene. I guess the only people that you'd say, like, come on, is the people. I'm sure there are some people who can't wait to get rid of their kids and want to, like, party all summer because they're not buying their own. I'm sure those are the ones that you can kind of thumb your nose at a little bit. But most of the people, like, you're doing this for the right reason. Yeah, no, it's great. I'm very excited for Kobe to be going. But have you ever done the compound interest table of, well, if I took this money and saved it, Kobe would have, like,$9 million.

47:31Oh, yeah. In the car on the way home, I said to Robin, between Kobe and Logan, we're going to pay these people quite a bit of money over the next 10 years. Yes. Okay. Did you see Deadpool? I did not. I'll see you when it comes out. I mean, you hate comic book movies, but you love Ryan Reynolds. Deadpool is the only comic book movie I really like. I mean, I don't know. After Iron Man 1, they all kind of fell downhill for me. I don't know why. I don't like I really love the comic book movies, but just the Deadpool winking at the camera. I don't know why. I just don't really care for it. I mean, that's why I like it because all the other comic he's making fun of the other comic book movies.

48:09I will see if this one goes. I like the first two. So I'll watch this when it comes out. So Charter had this thing about R-rated movies from 1995 to 1997. R-rated movies averaged 40 % of the boxed office domestically. Since the pandemic, it dropped down to almost 15%. Now it's back up to 30 with Deadpool. So we had a real bear market there in R-rated movies from box office wise, which I don't really know how to explain, but I guess this gets back to the point of the 90s were the peak of movies, always and forever. Yeah. I don't know why people shied away from it. Is that because Pixar came along and people tried to do more family movies?

48:45I don't know why that is. Well, it's an interesting point because this crash happened before the Marvel movies. Yeah, it did kind of. I don't know. I don't know what the reason is. I wonder if maybe more violence became acceptable that like what is PG-13 now used to be rated R. Is that possible? Yeah. That's possible. That could be. There are other ones that show like sex scenes have dropped off in movies big time. Maybe that was part of it too. If you had a sex scene in a movie, it had to be R-rated. I don't know. Maybe they thought, what's the point? We can get more people if we do it this way.

49:22Well, when you say sex scene, are we talking nipple? I got it. Are they showing it or is it you just see the silhouettes like Top Gun? I don't know what the rules are. Yeah. It's funny that when you said Top Gun is the first one that came to mind. It's the most ridiculous thing ever. What a movie. Yeah. Very blue. Everything's very blue. Take my breath away. Yeah. Just totally, totally ridiculous. I remember because I saw it for the first time like three years ago and I remember laughing out loud. Like what the hell is happening now? Yeah. Did you see TC at the Olympics? No. He's finally starting to show his age a little bit.

50:02Finally, like, okay. He's in his 60s. Yeah, he's in his 60s. John Ehrlichman tweeted, Saved by the Bell premiered this day in 1989. It was the first time many people had seen a cell phone. Roughly 1 % of Americans had one at the time. It cost thousands of dollars. It took 10 hours to charge, and the battery lasted for 30 minutes. Probably at the time, people were like, what the hell is this bullshit? Who would use a phone that costs as much money? It only lasts for 30 minutes. How about using this nonsense? What did Zach Morris' dad do to afford the cell phone? I guess they were in California.

50:31Did we ever see Zach Morris' dad in the show? That's a good question. I'm sure I've seen every one of these episodes as many times I've seen Seinfeld as well. But just a classic, classic show. Absolutely. Just elite, elite. I wasn't a big fan of the Miss Blissiers. Like the early ones. With Mikey. I think I was annoying. Then the one where Kelly Kapowski leaves and the girl Tori comes in with a leather jacket. Eh. Uh, yeah. But they brought it back. The college years wasn't bad. I like the college years. I like the beach club one. Ah, the beach club. Stacy Carosi. Stacy Carosi. Yeah. And Mr. Carosi.

