WEBVTT - Yes, ETFs Can Outperform Without Nvidia—But It's Not Easy 0:00:06.400 --> 0:00:07.080 What can itellions. 0:00:07.120 --> 0:00:09.559 I'm Joel Webber and I'm Eric Belchunos. 0:00:11.560 --> 0:00:13.920 You know, we should talk about mar Eric in video 0:00:15.320 --> 0:00:17.959 as a stock. Ever done anything like this. 0:00:18.920 --> 0:00:22.319 No, I can't recall. I mean, Tesla Apples was a 0:00:22.320 --> 0:00:24.520 little more of a slow build, and it's been on 0:00:24.560 --> 0:00:26.520 the top of the mountain federal distinguishes in video. 0:00:26.560 --> 0:00:28.400 It's like, it feels like it almost came out of 0:00:28.400 --> 0:00:31.240 nowhere and just as larger than anything else. 0:00:31.400 --> 0:00:34.559 Yeah, it's sort of even though it's happened over a 0:00:34.600 --> 0:00:37.040 couple of years, that is a short amount of time 0:00:37.640 --> 0:00:41.319 to grow as fast as this stock has and so on. 0:00:41.360 --> 0:00:45.280 Our team as ETF analysts were sort of like scientists 0:00:45.320 --> 0:00:48.360 in a way, and this stock provides such an interesting 0:00:48.880 --> 0:00:53.199 way to analyze how indexes are reacting, how product is 0:00:53.240 --> 0:00:57.280 being changed. It is there's so many little subplots because 0:00:57.320 --> 0:00:59.760 of the rise of Navidia. And I was looking at 0:00:59.800 --> 0:01:01.959 our notes and I'm like, wow, about half of our 0:01:01.960 --> 0:01:03.600 notes have been on Navidia. And I think the only 0:01:03.680 --> 0:01:06.120 other time we talked about this recently was with Will 0:01:06.200 --> 0:01:09.319 Rind of the Navidia the double leverage Navidia ETF at 0:01:09.319 --> 0:01:12.039 which we have covered. That's one of like six seven 0:01:12.080 --> 0:01:14.240 angles that we've taken on the video, so I thought 0:01:14.280 --> 0:01:15.280 we should cover the rest. 0:01:15.400 --> 0:01:19.320 Yeah, you think you're really a scientist, I'm gonna I'm gonna. 0:01:19.160 --> 0:01:19.720 Give a little bit. 0:01:19.959 --> 0:01:20.399 Yeah. 0:01:20.400 --> 0:01:21.240 I mean yeah, like. 0:01:21.200 --> 0:01:23.560 There are I think actual scientists may take an issue. 0:01:23.720 --> 0:01:26.320 You remember the scene it sounds the lamps when uh 0:01:26.920 --> 0:01:29.759 Jodie Foster brings this sort of specimen bug to those 0:01:29.800 --> 0:01:32.280 two guys with the thick glasses and they're like, oh, 0:01:32.360 --> 0:01:34.720 look at this, and they and they get all excited. 0:01:35.160 --> 0:01:37.840 That's us with stuff like this. I swear to God, Well. 0:01:37.880 --> 0:01:41.240 We'll test that theory. Uh. On this episode, we're gonna 0:01:41.240 --> 0:01:45.160 speak with Athanasio, Sarah Vegas, an ETF analyst with Bloomberg Intelligence, 0:01:45.480 --> 0:01:48.880 as well as Emily Grefeo, a cross asset recorder with 0:01:48.920 --> 0:01:52.960 Bloomberg News for first time on the podcast, this time 0:01:53.000 --> 0:01:58.520 on trillions. The Nvidia Effect. Emily Athanasios, what can allians? 0:01:58.640 --> 0:02:00.600 Yeah, nice to be back, Thank you for having me. 0:02:00.800 --> 0:02:04.360 Okay, Emily, let's start with XLK. What is XLK. How 0:02:04.360 --> 0:02:06.400 does Nvidia factor into it? 0:02:06.640 --> 0:02:12.679 So? XLK is a technology sector ETF that investors used 0:02:12.720 --> 0:02:14.680 to gauge. Okay, I want to invest in tech stocks, 0:02:14.919 --> 0:02:17.560 they can buy the cues, but they can also buy XLK. 0:02:17.960 --> 0:02:21.800 And due to the way that the index that XLK 0:02:22.040 --> 0:02:25.200 tracks was constructed, it didn't really have a large weight 0:02:25.240 --> 0:02:28.119 to Invidia. In the beginning of the year, it had 0:02:28.120 --> 0:02:31.680 big weight to Microsoft and Apple, and then Nvidia's weight 0:02:31.800 --> 0:02:35.720 was like only six percent, so it was actually underperforming 0:02:35.760 --> 0:02:38.920 the S and P five hundred, the cues, and it 0:02:39.000 --> 0:02:41.799 really wasn't a good gauge for Okay, how are tech 0:02:41.840 --> 0:02:44.840 stocks doing because it only had this six percent weight. 