In this episode of Motley Fool Money, Motley Fool producer Ricky Mulvey and analyst Nick Sciple discuss:
- Apple's Vision Pro Product, its biggest product launch in a decade.
- How Apple's hardware strategy differs from Meta's.
- The Vision Pro's possibilities and limitations.
- The SEC's complaint against Coinbase.
Plus, Motley Fool host Alison Southwick and personal finance expert Robert Brokamp discuss how to plan for a healthier retirement.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
This video was recorded on June 6, 2023.
Ricky Mulvey: The world's most valuable company introduces some very expensive goggles. You're listening to Motley Fool Money. I'm Ricky Mulvey, joining us now is Nick Sciple from the great state of Tennessee. Good to see you as always, Nick.
Nick Sciple: Great to be here with you, Ricky.
Ricky Mulvey: Yesterday, Apple presented the Vision Pro, an augmented reality headset and its first major new product since 2014. It's going to sell for about $3,500 and is available early next year. Huge products launched yesterday. What was your reaction to the overall presentation and even the price point?
Nick Sciple: The product launch, unlike other maybe big Apple reveals previously, was very much telegraphed. You could have opened up any big business publication yesterday and said, "Hey Apple's revealing a new product," which is maybe a little different than some of the reveals in the past. However, you look at the hardware, certainly interesting as Apple always immediately stands out. No hand controllers for this augmented reality device, very different than what you're getting with the Oculus or some others on the market, really have to have some sophisticated 3D sensing technology to be able to make that take place, to be able to see what your hands are doing and all types of lighting from all types of angles and seems they have released with sophisticated technology there. The other thing that stood out to me, it does have a battery pack that attaches via cord, and a lot of people talked about that, looks a little bit awkward, not maybe as sleek as you might expect from an Apple product, but clearly the company focused on the weight of the device. If you think about the Oculus is out there, sometimes the battery gets pretty heavy. All that weight on your head can maybe weigh on some of the extended wear issues.
That maybe explains the reasoning behind that. But the presentation, I think overall, was very interesting as well. Unlike the big competitor, Meta, which has changed the company of their name to get behind the metaverse hype. You didn't see Apple mentioned metaverse or AI really a single time. In their presentation, they talked about machine learning, about spatial computing. Really bring to it to the forth a new type of computing that we haven't seen before, focusing on the augmented reality side of things. Things like, we're going to project your eyes onto this device externally so that other folks that are in the room not participating in the experience know what's going on. Definitely a different focus to Apple, more about augmented reality that than some of these other folks. Certainly, the price point stands out. You're looking at a few hundred dollars for the competing Meta device, Apple coming out at $3,500. Very expensive, but I think that reflects some of the hardware under the hood. They've got the M2 chip, which they use in a number of their MacBook devices. This is a computer-quality chip. Along with that their R1 chip that's really going to be doing a lot of the sensing. Really some hefty hardware there, which maybe reflects the price point. Could other competitors replicate this at a similar price point? I don't know, but Apple has certainly delivered a top-of-the-line device, which reflects their brand and where they position themselves.
Ricky Mulvey: The trade-offs are absolutely noticeable, and there's a lot of talk about whether or not this is a smart idea for Apple to launch this at this time. My personal feeling is I wouldn't bet on Tim Cook doing something stupid. But the trade-offs are very noticeable. You have the battery pack and the device itself, only lasts for about two hours. But Apple also put a 4K television on something the size of a postage stamp. I would not bet against their engineers to figure this out in the future. Some of the use cases are really interesting to me, Nick, you have watching movies where it's going to basically be able to expand the screen to cinema size, videoconferencing, FaceTime where it's going to scan your face. When your friends and family are communicating with you and seeing a 3D rendering. It doesn't look like you're wearing snowboard goggles. Any of the use cases you want to focus in on?