51:05Mr. Carosi was the voice of, uh, Pumba. Oh yeah. That's right. I didn't realize that. All right. The Twitter deal was not great for the financiers. When banks do these deals, they make money mostly on the fees and then they get these loans off the balance sheet. They sell them to investors and they're stuck with Twitter. Nobody wants it. I wouldn't be surprised if they did an Elon Musk type billionaire run on industry. Like where they're doing the deal for a billionaire who's going to take a social media network private. Does that make sense for industry? Yeah. So anyway, so it's been the longest, they call this a hung deal, which is when these deals are stuck on banks' balance sheets.

51:52It's the longest since Pre-GFC? GFC? Hung Deal. Banker definitely came up with that at like 3 in the morning. By the way, speaking of industry, did you watch it yet? Episode 2? No, I watched the first episode. You know what my only problem with industry is? I like the show. I feel like none of the people are good at their jobs. I wouldn't hire any of these people.

52:17That's my only problem with it as a finance guy. Okay. I need to take my finance glasses off when watching it. But yeah, it's still a good show. Very entertaining. The second one was pretty epic. Okay. The American Gaming Association showed that combined revenue increased 8.9 % year over year, reaching$17.6 billion for the second quarter, the 14th consecutive quarter of year over year growth and its highest grossing second quarter revenue performance on record. Online gaming increased 32 % year over year compared to 21.8 % in Q1, driven largely by online sports betting. I wonder, they say, whatever, I wonder how much of this is like existing bettors versus just like more states opening up.

53:10Oh, right. You know what I mean? Yeah, the growth, that makes sense. Yeah. Because I would imagine that individual gamblers are not increasing their bets by 30 % year-over-year. That doesn't make sense. That's too high. But alongside this, there was a paper that was way too long for me to read, talking about they tried to analyze gambling and its impacts. I did a TLDR Bloomberg version. So they say, the legalization of sports betting has far-reaching implications for household financial behavior and health. Our results show that not only does sports betting lead to increased betting activity, but it also leads to higher credit card balances, less available credit reduction in net investments, and an increase in lottery play.

53:50These effects are particularly pronounced among financially constrained households. These findings suggest that while sports betting offers new avenues for state revenue, it also introduces significant financial risk to local residents, especially for already constrained households. I don't know. Again, I didn't read the article. A lot of formulas. But in the Bloomberg article, or I should say, I should not call it an article. It's a paper. In the Bloomberg article, they say, quote, notably, the researchers found that sports betting proliferated spending on lotteries and other online gambling activity, such as poker, increased too.

54:22So do things they characterize as betting-related, things like cable TV and dining out. How does that have to do with – how is that betting-related? So basically people spent more on everything. I just – The correlation causation is kind of hard to admit here. A lot of the comments that I saw were like, this study is bunk. like the way that they're – so I think they said that like it leads to a significant decrease in actual investing. Like people aren't investing in stocks because they're gambling. I don't know. I feel like the people who end up getting a problem with this, who are degenerate gamblers, they're going to gamble in the stock market anyway, probably.

55:03That would be my feeling. I mean there's going to be stories in the years ahead of sports gambling ruining my life. Oh, for sure. But, and people are going to be probably, I'm sure there's going to be some people advocating that politicians step in and do something, but they're getting the revenue from this. Politicians are never going to do anything about gambling now that it's legal. It's going to be like, hey, it's your responsibility. You're an adult. Have at it. Yeah. I mean, listen, I understand that people's lives are going to be ruined, but not to make light of it, but like how many lives is alcohol ruined?

55:32And yeah, unfortunately, I think if you have an addictive personality, that getting into something like this is just – that's what's going to happen. All right. So not to kibosh this myself here, but I do – there is a bet that I do like. I'm just going to throw it out there. You could take it. You could send it back if you don't like it. Did you watch some of the Caleb Williams highlights? I probably saw a couple on Twitter. Okay. Did you see the throw to Rome, the rookie? No, but I'm a Lions fan. I got to root against the Bears. Okay, so I'm a Bears fan this year. So Caleb Williams, for people that are not sports fans, is the number one pick for the Chicago Bears.

