The Zero Dollar Club (EP. 435)

24:16It's all over the map. And obviously, that's the COVID and supply shock and inflation and all that stuff. If anything, the most normal part of the period is right now. Right? The last six, 12 months or so. Sure feels like it. Everything before that was crazy. That was a JK. All right. Balchun has tweeted$1 trillion with two and a half months to go. He's talking about ETF flows. Unbelievable. Un-be-lievable. So look at the biggest flows. VOO, IVV, SGOV, and VTI. And then IBIT, which is the Bitcoin. So three out of the four are just big stock market ETFs. And then short-term treasuries.

25:01keep asking this question I don't know that there's an answer that's not very simple where's all this money coming from

25:09I mean listen part of it just has to be inflation doesn't it? It is funny at 3 out of the top 4 at S &P 500 but I'm saying like the fund flows is it merely earnings? like American people earning a lot of money and then putting it into the stock market I'm sure that's obviously the biggest source of it Like, duh, but it just seems like so much money. I would need to study this further, but how much of this could possibly be baby boomers retiring, rolling over 401ks into IRAs, and that money's going into ETFs, and money going into financial advisors? That's a stronghead. You need to see the other side of the equation with mutual funds to understand that.

25:45Okay. But that's a theory. I'm going to say that's obvious. That is 100 % happening. That's probably part of it. So is that two thirds of the pie or maybe more? Or, I mean, think about our business. When we have people come to us who have individual stock holdings that they made a ton of money on, what do we, what do they want us to do with that? Diversify it out of the concentrated position into funds or right. So I think that's probably part of it. It's not the whole thing. It's part of it though. Well, hold on. Maybe two thirds is underestimating it. It's earnings and it's, and it's that what, what's, what other pieces can there be?

26:24where the money's coming from you tell me where else would it come from right maybe just yeah earnings and uh 401k stuff all right we cracked the code good stuff ben um this is a great one since 2020 the value of equities who tweeted daily trevert the value of equities held by households has risen 300 for households under 40 542 for the final 50 of households and 50 for the middle 40 percent, the 10 to 50 percent of households. This is via Citadel Rubner. There's a wonderful chart. That's really good. This is really good. So the value of equity is held by the middle 40 percent. That is steady as it goes for the most part.

27:04Now, there was an inflection in 2020, but the under 40, this chart is worrisome. And I love that people are in the game. I love that they're speculating. Wait, wait, you're worried about this? I think this is fantastic news. No, no, no. Worried, I don't know if that's the right word. Let's just say that I think that this one is the most susceptible to drop dramatically. Okay, that's fair. Because as a lot of these DGEN names, and I don't mean that disparagingly, I would assume that, this is not cool to say, but listen, I'm sorry. I don't know what else to call it. A lot of these non-profitable names that have gone up and to the right, which is what this crowd owns, they are going to crash.

27:44So I think my thesis is, and again, I think this is fantastic news that younger people are more represented by the stock market. This is great. So do I, by the way, 3 trillion, that's, that's a hell of a lot of money. Wow. If you look historically, the, the really bad, it takes a really bad period for young people to throw their hands and give up. So after the seventies, when the death of equities happened, it was young people who gave up older investors, stayed invested. Young investors said, I'm out of here after the 2008 crisis. And, and we saw two 50 % crashes, it was young people and millennials that said, I'm done with the stock market forever.

28:15So I think it would take, especially since people are more diamond handsy these days and used to crashes, I think it would take an extended period and probably a financial crisis to get young people to say, all right, I give up, I'm tapping out. 100 % concur. Can I take umbrage with something that I just said? Now, I've mentioned this in the past, but it's been a while. So for newer listeners, there's times that I say stuff on the show that I acknowledge sounds completely idiotic and I'm about to do it, where I will listen back to something I said two days ago and said, whoa, whoa, whoa, nope, nope, you're wrong.

28:47And it's me. I'm calling myself out. So we've got takes flying all over the place. So if you disagree with something that I said, there's probably a good chance that I would say, yeah, you're right, that was stupid. All right, so what do I disagree with myself 30 seconds ago about? This inflection point that you saw in 2020, I think that if you were to look at the aggregate holdings of this younger cohort, it most likely is dominated by the MAG7 names. Okay? It is most likely dominated by the blue chippers. There's probably more ETFs and index funds in here than most people realize. Yeah. So it's not to say that those can't fall 50%.

29:23Of course they can. But the names that I was just referencing, the nuclear, the uranium, the quantum computing, all the names that are up a thousand percent of the last 12 months. That's the names that I think are at some point going to crash. And I also think that that is probably a relatively small, let's call it less than 10 % slice of the pie. Right. Yeah. These people are the, these people are the gamblers too. They're, they're on the Reddit or they're on their sports stuff. Gambler like this is just, I don't think that crowd is going to take a really bad bear market to get that crowd. Yeah.

29:59And now I also, I also think that these people are smart. Like they, they know what they're doing. They know that the, the music is playing. Now there's some true believers who think that these companies are the future. Maybe they are. And they've also, they've jumped from the meme stocks of GameStop and AMC to these others, to AI stocks, to quantum computing, to like these people, these people who are speculating and stuff, they've been jumping from idea to idea. They haven't been stuck in something. I've been, I've been making a hell of a lot of money so I don't begrudge. This is not, shot in for it if it doesn't crash i would do great wonderful credit to you for saying that word correctly because it's always hard for me yeah no i'm i have no rooting interest for these people to lose money i don't like when people lose money um all right so so at speculator underscore io tweeted a list of these companies it's called the zero dollar club um and there's wait why is it because they don't make any money that's right then that's wild huh forget about money losing companies.

30:56Companies that basically have little to no revenue. Serve Robotics is on here. We've joked about that because I think it's a name that Josh might have owned in the past. We were looking at their earnings report and it wasn't like$400 ,000 ARR. I mean, it's like a joke. It's like a start. It's funny that on this chart, they list price to sales and price to earnings for everyone who said NA. And then it shows the year-to-date returns and it's just hilarious. I mean, absolutely a wild scene here. so so obviously the and i i don't follow these these dgen socks very closely the the market caps for these were pretty small to begin with but now they're all like relatively large companies yeah like look at the size of the market caps on these things yeah dude these are these are not small names um they're not tiny anymore so what's the biggest name on here uh ast space mobile asts is the ticker uh i will admit i am not familiar with this name this is this is a young man's game and i'm no longer a young man that's 37 that's 35 billion dollars oklo is 25 billion righetti is 18 quantum scape is 10 joby is 15 big companies now and listen these allegedly are going to be the companies that that change the world so i'm i'm hoping that they work okay don't i don't get twisted i'm not i am not looking to pound my chest if these names crash i think everybody's consensus i'm sorry there's no way that a pasta is going to change the world righetti computing.

