LeBron James.

LeBron James away from the team right now for personal reasons.

Personal reasons.

The Diddy tape came out, photo was.

Released of him standing next to Jay Z.

50 called him and said, hey, dog.

You'Re my next post.

You know this ain't just a meme page, right?

It's a meme page.

I love what he's evolved in terms of.

Nobody came after him for the lawsuit yet.

For what?

56 is literally destroying people's lives.

No, he's not.

Yes, he is.

He's just having fun, at their mercy.

That.

That is destroying people's lives.

No, it's not destroying.

Come on.

No one's paying attention to him.

He's just a troll now.

That's all.

He is literally dragging Jay Z through troll hell.

Jay Z came out strong with a statement, too.

He did.

He's like, yeah, don't have it confused.

Yeah, I'm going after this attorney.

He's a scumbag attorney.

The whole thing.

I read the whole statement.

Whole statement.

I thought, damn, he's coming out.

He wants all the smoke.

And then 50 Cent comes right over the top.

You're so NBA on TNT was on last night.

You know those guys.

Charles Barkley, Kenny Jet Smith, Shaq Ernie.

Right.

Somebody.

Kenny references something about Jay Z and Shaq just gets up and walks away.

And then Charles Barkley goes, now it's probably not a good time.

Yeah.

Let me tell you, everybody you didn't invite to one of those parties is now coming after you.

Right?

Right.

Yeah.

You know, you threw a big party, you didn't invite somebody.

There's personal animus.

And can we talk about how Mel Gibson wasn't so crazy after all?

What do you mean?

No, he said.

He says some anti Semitic shit.

That stuff was crazy.

That stuff was crazy.

But he came out early on, calling all of Hollywood pedophiles.

All right.

Yeah.

So, yeah, he knew.

He took some shots.

Cat Williams came out just like that.

Two minutes into the show.

No YouTube advertising, just like that.

Bam.

So, you know, the numbers are going to be low.

That means it's a good episode.

I think we're in some kind of holiday slump right now.

Like, I watch the YouTube videos and it's just.

No, it's the bro.

That's what it is.

It's the holiday slump.

No, it's the flagging.

The flagging?

Yeah.

We've been flagged.

The sad part is I can't even, like, advertise our clips now.

I saw, I recognize that the term that people use on social media to get away with, to get around that term, what is it is PDFs.

Oh, like I send you a PDF, but you are a PDF.

Yeah, right.

Wow.

The PDF.

Right.

See, because that's my problem with the whole thing.

Like I said, you gotta get creative, bro.

No, but why, if we all know what I'm saying?

Right, Right.

And I'm just tricking the algorithm now to get through.

Yes.

Like we got censored people.

I would not know this had I not have been a content creator.

Okay?

Oh, you're a content creator.

I hate to say that.

Amongst many things.

And I've had such painful problems with traditional social platforms.

Unequivocally, the most free is X.

Formerly Twitter.

Right.

Okay.

But then Instagram meta.

There are things that they will.

You will say and do that will cause their algorithm to just put you in the backboard.

I was, I was blowing up.

My account went from like 0 to 50k, like overnight.

You're talking about getting shadow banned, right?

Got shadow banned, then got unshadow banned.

Like, that's crazy to me that people will search your name and it won't pop up.

Won't pop up.

But then by far and away, the worst, though, is Google.

Really?

Google, who owns YouTube?

Yes.

If you even say a president's name or the word president, just like that, you will be banned for election speech.

Wow.

Like during an election campaign.

Yeah.

If you talk about our former sponsors and the chemical enhancements, you are banned for un.

FDA approved substances.

So wild.

I mean, just little tiny statements.

And if you upload a video, like our video is typically an hour and a half long for the long format.

Right.

You will get.

They will.

They will literally review the video electronically.

The algorithm will pick it up and they will ban you from advertising.

You can still post it, but they ban you from advertising.

And they pull down your exposure on the video because the algorithm knows you talk about things.

So the only people who see are people who are subscribed.

You can appeal it and.

But then they go through like a manual review.

The manual review.

But all they do is they go, okay, it was flagged here.

What did he say?

Oh, he said this word.

Stop.

Yep, that's it.

Just a word.

And I'm like, that is not free speech, man.

Right.

And that's, that's the beauty of the podcast platform that most people understand.

And I'm happy we started this on the true streaming audio platforms.

Yes.

Because nobody monitors that.

Nobody.

Nobody's going to be your.

Your limiter.

They can't change the Algorithm.

It's just Spotify and Apple.

Podcasts are just pushing out content and you can choose to listen to it or you're not, but no one's going to deplatform you that way.

Well, that's the whole purpose of having long form content like a podcast, is to be able to say things or say certain words that typically get flagged or banned or that are viewed as, you know, they're prohibited on certain platforms.

But that on a long form content, you can actually try to understand what they're saying in what context it's being used in.

Right.

You know how many people don't, though?

I.

So you know that real I posted today.

Yes.

Where I said, you know, Jerome Powell made some comments, and I alluded to the comments, but I didn't say it on the real.

Yes.

The whole point was you go, oh, shit, yeah, I want to hear what Jerome Powell said.

Let me go to the long form format and listen.

You know, people DM me like, bro, what did your own pal say?

I mean, dog.

I mean, so, yeah, it worked.

It is obvious, right?

Like, is it obvious?

I just started sending the link.

People were like, no, bro, just tell me what he said.

Why would I do that?

Yeah, yeah.

The point is, go check out that and you let me know.

Yeah.

Give me a view.

Right?

Yeah, One view.

You know, just.

I just want from you.

All right.

Welcome back to the number one financial literacy podcast in the world.

Why so serious?

Because we got it.

Like, I got to.

Got to know what this is.

Who we are.

Yeah.

Who we are.

The picture they're looking at of our faces.

They can't read the sign sitting next to me on my left, my partner in crime, Chris Nahibi.

And sitting next to me is my partner in time.

Time that he was late for the show, time that he's been here.

It's.

It's confusing.

One minute.

One minute counts.

Wow.

I know.

The studio was all set up when I got here.

Thank you, sir.

I appreciate it.

Feel special, right?

It was very nice of you.

Walked you in like Jerome Powell, the one and only side.

Omar.

Thank you, my man.

And sitting behind the ones and twos, the man behind the switcher.

Awkward silence.

Still absent.

Yeah.

Not here.

Yeah.

Fmla.

Yeah.

Fmla.

Yeah.

He's on family medical leave.

We miss you.

Well, you saw him pre show.

Apparently he wears bifocals.

I did not know that.

They're thick.

Were you.

Were you going to save that for like a crescendo of the show at some point in time?

And tell me or that's the way I got to find out.

It's.

For the longest time.

I don't know if he still has them.

He might.

I'll ask him to send a picture.

So, like, you know how everybody has, like, when you're not feeling well, you have comfy clothes that you like.

You got a certain pair of sweats you like or a certain hoodie that you like wearing.

Right.

All higher standard podcast merch.

All the higher standard merch.

Right.

Go to thspod.com.

Yeah.

Get some comfy clothes.

Yeah, yeah.

We got some holiday stuff for you there too.

Yeah, well, he's got.

He's got a certain pair of glasses that he likes that are like extra thick, Bro.

When I'm talking thick.

Is that what he's wearing tonight?

No, no, no, no.

These are some other ones.

Those weren't the thick glasses that are missing the.

One of the sides is missing the part that goes around the ear, so it's hanging off from one side.

Why would he wear this?

No, I don't know.

They're comfortable for some reason.

That doesn't sound comfortable at all.

I swear.

He's a very unique individual.

So, yeah, to set the stage here, we did a live.

While I was waiting for you to get here, when you got here one minute late party, you jumped in and we.

We conversed with a couple people who were on the live.

And then Arun joined us on the live from his home, sitting on a couch in front of a television, feet propped up, baby monitor off in the distance.

His wife has now gone to bed and he is getting ready to watch a movie that was recommended to him by Tick Tock.

By Tick Tock.

Yeah.

And he couldn't be here because why.

He has to be the.

Just in case something goes wrong with the kids.

So the wife can continue sleeping.

Yeah, she's.

Bro, she's pregnant.

Baby.

No, no, I get it.

Baby number three on the way.

Come on.

I'm not being sensitive.

I just, you know, I just felt like.

Like we could have.

We could have used him tonight.

Yeah, we could at least use him.

He could be zooming in.

He could definitely be zooming in.

But he said he's gonna go to bed in 10 minutes.

That's also a lie.

Yeah.

I know how many hours he's logging in on 2K right now.

And the video game.

Oh, yeah.

Stop it.

Oh, yeah.

I was.

He had.

I told you he was throwing an engagement party for his cousin.

Yeah.

Over the weekend.

Right.

And some of the people that he Plays frequently with were there, and they were conversing about how much they play, and some of the wives were like, it's gotten to be a little bit too much.

What do you mean by like?

So they.

They jump on.

I've never done this.

I haven't played a video game.

The idea behind it, if you were into it, I can see how it would be really fun and cool.

I could see that.

But how long do you play a digital game of basketball against one another?

I mean, you can.

You can change the duration of the quarters.

Right?

So it could be anywhere as short as, like, two minutes a quarter to 12 minutes a quarter.

Like a NBA game.

I am so confused as to why this is entertaining.

Oh, and they're talking and their strategy and they're going up against other people.

It's a whole thing, bro.

It's like where they play on the same team with other people.

Yeah, it's like.

It's like us being the Lakers.

And I'll be Brody James.

You could be LeBron.

