We Have to Talk About Sports Betting (EP. 417)

25:08Yeah. All right. I saw a great chart from Grant Hawkridge, who does fantastic charting work. Top 10 for me. The chart was so good that I said to Matt... You and I have a completely different experience on who we follow on Twitter because every time you're like, this is a great follow, I've never heard of this person. Well, that's why I love plugging people. I want to put people on the radar. Sorry. That was like the clip of Shaq and Chuck. Yes. Yeah. When a man's banging you. I love plugging people. I do. That's my thing. So Grant Hawkridge tweeted a chart that showed the number of 1 % up and down days by decade.

26:00Okay? Mm-hmm. And he says - Which is a pretty good indicator of volatility because you get more of those. Yeah. Yeah. 437.1 % days up and down and counting. Grant says the 2020s are on track to be the most volatile decade in market history. But here's the twist. The S &P 500 is up over 80 % since 2020. Big moves, big gains. Not the combo we're used to. So this chart was so good that I had ChartKid recreate it. Credit to Grant. It's our chart of the week over at Exhibit A. If you're Grab this. That's a really good chart. I've never seen that before. Me either. And to your point, this is my whole idea of markets getting faster.

26:45Yes. It's more booms and more busts and things are going quicker and the moves are just more violent. And this makes sense to me that this would be elevated going forward. Yeah. So I immediately thought of you and you're 100 % right. And this evidence supports what you've been saying. Great chart. I love it. So we got a little AI pushback. And it is worth noting that the stuff that we're talking about AI, especially last week, we went really heavy on AI. No one knows how it's going to end up. I'm using an NBA analogy here. After the Denver Nuggets won their title, it was like, whoa, there's a window here for Dynasty, right?

27:25And the Celtics won last year, and it's like, whoa, there's a window here for Dynasty. And now the Thunder looks like they're going to win, and it's like, whoa, there's a window here for Dynasty. And it seems like we're really quick to – So I just want to say like, it seems like this is where we're going with AI. We don't know. Here's a good pushback. I'm very jealous of your night owl abilities. I fell asleep in the third quarter last night. I woke up very upset. I'm having trouble. Like on Friday night, I had to do this. I've realized that sleep is a very personal thing. There's people who say like, you have to get eight hours of sleep a night.

27:59Otherwise you can't function as a human being. I realize, and this year especially, I just for some reason have gotten less and less sleep and I stay up later and later and it hasn't impacted me at all. It's a superpower. I mean, you've got lots of hours on me. Remember, you know, the video of the guy who says he does three days in one? That's you. After a month? By the way. You have no chance. I would have to look back and see, but from memory, this has been one of the best finals. I've, one of the best finals in a long time. Very competitive. Yeah. Like, is it the best one since, since Dallas.

28:34I mean, that's 2011, I think, since Dallas beat Miami. That's a long time ago. And no one's watching. But the games have been so, so good. Yeah, I agree. And no one's watching. Let's see. Allow me to make a counterpoint on your AI take. If many of the jobs disappear and labor markets start to show massive amounts of unemployment, where will the relentless bid come from? Who will spend money on all the things that power earnings for the companies? Why would small businesses advertise on mag seven platforms if there's no return on their ads because no one is spending money? You just told me 60 % and change of Americans on the stock market.

29:04Unemployment will cause that number to fall as people dip into their savings. The consumer power, the consumer power is earnings. Employment powers the consumer. Just a thought. If employment gets weak, earnings will suffer too. AI can't replace the spending power by the consumer. Very good point. Fair enough. Here would be my counterpoint. I think it's possible. And I think this person is generally right. So like, yes, right. The pushback or the zag that I would have is this spend is being powered by the MAG7 stocks. We said they're spending half a trillion on R &D and CapEx. Now, this person would say, yeah, okay, fine.

29:38But if the consumer stops spending, then they're going to slow down. And I would say probably true. But you could also see a weird dynamic where some of the jobs that get displaced have no impact on the ultimate spending on these tech giants. But yeah, who the hell knows where this is going to go? My account, my, the counterpoint for me would be, well, the wealthy people are going to spend the money and they're going to be ones who benefit the most and they're going to power everything. Well, you're right. So we mentioned this a few times. The people that are most likely to get laid off, I would guess are probably not the wealthy, although maybe not.

30:12Maybe AI displaces white collar jobs too. Anyway, we're all just guessing. Like who knows, right? I don't know. I don't know. But I also think we are so dynamic that we will like literally make up jobs for people. People need a reason to get out of bed in the morning. And so if Waymos are getting lit on fire, guess what? Eventually, they're probably going to pay a guy less than they would pay a driver to sit in the car and make sure no one messes with it. So here's evidence supporting. There's going to be a Waymo greeter in your car or something. Here's evidence to support what we're talking about from Schroeder's.

30:41This is a great chart. U.S. companies have been generating near record profits per employee. So real profits per employee, if you were to draw a trend line, it is straight up and to the right. Okay, so you're just saying that they don't need as many employees as they used to. Correct. Okay. Not great. You know what would be the growth industry for me is probably just leisure and hospitality and other things if AI is going to make you more efficient? I still think regardless of how efficient technology has made us over time, does anyone work fewer hours than they did in the past? I always think of my dad working in the 1990s, pre-internet, pre-cell phone, pre-bring-your-work-home.

31:22It's different work. but it's more work. We've given ourselves more work. You're right. It's different, but we've got all these tools to make us more productive, but we still work just as much or more. But I do a lot of work and I don't know why I'm like, I guess you could air quote this because some people would say, how does that work? But I do a lot, especially when the weather gets nice. I do a lot of walking calls. That is so much different. Like my dad was a dentist. He didn't have that luxury, right? He was, uh, over the table in people's mouths. I think about that often when I'm at the dentist that, you know, you and I sit in front of the computer all day and we can get sidetracked on something else for 10 or 15 minutes or however long, watch a video or do some, something on our banking or whatever it is.