56:12Looks to be the best rookie quarterback since before CJ Stroud. I don't know, Andrew Luck? Like, he could be that good. His over-under for passing yards is 3 ,500. Now, assuming he doesn't get injured, which is a big assumption. Quarterbacks get hurt all the time. That's 205 yards a game, which seems mispriced. Plays outdoors in Chicago as well. Take that into account. That's true. But they have three good receivers. I'm hitting the over. I'm hitting the over. Okay. Good luck with that. He's a rookie. Got to play that Detroit Lions defense two times. One in the dome. True. Last week, we were talking about Airbnb.

56:52Long-time listener from California. Just listened to your last pod when you mentioned booking holdings and Airbnb are down year over year. I'm in the boutique hospitality space, and I've seen all-time highs in 2024 in revenue across my portfolio. I've got an explanation for why this is. When I list my units on online travel agencies such as Airbnb, Booking.com, et cetera, I mark up the rate by the amount the OTA charges me per booking. Therefore, the guest pays more, but I don't lose out of my revenue, and no matter which platform of booking comes through, I make the same amount. However, this also enables me to offer direct bookings at the discounted rate to the OTA.

57:26uh travelers are getting more savvy in some of our hotels we've seen 35 growth in direct bookings year over year so although my total revenue is up my booking.com and airbnb revenue is down that makes sense most of the time i will double check across like expedia or i'll also go directly to the hotel or resort website and oftentimes you do get a discount if you go direct to the website so it's kind of the same deal i just booked a hotel for new york i don't know it's because at the time of the year. My hotel was super cheap. They must have the most volatile prices of anywhere for hotels in New York, depending on the time, but it was probably the cheapest I paid for a hotel there in 10 years.

58:04Right next to our office, the Bryant Park Hotel. Hmm. I wonder if it's time of the year. It could be. A bunch of people said one and done presidents. You said, has it happened before? A lot of people said James Polk. Of course. Yeah, we should have got that. He actually ran on that saying, I'm coming in for, and they said he was a very successful president. What did he do? I don't know. Google it. James Polk, he, you know. All right. I like his policies. Hey, hand up. I'm a man. I'll admit when I'm wrong. Many dive watches, which are rated for waterproofness down to a certain depth, actually do show the depth rating in both feet and meters.

58:37Rolex Submariner does this. Tudor Black Bay and Omega Seamaster, both popular dive watches, show 100 feet and, or 1 ,000 feet, 300 meters. I didn't know this. Maybe I'm buying cheap watches. Speaking of which, someone asked, has been a watch guy because he talked about watches. I do like a good watch. I love wearing watches in the summer, but I own like seven watches probably, but they're all, I bet not one of them is over$100. I'm talking like a fossil kind of guy. I don't get like the nice$10 ,000 Rolexes just because I wouldn't want to, I would never want to wear it because I'd feel like I'd lose it.

59:09Not surprising. I don't think you ever wear a watch, do you? I mean, I have an Apple watch too, but. I wear watches. Okay, you're a watch guy? All right. Josh and Barry bought me a Rolex. That's right. You ever wear it? I wear it. Okay. I wouldn't buy it, but I wear it. I lost a pair of sunglasses again, but thank you to you, Ben. Speaking of things under$100, gooders. There you go. That's why I buy cheap in the summer. I have like 10 pairs of sunglasses, but again, they all don't cost anything. My kids drop sunglasses in the lake all the time. It was my Patriot, my July 4th red, white, and blue sunglasses.

59:46I did like those. Your wife probably crushed them and threw them away. She hated them. But for 25 bucks, I'll get another pair. All right, Ben. Do you remember this dumbest invention of all time? Remember like during the work from home time, everybody was sitting at their desk and sitting as a new smoking. So they came up with a bicycle for under the desk. I have very strong feelings about this kind of thing. Because I've seen the walking treadmills too, the desk treadmills. I have a very strong separation of church and state for working out because I think if you're working out, you work out.