Right.

This is so different than whenever I play video games.

I know.

So this is a whole different experience.

And how many hours a week is he doing this?

He didn't admit any number to me, but some of the other people, they were playing upwards of 15 hours a week.

Stop.

I know.

Come on.

This is wrong.

You know what he could be doing?

I've seen a lot of popular YouTube channels.

What they do is create a gaming leg Right.

Where their listeners follow them while they watch them play.

Yeah, they stream the games like a twitch.

Yeah, he could be that for us.

Why isn't he doing that for us?

Why isn't there a financial video game called Get Rich or Die Trying or Just Get Rich?

I mean, why is death got to be always part of your.

No.

Because 50 Cent.

We're bringing it.

No, I know you brought 50 Cent back in full circle, but he's trolling.

All right, so the intro topic of today's episode is, why does your net worth explode after the first hundred thousand dollars?

For the record, I don't agree at all.

You don't agree at all?

Well, I'm sorry, sir.

You know who does agree?

Alex Hormozi.

No.

A man by the name of Mr.

Munger.

Charlie Munger.

That is Rip.

He said you want to know his quote?

His exact quote, verbatim?

Okay, let me read this to you.

All right, the first hundred thousand is a bitch, but you got to do it.

I don't care what you have to do.

Find a way to get your hands on $100,000.

Obviously he means legally, because he did.

He, he said it's a bitch.

Find a way to get it done.

You said the name of the video game is Get Rich or Die Trying.

Honestly, it's that level of transparency from Charlie Munger, Rest in Peace, that I can appreciate and I love so very much.

I think the problem with that statement from Charlie Munger is you have to know Charlie Munger's history in order to appreciate the gravitas of what it is he's saying.

So tell me about it.

He's not saying get 100,000, make $100,000.

He's saying save, yes, accumulate $100,000 on the side.

And guess what?

If you're him, you go into the stock market and you make a long term play that will ultimately lead and supercharge your pathway to wealth.

Absolutely.

And this is where I wanted to start this conversation.

We'll get into those numbers in that timeframe here shortly.

But this all begins right, at a very, very early age.

And this is what I want people to know.

Whether you, if you have a problem starting or this is.

This seems like Mount Everest to you or you have kids that you want to teach this to.

Okay.

There was a 2018 study by a group of psychologists from Purdue, and they found that many of our financial habits are formed by the time we're seven.

Okay, I am fucked if that's the case.

If that's the case.

Right.

So look, if, if you're one of these people that maybe don't make this a priority, this, this isn't your fault per se.

This is something that could have been taught to you early on.

And we understand, you know, psychological behaviors, economic behaviors.

We've talked about it on the show.

So financial literacy is, is a learned skill set, though.

Make no question about it.

Nobody is born being good at it.

Right, Exactly.

And a lot of our behaviors are influenced by the people around us at an early age and how they acted and treated it, you know, while we were around growing up.

I don't think it's the skills as much.

It is the perception.

And how you perceive wealth and money and your possibilities plays a big part in how you actually choose to try to go after creating wealth.

Right.

And then to piggyback off of that study, there was a Harvard study done.

And now this is going to sound really cliche and really corny and nothing that's groundbreaking to any of us.

So like a normal conversation with you?

Yeah, very, like, very normal Tuesday conversation at around 11 o'clock when I stroll into your office, like when I say, bro, we got to have more conversations about mindset.

This is it.

This is.

This is literally what Harvard said.

This is.

This is the groundbreaking news of Harvard.

It begins with your mindset.

And I know that sounds corny, but it's like tuning in to shows like this and being curious and wanting to learn, reading some of the book recommendations that we've made in the past, or taking it seriously and hearing this conversation and now taking it a step further and doing your own research to seeing like, okay, maybe the way they broke it down and explained it isn't going to work for me because I can't set aside that much money a month.

But let me do my own calculations now to figure out how quickly I can get there or my family can get there.

Sure, I might.

The example that I'll be bringing up here Shortly is investing $10,000 a year, which is somewhere around $800 a month.

Right?

I get it.

If you're just starting out now and you haven't accounted for $800 a month, that might not be possible for you.

Right?

But something is possible and you need to start accounting for it and figuring out otherwise.

What are you going to say?

I'm not going to play the game of Monopoly.

I'll just sit this game out then.

Then you're throwing away your chances.

Yeah, but.

Okay, let's.

Let's go back to the Munger reference.

Okay, let's do it.

Charlie Munger is a very unique human being, or was.

And I spent a lot of time growing up really falling in love with the ideology of Warren Buffett's long term game plan.

Because to me, the philosophical position that Charlie Munger and Warren Buffett had taken was that anybody can be rich.

Like anybody can cook from ratatouille.

Right?

Ratatouille reference this early in the game.

Bro, that's a pretty solid reference.

Okay, I like it.

I'll see where it goes.

Anyone can cook, right?

But unfortunately, that has a comma, okay?

And you gotta play the game.

You gotta cook your food with the recipe.

If you deviate from the recipe and try to throw some extra sauce in here, it's not going to taste the way that it's supposed to.

Now, it might be spectacular.

You might make a new meal, you might make something that has a great flavor.

But for most people, you don't develop the skill set to deviate until you've been in the game for a long time.

You've cooked a lot of food.

And for Charlie Munger and Warren Buffett.

That recipe was time, patience and a long, long vision.

A vision longer than most people.

And people look at these, these two men as some of the most successful, if not the most successful stock market investors of all time.

What they don't realize is they started slowly, they built up over time.

They lived very humble lives, very simple lives.

They weren't out buying Lamborghinis and Ferraris.

Their luxuries were literally meals at McDonald's and Cokes.

You know, they owned and lived in the same homes they'd been in for decades, the majority of their lives.

And these men had very, very simple tastes.

And that allowed them to live off comfortably off the money they were making and continue to reinvest.

And the continue to reinvest part, that piece over decades is what ultimately makes the point of the first hundred thousand dollars is a bitch because you're playing a game where the scale really comes into effect.

If you can supercharge that scale by not putting an incremental dollars, $100 here, $200 there, and you can start with 100,000, you just get to the end goal of a million or 10 million or whatever it is for you much faster.

Because compounding interest takes time.

Absolutely.

So we need to, what we need to focus on is for the people out there, the listeners out there, the viewers out there, whether you're listening to this on Apple or Spotify where you can leave us an honest five star review, or YouTube where you can smash that like button, ring that notification, notification bell, hit that subscribe button, do all the moist goody good stuff.

Right.

We got two viewing options for you, Spotify and YouTube.

I mean this is like, I mean, top shelf shit here.

Blue ribbon, grade A.

Yeah.

White Wagyu.

Yeah.

Wait, yeah, Wagyu, Right.

What if there are mental barriers there?

You got to break down the mental barriers and say, no, this is possible and this is just a starting point and you're going to figure out how to get there.

Getting rich is not just for the rich.

I know the saying is rich get richer, but you, you got, you can start somewhere and you too.

Well, that saying is true because rich get richer because of compounding interest.

Absolutely.

They just have more money to make money from.

Right.

So all that, that, all these things really point to the same conclusion.

Yes.

It's hard to make your first, you know, a hundred thousand.

Yes.

It's easier to make money once you get to that first hundred thousand.

But the hardest part about it all is the same matter.

If you're Making a dollar or you're making millions.

Having the discipline to not overspend and to stay cautious.

Right, Absolutely.

So, and, and this is exactly what we're talking about here.

And now we're going to get into the mean potatoes of why we say your net worth explodes after that first.

Hundred thousand mean potatoes, which is exactly what I had for lunch today, by the way.

Great.

It was a phenomenal meal.

Steak Fraby steak.

It was great.

Steak Frank, it was great.

So here you go.

If you invest $10,000 a year, that comes out to $833 a month.

It will take you approximately seven and a half years to get to that first hundred thousand dollars.

This is assuming a 7% rate of return.

The stock market has averaged 7% return over the last hundred years.

That's because they're also accounting for inflation.

I mean, on average it's been around 10% when you're investing dividends, reinvesting dividends, but when you account for inflation as well, it brings it down 7.

That's a very, very number.

People hate that number.

People hate that number.

And they routinely have said to us in our comment section, what am I going to do with that million dollars, bro, when I'm, I need it now, I need.

When inflation kicks in, by the time I'm 65, a million dollars, I'll only be able to buy me a Mercedes Benz.

That's it.

Well, stay tuned to the rest of the show.

We're going to give you not one, not two, but five different examples to prove that isn't always the case.

Absolutely.

Yeah.

And we routinely talked about the power of compound interest so that we can break it down.

When you get to that first hundred thousand after seven and a half years, that 100,000 is comprised of 76% of it is your contributions and 24% of it is the interest that you earned.

Think of it a lot like your mortgage loan.

When you first start making payments on your home loan, almost all of it's going towards interest and a little tiny bit is going towards principal.

And at the very last payment, almost all of it's going towards principal and a little tiny bit of it's going towards interest.

Right.

Because what you need to remember from the compound interest is you're earning interest on your contributions now.

Your contributions from what you made before and all the interest that you have accumulated, it's continuing to compound on each other.

Right.

So after that, after that initial seven and a half years, the next hundred thousand takes you 5.1 years.

So just short a little bit over five years to get to 200,000.

Okay.

To get to 300,000, it only takes 3.7 years.

See where this is going?

Yeah.

ALEX Ramos, Wet Dreams.

Yeah, exactly, Wet Dreams.

So to reach 300,000 it would take you approximately 16 years.