0:02:45.280 --> 0:02:49.600 So then it had to rebalance, which we've seen recently, 0:02:49.639 --> 0:02:52.400 and the weights basically switched around. So now in Vidia 0:02:52.440 --> 0:02:55.480 has a much higher weight and the fund. 0:02:55.600 --> 0:02:57.680 What's weird about this index is you look, if you 0:02:57.720 --> 0:03:00.119 were to pull it up before the reboundce, you'd see 0:03:00.200 --> 0:03:03.520 Apple and Microsoft like twenty two percent waiting each. So 0:03:03.600 --> 0:03:05.440 like half the fun is these two stocks. That's all 0:03:05.600 --> 0:03:08.440 that's weird. First of all, then there's this huge drop off, 0:03:08.560 --> 0:03:10.920 almost like a cliff in the ocean, and then Navidia 0:03:10.960 --> 0:03:14.920 was six percent, and so now the question was will 0:03:15.320 --> 0:03:17.960 because will Navidia get big enough and pass Apple by 0:03:17.960 --> 0:03:21.440 the rebound state to be the second spot. It's the 0:03:21.480 --> 0:03:24.320 difference between eleven billion dollars of buying. Basically, like, if 0:03:24.400 --> 0:03:28.239 Navidia passed Apple by this Friday deadline, it got eleven 0:03:28.280 --> 0:03:31.520 billion dollars in buying from the ETF because it would 0:03:31.520 --> 0:03:33.880 go from six percent to twenty two percent. Just like that, 0:03:34.360 --> 0:03:37.320 an Apple would have eleven billion of selling because it 0:03:37.320 --> 0:03:39.760 would just fall off the cliff and it beat it 0:03:40.320 --> 0:03:42.680 like that in the last hour of trading. It was 0:03:42.720 --> 0:03:45.480 like a photo finish and a horse race. So Navidia 0:03:45.920 --> 0:03:49.000 is now twenty two percent, Apple down to I think 0:03:49.160 --> 0:03:52.080 five percent. And the rule I just talked to James, 0:03:52.080 --> 0:03:55.360 who's covered this. The index has a rule that any 0:03:55.360 --> 0:03:58.280 stock over five percent waiting five of them can't make 0:03:58.360 --> 0:04:01.480 up over fifty percent. So what happens is the two 0:04:01.520 --> 0:04:04.520 biggest stocks are so big Apple Microsoft at the time, 0:04:04.960 --> 0:04:07.240 they took up all the budget of the five stocks, 0:04:07.240 --> 0:04:10.080 so everybody else got like crumbs. So it's a really 0:04:10.200 --> 0:04:13.240 quirky I think they should design it differently, they should 0:04:13.240 --> 0:04:16.839 have it cascade more. And so this to me is 0:04:16.960 --> 0:04:22.120 a fascinating index situation that Navidia shined a light on. 0:04:22.800 --> 0:04:26.320 And now it's so funny that Apple, the great Apple 0:04:27.000 --> 0:04:29.920 got kicked down to the bottom rung, the crumb level. 0:04:29.920 --> 0:04:31.200 But when's the next rebalance. 0:04:31.800 --> 0:04:34.360 I don't This would be in the next quarter or 0:04:34.400 --> 0:04:37.960 so on the calendar quarter. But I mean Index's rebounds 0:04:37.960 --> 0:04:41.559 all the time. I can't remember such a big deal, right, 0:04:41.680 --> 0:04:43.320 There's been a few over the years, but this one 0:04:43.360 --> 0:04:45.400 was a really big one. And I remember when someone 0:04:45.400 --> 0:04:47.719 had brought it up. It was even our group chat. 0:04:48.480 --> 0:04:50.000 Oh and video is only a five percent way. You 0:04:50.040 --> 0:04:51.800 guys had mentioned how it came out of nowhere. I'm like, oh, 0:04:51.800 --> 0:04:53.960 that sounds normal, like in videos still like really small, 0:04:54.120 --> 0:04:56.800 Like no, it was like almost the same size as Apple. 