32:19It's never going to change the world. I'm willing to say that. I'll also say, like, there is a reason that these stocks are doing what they're doing. And now there's always a reason. And it doesn't mean that it's not being taken 3 ,000 steps too far, but there's a reason. So Morgan Stanley has a national security index. Who tweeted this? I want to give this person credit. Dividend talks. So 39 companies across four major industries worth watching. They're Look at nuclear energy and uranium, batteries and energy storage, rare earth and strategic metals, and lithium. And a lot of these names are in this list.

32:53And so if these are deemed to be national security type stocks and the government gets involved and puts them on our balance sheet, LOL, LOL, maybe the valuations might not make sense, but maybe they might be elevated for a reason. So getting back to my Scooby-Doo analogy, with all this stuff you're seeing, like if this economic recovery or economic expansion continues in the years ahead people are going to go well if it wasn't for robotics and if it wasn't for self-driving cars and if it wasn't for all this this new energy sources the economy and the stock market would have rolled over that that's going to be the story if this thing continues right they're going to like it's kind of crazy to think we're people are debating the ai bubble but we haven't even got the robotic side of things yet.

33:40Yeah. Like I actually think here's my take. I think if an AI bubble does burst, I think it will be a glorious, glorious buying opportunity because the AI stuff is going to work eventually. Robotics is coming along. Like you could, if there's a 20 to 30 % bear market because the AI stuff gets too far ahead of itself, it is going to be an unbelievable buying opportunity for the years ahead. I need a humanoid in my house that can do all sorts of tasks. One of them, electrician, plumber, cleaner, all this sort of stuff. I need somebody, I need a robot to look at my Wi-Fi connection and figure out what the hell is going on.

34:16Because I've had Verizon in here three times. And you know these extenders, I used to have an Orbi at my old house. Now I've got these Eros. Are they just complete? Are they just selling us shit because we buy it? I can't prove that it works. I can't even prove that it's on. I see a yellow light. It's not working. Yeah, I use some Google ones. I agree. It's hard to tell if it really makes your Wi-Fi better or not. I just feel like this. I've got two or three of those throughout my house. I really don't know. This is the American consumer. Oh, an extender. Yeah, I need that. Yeah, extend. It doesn't work.

34:44That is true. I don't know. But think about, I've said this before. All the baby boomers in years ahead, when they get to old age and need to be helped, we're literally going to need robots to help take care of them in old age. Because they're never going to leave their house. Millennials are too selfish to take care of them. Sorry, millennials. It's true. So we're going to need robots to help take care of people. All right. This is worrisome to me. A million people tweeted this out. ETF Tracker says this. There's 13 new five times single stock ETFs that are just filed with the SEC, AMD, and Amazon, and Coin, and Google, and Strategy, and NVIDIA, and Palantir, and Tesla, and all the companies that you know.

35:24And Ether. Wait. So what happens on the day that Ether had a 30 % drawdown? Does this five times leverage? Does this do you owe this company? Do you owe the stock exchange money? How does this work? I mean, a million people made this joke, but this is the Onion headline of Gillette saying, we're doing five blades, which they did eventually. But I, come on, what are we doing here? This is the kind of thing to me that is going to lead to a flash crash someday. Like there's taking stuff too far. Yeah. Yeah, this is crazy talk. I also don't know how much I'm bothered by it. I would want somebody, I would want like Noddick to say like, dude, this is the type of stuff, to Ben's point, that does flash crash the system.

36:07Because in a vacuum, I don't give a shit about people gambling because that's clearly what this is, right? And that's like obviously the world that we live in. And so to each their own. And there will definitely be people that use these. Now, if this poses like market structure risk, then ban it immediately. To that point, Dave Dondick does weigh in here. And he says, if I was making odds here, I suspect that these will be nixed by the SEC staff as soon as they come back to work and clear off their desks. there's a government shutdown. Dave says, but that's part of the strategy. Thanks to the ETF rule 6C11 and recent generic listing standards, as crazy as these filings may seem, they are actually, quote, normal.

36:44And thus, if the SEC doesn't explicitly kibosh them, they go live in 75 days. If this shutdown drags into the end of the year, a whole lot of products are just going to appear without a weather eye, and it will all come down to how conservative velocity, all right, whatever. This is crazy town. So if their strategy is to sneak it through while the government is shut down. And I guess from a business point of view, kudos to them, right? Like, you know, they're doing business and this is business. But my goodness, if this is where we are, this is, yeah. I don't love it. I get it. People are going to do what they want.

37:16And the pendulum obviously just keeps swinging. I just, if we're going to get the deregulation, can we please make it in places where it matters, especially the housing market? Just, like, is the deregulation really just going to be, we're going to let people blow themselves up with these different strategies? Let's make it easier to build houses. Come on. What are we doing here? All right, there was an article in the Journal of China betting it can win a trade war. It's playing hardball with Trump. Last week, Beijing imposed sweeping restrictions on the export of rare earth minerals, which are vital to consumer electronics and the tech industry.

37:44Trump then threatened the additional 100 % tariffs on China. All right, so China knows what they're doing, right? They're trying to mess with our stock market. They know that Trump is going to cave. I mean, they have seen this movie before and they do know how it ends. It's now taco day. It's not just taco Tuesday. It's taco seven days a week. And speaking of China, I just want to make one thing. Last week, we spoke about Beijing versus the United States. The book, Breakneck, Who's Gonna Win? And when I said those people about China, just to be very clear, I don't mean the Chinese people. I mean the government.

