It's a bull market and nobody drinks anymore. — TCAF 255

[00:00:00] Speaker 1: - So Todd, this is like a year for you. - Quiet on set. - I'm, a year is perfect. Even if it was two years, I don't care. - Wait, what are we talking about here? I'm saying, I'm saying 2026 has been a year. Oh, you thought I meant since the last year you were on the show. - Yeah, I don't need it. - No, no, no, no, no. - No, I meant 2026, like ETF-a-palooza. - Oh my God. - Like, you are having a moment. - It's nice. [00:00:21] Speaker 2: - It is the biggest launch year by Ticker. [00:00:24] Speaker 3: It's gotta be up there. - 900 funds, year to date. [00:00:27] Speaker 2: - 900 new ETFs? - Yeah. [00:00:30] Speaker 3: - But we're gonna pass last year pretty soon. - What, last year was a thousand? - Last year was like a thousand, 1100 maybe. - Dude. - I wish a third of them were levered, which we'll get into. [00:00:39] Speaker 1: - I don't know that this is, I don't know that this is temporary. [00:00:43] Speaker 2: - I don't, well, unless you get a really bad bear market. - Well, yeah, sure. - No, it's not temporary 'cause the cost of launching is much lower, right? - Yeah, oh yeah, it's like a, it's like- - And the cost of maintaining a fund that doesn't catch on? [00:00:56] Speaker 3: - ETFs have turned into Napster or just like, hey, come to my shed where I have a recording studio and we'll lay down the tracks and do it for you. Everything else for you. - It's like a mixed track. [00:01:05] Speaker 1: - Yeah. - Like everyone, you just make one for your friends. [00:01:07] Speaker 2: - You just make one and you ship it out. - I was involved in two ETF launches this year in the same- - Oh yes. - In the same week. - In the same week. - Over the same week? - Yes. I didn't promote either one of them. - You don't have to promote them. - 'Cause I don't need to promote them. [00:01:20] Speaker 3: - You can do whatever you want. [00:01:21] Speaker 2: - No, no, no, no. But like, just like as a, as an anecdote of how much activity there is. - It's, there's a- - I've never been involved in an ETF before now in this year. [00:01:30] Speaker 1: - Dude, Duncan's about to launch one. [00:01:31] Speaker 2: - Photography? - What is it? - Photography. - Photography ETF? [00:01:36] Speaker 3: I have books for you, by the way. If I do it, are we live? - Yeah. - Yeah, we're always- - I usually bring you real books. These are my books. - What do you mean your books? - What's happening? - Oh, you wrote a book? [00:01:46] Speaker 2: - Not, I didn't, I didn't write a book like- - Save it for the end. - Okay. - Save it for the end. - They're ETF related though. - Uh, let me show you a chart. Can we put a chart up yet? - Uh, which one do you want? - MSGS. - MSGS. - This is Madison Square Garden Sports. - Wait. - This is the Knicks. This is the- Dude. - Can we- - Look at this. - How did I miss this? - I actually wanted to talk to you about this. [00:02:10] Speaker 3: - How are you not investing in this? - The sphere. And can we talk about this Lakers price? - Well, that's what I wanted- - This has nothing to do with ETF. - Okay. - Lakers for 12 billion. [00:02:18] Speaker 2: - No, no, no. So leave this, leave this on the screen. This, what we're looking at is the market cap and enterprise value. This is the share price, but I'm saying, market cap is 10 billion. Enterprise value, so add back the debt is 11 billion. - Okay. - If the Lakers are worth 12.4 billion, what should the stock be trading at? - Way higher. - Understanding there's a discount because Dolan said he doesn't want to sell. - The building's involved with this too? - I think it's the building and the Rangers. [00:02:44] Speaker 1: - Ooh. - So they're splitting, by the way. The Rangers are next year to split. - I understand. - But you're right. [00:02:49] Speaker 2: This makes no sense. - This should be 30 to 50% higher right now. - Okay, are you gonna buy it? - I might. I mean, look how much it's up. I feel like the biggest idiot that I'm going to own it. - So you know it's going higher. I can't buy this either. It's too much. - But you could buy the Braves taking stock. - MSG expects to complete the spin-off of the Rangers business from the Knicks into a distinct publicly traded company by the end of October. Tax-free transaction, a tax-free distribution to shareholders. So they'll spin it off. Like they'll give you stock. If you own one. [00:03:16] Speaker 3: - Yeah. [00:03:17] Speaker 2: - You'll get stock in the other and then they'll change the tickers. It'll be a Knicks. - I just want the Knicks. - You're gonna buy the Knicks. - How do you not buy the Knicks? - You're gonna buy this when the Knicks is a stock, right? - I missed it. - No, I know. - What if they repeat though? [00:03:29] Speaker 1: - But you know what? It's so interesting how this happens. If you told anybody two years ago, hey, you could buy the Knicks in a liquid wrapper and it's three and a half billion dollars. You would say like, done, deal. The Knicks are worth way more than three billion. [00:03:40] Speaker 2: - Well, it's, I mean. But that thing that I just showed you is in and of itself a spin. - I get it. - Right. Here are the top 10 professional sports franchises in order. - By what? - And tell me if you think Lakers at 12 and a half billion moves any of these up and down. Number, we'll start with 10. New England Patriots. Oh, I don't have a number for this one. Los Angeles Clippers is number nine, seven and a half billion because of the new arena investment. [00:04:12] Speaker 1: He paid two for it. Remember when he paid two, it was a Twitter thing. People were like, what an idiot. They're not worth two billion. [00:04:17] Speaker 2: - Yeah, what a moron. - They are cursed though. - Atlanta Falcons, 9.78 billion. - Really? That's higher than I thought it would be. - Right, if that's the number, then maybe the Lakers should be higher. [00:04:28] Speaker 1: - Wait, the Falcons have to be that way because do they play all like the Rose Bowl games today or the college football playoffs there? - Stadium's nice. - It's gotta be from Mercedes-Benz. - It's gotta be because of the stadium. [00:04:36] Speaker 2: - It's got a super roof. New York Knicks, 9.9 billion. We know that's way low. - That has to be higher. - I don't know how low. - It has to be higher. - If the Lakers are 12 and a half or the Knicks 15, especially this year. - I think Lakers would be valuable. - If you asked me, I would've said 14. - You think the Lakers have a bigger international brand? - Oh yeah. - 'Cause that's what this is about. This is about selling- - Way bigger. - Selling merchandise in China. - It's Lakers. - And selling the streams and selling like- - If the Knicks go on a run here. - If the Knicks were a dynasty. [00:05:05] Speaker 1: - No, no, no, stop. It's not even debatable. The Lakers are more valuable than the Knicks. [00:05:09] Speaker 2: - All right. This one sounds way too low to me. New York Yankees, nine to 10 billion. No way. No way. That should be 20. - That's the highest base. What did the Dodgers go for? - I don't know. That's not even in the top 10s. Maybe this top 10 is flawed. [00:05:26] Speaker 1: - You know how I know they're worth more? How much is like a Jersey Mike's worth? [00:05:29] Speaker 2: - They just did a transaction. The Yankees just did a transaction with Apollo, right? - Yeah. - Was that this week? [00:05:35] Speaker 3: - Yeah. [00:05:36] Speaker 2: - Oh, I missed that. - What was that? A $2.6 billion financing agreement with Apollo sports. It's credit and equity. And I don't think there's valuation talk publicly. I could be wrong, but it's a mix of like, here's some credit. [00:05:51] Speaker 3: - Will Steinbrenner sell? [00:05:54] Speaker 2: - No. - I don't know. - No. What is their identity without the Yankees? Then what? - Being rich. - All right. - Really rich. - Lakers, they had a 10. It went for 12 and a half. Golden State Warriors, 11.33. - Sounds right. - Sounds right? - Sounds right. - No Steph Curry, take $2 billion right off the price. - Yeah, no Steph. - All right. - That's a billion. - New York Giants, $12 billion. - Okay. I suppose. How? - I don't know. A horrendously run franchise. - L.A. Rams, $12.7 billion. - That's so-fi. [00:06:26] Speaker 1: That's so-fi. [00:06:27] Speaker 2: - But that just sounds wrong too. - It's so-fi stadium. - That sounds high. - That sounds high. - A team without, I mean, yeah, they're in L.A. - It's a decent team. They're in the playoffs. - They're in the playoffs. - They're in the Lakers culture. - The Lakers culture. - All right. And then the Cowboys. - Again, this predates the Lakers news. Sportico has the Cowboys at 15.5. I'm going to say the Cowboys and the Yankees are $20 billion franchises. - Wow. - That's what I'm going to tell you. - Well, how about this? - How high do these go? - We're finding out now. - Chart on. - The Lakers. - You know what this is? [00:06:59] Speaker 1: Guys, you know what this is? It's the stock market. Throw up the sports team chart. All right. So I had Claude make this. These are all the transactions in the NBA going back to when Steve Ballmer purchased the Clippers for $2 billion. Then you got the Rockets at 2.2. You have the Nets at 3.3. There's some in between. The Suns at 4. Celtics just sold for 6. Lakers sold for 10 a minute ago. Now they're up for 12.5. The freaking trailblazers are 4.25. You know what this is? It's the stock market. Where do you think Josh Kushner's wealth is coming from? It's AI. [00:07:30] Speaker 2: - It's open AI, right? [00:07:31] Speaker 1: - He has a $15 billion position in open AI. Now I know that's not his money, but whatever. Like all of this, all of this upward trajectory, it's the top 