1 00:00:05,680 --> 00:00:06,400 Speaker 1: Woken a Trillians. 2 00:00:06,400 --> 00:00:08,840 Speaker 2: I'm Joel Webber and I'm Eric Balchuna's. 3 00:00:12,000 --> 00:00:14,920 Speaker 3: Eric. There was a big take by our friends at 4 00:00:15,000 --> 00:00:19,080 Speaker 3: Bloomberg News recently that totally caught my attention. The headline 5 00:00:19,400 --> 00:00:24,200 Speaker 3: the new American hustle dividends over day jobs. You know, 6 00:00:24,320 --> 00:00:27,880 Speaker 3: part of that sounds pretty alluring, you know, like give 7 00:00:27,960 --> 00:00:30,840 Speaker 3: up the day job and you just have steady paycheck 8 00:00:31,080 --> 00:00:34,080 Speaker 3: coming to you from an investment. We dabbled on this before, 9 00:00:34,320 --> 00:00:37,040 Speaker 3: but the numbers are actually pretty insane, which is one 10 00:00:37,080 --> 00:00:38,960 Speaker 3: of the things we want to talk about on today's episode. 11 00:00:39,040 --> 00:00:42,000 Speaker 2: Yeah, this part of the ATF market is getting huge, 12 00:00:42,600 --> 00:00:45,240 Speaker 2: and it's a spectrum. I mean, let's face it, older 13 00:00:45,240 --> 00:00:48,479 Speaker 2: people love their dividends too, but this is like dividends 14 00:00:48,520 --> 00:00:51,559 Speaker 2: on steroids. In fact, the names are even like they 15 00:00:51,520 --> 00:00:56,720 Speaker 2: remind me of that fate gatora company, Idiocracy, Brondo, the 16 00:00:56,800 --> 00:01:00,160 Speaker 2: Thirst Mutilator, it's like the income Mutilator, you know, it's 17 00:01:00,320 --> 00:01:03,600 Speaker 2: very I think one of them is called income Blast 18 00:01:04,959 --> 00:01:09,320 Speaker 2: income Boost with all caps. So this is selling. There's 19 00:01:09,360 --> 00:01:11,959 Speaker 2: a market for it, and I think people need to 20 00:01:11,959 --> 00:01:14,520 Speaker 2: just understand what they're buying. But I think it's again, 21 00:01:14,520 --> 00:01:18,160 Speaker 2: it's a spectrum and it's very hot area but interesting. 22 00:01:18,240 --> 00:01:22,720 Speaker 2: Just real quick on big Take, you should let's explain 23 00:01:22,800 --> 00:01:25,360 Speaker 2: this because how many reporters work at Bloomberg, like twenty 24 00:01:25,360 --> 00:01:27,679 Speaker 2: three hundred more, yeah, three thousand. 25 00:01:27,400 --> 00:01:29,480 Speaker 1: Something like that with analysts, and only. 26 00:01:29,280 --> 00:01:32,720 Speaker 2: One reporter gets there's one big take a day yep, 27 00:01:32,840 --> 00:01:35,240 Speaker 2: and this was that. So there's two hundred and fifty 28 00:01:35,760 --> 00:01:38,800 Speaker 2: big takes a year and this story got one of those. 29 00:01:39,200 --> 00:01:43,320 Speaker 3: Yeah, totally, and as it should have because the little 30 00:01:43,319 --> 00:01:45,440 Speaker 3: corners of like what's happening in Reddit and stuff are 31 00:01:45,440 --> 00:01:49,040 Speaker 3: just endlessly fascinating. And you know, I mentioned the number, 32 00:01:49,840 --> 00:01:53,520 Speaker 3: not only the inflows or which we'll talk about. 33 00:01:52,880 --> 00:01:54,640 Speaker 1: But the percent yields. 34 00:01:54,800 --> 00:01:57,800 Speaker 3: We're talking like eight percent in some cases, or when 35 00:01:57,840 --> 00:02:00,960 Speaker 3: it's super charged like triple digit, like above one hundred. 36 00:02:01,040 --> 00:02:02,400 Speaker 1: So this is going to be fascinating. 37 00:02:02,680 --> 00:02:06,200 Speaker 3: We're going to be joined by Wildonna Hirich, regular on Trillions. 