1:00:25You don't do other stuff. Like I go to the gym and I see people reading a book on like the treadmill or the elliptical. And I think, no, no, no. You, when you're working out, you work out. You don't multitask with working out. That's ridiculous. Right. I bought this and I returned it immediately. I don't know why I thought about it, but honestly, what is that going to, you, you do it all day and you kill five calories or something? Well, Majuli has a desk treadmill. Oh, wow. Okay. I don't know. I don't want to. Standing desk is good enough for me. You ever see him when we're on camera? Oh. It's so distracting.

1:01:05He's doing this. I didn't know that. All right. Do you guys have lanternflies? Yeah, we don't call them that. What do you call them? Fireflies. Nope. Lightning bugs. No, no, no. I'm not talking about fireflies. Okay. Google lanternfly. Okay. Spotted lanternfly. These things are taking over. No, I don't think we have those. And they're just spreading like... They're just spreading. So they're not physically dangerous to humans. And so... Do you take your bug zapper to them? I still have the bug zapper that you recommended me, and I use that thing all the time. I use it all the time. I love it. And I use it on my kids when they get it in hand.

1:01:48So these lanternflies, we, Kobe loves killing them. Loves it. And I feel like it's like from Starship Troopers. Remember that movie? Oh yeah. Where the kids kill the bugs. I'm doing my part. It feels like that. They're everywhere. I showed that movie to my son a couple months ago. You did? Yeah. That movie had a, there was breasts in that movie. I don't know if we got to, I think we got to that part. Were there really? Oh, I guess I should have been rated R. You let your seven-year-old watch that? I didn't know. You should have told me that it was a nipple shown. We didn't get to that part. Wait, that is a very rated R movie.

1:02:26Is it? Maybe it's possible my wife came and shut that one down. I'm a little more lenient in these things than my wife. We kind of balanced each other out. Okay. Good. We were talking working out. I got to tell a story. I almost died yesterday, I think. So I talked about there's all these apartment stuff, and they were doing yard work on these apartments, and they're weed whacking the edges, and they're mowing the lawns, and I'm out on my jog, I go for a jog, and I take a wide berth around these people because, you know, stuff flies out. And the guy's weed whacking, and I'm on the road, and he's in the sidewalk.

1:02:57And as he's weed whacking, something flies out, like a rock or a, I don't know, piece of something. Stick, just boom, right in the temple. Boom! Really? I got one of these, yeah. And it kind of just nailed me. And I kind of look at the guy like, you know, he had no idea. I think we should have some better safety measures for Weed Whackers. I don't know what it was, but it, boom, right in the temple. Can you imagine? Just, yeah. Did it hurt? It kind of just shocked me a little bit. It was, yeah, not bad, but enough to like, what the, ah. One of those, you know? So. Glad you're okay. Better safety measures on Weed Whackers.

1:03:38All right, recommendations. I'm loving the fact that these movies are coming to streaming faster. Like Furiosa's already on HBO, didn't watch it yet, but The Bike Riders. I can't remember, did you see that one in the theater? Do not. That's the Tom Hardy. What's the guy who played Elvis? What's his name? He was in - Austin Butler. Austin Butler. That is the post-child for Wait to See It at Home. Yes. And it needed a better name. I guess it's based on it. It's a true story based on an actual book by this guy who infiltrated this gang, this biker gang in Chicago in the 60s and 70s. Wait, where did you watch it?

1:04:09Did you pay for it? It's on Peacock. So I didn't pay for it. Technically, I paid for it. And got an awesome cast. Michael Shannon is in it. a ton of people that you know and it could have Tom Hardy was made to play a biker gang guy he was the head of the biker gang Tom Hardy is just perfect in this kind of movie it was a good but not great movie like it felt like it could have been great never quite got there but I enjoyed it and it was a the fact that it was a true story ish made it even more interesting for me I think needed a better name The Bike Riders I guess that was the name of the book I think it should have been called something else but I liked it should I watch it?