Sounds like a long period of time.

But that's, that's if you only maintain the $833 a month payment, you could actually do more and you could actually get there faster.

Right.

We've routinely said on the show instead of upgrading your lifestyle as you get promotions and raises, you can always upgrade your investments.

And these things can be realized a lot sooner, a lot quicker.

Okay.

If you keep investing for just another two years, you start making more on the interest than the contributions you made.

After 18 years, you will be making more money on the interest that you've accumulated over that time than the money itself that you put in.

So I know a lot of people who are.

So we have a pretty interesting demographic on the show.

And the interesting demographic is we have an 18, to call it high 20 year old base.

That's pretty big.

But the majority of our listeners are somewhere in the mid 20 to mid 40s.

Yes, pretty interesting demographic because there's very different life profiles and call it the mid-20s to mid-30s and mid-30s and mid-40s and so on and so forth.

But one of the things I think is universally understood by everybody is, okay, you keep talking about this compounding interest, like I'm just going to have it all in one account.

It's going to compound, but it's much more complex.

If you log into your 401k, for example, where most Americans have this visual, they're going to lock in and see like their total portfolio valuation, but they're going to see individual stocks they've invested in or funds, funds like if you're in, you know, Ivo or VO, or.

If you selected like a target end date fund, it'll break it out for you.

Yes, you'll see, you'll see these funds indicative of values going up or down.

But it won't be as simple as 7%.

It's going to be a little more complex to read.

So you are enuring the benefit.

But there's also market ups and downs.

We're talking about the average yearly year over year number.

So you can't look at it in a vacuum and say, oh, Chris, well shit man, this year was a fantastic year.

I got 42% returns and I'll see this all the time too.

This is the other Side of the equation.

We get on social media, we get criticized.

Bro, you're talking 7%.

I got 15% this year.

It's like, bro, I barely traded.

And it's like, yeah, well that was a fantastic year for you.

Good job.

But there'll be years in the future.

You get, I don't know, maybe 2%.

Maybe 3% or it might be negative.

Yeah.

So we're really talking about an average return over time in the market.

And you get closer to the average the more data points you have.

And keep in mind that that average rate of return accounts for the recessions that we've talked about.

Yes.

Geopolitical conflicts that we've talked about, wars that might happen, all of which, which.

Are going on right now, by the way.

I know, scary.

So it accounts for all of those, all of those things.

So that it's still a conservative number.

And hopefully, you know, you, you get lucky and you experience even more over the next hundred years.

But that's a nice safe number to think about now to get to that million dollar mark after 30 years.

Okay, just to put a nice little bow on this so we can move.

On to the non Alex Hormozi content.

The non Alex Hormozi content for the show is once you hit that million dollars with that investment strategy that we talked about, 70% of it will have been made off of the interest that compounded and 30% of it would be come from contributions.

So you will have made a million dollars off of only contributing $300,000.

Sounds pretty good to me.

You know, I would love to do, I would love to go in a public setting and have people log into their 401ks and see the 401.

Not, not the investment accounts, not the crypto accounts.

I want to stop people randomly in the street and say, show me your 401k balance.

I am morbidly curious to see what that looks like.

I bet you the a younger generation would be very comfortable in doing that.

Yeah, I don't know.

But the people with the big dollar amounts are not going to be.

They might, you never know.

I mean, we might get a handful enough to show.

I mean, I'd be down to try if you are.

I would not.

Can you imagine us two brown guys in the street going, show me your 401k?

Yeah, let's, let's see.

We need it for our content.

Yeah, I don't think so, bro.

Yeah, come on, why not?

It's very, very, very different when people were like, hey, show me what you got.

Show me what you got.

Yeah, yeah, yeah, the same.

So for the show this week, I didn't plan to go down the path that we're gonna go down.

It was by happenstance, one of my late night reading sessions where there wasn't enough archeology content to keep me awake.

And I was like, you know what?

Let, let's go down this path.

And full disclosure, I did attend a program at Yale, so I do have an affinity for the school.

I am a donor.

This is not an endorsement, but the Case Shiller Index is an often talked about index, particularly for those in the real estate communities.

But certainly Shiller himself is an interesting person who's called a lot of economic events in the most recent.

Call it 10, 15 years.

So what do people use the K.

Shiller Index for?

We will get to that.

All right, let's do it.

But before we do, I thought.

And there was more, well before this, but I thought would start in the Wall street crash of 1929 and we'll talk about some asset bubbles, some bubbles in general, because there's going to be a theme here where we're going to point to some of the warning signs that are out there and we're going to aggregate them all and let you form an opinion, whether you, the listener, the viewer, think that we are potentially in a bubble now based on some of the metrics we're going to provide to you.

Okay?

Okay.

So the Wall street crash of 1929, the Great Depression, we all know it.

In my house is the New York Times from October 30, 1929.

People often ask me why I have that page framed in my house.

The reason why is the positivity in the press.

The very next day reminds me every morning when I walk by that your brightest day can be right after your darkest.

Right.

So what happened in 1929?

The Roaring Twenties stock rose exponentially due to speculation and excessive margin trading.

Buying with borrowed money, leverage is going to be a common theme here with these.

Okay, so on October 29, 1929, Black Tuesday, the market crashed with stocks losing over 30% of their value in a matter of days.

People were losing their minds.

Mind you, the press came out the very next day, even though people were still losing money, saying, things are going to be glorious, it's going to turn around.

And it wasn't quite X and Twitter back then, but, you know, I got the similar kind of vibes.

This led to what obviously we know as the Great Depression with global consequences all across the world, with obviously a focus in the US Markets where this really started.

Well, we learned a lesson here, and the lesson was simple, that over leveraging and speculative euphoria create fragile markets prone to collapse.

And the surprising word that I want you to focus on here is euphoria in emotion.

That's going to come back to be a reoccurring theme here.

All right.

And I know you're going to say, well, Chris, this is supposed to be data driven.

There is an element of behavioral economics built into this, built into modeling in some ways that we don't fully understand.

And I think there's a psychological challenge that we have to face that has been dynamically changed by social media, one that we cannot ignore.

Your love and love affair with Alex Hormozi and positive motivation is symbolic of that change.

Not just that.

I mean, think of anybody who has got reached any level of greatness.

One thing that they've all have tried to do is control the narrative.

And by trying to control the narrative, you can control people's optimism and view and control their behaviors ultimately.

And I believe we're going to see that.

When did he gets to trial?

That's what he was trying to do.

I mean, you see LeBron trying to control the narrative.

You see Jay Z trying to control the narrative.

Clearly, lots of people trying to control these narratives.

Diddy trying to control that narrative.

Narrative control is a big part.

Perception becomes reality.

Rupert Murdoch controlling the narrative.

Rupert Murdoch did a lot of narrative controlling.

A whole lot of narrative controlling.

Well, let's talk about another asset bubble.

Not very often talked about.

I happen to have a bit of a love affair with Japan and Japanese culture in general.

There's actually some DNA that I have from from Japan, which I haven't really figured out how that works out.

Somebody did something with somebody, they shouldn't have done it.

I don't know where, when, but yeah, okay.

My 23andMe is very confusing.

So the Japanese asset bubble from 1986 to 1991 said was just a wee pup at that point in time.

What happened?

Driven by low interest rates in speculative frenzy, real estate and stock prices in Japan soared to astronomical levels.

Well, that sounds oddly familiar.

At the peak, the land under Tokyo's Imperial palace was valued higher than all of California.

All of California, which, by the way, is.

Has a larger GDP than a lot of countries do.

Yeah.

So that's a big number.

When the bubble burst, Japan experienced a lost decade of economic stagnation.

Wow.

Yeah.

Anytime they say it's a lost decade of economic stagnation, you did nothing for an entire 10 years.

The technical term is that's fucked up.

It is fucked up.

Their economy is viewed as somewhat stable now.

It's hard to grow.

Right.

Because I believe their debt to GDP ratio is like upwards of like 200%.

Yeah.

They have a very interesting economic philosophy which has served them well.

But this is a large part of the reason why that's in place today.

Okay.

The lesson they learned from that, to your point, was even a robust economy can suffer long term damage from bubbles fueled by excessive credit and speculation.

So now we've got euphoria, speculation.

Yes.

These are all behavioral driven.

Right?

So, and again, excessive credit, leverage, leverage and emotion are playing roles in these bubbles that we typically don't think about.

We always think about the leverage, we always think about the numbers.

We always think about like, oh my God, Lehman Brothers went down.

So, you know, that was.

Why didn't we see that hybridized securitization problem?

Well, there was an emotional disbelief and we're going to get into that and then I'm just going to ping you and say, Saeed, like what do you think?

And you're going to be like, oh my God, you're brilliant.

I'm like, I know.

Yeah, I know.

Because there's one thing that a lot of investors know is, and I know this is a concept very foreign to people that aren't really involved in this space, is that if you have the liquidity, why are you leveraging?

Right?

In order to scale any business, there needs to be a certain amount of leverage because you can use your dollars to put that into work in other ways.

There needs to be some level of leverage utilized.

The problem is in a lot of these instances, they overdid it.

Yeah, they overdid it.

And look, you can argue that leverage has got another side that people never contemplate up until recently.

You can have leverage and have your value be totally fine to cover your leverage.

You could have enough equity skin in the game to where your leverage makes sense.

You can be very conservative with how much you put risk on the table.

But if you're taking leverage at low percentages or high percentage rates, that also plays into the leverage game and changes the dynamic in a way that we hadn't thought about up until this particular economy.