32:05Um, but if you're at one of those jobs that you're constantly doing and you can't have computer time, that's like, that's real work. What we do sometimes is not real work. Knowledge workers. Yeah. Right. Yeah. And so I think that like people that are doing different work than us where they don't have the luxury of being able to take a phone call and walk in the sun or to be able to stand and look at their screen, I would hate people like us. Seriously. Oh yeah. No, I, I totally know. My, um, my wife was a radiation therapist and she would be, she would be there at the machine all day long, like, and get like a half hour break for lunch and that's it.

32:43Um, I want to talk about how much money there is in the economy, which is something we've talked a lot about, but I have a, I have a story to start this off with. So you have your beach club in the summer you talk about, right? We have a pool slash boat club on our lake that we go to. And this is, it's not like anything super fancy. This place has been around for like 100 years. So it's really, really old. And the dues for this thing are comically small. How much? Less than$1 ,000 a summer. And we get to go there. They have a little window you can order food for the kids and get ice cream. And there's a pool.

33:15And they have events. They have these social events. It's a really fun place. And this place has been around for a long, long time. The building is over 100 years old. So we had to have a meeting this past weekend because this building needs to be totally renovated. They've done studies on it, and they say, like, there's so much that is not to code here that, like, this place is literally, like, it's 118 years old. So, like, we have to either completely renovate it and bring it up to code or tear it down and build again. It's a huge, huge—this is like an 8 ,000-square-foot building. And what's inside of it?

33:45Is it, like, a hall? So they have a hall upstairs where they do events. It's really fun. It's it's a very you know, they have big party They have like theme parties and it's it's like at the end of the year the big party every year is a pirates costume ball Everyone dresses up as a pirate. Remember I sent you pictures last year of me dressed up as a pirate and So the community loves this place, but this is a big undertaking and they're saying like everything like the foundation is like So all the stuff that was done a hundred years ago They didn't expect it to last this long and it did they need to redo it So they're probably gonna like graze this place and restart over so I'm at this meeting and trying to understand what this means and stuff.

34:18And there's only like a handful, like a few hundred people who belong to this club. So obviously the dues don't cover anywhere close to the cost. So it's going to be five or six million dollars to either renovate or redo this place, right? A lot of money. Halfway through the meeting, finally someone raises their hand. How are we going to pay for this? Private equity infrastructure, done. Yeah, I'm going to start a private credit fund. But they weren't really worried about it because like, eh, we have a few affluent members who are probably going to pick up the cost. And I feel like that's the U.S.

34:47economy. Like, rich people power the U.S. economy. And they're in such a better place than the rest of, like, I'm talking like the top 1 % here. Are, like, they have the ability, they don't have to worry about the economy, really. Unless their company or business goes under or something, right? So, Mike Zaccardi had this tweet. I'm pretty sure Goldman stole this from me because I did a piece about this about a month ago. So, they say the top 1 % owns 51 % of the stocks. The bottom 50 % owns 1%. right? And this has been pretty stable over time too. I pulled this one from JP Morgan. It's total assets in the economy versus total liabilities.

35:25It's 190 trillion assets and it's 21 trillion liabilities. But when you dig down, Jeremy Herbert, I'll put this out. The median net worth... I'm sorry. You think Goldman stole this chart from you? They've been charting this for years. I think they incepted into your brain and you stole it from them. How do you like that? No, the way that they're showing this, the 50 and the one and the one and the 50, that was me. Trust me. I was on this well before that. So he shows the median net worth by households. And this is back to 2022. So it's a little higher now, but not much. It's like$140 ,000. So you look at all these assets.

36:04That sounds pretty good. So it's the highest in history. Again, that's the median number. But that also shows how much is concentrated at the top, though. He broke this down, too, by married, not married, single, children, no children. And if you're married and you have no children, your net worth is a lot higher. If you're married with children, it's a little lower. But that's much higher than people who are married and such. But my whole point here is that there are just a lot of rich people, And I think that they are kind of the savior for the economy at times. And I think they're probably part of the reason that this has just been powered for so, so long.

36:46Because they're almost immune to the ups and downs of the economy, save a bad business deal or a business sector going under. Fair enough? That's mostly right. It just makes me realize that like, oh, rich people will just, they'll come in and save the day. It's like that, oh, okay. Okay, a good segue to this. There's lots of rich people. That's my point. How's that? Yes. So, and they have lots of money. New cycle high for continuing jobless claims. Kevin Gordon tweeted this. Does this matter? Does a slowing economy matter for the stock market? I mean, I can't believe I'm saying this out loud, but I'm kind of serious.

37:23It would be weird if it didn't, right? Now it matters for certain areas of the stock market, obviously, like areas that would be impacted by, you know, people, whatever. We spoke about McDonald's as an example of things that people would cut back on. Um, but how does this impact the hyperscalers? Do they care? I, I do think, could this be the time where the unemployment rate, I've said this a few times, like where the stock market doesn't care if the unemployment rate rises a little bit, cause they'll think, well, that's AI working, right? AI is, is crowding out jobs and making it. So we don't, we're more productive.

37:55I don't know that you could prove that, but, uh, I don't know. Strange times we live in, Ben. It would be a weird statement to make that the stock market doesn't care about a slowing economy. Yes. That would seem to be a stretch. I would agree. All right. Nick Timoreos tweeted, Fed call us of 610 in terms of where banks are looking for rate cuts. And really nobody except for MUFG, who I'm not quite sure who that is, expects a July cut. We've got a Fed meeting tomorrow. It looks like there's a bunch of Septembers, a couple of Octobers, Decembers. Timoreos had a piece out this morning. talking about why the Fed is not cutting.