0:04:57.960 --> 0:05:01.600 So anyone who thinks that are passive should read through 0:05:01.600 --> 0:05:03.800 this document. It is insane, like you need like a 0:05:03.839 --> 0:05:07.240 PhD to figure out, like what is happening. But yeah, 0:05:07.279 --> 0:05:10.000 this was a big deal, and so we'll see this 0:05:10.080 --> 0:05:12.720 might all be in vain because if Invidia doesn't hold 0:05:12.720 --> 0:05:15.200 this weight in the next quarter, it's going to reverse 0:05:15.240 --> 0:05:17.080 this entire trade and just go back to the way 0:05:17.120 --> 0:05:18.640 it was the beginning of the year. 0:05:18.600 --> 0:05:20.719 Which speaks to what we want to talk about, which 0:05:20.760 --> 0:05:24.200 is the effect in video is having within ETF says, 0:05:24.320 --> 0:05:26.280 so what else is your research born out, so. 0:05:26.200 --> 0:05:30.000 We actually covered something the opposite. So, as you can imagine, 0:05:30.040 --> 0:05:32.080 some of the best performing ETFs all had a pretty 0:05:32.120 --> 0:05:34.800 lofty weight ten video. We actually wanted to look at 0:05:34.800 --> 0:05:37.279 the ones that weren't depending on in video, like who's 0:05:37.320 --> 0:05:38.400 done well without it? 0:05:38.680 --> 0:05:41.039 Oh, there's been products that have done that. 0:05:41.120 --> 0:05:43.960 Yeah, there's not many, but there was some interesting finding. 0:05:44.080 --> 0:05:46.919 So we looked at any ETF that's beat the SMP 0:05:47.560 --> 0:05:50.040 since this in video run with a very low to 0:05:50.080 --> 0:05:51.120 no weight within video. 0:05:51.760 --> 0:05:53.520 This is like winning the Tour de France in the 0:05:53.600 --> 0:05:54.720 nineties without doping. 0:05:56.120 --> 0:05:58.160 Did that happen? I don't think it actually happened. 0:05:57.880 --> 0:06:01.800 Though, That's what I'm saying. Yeah, yeah, that's how crazy. 0:06:01.839 --> 0:06:03.320 This is really impressive. 0:06:04.560 --> 0:06:06.640 I'm sure your you know, your listeners might be happy 0:06:06.640 --> 0:06:09.839 about this one. But Crypto was at the top, very little. 0:06:09.880 --> 0:06:12.600 I'm sure at one point maybe these worlds like converge, 0:06:13.080 --> 0:06:15.120 but they don't. A lot of the Crypto funds don't 0:06:15.120 --> 0:06:18.080 have in video exposure. The other one was and this 0:06:18.160 --> 0:06:20.479 is a very kind of like pro America story, but 0:06:20.560 --> 0:06:25.000 a lot of reshoring anything sort of American industrial revolution 0:06:25.640 --> 0:06:28.760 bringing manufacturing back had done really well, and then it 0:06:28.800 --> 0:06:33.400 was just a splattering of random countries. Japan, Greece, actually, 0:06:34.760 --> 0:06:37.239 India had all done really really well without Nvidia. 0:06:37.480 --> 0:06:38.760 Was it homebuilders on there too? 0:06:38.880 --> 0:06:39.680 Yeah? And homebuildings. 0:06:39.720 --> 0:06:42.880 That's interesting. Homebuilders beat in video beat, we'll beat the 0:06:42.880 --> 0:06:45.200 market okay, well out the video, yes. 0:06:45.080 --> 0:06:47.120 Yet, But it wasn't a lot of ETFs right now, 0:06:47.480 --> 0:06:49.920 just ninety six out of a universe of more than 0:06:49.920 --> 0:06:50.520 two thousand. 0:06:50.800 --> 0:06:53.600 It's hard, it's impressive, like Eric's point, like trying to it. 0:06:53.760 --> 0:06:55.080 So not many. 0:06:56.160 --> 0:06:58.080 But the reason this came up is there was that 0:06:58.160 --> 0:07:00.520 little correction about a month ago within d and they're 0:07:00.520 --> 0:07:03.000 sort of dragging the market down. So you know, it's 0:07:03.000 --> 0:07:04.960 a double edged sword, a lot of dependency on the 0:07:05.040 --> 0:07:07.080 video and it could go the other way if it does. 0:07:07.279 --> 0:07:09.520 And this is something David Cohene, who covers mutual funds 0:07:09.560 --> 0:07:12.760 and active managers for US found also is that large 0:07:12.760 --> 0:07:15.600 cap growth managers, if you outperformed, you probably had an 0:07:15.640 --> 0:07:18.480 overweight to Nvidia. If you underperformed, it was less. So 0:07:18.800 --> 0:07:21.800 it's