38:14Right? I'm not disparaging a whole nation. Oh, because they control everything. Yeah, I'm not disparaging a nation of three billion people. I'm talking about the government specifically. And then - No, no, no. You don't have to say that. Cancel culture's over. Fine. So I also wish that - while we were having that conversation. And towards the end, they were talking about like people defecting and leaving China and not thrilled with what's going on. And I wish I would like to amend my answer of last week, like, oh, they're a tough opponent and who knows how it's going to play out. Who knows what's going to win?

38:46They are a very tough opponent. And yes, who knows how it's going to play out? Yeah, that was interesting. Basically saying a lot of the people who are well-to-do and not well-to-do in China are saying, I'm not going to, I can't take this. I'm out of here yeah so it's not it's not like black or white where there's going to be okay here's the winner here's the looser like it's obviously shades of gray and everything else but but if i we're gonna win like i how could you just not believe in in in freedom and human rights versus a centralized authority authoritative decision maker that gets to do whatever they want to their people like so answer amended we're we're gonna win to these other here's the thing though I have faith in the US system as well but in something like this in a trade war they can take pain way more than we can so in a trade war I would put my money on them like yeah because they don't give a shit they don't care about their citizens and their the livelihoods of their people the way that we do some of the stuff that's described in the book is is truly horrific shit and they the the ability for them to tolerate pain on their society is next level compared to ours we cave as we should yeah So the fact that we did cave and it's better late than never, I guess.

39:58But if you, after reading that, and you and I are still macro tourists, but now I think we consider ourselves like 20 % China experts. If you read that book or listen to the book, you realize like we never had a chance in this trade war against them. The way that they produce products and how far ahead of them are. Yeah, they're probably laughing. Yes, they've been laughing this whole time. So the Wall Street Journal says the US is tiptoeing away from many of Trump's signature tariffs. Apparently, they're exempting a lot of the products because they're goods that we can't make in the U.S. and can't produce in the U.S.

40:30And duh, of course. But at this point, then we should just probably take them all back and just like, let's chill here. Because it does seem like it's all small businesses that are the ones that are dealing with the pain here. The large businesses have the margins. If they're dealing with, they're fine. That's why the stock market hasn't cared as much. Someone asked, I think my dad asked me a couple weeks ago. He said, man, I guess I was totally wrong about these tariffs because I thought for sure it was going to sink the economy and the stock market if you just look historically at how bad tariffs can be.

41:02And I told him like, no, you don't get it. They went back on all the biggest stuff that impacted the biggest parts of the economy and the market. That's why. They're still having an impact, just in different ways. Totally. And when I say totally, I have to admit, I wasn't listening. I was typing. I apologize. That was rude. But I did have to send something. That's okay. Okay, the over-under for parlay on how many times Michael's going to ignore Ben for this episode is set at four and a half. Oh, under. That's one time. All right. That's at least two. All right. So there's this chart from the Financial Times showing the most heavily shorted U.S.

41:38stocks have raced higher this year. And it shows the most shorted stocks since 2020 versus average U.S. equity returns. And so this is the top 250 stocks that are in a heavily shorted basket with a market cap above$300 million. That just a little more quote. It has not just outperformed recently. It has literally outperformed the entire decade. Now it's raced way higher recently. Now I have two ways of looking at this chart, okay? One is, man, this stuff is out of control. This is insane, like speculative, whatever. The second way to look at this is why are hedge funds so bad at shorting stocks?

42:13Well, there's a third way. There's a third way. Okay. So the first one is, what was the first one? this is a speculative this is crazy it's so speculative and oh my gosh so control yes why are hedge funds so bad at shorting i know they're so bad at shorting i think obviously they did not learn their lesson from the gamestop fiasco correct that's surprising right all right so it's a combination of speculation unleashed on society and in trading apps the likes of which we've never seen right bucket shops this chart shows reddit reddit one bucket shops made it very difficult to speculate. And even in the 60s, right, when these brokerages got just, literally, they couldn't fill all the orders.

42:56Remember that? What was that book? The Go-Go Years, Once in Golcon? One of the John Brooks books. Yeah, Go-Go Years. Okay. The other part of this potion is in a technological revolution like we're in right now, the money losing companies that people would short and say, these aren't real businesses, they get the benefit of the doubt because you are in a believe everything bull market. Yeah. Right? It's funny though. So all of these names like, yeah, this is a speculative bull market with new technologies. The companies aren't making money because they don't need to, right? Like they're just, they're not there yet.

43:41It's like that thing that's in Silicon Valley. No, no, no, revenue is the worst. Don't show any revenue. So it's funny, though, because I tweeted about this and I gave my two things like saying one speculation is out of control to hedge funds are terrible at shorting. And Jim Chanos, a famed short seller, replied to me and said even another way to put it, despite clear outperformance from such stocks, long only managers still generally underperform the market. And it's like everyone loses. But the thing is, this this decade is literally the only people winning our retail. Yeah, like retail degen traders or retail.

44:13Just I'm going to buy what I know. Those are the only people outperforming the market. as somebody who is not on the other side of those people, you love to see it. Now, I can't imagine the frustration from the professional investors. Fundamental, I'm guessing like a David Einhorn or something like that would look at the balance sheets of these and go. I can't imagine the pain of, this doesn't make sense. I've seen this movie before. I can't imagine what that is like to live through. And I'm happy that I don't. short selling stocks just it's you have to be wired differently i i would never be wired to try to short anything oh no i'm a sheep i i i need i can't i can't take the the pain of people being mean all right this is interesting let's talk about crypto this is from kelsey they have a bet will bitcoin be above two hundred thousand dollars by 2027 and i think the it's does it hit that at any point in the year which is not that far away and it's essentially it's a little it's like 50 93 % say yes above$200 ,000 by 2027.

45:19I feel like that's exactly where the odds should be. It feels like a coin toss. Really? Like a double, essentially, in the next year and a half? Yeah. You think that should be a 50-50 proposition? I mean, um. That seems, those odds seem way too high for me. A double? Okay, then bet now. I, all right. I think I, I. I mean, if it's free money, Ben, pick it up. All right. obviously it's not free money because there is the tail. Oh, there's that Grand Rapids hedge right there. Yes, but I'm sorry. That number should be 25%. Okay, then that's grossly mispriced and you should pick up those dollars. Yes, I think I will.