Nick Sciple: Well, I think the one thing that really stood out to me was the, I don't know if it's the home movie experience, so that's the way to describe it, but it's going to feature Apple's first 3D camera, which is going to let you really have a massive experience. You think about, every Sunday I have a FaceTime call with my parents, I have a young child and my parents live a long way away. FaceTime really opens up a new dynamic of interacting with folks. You can tell a story about how this technology with some of these 3D home movie experience is really opening a new dynamic of interaction from long distances away. Whether it's families here in the U.S. that the children have moved away or folks that have moved across the world. I think that'll be an interesting application, and I find that a lot more exciting for your everyday consumer, more so than some of these really niche gaming experiences that you've heard sold with other products.
Ricky Mulvey: One question with this is, why do you have to have it? I thought one compelling answer in the presentation was, they showed this father with two daughters capturing memories with the 3D video camera and then this device, it can take you right back to that memory in a life-size and three-dimensional way. I think that's going to be a pretty strong selling points to a lot of parents. For me at least it answers, why do you have to have this in one instance. Whether or not it's replicable by other companies we'll see. But I think that's going to be one of the big questions moving forward is why do you have to have this $3,000 device or one that's a little bit cheaper when they unleash the non-Pro versions.
Nick Sciple: If you think about when the iPhone launched really opened a whole new medium of communication, the whole selfie video, YouTube, a lot of those things, has really been opened up by what the iPhone allowed. You could tell a story about where this technology opens up a new market, I think to get that type of impact though on the market. You need to see the product widely distributed in a way that the iPhone has become today. If you think about when that product first came out. I remember my parents telling me, why the heck would you need a whole bunch of apps on your phone? Why would you need internet access and why would you want to pay the price point to that product? You could see a similar experience, here I will say one challenge with getting that distribution for this virtual reality device as compared with the iPhone is you're not going to have companies like AT&T, Verizon, T-Mobile subsidizing the purchase of this device in order to attach a wireless plan. Apple really having to sell this device on its own merits without support from third parties, which I think getting to that distribution you see with the smartphone much harder. But certainly, an interesting innovation in this virtual reality headset world, a different approach relative to some of the other folks. Apple has a reputation to support, they've certainly taken a good first step into the space.
Ricky Mulvey: The one last application I think is interesting is the productivity question. Is it going to be better to do spatial computing than work on your laptop? Joanna Stern of The Wall Street Journal checked out the device and said, "Maybe the office is actually better interface computer. I was able to scatter a few apps in the space over the coffee table, messages, notes, and Safari. Instead of having multiple monitors, you could just put these virtual screens around your room." She actually used the device. I'm going to go based on, based on her experience with it. Whether or not this ends up replacing your home laptop remains to be seen, but it is definitely a compelling question moving forward.
Nick Sciple: I'm excited to see what type of software applications come out for the device and another going back to the iPhone example. What really made the iPhone magical was the App Store, all the different things you could do with the device. Now that developers have their hands on the software, on the hardware, and can start innovating, I think we'll really see some interesting things come out into the market.
Ricky Mulvey: Let's move on to Coinbase, because while Apple stock did not react to the presentation of these new goggles. Coinbase fell 15% this morning after the Securities and Exchange Commission announced that it is suing the company for operating as an unregistered securities exchange and failing to register its staking-as-a-service program. We'll get into what that means. But first, Nick, why do you think the market was taken by surprise on this announcement?
Nick Sciple: That's an interesting question. I'm unsure; the SEC has telegraphed what they were going to do, so there shouldn't have been a surprise to many market participants. On March 22, the SEC issued a Wells Notice to Coinbase in relation to what has now become a complaint against the company that says, a Wells Notice says -- it's a formal statement of intent to pursue enforcement action following an investigation. Coinbase, the companies have an opportunity to rebut that. Certainly that has taken place and now the suit has been brought. But this risk has really always been known for the business. They're offering what appear to be securities and on an unregistered exchange, that's a violation of the law I guess. If you wanted to come out with a narrative of why the market might be surprised. Coinbase is big and established. They've been operating for over a decade. They have made some efforts to comply with the law. Certainly more so than other operators out there on the market. Then there has been some question, well, because the SEC hasn't enforced so far, maybe they won't enforce going into the future. You think about Uber as an example, broke a lot of laws. Got big enough that the laws magically changed for them. Doesn't seem that that's likely to be the case here with Coinbase, though.