38:33And it seems like they are just, for better or worse, in my estimation, worse, they are much less focused on the slowing economy, arguably, well, yeah, deteriorating economy, as they are the potential for inflation to come back. They're not cutting in July. If the economy is slowing, the Fed's going to be late. That should be your baseline assumption. Yeah, and they're basically saying that. so um this is a wild chart wait hang on duncan duncan says that um i'm gonna get punched in the face by someone thinking i'm sarcastic by saying my pleasure so maybe i should rethink that strategy what's wrong with my pleasure how many people do you know besides chick-fil-a that actually say that it could sound kind of sarcastic depends depends on how you say it i don't think it would sound sarcastic coming from you okay um all right we talk a lot about consumer confidence the UMICH survey.

39:30Torsen Slock did a chart book on China. And look at this. Chinese Consumer Confidence Index. Holy mackerel. Crashed and no recover. I thought the way that it works in China is the president tells you what your consumer confidence is and that's what you say. And then all the surveys work there? I guess not. Look at this. Isn't that wild? Not great. I mean, compared to them, we are downright giddy. Okay. They don't enjoy spending money as much as us though, right? I know very little about the Chinese culture, but I would assume that's fair. All right. So I have read a lot of books about bubbles over the years.

40:07I find it fascinating from the South Sea bubble to the Mississippi bubble and the great, the roaring 20s and all these different nifty 50 stocks. And every one of those, those books that I've read about bubbles, I think the Devil Take the Hindmost is my favorite, just short chapters all on, and it has great stats on every one of them. And every one of those has stats that you read, and you go, oh my gosh. Like, in the South Sea bubble, like, there was a hunchback people were using to sign away their equity papers on his back or something. It's crazy, like, crazy stories, right? This is the one from Stratechery about the AI bubble.

40:44This is going to be used in future books about the AI bubble, okay? I don't know if you read this. So this is Ben Thompson quoting Casey Newton's substack. They're talking about Meta trying to hire away AI researchers. All will be making pro-athlete money or better. I heard one credible story of a researcher being offered$75 million to join Meta. The Times reports some offer stretch into nine figures. That may sound like a lot for one person, and it is, but in some sense, Meta's future depends on hiring and retaining these people, and Meta has already committed$65 billion to AI infrastructure this year.

41:18What's a few hundred million more? Now, this may seem like, oh, my gosh, these AI researchers are making NBA money. But when you think about the amount of wealth that's at stake here, it actually makes sense. It doesn't make sense, but it does actually. But that's a bubble anecdote right there. That's a good one. Right? That is a good one. All right, here's a good one from the Wall Street Journal. news sites are getting crushed by Google's new AI tools. Business Insider cut about 21 % of its staff last month. A move CEO Barbara Peng said was aimed at helping the publication, quote, endure extreme traffic drops outside of our control.

42:04Organic search traffic to its website declined by 55 % between April 2022 and April 2025. At a company-wide meeting earlier this year, Nick Thompson, chief executive of The Atlantic, said the publication should assume traffic from Google would drop towards zero and the company needed to evolve its business model. Quote, Google is shifting from being a search engine to an answer engine. Thompson said in an interview with The Wall Street Journal, quote, we have to develop new strategies. So, wow. That's a crazy chart. So this is why I keep coming back to the whole creativity thing and like the ability to build your own audience.

42:41And I think having like an email list is so important now because you go straight to the consumer as opposed to relying on, I know why these big news sites have to rely on these platforms, but that's why as an individual practitioner or whatever, having your own audience is going to be more important than ever. So these stories, stories like this are going to keep coming. Oh yeah, for sure. All right, Ben, I've been thinking a lot about this and I'm glad that I waited on the matter because there was an article that Kyla wrote on her sub stack talking about a new book called Losing Big, America's Reckless Bet on Sports Gambling by Jonathan Cohen.

43:24And I've been thinking about this because there are people, many people, some that I know, that are being greatly impacted by sports betting. Now, I want to preface this. There have to be some tales of woe for this stuff. It just has to. By saying, I love gambling. And I enjoy the shit out of sports betting. Yes, I lost more money than I should have last season. Oops, happens. I'm not mad. I will continue to gamble because I love it. I will put better guardrails on this time. But, okay, with that said, this is not great. So the founder of Polymarket tweeted how popular Polymarket is getting visits in May, 15.9 million, Coinbase, 34.7 million, Robinhood, 37 million.

44:16Also right on this list right behind number four and five spotter, DraftKings and FanDuel. Now, I think betting markets like Polymarket are generally more fun, less addictive type betting, right? I would suspect. I bet there are people who are addicted to just trying to guess every outcome of everything, though. Yeah, but I feel like I got ruined on Polymarket. It's like, come on. Like how, I mean, that's... True. More likely on FanDuel or DraftKings, yes. But the betting on sports... Now, it's not going backwards. I think that there are probably some things that can be done. They alluded to in this article about how to better regulate it and prevent people.

45:01So here's something from Kyle Substack. A study on NFL bettors from the 2023-2024 season found that 87 % of bettors accounted for a total of 1 % of sportsbook revenue, which means that the vast majority of bettors are able to play safely. Okay? It's a big number. 87 % accounted for 1%. Then there's that other percent of players, like 3 % of players, that account for like 80 % of the revenue. Some of them are really rich and good for them. They can spend their money however they want. Some of them are not really rich and their dopamine pathways are rewired and they're addicted. So Kyla asked him, how do you exercise personal responsibility against a system designed by teams of behavioral psychologists and data scientists specifically to defeat your capacity for rational decision-making?

45:55I genuinely don't know. And I've used as an analogy alcohol, but it's probably not a good one because John said, it's unlike drugs or alcohol in that way. There's no reason that you'd expect, oh, if I have another shot of vodka, it will cure all the negative effects of my alcohol addiction. Theoretically, like if you hit the Milwaukee Bucks over tomorrow night, it could wipe out all of your debt. So you just keep chasing and keep chasing. So it's more like the lottery mentality. So there's been a lot of studies out of the UK about suicide among young men because they're way ahead of us in terms of their adoption of this.