1% of the 1% getting so rich. [00:07:43] Speaker 2: Yeah. And that's what this is. The Celtics number. I agree with that. I agree with that 100%. This is not people that made their money in shipping, like the Steinbrenners. No, no, no. This is straight up like shareholders in the 100 largest companies in the world. That's the stock market. [00:07:59] Speaker 3: Yeah. [00:08:00] Speaker 2: The Celtics at 6% has to feel slighted now. All right. So some of this data. [00:08:04] Speaker 1: How about the T-Wolves at 1.5% like five years? [00:08:07] Speaker 2: A-Rod. I would say that the Nets at 3.3 billion could be the first franchise in history to resell at a lower price. Stop. Like in modern history. Where are the, the bucks aren't on here? Dude, I think Steinbrenner bought the Yankees from CBS in the seventies for like $6 million. It was nothing. [00:08:27] Speaker 1: I think that's what, I literally think that's what it is. All right. So I have a new rule, a new rule proposal that will never pass muster. Although maybe it will. You don't want NBA teams being flipped. Now I know there's extenuating circumstances. We don't know everything about what's happening with the owner, but he's under investigation. There's, there's some smoke there, but there needs to be a five-year holding period because if this is just about money and flipping the teams, this is not going to be great for the fans. Like there needs to be some stability at the helm. [00:08:51] Speaker 2: What do you think about minority stakes? Cause that's the new thing. [00:08:54] Speaker 1: So I didn't realize Kushner owned a piece of the Grizzlies. Yeah. He had to sell that to buy. Oh really? He was a 5% owner in the Miami heat. Obviously he has to sell that. [00:09:01] Speaker 2: Don't you remember? Don't you remember we had David Edelman here who explained Michael Rubin had to sell his piece of the Sixers and that's how he was able to buy that piece like that. Yeah. Cause if you want to get into gambling, for example, or if you want, or if another franchise opportunity comes along in the same league, you got to sell. [00:09:21] Speaker 1: But if, if this is just about flipping to make a couple, a hundred million dollars in a few years or whatever, that's going to be the, it's not going to be good for the fans. If they are purely looking at this as how do I make more money? There's going to be some nasty side effects. [00:09:34] Speaker 2: The private equity guys are all in. They, if they put the word sports on the wrapper of a fund, it sells out. [00:09:41] Speaker 3: There's a, is it future sports? What's this company that's going to be there to help hedge on sporting events and stuff like that? Not a prediction market. [00:09:49] Speaker 2: Hedge on the value of a team. It's something I'm probably butchering. Is there an ETF for that? I took the pitch from Eldridge, which is Todd Boley's firm. It's private equity. He's made a ton of money at like Guggenheim or whatever. And they own the Dodgers and I'm not flipping, but like they're out with the deck and they're going to buy in Indian premier league cricket teams. They're going to buy soccer teams. They're going to buy. By the way, it's as big as the NFL. What is? I have no doubt. Indian premier league cricket. What about? In half, in the other half of the world that we don't live in is as big as the NFL. Pillow fighting championship. All right. You out of here. Your son's taking a nap on this bench by the way. [00:10:29] Speaker 1: It's a great story. It's a great story. He's posing. Have you ever seen it tonight? Justin, what are you doing? [00:10:36] Speaker 2: He's like a stick. I'm telling you, this kid's been laying down. He laid down on the train on the way in. He laid down in my office just now. [00:10:44] Speaker 4: He's laying down in the studio. What did you think of the stock exchange? Would you have a Baconator? [00:10:48] Speaker 2: He's like, no, I took him to Keen's. [00:10:51] Speaker 1: First time? No, right? Second. Tell him what you said. [00:10:54] Speaker 2: Tell him what you said in the stock exchange. Why isn't there a couch? Shut up. [00:11:00] Speaker 4: Someone tell Jay Woods. [00:11:01] Speaker 2: He's like a stuffed animal. This kid. Unbelievable. All right. Let's do the show. [00:11:06] Speaker 3: Let's start it up. Compound and Friends, episode 255. [00:11:23] Speaker 1: This podcast is brought to you by VanEck. Look, we're in an era of rising debt, deglobalization, [00:11:30] Speaker 2: and a massive physical build-out to power the AI economy. No, you look. That means more demand for energy, raw materials, and infrastructure. Historically, that's been a really strong backdrop for real assets. And VanEck has an ETF for that. It's called RACS, the VanEck Real Assets ETF. It's actively managed and shifts exposure across gold, energy, infrastructure, and natural resources based on what the macro environment is actually doing, not just what it's done in the past. [00:12:00] Speaker 1: RACS is your one-stop shop for real assets. Head over to VanEck.com/RAAX compound to learn more. [00:12:10] Speaker 2: That's VanEck.com/RAAX compound. Oh my God. 255? Man, what a treat you guys are in for. Returning champion Todd Sohn in the house. He could not be more excited. Todd is one of the best. When my inbox says Strategas, Todd Sohn, I'm reading it. I know you feel the same way. And a lot of Todd's charts make their way into compound content because we're such huge fans. Todd Sohn is the chief ETF strategist for Baird, Strategas, and Strategas Asset Management. He leads Strategas' ETF research examining industry trends and how investor flows fit with or against the consensus. He is also the author of Strategas Asset Management's monthly ETF field book, a compendium of charts focusing on the growth of the ETF industry. We thank you so much for coming by. Thank you. We're so excited for this episode. This is the field book. What is that? Give it here. That's the... Why is it a field book and not a field guide? Because other folks use the word guide. [00:13:25] Speaker 3: There's no such thing as a field book. We just called it field book. We did a market research. [00:13:29] Speaker 2: Do you know what a field guide is? Okay. How to get through the forest. If you're a bird watcher, as Duncan is, you would go out into the field with your equipment and a book and the book's a field book. This is the book. You go out to field with this book on ETFs. Are there birds in here? No. How often are you producing these? This is monthly. [00:13:49] Speaker 3: Wow. And this goes out to... This is dope, man. Strategas' clients, investors in Strategas' ETFs are our products. And it's meant to just be everything you want to know about the ETF world. I love it. A field guide. A field guide. A field guide, chart book. [00:14:03] Speaker 2: Is it available as a trapper keeper? Yes. All right. Awesome. All right. So we were talking as we walked into the studio. I've never seen this many ETFs launched. It's nuts. Okay. Busier than ever. But say more. Besides it being nuts, because everybody seems to be making money. If you launch a fund and it's a dud, it's almost like, who cares? Move on. Just close it. We'll launch 10 at once. Okay. But it's not haphazard. It doesn't feel that way. It feels that different issuers have different game plans for what parts of the map they want to cover. And to me, it just, it feels, I've seen spaghetti cannon moments with ETFs. I was around 2010, 2011, when they were launching all the commodity ones and all the, and there was agriculture, a lot of nonsense. The ones that are coming along, I'm not saying they're all good, but there are some really great ideas coming, coming out. [00:14:58] Speaker 3: It's about, uh, if you're an issuer, what's your brand, what's your target market and what's hot, right? If your brand is you're a legacy fund manager from the 1940s, you're coming out with just core stuff, right? Plain vanilla. Is there an audience for that though? They go for the advisors. You know, maybe there's always advisors who are looking for something different. Dimensional and Avantis. Dimensional, Avantis, systematic. [00:15:20] Speaker 2: So you can still do something vanilla and hit haters. [00:15:23] Speaker 3: It's going to be more of a grind though. Okay. You're not going to wake up and it's like, oh my God, I have a billion of my assets overnight. [00:15:29] Speaker 2: The way that happens is only one way, really. Either an extremely high income or a theme. Theme. DRAM. ETF of the year. That's the best example. Oh, it's ETF for the decade. Yeah. Thematic. That's the way to wake up with a billion dollars in your account. [00:15:45] Speaker 3: What a launch. Holy shit. Yeah. Avantis are great and they're doing excellent work now with photonics. They have a big one now. It's probably 200 billion, 200 million, not billion. 