WEBVTT - Black Hat vs White Hat ETFs 0:00:06.000 --> 0:00:09.160 Tis, I'm Joel Webber and I'm Eric Belchunis. 0:00:12.200 --> 0:00:13.399 What are we gonna talk about today? 0:00:13.760 --> 0:00:15.560 We wrote a note I think it was like two 0:00:15.680 --> 0:00:20.000 or three weeks ago, no industry for old analysts because 0:00:20.360 --> 0:00:22.720 the products that are coming out are getting crazier and 0:00:22.760 --> 0:00:26.400 crazier and more. They use a ton of derivatives. Now 0:00:26.760 --> 0:00:30.040 it is a very different industry in terms of new products. 0:00:30.120 --> 0:00:32.120 Now the flows still go to very vanilla, but a 0:00:32.159 --> 0:00:34.320 lot of the new stuff is getting pretty wild, and 0:00:34.720 --> 0:00:37.519 there's been some of the old dogs in the industry 0:00:37.520 --> 0:00:40.760 have been like, Hey, I don't really like this. I 0:00:40.760 --> 0:00:43.960 don't like where this is going. Athanasios on my team 0:00:44.040 --> 0:00:48.160 probably plays that role. And Dave Nadig, who I really 0:00:48.240 --> 0:00:50.000 was one of one of my biggest influences from the 0:00:50.000 --> 0:00:52.559 Index Universe days back in the back in like the 0:00:52.600 --> 0:00:55.360 two thousands, he wrote a substack called trust in a 0:00:55.400 --> 0:00:57.720 Black Hat World about this, and I thought we should 0:00:57.760 --> 0:01:00.960 really explore this idea of all of these new products 0:01:00.960 --> 0:01:04.080 being thrown at investors. I think I am more on 0:01:04.120 --> 0:01:07.039 the libertarian side here, but I also understand the arguments 0:01:07.080 --> 0:01:10.759 that some of these you know, products are not good 0:01:10.760 --> 0:01:13.080 for people, and so I thought we should mix that 0:01:13.200 --> 0:01:14.480 up right now and just get it all out in 0:01:14.480 --> 0:01:14.840 the open. 0:01:15.240 --> 0:01:18.399 So joining us on this episode Dave Nodding of Natti 0:01:18.760 --> 0:01:22.240 dot Com. He's taken to Substack. He's an ETF expert 0:01:22.280 --> 0:01:30.000 and veteran and also Wildona Hirich, processor reporter with Bloomberg News. 0:01:29.360 --> 0:01:36.039 This time on Trillions Trust. Dave Fildona, Welcome to Trillions. 0:01:35.959 --> 0:01:38.440 Thanks for having me, Thanks for having us, Uh, Dave, 0:01:38.640 --> 0:01:40.839 your paper Trust in a black hat world. 0:01:41.000 --> 0:01:43.160 Where did the idea come from? 0:01:43.480 --> 0:01:46.480 Well, look, I think it's very clear that the regulatory 0:01:46.800 --> 0:01:49.920 environment is going to be different going forward than it 0:01:49.960 --> 0:01:52.320 has been for the last at least oh, I don't know, 0:01:52.360 --> 0:01:52.840 forty years. 0:01:52.840 --> 0:01:54.920 It's saying more than regulatory, it's everything. 0:01:55.800 --> 0:01:57.560 Well, yeah, but I'm going to I'm trying to I'm 0:01:57.560 --> 0:01:59.080 trying to keep it narrow so that we don't get 0:01:59.120 --> 0:02:02.040 into a big discuss about lots of things. But just 0:02:02.080 --> 0:02:06.320 from the perspective of a financial advisor and investor buying 0:02:06.360 --> 0:02:09.920 products off the shelf, the world you're buying those products 0:02:09.960 --> 0:02:13.760 and is different. Right, We're clearly working towards a world 0:02:13.760 --> 0:02:16.160 that is more corporate friendly than it has been in 0:02:16.160 --> 0:02:19.040 the past, that is more deregulated than it has been 0:02:19.040 --> 0:02:21.120 in the past, and if we look at things like 0:02:21.200 --> 0:02:24.640 product launches and what's approved and how they're sold, the 0:02:24.800 --> 0:02:28.040 guardrails that have protected investors for a long time are 0:02:28.120 --> 0:02:30.720 being pulled down as we speak. We can argue about 0:02:30.720 --> 0:02:33.120 whether it's good or bad, and that's not really the conversation. 