The Unluckiest Generation (EP.149)

Episode Summary

Executive Summary: The episode is a wide-ranging reflection on a traumatic 2020 backdrop, connecting social unrest, pandemic fallout, and economic divergence. The hosts discuss how “bad is stronger than good,” compare the moment to historic crises, debate inequality and the Fed’s role, highlight uneven market and labor outcomes, warn about risky financial products, and end with personal recommendations on books, movies, podcasts, and child-care/education uncertainty.

Main Topics: 2020 Crisis, Trauma, and Historical Parallels (Priority: 5/5): The hosts open with grief over current events, linking protests, violence, and pandemic misery to historical periods like 1968, and arguing that reading history can provide perspective even when the present feels especially bleak. Negativity Bias and Post-Traumatic Growth (Priority: 5/5): They discuss Ben’s post about Roy Baumeister’s research that bad experiences have stronger and longer-lasting effects than good ones, while also noting the possibility of post-traumatic growth for many people after hardship. Inequality, Job Losses, and the Limits of Fed Policy (Priority: 5/5): The conversation centers on how job losses hit lower-income workers hardest, why the Fed is being blamed for inequality, and why the hosts think Congress and the president have more direct tools than the central bank. Market Divergence and Pandemic-Era Economic Distortions (Priority: 5/5): They review charts showing record savings, record income growth, and severe divergence between card-present and card-not-present spending, as well as the dramatic gap between large-cap stocks and smaller companies. Speculation, ETFs, and Dangerous Leverage (Priority: 5/5): The hosts react to bizarre flow into the airline-focused JETS ETF and to leveraged ETNs tied to mortgage REITs, arguing that many retail investors do not understand the risks of these products. Childcare, Schooling, and Work-from-Home Inequality (Priority: 4/5): They note that remote work is largely a white-collar privilege and discuss the fragility of childcare providers, the uncertain fall school plans, and how the pandemic exposes structural inequities. Personal Recommendations and Media Consumption (Priority: 3/5): The episode closes with film and TV reactions, plus reading and podcast recommendations, including Devs, Space Force, Gangster Capitalism, and history-focused listening and reading.

Key Arguments: Negative events tend to have more lasting psychological and social impact than positive ones, which helps explain why the current period feels so overwhelming. Historical comparison matters: 1968 and other crisis years show that social upheaval can coexist with long-run progress, though that is little comfort in the moment. The Fed is not the main cause of income inequality; fiscal policy and broader government action matter more than monetary policy. Pandemic job losses and income disruption have fallen disproportionately on lower-income workers, intensifying inequality. Market returns are increasingly driven by a small number of huge companies, while smaller companies and much of the real economy remain under pressure. Retail investors are reaching for yield and excitement in risky, leveraged, or misunderstood products, often with disastrous results. Remote work and many pandemic “choices” are only available to a relatively privileged slice of the workforce. Childcare is a critical but under-supported part of the economy, and closures could create long-term damage for families and labor participation. At some point, investors need to stop reading and start implementing; additional books offer diminishing returns compared with disciplined action. Critics’ taste is not the same as audience taste; the hosts prefer practical, accessible entertainment over “artsier” films.

Data Points: Twitter happiness: “Yesterday was the saddest day in the history of Twitter” - Referenced a Hedonometer chart showing record sadness online Historical comparison: 1918, 1929, and 1968 - Ben described 2020 as feeling like a combination of these eras Vietnam war deaths by 1968: 10,000 or more young Americans killed - From the cited passage in Rocketman about the turmoil of 1968 April 2020 personal income growth: 10.5% - US personal income rose at a record pace during the pandemic shock April 2020 personal savings rate: about 33% - Savings spiked alongside government support and reduced spending Card-present spending: down 33% - JPMorgan/Chase chart showing in-person card swipes collapsed Card-not-present spending: up 1.4% - Online/app-based spending increased during lockdown Cash as a share of equity market cap: about 16% vs. 10% previously - US cash holdings rose sharply as investors moved to safety JETS ETF assets: from $33 million to about $930 million - Airline ETF inflows surged despite weak airline fundamentals JETS ETF performance: down 50% year to date; up 26% from the bottom - Illustrates the disconnect between inflows and price action Largest 10 companies market cap: $6.6 trillion to $7.3 trillion - Drew Dixon’s chart showing the largest firms gaining size during the crisis Average market cap of largest firms: $664 billion to $732 billion - Further evidence of concentration at the top of the market Smallest 50 S&P companies: down 21% YTD - Shows underperformance of smaller firms relative to mega-caps Largest 50 S&P companies: up 4.7% YTD - Top-end stocks outperformed materially PE premium: 80% premium - Largest 50 traded at a substantial valuation premium to the smallest 50 Millennial performance metric: lowest ever in the Washington Post comparison - Millennials had the worst GDP-per-person growth in their first 15 years of work among measured generations Work-from-home share by education: 46% with bachelor’s degree or higher vs. 3% with less than high school - Work-from-home access is highly unequal by education level Childcare risk: Half of childcare supply potentially at risk - Center for American Progress estimate cited by NYT Childcare survival without support: 17% could not survive any closure; 30% could not survive more than two weeks; 16% could not survive more than a month - Survey of 6,000 providers on pandemic viability March 2020/after-hours market behavior: Up 600% if buying close-to-open; flat if buying open-to-close - Bespoke chart showing overnight gains dominate long-run SPY returns Hertz/Carl Icahn loss: $1.5 billion initial investment to $342 million value at Q1 2020 - Icahn’s stake in Hertz after the bankruptcy filing Berkshire recent losses: at least $7 billion lost on roughly $10 billion investments in each of Kraft Heinz, Occidental, and airlines - Marker Watch critique of Buffett’s recent track record Leveraged ETN example: $800,000 invested, then lost everything in about two weeks - WSJ story about an investor in a triple-leveraged mortgage ETN Another ETN loss: $700,000 lost - Investor in a UBS ETN paid $13/share, later paid out at 20 cents/share Federal government pay structure: 15 pay grades and 10 steps - Example of salary adjustment by geography already used by government

Pivotal Quotes: "Bad events take longer to wear off than good events." — Ben Carlson: Explaining the psychology behind his essay and Roy Baumeister’s research "To get the misery out the door." — Manufacturing executive quoted by Ben Carlson: Answering why firms lay off workers rather than cut everyone’s pay in a downturn "The stock market is not the place to put it at because it's not going to be the barometer of that stuff." — Ben Carlson: Arguing that market performance does not track social anger or national trauma

Implications: The episode suggests 2020 is accelerating inequality, behavioral excess, and institutional strain. Investors should be cautious with leverage and narratives, while families and policymakers face urgent questions about work, childcare, and support for vulnerable workers.