200 million. What is a photonic? I don't even know what a photonic is. It's another layer of the AI. It's a laser. [00:16:01] Speaker 1: Have you heard of their Halo ETF? Of course I know the Halo ETF. [00:16:05] Speaker 3: But the problem is I keep typing in the ticker Halo, which is a pharmaceutical company. [00:16:08] Speaker 2: You know, they really need to buy. I think Halo is a pharmaceutical company's ticker. Yeah. [00:16:14] Speaker 1: So I keep typing that in. Just buy them and spin them out. [00:16:17] Speaker 2: It's like Halo Therapeutics or something. Yeah, Halo something. All right. So will they have LOHA, which is not even Halo backwards, really? Lo... It's just sort of some of the same letters. I can't even pronounce it. I didn't come up with the ticker. It's okay. But I do like the approach. And I think what's interesting is that Roundtail launched Halo. Yeah. Which is the antithesis of their hottest fund, which is DRA. [00:16:40] Speaker 3: Literally. I think it's a great strategy, right? Well, for them, it's like a balance. It's a correlation thing, right? Yeah. On one day. And you can structure a portfolio like that. One day, my memory stocks are up. The other day, my anti-AI stocks are up. [00:16:54] Speaker 2: All right. By the way, if the FBI is listening, I'm not promoting ETFs here. This is not a promotion. Don't buy it. I really don't want to buy it. [00:17:01] Speaker 1: You know what's different about 2026, though? It's not just the number of new issues. It's the number of new issuers. At least, for example, have you ever heard of a company called Corgi? [00:17:12] Speaker 2: I'm aware of it. I have no idea who they are or where they come from. [00:17:15] Speaker 1: So I only just found out about it kind of recently. Tell us their story. Okay. [00:17:18] Speaker 3: So Corgi, and if they're listening, I apologize if I butchered their backstory. They are a Y Combinator-backed company. I don't know Y Combinator. Silicon Valley money. Wait, sorry. Y Combinator backed an ETF company? [00:17:31] Speaker 2: Yeah. Something like that. That used to be a badge of honor. Now they have a graduating class of 9,000 companies. I don't know. All right, whatever. [00:17:38] Speaker 3: That's where the money comes from. Yeah. And the folks there are basically saying, we still think fees in certain segments are too high. Levered ETFs and thematic ETFs. So they are going to launch everything under the sun and they're just going to try and scale it up. So they did 30 different thematic ETFs. Everything that we know. [00:17:58] Speaker 2: They're copying the most popular funds, but for a lower price. [00:18:00] Speaker 3: But for half the cost, about 35 basis points. [00:18:03] Speaker 2: What a great pitch. And they don't have to make money. They just have to sell it to some other schmuck. [00:18:07] Speaker 3: You just got to scale it up. Yeah. [00:18:08] Speaker 2: Right. [00:18:09] Speaker 3: And it's kind of the Hollywood box office approach. I release 10 films in a year. Seven are flops. Three are hits. [00:18:15] Speaker 2: And the hits will pay for the flops. The hits will pay for the flops. [00:18:18] Speaker 3: And they're doing it with levered ETFs too. Single stock and index base, but at 50 basis points. Levered ETFs are usually what? 90 to 120. [00:18:25] Speaker 2: Do the other ETF issuers look at them like, guys, what are you doing? We have great businesses. Why are you wrecking our business? [00:18:31] Speaker 3: I think there's a little consternation. I applaud them for trying to do something different on the fee basis. But, you know, it's also a distribution game. If you don't have the distribution, then you're not going anywhere. [00:18:40] Speaker 2: There used to be ETF conferences. [00:18:42] Speaker 3: Yeah. [00:18:42] Speaker 2: I feel like this would be a knife fight. [00:18:45] Speaker 3: Oh, it's definitely a knife fight. [00:18:45] Speaker 2: Like if we were all at the Diplomat Hotel and this was 2016, this could get ugly. [00:18:51] Speaker 3: And it's interesting because their thematic ones are actively managed. But I think it's probably more AI managed than portfolio managers. How's the performance where it's too soon? They're too soon. Okay. They're too soon. They have one. Now, they also have a photonics ETF. Yeah, why not? [00:19:05] Speaker 2: I might have one. Do institutions care that they've never heard of Corgi? Would they ever trade it? Or does it need three years of seasoning? [00:19:14] Speaker 3: No, I think if they were to become the liquidity dominant vehicle in a theme, they don't care. [00:19:19] Speaker 1: I think it's the basket of stocks. There's liquidity there. I don't think people care. If you're trading $100 million, it's different. You want the liquidity. [00:19:26] Speaker 2: What do you mean? You mean as long as the underlying stocks trade? [00:19:29] Speaker 1: I don't think the brand name matters like it used to in 2018. [00:19:32] Speaker 2: Okay. Of the issuer. To a hedge fund, no. But to a financial advisor, yes. Yeah. [00:19:39] Speaker 3: Financial advisors care. I'll give you an example. And we're going to stay on this photonics. Even though none of us have any idea with the whole photonics. Michael's going to Google it. There are five photonic ETFs right now. They've all launched. [00:19:51] Speaker 4: And there are three photonic stocks. [00:19:53] Speaker 3: Yeah, exactly. They're going to get watered down. [00:19:57] Speaker 4: They just have different proportions of each. Yeah. They're all. What's the big one? [00:20:02] Speaker 1: All right. And Photonics. Lumentum. They target optical networking, lasers, and silicon photonic companies. I know what this is. [00:20:07] Speaker 3: It's a freaking laser. Yeah, a freaking laser. I don't know what it is. Okay. There were four of them. Previous to the last week. Corgi. Cuddle. And two others. I cannot remember all the time I had. Roundhill. Roundhill. Roundhill. Tema. Who's Tema? Tema. Tema. They said Teemu ETF. Teemu ETF. Teemu EMU. The four of these were around. And they were doing some volume. Roundhill launches their photonics fund. And takes all the volume. And it's only three or four days old now. They're already doing more volume than the other four combined. Do you understand? [00:20:41] Speaker 2: So are the active slash thematics going to be 10 basis point products by the time this is done? I think by the end of the decade, it's not unreasonable. Will the incumbents fight back and cut prices? They're going to have to. They're going to have to. [00:20:53] Speaker 3: Especially once these funds get seasoned and aged. And if you're seeing that there's no tracking error between them. Then you have a problem. You know what's nuts? [00:21:01] Speaker 2: There's no referee. No. Yeah. Like if you rip people off like this in some other business, you're going to go to court. You might prevail. But there's no referee saying that ETF looks exactly like a different ETF. You can't just do what they're doing. [00:21:18] Speaker 1: Remember in 2017 when hack was mugged, our friend, what was Andrew? Well, right. And then everybody was like, everybody was like, this is, this is not right. This is bullshit. Boo that man. This is unethical. [00:21:32] Speaker 2: Nobody cares. Nobody cares. Well, wait, wait, wait, wait. It's two different things. He had an ETF stolen from him. Allegedly, allegedly, allegedly he created an ETF. And then he got booted. You're right. And they found a way to get, they found a way to get rid of him. What we're saying is like, if hypothetically, somebody came along and said, look, I just invented, I just invented a chat GPT. No, you didn't. It exists already. You can't call your product. Like there's nobody coming to rescue these incumbents as they, as they get. If you could build a great product at a cheaper price, they will, they will come to you. [00:22:09] Speaker 1: Don't you think this just ends at three basis points? Not for the levered stuff. Because nobody cares. Yeah. Levered stuff is different just because it's supposed to be. So like, no, nobody's going from one that's 59 basis points to one that's 37. Because nobody cares. You're trading it anyway. It has to lie. [00:22:24] Speaker 3: Unless you are a brand loyalist. I think this is going to be a great test of brand loyalty. Roundhill has developed their brand. People know the brand. These other upstart issuers who are trying to get into space, you got to work on it. [00:22:36] Speaker 2: Well, who else in that second and third tier? I don't mean that as a term of disrespect. I mean, not BlackRock, Vanguard, State Street. The middle class. Because I felt as though Wisdom Tree had a brand. Right. It had like its adherence and, you know, the Jeremys. Yeah. Who else do you think has a real, I mean, not how much could they sell the company for, but who has a brand that, because I know you could sell anything now. It resonates. You could start a company last year and sell it right now. But it's a brand that I think resonates the most is... Direction? [00:23:11] Speaker 1: VanEck. I was about to say VanEck. Yeah. I was about to say VanEck. I'm so glad you said that. Yeah. SMH. SMH. [00:23:17] Speaker 3: There's nothing rocket science-y there, but they've got the Stranglehold. They have the best ticker in the world of ETFs to me. Racks? No. HOTL. [00:23:27] Speaker 2: They did the social media one. [00:23:29] Speaker 1: Yeah. I don't know. I don't know. [00:23:31] Speaker 2: The meme stock one. One shut down, I think. No, it's... GDX is a huge product. They just... [00:23:38] Speaker 3: Why do you think VanEck has a brand? They play their social game really well. It's the intern is on the... Whatever that is. I don't get the joke. VanEck intern is their social media account, and it just tweets out random stuff. It's actually Jan. It's Jan. You're right. You're right. They do the ties. The ties are great for folks like me who wear a tie, and I respect that. [00:23:56] Speaker 2: Pacer ETFs? Good products. Do they have a niche, or do they have a brand? They have a really good sales force. Good sales force. And first trust. I've met those guys. [00:24:06] Speaker 3: Pacer and first trust. Just relentless, boots on the ground, sales force. [00:24:11] Speaker 1: Gifts. Like... Not gifts. Meals. Meals. Meals. Meals. [00:24:14] Speaker 3: Baseball tickets. Yeah, and they build products. They build quality, for the most part, products. But I don't think of them in terms of going viral. [00:24:25] Speaker 2: Granite. Granite shares. Direction. Crane. [00:24:28] Speaker 