46:31And again, I know this is like wildly complicated and I get personal responsibility, you know, people, but like, oof, I just don't know. So we had, before casinos were everywhere, we had a handful of them in northern Michigan where I grew up on the Indian reservations. That used to be the only place you could have casinos in a lot of areas, right, when I was younger. And they made the switch when I was in high school. It was perfectly timed when I was a senior in high school. They made the switch from the gambling age being 21 to 18, right? So a senior year of high school, my friends and I would go out to the casino, drink a few beers in the parking lot, go gamble.

47:07The greatest thing was the first weekend they made the change, all the waiters and waitresses, in their head, it was like, you don't have to ID anyone. So they were serving us beer at 18 at the table. Great time. Well, I would witness these people on a Friday night take their paycheck, sign it over to the casino, and get it all on chips and go literally gamble their paycheck. And now it's on your phone. And we talked earlier about the benefits of breaking down the barriers to help people invest in the stock market. That's amazing. Breaking down the barriers to help people gamble, obviously, is the opposite effect.

47:39And it's one of those, you can't put the genie back in the bottle things, unfortunately. People want everything to be easier because we have the technology for it. And I don't know how you stop that. One of the suggestions that was made, which seems reasonable, is, I don't know how this would work or enforce, but maybe like some income verification on if you get past$10 ,000 in losses, whatever it is. Like now, are they going to enforce that? Why would they? But lives are being ruined. And that is just a fact. Yeah. And I think we are in the era of, I don't need other people to tell me what to do.

48:18I can do what I want. Like good and bad, put it all out there. Let me make my own choices. And unfortunately that's going to hurt a lot of people. Yeah. I think that's just the way it is. That is just the way it is. You're right. All right. Let's talk about Bitcoin again. Last week I talked about how crypto is TradFi. I think crypto needs TradFi. So Eric Belchunas quote tweeted this one from a crypto person. What percentage of crypto people do you think have like a cartoon or AI generated picture for their social media? It's got to be like 90%, right? It's very high. So this person tweeted, Bitcoin is currently trading at over$105 ,000.

48:55If you want to buy on Coinbase, they charge close to$107 ,000. If you want to sell, it's more like$104 ,000, WTF. So Eric Belchuna says, like, this is why ETFs are growing like wildfire. They don't have these wide spreads like this. And I do wonder how much of the money going into this, obviously a lot of it is new adoption, is just people who are like sick of paying these ridiculous spreads. And also, how is this still happening? Bitcoin is way more, it has to be far more liquid now than it was. I understand this happening in 2014 and 2017 at the beginning when it was still this new thing. How are, because I saw this when I was on trying to sell some Bitcoin earlier this year on Robinhood, which was a great timing at the time.

49:40Roundtripped and not so much anymore. I did buy back in some. But the, I looked at this and the spreads were really, really wide still. And I guess the whole point is use limit orders. But how many people actually use limit orders? Yeah. Yeah. That's the solution. But this is why the ETF, even if you're paying a fee on the ETF, it probably makes sense because you're going to pay higher fees to jump in and out on these brokerage platforms. No doubt. Why are these spreads so high still? Just because they can and no one pays attention? It seems ridiculous to me. Yeah, because they can. I don't know.

50:15That's it. Okay. I think the potential gains that people are looking at on Bitcoin and the speed with which people are transacting, they just don't care. Because if they did, it would change. I do think that's part of it. But that's one of the biggest bull cases for the ETF, though, is just people finally wising up to it. So here's a headline. crypto tycoon Justin Sun's Tron Group to go public in US via the first merger, aka SPAC. Here's the lead. Winter Park, Florida, based SRM, currently designs and manufactures toys, souvenirs, and plush items for theme parks and entertainment ventures. Its products include Smurfs, water bottles, and stuffed animals such as Hannah Hedgehog and Gideon Gator.

51:07SRM shares surged on the disclosure, rising more than 500 % in midday trading. The toy company said it was acquiring TRX to establish a Tron treasury strategy, referring to the growing ranks of publicly traded companies that have announced plans to add cryptocurrencies for their balance sheet. Okay. Seems legit. I don't know. So I guess we're doing this again. This is where we are. We're at this part of the cycle. Mm-hmm. It's going to get stupider. Just wait. We're not even close. All right. Here's another one. Thomas Braziel tweeted, at this rate, at this rate, the company is going to be worth more than the assets under admin.

51:51Ha ha. I mean, come on people. So Split Capital tweeted it and said, Circle made about$200 million after paying out incentives in 2024. It's trading at 162 times those figures now. Market can't get enough stablecoin exposure. Now, I think the last part is the interesting part. Market can't get enough stablecoin exposure. Now, you may say this is madness. This is stupid. This makes no sense. And I would agree. But I also am a market person and the market has spoken. It's not to say that the market can't change its mind, but it's really interesting. Market can't get enough stablecoin exposure. Did you read the Michael Semblis piece on stablecoins?

52:38He's, he's, okay. Take a look at that. Maybe we can discuss it. He's not sold on stablecoins. Yes, I did. He does some adjustments about the actual transaction count, right? Yeah, he's not as sold on stablecoins as the BLN like a lot of other people are. Okay, and I don't really have an opinion on the long-term adoption of stable coins. I would probably think I'm a little bit more bullish than him. But I just think it's interesting that public markets are eating this shit up. And I generally am of the mind that even though stuff is stupid, markets aren't that stupid. Yeah, I just do find it kind of hilarious that the whole idea of crypto was like, we're going to end the dollar.

53:16And the whole idea of stable coins is it's a way to put your money in the dollar. Yeah, but I don't think that's like a good gotcha. What? Are you kidding me? It's not like every Bitcoin person is saying it's going to replace the dollar and every Bitcoin person is saying stablecoins are the dollar. Like, I get the paradox, but... Okay, let's talk about housing. A lot of people keep saying housing is broken. Maybe I've even said that before. I think I've come around to the fact that housing is just not fair. It's not broken, but it's not fair. Okay, go on. Joe and Tracy on OddLots this week had the guy from Morgan Stanley, their housing expert.