0:02:33.240 --> 0:02:35.000 I think that's important. The question is what do you 0:02:35.080 --> 0:02:38.040 do about it? And to me, the answer is you 0:02:38.160 --> 0:02:41.239 need to be much more careful about both what you're 0:02:41.240 --> 0:02:44.440 buying and who you're buying it from then we have 0:02:44.560 --> 0:02:47.000 been in the past. So it's not just that this 0:02:47.160 --> 0:02:49.480 kind of product or that kind of product is good 0:02:49.600 --> 0:02:53.280 or bad. It's can you trust these kinds of players 0:02:53.639 --> 0:02:56.799 to be on your side when something goes wrong, Like 0:02:56.840 --> 0:02:58.840 when the market's going up every year and everything's great, 0:02:58.919 --> 0:03:01.360 nobody cares. This is all about what happens when we 0:03:01.400 --> 0:03:03.520 have a down twenty percent day, or you have a 0:03:03.520 --> 0:03:06.480 broken trade, or something breaks in the derivatives markets. 0:03:06.960 --> 0:03:09.799 Everything that you've said is so saying, Eric, how could 0:03:09.840 --> 0:03:10.960 you take issue with any of that? 0:03:11.400 --> 0:03:13.720 Well, well, of course we got to break this down. 0:03:13.760 --> 0:03:16.840 Okay, when with the you like saw him tweet this. 0:03:18.000 --> 0:03:20.520 Well he's been ranting about it for a couple months 0:03:20.520 --> 0:03:23.720 on LinkedIn mostly and then the paper I think brought 0:03:23.760 --> 0:03:25.400 a lot of that together where I could read it 0:03:25.440 --> 0:03:26.120 all in one spot. 0:03:26.200 --> 0:03:27.679 Yeah, but he's on alone again. 0:03:27.720 --> 0:03:31.560 Athanastios is very similar, and I'm sure they represent a 0:03:31.639 --> 0:03:34.600 portion of people who all feel this way. So I 0:03:34.600 --> 0:03:36.360 think we just have to go through some of these 0:03:36.680 --> 0:03:38.960 new products. Let's start with the hot topic of today, 0:03:38.960 --> 0:03:41.920 which is putting private credit in private equity into ETFs. 0:03:42.360 --> 0:03:45.000 You bring up XOVR, which is an ETF that recently 0:03:45.080 --> 0:03:48.840 changed strategies to include some private equity and it added SpaceX, 0:03:49.400 --> 0:03:53.600 and SpaceX I think is a ten percent holding. Kathy 0:03:53.640 --> 0:03:55.520 Wood has an Interval Fund, which people say is a 0:03:55.520 --> 0:03:59.360 better form, for a better format to deliver private equity 0:03:59.360 --> 0:04:01.280 in where you can only get out once in a while, 0:04:01.360 --> 0:04:03.960 but nobody cares. I mean that fund has almost nothing 0:04:03.960 --> 0:04:07.440 and it's Kathy Wood. Here comes this new fund, XOVR, 0:04:07.840 --> 0:04:10.680 and people as soon as it puts SpaceX, the flows came. 0:04:11.280 --> 0:04:13.720 And it just seems to me the market wants private 0:04:13.720 --> 0:04:16.000 equity in the ETF, even if it's not the perfect 0:04:16.000 --> 0:04:18.120 way and comes with a bunch of public equities. And 0:04:18.200 --> 0:04:21.599 again it's pretty small. But what's the problem here? 0:04:21.720 --> 0:04:25.159 Essentially, So, the problem with XOVR is not that it's 0:04:25.200 --> 0:04:28.200 doing something wrong right, it's using the same fifteen percent 0:04:28.200 --> 0:04:30.479 the liquid bucket that every fund gets a chance to 0:04:30.520 --> 0:04:34.320 own the problem is that putting SpaceX in as the 0:04:34.400 --> 0:04:38.480 point to own the fund is both disingenuous. The most 0:04:38.480 --> 0:04:41.000 you're gonna get is ten percent exposure, and that exposure 0:04:41.040 --> 0:04:43.520 could go down significantly if you're part of a big 0:04:43.640 --> 0:04:46.440 rash of money coming in. So you're selling a fund 0:04:46.480 --> 0:04:50.480 based on maybe ten percent of its exposure, and then 0:04:50.680 --> 0:04:54.120 the very thing that you're investing in is problematic to price. 