1: I mean, there's a million. Yeah, I mean, there's... [00:24:30] Speaker 2: I think that's, I think like, I do think advisors care about brands because they have to answer for these products to their clients. Yeah. And I think having logos that are recognizable in an investor presentation does... I don't know if it helps raise money, but I think it helps clients feel good about what they're about to commit to. The brand... [00:24:53] Speaker 3: I mean, ticker sometimes, depending on who you're talking to. Some people like the exotic tickers. And some people are like, well, I can't have this on a... [00:24:59] Speaker 2: I'm agnostic. I don't, I don't, I'm not one of these people that's like, oh, it's cutesy ticker. I will buy it. As long as you can explain it. Yeah. [00:25:08] Speaker 3: But the brand and then, how does the ETF work? Is it a quality product? Because there's not, there's products out there that are like, what is this? [00:25:13] Speaker 2: All right, let's do the chart. This is the annual number of ETF launches. This is a strategist chart from Todd. This is getting difficult to keep up with. So what do you mean by that? Because you, because you have to write research on all these products. [00:25:26] Speaker 3: I try to keep up with what's going on. People want to know, hey, what new products are coming out? What new ETFs are coming out? And just kind of keep track of everything. [00:25:34] Speaker 2: And especially the flows too. [00:25:34] Speaker 3: But you can drop coverage of things that don't matter anymore. Yeah. Yeah. But I, you know, a lot of our clients always want to say, hey, what are you seeing out there? That's unique, different, not necessarily hot. Because they all, they all know about the hot ETFs. It gets written up a thousand times. There's like 20 a week. Yeah. Yeah. But they just want to know, like, is someone doing something that's really interesting that we need to be aware of? I'm talking the big institutional players that do not want to miss out on the next big. [00:26:01] Speaker 2: Whatever. So, all right. So if there's something thematic or active. Auto callables are coming up. [00:26:07] Speaker 3: Huge. Coming up more in my conversations. Billion dollars already. Kyle Lemos is. Yeah. There's more of those popping up. I am not an auto callable expert. I can do auto callable kindergarten. [00:26:17] Speaker 2: Yeah, I am. I'll explain it to you off the air. So, so what's your process to keep up? What do you, like, you read the, you read the news or do you have a filter? [00:26:25] Speaker 3: I have, I've, I've got the software, you know, Bloomberg, ETF action, just going through everything each day. Most of the time you can figure out what it is. It's pretty vanilla. Like, oh, 2x this or thematic that. But I also keep track of whatever a new filing comes in, a new registration for an ETF. I'm digging into it. Just commit it to memory. [00:26:43] Speaker 2: Okay. And then how do you decide which ones you want to write about? You're focusing on the volume. Like, are people involved in this or should I not waste my time? It's just me. Okay. I don't do pay to play. [00:26:55] Speaker 3: Okay. You know, of course, if you're a strategist client, maybe I'll give you an edge. [00:26:58] Speaker ?: Okay. [00:26:58] Speaker 3: You know, if I'm going to make a list of 10 tickers, I think you should pay attention to. And you're a strategist client. Of course, I'm going to be preferable to the non-paying strategist client. Right. But I also want to know, hey, where are the assets? I can't put something that's $10 million on a list in the note. Right, right. I want to know the volume, the liquidity. What's it doing? Is it paying out capital gains? That's a kind of a no-no for me. Yeah. There's these entire cases of that. [00:27:24] Speaker 4: But it's a little bit of just due diligence. What's the new floor? [00:27:27] Speaker 2: Because I remember people used to say. A hundred million. It used to be a hundred. Well, I thought it used to be a hundred and now it could be a billion. Before something is like, this thing is real. [00:27:36] Speaker 3: So we've, within Strategas, right, we have our ETFs. With SAMT, we're getting pushback on, hey, call us when we get to a billion. [00:27:46] Speaker 2: Right. That's what I'm saying. [00:27:47] Speaker 3: It's at 890 million right now. They're like, call us when we get to a billion. [00:27:50] Speaker 2: I think a billion is the new hundred million. Yeah, exactly. Yes. In terms of like, this is something we could put into an allocation and not look stupid in six months or a year. Yeah. They don't want to get burned. There's too much money at stake. And there's too many other established products. Can I tell you one thing that is funny? I thought, and I was wrong. You might have agreed with me or not agreed with me. I really thought direct indexing was going to halt the ETF. Maybe not the size of the market. I just thought it would calm things down. I don't think you thought that. I did think that. I just. I know you're wrong. Maybe for core products. I basically thought custom indexes will probably capture 10% of the wealth management business. And what that will mean downstream is that there'll be less ETFs. What a horrible opinion. It's just easier to buy. It's a thousand ETFs a year. [00:28:40] Speaker 3: It's just easier to buy a ticker. I want memory exposure. I buy the memory ETFs that are out there. And I just do it real quick. [00:28:47] Speaker 2: Retail doesn't care about custom indexing. [00:28:49] Speaker 3: The custom indexing to me is a, is a, is a wealth management. Yeah. Product issue. High net worth. [00:28:55] Speaker 2: They try like a Vanguard fidelity. They all tried to push that in front of. Um, and nobody wanted it. Retail investors. I'm sure some people are using it, but you're right. It's not, I don't need it. People are not climbing over the walls to get into custom. [00:29:07] Speaker 1: Let's, let's look at, let's look at the categories. Cause there's one that's not here. That's going to prevent this from slowing down. If it's only going to accelerate next chart. Todd has the annual number of ETF launches by exposure. And it's pretty diversified. There's obviously a lot of leverage. There's equity as usual, fixed income. Buffer is now a real category. Option income is a real category. Crypto is smaller, but commodities are still doing it. I mean, there's, there's a lot going on here. Here's one category that you're going to see. I don't know when predictions. [00:29:34] Speaker 3: Ooh. Yeah. [00:29:35] Speaker 1: Okay. Here's my, here's my thesis. Uh, Mike Mobison and Dan Callahan wrote a paper last week about prediction markets and all markets and the wisdom of the crowds and how it works. And they showed a line between what Calci predicts, like what's implied in the odds and what actually happens. And it's basically one for one up into the right. The market is usually right. The betting market is usually right. However, there's something called the long shot bias, which means that people are more structurally, people are more likely to bet on a long shot that will not win. So the long shots are overpriced, but the heavy favorites are slightly underpriced. So if you are minus 900, nobody's taking that bet, right? Who the is risking $900, $100, right? Nobody does that. So the heavy favorites are slightly undervalued. Okay. Hear me out. If there is a market, a basket, an index, an ETF that only buys the heavy favorites and set the line where it's an 85% chance to win. All right. So there's a 15% upside. There'll be some slippage, right? But that is a structural. 15% is great. That is a structural impairment in the market. It's an investment product. [00:30:44] Speaker 2: That's great. [00:30:45] Speaker 1: So now it's not fun. It's not fun, but who cares? So if you take every heavy favorite across, not just the NFL and the NBA, but across the Oscars, whatever the betting market is, and you say, we bet on every heavy favorite, minus 850 and above, when there's $10 million in liquidity or whatever it is, that's going to be an ETF. [00:31:03] Speaker 3: It's already been filed. Who's going to, who's doing it? Um, Subversive? That sounds perfect. It's the company. That's the, that's the, that's literally the name. It's the company who did the, the, the Nancy, the Democratic and Republican trading ETFs, like the Cruz and Nancy. But you're going to see a million of these markets in the next few years. I think it's Subversive. So this, it sounds like a company that's going out of their way to do things that. The SEC put the brakes on these things for now. Yeah. They're open for comment because once you open up prediction market ETFs, [00:31:31] Speaker 2: we're going to have 50 of them. [00:31:31] Speaker 3: We're going to be doing that. [00:31:32] Speaker 2: It's going to be insane. We just, we are inventing new and exciting ways to lose our money, grind our portfolios. [00:31:39] Speaker 1: You will not be disrupted by AI. You are safe. Yeah. [00:31:42] Speaker 2: I hope so. [00:31:43] Speaker 3: People need you. I, but so, so the, the idea though behind the ETF was to hire a professional, like sports betting manager who finds value in the lines. So there'll be that too. Yeah. Like an actively managed hedge fund of, of betting. [00:31:56] Speaker 1: You're talking about like, uh, what's Matt Taman's character in rounders? Uh, not Wyrm. [00:32:00] Speaker 3: Um, he, him and an ETF. Wyrm is Norton. [00:32:03] Speaker 1: Yeah. [00:32:04] Speaker 3: Uh, Mike, Mike something. [00:32:06] Speaker 1: Oh, uh, yeah. Yeah. Mike. [00:32:07] Speaker 3: Mike. Yeah. Him, him managing an ETF is basically. Hunt. Number two is