45:58How's that sound? No, I don't do prediction markets. Come on. I'm degenerate. All right. Let's talk housing for a second. You just bought a house. So this has nothing to do with your purchase, but I think it'd be really hard to be bullish and or positive on the housing market right now for a number of reasons. Here's some charts from Redfin. The homes sit on the market a lot longer. So this is median days on the market has gone from like 20 to 50, which is a lot. It's going up and to the right. Most houses are selling for under list price these days. The median down payment obviously has hit a record high.

46:37This is kind of crazy. So it's$70 ,000 on a US on a median home these days. This is surprising to me, though. Where's the chart? Oh, I didn't put it in here. But they show that the average down payment is still roughly 20%. I'm surprised people, or the median down payment. I'm surprised people haven't lowered that. But listen to this. So this is, it seems to me like it's just the people with, it's a shrinking group of people who can be the buyers. And you mentioned this. You said, like, listen, we had like one or two people check the house out, essentially, right? It was a small pool of buyers.

47:07We had two offers. So this is from a Redfin article. With the housing market in a downturn, And the people who are buying are those who are financially comfortable, secure in their jobs, and have money ready and waiting in the bank for a down payment, said this guy who's an agent in Austin, Texas. For example, a few months ago, I helped a buyer close on an$800 ,000 home with a 50 % down payment. They were able to liquidate stocks to make a$400 ,000 down payment without thinking too much about it. And now their monthly payments are lower. That's the wealth effect right there. Yeah. Austin is one of the worst areas of the housing market right now.

47:36Yes. Texas and Florida sound like they're in kind of a world of pain. and I don't know. I'm starting to think like the people have decided like, listen, the prices are just too high in a lot of areas and I'm just going to sit out. Okay. I am on the other side of this. I don't think it's hard to be bullish about housing. I think that - What's your bull case? Rates continue to come down. That's it. That's the whole king caboodle. I don't think it's a down payment per se. I think it's the monthly payment. It's just crushing people. I feel like I've been on that corner for a while now and I'm wondering if the level of rates is lower than we assume to get people to really, because rates have been falling this year.

48:19I think we're right there. I think that once we get to five and a little bit under, I think housing activity can explode. Alright. I've had that same feeling for years now. I'm starting to backtrack on it a little bit. I don't know that I'm saying that prices are going to explode higher, but I think that activity is going to, I think activity could moon. I still think that there's a lot of people. I don't think people stopped wanting to be in a house. I think it just became completely unaffordable. Well, I also think that the difference between buying and renting in some places is so wide now that I think a lot of people just said, fine, I'll just keep renting.

48:54It's not worth it. Yeah, well, that is definitely what happened. All right, cool chart from, we talk about this all the time. Like, am I rich? Well, tell me where you live, right? right? Flowing Data has this cool chart where they broke out housing costs by state. And it's, are you paying more or less than the national average, right? And it looks like Alaska and Delaware are right at the national average. Of course, places like Washington, DC, California, New Jersey, these places are way above. So California is 60 % higher than the national average for housing costs. But it's funny that there are more states that are below the national average that are above it.

49:33So the places that are really expensive, California and Hawaii and these places, they pull up the average a lot. It's a huge, huge difference. Yeah, it's really good stuff. Yeah, anyway. All right, let's do some quarter stuff. I do keep saying this. I do love hearing from the companies. And we've had people say like, Michael, you keep saying the CEOs won't lie. What are you talking about? All right, I think what I'm saying is That is, that's a fair pushback. Totally. So let me be, let me be clear. If they are forced to report every 90 days, the ability for them to hide parts of the story that they don't want you to hear goes up dramatically because if you give them 180 days, they can maybe think that they could figure it out.

50:20That's human nature. Don't, don't tell anybody. We'll figure it out. If you report every 90 days and there's cockroaches and you don't tell shareholders, you're out. Your stock will get crushed. The board of directors will remove you from the position if you lie to your investors so blatantly. So are there a million examples of that happening? Yes, there are. Absolutely. And I think that if you were to remove the 90-day increments, that would only happen with an increasing amount. I agree. The level of analysts looking into things and asking questions. It'd kill you. So I only mean that CEOs are incentivized to tell the truth only because everything's public.

51:04That's all I'm saying. If they could lie, oh, yes, they would. Absolutely. And obviously, there still will be cases of fraud, but it's got to be so much harder today than it was in the past. Yeah. to really fool people. Yeah. So, all right, Amex. Amex is just, Amex is in the absolute sweet spot of this K-shaped economy. They are a premium product for premium spenders and they are killing it. So their total build business, it's just, it's 6%, 8%, 6%, 7%, 8%. That's year over year growth. And these are not small numbers. And goods and services and travel and entertainment up 9 % and 8 % respectively in the recent quarter.

51:42Here's the chart that we share every year, every quarter, and it just continues to blow the face right off my body. Look at the year-over-year growth of the younger people. Gen Z is 39 % growth. Millennials growing 12 % versus baby boomers are only growing 4%. And if you look at a percentage of the total, Gen Z is only 6%. With 39 % growth, that will continue to creep up the percent of the total. But look at millennials, dude. Millennials are 30 % of total spending, higher than baby boomers. How about that? Where did you put this? It's a great quarter, guys. Total build businesses, the second chart, U.S.

52:24Consumer Services build businesses are highlighted in yellow. Oh, there we go. Okay. How crazy is this? Millennials are spending more at Amex than baby boomers. Huh. Yeah. That is surprising. So a lot of people would say, this is bad news, but... Bad news? What's the bad news? That people are spending more on credit, but I... No, no, no, no, no. Amex is not a credit card. Amex is a charge card, and you pay this shit. Amex, people are not relying on their Amex to make ends meet. That is not what's happening. And to that point, their credit metrics, no change. Percentage of card member loans and receivables that are 30 days past due, 1.3 % for the last five quarters.

53:07These are... Now, again, does this speak to the entire economy? No. These are premium spenders. But net write-offs too, there's nothing here. People with money are continuing to spend money. But look at their net card fees, Ben. Look at the next chart. Yeah, I know because I pay them. So it was a billion dollars in Q3 2019, and now it's$2.6 billion. I wonder how much of that is the annual payments. That's what this is. That's what this is. By the way, speaking of credit cards, this is another one that was, do you remember how many news stories there were about when the US credit card debt hit$1 trillion.