0:04:54.480 --> 0:04:57.440 They price this at one eighty five in December, it's 0:04:57.440 --> 0:05:00.640 still priced at one eighty five today. You can go 0:05:00.720 --> 0:05:03.320 on Forge or any number of these sort of alternative 0:05:03.320 --> 0:05:06.280 platforms like Karta where you could trade SpaceX stock as 0:05:06.279 --> 0:05:09.359 an individual investor, and it's trading anywhere from one hundred 0:05:09.360 --> 0:05:12.279 and forty to two hundred and forty. So there's an 0:05:12.480 --> 0:05:16.640 enormous band around what the SpaceX position is actually worth. 0:05:17.680 --> 0:05:21.719 I think there's real transparency issues, among other things. These 0:05:21.720 --> 0:05:25.239 aren't even indirectly investing in SpaceX, they're investing in another 0:05:25.360 --> 0:05:28.480 vehicle called an SPV, which or may or may not 0:05:28.560 --> 0:05:31.120 have fees on it. They will not tell us whether 0:05:31.240 --> 0:05:34.520 or not that position is being eroded by a continuous 0:05:34.600 --> 0:05:37.560 feed drain. So that lack of transparency and the lack 0:05:37.600 --> 0:05:41.719 of ability to price it accurately means that there's perverse incentives. 0:05:41.720 --> 0:05:44.719 They're only ever gonna mark this up because they get 0:05:44.760 --> 0:05:46.200 paid more when they mark it up. 0:05:46.279 --> 0:05:48.200 I'm with Dave here, this is like a game of 0:05:48.279 --> 0:05:51.400 telephone that's gotten really distorted with Bildana. What do you think? 0:05:52.160 --> 0:05:55.120 I think what we're all getting at is this good 0:05:55.160 --> 0:05:55.920 for the investor? 0:05:56.040 --> 0:05:56.240 Right? 0:05:56.880 --> 0:05:59.200 So that's like the crux of the question is a 0:05:59.200 --> 0:06:03.359 good or bad I've spoken with a number of issuers 0:06:03.400 --> 0:06:08.000 recently who have, for example, single stock levered products, and 0:06:08.080 --> 0:06:09.960 I asked them, like, what if in a year you 0:06:10.040 --> 0:06:13.000 look back and one of your products has just done 0:06:13.240 --> 0:06:17.800 just really terribly and people are like retail investors are 0:06:17.839 --> 0:06:21.359 calling you and complaining or have lost tremendous amounts of money, Like, 0:06:21.440 --> 0:06:25.520 do you have a sense of guilt or I don't know, 0:06:25.560 --> 0:06:28.359 some sort of sense that maybe things should have been 0:06:28.440 --> 0:06:31.200 clearer for the end investor on how risky some of 0:06:31.240 --> 0:06:34.599 these things are and all of them to a t said, 0:06:34.920 --> 0:06:37.600 this is America, Like people are free to buy what 0:06:37.640 --> 0:06:41.560 they want and if it means losing money, sometimes that's 0:06:41.839 --> 0:06:44.760 just what happens. That's the market called risk. 0:06:51.920 --> 0:06:55.360 Your point isn't the illiquidity, it's more of what's it 0:06:55.480 --> 0:06:59.000 being priced at every day, almost like there's some you know, 0:06:59.040 --> 0:07:01.640 there's been some mets back in the day that held 0:07:01.680 --> 0:07:04.680 stuff that didn't trade, and even bond ETFs in a crisis. 0:07:04.760 --> 0:07:07.359 Sometimes those bonds are stale, they don't have pricing. So 0:07:08.120 --> 0:07:11.679 what if they marked it more often? Would that solve 0:07:11.720 --> 0:07:12.239 your problem? 0:07:13.120 --> 0:07:16.400 I mean I suggested that they go interact with these 0:07:16.440 --> 0:07:20.440 platforms on like say a weekly basis like put yourself 0:07:20.480 --> 0:07:22.680 out there that you'll trade ten basis points of your 0:07:22.720 --> 0:07:25.840 SpaceX position in or out. Once a week you'll set 0:07:25.840 --> 0:07:28.560 a new mark that's based on live trading. That would 0:07:28.600 --> 0:07:31.320 be great, that would be transparency, that would be an 0:07:31.440 --> 0:07:35.760 actual value add to the market. This is the opposite 0:07:35.800 --> 0:07:37.880 of that. Not only are they not doing that, they're 0:07:37.920 --> 0:07:42.600 obscuring the very way they're acquiring these shares. That's the issue. 