Leverage in and of itself becomes very different when that leverage is at 2% or it's at 20%.

Oh yeah.

So very, very different dynamic.

It's not just how much skin in the game you have, it's how much does that leverage cost You Absolutely.

And that is a very misunderstood ideology when it comes to leverage.

And I want to be clear, these are bubbles bursting.

These are not recessions.

Even though you associate some of these bubbles with recessions.

So you Associate like the 1929 Great Depression, the stock market crash with the Great Depression which was the recessionary economy that followed it.

But the event that kicked it off was that event.

So when I talk about the next one, it is the dot com bubble burst.

It's really from 1995 when the dot com bubble started to about 2000.

But 2001 was a dot com bubble based recessionary economy, if that makes sense.

Makes sense, yeah.

So what happened?

The Internet's rise of irrational excitement over.

Tech startups makes sense.

I mean you could see, you could see how they got caught up in the hype.

There's a little thing known as artificial intelligence.

There's a couple stocks right now.

We form a little group of hippies called the Mag 7 that are really.

Propping up the entire market.

And they are all tech stocks.

Yeah.

Magnificent seven.

Tesla, which I could, I could carve out as unique.

Apple, by the way, Amazon 400 billion.

Yeah.

What?

The moment of silence.

Everybody else in the world's ego.

Elon Musk is worth $400 billion.

God.

I know.

A lot of that had to do with, I think what's going on with SpaceX and his endorsement of, you know, the next administration.

Because they're going to get a lot of government contracts.

Yeah, bro, you can get all the contract contract.

If you're in the defense contracting space, you're like this motherfucker right here, you.

Know, Bezos is over there like oh, I get it now.

I see what you did.

You dry humped him and they paid dividends.

It's making sense.

I see what you did.

Yeah, well played, sir.

So you didn't just catch a rocket.

You caught a rocket.

Right.

So companies with no profits or even business plans saw their valuations skyrocket during the dot com bubble burst.

When reality hit, The NASDAQ lost 78% of its value by October 2002.

Remember that.com bubble burst?

NASDAQ lost 78% of its Value literally within two years as a result of the recessionary economy that followed.

We're going to really hit that point home.

And it's corollaries to today at the tail end of the show.

So explain, explain to people the difference between, you know, the stock market and the Dow and the nasdaq.

I think a lot, I don't, I think that Goes over a lot of people's heads.

Okay, so the Nasdaq is an index that you could be traded on.

Right?

It is a market.

The New York Stock Exchange is another exchange you can be traded on.

They're actually talking now about possibly building another one in Texas.

A Texas based stock market exchange.

These are just exchanges where you trade your stock.

Typically speaking, the Nasdaq is a lot more focused on tech historically.

In the future.

In the future, yeah.

Whereas the New York Stock Exchange is more stable, time tested.

I get, in some ways probably the more tenured exchange.

Because it's older.

Yes.

Right.

It's really hard to build a new exchange.

So typically those two are the ones you want to be listed on, but you can be listed on one or both.

Okay.

So it's got some interesting idiosyncrasies.

Our company for example, was on the Nasdaq and we actually transitioned to the New York Stock Exchange.

And there's lots of technical reasons why one might have advantages over the other.

Depending on what sector you're in, we.

Can say that for one is definitely a little bit more sexier.

Yeah, I think so.

I like the New York Stock Exchange.

I think it's sexier personally.

But if you're a tech company, I think that's a caveat.

If you're a tech company, you want to be the Nasdaq that is your New York Stock Exchange.

But outside of that.

Yeah, you want to be on the more time tested one here.

The technological innovation doesn't always guarantee profits.

That's the lesson from the dot com bubble burst, that fundamentals in the stock price matter, the things that Charlie Munger and Warren Buffett, to your point, would look at and be conscious of at all times, those things matter.

And to play this out in a more realistic way, companies like Uber who come up that are transformative during the dot com bubble like era, and I'm using them as a proxy with today's, but they weren't around back then.

But like, you know, similar companies, if they're changing a sector with new technology and it's never been done before and it's sensational and it's sexy and it's new, there is a risk that it ain't going to fucking work.

Right.

And whatever valuation that the market is putting on them, you got to start questioning like how do you know, are.

These crazy ass numbers?

Right or are they valuable numbers?

Right.

And there's plenty of times where that's gone the other way.

Right.

Blockbuster Video, Netflix, Game Over.

Right.

Game Over.

Game Of Thrones.

You lose.

Never seen it.

Yeah, I know.

That was.

Damn.

That was a swing and a miss, bro.

I could tell you.

Never seen it.

That was a terrible reference.

Game of Thrones, I was referencing.

Not the show as much as, like, who's the king, sits in the throne.

Who sits on the throne?

But, I mean, I know that your literature and your literary background is exclusive just to television shows on.

Just hbo.

HBO television shows.

Yeah, exactly.

Some of us.

I was a huge Game of Thrones fan.

Yeah.

Never seen it.

Shame on you.

I didn't want to watch softcore porn.

I mean, I don't want to watch.

There's no winning for me.

Yeah.

There's no way for you to answer that.

And win.

I do.

All right, well, the next one I wanted to highlight.

It's a bubble.

It's one we all know.

It's what people think is closest in proximity to them.

Although I do have another one in here that I put in just extra special for said this.

This is the one that scarred a lot of people.

Yeah.

Well, the 2008 housing bubble.

What happened?

Well, banks gave out risky mortgage loans to buyers who could not afford them.

Yep, that happened.

I can believe it or not.

Yeah.

What you make, how much you did that, you get.

You can, hey, go buy this house.

This is yours.

State your income.

Yeah, for me.

I don't want to look at the documents.

Just tell me what you make.

The idea behind that to me is just so baffling.

Oh, yeah, we did that.

Yeah.

Just show me the receipts coming into your accounts.

It's fine.

I know.

Then there was a no income.

You know what?

I don't know how much you make.

Just.

Just don't tell me.

How much home do you want?

That's where we got to.

That's where we were at.

And we were at.

Oh, you're gonna put $200,000 down for this house.

Cool, thanks.

I don't think you got enough skin in the game.

Honestly, I don't even know.

Need to know where it came from.

Yeah, as long as you don't tell me it came from a cartel.

Okay.

Yeah, just don't tell me where it came from.

It came from your roofing company.

Yeah, Great.

That sounds good.

I like that.

I like that.

How long you been in roofing for.

The counts in your name, right?

You.

Oh, you've been a roofer for a year.

Yeah.

Great.

Perfect.

Thanks.

Yeah, I'm just going to put that in the proof stack over there.

Yeah.

Congratulations.

Here are your keys.

Yeah, well, mortgage backed securities created a false sense of security.

These, These mortgages that were originated were being sold in the secondary market because investors believed in them.

Right.

So they had to be good.

Right.

I mean, why wouldn't they be?

They're.

They think they're a long term viability.

I mean, they bought them, clearly.

So, you know, I mean, they were made by some reputable institutions, I mean, obviously.

Right.

Yeah.

When the housing market collapsed, it triggered a global financial crisis, wiping out about $8 trillion in household wealth.

$8 trillion.

8 trillion.

That's a lot.

All gone like that.

Yeah.

2.9 million homes came online.

Well, yeah, there was a lesson.

Complex financial products and easy credit can hide systematic risks until it's too late.

Easy credit and complex financial products, again, easy emotional.

Right.

The feeling that you can get this without challenge.

And complex financial products, products that were designed to be a little more sophisticated than they should be, can make a market fail.

Right.

Now, look, there was definitely some players in the game that understood the gravity of the situation and were taking advantage of the situation.

And then there was definitely a lot of people out there that were led to believe that this is just the way everybody's doing it.

I'll be able to find a way to make it work too.

And we're going to get into the psychology of what exactly that is.

And that phenomenon is documented, and it's a reoccurring pattern of behavior in every single one of these bursts.

So said, you are sexy and worthy of the laureate again tonight.

Thank you, sir.

Thank you.

And of course, I had to include this, this bitcoin boom and bust from 2017 to 2018 because Saeed Omar Sayedire, standard podcast.com requested that I put in because he likes to emphasize I did not put this fifth one in there.

You did this.

Okay, I just.

I'm reading the notes that you put in the show.

Notes.

Okay?

You're lying to the people.

Now.

The people need to be steered in the right direction financially, all right?

They need to understand the truth of why you're giving them information.

All right?

You have a vendetta against cryptocurrency, one that has caused me a lot of social animosity amongst the people on X.

My people, the diamond hands, folks.

Diamond hands.

You and your wet paper hands.

You go sit over paper hands.

Wet paper hands.

Ew.

So what happened?

Bitcoin surged from around $1,000 to nearly $20,000 in 2017 due to widespread hype.

And there's a technical term, FOMO technical.

The fear of missing out again.

An emotion.

Right.

That means people going into the product not believing in it, but they just want to get in.

Because it's going to go up.

I know it is.

Even though I think it's not a good product, but everyone else is going to make money.

I don't want to be not making money.

Without a question of a doubt.

Every fucking one of you listening to this show.

Yeah.

Every one of you was like, God damn it.

Bob just bought more fucking crypto, More bitcoin.

Right?

I gotta buy some shit.

Cause if that motherfucker gets rich and.

I'm sitting here left holding an empty.

Bag, and we all know Bob's a dumbass.

That's right.

That's the aggravating part.

And if Bob gets rich being a dumbass, I can't not buy and let that dumb ass make more money than me.

I can't tell you how many people around the office have had this conversation.