1:04:44I liked it I think it was good not great good I watched, oh, I went on a little Vince Vaughn-a-thon lately because he was on Smart List and he's been talking. They did a Dodgeball rewatchables. And so I watched Dodgeball and Old School and Wedding Crashes in the last couple weeks. That was like 2003, 2004, 2005 Vince Vaughn. Remember if we talked about it on this show or another one where I said, Dodgeball didn't do it for me. Yeah, you don't like Dodgeball. I never watched it since I thought in the theater. So I watched it again. Here's the reason I didn't like it. They didn't let Vince Vaughn cook.

1:05:15This is prime Vince Vaughn. This is peak of his powers, Vince Vaughn. Because this is in between Wedding Crashers and Old School. No, there's some good Vince Vaughn cooking. I know you said that. He's more so much. I mean, Ben Stiller is great in that. But it's a cheesy movie, and they didn't let Vince Vaughn cook. So I'm sticking with my theory that Dodgeball, eh. Take it or leave it. Also, James Carville was in both Old School and Wedding Crashers. What a duo of movies for that guy. Oh, and Wedding Crashers, was he at the wedding? He was at the clearest wedding. By the way, hold on. But you're a big Justin Long guy.

1:05:49I am. But he was just okay, and he was kind of a dodgeball. I guess we'll have to agree to disagree on that one. He was a little too over the top for me. I like slapstick humor. It was a little too over the top. So I watched Bad Monkey with Vince Vaughn. We're two episodes in, his new movie, or his new show on Apple. And I'm a big private detective guy as far as books go, and it's based on one of these series of a private detective, kind of a wise guy, does his own thing, kind of a loner. And I'm into it. I like it. Okay. I'm a big, first of all, I also, coincidentally, we watched Old School this week.

1:06:24Just 12 out of 10. Perfect movie. Right? Yes. So Bad Monkey, I'm a big, not a big private detective guy like I know you are, but I'm a big out tropical guy. Yes. The setting of the show gives it a premium, doesn't it? Being in the Keys in Miami. What was the show? I have a block in my brain for the show for whatever reason. I can never remember the title, where they're in the Florida Keys, the three siblings on Netflix. Oh, yes. The Netflix show. Blood. Was there a blood in there? Bloodline. Bloodline, yeah. I love that show because it's outdoors. And I feel like I love the movie Cocktail, which is not even a good movie, but you're outside.

1:07:01Right. You get a premium. So I love the fact that this is in the Keys. However, I don't like the narrator. I could do without that. I agree. They could have picked a better narrator. I'm in agreement there. I think Vince Vaughn is great in it, though. He's a little more subdued, but he still has the funny one-liners. Is the second episode good? Because the first one, I don't know. I thought it gets better in the second one. Okay. All right. Maybe I'll stick with it. And he's looking pretty good in his mid-50s. He's still got it. I can't believe I actually influenced people to go see Trap who were not M.

1:07:27Night Stans. You guys can make complaints? I guess I should have been more explicit, but I feel like two weeks ago, we read a review about Trap, how it was laugh out loud, horrible, silly, ridiculous, and I loved it. Remember that review? Yeah. Yeah, so it's kind of like - Isn't that what I conveyed? Yeah, you kind of liked it. You said the ending was hilarious, and it's not a funny movie. Yeah, no, it was absurd. It's M. Night. He makes absurd movies. So I apologize to the people that were expecting something else, but I feel like that's on them, not me. That's fair. Like, when I say it was a great movie, I don't mean it was Gone with the Wind.

1:08:02It was terrible great. It was awful great. Great awful. You liked it ironically. Yeah, but sincerely. Okay. Ben, somebody emailed us specifically citing you. They said, I feel like this is like a Ben movie. You ever see this movie? Or a recommendation from the early 90s called The Cutting Edge? Oh, yeah. I used to watch this movie a lot back in the day. What? Nailed it. Really? I never heard of it. Oh, yeah. I've seen that movie multiple times. Wow. Figure skating. So let me read. So stuck up figure skating with Kate Mosley is denied a gold medal at the 1988 Olympics after fall as Kate drives off partner after partner.