funny that it's come down to Navidia plus maybe 0:07:21.840 --> 0:07:24.840 the mag seven. Do you overweight or underweight? That is 0:07:24.880 --> 0:07:28.960 the question, and who knows every time you've underweight because hey, 0:07:29.160 --> 0:07:32.440 could they really go up more? You've lost, but at 0:07:32.440 --> 0:07:35.800 some point you're going to overweight and lose. But when 0:07:35.840 --> 0:07:36.240 will that be? 0:07:37.240 --> 0:07:40.600 So another thing that you seem to have honed in on, 0:07:40.640 --> 0:07:44.320 and you mentioned it here is how Nvidia and passive interacts, 0:07:44.360 --> 0:07:47.679 because there's this, you know, ongoing debate about active and passive, 0:07:47.720 --> 0:07:51.480 but like who's actually buying in Vidia and ETFs that 0:07:51.960 --> 0:07:52.640 hold in video. 0:07:53.040 --> 0:07:56.360 We've also been working on broader pieces about like the 0:07:56.360 --> 0:08:00.200 effect that passive is having on the markets, right and 0:07:59.720 --> 0:08:01.680 I and Video is a really great example, like it 0:08:01.760 --> 0:08:03.840 just didn't decide that one day. Path was like, oh, 0:08:03.880 --> 0:08:06.400 let's make in video like the top stock in the world, 0:08:06.440 --> 0:08:08.520 and all of a sudden it moved up the rankings. 0:08:08.520 --> 0:08:12.160 Like that's still hedge funds and retail and institutional buyers 0:08:12.520 --> 0:08:14.760 decided they liked the stock, they bought it, and it 0:08:14.800 --> 0:08:16.880 moved up. But you have to remember eight or so 0:08:17.000 --> 0:08:19.160 years ago, and Video is like three hundred or so 0:08:19.200 --> 0:08:22.400 in the SMP, like it's ranking and it just moved up, right, 0:08:22.440 --> 0:08:25.280 and while Apple, Microsoft all stayed at the top, So 0:08:25.360 --> 0:08:28.200 it wasn't you know, this is still very much active 0:08:28.280 --> 0:08:31.320 setting the prices on these stocks. So I thought this 0:08:31.440 --> 0:08:34.760 was a really perfect example that passive is not the 0:08:34.760 --> 0:08:38.320 one deciding to move these stocks higher, artificially keeping these 0:08:38.360 --> 0:08:40.640 stocks higher. So I thought this was like a really 0:08:40.640 --> 0:08:44.240 really prime example of how interest in the stock in 0:08:44.360 --> 0:08:46.160 active buying is what's going to move it up, not 0:08:46.559 --> 0:08:47.520 just passive flows. 0:08:47.800 --> 0:08:49.760 Let me break that down a little more. So, you 0:08:49.760 --> 0:08:53.760 have an index. Active managers love Navidia, retail investors love Nvidia. 0:08:53.800 --> 0:08:55.720 They start buying it, the price goes up, the market 0:08:55.720 --> 0:08:58.840 cap goes up. The index, which has rules, is like, okay, 0:08:59.160 --> 0:09:02.160 this thing is now a couple trillion dollars. It should 0:09:02.160 --> 0:09:05.079 be second or third in the index. And it's just 0:09:05.160 --> 0:09:08.360 simply a market cap decision that is made by active 0:09:08.760 --> 0:09:11.400 on the flip what was it, General Motors or ge 0:09:11.520 --> 0:09:14.520 ge ge they hate so they started selling it and 0:09:14.559 --> 0:09:16.640 that went out of the top ten, top twenty. I 0:09:16.679 --> 0:09:19.480 think it's not one to fifty or something. So you know, 0:09:19.760 --> 0:09:25.679 active is it's ironic. Active controls the index waitings it's 0:09:25.800 --> 0:09:28.559 it's ironic, but it's true. And I also what I 0:09:28.600 --> 0:09:31.520 thought was interesting about yours was that those top stocks 0:09:32.000 --> 0:09:34.040 have been in the top ten for like seven years. 0:09:34.400 --> 0:09:38.520 Only na Video has like broken through that, like, I 0:09:38.520 --> 0:09:41.520 guess you'd call them like the studs, And it's hard 0:09:41.520 --> 0:09:44.280 to break through, let alone go to number two. It's 0:09:44.280 --> 0:09:47.120 easy to go from three seventy to like one fifty, 0:09:47.800 --> 0:09:50.200 but to get to two from three seventy is crazy. 