Oh, yeah, dude.

It's a thing.

It's a real thing.

I do it with cold plunging all the time.

I'm telling you how shredded I'm getting.

Just so you feel like you have to get one.

I've now fully weaponized this psychological profile.

Yeah.

Yeah.

You know what you're doing?

Yeah, I know exactly what I'm doing.

Well, guess what?

In 2018, prices crashed by more than 80% as speculative mania faded.

And people were like, you know what?

Fuck it.

I also want to say, I don't know.

I don't have the years on me, but in 2018, when it crashed 80%, the reason, the number one reason why I am against cryptocurrencies, because it did that also two other times.

OK.

That wasn't the only time.

It's happened three times.

And I'll never forget, in 2018, people were like, oh, shit, Bitcoin's entering another crypto winner.

I'm like, wait, another?

Why is this?

Y'all knew this.

Why is it just accepted, like, oh, we're just going to go through another winner?

And then people were like, wait, But Satoshi Nakamoto is the.

Is the guy who made it.

And, you know, I have faith in him.

Oh, you know who he is?

No, no, no, no.

Yeah.

You're like, wait, what?

Right.

Why is that?

Okay, well, lesson here.

New assets, especially cryptocurrencies, are vulnerable to extreme volatility driven by speculative narratives by unknown founders.

Yeah.

So.com bubble burst versus today.

Good proxy, right?

Because we got a lot of tech stocks, almost all tech stocks, leading the Mag 7, which is literally carrying the market's returns during the dot com peak in 2000, the NASDAQ hit 5048 before crashing 78%.

Wow.

It was at 5048 and went all the way down 78% from there.

Well, today, the NASDAQ in 2024 is hovering near 16,000 as of the date of this show, December 11, 2024, with.

Every earnings call citing AI and tech hype approximately a hundred times.

Yeah, like if you're not saying it a hundred times on your earnings call, you're losing.

I want to talk about a meeting I had so badly right now.

Oh, my God, I can't do it.

That's offline conversation.

Come on.

But, man, I can tell you there are meetings happening right now in corporate America where people are saying, ah, I just have AI do it.

And you look around the room and everyone's agreeing.

And you know that every single person that room has never used AI.

Yeah, right.

They have no idea how to actually put it into work.

But they're like, it should be able to do that, right?

Yeah.

Well, kick in the door, waving the 4.

4.

Robert Schiller is here.

Wow.

Yeah.

Did you practice that?

No, I just came in my head right now.

Kick in the door, waving the 4.

4.

That's a T shirt, baby.

Case Schiller.

In the late 90s, we saw a market frenzy like we've never seen before.

Tech stocks were minting new billionaires every single week.

Keep in mind 1995 to about 2000, that's your tech bubble bursting.

And, well, Robert Schiller was all up in there, all deep up in there.

Like swimwear.

Like swimwear.

This time it's different, they said.

And the Internet changes everything, just like they're saying today about AI.

Well, one economist saw through the mania.

The one and only Robert Schiller.

His research revealed something terrifying.

Markets aren't driven by logic, but by stories we tell ourselves.

Let that marinate.

Markets are not driven by logical behavior.

They are driven on the narratives we form in professional communities, in the media, and we regurgitate to ourselves until we literally believe them.

Absolutely.

And now think to yourself the narratives that you're taking in by all these financial gurus on social media.

They're all being driven and created over the experiences that they have claimed to have had over the last 14 years.

Artificial intra deflation in one of the most artificial synthetic economies we've ever had.

Basically what that just means, what Chris just said is you could have put your money into anything during those last 14 years and you Would have been profitable.

You would have made money.

You were borrowing money for.

Basically for free.

Right.

So whatever financial advice that people were getting in this arbitrage.

Yeah, you make Airbnb arbitrage.

Right.

It's.

It's nonsensical.

Yeah.

Well, and then look.

And then you saw the rise of everybody who thought they were an influencer.

Everybody labeled themselves an entrepreneur and so on and so forth.

Me full well knowing that I'm labeled an entrepreneur on Google.

But that being said, like, you know, there's this false reality that we all bought into and.

And it's around you all the time.

And if you think, Chris, humans are smarter than that.

Walk into a gym, see how many people are not in good shape posing in front of a mirror who really believe they're in good shape.

Oh, yeah.

See how many people that you've seen over the last however many years doing exercises and still having the wrong rep range.

Right.

Still doing the same rep count.

Still stuck on 135.

Never got to that Andy Frisella, 225.

Or those girls who got permanent duck face and they think they look great.

Yeah.

The gym got.

I can't do.

I know I don't get the duck face, bro.

There's a whole thing there.

But we've told ourselves that we look good or we are smart or we are wealthy.

This will make me money.

And we buy the narrative.

Well, when these stories become divorced from reality, bubbles form, not break.

Bubbles form, key distinction.

Right?

So in the dot com bubble burst, people really got divorced from the fundamentals of companies, and they started saying, I believe unequivocally, this company is going to make money.

And some bets paid off.

Yeah, sure.

Amazon, you know, online book retailer, blew up to be the world's biggest retailer.

And sometimes they implode.

But you're not betting on fundamentals like Charlie Munger, like Warren Buffett.

You're not doing what they said to do.

When you make your first hundred thousand before, that's the bitch you're gambling.

You're putting it on 21 black and watching the roulette wheel spin.

Wow.

You know, that's not a good way to.

That's not.

That's not a good way to invest.

That's a different risk profile altogether.

And to your point, bubbles form, and now there's.

There's certain monetary and fiscal policies in place that should occur to make sure that if bubbles do form, they don't get out of control.

Okay.

And when there's stimulus packages being sent out, stimmies Stimmies.

To save whatever bubble there is from bursting.

All that is is putting a band aid on a gunshot wound.

I like to call it a penis pump on a penis.

You keep pumping it too hard and you get past utility and you go towards permanent damage.

Nobody wants it.

Nobody.

Nobody wants.

It's great.

The first couple pumps, right?

You see.

Oh, it's just working.

Yeah, but you go too long, nobody too far.

Nobody's actually buying those things, are they?

Like, you think that's a real thing?

I was speaking from experience.

I didn't know about you.

Oh, she's like, we're not on the same page here.

I mean, nobody buys those things.

And that joke can't be advertised.

So still, late in the late 90s, this bubble is about to burst.

The NASDAQ collapsed exactly as K.

Shiller.

I'm sorry.

As Robert Shiller predicted, 78% of the value, like we talked about before, is gone by October 2002.

But this was just the beginning of Robert Schiller's prophecies.

In 2005, he warned of a housing bubble.

He himself.

He himself.

So he worried about the dot com bubble verse.

And here he is warning about the 2008 housing recession.

The Great Recession as it came known by.

We talked about it earlier.

And again, he was also dismissed.

Oh, you know, Robert, you're just so negative.

Yeah, you're so doom and gloom, Robert.

You just.

You're a broken clock.

It's right twice a day, Robert.

You're the clock.

Right.

Well, he was dismissed.

And housing prices never go down nationally.

They said they don't go down.

Sounds a lot like, I don't know, I'm just off top of my head, you know, I can't think of anybody.

Maybe Dave Ramsey sounds a lot like Dave Ramsey.

Well, Shiller saw the same psychological patterns emerging.

And if you're an economist and you're referencing psychological behavior, it's easy to write them off.

It's easy to ignore him.

Say, Robert, you're not Sigmund Freud, okay?

Why do you keep talking about these behavioral economics.

You're supposed to be an economist.

Give me numbers, give me data.

Well, sometimes it's as simple as the people behind the data.

Right?

To write that off to me is so wild.

And if people are still writing that off.

Look, tech companies wouldn't invest tens, if not hundreds of millions of dollars into learning and studying human behavior if they didn't know that it was a real thing and that they could profit off of it.

That is why these social media companies, our Cell phones, right.

They all operate off of understanding our behaviors.

Yeah, it's a big deal.

There's this one feature on my phone that I absolutely love that I always go to, and I kind of do it as, like a test to see if my phone knows me.

There's a feature, like on the iPhone, where you just swipe down and, like, the top eight apps you use, and it says, siri, suggestions.

And I'll just like.

Instead of going to search for the app, I'll do that to see if it knows what.

And it.

It's always in my top eight.

And I'm always like, what the fuck, man?

Mine now, every time I leave my house in the morning, it tells me I want to order Starbucks.

I don't think about it.

It notifies me to order.

And I didn't tell to do that.

I just recognize that, oh, you go to Starbucks.

And I'm not gonna lie, this morning I was like, I love you, Siri.

No, mine's great.

Have you seen the new AI features that are rolling out now and the new update that's coming out?

No.

They're just now incorporating chat GPT into their AI.

It's wild.

Some of the features that are coming.

Who's it?

AI?

Apple.

Good for them.

Yeah, good for them.

It's game over for your.

Any type of choice you think you.

Had just got completely abyss.

I always wondered to myself, like, is any thought of mine original?

Or you've got a crack dealer in your pocket now and it's constantly going, hey, man.

Hey, man.

Dude, those phantom vibrations, by the way, they're real.

Yeah.

Especially from my watch.

And I.

I'm convinced.

I'm convinced that they send.

They send them out just for you to.

But then there's no notification, right?

It's like, look at me.

Yeah.

And then.

And then there's some medical term now, phantom vibrations, where you feel like you got a vibration.

So you check.

And I'm saying, I swear to God, there was a vibration.

I felt it.

You ever phantom pass gas?

I do all the time.

What is that?