53:52And did you see this chart here? The evolution of mortgage payments to household incomes. It's kind of a weird chart. So, but go with it. And so it looks at the percentage of your income you're spending on your mortgage payment. It's an excellent chart. And this went from 12, 13, 15 % pre-pandemic to now in 2022, 23, and 24, more like 24, 25, 26 % of your income. That's a huge, huge jump, obviously. Now, here's the not fair part. So I'm making these numbers up, but I think they're directionally right. So 60 % to 65 % homeownership rate in this country, right? We know that number. I would say 25 % to 30 % of the country is probably always going to rent because they live in a big city or they just can't afford to buy a house or don't want to buy a house.

54:36And then that leaves anywhere from 5 % to 15 % or so of people who want to buy and are in a difficult situation. My point is, and obviously there's people who own a home already who want to buy, and they don't want to because of mortgage rates, but they have equity and they could if they wanted probably. My point is that it's a minority of people who are really impacted in a bad way by this. And it stinks. It's not fair. But I think that's probably why there's not more like groundswell support for like pitchforks and torches, right? We need to fix this. That's probably why it doesn't happen because the people who already own a home are the majority.

55:13They're the ones who've benefited the most from this. Think about - New homeowners are getting absolutely, absolutely plugged. So think about this. If you bought a house in 2018 and it was 16 % of your income. Wages are up 30 % since then. So your mortgage payment has stayed exactly the same and now it's a smaller percentage of your income because your income has grown. Think about how much of a better position you are as a consumer to spend money now because of that. It almost doesn't seem fair. It's not fair. All right, let's talk private markets because we've been talking about them a lot lately.

55:46And this is one of those that it's not a flash in the pan thing, right? Private markets, like this is going to be a big story for a long time to come, I feel like. I am super bullish on the idea that private equity, private assets are going to continue to infiltrate and grow in size. That is no comment on whether or not these are going to be good investments, but they're going to win. Yeah. We've talked to a number of managers that they've made these evergreen slash interval funds that make it easier than ever to invest in this stuff. And yeah, I, I agree. And I assume, do you think that some of them, I don't know what the rules are.

56:28Why do you think it is that every quarter you can only take 5 % out? Is that a rule? Or is that just the industry standard? Okay. I'm going to talk with Phil about this. I'm talking wealth. And there are certain funds, there are certain interval funds where it is contractual that you have to redeem up to 5 % of NAV. There are other structures like Starwood that have the ability to say, can't do it. Yeah. We can't do it. We're going to gate it. We're going to gate it at 2%. Wouldn't we get in the future, one of the companies saying, all right, these funds are all doing 5%. We're going to let 10 % out.

57:03We're going to be more liquid. It depends on the underlying investments. If you're a real estate, how do you do that? You can't. True. All right, so this is from the New York Times. Yale is rushing to sell billions in private equity investments. Here's from the story. Yale University's famed endowment has been trying to offload one of the largest portfolios of private equity investments ever in a single sale, a movie that reflects both pressures on Wall Street and higher education under the Trump administration. The Ivy League school has sought buyers up to$6 billion in stakes of private equity and venture funds.

57:29And it sounds like the secondary discounts aren't as much as they were, but this is the downside of illiquidity. They realize like their liquidity profile might have to change if they're gonna have to pay higher taxes or they're like gonna have to spend more money because they're not gonna get as much government funding. This is when illiquidity hurts you. Now, the people say, well, who cares? For 40 years, Yale has benefited from private equity. They're way bigger than they would have otherwise. I read all the David Spence books. Like they were the first ones there. But this is the downside of it.

57:57When you need the money, sometimes it's gonna be painful to get it. Did you hear Mobuson with Patrick? I don't think so. So I'm sorry, not my person, Bill Gurley, my bad. Yes, I did listen to that. So Bill Gurley said, and by the way, shout out to Patrick for including videos. I love seeing videos on podcasts. I kind of didn't think I was going to five years ago. But it is something I would never would have thought of either. And it's not that I'm like glued to it, but like I like looking down and seeing people laugh and seeing the body language and seeing who's speaking, right? These are generally faceless people.

58:32Not all Patrick's guests are people that I've heard of. Graham Weaver, for example. I enjoyed watching that guy. We have a lot of YouTube-only viewers of this podcast, obviously. Part of it is they get to see some of the visuals, and they get to see your t-shirts and my Hawaiian shirts. So Bill Gurley said, does the Yale model work when everybody's doing it? Now, there's a lot of nuance in the story because Yale's been doing secondaries forever. And I think the impetus for this is potentially new regulation. So in a statement provided to the New York Times, a representative for the Yale Endowment acknowledged the sale but called private equity, quote, a core element of our investment strategy.

59:07The statement added, we are not reducing our long-term target to private equity. So there is so much to talk about with private markets, and there's so much nuance. Damn it, I lost my train of thought. How about that? How about this? one of the reasons they're harder to understand is because this is a good one for Morningstar. IRRs are not the same thing as returns. You can't eat IRRs. I wrote a story about this a long time ago. There was a story that Yale's venture portfolio has an IRR of like 70 because they invested in LinkedIn early on or something. And it was like 70 % IRR. And that would be like an annual return.

59:50But if you plugged 70 % per year on Yale's endowment or just their piece of venture, their portfolio would have been worth like a trillion dollars or something. So the way IRRs work, it's not, it depends on the timing of the cash flows matters a lot in that calculation. And so it's not the same thing as a compounded return. Now, I do think that the interval funds make changes a little bit, make it easier, but those old school private equity funds are not as good as they look from their IRR numbers. So the example that they gave was, they gave an example, and again, we'll link to this if you want to read it more closely, but they show an ETF with a 15 % annualized return.