0:07:42.640 --> 0:07:45.400 It's not that these securities can't and shouldn't be held 0:07:45.440 --> 0:07:48.720 by anybody I'm not against SpaceX, I'm against the way 0:07:48.760 --> 0:07:49.000 this is. 0:07:49.240 --> 0:07:51.520 Yeah, you know what, I agree with him on that detail. 0:07:51.600 --> 0:07:54.440 I think XOVR should just market. And this is what 0:07:54.440 --> 0:07:57.320 Cliff Asten is brought up actually with the State Street one, 0:07:57.320 --> 0:07:59.720 which is going to hold private credit, which is if 0:07:59.720 --> 0:08:02.440 they start marking it, this could get interesting because a 0:08:02.480 --> 0:08:05.280 lot of people buy privates in the institutional world because 0:08:05.280 --> 0:08:08.000 they don't move. They like that NAB never moving because 0:08:08.000 --> 0:08:10.720 it lowers volatility. They call it volatility laundering, or at 0:08:10.760 --> 0:08:14.560 least Cliff Astnest does so. In essence, by not marking it, 0:08:14.560 --> 0:08:17.480 you're kind of getting that institutional lowvall. But I think 0:08:17.480 --> 0:08:20.120 they should market, and why not. You're right, these other 0:08:20.120 --> 0:08:23.920 platforms have. Okay, so I'm half with Dave there. 0:08:24.000 --> 0:08:27.560 Well you're being a purist here too, Dave, Right, Like, 0:08:27.760 --> 0:08:29.880 you have this thing called it an ETF. It's got 0:08:29.880 --> 0:08:33.720 this rapper that has superpowers. One of those things that 0:08:34.040 --> 0:08:37.000 investors that come to expect has been transparency. And if 0:08:37.040 --> 0:08:39.400 you're not being fully transparent in that rapper, it's like, well, 0:08:39.440 --> 0:08:42.080 you're doing something that's against the will of the ETF. 0:08:42.800 --> 0:08:45.160 Right, And I'm not arguing that these products should be 0:08:45.200 --> 0:08:48.400 all shut down. What I'm saying is that the ETF 0:08:48.480 --> 0:08:52.600 market historically has had the characteristic of being a white hat, 0:08:53.120 --> 0:08:56.160 generally being on investor's side, and you had to be 0:08:56.440 --> 0:08:58.520 said to do your due diligence, but you could count 0:08:58.520 --> 0:09:01.480 on the fact that as an industry, ETFs were largely 0:09:01.520 --> 0:09:05.480 on investor's side. With the current raft of ETFs, I 0:09:05.520 --> 0:09:08.160 don't think you can make that claim. I think XOVR 0:09:08.400 --> 0:09:11.320 is on er share side and will always be on 0:09:11.679 --> 0:09:12.520 er share side. 0:09:12.559 --> 0:09:14.800 Well, you you already did one thing, which is you 0:09:14.920 --> 0:09:16.240 changed Eric's mind slightly. 0:09:16.440 --> 0:09:18.840 So that's a win. Yeah, you eat out a win already. 0:09:18.880 --> 0:09:20.520 So you want to keep going? Do you want to 0:09:20.600 --> 0:09:21.440 keep playing this game? 0:09:21.559 --> 0:09:25.319 Yeah? So let's look at the private credit ETF, the 0:09:25.360 --> 0:09:28.520 Share Street Apollo private product credit ETF that I won't 0:09:28.520 --> 0:09:30.880 go into the sec versus State Street shenanigans. 0:09:30.880 --> 0:09:32.560 That happened, but that's a little wonky. 0:09:32.600 --> 0:09:35.839 But this market, this product is out and according to 0:09:35.840 --> 0:09:38.520 State Street, they hold twenty one percent in privates, which 0:09:38.600 --> 0:09:41.000 goes above that fifteen percent threshold. 