0:09:51.120 --> 0:09:52.800 Yeah, if we see kind of the it's literally like 0:09:52.880 --> 0:09:55.440 a parabolic chart since there's no stock. I think that's 0:09:55.440 --> 0:09:57.679 ever sort of had a run from where it's been 0:09:57.760 --> 0:09:59.280 to where it is now. 0:10:00.720 --> 0:10:03.760 Emily, how is this born out in your reporting? Where 0:10:03.760 --> 0:10:05.960 are some ways that you're seeing the effects show up? 0:10:06.280 --> 0:10:09.760 Well, you can't really write a story about markets in 0:10:09.840 --> 0:10:13.240 twenty twenty four without mentioning in video. So every time 0:10:13.320 --> 0:10:18.960 we're writing about an ETF that's underperforming, the reason this 0:10:19.080 --> 0:10:21.520 year has typically been that it doesn't have in Vidia, 0:10:21.960 --> 0:10:24.800 and one that's outperforming the S and P five hundred 0:10:24.840 --> 0:10:29.600 probably has an outsized weight to some AI name, typically 0:10:29.679 --> 0:10:32.160 in Vidia. So that's kind of been what I've noticed 0:10:32.160 --> 0:10:35.240 as a reporter. You literally like can't not mention it 0:10:35.280 --> 0:10:37.920 and not think about it. And it has been interesting 0:10:37.960 --> 0:10:41.200 too when we talk about the passive versus active, because 0:10:41.679 --> 0:10:43.880 you know, I write a lot about like retail investors 0:10:43.880 --> 0:10:47.760 who just buy these low cost index funds, and you 0:10:47.840 --> 0:10:51.400 can pretty much get a really large weight to in Vidia, 0:10:51.600 --> 0:10:53.960 the most important stock of the year, if you just 0:10:54.080 --> 0:10:57.760 buy SPY or VU. I think a lot about like 0:10:57.800 --> 0:11:02.280 portfolio construction, Like why would you buy an AI ETF 0:11:02.280 --> 0:11:04.920 that has a big weight to Nvidia If you're already 0:11:04.960 --> 0:11:07.160 buying the S and P five hundred, you already have 0:11:07.280 --> 0:11:08.560 that big in video weight. 0:11:08.800 --> 0:11:11.600 Yeah, and it's interesting. I agree with you. I think 0:11:12.080 --> 0:11:15.440 the AI story is a little bigger. But personally that's 0:11:15.480 --> 0:11:17.720 what's great about NEDEX investing. You don't have to worry 0:11:17.800 --> 0:11:20.320 about whether you own something you do, so it's like 0:11:20.640 --> 0:11:22.400 you can just be like walk around, but you don't 0:11:22.480 --> 0:11:24.839 arn a lot of it now. One example I thought 0:11:24.920 --> 0:11:28.280 that is interesting is robotics and AI ETFs. So Robotics 0:11:28.320 --> 0:11:31.079 ETF's been around for like fifteen years and they had 0:11:31.080 --> 0:11:34.480 this huge run up, then they fell, people left, then 0:11:34.520 --> 0:11:37.760 actually came back, got some more money, but then they 0:11:37.760 --> 0:11:40.320 fell again, and I was like, Okay, I think these 0:11:40.360 --> 0:11:42.319 are just gonna die off. But then Navidia kind of 0:11:42.360 --> 0:11:44.600 gave them a third bite of the apple. And so 0:11:44.679 --> 0:11:47.640 I think I know from my personal experience, like people 0:11:47.679 --> 0:11:51.719 I know have asked me about AI investing, and you know, 0:11:51.840 --> 0:11:54.320 if you look at Chat, there are stocks outside of Navidia, 0:11:54.360 --> 0:11:57.880 but Navidia clearly is is the big winner here right now. 0:11:58.400 --> 0:12:01.120 And so the good news is most people already own it. 0:12:01.160 --> 0:12:03.600 But people are a little greedy that they want more. 0:12:03.720 --> 0:12:05.880 They want more, you know, to get deeper into AI 0:12:06.000 --> 0:12:09.199 and not miss anything and kick themselves later. So I 0:12:09.200 --> 0:12:12.040 think that's why Robotics ETFs got that rare third buddy 0:12:12.040 --> 0:12:13.679 at the Apple, which we also wrote about. 