Ricky Mulvey: Well, one of the things that Coinbase was presenting. A lot of its marketing was, hey, we're a publicly traded company, therefore, we're more transparent than a lot of our competitors. It seems that the SEC has come out and said, well, maybe not so much. One thing the SEC is nailing down on Coinbase, is their staking-as-a-service, which they're arguing is an investment. So the accusation is that Coinbase allegedly pools crypto assets, which perform blockchain transaction validation services, then provides a portion of the rewards generated from this work to its customers whose assets were part of the pool. So basically, you've lent out your crypto. It validates other transactions that were on the blockchain and you generate a little bit of interest based on the work that's being performed. So why would the SEC be so upset about that activity going on on Coinbase?
Nick Sciple: Well, without getting too down in the weeds about staking and what it is, the gist of it is, the SEC considers staking programs to be security offerings if the underlying assets that are being staked are considered securities. There's a test to decide whether, whether an asset is a security, it's called the Howey Test, a three-pronged test. First, is there a financial investment being made? Are people risking money? I think that's a pretty easy pass here. Second, is there's a shared enterprise, where multiple people investing into a shared operating business. Usually the test for that, is there a third party managing the assets, pooling those assets together? Well, as you describe, it seems to be what's taking place. Here in the third, is an expectation of profits by the efforts of others. So you, by investing money into this enterprise, expecting to make money by what the enterprise engages in. By that test, seems pretty clear that most crypto tokens are securities. The SEC seems to agree with that, under that logic. That Coinbase is operating an unregistered securities exchange in violation of the law. On top of that, there's not really a path, under current regulation, for Coinbase to really comply with the law and become a registered crypto exchange with the SEC. Coinbase has complained about regulatory clarity. That's fair given, the company has gone public. Those types of things, have gone over a decade without enforcement. But as things stand, if you enforce the laws on the books, there's really not a path forward for Coinbase. Or many of these other companies to move forward as a crypto exchange. So without a change in the underlying regulation. Without some government entities coming out on the side of Coinbase to change things. The company may just need to cease operations in the U.S., which obviously would not be ideal for the going concern of the business.
Ricky Mulvey: It's not just Coinbase the SEC is taken aim at. It's also launched a similar complaint against Binance. With the addition of launching its own unlicensed securities and encouraging investors to use its offshore platform to get around those pesky SEC rules. It's still early days. But do you think this is a game changer for these exchanges? Or is it closer to what you described with Uber where they're breaking laws and then the company is able to move on? Or maybe even Meta's privacy violations in the European Union, where they pay a fine and then continue as is?
Nick Sciple: I think the Binance case that there's a little bit more flagrant issues and misuse of customer assets than may be in the case of Coinbase. But that was a pretty inflammatory quote from that Binance chief compliance officer, "We are operating as an expletive unlicensed securities exchange in the U.S. today." So just goes to the idea that these companies, they've been flirting with violating the law for quite a while. I think if the SEC continues to enforce as they have done, you're going to have a really tough time maintaining operations in the U.S., which I think is devastating to the investment thesis. I think part of the reason you're seeing enforcement action now, as opposed to a number of years ago, is because these assets were going up in price a number of years ago and people were making a lot of money. This year, those assets have gone down in price and people have lost a lot of money, including the FTX scandal, people likely getting put in prison. So from the perspective of the regulators, a lot more safety and being aggressive here today. Whereas in the past may have been more safety in being hands-off. So things change pretty quickly sometimes.
Ricky Mulvey: It's sure is hard to operate an unlicensed security exchange in the USA, bro. Nick Sciple, appreciate your time and your insight.
Nick Sciple: Great to be here with you, Ricky.
Ricky Mulvey: Retirement is something you plan decades for, but is it even good or healthy for you? Alison Southwick and Robert Brokamp have more.