it. [00:32:11] Speaker 2: Is it? What? Oh, so can I ask you, can I ask you about, um, buffer ETFs? Yeah, of course. This is the breakout. This is the breakout category of the last two years. Probably not. Um, not crypto. Dude, six years ago. Buffer ETFs. Six years ago. Buffer or, or you could argue option income. Both, both, both. They're both, they're both options. Well, the covered call ETFs have been around forever. True. Yeah. The first one came out in 2010, maybe. But they got sexy. They got real sexy. Oh, that's that. That's like Jeppy and, uh. Uh, well, Neos. So actually, great topic. [00:32:43] Speaker 1: So Neos and, and Bruce Bond's, uh, company, um. Both of these categories were acquired by Goldman. Wait, what's Bruce's company's name? Why am I joking about it? Innovator. So Innovator and Neos were both bought by Goldman. [00:32:53] Speaker 4: Yeah. Four billion dollars worth of, uh, acquisitions. What is the Goldman ETF strategy? [00:32:59] Speaker 3: I know it's more. I know it's more. If we asked six months ago, I would say, I have no idea. Cause they were like. Now you know. Now you know. Now it's too. Okay. So they acquired a buffered ETF shop, Innovator. Which for the, for the unedgy. The uninitiated. It protects you on the downside over the course of the next 12 months. Caps you. Caps you. [00:33:16] Speaker 2: These are like the old school structured products that brokerages used to sell. [00:33:19] Speaker 3: Right. Okay. And then they also acquired Neos, which does option income ETFs, S&P covered call funds. Right. [00:33:26] Speaker 2: So let me tell you, I ran into Tom Lydon at the New York Stock Exchange. The GOAT. Today? The GOAT. The GOAT. Six months ago. He's with the guys from Neos. Yeah. And I don't even know. I don't even remember the guys. I think some of them didn't even speak English. He's buying the Lakers. Tom Lydon? Yeah. Yeah. Why not? I mean, so he goes, Hey man, you ever hear of these guys? You should check these guys out. He's like, I'm just sort of helping them out, making introductions. Right. But these guys have a great product. People love it. And I'm like, all right. Yeah. I'll look into that. What I should have said is, Tom, I don't care what it is. Please. Can I have 1%? I want to, like, what do I need to do to buy 1% of this? [00:34:07] Speaker 4: Because this guy is, like, just striking gold every three years. He's a goat. He's a goat. He's a great, great guy. We love shots of Tom. [00:34:15] Speaker 3: So they bought an income provider and a structured outcome provider. [00:34:19] Speaker 4: You guys know this. So time out. Stop. 2 billion dollars? 2.3. For both of them. [00:34:25] Speaker 2: 2.3 billion for Neos? 2.3 for Neos. I forget. Innovator was like two something. And what was the AUM for Neos? 30-ish. Low 30. 30 billion. [00:34:34] Speaker 1: Wait, we don't know what the terms of the deal are. 2.3 is probably like, if this happens and if this happens and if this happens. There's probably a lot of ifs. But great for them. [00:34:41] Speaker 2: What are we wasting our lives doing? [00:34:43] Speaker 1: Yeah, Tom, you want to run the show? [00:34:44] Speaker 2: We should do it. Should I make Tom the CEO of Ritholtz? Tom Leiden? Just sail off into the sunset? I mean, given his magical touch, then yes. He'll sell this company for a hundred billion dollars. Anyway, it's enough glazing Tom Leiden. [00:34:58] Speaker 3: They are catering to the, what I believe is the aging demographics of America. They want yield. Yield, buffer, or downside protection. [00:35:07] Speaker 2: That's so brilliant. You're exactly right. That's my guess. [00:35:09] Speaker 1: Goldman, on the recent call, Solomon was talking a lot about leaning into wealth. Now they're trying to, they're doing the custody thing, but I did not see this one coming. [00:35:20] Speaker 2: No, me neither. It's smart though, because if they're going to, if they're really going to do RAA custody, it can't be for basis points on trades. There's got to be a purpose. And the purpose is to get more asset management revenue. And this is the product that makes it make sense. These are products that people in their fifties and sixties want. [00:35:42] Speaker 1: These products have legs. They already have. [00:35:44] Speaker 2: And it's sticky. The AUM is sticky. Oh, it's definitely sticky. Nobody's selling these products. It's not hot theme money. You know what else? It's the opposite. You know what else? Vanguard's not in these categories, or at least not meaningfully. You know my hot take? And I think I'm probably wrong, but I think Vanguard will get into them. They have to. Yeah. He's probably taking meetings about this every day. I mean, they're in the ETF business. Like, why wouldn't you? They're not going to buy. [00:36:07] Speaker 3: No, they would just do it themselves. They'll do it themselves. I just think it's a matter of time. Like, this is where the money is going and the growth areas. [00:36:14] Speaker 1: I can't believe they missed this. [00:36:15] Speaker 2: So wait, so then does that make, does that make Goldman regret its decision? If Vanguard comes in and hoovers up 80% of the market or not really? [00:36:23] Speaker 3: Then it becomes a, our wealth platform versus your distribution mechanism. [00:36:29] Speaker 2: I can't believe Vanguard is not in the RIA custody business. It's a whole other conversation. I just can't. I'm thinking about from the ETF landscape. [00:36:36] Speaker 1: Vanguard is low cost core. Yeah. Not derivatives. Tom, I saw, uh, Tom, Todd, not Tom. We can't stop thinking about Tom. What the hell is your name? Call me whatever you want. I saw this today from James Seifard. I like this. I'm like, that guy. All right. So James is great. Today we have ETFs from Harvard Capital launching. [00:36:53] Speaker 4: Yeah, yeah, yeah. [00:36:54] Speaker 1: They'll be actively managed funds that specifically target each firm's ecosystem. I love this. I think it's a great idea, Josh. Tell me what you think about this. So for example, uh, did you look at the holdings? No. So tell me about it. I don't understand. Let me tell you. SpaceX AI lab ecosystem ETF is an ETF incorporated in the United. Okay. The fund seeks to provide exposure to the portfolio eligible companies most directly linked to the SpaceX AI artificial intelligence ecosystem. So imagine, imagine you want to be in the Nvidia business. You want to own the ETF of all the companies, core weave, whatever, all the companies that do business with Nvidia. I think it's a great idea. [00:37:29] Speaker 3: It's, it's interesting. The largest one I looked at the holdings, the largest in the open AI ETF is soft bank. [00:37:34] Speaker 2: So what is, what's wait. So what's in the Google deep mind? Google. Like how much overlap? There's going to be a lot. [00:37:42] Speaker 3: There's a lot of overlap to other. [00:37:45] Speaker 2: I like the, I like the concept. It's interesting. I got it. I have to be honest with you though. I think we're in a very specific market moment where like mom and pop investors are waking up and turning on CNBC and making money and well, listening to Leslie Picker, very like specifically explain who's buying chips from who people are not going to be that interested in this in a, in a year or two. It's people know way more about this than I've ever seen people understand because the media is so fascinating and I'm not saying it's a bad thing. I think we're going to move on. That's usually what happens. That's always what I think about it. [00:38:26] Speaker 3: Six years ago, we were like innovation and disruption. [00:38:29] Speaker 2: I have to tell you that I was in this business when people would go on TV and with a screwdriver, take apart, um, take apart and a tower, a computer tower and point out the Intel chips in it. [00:38:42] Speaker 3: They used to do that with the iPhone, right? [00:38:44] Speaker ?: Right. Yeah. [00:38:44] Speaker 2: So I was going to bring you up to modern times, but early in the game, they would take, they would take a compact or a Dell. They would open it up and they would say, look, it's a Pentium chip from Intel. And that was like the investing theme and people grew tired of that really fast. And then they did it with the iPhone. And I remember there was this whole suite of stocks like Skyworks and this one and that one. These guys make the glass. These guys make the antenna. People got bored of that. They're going to get bored of this. I think it's clever and I'm sure they'll make a lot of money. Well, I don't know. It's all about the distribution game now, right? [00:39:19] Speaker 3: Interesting ideas. So who's the distributor of this? It's Harbor Capital, I think, right? [00:39:25] Speaker 2: Who's the investor in this? I'm asking the wrong question. I think it's going to be retail. Who do you think is buying this? [00:39:29] Speaker 1: I like the idea. I don't think this is going to get traction. [00:39:32] Speaker 2: Me either. I would tend to agree. And we will delete this if it does. Yeah. [00:39:36] Speaker 1: No, I hope it doesn't. I want everybody to win. But Josh is right. This is also a bull market activity. [00:39:42] Speaker 3: Like this type of shit does not find a bear, obviously. You don't see this at bottoms. [00:39:46] Speaker 2: No. Or at the start of cycles. But it's also there's a fatigue that sets in. Even if there's no crash as a result of this, it's like, oh, are you? I'm exhausted. You're going to see somebody come on Twitter and be like, remember we used to talk about the ecosystem of open AI? Like, it's going to feel stupid. I don't know if that's in three years or six months. [00:40:08] Speaker 3: Their challenge would be, why do I need this over