0:12:14.240 --> 0:12:17.280 Ethanasia is another thing that you wrote about that I 0:12:17.280 --> 0:12:20.040 think was an interesting insight that I hadn't considered before. 0:12:20.160 --> 0:12:24.599 Is the actual price of the ETF that holds in 0:12:24.679 --> 0:12:29.240 video compared to maybe the stock itself, right, So what 0:12:29.280 --> 0:12:29.839 does that look like? 0:12:29.920 --> 0:12:32.520 Yeah, we don't think about this that often, but it 0:12:32.559 --> 0:12:35.080 got up to like a thousand plus in video, did Yeah? 0:12:35.120 --> 0:12:37.199 And video got up to a thousand or so a share. 0:12:37.920 --> 0:12:40.720 And this just comes from text messages with my friends 0:12:40.720 --> 0:12:42.280 sometimes like oh, I don't want to buy in Vidia 0:12:42.280 --> 0:12:44.720 its one thousand dollars to share. It's expensive. So I 0:12:44.720 --> 0:12:47.280 think sometimes retail has this association that if it's a 0:12:47.320 --> 0:12:50.840 low price, handle it it's cheap, right, And then now 0:12:50.880 --> 0:12:53.360 you have all these single stock ETFs, and something you 0:12:53.360 --> 0:12:55.520 don't think about is they trade at a lower handle. 0:12:55.559 --> 0:12:58.000 They're twenty five to thirty dollars to share. Yes, they 0:12:58.080 --> 0:13:01.160 might be leveraged or whatnot. But I think before the 0:13:01.600 --> 0:13:04.160 in video split, a lot of people were using single 0:13:04.160 --> 0:13:07.079 stock ETFs just as like fractional trading in a way, 0:13:07.080 --> 0:13:09.320 while you can do it on the platforms, didn't really 0:13:09.360 --> 0:13:11.160 take off as much as just kind of buying a 0:13:11.160 --> 0:13:14.800 single stock ETF or even white people buy bond ETFs, right, 0:13:14.800 --> 0:13:16.480 you don't have to buy a full bonding, just buy 0:13:16.480 --> 0:13:17.959 a fractional share of a bond. So I think that's 0:13:18.000 --> 0:13:22.240 an unintended advantage of the ETF that doesn't get covered. 0:13:21.960 --> 0:13:25.960 Enough because instead of paying even a fractional share of 0:13:26.160 --> 0:13:29.400 say in video, there's this psychological effect that it's like, oh, 0:13:29.400 --> 0:13:33.000 that feels expensive versus I can buy something that's in 0:13:33.040 --> 0:13:36.000 an ETF wrapper in a fraction of the price totally. 0:13:36.120 --> 0:13:38.080 Would you rather have one share of the queues or 0:13:38.120 --> 0:13:42.199 like ten shares of QQM. I think psychologically that impacts people, 0:13:42.280 --> 0:13:45.600 so I have ten shares versus just one. I don't 0:13:45.600 --> 0:13:47.400 think it's the main reason why they would buy like 0:13:47.400 --> 0:13:49.360 a two x leverte in video. But I think it's 0:13:49.440 --> 0:13:51.120 it's something that is advantage. 0:13:51.160 --> 0:13:53.360 I don't know. You guys call yourself scientists and you're 0:13:53.400 --> 0:13:55.480 like talking about text messages with your friend. Is there 0:13:55.480 --> 0:13:57.760 any real research or analysis here? 0:13:58.280 --> 0:14:01.120 Yeah, I mean a lot of there's been jail D 0:14:01.640 --> 0:14:03.320 had a huge handle. I think it was like six 0:14:03.400 --> 0:14:06.600 hundred bucks or something. Don't ding me if I'm wrong, 0:14:06.600 --> 0:14:09.240 but it was high, and then the minime Gold came 0:14:09.280 --> 0:14:11.760 out and purposely made its handle what like forty bucks. 0:14:12.520 --> 0:14:14.320 So a lot of times when they do introduce a 0:14:14.360 --> 0:14:16.880 new fund, first of all, all the handles are typically low, 0:14:17.200 --> 0:14:19.920 but sometimes if somebody creates a minime of a large fund, 0:14:20.440 --> 0:14:23.840 they do lower the handle. Now, a large price handle 0:14:24.160 --> 0:14:27.520 can actually help institutions who sometimes pay per share, so 0:14:27.560 --> 0:14:30.200 they actually like to have the big handles. That's why 0:14:30.240 --> 0:14:34.120 there are these old stallwart kind of ETFs that keep 0:14:34.120 --> 0:14:36.640 the high handles and then the minimes with the lower handles. 