Alison Southwick: Retirement. What a novel concept. Spending the last two to three decades of our lives in full-time leisure mode is a relatively recent development. In 1900, the average retirement age was 76, but most people didn't even live that long. Life expectancy from birth back then was under 50 years old. People lucky enough to survive until 65 lived on average and other 11 to 13 years. So for most, retirement lasted just a handful of years. If they retired at all. Again, you are more likely to be dead. This is going to be such a fun episode. I can already tell.
Robert Brokamp: Some good news. So the modern version of retirement, really began in the 1950s. The term senior citizen first entered popular use in 1955. The American Association of Retired Persons, now officially known as AARP, was founded in 1958. The phrase "golden years" showed up in a 1959 ad campaign for Sun City, one of the first retirement communities in America. At that point, the average retirement age was around 68. Fast-forward to today, and the typical retirement age is 61-65. We're retiring sooner and living longer. Americans who reach their mid-60s live approximately another 20 years on average. People with higher levels of education and wealth, which I think describes most of The Motley Fool podcast listeners, are more likely to outlive the averages.
Alison Southwick: You might think that spending decades free from the stresses of the workday would be beneficial to one's health. But that may not be the case. Studies that have looked at whether retirement is good for people have come to mixed conclusions. So let's look at three measures of wellness and see what the evidence says about how they're affected by retirement. Let's start with physical health. So Bro, what do the studies tell us about whether retirement does a body good?
Robert Brokamp: Well, Alison, if you want to die sooner, retirement might just do the trick. At least that's the implication from some studies so far. For example, a 2017 study found that the death rate of males in the U.S. spiked at age 62, which is the most common age for claiming Social Security benefits. According to the study, the findings are evidence that males engage in more unhealthy behaviors once they retire. Then there's a study of almost 3,000 Americans who retired between 1992 and 2010. Those who retired at age 66 had an 11% lower risk of death than those who retired at 65. Even after controlling for demographic lifestyle and health factors. But as we said before, a lot of this evidence is mixed. For example, there's an analysis of the University of Michigan's health and retirement study, which is this ongoing survey of 20,000 Americans. They found strong evidence that retirement improves reported health, mental health, and life satisfaction. I think that conflicting evidence can be partially explained by the fact that people have different types of jobs and different types of retirements. Some jobs put a lot of wear and tear on a body and retirement can improve health for these types of workers. The same if your job is extraordinarily stressful. On the other hand, many jobs aren't that taxing and in fact are good for your physical health because they get you out of bed in the morning and gets you moving. Anyone who just retires to the couch in front of the TV is going to see their health suffer and retirees on average, do watch much more TV than people who are working. One study pegged it at almost 50 hours a week.
Alison Southwick: Can you blame them? It's a great time to be a watcher of television. Speaking of your brain on drugs, let's move on to cognitive health. Is retirement good or bad for a brain?
Robert Brokamp: While the evidence here is also mixed, but it's clear that for many people, their jobs provided intellectual stimulation that isn't replaced when they retire. The brain, like most parts of the body, gets weaker when it's not exercised. Experts call this the use-it-or-lose-it hypothesis, and here's what a couple of studies found. One published in 2021 concluded that postponing retirement is protective against cognitive decline. The effect was more pronounced for people with higher levels of education. Then another study published in 2021 survey more than 9,000 people over the age of 50 across 17 European countries and had them perform memory tests over a span of 13 years. The study concluded that retirement was associated with a moderate decline in word recall and memory decline accelerated after retirement. Interestingly, it was worse for countries with less robust pension systems, which suggests that financial stress can be bad for the brain in retirement.
Alison Southwick: Well, let's move on to social well-being because retirement conjures up visions of mornings spent with your buddies on the golf course and afternoons taking art classes at the rec center where some naked guy sits on a stool surrounded by easels -- you know the scene I'm talking about. Does retirement result in more and better relationships because you now have time to spend with friends -- although that naked guy probably doesn't want to be your friend -- although maybe? But probably best to keep it profesh.