1:08:40or her and then it got cut off. But wow. Really nailed it. Really nailed it. It's been a long time since I've seen it. So it didn't age well. There's a new movie on Netflix with Mark Wahlberg and Halle Berry called The Union. And it's got the worst trailer I've ever seen. He's reached the point of his career where he's doing like straight to streaming movies. I want to see what it's like on Netflix. I'm going to guess this is like a 30 % on the tomatoes. Ooh, nailed it. 39 % from the critics. 26 % from the audience. That's how you know it's real dog shit. By the way, I swear, I put in the doc, let's check Rotten Tomatoes live on the show.

1:09:20I did not check it before. Okay. I took Robert to see It Ends With Us. Yeah, how was it? Highly recommend. Really? As a, listen, the movie was more for her than for me. I thought it was entertaining. But if you are looking for a date night, if you're like, you know what? Me and my significant other, we haven't been to the movies in a while. Looking for one of those date night experiences, it's a good date night movie. Okay. Good to know. Good date night movie. I watched Furiosa. What do you think? I was a big fan of the first one with Tom Hardy. Well, who wasn't? Great movie. It's just like the first one except half as good and an hour too long.

1:09:59Legitimately an hour too long. Well, it was two hours 20, I think. There was no reason for that. Okay. I fell asleep multiple times. So was it entertaining? Sure, yeah. Entertaining, but. All right, give us your Alien recap. All right. So I saw Vimulus at IMAX, and IMAX is the only company that I'm an investor in that emails, sends out these great emails. They said, we look to build on that momentum for the second half this past weekend on Alien Vimulus. We had our second highest ever August opening and realized$16.8 million of box office with a high of 15.5 % of market share and 17.6 % in China.

1:10:42I'm sorry, 17.6 % domestic and 20 % in China. Okay. So Alien Romulus was... I think it's funny that they email you, like their investor relations email you. Yeah. I love Aliens, one of my favorite franchises of all time. Alien Romulus was a fun movie, a good movie, violent, felt very much like a throwback. Like it felt like Aliens, which I enjoyed. The story was a bit flimsy. I'm not sure I followed it. I'm not sure that the story really matters. But Fede Alvarez, the director, did a great job. Sort of like forgetful, but I had fun. It was a good movie. A bit hollow, but good. Definitely not pounding the table.

1:11:19No, a bit hollow, but good. Okay. Lastly, Ben, you made a comment last week about movies being top heavy, right? Yep. So I had Sean and Matt put something together for us. I didn't drop it in the notes because I wanted this to be a surprise. So bear with me. I'm going to drop it in momentarily. All right, Ben. Feast your eyes on this. Eye candy. Top 10 box office has a percentage of overall ticket sales. So not only is this pretty, and I'll explain the numbers in a second, but there's actually some information signal in here. So the median is 42%. For the last 10 years, the median is 42%. But interestingly, prior to the pandemic, it was below 40.

1:12:11So starting in 2015, 37, 39, 33, 34, 40. And we're talking about the top 10 as a percentage of overall box office. Just like the S &P, things are becoming more concentrated. And then in 2020, obviously due to the pandemic, it spiked to 83%. And then 52, and then 64, then 43, then 53. So there was a clear line in the sand before the pandemic and after the pandemic. And the reason is because people are only going to the movie for the most part to see the blockbusters. I was right. Yep. Top 10 % is 53 % this year of the box office. So that's actually probably higher than I even thought. So you're right.

1:12:52It's very hit or miss. So Aliens has done$110 million worldwide so far. not bad. It ends with us also. Hell of a show. $180 million. Wow. I'm telling you, man, movies are, movies are doing okay. And, uh, and that's that. All right. Good chart. You've done some good. Add this one to your Kevin Bacon collection. This is a good one. We went long. Uh, we had 42 pages in the doc today and we skipped some stuff. It's true. All right. What's your email? Animal Spirits at the compound news.com. See you next time.