0:14:36.680 --> 0:14:39.440 They can serve both worlds. But I'm with you. Retail 0:14:39.560 --> 0:14:42.720 definitely likes that this probably is benefiting the bitcoin ETFs 0:14:42.720 --> 0:14:45.120 to a degree. You can buy many shares of ibit, 0:14:45.440 --> 0:14:48.200 but to buy one bitcoin would be what fifty four 0:14:48.240 --> 0:14:50.720 thousand dollars, which is a lot. So I think people 0:14:50.760 --> 0:14:52.720 do like to have that satisfaction of owning more than 0:14:52.760 --> 0:14:53.240 one share. 0:14:53.480 --> 0:14:57.400 By the way, we've said it like thirty times already. 0:14:57.640 --> 0:15:00.760 How do you actually say Nvidia? That's how I say 0:15:00.760 --> 0:15:01.200 it video. 0:15:01.280 --> 0:15:04.560 I think I've said it wrong already. Katie Greyfield and 0:15:04.600 --> 0:15:08.360 Scarlett correct me all the time. It's n video, yeah, 0:15:08.400 --> 0:15:12.040 in video, but I tend to say in video like 0:15:12.360 --> 0:15:14.440 en video, like too quick or something. I don't know. 0:15:14.120 --> 0:15:20.080 I don't know. I've been correcting again, the the Eric 0:15:20.480 --> 0:15:23.760 or the real way the Eric in video Okay. They 0:15:23.760 --> 0:15:27.200 would say N video. Okay, it's almost like you're pronouncing 0:15:27.240 --> 0:15:30.520 this capital N. Then you're going video N video. 0:15:30.920 --> 0:15:33.680 Yeah, but I don't say it right. Yeah, no, I'm 0:15:33.720 --> 0:15:47.160 self conscious. Thanks for that. Welcome, okay, Eric. We talked 0:15:47.160 --> 0:15:49.920 about how in Nvidia felt like it almost showed up 0:15:50.120 --> 0:15:53.120 out of nowhere even though it was actually kicking around, 0:15:53.120 --> 0:15:55.400 but then it had this kind of super serge and 0:15:55.560 --> 0:15:58.240 has become such a you know, integral part of the market. 0:15:58.680 --> 0:16:02.840 What long termplations does this sound? Because one thing about 0:16:02.840 --> 0:16:06.040 this company, it seems like it has a pretty deep moat. 0:16:06.160 --> 0:16:07.800 There's not a whole lot of people who can do 0:16:07.840 --> 0:16:10.920 it in Nvidia does. So what implications does that have 0:16:11.000 --> 0:16:14.880 for the market indexes and ETFs as a whole. 0:16:14.920 --> 0:16:16.840 It's a good question, you know, It's something we're watching. 0:16:16.880 --> 0:16:19.800 I think the advent of single stock ETFs is really 0:16:19.840 --> 0:16:21.600 one thing because you take a stock that trades a 0:16:21.600 --> 0:16:24.080 lot and is huge, and you just add different ways 0:16:24.120 --> 0:16:26.760 to bet on it. Let's go short, let's go double long, 0:16:26.880 --> 0:16:29.400 let's add call options, and you're going to sell that. 0:16:30.080 --> 0:16:32.280 So I think anytime a stock gets hot or big, 0:16:32.400 --> 0:16:34.840 you're going to see an ecosystem build around it. The 0:16:34.840 --> 0:16:36.680 ETF industry is going to give you one hundred ways 0:16:36.680 --> 0:16:38.600 to play it, to bet on it, and that'll be 0:16:38.640 --> 0:16:41.960 one thing. Now. I don't know if Navidia is that unique. 0:16:41.960 --> 0:16:43.720 I mean apple Com went up and down, Tesla went 0:16:43.760 --> 0:16:47.560 up and down. I think the mag seven though, and 0:16:47.640 --> 0:16:51.360 these big megacaps are so big. I think like, if 0:16:51.360 --> 0:16:52.760 you take a couple of them, they're bigger than the 0:16:52.880 --> 0:16:56.120 entire stock market combined or something. Gina had some set. 0:16:56.160 --> 0:16:59.400 I think the top five stocks in the SMP are 0:16:59.440 --> 0:17:03.120 bigger than the the bottom two fifty. It's something ridiculous. 