Robert Brokamp: Yeah. Probably so. Again, it depends on what you're retiring from and what you're retiring to. If you're leaving a relatively solitary job and then after retiring, you're able to spend more time with friends and family, then retirement is good for your relationships. Unfortunately, it's the other way around for most people. Work is one of their primary sources of social interaction. In fact, when retirees are asked what they miss boast about working, the No. 1 response is almost always the daily interactions they had with colleagues. A 2018 meta-analysis of 151 studies involving more than 700,000 people found that, "Early retirees undergo a significant reduction of social integration, a negative experience that does not seem to be compensated through non-work activities such as volunteering, family duties, and hobbies." A 2020 report from the National Academy of Sciences found that a quarter of Americans 65 and older are socially isolated. Now, being lonely is not only just sad, but it can be bad for your health. Earlier this month, Surgeon General Dr. Vivek Murthy issued a report entitled "Our Epidemic of Loneliness and Isolation" and included this in the introduction: "Loneliness is associated with a greater risk of cardiovascular disease, dementia, stroke, depression, anxiety, and premature death.
The mortality impact of being socially disconnected is similar to that caused by smoking up to 15 cigarettes a day and even greater than that associated with obesity and physical inactivity." Get this, in England, they believe that this is such an important issue that the government created the role of minister of loneliness in 2018. Just finally on this topic for many retirees, the most important relationship is their marriage. The evidence suggests that the happiest retirees are those who are happily married, followed by single retirees and then retirees in unhappy marriages. The Wall Street Journal recently asked people about their concerns about retirement and one 64-year-old said that, "At times I worry about my wife and me. I have heard of plenty of couples who, when they retire, they find they have nothing in common and that scares the crap out of me." Investing in your marriage is also a key part of retirement planning.
Alison Southwick: It makes a lot of sense to me when we were all social distancing and working from home during the dark times, I really felt lucky that I had my husband to keep me company. A lot of Fools who were single, who work at The Motley Fool, they really struggled with the isolation, it was sad to watch. OK Bro, so this episode has truly been on-brand with your awfulizing reputation. The thing that people spend most of their lives working toward you've been saying will make them miserable. But just surely it's not all bad given that most people don't want to work forever. What is your parting advice for how people can thrive in retirement?
Robert Brokamp: Yes. I guess it is perhaps ironic that I'm the retirement expert here at The Motley Fool, and I've just given you all a parade, a study saying it's bad for you. Let me make this clear. Studies also show that retirees on average are pretty happy. In fact, in most cases, just as happy or happier than when they were working. I personally, I've spoken with many retirees over the years and I have often heard them say some variation of my only regret is I didn't do it sooner. The key to happy and healthy retirement is to figure out how to replace the good things that work provided. This of course, starts with determining whether your portfolio and benefits can replace the paycheck and health insurance that you received from your job because retirement is very difficult if you don't have enough money. But it also includes the social interaction and intellectual stimulation you got from working. A joint report from Edward Jones and Age Wave provided some examples on how hypothetical people could prepare for retirement. Here are five suggestions they had for someone who is in her late '50s and still working. Starts with create a plan to test-drive life in retirement.
No. 2 is start playing a musical instrument or maybe just pursue some other long-held goal that challenges your brain. No. 3 was to try out two different volunteer opportunities every week and the evidence is very clear that people who regularly volunteer are happier than those who don't. No. 4 was organize monthly lunches with colleagues nearing retirement with plans to continue those luncheons after they retire. Then No. 5 was keep an ongoing list of activities to try in retirement. Finally, I'm just going to close by saying that when you look at the studies about happiness and retirement, they often talk about the importance of finding purpose. There can be a pretty nebulous term, but I like the definition provided by Mark Friedman, who is the CEO of Cogeneration, and that's an organization it looks for ways to bring older and younger generations together to solve problems. Friedman wrote, "Purpose is feeling like the world needs you as much as you need it, that you have something to contribute, and that you still matter." If you can make that part of your retirement. I think you'll be in good shape.
Ricky Mulvey: As always, people on the program may have an interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Ricky Mulvey. Thanks for listening. We'll see you next time.