1:00:30That's actual dollars annualizing versus a private fund that is able to say that they have a 15 % IRR and the growth of a dollar, it's night and day, not even close. Because you don't just give all your money one day to the private equity fund and it's invested it up front. It takes a long time to invest. So that's the point. It's a different ballgame. I lost my train of thought. I felt like I was rolling. Oh, well. Okay. We'll have more to talk about with this. More to come for sure. All right. Survey of the week from Gallup. American satisfaction with the way things are going in the US. This is just trash.

1:01:02Just garbage. I mean. In the 80s and 90s and even the 2000s, it was regularly 70%. It's now at below 40%. And really since the great financial crisis, it never recovered. Do you think you could accurately track happiness? No. Impossible. Impossible. There was that one happiness study. I can't remember what the name of the book was. It was a happiness study by Harvard that they did over the course of people's lifetimes. And they constantly sent them surveys and like that to me. But that's not how these other surveys work. It's a point snapshot in the point of time, right? Yeah. All right. What did you call last week?

1:01:38The people who are really rich, but then they don't. It's a reverse. What did you call it? Reverse flex. So I don't even know how to say his name. Ingvar Kamprad, this is from Dividend Growth Investor on Twitter, founder of Ikea, was worth close to$60 billion at the time of his death. He drove a 1993 Volvo for two decades, purchased clothes from flea markets, got his hair cut in foreign countries. Can you get cheaper haircuts in foreign countries? And he flew coach. This is not something to aspire to. But the problem is, and I don't think so personally, he probably doesn't become as successful as he is if he doesn't do these things right he doesn't create ikea if he if he doesn't have that maniacal whatever about him sure so that's that's the hard part about it as a regular person you look at this and you go this is insane behavior but if he wasn't a little insane he doesn't create this type of company right all right um our very own kelly cox had a great piece this week called my money story and she talked about how childhood financial insecurity defined her life.

1:02:40And she told her whole story about growing up in a family with a lot of kids and not having a lot of money and how the great financial crisis sort of devastated her family. Her parents lost their jobs and it's a really, really good reminder of how much your experiences can shape your views of the world and your views of money and risk and all these things because I think a lot of times in finance, we look at the spreadsheet stuff and go, here's your measurables. You should do this. And so many times that those measurables do not tell the whole story, obviously. No doubt. Excellent piece. It's really good.

1:03:19I mean, I remember talking to a client once who worked at Lehman Brothers and had, I can't remember the number, 70 % of their net worth in the company that went to zero. Totally, completely changed their view of risk forever. Of course, how could it not? Right? These are the things that I think you can't pick up in just the measurables. Totally. All right, Ben. We are living in the age of nostalgia in movies in particular. So we've got a new naked gun coming out. We've got... It looks decently funny. I was forced... I said I was out, but I was forced to watch the trailer and a movie I saw lately.

1:03:58And you're right. Looks good. Okay. Lewis Pullman is set to star in Spaceballs 2 next to his father, Bill Pullman. I mean, obviously - Wait, that guy's, the guy from Top Gun Maverick, that's Bill Pullman's son? News to me. Can I make, can I give an admission here? I have seen Spaceballs more than I have seen Star Wars. Like I enjoyed Spaceballs more than Star Wars growing up. I mean, that's fair. I certainly enjoy Hot Shots more than Top Gun. Hot Shots was pretty good. I have some, I still have Star Wars hot takes. I'll save them for another time because we're going long. One of these times. Another one.

1:04:35Masters of the Universe. Holy shit. He-Man? You kidding me? By the way, I haven't said the word He-Man in 30 years, and that's a hilarious name for a superhero. He-Man. Yeah, that was kind of a weird one. Skeletor, great villain, though. Who is He-Man? Do you know who that is? No idea. Looks pretty jacked, though. All right. Let's just skip. Oh, one thing. I just want to talk about this real quick. So there's a chart in the FT. Gold is now the second most important reserve assets for central banks. Gold is overtaking the euro as the world's second most important reserve asset for central banks, driven by record purchases and soaring prices.

1:05:15So we had Steve Eisemann from The Big Short on TCAF last week, and he spoke about all of this deficit talk is virtue signaling. He's like, where else are you going to go? I loved that. That's always been my take. I was like the lady in church with her hand in the air with a preacher. like, yes, preach. I have for years have said, I'm not worried about this. And I totally agree with him. All these hedge fund managers, they have to try to one up each other and say like, I'm more worried. No, I'm more worried. And then if you're not worried, it's like, you don't care about America. You don't care about starving our children, leaving them the burden.

1:05:50Like it is virtually. Screw the grandkids. Yeah. When has the bill ever come due for the grandkids? When? I don't know. Now you're being selfish because just wait. Yeah. Did the grandkids pay off the bill from World War II? Like, I don't know. It seemed to work out okay. I don't. Yeah. I totally agree with them. What is the alternative? Show me an alternative first, and then I'll start worrying. Yeah. So I thought it was well said. All right. Ben, I saw what you did here, by the way. We can talk about this in a sec. Okay. I'm going to out my beloved partner, Chris Venn, who is the ire of one of my pet peeves.

1:06:31don't tell me you're five minutes away when you're really 45 minutes away. Why do that? Why do that? He does this repeatedly. I FaceTimed him. He was in the shower. He said, I'll call you back in five minutes. He called me back in an hour. All right, I get that. Like, I'll call you back. I get it. But that's an expression. I'll call you back in five minutes. But I was meeting him at the dock to go ride in on jet skis. And he said, I'm at Belmore Avenue. I'll be there in a minute. No, you won't. You're 14 minutes away. Why say that? Okay. I do that sometimes where I'm still at my desk cleaning stuff up and getting ready to leave for the day and I'll text my wife, hey, on the road, see you soon.