53:38Oh my gosh. A trillion dollars in credit card debt. What's it now? 1.2 trillion. It's at 1.2. This is from Y charts, uh, as of Q2 2025. And guess what? I actually view the increase in credit as for most people, like you say, it's probably a positive because they're feeling good and they're okay. And you're right. Most of them pay it back off. So it doesn't, it doesn't matter that much. Right. It's an expansion of the pie. Right. Um, all right. So let's talk about Bank of America, a company that serves more or less main street, main street America, right? Bank of America. All right. Look at their asset quality, net charge-offs and their net charge-off ratio.

54:17Is this going higher or lower, Ben? It's falling. Total net charge-offs of$1.4 billion decreased by$158 million from the second quarter. Plus look at how tiny the percentage is. It's nothing. Provision for credit losses, also down. And if you look into consumer net charge-offs and you look at credit cards, falling, Ben, in the first quarter of the year, it was 98 basis points, down to 90, now down to 82. I'm sorry. I know that there are people struggling. Broken horse here. There always are. But this - You said broken horse? Broken horse, broken, dead horse, beating the dead horse, broken wheel.

54:58You just put broken record along. Broken arrow. Broken hour. That's what I meant to say. I think you combine broken record with being a dead horse. Nope. I can't remember. We do so many podcasts. Sometimes they all merge together. But you asked someone a few weeks ago, like if you had one indicator in a few years to know if you're right or wrong, what would it be? And I feel like for you, credit card companies, that's your indicator. This is it. I don't care about the stories in the journal that are interviewing random people. Show me the data. Right. We found this one person who is struggling because they have a low income.

55:28Of course you did. There's a lot of them. Show me the data. And matter of fact, somebody sent us a video that I watched. It was on PBS about the K-shaped economy. And it's sad as shit. Hearing these personal stories from people, like on an individual person basis, it's horrible. I hate that there are people struggling. That's not unique to today. There are always. But if you look at the aggregate data, it is not showing what they want you to believe. so i just put the finishing touches on my new book i'm handing in the edits this week it's done going away it's going to come out in the spring um and i write about the great depression a little in there and even after the roaring 20s which is like the biggest one of the biggest booms for retail households ever like they got all these new fancy new things in their houses and they borrowed on credit for the first time.

56:24By 1929, at the peak, after the great decade, it was one of the better decades we'd had at that point, 60 % of U.S. households were below the poverty line. So, like, no one had any money. And so, it's like, people point to these things, and obviously it is sad, but it's an improvement in the past, which is hard to wrap your mind around sometimes. Yeah. Speaking of the past, one of the books that I'm listening to and I'll talk about it maybe next week when I finish it. Historical records and all these historical books you mentioned the 1929. You know where a lot of the qualitative, the good stuff comes from?

57:07It all comes from diaries. Right. Yes, people kept track of stuff. Right? My grandfather had a diary. We found them when he died and reading them was actually pretty brutal. Yeah, you know what our diary is called? Twitter. Yeah. Yeah, prior generations did not have easy lives. You're like great-grandchildren going to be like, wait, my dad, my great-grandfather created this pie chart? Yeah, he was just shitposting all... Well, for a period he was, and then he grew up. But I mean, the Hamilton one, all of it, it's based on letters they wrote to people. Yeah, it is kind of crazy. That's how people...

57:37Because they had nothing else to do. What else are you going to do besides write a letter at night by candlelight? You know how... No TV. People had nothing to do. Bill Simmons always talks about like future generations are going to think Carmelone was the greatest power forward of all time. And that's why he created this sort of line in the sand arbitrary metric that cuts off Carmelone. I wonder if future generations are just going to like look at headlines as the arbiter of truth. Like just, they're going to look at Google searches and newspaper articles as if that represented the reality of what was happening.

58:10I think history is going to be rewritten a million times because there are so many opinions now, I think in the future, people are going to be able to look back and pick and choose and they're going to be able to create the history that they want. And so it's good. History is going to be very hard to discern going forward. It'll be a choose your own adventure. Speaking of that, I had this, I had this really dumb, obvious, not profound thought the other day about it's because Kobe, Kobe is reading, uh, goosebumps. I told him to get, see if those books were still around. So he got one of the ones that I was like, Oh man, I remember this from my childhood.

58:39Yeah. Books don't disappear. Obviously. Right. We're reading books that are hundreds of years old still. And I was like, oh, wow, goosebumps is still around? Yeah, first is still around. No way. Yeah. All right. This is a tweet on the internet from BoringBiz underscore. People wildly underestimate how hard it is to be wealthy. The bull market has cooked everyone's brain, and reality is that most people will not come out wealthy on the other side. Many will be stuck as their paper wealth evaporates. Being sustainably wealthy is grueling, requires years of hard work and building up skills and relationships.

59:13The people trying to tell you that you can side hustle or day trade your way to wealth are selling a complete lie.

59:20I agree with most of this. I fully agree with that last sentence. Do I think that most people will not come out wealthy on the other side? Depends what the other side looks like. So you could quibble with that maybe on where the market is in a couple of years. But the people trying to tell you that you could side hustle or day trade your way to wealth is selling a complete lie. Amen, brother. I agree with that. I actually think, I disagree with the first part though. I think it's never been easier to be wealthy. In the past, we talk about the Vanderbilt stuff and them squandering it all. That would never happen today.

59:54I think there are so many experts and advisors and consultants and lawyers these days. If you're an extremely wealthy person, it's never been easier to hold on your wealth. Yeah. Yeah, fair. I guess he's probably talking to like the self-directed young men that are 23 that think that like they are going to be wealthy for the next forever and ever. And I think for that cohort, yeah, he's right. Yes, right. And yeah, the paper wealth thing, it's true. It's not real until you make the sale, right? Yeah. On the other side, though, you can say, like, listen, if I don't sell, I don't lack in the loss, right?

1:00:28Die with zero, am I right? All right, this is nuts. Speaking of wealth, our colleague Patrick Haley shared this. I think it was a Boston Globe article talking about how to deal with cognitive decline as you get older and health problems and how are the baby boomers going to deal with this? And they show this chart that shows wealth and death gap of U.S. adults over 60. And it breaks it down by people over 60 and what part of the wealth cohort they're in. And so the top 10%, the death rate is 11%, and the average age of death is 85. If you go down to the bottom 60, 80%, the death rate is closer to 20%, and the average age of death is 79.