You're like, wait a minute.

What's phantom passing gas?

Did I.

No, I don't think.

No, I didn't.

I didn't.

I don't know.

And you're like, no, that one's definitely me.

They don't all smell, though.

Like, did I do.

Because, you know, you move on a chair a certain way and it makes that sound, and you're like, wait, wait.

Then you, like, make the same movement again to see the chair makes the same sound?

Yeah, it's random gas passing.

Put that on his shirt.

Well, Schiller's prediction proved to be devastatingly accurate.

The 2008 crash wiped out 8 trillion in household debt, like we talked about.

And, well, the work on market psychology.

Not the economics, the economics, the economics.

The market psychology work that he did earned him the 2000 Nobel Prize.

He's a laureate, just like Saeed Omar, green jacket and all.

Thank you.

Now he sees three dangerous patterns that are forming once again for the current economy.

His housing prediction, which once was devastatingly accurate.

Well, I gotta tell you, if he was that good in both of the last two, in my mind, recessionary economies, I discount the 2020 pandemic recession.

There's a psychology of a market chart that I'm gonna put up here between us.

Whenever we show this, he's concerned about a couple things which, well, frankly are hyper important.

But the psychology of the market is something that's noteworthy here.

It starts off with hope, right?

A little bit of disbelief that the market's going as well as it is.

And then people have hope and there's optimism and belief.

And you go up this chart of thrill and euphoria and then we get to a point of complacency where people are like, wait a minute, things are cooling off a little bit.

We just need to cool off.

The next rally is coming and then it doesn't come.

And then we get to a point of anxiety and you're like, shit, I believe we are at that point currently, okay?

Then there's denial where people are going, My investments are with great companies.

It's all going to come back.

That company's not going to.

It's too big to fail.

They won't let it fail, right?

They're not going to let it fail.

Say they're not.

They can't.

They're not going to do that.

The whole market would collapse.

They wouldn't do that.

And then the panic, panic kicks in.

Then it's capitulation.

And then finally, my favorite, the rage phase, anger.

And then depression.

You're just sad this shit happened and it sucks, right?

And then you go right back to that disbelief face, which goes right back into hope, optimism, belief, thrill, euphoria.

And it's just a circle.

It's a big circle.

It's actually a sine wave more than a circle.

And it follows the recessionary economies and the prosperous economies and it just goes up and down, up and down, up and down.

Ultimately, it will eventually go back up.

Yeah.

At some point in and as long as you've accounted for it and you can weather the storm, and sometimes the storms are.

Are longer than others.

And typically speaking, seven to ten years from trough.

The trough.

Peak to peak.

Trough, trough.

So Warning one, let's be clear here.

Now that we know the psychology.

Now that we know this man has an understanding that won him a Nobel Prize.

Warning one is that the AI revolution's dark side is here.

Okay?

In November of 2024, Schiller pointed out something troubling.

AI isn't just transforming technology, it's warping market psychology.

Once again, this man won a Nobel Prize for his psychological evaluation in economics.

Economics.

I'm getting like, British economics.

Lifestyles are rich and famous for the.

For people out there that don't know Chris, he.

He literally can't go 10 minutes off air without doing some type of impersonation.

It's kind of a weird problem.

It's a weird problem.

It's your way of entertaining yourself.

I do it in the shower.

I know you do.

Yeah.

And I do like the Red Hot Chili Peppers, too.

Yeah, it's a whole thing.

I'll do like each one of them.

That's disgusting.

Just like the Internet boom of 2000.

We're seeing mass delusion take hold.

Everybody and their mother loves AI.

That is warning number one.

Warning number two.

And I've got a chart for this one.

Too dangerous.

Market levels are once again here.

Robert Schiller points to the S P500's CAPE ratio.

This is his famous metric.

It just hit 35.

Now, Chris, 35 means nothing to me.

Don't worry, kids.

Yeah.

What does 35 mean?

Daddy's got some answers for you.

Okay?

So hold on to it.

It hit 35.23.

For context, this level has only been exceeded during one other time.

That was a dot com bubble, which Schiller also called history shows that such elevated valuations precede significant downturns.

You're saying, Chris.

Okay, I'm looking at this chart which is conveniently placed between you and me, in between the center of us and our relationship.

But I don't understand what it means.

It's just going up.

Well, here's some ratios.

Here's some facts.

Okay?

Dot com bubble.

In 2000, the CAPE ratio peaked at 44.2.

That was the peak.

The 1929 crash.

When you went backwards and looked at it, applying the same analytics backwards in time.

The Great Depression.

The Great Depression, yes.

1929 crash.

Yes.

It reached 32.6.

Right before the Great Depression.

Today, the CAPE ratio over 35 is dangerously close to its historic highs.

So.

Higher than that before the Great Depression.

Yep.

Wow.

Historically, when the CAPE ratio exceeds 30, the probability of a significant market correction within the next five, ten, ten years increases dramatically.

Yeah, I mean, there is.

You're hearing more conversations about there will be a devaluation across the market.

These, these companies are overvalued and I'm sure that there are.

There is a lot of potential for AI to help out the workforce in some compass capacity.

Okay.

Yeah.

From what I'm seeing right now and what's currently being implemented and utilized into the market right now, it's a lot of.

What's so sexy about it is a lot of leisure.

Right.

It's.

It's like.

Let's just, let's put.

Thing about the Facebook glasses or the meta glasses, I should say.

Right?

Really cool features, man.

Yeah, I don't need it.

You haven't though, bitch.

No, no, no, not that one.

No, the.

The second generation one.

Oh, one that isn't released yet.

That looks really cool.

It's cool.

The augmented reality.

Augmented reality behind it.

Amazing.

And you incorporate the AI behind it too.

Looks really cool.

Do I need it to get through my day?

No, I don't.

Have you tried the Apple ones you put on the store yet?

Have you gone to the demo?

No, I haven't.

I.

They look.

It looks really silly and.

It looks silly.

Try them in the store.

I made an appointment, I went in and I physically just did the whole walkthrough with them.

It's an incredible experience.

Oh, I'm sure it's an incredible.

And I could see a world where you no longer have.

Because keep in mind, you can see through these things, right?

Yes.

So I can see a world where you no longer have a television in the house.

You no longer have computer screens, monitors, where that is your computing device, that is your phone, that is everything.

There's even a feature on it where you.

You basically created a real life looking avatar of yourself.

Like ready Player one.

Right?

Yeah, I get that it sounds far out.

I feel like it's a little too far out.

Like I'm never not going to have.

A TV in the house, trust me.

So I like the.

I like the idea of being able to look away from the tv.

You can do that with these though.

Yeah, but it's see through.

You can see right through them.

There's that human element though.

Okay, let me put it to you in different contexts with.

You can look at a screen and choose to make the screen as Big or small as you want in front of you.

And it makes you feel like you were literally immersed in a movie theater, even though you're.

But if you had one of those on and.

And your wife had one of those on, you're.

And I get it.

To you, you could see straight through them.

And you're looking at your wife, and she's also wearing this headgear.

Admit.

There it is.

Huh?

There it is.

I get it.

What?

What?

You're the world's greatest husband.

We know.

Stop.

Well, who said that?

We're 260 shows deep.

No, no, no.

I'm saying.

I'm saying we know.

We know you love your wife.

Wait, hold on.

Christopher.

I'm saying you're at home.

What other person.

Ok.

Your son.

Carter.

I get it.

You're the world's greatest father, too.

Oh, holy.

Are you really going to want to look at them with this headgear on?

Come on, man.

We're going to get to the point where the headgear will be much, much smaller.

Yeah, like the glasses.

I'm just talking about the technology in and of itself.

Augmented reality versus virtual reality is where this really becomes cataclysmic.

It is going to be a cataclysm which shakes the way our foundation as humans work.

Driving will be different.

I mean, everything around you'll be different.

I look at it as, you know, like when you're in a car, like my truck, the Rivian.

It'll sense cars coming at you before you can physically see them, and it'll alert you.

Yes, Right.

That's the level of.

Of change it'll make into your lives.

Right.

Imagine a boarding event where you can watch the players on the floor with your glasses on, and it'll tell you who that player is.

Give you stats and a rundown in real time.

Yeah.

To me, very cool.

I look forward.

I welcome the day where we've all jumped into an electric car and they're all communicating with one another and there's no more traffic.

And I have to tell the story to my kids that, you know, we used to.

It used to take me like an hour and a half to get to work.

I used to drive one of these things by my hands.

Literally.

They'll look at us like, the fuck you sat.

Why did you sit in traffic?

What?

What is that?

Like, back in the day.

Back in the day, like, people don't realize this, that we don't realize this.

We don't appreciate enough that when people were riding around on horses, the shit from the Horses on the street was a serious problem.

Yeah.

You're gonna have to explain to your kids why Ferrari's symbol is a horse.

Horsepower.

What?

Yeah.

I don't get it.

Why would you need a horse?

That's power.

That's a weird, like, logo.

Why isn't in kilowatts, dad.

Yeah.

Why isn't a volt.

I've already explaining to my kids, especially Adam, because he's older and he gets it that I'm older than the Internet.

It's like, what, dude?

I had explained to my son that for.

I just.

My little brother, when he was growing up, about how pages could only send telephone numbers.

And, like, numbers.

Yeah.

You had to have codes.

Yeah, right.

He was like, that's stupid.

I'm like, that's human.

I.

I understand this, but that's.

That's all we were.

That's where we were at at the time.

I.

I remember a time where I would have to call my mom, which my mom was working at the mall.