0:09:42.040 --> 0:09:43.280 Do you have issues with that? 0:09:43.559 --> 0:09:47.439 And State Treat obviously launched the ETF industry, and are 0:09:47.480 --> 0:09:49.679 we like, how do you deal with something like that. 0:09:49.720 --> 0:09:52.120 If you think that product is black hat but the 0:09:52.120 --> 0:09:54.599 issuer's white like, what's your take on? 0:09:54.760 --> 0:09:57.360 So again, I think there are good ways to do this, 0:09:57.440 --> 0:09:59.760 and they are bad ways to do this. As structured, 0:10:00.320 --> 0:10:04.280 I think this Apollo State Street product is problematic. The 0:10:04.320 --> 0:10:07.479 only they what they hold right now is irrelevant by prospectives. 0:10:07.520 --> 0:10:09.920 They could have thirty five percent in the Polo bonds 0:10:09.960 --> 0:10:13.600 and another fifteen percent in other liquid stuff, so half 0:10:13.640 --> 0:10:16.439 of this fund could be in what we would all 0:10:16.520 --> 0:10:20.640 rationally call illiquid private credit. That thirty five percent bucket 0:10:20.679 --> 0:10:23.920 that Apollo is going to be responsible for. The only 0:10:24.000 --> 0:10:26.480 reason we know anything about how that's going to work 0:10:26.559 --> 0:10:29.160 is because the SEC forced their hand on a bunch 0:10:29.160 --> 0:10:33.400 of disclosure they chose to leave out of their formal documents. 0:10:33.440 --> 0:10:36.240 So they're not in the SAI, they're not in the prospectus, 0:10:36.480 --> 0:10:38.440 and they're critical right, So what are they on the 0:10:38.440 --> 0:10:42.319 hook for providing a bid every fifteen minutes for up 0:10:42.360 --> 0:10:45.839 to twenty five percent of the portfolio on a given day. Now, 0:10:45.920 --> 0:10:48.480 maybe that's the right number, maybe it's not, but we 0:10:48.559 --> 0:10:50.920 have no way of knowing because they didn't show us 0:10:50.920 --> 0:10:53.920 a liquidity study. It's not like what Bitwise did with bitcoin, 0:10:54.200 --> 0:10:57.679 where they published acres of research to get everybody comfortable. 0:10:58.080 --> 0:11:01.319 This is completely just trust us. We believe twenty five 0:11:01.320 --> 0:11:04.640 percent is enough. We believe these every fifteen minute bids 0:11:04.679 --> 0:11:07.120 are enough, and that's what you have to count on. 0:11:07.240 --> 0:11:09.640 And if the fund goes from one hundred billion dollars 0:11:09.640 --> 0:11:11.960 to fifty billion dollars in one day and they have 0:11:12.040 --> 0:11:15.680 to unload half the portfolio, oh well, well it seems 0:11:15.720 --> 0:11:17.600 like this is setting us up to be right back 0:11:17.640 --> 0:11:18.440 in third avenue. 0:11:18.600 --> 0:11:18.840 Yeah. 0:11:18.880 --> 0:11:20.679 Well, hold on a second, though. But here's the thing 0:11:20.679 --> 0:11:21.439 about ETFs. 0:11:21.559 --> 0:11:24.760 Even if we had that worst case scenario and only 0:11:24.760 --> 0:11:27.120 twenty five percent of the private credit, which again is 0:11:27.120 --> 0:11:29.640 only thirty five percent of the portfolio at max, so 0:11:29.679 --> 0:11:33.000 you're looking at maybe a slice of the portfolio is illiquid, frozen, 0:11:34.000 --> 0:11:36.400 the market makers of this world will still make a 0:11:36.480 --> 0:11:38.720 market in it. They'll just stretch out the arbitrage band, 0:11:38.920 --> 0:11:41.240 so it'll trade at a premium or discount, probably a discount. 0:11:41.840 --> 0:11:43.840 And you know J ANDK traded a discount at eight 0:11:43.880 --> 0:11:46.800 percent during the financial crisis for the same reason. So 0:11:46.960 --> 0:11:50.439 I just think that investors would rather have all that 0:11:50.600 --> 0:11:53.640 jazz and have the ETF turn into a semi closed 0:11:53.760 --> 0:11:57.800 end fund in those situations, then have it in a 0:11:57.840 --> 0:12:00.160 more proper wrapper like an interval fund or e a 0:12:00.200 --> 0:12:02.280 mutual fund or a hedge fund which they have no 0:12:02.400 --> 0:12:02.840 trust in. 0:12:03.720 --> 0:12:05.400 But do you know that these funds are just going 0:12:05.480 --> 0:12:06.439 to be sold on yield? 0:12:06.720 --> 0:12:06.840 Right? 