1:07:07That's fine. Well, on the road, but here's credit to me. I am, if I'm like 17 to 20 minutes away, that's what I say. I don't say five minutes away. Why would you? Waze makes it easier to know those times now too, right? Yeah. Just, just tell me exactly how far away you are. Don't, okay. Um, here's, here's a email etiquette tip. Not to sound too, not to have one of those in a while. The funny thing is, is that a handful of our emailers now will say, P.S., I hope I didn't break any Michael's rules here. And guess what? People are walking in eggshells around you for emails now. None of them do. None of them do.

1:07:40A little pro tip here. Although this is such a weird thing to do. This is not even like nitpicking. It's just, you know, come on, don't do this. Somebody sent me a text message. What's your email number? What's your email address? An acquaintance, right? This is not a friend of mine, an acquaintance. Barely. Although I do like him. Nice guy. So no heads up. And this, this part I could forgive, although I don't like to see the action. Actually, you know what? This bothers me more than the pet peeve, the nitpick. So he connected me with somebody who can offer me nothing and I'll take the meeting because he asked me to, but Hey, give a heads up.

1:08:16Like, Hey, you mind if I connect you with this guy? Cause I would have said like, actually I kind of do mind. I have no use for that guy. I can't help him. I'm done with this guy. I can't help him. All right. But that's not, that wasn't even the part that I led with or that came to mind. It's this part. So this person clearly asked for an intro to me, which I, that makes me feel good. Thank you. But he, this person who made the intro copied and pasted into a new email and then signed off and clearly separate texts. So it's now obvious to me that he just copied and pasted what the guy told him to send.

1:08:53Don't be so lazy. Right. Right? It was like the texts weren't even remotely close. It might as well have been 14-point purple versus like 11-point black. See, this is why you need to just train AI in the future to like look out for these email etiquette things. That's going to be… It's the little things. That's all I'm saying. Okay. I have probably a mild case of OCD. So sometimes I just have a pen in my hand when I'm doing stuff. And you commented on it a couple weeks ago. Like, why do you have a pen in your hand? It's just something to do. Again, mild OCD. And yesterday we were doing a podcast.

1:09:23You know, I saw you smiling, and I was about to say, what are you laughing about? And when I saw this picture in the doc, I knew what you were laughing about. That was it. So I snapped a picture of you. You did the pen in the mouth the whole podcast, and I didn't know if you were trying to make fun of me, or you actually just… No, I wasn't. Because sometimes it's just nice to have a pen in your hand. So the pen is on my desk. I almost never have a pen on my desk, because why would I have a pen on my desk? I don't write. Do you write? Occasionally, I'll write a note to myself, but it's very, yeah, it's not as much as I…

1:09:51I have a whole like cup full of pens that just never get you. Okay. So I had to sign the documents the other day and now I've got a pen up here and I kind of get it. It's useful. Yeah. Okay. I got a story. Taking your dog for a walk. When you take your dog for a walk and you pass someone else taking their dog for a walk, there's this constant, because my dog's still a puppy. She's like 11 months old. You worry that your dog's going to be a little spaz or freak out or like bark and make you look like an idiot. Right? Of course. So the other day we were walking by and usually my dog, she's fine.

1:10:21She's a little, she's like 10 pounds, tiny, more bark than bite. Usually she's fine. Unless the other dog makes a noise, then she'll freak out, you know, and I have to pull her back. But the other day she kind of did one of these and jumped at the dog, you know, and the other guy, I was a little like one of those, uh, little bulldog kind of, I don't know, not a bulldog, but English bulldog, whatever. A French bulldog or a bulldog? There you go. French, not English. Um, and the owner goes like to the dog, a good job, Denny, for not like freaking out. Like kind of like, you know, and I'm going to be like, dude, come on.

1:10:54But isn't it? You always, you feel good when your dog doesn't freak out, but the other one does. Right? Yeah. Well, yes. That's a great, that's a great feeling. I have extreme anxiety about dog walking. I am not prone to anxiety and I didn't really know what the feeling was in most of my life. But my other, my first dog, Bianca, we used to take her to the dog park all every single weekend. And she was great. Got her energy. Boxers have a lot of energy. and when she turned one, something in her behavior changed where she would get into fights every single time we brought her to the point where I had to stop bringing her.

1:11:31And she's the sweetest angel, but around dogs, she would get aggressive. And so I felt like my balls in my throat. Like it was just an awful feeling walking her. And so now that I've got like my new boxer, like I took her for a walk the other day and two dogs came over and like I just felt it again. And I was like, oh, like a very uneasy feeling. And she made it, but I am nervous. Yeah, you do like the wrap the leash around your hand a couple times to get them closer. But I love, my dog has a lot of energy too for a puppy. So I take her for like two walks a day. And it's kind of nice just to get out of the house.

1:12:05All right, let's do recommendations. Okay. I've got a bunch. Somebody emailed us. I can't remember what the exact email was. But recommended the way, way back. and... Wait, is that the Ben Affleck one or the summer one? The Steve Carell one. Okay. That's funny because I really like this movie. Okay. I know you do. Okay. So I watched the first 45 minutes of it. And it's just, these are just not my type of movies. Coming of age. Yeah. Coming of age. You know, not a whole lot happens. And I turned it off and And like I gave like a few different sittings. I watched it for 15 minutes here, 30 minutes there.

1:12:50And then I was like, I get it. So here's what I, the kid. This is, I thought like Ben must love this movie. I do. The kid in the movie is not very good, but it's got Steve Carell playing a jerk. And he's pretty good at playing a jerk. Sam Rockwell, who I love. And then Maya Rudolph. So I love the whole summer working at a water park thing. It's a great, it's a great. I don't, I don't not like it, but like whatever. It's just, it's a Ben movie. So yeah, those are the kinds of movies that you watch them in the summer and it puts you in a good mood. Sure. All right. But Tyre season two, like laugh out loud funny.