Okay.

For Lancome.

I would call her.

I'll never 1-800-collection call it.

And literally, the name.

I'd say, come pick me up.

I'm done with practice.

And then she would get it and then hang up, and she'd come pick me up.

I used to do that ghetto.

I didn't say I, bro.

But that was the only way.

There's no.

There was no other way to communicate.

No, no, I get it.

I mean, that was the time.

Yeah.

I.

It's.

It's.

And we live too far away for me to walk home.

Otherwise, I would have walked home, and I lived in the ghetto.

You had to maintain that weight.

I get it.

So the number three warning sign, which is again been alluded to several times in the show, is mass psychology.

Again, this man won a Nobel laureate for his interpretation of mass psychology and economics.

Third time's a charm.

I got a third time.

Yeah, I had a slow play in my head.

Say it right, bastard.

In August 2024, Robert Shiller emphasized how investor behavior mirrors past bubbles.

Currently, this man has studied them.

Investor behavior, specifically, dismissal of traditional metrics, blind faith in new paradigms, belief that historic patterns no longer apply.

And I want to be clear, that is absolutely what the psychology of social media is changing in us, okay?

Psychology of social media.

These gurus, these masterminds.

People are so like, Chris, why do you waste your time criticizing them?

This is.

Why is that dismissal of traditional metrics?

Because you blindly believe somebody's narrative in front of you.

Blind faith in paradigms.

Which are not real.

Based on 14 years of a very synthetic, artificially created economy.

And the creators who came out of it, who act as entrepreneurs, who were really something else.

And of course, belief that history patterns no longer apply to you because everything is different this time.

Just like it was in the Internet age, now we're in the AI age.

This man studies this.

Those three things are being weaponized against us daily to get us to buy products on social media, gamifying life.

And we have now entered this high trajectory cadence towards what could be a behavioral paradigm shift, making a bubble far worse than it had ever been before.

Yeah, we can't.

You can't deny any of this.

People get addicted to coming home to Amazon boxes.

They want to come home to a present.

I know you're baiting me to talk about my wife's compulsion to buy stuff.

I'm not doing that.

No, I did not.

See?

Honey, I love you, baby.

Your wife.

Your wife isn't the only one.

My wife too, man.

Yeah.

What do you mean, bro?

Everybody, I feel like you're the one buying the Amazon box.

So.

I actually did.

I bought Adam some honey sticks to help his throat.

I have a game I've yet to play with my wife that I want to play.

Really?

On a day that it's raining and we're not going outside or something like that, and we're inside and, you know, we're frustrated or something.

I want to play a game, a challenge.

Who can order the most ridiculous thing on Amazon for $10 or less?

Love that.

And I just want to see what shows up.

That's good, right?

That's good.

So kind of like a white elephant, like gag gifts.

Yeah.

But I want to know which one of us can pull off the most ridiculous item possible from Amazon for less than $10.

That's good.

That's really good.

Right?

So I only.

I want to.

I feel like yours will have to do with beads.

What kind of beads?

You already know, bro.

Something tells me they're made out of silicone.

Special beads.

I like that.

You already knew.

There's only one kind of bee that I like.

So we had a lot more data to get into because the inflation data came out.

But I think we should wrap the show up on two really interesting points because I think you're really going to like one of them.

Want to spend some time on it?

We're doing.

So I have here three behavioral economics in market psychology, patterns of behavior, which I think are somewhat relevant to the things we're seeing in the economy.

Today, they're clearly been present in Case Shiller's research and.

Sorry, in Robert Schiller's research and when he came up with the K.

Schiller index.

And I think you alluded to one of them earlier in the show, fomo.

But certainly the bandwagon effect.

Okay.

Investors often jump into rising markets because, and I'm quoting here, everyone else is doing it ignoring fundamentals as a key driver of bubbles.

Right.

That is certainly cryptocurrency.

It was certainly Airbnb.

It's certainly AI.

And this fear of missing out is widely taken advantage of on social media.

Want to create a classic example of this?

Yeah.

You don't want to hang out with brokies, Saeed.

You don't want to be a brokeie, do you?

That sounds terrible.

I do not want to be a brokeie.

You want to be rich.

You don't be a brokeie.

Yeah, I want to be a richie.

I don't want to be a brokey.

Exactly.

So why aren't you playing Richie games?

Brokey?

I want to play the richie games.

Teach me the richie ways.

I'll teach you for $97.

That's not bad.

I mean, not bad.

Yeah.

I mean, I'll teach you not how to get rich to teach you how to not be a broker.

You want to learn how to get rich?

That's a.

It's a $9,000 course.

But you get to talk to me face to face in the flesh.

Okay.

I feel like this is worth it, though.

I mean, I see.

I see the car you rented sitting right behind you.

How much are you willing to pay to not be broke?

Right.

It's sad, you know?

So the question, though, so many people got swindled that way.

How much are you willing to pay to not be broke?

I'm just waiting for the first guy on social media to come out and be like, my name's Kevin.

I'm rich.

I can teach you how to be rich.

There's a.

It's me, Kevin.

Yeah.

How much are you willing to pay to not be broke?

My course here.

I'm available to you.

Yeah.

I'm $25,000.

I'm auctioning off 10 slots.

How much are you willing to pay?

No, no, no, no, no.

I'm auctioning off five slots for $100,000.

Each, by the way.

Hold on.

I just found this out about my elementary school that I need to.

I need to get off my chest.

Oh, the fundraising activities.

No, no, fuck.

This is some.

This is some gypsy bullshit, bro.

Okay?

This Is crazy.

I just found out there are three parking spots at my school, at my kids school that they auction off.

Okay, wait, what?

So that when you come in, you don't have to sit in that long ass line and sit around the roundabout to come pick up your kids.

You just come in and then there's an attendant there that picks up the cones for you to like go through.

And you could park your car in one of the three spots.

And I'm like, what the fuck?

And all three are taken by three different cybertruck owners.

And I'm like, you son of bitches, bro.

It's like added insult to injury too, you know.

I'm like, I have so many questions.

What?

I'm like, watch.

Yeah.

How much I got?

You don't know?

I got to know next year I'm putting in a bit.

I'm the first question you got to ask.

Well, I'm putting in.

I know I got to get on.

Someone on the lump sum one time payment.

It's a one that they auctioned off the beginning of the year.

Is your name on?

I'm like, this is, this is fucking brilliant.

This is.

I would love to have my name on it.

My name just to be like something ridiculously shaped, an emoji, like a middle finger icon or something.

Oh, this one?

Yeah, yeah, the clock, right?

Not me.

I was like, what the hell is.

What, what is this?

I just found this out.

There's, there's always.

They're always taken by cyber trucks.

I'm like, dang.

These cyber.

Are these.

I made a joke to the principal.

I was like, are these reserved for like cyber trucks only?

And they're like, oh, no, those are auctioned off.

I'm like, what?

Yeah, bro, the school emails, we get those from my son too.

The school emails that we get about fundraising activity.

Like the shit they're doing now.

You're like, now you're just being greedy.

But y'all have passed the point of normal.

And then I got into a point of.

You guys got like these booster thons that they throw.

Yeah, all the time.

Every week, dude.

It's yours every.

So ours is twice a year.

They did a candy thing today.

The week long booster thon.

And then if you get your parents to donate X amount of dollars, then you get this present the next day in front of your class.

Yeah.

And they show the other kids.

It's like, bro, why are you extorting me?

So I l literally tell Adam like, hey, you go to class tomorrow and you say, I've Donated.

And my dad's going to buy me the.

All these gifts on Amazon for half the price.

Yeah, just.

It's ridiculous.

Like, he wanted a sweat band with a matching, like, head sweat band.

I'm like, first of all, like, that's not even cool anymore, bro.

Right?

It doesn't even got an NBA logo on it.

What are you doing?

Right?

I'll buy it for you from the NBA store.

Jonas Brothers.

What is this, bro?

The Back Street Boys.

What's going on?

My br.

My wife went down this path.

She was looking at how much teachers make.

She went deep.

Yeah, she was like, financial, forensic, like, evidence.

Like, she was going to the accounting, and she's like, this doesn't make any sense.

And I'm like, baby, calm down.

I need the audit of the books.

Yeah, she's.

She's hot.

I'm gonna find out.

I'm gonna report back on how much they auctioned off these parking spots for.

Because I was furious when I found out about this.

Tell me the show and then we'll find out.

Cybertruck owners, we'll call them out by name.

Yeah, I'm talking to you, Stephen.

Yeah, I'm coming out.

I swear, next year, I'm.

If they don't tell me, I'm going to just put them put out, like 100 bucks.

Is that.

Win it $1.

There's no way $100 wins it.

Right?

Price is not right, bitch.

All right, we got two more psychological phenomenon to come through here.

Number two, recency bias.

Not only do you have a bandwagon effect, we got recency bias.

People tend to believe recent market trends will continue indefinitely, leading to overconfidence during bull markets.

Like 14 years of artificial interest rate deflationary.

It only takes that recency bias and gives people a false factual relative in time to point out and say, this has always worked for me.

Well, it always worked for you because from 18 to 32, you were in the.

Probably the most prosperous economy with artificial deflation ever in history, and you never had to deal with real financial issues.

It matter what you do.

You could have been an Amazon E Com store seller and make tons of money.

And people did a lot.

So, yeah, recency bias with the bandwagon effect.

That's how social media sells you.

You know, I've got five friends that drive Lambos because they all took my course.

Yeah.

Do you know what?

Oh, you saw the Lambo.

