Podcast - December 12, 2022

Episode 64: That’s Ridiculous | Josh is Riled Up

Josh is riled up and he wants you to know about it. What’s got his goat? Check out this week’s episode of Barenaked Money to find out.

Episode Transcript


That’s Ridiculous | Josh is Riled Up

Announcer: You’re about to get lucky with the Barenaked Money Podcast, the show that gives you the naked truth about personal finance with your hosts Josh Sheluk and Colin White, portfolio managers with WLWP Wealth Planners, iA Private Wealth.
Josh Sheluk: Josh and Colin here with an absolutely ridiculous episode of Barenaked Money coming your way. And I thought about this idea because I’ve been going through the news a lot, reading a lot of not only headlines but in-depth articles, listening to a lot of podcasts.
And I found myself thinking an awful lot. This is absolutely ridiculous. This is absurd. I can’t even fathom why this is happening right now, or just being left absolutely speechless with some of this stuff. So this podcast is dedicated to these things that make me say, “That’s ridiculous.” Now, when I positioned this idea to you, Colin, you said what?
Colin White: I’m too old and cranky to have those feelings anymore, so I’m along for the ride this time because I think I’m broken. I think that I’ve just learned to accept whatever the world sends my way, but I am absolutely riveted by the idea that you are still feeling this way.
And I really want to explore these thoughts with you through your eyes, if you will. And I just can’t wait to see where this goes, Josh. I just cannot wait to see where this goes.
Josh Sheluk: There’s been so many crazy things that have happened over the last few years. And I was going through the list and thinking, yeah, that’s crazy, but I could see that happening. Or this is absurd, but yeah, it’s not that far out of the realm of possibility.
But then there’s just been a few things recently where I’m dumbfounded. I’m excited for this one. I said let’s go and pick five. I wasn’t even able to pick five. I’ve picked four. Because that’s how high my standards are for this ridiculous podcast.
Colin White: I got reminded of a meme recently where somebody was describing the fact that, on their cellphone, they were listening to William Shatner speak from space. If somebody had told 12-year-old him that he would be talking or see Captain Kirk in space from his handheld computer, that just would’ve blown his mind as a 12-year-old.
I can’t wait for your sense of wonder, Josh. I cannot wait. Please, without further ado, give us the first thing on your list.
Josh Sheluk: Okay. Number one. One of my favorites. Elon Musk. He bought Twitter for $44 billion.
Colin White: Or did he?
Josh Sheluk: So that’s not the ridiculous part. The ridiculous part is he didn’t want to buy Twitter for $44 billion. He accidentally spent $44 billion buying something that he didn’t want. That is absurd.
Colin White: And doesn’t know what to do with it, really. Well, judging by the reports.
Josh Sheluk: Well, he knows what to do with it because, first thing… Actually, the whole idea of him buying it, I was like, okay, that’s dumb that he didn’t really want to buy it. That was really, really dumb.
But what I found most ridiculous is, so he comes in, the first thing he does is he fires half of the staff. And then he realizes, the next day, that he might need some of these staff, so they rehire them or start reaching out to them. This whole thing is just mind-blowing how absurd it has become.
Colin White: And it’s neat to watch on a couple of levels. And again, I tend to reflect on these things a little bit because I found myself at one time, I even went to check to see what was going on with Twitter’s price. I was like, oh, wait, it doesn’t have a price anymore because it’s private.
Josh Sheluk: Yep.
Colin White: Ah. See? Now, there it is. You get to do what you damn please without the eyes of the world peering into exactly what’s going on. So we’re left sitting in the cheap seats, hearing dribs and drabs about things, unable to really put anything together.
And there’s not really any super motivation for him to clean that up. Now, people can think what they want because it’s his own private company. Now, I think it’s going to come to light as to exactly… SpaceX was prepaying for advertising on Twitter, which is taking federal money and using it to buy ads.
I think there’s going to be all kinds of little things that are going to come out from the background that he’s doing because, “Well, these are all my private companies. I can do whatever I want.”
Not all of them are private companies. It’s like when he was tweeting about, oh, I think I might just take Tesla private. You can’t do that during a trading day. There’s rules even for billionaires.
Josh Sheluk: Well, he did it. So you can do it, and he did do it.
Colin White: [inaudible]. You shouldn’t do those kind of things. In fact, that’s like standing up and yelling, “Fire!” in a crowded theater. There’s certain things you just shouldn’t do. You can do them, but there are going to be consequences.