0:12:06.920 --> 0:12:09.600 That's the only way this fund is being sold is hey, 0:12:09.640 --> 0:12:13.120 mister financial advisor, buy our private credit ETF because you'll 0:12:13.120 --> 0:12:15.520 get better yields for the same credit quality as you 0:12:15.559 --> 0:12:18.880 will get somewhere else. Nobody is saying we want privates 0:12:18.920 --> 0:12:22.640 because it's structurally different. They just want the better yield. 0:12:22.960 --> 0:12:25.920 So they're not buying this as a long term speculative play. 0:12:26.040 --> 0:12:28.640 They're buying yield. And when that yield locks up, as 0:12:28.679 --> 0:12:31.199 you said, I think that's going to be a problem. Again, 0:12:31.400 --> 0:12:33.800 not saying the products should go away, I'm saying advisors 0:12:33.840 --> 0:12:37.280 need to ask themselves. Do you trust Apollo to be 0:12:37.440 --> 0:12:40.359 on your side when we have a credit crisis? 0:12:40.679 --> 0:12:41.280 I don't. 0:12:41.440 --> 0:12:43.160 They're going to be very much on one side. 0:12:43.200 --> 0:12:46.439 Well follows, But do you trust State Street? State Street? 0:12:46.480 --> 0:12:48.240 Now this is an active fund. If it was passive, 0:12:48.240 --> 0:12:50.920 I would agree with you. But State Street has PMS 0:12:51.080 --> 0:12:53.240 and I talk to them. They're like, we're out there 0:12:53.240 --> 0:12:55.400 trying to find good deals, and they in the perspectives 0:12:55.440 --> 0:12:57.440 they can go beyond Apollo if they need to. 0:12:57.880 --> 0:12:59.160 So I think, in in. 0:12:59.120 --> 0:13:01.360 As essence, you are giving your trust to stay streat 0:13:01.600 --> 0:13:04.280 as an active manager to work all this out. And 0:13:04.320 --> 0:13:06.559 I think, I don't know, maybe it's a good guinea pig, 0:13:06.640 --> 0:13:07.720 like we'll see how this works. 0:13:07.720 --> 0:13:10.520 It's only a portion of privates. I don't know. I 0:13:10.600 --> 0:13:12.080 this time, I'm not convinced by Dave. 0:13:12.320 --> 0:13:14.640 Here's the positive coming back. I think it's going to 0:13:14.679 --> 0:13:16.520 be great that we get to see how they're marking 0:13:16.520 --> 0:13:18.880 these bonds every day. It's too bad that you have 0:13:18.920 --> 0:13:21.000 to have like a pH d in Excel to actually 0:13:21.000 --> 0:13:23.480 track it day to day. But we are getting I mean, 0:13:23.520 --> 0:13:27.040 already we're getting interesting pricing on private credit by digging 0:13:27.080 --> 0:13:29.160 into the fund, but you're gonna have to track it 0:13:29.200 --> 0:13:31.079 by hand because half the stuff doesn't have an icon. 0:13:33.800 --> 0:13:35.760 Bill Donald, let's send these guys back to the corners. 0:13:35.800 --> 0:13:36.439 Get some water. 0:13:38.240 --> 0:13:40.360 I have to say, this is so fun to just 0:13:40.440 --> 0:13:41.200 sit here and listen. 0:13:41.760 --> 0:13:43.560 I'm glad that we could join. 0:13:43.679 --> 0:13:44.880 Can we do this every week? 0:13:45.679 --> 0:13:46.720 Are you ready for Round three? 0:13:46.840 --> 0:13:47.680 Glad that we could join. 0:13:47.840 --> 0:13:50.400 Yes, hold on, well, just on the private credit stuff 0:13:50.440 --> 0:13:54.360 like what if anything jumps out at you and begs 0:13:54.400 --> 0:13:56.200 for a little bit more finessing. 0:13:56.320 --> 0:14:00.240 So it's early days still, but like super early days launch. 0:14:00.600 --> 0:14:04.320 But one way to maybe track the appetite from people 0:14:04.360 --> 0:14:07.720 for this is obviously via flows, and they are not 0:14:08.840 --> 0:14:12.760 there are no, they're non existent. Yeah so far unless 0:14:12.760 --> 0:14:16.200 there's some huge delay in the data coming out, but 0:14:16.360 --> 0:14:17.520 there hasn't been much going on. 0:14:17.559 --> 0:14:19.840 The volume's ok, eight million the first year. It's not bad. 0:14:20.200 --> 0:14:22.760 It's pretty good actually, and then the assets were fifty 0:14:22.840 --> 0:14:23.480 so they had seed. 0:14:23.920 --> 0:14:25.920 But yeah, you're right. Also it's credit. 