a regular tech ETF? Right. If the holdings are the kind of the same. [00:40:15] Speaker 2: Wait, John, they're not sponsoring the show, are they? Who is this harbor? All right. [00:40:18] Speaker 1: Todd, what did we see in the levered universe over the last couple of weeks during the washout? [00:40:24] Speaker 3: Oh, yeah. Okay. So, speaking of AI semis, right? We had a moment in July. Things got shaky. And you talk about tightening, monetary tightening. Korea decided to tighten their market significantly. Not through interest rates, but through saying- No more 2X. No more. You cannot launch more 2X single stock funds. And if you want to trade them, you got to go through driver's ed. And they're serious about it. So that was a different form of tightening. Yeah. But what I find interesting is- Wait, they made them take a course? Yeah. They're putting in place all these different regulations now. Like you have to go through a, I think it was a week worth of simulated trading now. Yeah. To trade levered ETFs. I love that. [00:41:02] Speaker 2: So- Yeah, makes sense. Korea is a very homogenous culture, right? It's different than America. The Koreans are Korean. They have the power and they have the cultural buy-in. If they all decide this is what's best for our communities and our families and our future retirement hopes and dreams, then we're going to- Here, it's like the opposite. It's like, what can I bet on next? What could I, yeah. [00:41:29] Speaker 1: I think what you're trying to say is they're very dim sum. What? [00:41:35] Speaker 2: No, no. I'm making the point. We don't have that kind of cultural buy-in. If you get one person says, I want to ban this, there'll be another person right next to them You don't want to be shamed. I want to do five times the amount of this. Oh yeah, yeah. Right. We don't have a culture where we all agree on it. We don't have a shame culture. So now the default is like, can we gamble on it? And will it sponsor podcasts? [00:41:57] Speaker 4: Yes. [00:41:57] Speaker 2: And these are the only two requirements for something to happen. So they tightened their market. [00:42:02] Speaker 3: Levered long AUM. The levered space got up to $200 billion, which was a new high watermark. $500 billion in Notional, new high watermark. People started to get real uncomfortable, I think, in terms of their exposure there. Specifically, counterparties doing the swaps. [00:42:14] Speaker 1: Yeah. The air gets pretty thin up there. Yeah. [00:42:17] Speaker 3: And as much as it was a rough July for a lot of those stocks, the assets in levered long products only went down about 25%. That's not that much. And given the action today, like Sandisk was up, I don't know, silly amount. 15%. We're about to go right back to that high. I know that this situational awareness fellow, situational awareness, I think you were doing the other day. That was great. Yeah. He got off the field. He's going to come right back on. And I think we're going to be back in the same place pretty soon. [00:42:42] Speaker 2: I called that very quickly. Like, this kid will be managing money tomorrow. Yeah. You think this is a scandal. It's not. This is what Silicon Valley guys love. [00:42:53] Speaker 3: The demand for leverage, as much as July was a reprieve or a spite, whatever you want to call it, is coming right back. We're not through this yet. And your son's asleep. I mean. [00:43:05] Speaker 2: Am I that boring? We're talking about ETFs for three and a half hours. I can't believe it. [00:43:11] Speaker 1: Fantastic. [00:43:12] Speaker 2: What is this so much? What is this retail cash? [00:43:15] Speaker 1: This is interesting. [00:43:16] Speaker 2: What you got? [00:43:18] Speaker 1: I got a lot wrong, but sometimes I get things right. And this is one of them. [00:43:22] Speaker 4: That's okay. [00:43:23] Speaker 1: That I said early on, when interest rates went all the way up and all the money went into cash, that this money was stuck. Not literally stuck, but it was going to stay put. [00:43:32] Speaker 3: Yeah. [00:43:33] Speaker 1: That it was not going to come out in the event of a stock market boom. I did think probably if you said, well, what if the 10 years at 4.5, nine, I probably would have said, yeah, then it'll probably go into bonds. Nope. [00:43:45] Speaker 3: No, you need, you need fed funds below 3%, I think for this to unstick. [00:43:50] Speaker 1: So that I could have foreseen that you would have the stock market boom. You would have interest rates going higher. You would have the fed funds rate coming lower and still it's not leaving. [00:44:00] Speaker 3: Yeah. Yeah. I think get down to 3% or a massive stock market correction. [00:44:06] Speaker 2: Like, you know, real. But why not? Doesn't this line, does, does this line go higher in a correction? No, I think the opposite. When you. So let's just say. Because people get scared and they pull it into their bank. [00:44:17] Speaker ?: No. [00:44:17] Speaker 2: Out of the money market. [00:44:18] Speaker 1: No, I think. I do think that this generation of investors will not run out of the stock market. [00:44:24] Speaker 2: Wait, so for people listening. This is $3 trillion in total retail money market funds. And for retail. Retail. For context. It was $1.5 trillion the day before the pandemic started. Which is six years ago. A little more than six years ago. [00:44:42] Speaker 1: I think if you get a 40. If you get a 35% meltdown in the S&P 500. Money will come out of money market funds. Yeah, I agree. And go into the stock market. And that's probably never happened before. [00:44:55] Speaker 3: I could see that. [00:44:56] Speaker 2: And then if. If you were. Are we all saying the same thing here? Are we saying Dow 100,000? [00:45:02] Speaker 4: All it has to do is fall 30% first? Yes. Is that what we're saying? Basically. [00:45:06] Speaker 3: All right. If you told me Fed funds rates were going to be below 3% along with that. Then yeah. That's what happened in 2007. What if it still doesn't move? [00:45:15] Speaker 2: What if it just never moves again? People just got lazy. I don't know. A lot of the economy runs on borrowed money versus spent money. It's very different now. I'm not saying that's good. But I am saying people are doing things with their assets. Without their assets having to be sold. Like buying the Lakers? Yeah. I mean. [00:45:35] Speaker 1: Basically. Can I ask you guys a question? So the S&P 500 is at an ultimate today. Okay. I'm not even sure where the Dow is. Is the Dow at 56,000? I really have no idea. I don't. [00:45:45] Speaker 2: Do you want to know exactly? I'm not a big Dow guy. Well, I am. [00:45:48] Speaker 1: Well, you just said Dow 100. That just reminded me. I really don't track it. [00:45:51] Speaker 2: No, I think it's 48,000. But hold on. [00:45:53] Speaker 3: I get interested when stocks get kicked out of the Dow. You think what? I get interested when stocks get out of the Dow. I don't know. Unless you were talking about Michael. [00:46:00] Speaker 1: The Dow is at 54,000. 54. And the market is healthy, Todd. The market is very healthy. We've got a dashboard from Chartkin Matt. Fill this up, fellas. All right. How about this? Energy leading the way. [00:46:17] Speaker 3: I'm a fan. Because it's anti-beta to the S&P now. Energy's beta has collapsed. [00:46:25] Speaker 2: And it's at 2% of the market. [00:46:27] Speaker 3: Yeah. And so, okay. So, if you don't want to take a big swing, you buy a natural resources ETF, where you're going to get energy and materials and maybe some other stuff. But energy's beta is negative to the S&P. It is just a complete collapse. So, it's a hedge, necessarily. Especially when bonds aren't hedging. Wait. [00:46:41] Speaker 1: Healthcare, I said. Healthcare, too. I'm talking about energy. Okay. So, we're sorting by RSI over 70. So, I mean, healthcare is working. It's been a while. It was really shitty in the first half of the year. Healthcare has been the bane of my existence. [00:46:57] Speaker 3: Why? For the last year and a half, two years, the case has been the same thing for healthcare. A massive money out of healthcare ETFs. Okay. You know, I start to think contrarially. The temperature's very cold. And relative performance that is in its bottom decile. So bad, it's so good. So, that's an interesting combination. Bottom decile performance. Healthcare outflows. People hate it. So, the contrarian to me starts to say, oh, look at this. And it's finally starting to work. The joke I always use is healthcare took a GLP one. It went from 16% to 8% of the S&P 500. [00:47:27] Speaker 2: I think people hate it as a sector, but they love some of the individual stocks. Because while that's going on, what you're describing, Lilly became one of the 10 largest market caps in the world. Yeah. So, I think it's, I think in healthcare more so than energy. Energy is one trade. [00:47:43] Speaker 3: Yes. [00:47:43] Speaker 2: Yeah. Now, we have some stocks on our best stocks in the markets list from the energy sector. Marathon, Valero. HF Sinclair. What's called the Phillips 66. So, all three are all three refiners. We have Baker Hughes. A few. But like, if I look at the energy sector on any given day, they're probably going to be all red or all green. Exactly. You cannot say that about healthcare. Healthcare is very diverse. Extraordinarily diverse in terms of the number of industry groups. And then on a stock by stock basis, we're talking about, you get a drug approved or not approved, it could mean 30% market cap. Yeah. [00:48:26] Speaker 3: Instantly. I think that's also why sector investing needs to evolve. You can't just buy XLV or XLI because industrials are super diverse, right? You buy