1:01:06So as you go lower down the income scale or the wealth scale, the death rate increases and the average age of death is earlier this is a crazy chart is it not this is nuts yeah also what you would the numbers are startling but also what you would probably expect no i guess i just didn't expect the gap to be that large and that so the bottom 80 to 100 the average age of death is 76 if you go up to the top 10 the average age of death is 85 yeah Nine-year difference? That's crazy. It is. All right, we got to talk about$50 ,000 cars. This is just my beat, I guess, because a million people sent me this story about how the average price of a car is now$50 ,000, according to Kelly Blue Book.

1:01:49Adding to the sticker shock, more than 60 models had average prices of more than$75 ,000. Insane. How much of this is attributable to inflation, which is obviously big, and I think the average price of a new car is up 25%, since the beginning of the decade, right? And then we have all these new sensors on the cars and the cameras. And so like the Apple CarPlay, the screens, there's more stuff in them. So in that sense, it makes sense. Cars would be more expensive. But how much is this? How much of this is also just people buying trucks and SUVs as opposed to sedans? Like, I'd love to know what percentage of that increase is because of that.

1:02:23It's gotta be a big part of it. I suppose you can still get an Accord for, I don't know, 35, 38, something. So Arbor Data and Science wrote about this. They write the average age of the US passenger cars on the road up until the right since 1995. It was 8.4 years. Now it's 14.5 years. They also say that the Toyota Camry, the best-selling car in the US, is more affordable than ever. They show it adjusted for the median hourly wage. It used to take 1 ,600 hours. Now it only takes 1 ,000 hours. That's it. That's very interesting. But here's the other thing that I was thinking about. Yeah,$50 ,000 for the average car does sound nuts.

1:03:02I think that a lot of the SUVs are pulling this up and maybe some of the high-end cars are pulling this up. Yeah, it said the luxury vehicles definitely are pulling it up. All right, but think about it this way. Because cars are on the road longer than they ever have been, because cars have so many more pieces of technology and gadgets and are more durable, it's sort of like the stock market. Like, yeah, the multiple is higher. It should be higher. It's better companies. Is it not the same exact thing with the cars? Right, the technology is better. Now, notwithstanding the piece of shit that I drive, but oh and speaking of pieces of shit so my my uh car is my lease on my wrangler hybrid is up in april so i called my broker or texted him said hey steve i've got uh i'm like six months out can i can i get out of this now like the summer's over i'm not gonna take the roof down i want to get out he goes uh maybe what's your vin number and how many miles you got he goes nope you're 10 ,000 underwater.

1:03:57He goes, he goes, you're, you're paying the lease off and then you get a new car. All right. Um, not to throw shade here. Is it time to fire your car broker? Because every time you get a new car, you're underwater, like immediately. No, these, this had nothing to do with him. Um, all right. And the other Duncan, Duncan sends us that a new accord starting MSRP is 28 ,295. There you go. So you, you drive a car along. If you, if this concerns you, you drive a car longer or you get a sedan or so like there are ways around this if if that number is it sticker shock is so big for you but i'm guessing most people will just say screw it i'm taking an 84 month loan i don't care okay that's where probably most people land other part of the car story is headlife in bloomberg underwater car loans hit four-year high and new signs of distress just over 28 of trade-ins toward new car purchases carried negative equity the highest level since the first quarter of 2021, according to, okay.

1:04:56The amount owed on those so-called underwater loans was$6 ,900. Not nice in the latest quarter. I think that a lot of this was supply chain COVID issues. I also think, hey, guess what? Headline writer, it's not even where it was in 2019. And was anybody writing about this story in 2019? Did anybody care about underwater cars in 2019? Nope. Yeah, aren't most cars underwater by definition? you drive it off a lot and it's 20 % less than when you had it on the lot. Exactly, Ben. It's not even where it was in 2019. Right. Oh yeah, so in 2019, it was 34%. Yet here we are, and I'm not mad at journalists.

1:05:33I know I've been hard on them. This is the business, okay? And we all deal with what is best for us. You're right. No one was talking about this in 2019. It wasn't a story at all. Nobody gave a shit. And in fact, getting back to why I enjoyed listening to the company call so much, Ally, kind of exposed to the auto market. So Sanjay Sakharani, an analyst asked, okay, obviously lots of jitters around some of the cracks that we've seen in sub-private auto and just broader consumer credit trends, Michael. It seems like your metrics don't necessarily suggest a lot of that. Okay. So the CEO said, I appreciate there's a lot of macro uncertainty in the environment, but we're not seeing that impact our credit performance.

1:06:12And so we feel good about what we're seeing right now. Credit performance, data, data. Okay. Look at the net charge-offs. Do you see anything there? Is it going up to the right or is it going down to the right? Look at the delinquencies, Ben. Is it going up or is it going down? This is one of the biggest some prime lenders in the world. No? Just wait. Hasn't happened yet. It's going to happen. So, okay. I saw this morning on Instagram an image of somebody who looked a lot like Rocky on the beach running with the dog from Rocky and it said, oh, I play Rocky. And it said, nope, no, no, no, no, no, no, no.

1:06:52We're not doing this. We are not doing this. I don't want a remake of Rocky. No, hard no. And good news. It's not a remake. It's the making of Sylvester Stallone making Rocky. And that I'm in for. What documentary? Okay. Yeah. All right. That I'm in for. All right. Daniel, I tweeted, I can't believe it's been two years since we brought in audiobooks, Spotify, blah, blah, blah, blah, blah. Audio listening hours up 37 % year over year. it does feel like I've unlocked a new form of learning in my life with audible. It really feels good. Yeah, it does. It feels, it feels so much better than listening to most podcasts.

1:07:26A lot of the garbage I listen to, I still have some garbage that I listen to. Cause I listened, I listened to Sean and Chris, uh, talk about the best horror movies of 2025. Um, and I loved it and I do love it, but it feels nice to mix in a little bit of, education every now and then. All right. Uh, two quick things. I know we're running long here. Sorry, Duncan and team. Um, Um, so I got the house that I bought. There's a bar in the basement area and we don't really have like a place for the kids to play. There's no, like, there's no, that is the basement. There's no up, you know, so. The great thing is eventually the kids graduate from play areas.