I don’t even know if or when we’re ever going to hear the whole story because everybody’s going to try to make a nickel off of this by telling their inside story, or they’re promoting it to their TikTok followers. And you have all these things. And what’s staged and what isn’t? And what’s real? I think I’ve got more understanding of the exact military operation in Ukraine than I do on what exactly is going on within Twitter right now.
Josh Sheluk: I would guess that Musk might be the same way. He might not have any better idea. He’s just pulling names from a hat and deciding to let them go. Crazy story.
Colin White: An interesting development today that I was reading about because he gave Donald Trump his account back.
Josh Sheluk: Oh, yes.
Colin White: But Donald can’t use it because he’s in the process of trying to sell Truth Social to a SPAC. And he signed… One of the agreements that he signed is that he cannot use other platforms.
Now, Donald’s not bound by normal thought either. There’s even that intrigue playing. I was like, oh, Donald gets to tweet again. No, he’s not tweeting. Why is he not tweeting? Oh, there’s a reason. See, the layers of the onion.
Now, listen. Whoa, whoa, whoa. Josh, we missed something here. We need to say, at this moment, this is purely for entertainment purposes only. Any of you trying to turn this into any kind of an investible idea, please stop. In fact, please delete us. Just stop listening. Because that’s not remotely what this is about.
Josh Sheluk: Yeah. In case you think you’re going to get investible ideas from our That’s Ridiculous podcast, you should maybe second-guess. But you just took the story and added two layers of ridiculousness to it because you added Trump as well. That’s a good one.
Colin White: And SPACs. [inaudible]
Josh Sheluk: And SPACs. Trump and SPACs. That’s a second layer. Wow. Impressive. Okay, you ready for number two?
Colin White: How could I not?
Josh Sheluk: Crypto and this whole FTX saga. Unbelievable. Actually, maybe not unbelievable because we’ve been totally ripping it apart for the last couple of years. But it is totally ridiculous what has happened here.
Colin White: I don’t even know what’s left to add. Who would’ve thought, in a completely anonymous, unregulated space, there’d be room for fraud? Who would’ve thought that those are the kind of people that would be attracted to that space? Who would’ve thought?
Josh Sheluk: This one, it’s surprising to some extent. I don’t know these players or anything like that, but this guy is or was the so-called golden boy of crypto; Sam Bankman-Fried, the guy who was running FTX, who now…
By all accounts, it seems like nothing’s been proven yet, but it seems like there was some massive amounts of fraud or illegitimate activity going on. Truly stunning to a lot of people in the crypto world. Billions of dollars just seemed to evaporate overnight.
The reason that I think this is so ridiculous is because, I’m going to get my days wrong here, but Monday, they were looking for a bailout. Tuesday, they needed $10 billion. And Wednesday, they were bankrupt. It was like, what just happened?
This went from one of the most successful companies… They were bailing out the other crypto companies three months ago. And all of a sudden, they’re looking for capital and there’s a massive fraud there? And this guy, I don’t know, what was his net worth? It was $8 billion or something like that at age 29. And now it’s what? Zero? Negative?
Colin White: Are any of those numbers really real?
Josh Sheluk: Well, this one, for sure, was not. It was all smoke and mirrors.
Colin White: Well, yeah. And it’s interesting to watch [inaudible] the Ontario Teachers’ Pension lost money on this.
Josh Sheluk: OTTP. Yeah. Yeah.
Colin White: So this was making it into the mainstream. And, man alive, what the people in the mainstream are thinking about… It’s the same as the retail product that was getting launched. There are a number of crypto retail products that are out there tracking the various baskets of cryptocurrencies and stuff. Again, I can’t imagine they’re doing well, and I can’t imagine there’s very much liquidity there.
Josh Sheluk: No, they’re just getting decimated right now. Yeah. So when I first heard the story, I thought, oh, they just over-leveraged themselves. You see banks fail or exchanges get into trouble from time to time when things like this happen. You take in money, you lend out the money. We’re not going to get into all the mechanics of this.
But then when people are looking for their money, you don’t have it all. And next thing you know, everything comes crashing down.
Then the next day, I hear that this could just be a massive fraud where there was money being siphoned out by Sam Bankman-Fried to satisfy whatever other things he had going on on the side, his own hedge fund, which seems to be a massive conflict of interest when he’s running these things in parallel.
Now you’re hearing about this is a 10-person operation operating out of some mansion in California with nobody that had any clue what they’re dealing with. Who’s the guy who handled the Enron bankruptcies come in and said he hasn’t seen anything like this before. That’s ridiculous.