transport, you're buying power generation. [00:48:36] Speaker 2: Or airplanes or Uber. [00:48:38] Speaker 3: Right, right. So, you're seeing more, not necessarily niche, but subsector ETFs launch. Thematics. It's thematics. And that's the kind of the... [00:48:46] Speaker 2: The sector is very artificial. They come from the 1930s, 40s, 50s. They're not applicable. Antiquated. [00:48:52] Speaker 1: It's visa discretionary and not a financial. It's a tech or tech. No, it's a financial. I should know this. [00:48:59] Speaker 2: Exactly. It's in the XLK, isn't it? You might be right. It shouldn't be. [00:49:02] Speaker 3: Well, what index provider are we talking about? Because now you're getting into index providers. [00:49:05] Speaker 2: Is it S and P? Is it FTSE? You know what's funny about this? MSCI. One of the big things like with financial TV, one of the tropes is like, what sectors are you overweight? What sectors are you underweight? You can't do it. It's just not helpful. I understand it's a good conversation starter. Of course. And maybe with tech or with oil, it makes sense. Because that is sort of thematic. Yeah. But like, what do you think of consumer discretionary? I don't know which one. [00:49:31] Speaker 1: No, tech doesn't work anymore. Software versus semis. [00:49:34] Speaker 3: Yeah, it's true. Can we talk discretionary for a moment? And consumer? Oh, I brought one of your charts. Is it the weight chart? No, but talk to it. [00:49:42] Speaker 1: Oh, where did the consumer go? Yeah. Yeah, it's great. Yeah. Chart nine. I love this. [00:49:45] Speaker 3: This is interesting to me because the consumer is such an important part of our economy and yet both discretionary and staples weight in the S&P is evaporating. Staples, we know it's right. It's a bull market. Nobody drinks anymore. They're four and a half percent of the S&P 500. [00:49:59] Speaker 4: That is a full market and nobody drinks anymore. [00:50:02] Speaker 3: But you know what this is? [00:50:03] Speaker 2: This is just, this is Google and Nvidia growing faster. That too. What? Why? What are the, are there big alcohol weights in here? It's just like. It's alcohol, tobacco. [00:50:11] Speaker 1: No, it's the denominator. The S&P is outgrowing. [00:50:14] Speaker 3: Yeah, tech, it's, if it's not risk off, there's no reason to only own staples. And especially in the option income world we're in. I don't need staples for yield. Discretionary below 10% is rare. That's interesting to me. That usually happens in tougher economic environments, of which is not the case right now. And that kind of speaks to how dispersed that whole sector is. But is, which one? Discretionary? Discretionary, yeah. Because you've got hotels, Amazon, home building. Tesla. Is Tesla in there? Yeah. [00:50:42] Speaker 2: Why is Tesla not an industrial? [00:50:43] Speaker 3: Am I, am I like, why is SpaceX not an industrial? It's a communication. Yeah. [00:50:48] Speaker 2: How is Tesla discretionary? You're right. I think throw all of that out. It's from another era. [00:50:52] Speaker 3: Can you name me one person who works with geeks? [00:50:56] Speaker 2: No. [00:50:56] Speaker 3: You're, you're, you know a lot of people, right? [00:50:58] Speaker 2: No. It's probably some sort of cabal. I don't even know. [00:51:01] Speaker 3: Who is on the geeks? [00:51:02] Speaker 2: Who is geeks? Who is geeks? I, I don't know. [00:51:05] Speaker 3: I don't know. [00:51:06] Speaker 2: It could be some skull and bones thing. It's a, yeah. It's like the, what's that Simpsons episode? The skull, whatever. [00:51:11] Speaker 1: Yes. What's going on with the small caps? Are anybody buying them? You've charted this for a while. [00:51:17] Speaker 3: Lack of interest. Small caps. Um, there's money coming back into small cap ETFs, but I just get the sense that people are like, yeah, we're dabbling back in after three years of being out. I think there's a lot of reluctance. I think, I don't think though, following this Russell reconstitution, the next six to 12 months will be interesting for small caps because they had bloom energy, which was a hundred billion dollar market cap. That's never happened in the Russell 2000 before. [00:51:39] Speaker 1: Right. Right. [00:51:40] Speaker 3: Um, how can, how come they can't update their rules? [00:51:42] Speaker 1: Okay. Yeah. [00:51:43] Speaker 3: Well, I think they make it semi annually now. Great. Yeah. [00:51:44] Speaker 1: But if a stock is two and a half times larger, if number one is two and a half times larger than number two. [00:51:50] Speaker 3: Yeah. [00:51:50] Speaker 1: It gets out of there. Draw a line somewhere. [00:51:52] Speaker 3: That you should be an index provider. It's common sense. Batnik indices. Um, that would make sense. [00:51:57] Speaker 2: I want to ask you about, I want to ask you about the, the, uh, crypto ETF race. Is it still a race or has it been one? And what, like, is anyone going to give up? [00:52:09] Speaker 3: Uh, okay. Crypto. The money, money's leaving crypto ETFs. Interestingly. [00:52:16] Speaker 2: Leaving. Is it going into, it's obviously not going into crypto. [00:52:19] Speaker 1: Wait, I thought they were coming back. [00:52:21] Speaker 2: Are these people just buying AI? Are they just buying AI stocks? I think they're just buying AI stocks now. Right. Or maybe software. Can you blame them? Yeah, they got tired. They thought they owned the innovation of the decade and now they realize they don't. It's ice cold. [00:52:33] Speaker 3: Um, the amount of crypto ETF products, though, got stupid. I mean, we were doing 2X Dogecoin. Why? You gotta have it. Right. [00:52:41] Speaker 2: Nobody wants it. [00:52:42] Speaker 3: The one that interesting to me is, is Hyperliquid. Cause I actually have a tangible feeling for it. Like I can go on a computer and say, look at Hyperliquid. This is neat. [00:52:48] Speaker 1: I thought it's super cool. So for people that don't know about it, explain it quickly. [00:52:51] Speaker 3: It's a perpetual futures exchange. So you were able to trade SpaceX synthetically on Hyperliquid before it IPO. [00:52:57] Speaker 1: And it got it right. [00:52:59] Speaker 3: Yeah. It's the market. Yeah. Yeah. It might be not the most liquid market, but it's growing. Crude oil over the weekend. You can trade crude oil on the weekend. You can trade Bitcoin, whatever you want. It's an exchange disruptor. That's interesting to me. But all these other random crypto ETFs of which I'm naive and don't understand. Like, okay. Chain links. [00:53:16] Speaker 2: Why can't we just be honest and say they're penny stocks? They probably are. They're chain letter stocks. Why can't we just be honest with each other? They were supercharged because of the existence of Twitter and Reddit, which did not exist in prior penny stock bull markets. But that's, it was penny stocks. [00:53:32] Speaker 3: The majority of advisors will buy the brand name, which is Bitcoin. Yeah. Some smart ones will say, oh, I like this. I don't know. Exactly. Whatever. [00:53:42] Speaker 2: I don't know. We had a financial advisor sitting in your seat talking about Ethereum. Yeah. I love him. I have no idea what he said. He's one out of a hundred. I have no idea. Like, I don't know if he does either, but it was great. All right. I want to ask about international ETFs. I haven't heard a peep about, I guess like Robinhood retail doesn't care about foreign stocks. There's no AI. [00:54:06] Speaker 3: I mean, there's AI, but there's no EM. [00:54:08] Speaker 2: You have Korea and that's it. There's Korea. A little Japan. Korea and Taiwan jacked up emerging markets, which is interesting to me. But so, are you saying if there's no AI, there's no flows? There's no semi. [00:54:17] Speaker 3: I mean, they get flows only for model allocations, like the real boring MSCI IFA ETFs. Stocks have not been bad. Japan's great. Japan's been excellent. Europe has been surprisingly good. Right. Uh, Korea, China's the kind of the disaster. Okay. That's always the case. Okay. [00:54:33] Speaker 2: Nothing new there, but people just don't seem to care. Are you surprised that commodity stocks never worked? To this day have never worked commodity ETFs. [00:54:42] Speaker 3: They have their EPS. [00:54:43] Speaker 2: Oh, like the actual. [00:54:44] Speaker 3: I mean the funds, the products. They come with futures role problems and they come with tax problems too, right? If it's not, uh, if it's in a partnership, a commodity pool, you get a K1. [00:54:55] Speaker 2: Oh, I know. I won't buy these things, but I'm at, but I guess my question to you is. Are you surprised as somebody who follows this industry more closely than anyone? Why did nobody figure this out? So you have this. I tried to. You had the futures role problems with Contango and too boring for me to even get into. Yeah. Um, the tap, right. The tax side, the type of the way it's classified, the gains are classified. There are some successful actively managed commodity ETFs out there. [00:55:23] Speaker 1: Yeah. How about this? The sponsor of today's show. Wax. No kidding. [00:55:26] Speaker 3: They figured it out. [00:55:27] Speaker 1: So they have over a billion dollars in that fund. Yeah. [00:55:29] Speaker 3: That's a, and that. That's a, that's a real fund. A purpose in a portfolio. Right. Right. As a diversifier, as an inflation hedge, if that ever becomes a thing again. Uh, and you have someone at the wheel. I think it's David. [00:55:40] Speaker 2: So that's different. You're talking about, you're talking about managed. [00:55:43] Speaker 3: Yeah. [00:55:44] Speaker 2: What I'm saying is like, I'm saying what never worked is like, I just want an ETF product that will go up and down with crude