1:08:00We took the play area and gutted it and turned it into a media room. Yeah. Didn't, didn't need it anymore. Yeah. Um, I can't wait to get there because I'm, I'm going the other way right now. So there's a bar in the middle of the room and I love it cause I love alcohol and I love the look of it and I, I want it to be my bar. but it's not my bar. We're getting rid of it. So, all right, whatever. No, you're getting rid of your bar? I'm getting rid of it. Tell Robin to call me. You can't get rid of the bar. Sorry. I lost this battle.

1:08:27So, we got two quotes. One of the people we know is a little bit more expensive and the other guy just wasn't getting back to us. So, I'm like, all right, well, go with this person. It seems like, I guess, sort of reasonable. $5 ,500 was the quote that he gave us to get rid of the bar and clean it up and paint it, whatever. And then the other guy just got back to us this morning,$1 ,800. And I said, well, shit, because we just gave the other guy$2 ,000 deposit. And so I went to chat GBT and I copied and pasted. And I said, tell me the difference between these two contractors. Why is there such a discrepancy in the prices?

1:09:02One promising to deliver anything more than the other person is. And it worked amazing. It was perfect. The output was freaking perfect. So anyway, now I got to call this guy and be like, dude, I need my money back and or you got to lower your price dramatically. Oh, so it didn't say like this other guy is is ripping you off. He was. So the one the higher price is two and a half times it's eighteen hundred dollars versus fifty five hundred. Right. That's a big deal. It's a big difference. So. All right. I'll let you know how that goes. I'm a little bit nervous. Hey, I need my money back but I'm going to do it.

1:09:33All right. Ben, you would just say it's fine. Keep my money. Right. No way. All right. I am done with pumpkin farms. I'm done with pumpkin farms. I'm just done. Oh, thank you. They get bigger and grander every year, don't they? It's just enough. Towards the end, I'm yelling at Robin. I'm like, just take the pumpkins. I'm done. I want to go home. And then everyone's got to take the Instagram pictures next to the whatever. She's 100 feet behind me. I'm online. There's people that are now behind me online. And now I have to let them go in front of me because Robin's not coming. She's with the kids.

1:10:05And I'm like letting people go. And then I just get off the line. And I'm like, I'm screaming. She goes, you sound like a crazy person. I'm like, yeah, I want to go. Been here for long enough. I hate those places too. But here's the thing. We've been so busy with kids sports. We just realized this morning, my kids go, wait, we don't have pumpkins yet. And my wife going, oh my gosh. You don't have pumpkins yet? Good for you. I'm jealous. And we just realized we have no time to go to a pumpkin farm. And I'm going, yes. That's awesome. I'll get them at the grocery store. Don't worry. Who cares? Yeah, not me.

1:10:30We're going to throw them out anyway. All right. Before recommendations, real quick. Paul Warner on Blue Sky said, looking to differentiate a new system, Sam Halloyed, which is an original name of Xerox, hired a Greek scholar at Ohio State University and coined the term Xerography from two Greek rukes, meaning dry writing. Halloyed changed his name to Halloyed Xerox in 1958 and Xerox in 1961. So they literally made up and they literally did make up a word. Xerography wasn't a thing. Oh, good for them. Yeah. All right. Recommendations. I got a lot this week. God. I watched I Like Me, the John Candy doc on Amazon Prime.

1:11:06John Candy was my guy. Yeah. I think Uncle Buck is one of the greatest movie characters of all time. It's one of my top ten favorite movies. Planes, Trains, Automobiles is obviously one of my favorite movies too. And it's just so, so good. It's very sad too in a lot of ways at the end. But it's crazy how in the 70s, there was a group of people that got together in Chicago and Toronto. And it was like Martin Short and Bill Murray and Harold Ramis and Catherine O 'Hara and Dan Aykroyd and Eugenie Levy and John Candy. and all these people just happened to be coming up at the same time together. And it's kind of like one of those lightning in a bottle moments, but it was so good.

1:11:42And you, you got to see all the, like how good of a guy he was and all the different parts he played and everything he was in was good. I summer rental and great outdoors. And he had the small parts in, you know, vacation and home alone. And I was a big John Candy guy. Love him. It was very, very good. I think I want to watch it. I'm not as, as big on, on him as you were, but I love that you love him and I want to watch it. Uncle Buck is probably one of the movies I've watched more than any other in my life and I introduced it to my kids a couple weeks ago and they loved it too. Is there one in the woods that you've mentioned with him and Dan Aykroyd or is it just Dan Aykroyd?

1:12:18No, that's him and Dan Aykroyd, The Great Outdoors. That's a great summer movie. Great. Dan Aykroyd plays the shooter guy from Chicago. Very, very well. No, it's so interesting. So because you're just a few years older than me, like your window of movies, of your childhood movies is like, fairly different than mine, at least on the early side. Yeah, that makes sense. Like, those 80s movies, like, I just missed them by, like, a year or two. Yeah, that makes sense. Like, the whole, I remember seeing the preview for Home Alone and going, oh, my gosh, is this Uncle Buck 2? Because it was Macaulay Culkin.

1:12:48Oh, wow. Oh, that's a kid from Uncle Buck. Okay, I also introduced myself, my kids, to Tremors this week. Kevin Bacon classic? My son. Wait, why Tremors? It's so random. My son loves that kind of cheesy action stuff. Tremors was one of my movies too growing up. I don't know why. Tremors was just, I watched it all the time. Anytime it was on USA, I watched that movie so many times. And my son watched it like three times last weekend. He loved it. And it just it's one of those movies that shouldn't work. It should be way, if it was made today, it would be way cheeser than it is. But it just, I don't know something about that movie.

1:13:22It's so good. And you being a horror guy, you should love that movie. I like Tremors. It's so, kids don't know what it was like to watch a movie on USA. Oh yeah. It's like, all right, this movie's three hours with commercials and you're just going to sit here. Right. And the swear words are bleeped and yeah. All right, one more. Another movie I watch all the time. It was on Rewatchable, so I rewatched it again since it was Robert Redford month. Sneakers. You ever watched Sneakers before? I never watched Sneakers and I never saw The Natural. Okay. My daughter and I sat down to watch The Natural this week too.