Colin White: And that’s the comparison being made. This is an Enron-esque kind of thing. It’s more about just blatant fraud. Josh, you or I get taken out to dinner for more than a hundred bucks, we have to report it to our regulators.
Some of the stuff that’s getting away with at this table is just like, oh my goodness, seriously. This unregulated thing. I understand the frustration with regulations. I get frustrated with regulations on a regular. But these regulations are put in place to protect against things.
And all regulation came from an event somewhere. There are going to be some changes coming soon to a theater near you because the politicians… Everybody’s looking to the government saying, “Aren’t you going to protect me?” And government likes nothing better than to protect people because there’s votes in it. And if I can get people wound up about it, that’s good in a democracy.
I do think that this is the final nail in the coffin of a completely unregulated crypto space that people are going to be enthusiastic about. Sorry, let me change that. I hope this is the final nail in the coffin of the belief in an unregulated crypto system because we don’t even know all that has gone on here, but it’s bad. We’re going to need to see some changes happen going forward.
And you got to get into conversations with people. And they’re talking about the Bitcoin universe; how there’s 10 wallets that control the vast majority of Bitcoin, therefore, at least 10 whales. It’s like, you don’t know there’s 10 whales. Each of those accounts could have 50 people attached to them. You have no idea because it’s anonymous. Stop it. It’s not good.
Being anonymous when it comes to billions of dollars disappearing, nobody likes that except the person who got away with billions of dollars. Nobody else in the food chain likes that. Josh, you’ve managed to bring it out of me. You’re getting me wound up.
Josh Sheluk: Got you wound up. I knew it was going to happen. Okay. Number three here. I’ve already ranted about this once, so you know what I’m going to say, but the government taxing stock buybacks.
Colin White: Oh, I thought we resolved this one as being basically a non-issue, maybe even a positive thing. [inaudible]
Josh Sheluk: Well, it is a non-issue. But that’s the point, isn’t it? This is a non-issue. It makes no sense. Ultimately, it doesn’t really affect anything, but that’s the whole point. This is ridiculous. Why would you do something that is completely nonsensical?
Colin White: Josh, all right, I need you to start taking some notes here because it’s very sensical. It’s the opposite of nonsensical. It’s got so much sense, it’s its own thing.
This is the government getting votes by going after the mean, corporate, greedy people. Every play needs a villain. And no more fun than beating up on a villain. You want to keep the villain around so you can beat him on a regular basis. And every time you beat the villain, you get a positive feedback loop from your base. That’s what this is.
Again, you could make the existential argument that share buybacks are bad. Why not dividend the money out? All that kind of thing. You could make that argument.
Josh Sheluk: You want to know why, Colin? Because it makes no difference. It’s the same thing. So, unless the government thinks dividends are bad, then they shouldn’t be.
And I totally get where you’re coming from. The ridiculous part of this is not that the government is doing something to get votes. The ridiculous part is that they’re able to do something that makes no sense except from maybe getting them a few votes. That’s the ridiculous… You shouldn’t be able to implement something that is impacting the financial lives of people that is totally pointless.
Colin White: Well, no, you were the one actually that drew the conclusion on our PM call [inaudible] all the way through. You were the one that pointed out the benefit here.
Josh Sheluk: Okay. Okay. Just so our listeners know the full loop that I went through, my first step was-
Colin White: I can’t take the highlights? The highlights are more succinct.
Josh Sheluk: Well, everybody needs to understand how we arrived at the conclusion that maybe this is a positive thing. Stock buybacks are just a way for companies to give money back to their shareholders.
When companies have too much money, more money than they can spend on viable business-related projects, they’re going to give money back to their shareholders. This makes total sense. This is what a dividend is. This is what a stock buyback is. It’s simply the company saying, “We have more money than we can spend on sensical things. Let’s give some money back.”
So this is something you should encourage. You should want this to happen. Because if a company doesn’t have something smart to spend money on, then they’re going to spend money on dumb shit. And you don’t want companies spending money on dumb shit because that’s not helping the economy at all. So disincentivizing them from giving money back to the shareholders in an intelligent way is a bad idea.
Now, what are companies going to do in this sense? Well, if the stock buybacks, the share buybacks, are being taxed, they’re just going to pivot to give more through the form of dividends. Now, there’s some disadvantages for the company doing that. They don’t really want to dividend as much as maybe they’re being incentivized to do now because share buybacks give them a little bit more flexibility, a little bit more control.