oil. I don't want to hear about, I don't want to hear about backwardation ever. [00:55:59] Speaker 3: How come gold works? Because you can store it. [00:56:02] Speaker 2: That's it. Yeah. [00:56:03] Speaker 3: That's the whole thing. Crack the code. [00:56:05] Speaker 2: You can't store copper. So you have to, you have to use the futures for like I don't know, agricultural products because you can't store wheat forever. It'll go bad. It goes bad. Yeah. That's all it is. That's the whole thing. It's always good. Stored somewhere. This whole time. This whole time. That's a great answer though. Why? Like, why is. You know, it's so funny. [00:56:23] Speaker 3: Josh is going to be saying this for the rest of his career. It just goes in a vault and it just sits there. I never understood. [00:56:28] Speaker 2: No, I never understood why they couldn't give me oil and gas or gas. Those are harder to store than transport. Who is working on the compute ETF, which you know is coming. [00:56:40] Speaker 4: Oh, there's a whole bunch of them. [00:56:42] Speaker 3: ProShares, Roundhill, maybe Defiance. [00:56:44] Speaker 1: Wait, what do you mean by compute? [00:56:45] Speaker 3: Like the stuff that Jess is talking about. [00:56:46] Speaker 2: Like literally we'll track the price of compute. Not we will buy Korean memory stuff. [00:56:52] Speaker 3: That's the next. Oh, I know it is. Rat race. And the price of chips. I have a list somewhere of all the thematic launches coming out, including compute. And it's getting stupid, but there's a bunch there. [00:57:03] Speaker 2: How many compute ETFs will we see by year end? They'll be, let me, let me back this up. At least five. Let me back this up. So the big thing that happened this week, which we talked about already on, uh, what are your thoughts this week? People that missed it. Um, there was a CNBC infomercial. I can't describe it any other way. Oh, with the, with the CEOs? They, I'm, I would say this, there's some closing bell overtime, which I think is on at four o'clock. Something like, yeah. So I think they called the network and said, would you be interested in Jensen Wang? And they said, I'm listening. Would you be interested in Jensen Wang, David Solomon, Apollo, Blackstone? Would you be interested in all of them? That's a lot of security, dude. A round table at the NASDAQ announcing a $500 billion partnership. And they said, you could have the rest of the afternoon if you want it. A round table of circular financing. Right. It's like, all right, so now that is gentlemen, start your engines. Everybody on wall street watched it. It was 34 minutes I watched on YouTube. So now you have to assume you're going to get futures markets on the price of compute. And then you're also going to get an ETF product. Yeah. [00:58:11] Speaker 3: There's already registrations out there for compute funds. [00:58:14] Speaker 2: So who, who do you think has the most compelling idea or who do you think will get out the door first? [00:58:20] Speaker 3: I don't know who gets out the door first off the top of my head. Do they all file at once at the same time? I think they've all filed pretty close together. So then this comes down to brand loyalty. Who has the best brand loyalty out of the thematic space right now? It's Roundhill. This should be the top. But it's not thematic. It's a commodity. [00:58:37] Speaker 2: It's like electricity. [00:58:38] Speaker 3: It's like betting on the price of. If you're catering to retail, to allocators, that's a different story. You know, if BlackRock does a BlackRock computing ETF, that's a much different story. [00:58:47] Speaker 2: Okay. So the CEO of BlackRock, Larry Fink, was part of this round table. He's the only one that didn't come in person. I think he thought they were all going to get whacked. The opening scene of The Godfather's Night. [00:58:59] Speaker 3: Can I tell you about an ETF that got filed today that I saw? [00:59:02] Speaker 1: Spoiler, I never saw that. [00:59:03] Speaker 3: Speaking. You want to know what was filed? It's from 1989. You want to know what was filed today? Yeah. Jensen Huang interview ETF. [00:59:11] Speaker ?: Stop. [00:59:11] Speaker 4: I'm not kidding. Who's launching this? You don't want to know. Is it our sponsor? [00:59:15] Speaker 3: No. [00:59:15] Speaker 4: Okay. Wait, what does it do? [00:59:18] Speaker 3: Companies he interviews are in the portfolio. What? I'm a little… Who does he interview? I don't know. Is he Jay Leno? [00:59:23] Speaker 2: Maybe it's the people who make the coat. Hold on. They said during this round table, though, that computer is a new asset class. Wealth management, blah, blah, blah. [00:59:36] Speaker 1: Todd, I don't know if you've heard. There's a shortage of it. [00:59:38] Speaker 2: But… So how do I do computers? So hear me out. How do I do that? Is there a world in which in three years, financial advisors are showing a model asset allocation and there's a slice for compute? Yeah. [00:59:51] Speaker 3: It's a new commodity. [00:59:52] Speaker 2: Why not? Well, so like it's, here's my 1% allocation to gold just because… And here's my 2% compute sleeve. All right. Stop. The answer is no. [01:00:01] Speaker 3: There's electricity futures in an ETF now also. So… Okay. I like that. [01:00:07] Speaker 1: I heard that pitch. I thought that made sense. I forget the ticker. [01:00:10] Speaker 2: In my day, you could buy the utility stocks. I'm just saying. Not anymore. [01:00:15] Speaker 1: Wait, the price of electricity is not going down. It should be going up. Ever. [01:00:19] Speaker 3: It's not sexy enough to buy utilities anymore. I can buy covered call on Bitcoin. Why don't I need utility? [01:00:25] Speaker 2: What's your fall/winter outlook as far as like what people are going to be doing? What people are going to be talking about? For ETS? Yeah. [01:00:36] Speaker 3: I think the resumption of leverage. [01:00:38] Speaker 2: Well, no, I wasn't going to ask you about Broadway. [01:00:40] Speaker 1: Literature. [01:00:41] Speaker 2: What's your outlook? Any hot novels coming up, Todd? Like what? Give us like tomorrow's headlines today. What do you think is going to be big stories? [01:00:50] Speaker 3: I would not be surprised if we start reading about how some of these thematic funds are kind of falling on their face. Okay. Cynically. Cynically. I say it cynically because there's so many of them. There's not enough money to go around. [01:01:00] Speaker 2: Okay. [01:01:02] Speaker 3: It is still very much a bull market for stocks. It's not, you know, that's not a crazy thing to say. [01:01:05] Speaker 2: You know what's funny though? If you do an IPO for a company and the stock falls on its face, people get hurt. Yeah. Because they bought it at the IPO price and it gets cut in half and there's no interest and the analysts downgrade it or don't even cover it. With a failed ETF, so long as it accurately tracks what it's meant to track, if it doesn't attract assets, nobody gets hurt. Who gives a shit? Yeah. A couple of investors in it, but that's. No, but why do the investors get hurt? In other words. They bought it. Hear me out. Hear me out. They launch 10 compute ETFs, let's say, between now and the end of the year. And the price of compute actually goes down. And the ETFs actively track the price of compute. Yeah. You might've lost money as an investor on the bet, at least temporarily, but the ETFs did their job. Oh, exactly. They're packaged products. Here it is in the opposite direction. They launched 10 compute ETFs. The price of compute goes up 50%. Of those 10 ETFs, eight of them don't raise any money. They're flops. Yep. That would be the price went up of the vehicle, but the product is a fail. [01:02:19] Speaker ?: Yeah. [01:02:19] Speaker 2: Nobody wants it. Who gives a shit though? That's. [01:02:21] Speaker 3: Nobody loses money. That's what happened with this with tanker shipping ETFs. Things up like a thousand percent, but it's not taking any money. Right. So is it a flop or did it do its job? It's doing its job. It's just nobody wants it. Nobody made money. Yeah. Nobody wants it. Or people could be making money. They just don't need the allocation for it. [01:02:35] Speaker 2: You have fun on the show today? I always have fun on the show. Okay. Are you unnerved by this or it's okay? [01:02:40] Speaker 4: Your child or Michael? [01:02:41] Speaker 2: My, my. [01:02:42] Speaker 4: Or boy. He's, he's adorable, right? [01:02:46] Speaker 2: I like the pillow. Yeah. Shout out to the nugget. All right. Todd, we want to thank you so much for all the unbelievable work you do all year. You are my primary conduit for, it's like three people on the ETF side. I appreciate that. [01:02:58] Speaker 1: You're the vessel. [01:02:59] Speaker 2: And you're, you're, you're in there. It's Balchunas. It's you. I would have to think long and hard about the third person. You really. He's a great guy. You cover it. You cover it really well. I want to tell people how they could learn more about Strategas and potentially become clients of what you guys do. Institutions, Bairdstrategas.com. [01:03:18] Speaker 3: Okay. Or if you'd like to invest with us, StrategasETFs.com. Okay. Very proud of you. How many ETFs do you have now? We have three. And if you're invested, if you're interested in. Only three out of 900 launched. What are you guys so busy doing? We're working on it. All right. If you want Strategas in an ETF. S-A-M-T. That's me. [01:03:37] Speaker 2: All right, Todd. Thank you so much. We appreciate it. Thank you, guys. Hey, thanks to everybody for listening. Thanks for watching. We appreciate you. Leave a rating, leave a review. We'll talk to you soon. [01:04:04] Speaker ?: Thank you.