1:13:55And I said he's like Otani on the Dodgers basically in real life. But Sneakers is another one of those 90s movies that I watched all the time. My mom and I loved that movie. And it's just a great, like, spy. And it feels a little dated now. But in the cast of that, Dan Eckerd's in that as well. It's an amazing cast in that movie. Great movie. And I think Robert Redford might as, he has, people always talk about, like, James Earl Jones and Morgan Freeman. I think Robert Redford has one of the best voices ever. Oh, yeah? How's that? Because he did the voiceover for River Runs Through It, too. He's just got a great voice.

1:14:28Did you finish Task? We didn't do it yet. I was watching the Lions game last night. Okay. what do you think about the finale great so just HBO is just better than everything else I mean obviously Ruffalo oh so there was a there was a not no spoiler there was a scene at the end in the courtroom where Ruffalo just was amazing amazing acting the acting in that show was amazing the character Maeve I thought was the strongest she was good the dude who played Robbie I forget his name was excellent yeah he's the guy from he was in Ozark I think he's fantastic yeah it was a very good show and I love because I even do think that episode six and seven had quite a bit of fat in it.

1:15:06Like more character stuff than I, than I love, but I love that it was seven episodes. Yeah. Love. That's pretty, yeah. Oh, okay. I almost forgot about this. I saw, I saw one battle after another. Okay. All right. It was a good movie. It was a very good movie. It didn't drag, even though it was very long. It wasn't like, it wasn't like, I didn't false. It wasn't bored. But, but, um, and there's some, there's some, some great stuff in there, some really cool camera stuff that the film nerds love. And it was a good movie. It just was. It was at$170 million budget. Good movie. Uh, wild. But I just, people love PTA and I don't get it.

1:15:51And I don't want to be a hater because I liked the movie. I really did. I really did. So it's like a seven out of 10, maybe. Uh, no, it's better than that. I would say like, it's like a seven, four, like it's a good movie. It is a good movie. You're right. That's why I told you, you can't trust the film nerds anymore because they're blinded and they just say everything is the greatest thing they've ever seen. I just, the PTA adoration. Now, I'm just a movie guy. I'm not a film guy. So, I just don't get it. Yeah. I'm okay. All right, last, all right, real quick. Let's run through this. It's Halloween season, so I did come up with my 10 favorite horror movies.

1:16:27Now, this is no particular order and I, to be honest, I didn't spend a ton of time on this, So is this the definitive final list? No, but it's my list. And there's no, nothing obvious in here. Okay. No Friday the 13th, no Halloween, no scream, no Blair Witch, no the ring. Like I don't, there's any movies on this list. In fact, there are no movies on this list that did like$50 million at the box office. So nothing mainstream. Okay. Here we go. These look like names that you all could have just made up and I wouldn't have known any better. Um, now I do love found footage. I love a good fan. They just scared the bejesus out of me, where it's either found footage or when they hold the recording.

1:17:08Yeah, found footage, I guess. That's what it is. Deadstream was one of those. Host. Host they did during the pandemic. It was a Zoom call with five teenagers, and things went awry, and that scared the hell out of me. Speaking of hell, Hell House, LLC. Hell House, LLC. Great one. Great one, Ben. I think you might like that one. All right, I saw this movie when it came out in 1995.

1:17:37I've spoken about this on the podcast before. What year is this? 94. Insane. My dad took me to see this when I was nine. And this movie gave me nightmares for months. My mom was very upset that I saw this. In the Mouth of Madness is a John Carpenter movie with Sam Neill. You ever hear of it? No, it sounds like it could be a porno, though. So the concept is Sam Neill is, is he an agent, a literary agent? I don't even know. But this author, this famous horror author goes missing and they go to find him and they get wrapped up and he's writing the movie. It's very meta. Very good. All right. VHS, similar to Hell House, while there's multiple of them, VHS has also found footage one.

1:18:19The most recent one is a Halloween version. There's probably five or six of them. Always slap. All right. and then the next few are demented the dark and the wicked uh the dark and the wicked is quite dreadful just just hurts to watch borderline painful speak no evil not the american version not the american version not the american version uh green room i don't know green room is horror per se but i don't know what other genre you would put it in okay i actually tried to watch that i couldn't make it through it very gnarly i would say grizzly that's that's grizzly um Eden Lake, also a grizzly movie.

1:18:55That is with Beth from Yellowstone. And lastly, perhaps the cake taker of demented films is When Evil Lurks. I think that was an Argentinian one, but I'm not 100 % positive. Okay. Green Room is the only one I've ever heard of here. Argentinian horror movie. You said you're not a film guy. So I had a realization this weekend. We went to one of those horror things in the woods, right, at our local ski place. and it was a path you followed and it was meant to scare you, right? And so we went with my daughter and her two friends. They're 11. And people would jump out and the people dressed up were really, really spooky looking.

1:19:33It was very well done. I don't like that. That's too much. See, I wonder about it. So, like, honestly, I had zero. My daughter's like, why are you laughing? I was laughing at what I was going through. It didn't, nothing scared me. It didn't do anything for me. And my daughter and her friends are freaking out, right? Because they're jumping out and they have cleavers. I'd be... terrified. I get very scared at horror movies. So I think that's why you like for whatever reason, the horror thing doesn't do anything. Like it doesn't bring about any emotions for me at all. And that's why I don't like these movies.

1:20:04You're not alone. I just I find it bizarre because for me, there's often times, in fact I would say 90 % of the time where I will either have to like mute it while I'm watching like I prefer to watch Halloween during the day because I get very, I close my eyes. I get scared and maybe that's why I love it. See, that's it. For whatever reason, it just doesn't hit me that way. So to each their own. Okay. Credit to you. That's why there's a market. You're a brave man. idontshop.com. We have a brand new Animal Spirits mug for the fall for all those hot chocolates, coffee, tea, right? Very well done.

1:20:44Thanks to the production team as always. Duncan, Dan, John, Travis. who else am I forgetting Nicole, Rob, Graham appreciate you all email us animalspirits at the compoundnews.com and we will see you next time