0:17:03.960 --> 0:17:06.719 I think that the indexes I don't know, like XLK. 0:17:06.880 --> 0:17:08.879 If I were it, I would make a change. I 0:17:08.920 --> 0:17:11.240 would not do twenty two to twenty two and then five. 0:17:11.960 --> 0:17:16.640 I would cascade that. So these megacaps I think does 0:17:16.760 --> 0:17:19.560 pose some questions for index makers. That said, as much 0:17:19.600 --> 0:17:22.879 as these index gets kind of like mocked on Twitter 0:17:22.960 --> 0:17:25.679 sometimes for like being like dumb and not having these rules, 0:17:26.320 --> 0:17:28.960 they still beat active because you can get them for free. 0:17:29.520 --> 0:17:33.359 The cost factor well overwhelmed some of these dumb quirks 0:17:33.359 --> 0:17:36.359 that you see. Yeah, those are all great points. 0:17:36.400 --> 0:17:38.800 I think there's a lot of ways to play in 0:17:38.960 --> 0:17:42.600 Vidia in AI companies. I think the next frontier is 0:17:42.600 --> 0:17:45.520 going to be using AI to pick stocks right or 0:17:45.600 --> 0:17:48.800 make make assy allocation decisions. There's a couple products out there, 0:17:49.920 --> 0:17:52.080 AI EQ which is like one driven by AI. But 0:17:52.560 --> 0:17:55.080 what's interesting about that it doesn't own in Vidia, Like 0:17:55.119 --> 0:17:56.360 how does AI not know. 0:17:56.440 --> 0:17:57.320 To own beck? 0:17:58.160 --> 0:18:00.760 Like bet on me, Yeah, so she didn't figure that out. 0:18:00.800 --> 0:18:02.720 But anyways, I think maybe the next frontier might be 0:18:02.760 --> 0:18:06.879 AI powered ETFs. Why it doesn't it own Yeah, I 0:18:06.880 --> 0:18:09.160 don't know, I gotta ask you algorithm. 0:18:09.240 --> 0:18:10.919 Yeah, maybe just doesn't think. 0:18:10.920 --> 0:18:13.960 They did come out with the one IBM Watson picking stocks, 0:18:14.520 --> 0:18:17.840 which is aiish I guess, And it didn't do that well. 0:18:18.160 --> 0:18:21.200 It traded too much. The turnover was intense, and yeah, 0:18:21.200 --> 0:18:23.520 I think it returned half the S and P I think. 0:18:23.720 --> 0:18:26.879 I think you're right. AI will be used to pick stocks, 0:18:26.880 --> 0:18:28.520 but it's going to run the same problems human have, 0:18:28.560 --> 0:18:31.199 which is when do you buy and sell how much 0:18:31.240 --> 0:18:33.440 of your costs. I don't know if it'll be able 0:18:33.520 --> 0:18:34.959 to AI out of that. 0:18:35.960 --> 0:18:40.520 I think of that meme with DJ Khaled when he says, congratulations, 0:18:40.520 --> 0:18:43.720 you played yourself, and that's kind of like when an 0:18:43.920 --> 0:18:49.040 AI powered ETF is underperforming actual AI stocks. 0:18:49.440 --> 0:18:53.120 That's good, that's pretty good. Yeah, it's it's because they're 0:18:54.400 --> 0:18:56.520 not to pick on the IBM Watson one. But they 0:18:56.520 --> 0:18:58.240 were like when they came out, they came out hard 0:18:58.240 --> 0:19:03.119 with the marketing. They're like, we can analyze this, you know, 0:19:03.680 --> 0:19:08.400 eight million pages of research that eight thousand analysts can 0:19:08.400 --> 0:19:12.800 do in eight seconds, like it was something so crazy 0:19:14.200 --> 0:19:18.399 and then you know, but my theory is the machine learning, 0:19:18.880 --> 0:19:20.760 the computer is going to end up going wait a second, 0:19:20.760 --> 0:19:23.560 It's going to end up into into getting into bogol land. 0:19:23.640 --> 0:19:26.000 It's going to go, wait, what if we trade less 0:19:26.160 --> 0:19:28.920 and lower our fees, that's how we win. And it's 0:19:28.920 --> 0:19:32.000 going to end up the AI AI parwerd etff it 0:19:32.040 --> 0:19:34.919 has a machine learning will end up being voo. 0:19:37.440 --> 0:19:41.280 All right. On that note, Eimmling Athanasius, thanks for joining 0:19:41.320 --> 0:19:48.320 us on Trillions, Thanks for having me, Thank you, Thanks 0:19:48.400 --> 0:19:51.280 for listening to Trillions until next time. You can find 0:19:51.359 --> 0:19:55.960 us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, 0:19:56.600 --> 0:19:59.040