0:14:26.520 --> 0:14:29.280 I just think xov are getting private equity would be 0:14:29.280 --> 0:14:31.920 a bigger rockstar launch. This is still bonds and it's 0:14:31.920 --> 0:14:33.360 still more boring and slow moving. 0:14:33.480 --> 0:14:34.640 Hey, do you need a pep tacotol? 0:14:35.000 --> 0:14:36.720 No, I'm good, I'm ready to go. 0:14:36.800 --> 0:14:38.400 Yeah, take the towel off. You're going back in. 0:14:40.440 --> 0:14:41.520 I'm like Matt Foley. 0:14:41.520 --> 0:14:43.840 I've been down the basement eating no dos for the 0:14:43.880 --> 0:14:44.800 past five hours. 0:14:46.360 --> 0:14:47.760 Okay, get back in there. 0:14:47.800 --> 0:14:51.360 You don't take any ribshots, okay, okay, okay, ready. So 0:14:51.440 --> 0:14:55.560 here you have this thing called leverage ets for chaos goblins. 0:14:57.360 --> 0:15:00.280 So what's a chaos goblin. Yeah, that's a great visual. 0:15:00.360 --> 0:15:02.440 By the way, that sounds like a good band name. 0:15:02.480 --> 0:15:03.880 I thought pretty much. 0:15:04.200 --> 0:15:07.080 Jim Kramer. Jim Kramer is the ultimate chaos goblin. Right, 0:15:07.120 --> 0:15:10.000 He's just gonna say whatever he's gonna say. The more 0:15:10.120 --> 0:15:12.560 chaotic it is, the better. And look, a lot of 0:15:12.600 --> 0:15:15.000 a lot of Wall Street finance, a lot of Wall 0:15:15.040 --> 0:15:18.800 Street medias are just chaos goblins. And that's largely what 0:15:19.280 --> 0:15:23.320 a lot of these sort of crazy like ninety percent 0:15:23.480 --> 0:15:27.040 yield on bitcoin type products are. Four They're not actually 0:15:27.080 --> 0:15:31.760 particularly useful. They are headline grabbing, hoping to catch people 0:15:31.880 --> 0:15:34.840 unawares so that they can, you know, in the case 0:15:34.880 --> 0:15:36.560 of like the yield Max stuff, just get all their 0:15:36.560 --> 0:15:39.560 money back and wash it through their return of capital 0:15:40.040 --> 0:15:41.360 gains situation. 0:15:41.680 --> 0:15:44.720 Okay, well there's two things. There's leverage ETFs and there's 0:15:44.760 --> 0:15:46.800 yield max. Let's go yield max first, since you brought 0:15:46.800 --> 0:15:49.200 it up. Okay, yield max is basically like I was 0:15:49.320 --> 0:15:51.600 the Money Show, which is all retail like a lot 0:15:51.600 --> 0:15:54.360 of like older investors, and I spoke at the inside 0:15:54.360 --> 0:15:55.960 the booth room, which is like I feel like a 0:15:56.000 --> 0:15:58.280 carnival barkroom up there, trying to get people attracted to 0:15:58.280 --> 0:15:59.160 my whole thing. 0:15:59.400 --> 0:16:01.800 It's good practice ground to speaking honestly. 0:16:02.080 --> 0:16:05.800 So I'm going over like a presentation called etf Hot 0:16:05.840 --> 0:16:08.480 Sauce the pros and cons, and people are like, there's 0:16:08.520 --> 0:16:11.120 like twelve people there. I start going over yield Max 0:16:11.160 --> 0:16:13.280 and I show these yields and it's like ninety eighty 0:16:13.320 --> 0:16:16.600 one hundred percent, and like the people start coming over. 0:16:16.760 --> 0:16:20.000 I can see jewel. My audience doubled. It was like 0:16:20.040 --> 0:16:23.400 Pavlovian dogs. I was like ringing some bell and I 0:16:23.440 --> 0:16:26.280 was like wow, And I said, wait, guys, all you're 0:16:26.320 --> 0:16:29.520 really doing is giving your total return and taking it 0:16:29.560 --> 0:16:31.840 back in the form of yield. It's you're almost like 0:16:31.920 --> 0:16:33.800 taking from one hand and giving it to the other. 