The Best Way to Get a Raise (EP.216)

Episode Summary

Executive Summary: The episode ranges from a rapid post-pandemic V-shaped economic rebound to a wide tour of investing, labor shortages, personal finance psychology, and tech/consumer trends. The hosts argue that the recession was unusually brief, inflationary pressures are being amplified by supply/labor bottlenecks, and money decisions are deeply psychological. They also discuss Robinhood, NFTs, crypto leverage, buy-now-pay-later, real estate booms, and shifting corporate policies on vaccines and tuition.

Main Topics: Post-pandemic V-shaped recovery and “1987 of recessions” (Priority: 5/5): The hosts describe GDP and retail sales as having snapped back sharply, arguing the recession was so brief and sharp that it resembles a deep V rather than a prolonged downturn. CFA exam pass rate and career signaling (Priority: 4/5): They react to the record-low CFA Level I pass rate, debating whether the pass rate is meaningful and sharing how CFA candidacy helped or hurt their own career paths. Robinhood, IPO flipping, and crypto-era incentives (Priority: 4/5): They discuss Robinhood’s IPO experience, the platform’s warnings about flipping, and broader concerns about trading behavior, legal compensation, and speculative finance culture. NFTs, crypto leverage, and market mania (Priority: 5/5): They cover the renewed surge in NFT trading, the rise of CryptoPunks and Axie Infinity, and disturbing data showing extreme leverage usage on Binance Futures. Labor shortages, wages, and pricing power (Priority: 5/5): Listeners’ anecdotes and news reports suggest companies are struggling to hire and retain workers, raising wages for job switchers and pushing firms to increase prices without easily lowering them later. Money psychology, debt, and financial security (Priority: 5/5): A substantial segment focuses on Ramit Sethi’s idea that money psychology is separate from net worth, and that feelings of security, guilt, and scarcity are shaped by upbringing and life stage. Consumer finance, housing, and corporate policy shifts (Priority: 4/5): They cover securities-based lending, mortgage refinancing, buy-now-pay-later, rising real estate in Bozeman, and how corporations may increasingly set de facto policy on vaccines and tuition benefits.

Key Arguments: The economy’s rebound is unusually fast and sharp, with GDP and retail sales recovering in V-shaped fashion rather than a drawn-out recovery. A low CFA pass rate may reflect changes in test delivery or candidate volume, but the designation still matters as a career gateway for many. Robinhood and similar platforms nudge behavior in selective ways; they warn about IPO flipping but not excessive day trading. NFTs and crypto collectibles may look irrational, but if enough wealthy insiders and online culture participants want them to succeed, momentum can sustain the market. Labor shortages appear to be structural enough to keep wages rising and prices elevated even after some temporary supply pressures ease. Job switching is currently the best way to get a raise, especially for younger workers willing to move around. Money psychology is not solved by hitting a target number; emotional security and spending behavior are shaped by deeper life experiences. Rich households can borrow against portfolios at low rates, making leverage and tax deferral powerful tools compared with simply selling assets. Buy-now-pay-later has real economic demand because it reduces friction for consumers and generates merchant-funded revenue, even if the model still feels opaque to skeptics. Corporate mandates and benefits are increasingly becoming a substitute for government action in areas like vaccination and education support.

Data Points: US GDP pre-pandemic level: $21.7 trillion - Referenced as the level before the pandemic recession US GDP trough during recession: $19.5 trillion - Brief recession dip before recovery US GDP current level mentioned: $22.7 trillion - Host notes GDP is now above pre-pandemic level US retail sales pre-drop level: $460 billion - Retail sales before the pandemic dip US retail sales trough: $380 billion - Retail sales during the recession US retail sales current level mentioned: $550 billion - Retail sales now above trend CFA Level I pass rate: 25% - Lowest pass rate on record according to the CFA Institute Previous lowest CFA pass rate: 34% - Compared against the new record low Robinhood chief legal officer compensation: more than $30 million - Paid in 2020 despite joining halfway through the year GameStop market cap: $11 billion - Used in comparison with sports franchise value Yankees estimated value: $4-$5 billion - Compared against GameStop ownership analogy Simplify downside convexity ETF AUM: $250 million - Illustrates demand for downside protection Simplify upside convexity ETF AUM: $10 million - Shows limited appetite for upside hedging Weekly NFT trade volume: surging again - Referenced as rebounding after a lull Gary Vee CryptoPunk purchase: $3.7 million - Example of renewed NFT enthusiasm Binance Futures high leverage usage: 20% of leveraged users at over 100x leverage - Chart cited to show extreme speculation Wage increase for job switchers: 5.8% - ADP data from June 2020 to June 2021 Wage increase for stayers: 3.1% - ADP data for workers staying in same job 10-year Treasury yield: below 1.2% - Mentioned in discussion of low rates and refinancing Morgan Stanley securities-based lending: over $68 billion - Non-mortgage loans outstanding for clients Bank of America securities-based lending: $62 billion - Compared with home equity lines of credit Merrill Lynch low borrowing rate: 0.87% - Available for clients with more than $100 million Merrill Lynch borrowing rate for millionaires: 3.2% - Quoted for clients with at least $1 million Bozeman, Montana million-dollar home sales: 33 sales - January through April, more than four times the prior year period Bozeman median home price change: up 24% to $467,000 - Illustrates booming real estate demand Bozeman median days on market: 6 days - Down from 18 days pre-pandemic

Pivotal Quotes: "This really was our 1987 of recessions, correct?" — Michael Batnick: Describing the speed and shape of the post-pandemic recession and recovery "Paying off your debt won’t magically change your money psychology. Having $1 million in the bank also won’t magically change your money psychology." — Ramit Sethi (quoted by hosts): Discussing the emotional side of money management "If you want to be an analyst, this is not the right role for you." — Interviewing manager, recounted by Ben Carlson: Ben explains how mentioning CFA study during an interview derailed a career opportunity

Implications: Listeners should expect continued volatility in speculative assets, persistent labor-driven inflation pressure, and growing use of corporate policies and fintech tools. The episode’s broader message: personal finance is less about a single number than behavior, context, and psychology.