And the sinister side of share buybacks is that companies will buy back the shares to prop up their earnings per share. In which case, that that’s bolstering the compensation packages for some of the executives. That’s the cynical side of it.
Now, I [inaudible] conclusion that, hey, maybe this diverts these senior execs from doing this, from propping up their own EPS through the share buyback mechanism. And if that actually happens, it’s a good thing.
But for the government to think that companies… and this is their words, that companies are going to use this cash that they now have, that they’re not using on share buybacks, to either boost the wages of their employees or on other capital investments, that is absolutely asinine. There’s no chance, there’s zero chance that that’s going to happen.
The company, by wanting to give a share buyback, is already telling you that there’s no smart capital investments for them to make. So that doesn’t make any sense. And they’re just not going to willfully throw around a whole bunch of money and hurt their margins because they can just as easily pay a dividend and end up at pretty much the same spot.
Colin White: Well, the inner accountant in me likes to see companies behave as you described, Josh; have a hurdle rate. This is the expected rate of return that we need on deploying capital. And if we don’t feel we can achieve that hurdle rate, then we should return the capital back to the shareholders and let them deploy it in the capital market.
A bit of a hallmark of the whole capital market thing. You always want to be concerned. Back in the tech wreck of early 2000s, when you had a property management company talk about their new online business, you wanted to sell them quickly because, obviously, they were pivoting into something they didn’t know about.
But in a well-functioning capital market, you want capital deployed where it can achieve the best rate of return. And that’s what we’re talking about; deploying the capital. Then this tax and share buybacks is something that can raise some revenue for the government because they’ve already spent it, and appeals to a certain segment of the population because the corporations are evil, and this is a way of taking money away from them and punishing them for being bad. So the villain takes another punch.
Josh Sheluk: Yeah. In reality, it’s more like punishing them for being good, which doesn’t make any sense. All right. I got one more for you, Colin, before I let you go.
This is maybe not a here, this point in time, ridiculous viewpoint, but I’m going to rewind for about two and a half years. So let’s time-travel back to… This is traumatizing me a little bit because I was going to say time-travel back to early to mid-2020. That’s not where we want to be, but anyways.
Colin White: No. Keep going.
Josh Sheluk: We’re just going there temporarily, so come back with me just for a second. The 10-year bond yield in the US was 0.5%. Does that not seem absolutely ridiculous to you in hindsight?
Colin White: It felt that way in present sight. We were sitting in meetings looking back going, “This is [inaudible].” Where does it go from here? And the debate was on.
There were lots of people writing about it, lots of really smart people combing through the annals of history back to the 1400s to try to decide what possibly could come next. Not one person came up with a global pandemic. It didn’t make any sense at the time.
Josh Sheluk: Yeah. Well, I’m more so looking at the time just after the pandemic hit and when the central banks just took the interest rates back to basically zero wherever they could. And yet, five-year government bond yields hit about half a percent for three or four months there, in and around that level from March to July 2020.
And now you sit here… So, at the time, it was like, okay, I could buy this bond and make half a percent per year. If inflation is 1%, I’m losing money every year. That seems ridiculous.
Now, we sit here today, and inflation has probably averaged about 5% per year over that couple-year period of time. Not only that, but US 10-year government bond yields are in and around the 4% level. They hit as high as 4.25% a few weeks ago. And you look back at that time and think, what were we thinking? Why did we think that was a good idea? Why did anyone own a bond at that level?
Colin White: See, markets don’t think. [inaudible]. There’s no thought that goes into it. It is the net sum calculation of everybody’s feelings at the time or schemes at the time.
You’d have to go around and pull the entire planet and ask what everybody was thinking when they were investing in those vehicles. Some were hoping to hang on to their money for the huge correction that was about to happen so that they could flood all the money into the equity markets later and make money on it that way. There’s a significant amount of money being bet there.
You also have institutions such as pension funds and sovereign wealth funds that are required to keep a certain amount of money. So there’s a certain amount of demand that’s absolutely baked in.
And then you get the supply side of the equation. What kind of supply? Oh, look, there’s all kinds of supply. There’s a whole bunch of this stuff coming on the market because governments want to spend.
It’s funny because that’s just how we talk. What were the markets thinking? Well, they don’t. They are the net sum calculation of what everybody was thinking all put into a big, messy heap. There’s no cohesion there. There’s no overall plan or strategy. It’s just the net sum total.
It may or may not have relationships with any of the constituent players who are trying to contribute to that game. At the time, it was stupid, but it didn’t help us figure out what was coming next.