You saw it?

Yeah.

You want one of those?

Right now you're in the bandwagon effect.

Plus, you believe this trend is going to continue indefinitely because they all got them and they're going to.

They're never going to lose them.

Right.

So you want one, too.

Which leads me to again, loss aversion, the third psychological effect.

Here.

Studies show investors feel the pain of a loss twice as strongly as the pleasure of a gain.

Wow.

Interesting.

We don't like losing.

We are a species that likes to win, but the winning fades.

The dopamine from a win fades, but the psychological animus of a loss stays with us until we can prove it wrong.

Yeah, yeah, that makes sense.

The fear often leads to irrational decisions during market corrections.

And this plays out in a very interesting way.

And you and I have had this conversation about somebody, I won't mention the show saying they have to win.

They refuse to consider other options because this has to work out for them.

That is the fear, that is the loss aversion.

That is the tip of the iceberg before the bad things happen.

And if you look at the psychological trends, the bandwagon effect, the recency bias and the loss aversion, that's boiler room, right?

It is.

That's boiler room psychology.

That's the mortgage business psychology that you get in these mortgage telephone call centers.

That's all of the multi level, multilevel marketing nonsense.

That's all of your guru selling online.

That's all three of these things being weaponized against you in a way to make you feel like you're part of an in group, part of an out group.

Okay?

If you're in the out group, you're not in the bandwagon.

You're not getting the recency of, you know, the bias everybody else is getting in you.

Don't you see it, but you're being excluded from it.

And then you have this loss aversion.

You're trying to not feel that pain of that loss, so they weaponize all three of them against you.

Interesting quotes here to discuss, one of which from the man you started the show with, not Charlie Munger, but Warren Buffett.

Okay.

Be fearful when others are greedy and greedy when others are fearful.

I think we are at that inflection.

Point now where it's okay to start becoming greedy.

Yes.

Yeah.

I think that's the positive spin here, is that we're at the point in the economy where now you can start thinking about being greedy and taking advantage of opportunities that are coming in the markets.

And it's taken a long time for me to go from fearful to greedy, but I'm getting there.

Okay.

I think that's The.

That's a good thing.

And I couldn't end the show without quoting the man, the myth, the legend, your partner in the laureate game.

Bernanke.

No, Robert Schiller.

Schiller, okay?

The man we've talked about the entire show.

Man who came up with the Schiller K.

Schiller index.

Speculative bubbles are like naturally occurring Ponzi schemes.

Early investors are paid out by new investors.

And the game only ends when the new investors stop coming in.

Yeah, I mean, exactly.

That's true.

In an economy like this, this Ponzi scheme ends when people are no longer capable of playing the game.

And I believe with housing affordability being what it is, with the debt levels being what they are, with the markets as overinflated as they are, people can no longer afford to play the game.

Yeah, they're definitely starting to feel that squeeze and that pinch I had somewhere.

I can now update it for the show, but given that we're an hour and 18 minutes in, I want to end with a final thought that you and I can discuss a little bit collegially.

Well, I got a quick.

Let me do a quick rundown before you give your final thought.

Look at you.

A quick run out.

Well, I think it's important just because when this episode drops, It'll be day one of the FOMC meeting.

Meaning the following day, the 18th, the 17th.

This episode drop on the 17th.

The 18th is when the FOMC will make their decision to not give you.

A fed funds rate cut.

Chris believes it.

Chris believes that.

I'm going go opposite, bro.

So one of us is going to be wrong.

Wow.

Yeah.

First time.

I'm going to go opposite because I got the data after the CPI print and I'll tell you, I'll give you the rationale as to why.

Okay.

Okay.

So inflation came out today, met expectations.

Okay.

And the expectation was that it was actually going to increase.

And it.

That's exactly what it did.

It went from 2.6% to 2.7%.

So still short of their goal of hitting 2% inflation rate.

Right.

And core inflation came in at no change, 3.3%.

We've talked about it.

It's because housing.

Right.

Shelter, the shelter component is still very much high and services inflation is still starting to come on the come up.

Before the CPI report came out, there was an 85% chance at a 25% rate cut per the Chicago Mercantile Exchange, the Fed funds watch tool.

It's now sitting at 94%.

I'm awry with CME on this one.

Okay.

And the reasoning behind it that they're going to lean on.

Because if you look at the data, right, it's confusing.

Wait, inflation is staying the same.

If not ticking up a little bit, then that would, that should mean we will not be cutting rates.

They need to stay firm.

Right.

But the jobs report that came out, unemployment ticked up from 4.1 to 4.2%.

Still low historically.

But the Fed will lean on that, I believe, and use that as the reason to quote, unquote, save the labor market.

Because we know the government has been putting on 50,000 jobs a month and we know these jobs numbers.

Some of the jobs that are being added are seasonal.

So 1,000%.

1,000%.

If you average the last two months, it's only at 130,000.

Okay.

Because it was 227,000 for November.

But if you average the October month before, it's only 132 together.

So they're going to, they're going to come in and lean on the labor market.

And then I think you definitely get a pause in January.

I think the only reason the FOMC would cut rates is to honor what they said early in the year and not lose face.

Yes.

And if you, if you have an FOMC meeting in January, you could say, hey, look, the data hasn't moved really polar in one direction or the other.

That being said, I think they may want to take the tact of shocking the market a little bit and waiting and seeing a little bit longer.

To your point, I do believe that what they should be doing is not cutting.

They should be holding.

If you want to accomplish your goal of bringing inflation down higher for longer.

I think the rhetoric that I've seen lately, I don't know why I feel the way I do.

I get all.

I totally agree everything you're saying.

I've seen the cme, I've seen work the World Interest Rate Probability from Bloomberg, but I just, I just feel like they're not going to cut and now.

It'S going to send a huge shockwave.

And I can't recall if at the end, after this meeting, I think so at the, after this meeting, there will be another summary of economic projections.

Yes.

Yeah, I think they're trying to.

I think they're trying to shake that, that confidence.

The market's been.

Right.

You know, when they were, when they were increasing rates.

Shaking the confidence has a different effect.

You want to shake the confidence on the way down to see how many apples fall off the tree.

Exactly right.

So I think they, I don't know.

I have this gut, gut feeling.

I've got nothing really tangible other than the fact that data has been somewhat inconclusive.

I really don't feel like they're going to cut a rate.

And if they do cut rates, ok, you can rest assure all that really means is.

Yeah, yeah, yeah.

We see the jobs report numbers and we think they're bullshit.

We think that it's way worse than it actually is because if they weren't as bad, then there's really no reason to cut rates.

You had GDP come in high, you had inflation still high, you had wages going up.

So things are still fine.

Right.

And the jobs numbers are technically positive.

Right.

Do you think that the jobs number, the unemployment number is going to spike in January?

Spike?

Yeah.

I don't know.

Maybe not spike, but definitely increase.

Yes.

Okay.

You mean, so you mean the February report of January's numbers, That's what you mean?

Yeah, yeah, yeah, yeah.

Absolutely.

Because it's seasonal.

Yeah.

Okay.

Well, because the other thing that, that's not being accounted for is, okay, some of the, some people that are employed, they have low income jobs, man.

You know, I hear you.

It's not, they're not, they're not jobs to where they can that are helping them service all their debts and get through this tough time.

I get it.

Again, I don't have anything really meaningful to say other than that.

I think it's.

I've been kicking your camera.

Sorry, my bad.

I just don't feel it.

The vibes aren't there, bro.

The vibes are there.

Yeah, I just.

It's a vibe.

I have some strong apprehension.

Okay.

So I want to put a final vote on this episode.

You can wrap it up.

No, you, you said you had something that I wanted to get some data points in before we did.

No, I think we can wrap it up there.

You want to wrap it up?

Yeah.

Well, I.

Well, okay.

The point I was going to make was a simple one.

This entire show we have not said we think a recession is going to happen or we are in a recession or we are in this or that.

Okay.

We've alluded to things.

Do I think we were in a bubble?

Yes, I do.

Absolutely.

Do I think that the bubble is going to burst?

Yes, I do.

Can I tell you inconclusively that there is data that supports it that's 100%, you know, absolute?

No, but there are so many red flags.

And the focus on Robert Schiller is a focus on a man who's highly Intelligent, who's won a Nobel Prize for this research based on the emotional impacts here.

Don't listen to us.

We can be a broken clock.

That's right.

Twice.

But this man knows this.

He's trying to warn the market for a third time in a row.

And something else to think about is if all the data points that are coming out that the Fed is using to rely on to make their decision are all positive, yet somehow they're still cutting rates.

That's got to tell you that they recognize something terrible is right around the corner.

And they need to allow for some quantitative easing to creep back in to make it easier to now go back out there, borrow money again, and keep.

Keep this going.

Yeah.

Not.

Not a good thing.

Not a good thing because you're only delaying the inevitable.

I get that.

But it's JP from the hoods.

Like, I don't want.

I don't want this beef.

I don't want this smoke.

That's gonna be somebody else's problem.

Yeah.

You don't want to pump that pump too much.

No, you can never pump the pump too much.

You.

You can, and then it'll blow up.

And that's a problem you don't want.

No.

Nobody wants that problem.

Yeah.

All right.

Odun, you got anything?

No.

You gave a good show tonight.

Room.

Yeah.

Appreciate you, bro.

Yeah.

Way to tap in.

I love you, buddy.

Are you got anything?

No, I'm good.

Feeling frisky?

Feeling frisky.

All right, good night, everybody.

Okay, bye.