0:16:34.520 --> 0:16:37.080 I don't think they care. I think I just think, 0:16:37.120 --> 0:16:38.600 you know we have this, you know that Journey song. 0:16:38.640 --> 0:16:41.400 Anyway you want it. They some corporations have taken on 0:16:41.440 --> 0:16:43.760 that as a commercial. Any way you want it, that's 0:16:43.800 --> 0:16:45.960 the way we'll get it. I think, if if you 0:16:45.960 --> 0:16:48.240 want your return in the form of yield through these 0:16:48.560 --> 0:16:51.080 right out of the money options writing strategies, well we'll 0:16:51.080 --> 0:16:52.640 give it to you that way, If that makes you 0:16:52.640 --> 0:16:54.600 feel good, you get to all in the income. I 0:16:54.640 --> 0:16:56.840 don't know that's how I see it. I agree with you. 0:16:57.040 --> 0:16:58.800 I wouldn't tell my mom to invest in these. But 0:16:59.120 --> 0:17:02.840 if somebody was just love seeing that income versus going 0:17:02.880 --> 0:17:05.160 and seeing total return, is that Is there any harm 0:17:05.240 --> 0:17:05.439 in that? 0:17:05.520 --> 0:17:08.119 Also, Dave, did he just admit to being a chaos goblin? 0:17:08.880 --> 0:17:14.399 I think so. Look the again, nobody's doing anything illegal here. 0:17:14.680 --> 0:17:17.159 This to me is about as an advisor, where are 0:17:17.200 --> 0:17:19.959 you putting your trust relationships? As an investor, where you're 0:17:19.960 --> 0:17:23.600 putting your trust relationships. There is nothing wrong with taking 0:17:23.640 --> 0:17:26.359 a volatile asset like bitcoin and trying to turn it 0:17:26.400 --> 0:17:28.520 into yield. There are lots of people trying to do 0:17:28.560 --> 0:17:31.919 that all across the ETF industry. What's wrong, or what 0:17:32.000 --> 0:17:35.760 I have problems with, is that to find out the 0:17:35.760 --> 0:17:38.560 fact that your eighty four percent yield is actually showing 0:17:38.640 --> 0:17:41.760 up as return of your own capital every single time 0:17:42.040 --> 0:17:44.639 you have to go three pages deep and then open 0:17:44.640 --> 0:17:48.520 a PDF. They're not leading with the most critical feature 0:17:48.600 --> 0:17:50.720 of this product, which is it is a way to 0:17:50.840 --> 0:17:55.200 generate return of capital, not to generate actual meaningful income. 0:17:55.600 --> 0:17:58.040 So they're not on your side. They're trying to convince 0:17:58.119 --> 0:18:00.520 you that you're getting something that you're not actually getting. 0:18:00.800 --> 0:18:02.760 There are other ways to do that. I actually think 0:18:02.800 --> 0:18:05.119 our old friends like Direction and pro Shares and the 0:18:05.200 --> 0:18:07.840 leverage side, who now are in this game as well, 0:18:08.200 --> 0:18:10.880 are actually examples of doing this about as gray hat 0:18:10.920 --> 0:18:14.120 as you can. They're over disclosed. They're warning you against 0:18:14.160 --> 0:18:17.520 these things. They're putting the warts out front and then 0:18:17.680 --> 0:18:20.800 convincing you of the benefits of the products. They're much 0:18:20.840 --> 0:18:22.680 more on your side in this case. 0:18:23.359 --> 0:18:24.639 Who said, are you on bil Donna? 0:18:25.960 --> 0:18:29.160 I don't want to take sides here. I like both 0:18:29.160 --> 0:18:29.800 of you a lot. 0:18:32.359 --> 0:18:34.399 Okay, son right there? 0:18:34.760 --> 0:18:35.440 Yeah, exactly. 0:18:41.280 --> 0:18:43.280 Part two of this one is the double leverage stock 0:18:43.320 --> 0:18:47.360 ETFs okay, NVDL. The Donna's covered this, ye, And these 0:18:47.400 --> 0:18:49.720 have been surprise hits. Some are five six billions. I 0:18:49.760 --> 0:18:52.840 mean sometimes the team were like, dude, what are we 0:18:52.920 --> 0:18:54.840 doing here? We should just put We feel like we 0:18:54.920 --> 0:18:58.240 missed the easiest idea ever. Just slap leverage on a 0:18:58.280 --> 0:19:00.400 stock that's doing well and like and then you can 0:19:00.440 --> 0:19:01.240 just go buy an island. 0:19:01.320 --> 0:19:04.760