Josh Sheluk: Yeah. If you just look at the collective point of view, we’ll call it, not thought, but point of view, if you’re using the market price as the collective point of view, you just have to think now, God, we were so misguided at that time.
The point of view was so distorted. I guess it’s understandable because you have a global pandemic, you have something that’s never happened before. Really, we had deflation at that time and tens of thousands, millions, I guess it was millions, tens of millions, maybe in the US, of people out of work. Yeah. It’s kind of understandable. Again, in hindsight, it just looks absolutely ridiculous.
Colin White: And again, this goes back to a theme that we’ve been exploring on a lot of podcasts lately, about being really confident about what comes next. Let’s go back at all the times that were really super odd in hindsight or we were super sure of things in hindsight, how did that play out?
Well, it’s impossible to get from, “Yeah, this is really bad,” to, “What comes next?” Because there’s just way too many variables at play. Way too many variables. It was funny, you were talking about all of these “oh my God” moments.
In my career, it’s like, “Oh my God, there’s a computer.” I’ve gone through that. “Oh, and internet. Oh, that’s cool. I can talk on a phone in my car.”
These moments of wonder and trying to figure out what they mean going forward, lots of words are going to get spent, but it’s just… Hang in for the ride. That’s why we get up every morning, pour a cup of coffee, and go, damage report. And then you listen to the news and find out what’s going on.
Josh Sheluk: Or don’t listen to the news and you’ll be better off for it.
Colin White: If you listen to the news for entertainment purposes only, and you find that it doesn’t cause you an inordinate amount of stress, causing you to lack sleep or to eat poorly, or to do other things, bad things, to yourself, then you can listen to the news. There it is, Josh. We need to develop a test. If you can answer the following eight questions, you’re allowed to go through the portal and listen to the news.
Josh Sheluk: That would make the world better off, I’m pretty sure. So did any of my four topics here… Did it hit your scale of saying that’s ridiculous, or did I disappoint?
Colin White: Oh, no, you didn’t disappoint, Josh. And again, my disappointment scale is kind of broken because I’ve been disappointed by so many things. And I continue to rage against a whole bunch of things.
The marijuana thing, I just threw something on LinkedIn because we have been, and I have been on the record of making fun of marijuana investing. And somebody did a calculation that Canadians lost $131 billion investing in marijuana. So I raged against that when it was happening, and I continue to rage against it now.
But it’s tiring. It’s tiring to rage against things. This is why I marshal my energy for more positive things, to have positive conversations with people.
Josh Sheluk: I’ll be looking forward to that same calculation for how much Canadians have lost on crypto because I know, globally, for sure, it’s dwarfed whatever anybody’s lost on marijuana. But here in Canada, marijuana had a particularly close place in our heart.
Colin White: But you’re missing the fundamental point of crypto; we’ll never know because it’s anonymous and all made up.
Josh Sheluk: Well, I’ll just end off by saying that-
Announcer: This information has been prepared by White LeBlanc Wealth Planners, who is a portfolio manager for iA Private Wealth. Opinions expressed in this podcast are those of the portfolio manager only and do not necessarily reflect those of iA Private Wealth Inc.
iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.
Colin White: We’ve noticed something. It seems there are a lot of people who would rather try to figure out their lives with an online calculator than air your finances to a human. Stop doing that.
You need to talk to someone who can help direct you, tell you where to start with what you’ve got to make the biggest impact on your future. You can’t figure that out at DoIHaveEnoughCash.com, but you can figure it out by chatting with us. Call us. It’ll be okay. You’ll see.
Announcer: The content of this presentation, including facts, views, opinions, recommendations, descriptions of or references to products or securities is not to be used or construed as investment advice, as an offer to sell…
Although we endeavor to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it. This should not be construed to be legal or tax advice, as every client’s situation is different.
This podcast has been prepared for information purposes only. The tax information provided in this podcast is general in nature, and each client should consult with their own tax advisor, accountant, and lawyer before pursuing any strategy described herein, as each client’s individual circumstances are unique.
We’ve endeavored to ensure the accuracy of the information provided at the time that it was written. However, should the information in this podcast be incorrect or incomplete, or should the law or its interpretation change after the date of this document, the advice provided may be incorrect or inappropriate.
There should be no expectation that the information will be updated, supplemented, or revised, whether as a result of new information, changing circumstances, future events, or otherwise. We are not responsible for errors contained in this podcast or to anyone who relies on the information contained in this podcast. Please consult your own legal and tax advisor.

Join Our Email Community

You can expect financial education straight to your inbox, plus invites to exclusive events & webinars.