1:13:19I can't believe season one was frankly junk. I didn't even crack a smile in season one. Yeah, I don't think I did either. I'm literally LOLing. Thomas Hayden Church as Shane's dad was incredible. I love Thomas Hayden Church. What a season, right? Like just, and I love that the episodes are 23 minutes long. Like that's nothing. I think the dorky guy who plays the boss or the manager. He was so much better than season one. Yeah. I mean, it's a ripoff of The Office in a lot of ways, but just a little more crass because it's that tire repair shop or whatever. But those workplace comedies, they almost always work.

1:13:56Okay. I saw Bring Her Back in the Theater. Bring Her Back is the movie that was done by the dudes who did Talk to Her. Talk to Her was a mainstream-ish horror movie. There's some laughs. It's fun. It's scary. It's a little bit light in certain places. It's a good watch. This movie looks psychotic from the poster. Okay, you could watch Talk to Her and have a good time. Okay. Okay. Bring Her Back was soul-sucking. It was the darkest f***ing movie I might have ever seen. It's up there with Speak No Evil and— not Speak No Evil. Damn it. The Dark and the Wicked and something evil. I can't remember.

1:14:38How have they not run out of names for these movies? Just, dude, this was pure black. Did I enjoy it? Kind of? Oh my God, this movie hurt. So this is for sickos only. So certainly, Ben, this is not for you. Wow, credit to them. They really did it. Just this movie hurt physically. After that description, I can't believe you said I actually kind of liked it. It physically, it physically, I'm a sicko. I'm a sick puppy. It physically hurt to watch. All right, lastly, I saw, I took the boys to see How to Train Your Dragon in IMAX. and we walk in and Logan goes, whoa, that's a big TV screen. And it is.

1:15:13And this was, I think, the best kids movie I've ever seen. Wow. Like with your kids, you mean? With my kids. I can't believe how good it was. I was more expecting to be on my phone. And the plot is, it's kind of like Free Willy, but with dragons. Remember that movie? Oh, yeah. just fantastic. It's going to do half a billion. I think. Kids are going to love this one, huh? It was. My kids can't wait. And not just kids. You're going to have a great time. It was so, so good. Shockingly good. So if you have a child of age, go see that movie. Okay. My daughter and I are still going through our sports movies.

1:15:59We started Miracle this week and the, the credits for Miracle at the beginning, this is like a 2004 movie. I never saw that one. I don't know how I just missed it. Kurt Russell. They go through, because it was the 1980 Olympics that this happened, right? And do you believe in miracles? And they show the 70s how awful they were. Like, it's just this constant barrage of, like, the 70s are so bad, and it was kind of like how this was an uplifting moment for the country after the terrible 70s. It's funny that I feel like the sentiment of the 2020s and all the crazy stuff that's happened kind of almost feels like it matches the 70s, but we've also had a good economy and a booming stock market.

1:16:35it's like it's weird to think the 70s had a lot of bad stuff happen but also a terrible economy and a terrible stock market like we at least we've had some crazy things happen but at least like that stuff is going okay so i think there's a lot of tv shows that should be miniseries and miniseries that should be movies like the better sister i finished it i probably not for you now that i think about it that should have been it should have been a movie because there's three episodes that were totally unnecessary and then at the end they hurried the last 20 minutes like shoved all this stuff in there and didn't explain it.

1:17:05So it was decent, but it should have been a movie. And The Handmaid's Tale that we finished, that should have been a miniseries. Because I read the book now. Chris talked me into reading the book. And the book is fantastic. And it actually makes the TV show better. But it made me realize that the TV show was way too long. So this was the last season? Yes. And I didn't realize that the book was written in like 1985. It's really, really good. And finally, Chris Hutchins was on Tim Ferriss this week, this past week. Chris from All the Hacks, friend of the show. I'm going to be on his podcast soon.

1:17:37I recorded it last week. I don't know what's coming out. But he talked about, he is like the most optimized points person there is. And there's kind of like a dark web for credit card points. He was talking about how he's buying $300 ,000 worth of gold bars on Costco for the points and selling, reselling the gold bars and like making the difference and buying a million dollars worth of cards on Amazon, gift cards on Amazon for resale because he can somehow get the points. It shows you how crazy. This is what you're up against in the points world. Tim Ferriss has 15 million points because he's never spent a dime of his points, even from all his business cards.

1:18:13What does he say? Why is he doing that? He's just decided never to do it. So Chris is giving him advice on what he should do those 15 million points. Very interesting episode. Did you see the Sapphire Reserve is now going to$795? I'm out. Well, they're also increasing their benefits to$500 cash back. I'm so out. That's too much. Sorry. See you later, Chase. Okay. Too much inflation. There's other parts. It doesn't... We'll report back next week. I have some work to do there. Lastly, I know we're... By the way, I could feel Duncan sweating. This is probably the longest pod we've ever gone. I saw 45 pages in the doc.

1:18:48So thank you, Duncan, Daniel, and the rest of the team. Out for Justice Rewatchables. You have to listen to it. It was laugh out loud funny. Now, mind you. I don't think I've ever seen this movie. It's Seagal's first big hit, or I might've seen it when I was a child. I don't remember. I saw all the Seagal movies back then. Here's my problem. I don't really like the, I like this movie ironically. That doesn't do it for me. How could you like Seagal movies unironically? That's the thing. You don't. So I don't get the point of liking something ironically. I don't get that. Just, I'm telling you, just listen to the podcast.

1:19:27It is so funny. All right. It is so funny. Seagal, some of the Seagal stories are hilarious. Okay. All right. I was a big fan of Under Siege. Of course. Under Siege 2. Under Siege might have been the first time I saw a naked woman on the screen. All right. Congrats to you. All right. Shoot us an email. It might have been Terminator 1 with Linda Hamilton. I remember my dad putting his hands over my face and fast forwarding. Okay. You can come up with your top 10 list of naked women you've seen at a young age. Desperado number one that's obvious shoot us an email animal spirits compoundnews.com we'll see you next time