38 00:02:06,480 --> 00:02:08,760 Speaker 3: She's a cross asset reporter at Bloomberg News and she's 39 00:02:08,760 --> 00:02:13,959 Speaker 3: on the byline. Diniza Sikova is the other reporter, this 40 00:02:14,080 --> 00:02:19,400 Speaker 3: time on Trillions Dividends over Day Jobs fil Donna, welcome 41 00:02:19,400 --> 00:02:20,480 Speaker 3: back to Trillions. 42 00:02:20,120 --> 00:02:21,080 Speaker 4: Thanks so much for having me. 43 00:02:21,200 --> 00:02:25,440 Speaker 3: Okay, so dividends we've written about You've written about this before, 44 00:02:26,000 --> 00:02:29,280 Speaker 3: but the numbers really blew my mind. Walk us through 45 00:02:30,040 --> 00:02:34,239 Speaker 3: how big of a landscape this has become in ETFs, right. 46 00:02:34,120 --> 00:02:36,760 Speaker 4: And maybe we should just categorize what it is. I 47 00:02:36,800 --> 00:02:40,040 Speaker 4: feel like there's two categories, which Eric already sort of 48 00:02:40,120 --> 00:02:42,959 Speaker 4: hinted at. One is the traditional dividend investing, so there's 49 00:02:42,960 --> 00:02:44,239 Speaker 4: an choke or. 50 00:02:44,320 --> 00:02:46,160 Speaker 1: Right excellon or and there's. 51 00:02:46,160 --> 00:02:48,560 Speaker 3: Companies that are famous for dividend payouts exactly. 52 00:02:48,600 --> 00:02:54,320 Speaker 4: And there are ETFs that hold shares of companies that 53 00:02:54,360 --> 00:02:58,200 Speaker 4: are high dividend, so those are like your traditional dividend payers. 54 00:02:58,520 --> 00:03:01,520 Speaker 4: And then there's this new category where you're getting, like 55 00:03:01,560 --> 00:03:06,240 Speaker 4: you said, like super high yields, sometimes ninety percent or more. 56 00:03:06,639 --> 00:03:08,840 Speaker 4: And we have written about it before, but since then 57 00:03:08,880 --> 00:03:12,320 Speaker 4: it's only grown and you're just seeing billions and billions 58 00:03:12,320 --> 00:03:17,119 Speaker 4: of dollars going into these funds. It's a category altogether 59 00:03:17,200 --> 00:03:21,959 Speaker 4: that encompasses more than seven hundred billion dollars. But part 60 00:03:22,000 --> 00:03:24,080 Speaker 4: of the reason that they are growing so much is 61 00:03:24,120 --> 00:03:29,400 Speaker 4: that there's a whole cohort of influencers who post on 62 00:03:29,480 --> 00:03:32,600 Speaker 4: YouTube and read it and other places who love these 63 00:03:32,639 --> 00:03:35,760 Speaker 4: products and are almost like ambassadors for them. 64 00:03:36,160 --> 00:03:39,000 Speaker 3: One out of every six dollars so far this year 65 00:03:39,360 --> 00:03:42,280 Speaker 3: have gone into this space. Eric, how does that compare 66 00:03:42,600 --> 00:03:46,440 Speaker 3: with other hot assets classes? 67 00:03:46,440 --> 00:03:47,160 Speaker 1: In ETFs? 68 00:03:47,520 --> 00:03:49,520 Speaker 2: They're punching way above their weight. So when you say 69 00:03:49,520 --> 00:03:51,360 Speaker 2: one of every six dollars, that would be ballpark of 70 00:03:51,560 --> 00:03:53,760 Speaker 2: you know, there's eight hundred billion into ETFs, it's one 71 00:03:53,800 --> 00:03:56,800 Speaker 2: every sick with one hundred and twenty billion. That's probably 72 00:03:56,840 --> 00:04:00,080 Speaker 2: a high percentage over their assets. So this is one 73 00:04:00,120 --> 00:04:01,400 Speaker 2: of the faster growing areas. 74 00:04:02,680 --> 00:04:03,240 Speaker 1: I get it. 75 00:04:03,360 --> 00:04:07,280 Speaker 2: I mean I know firsthand. This is really exciting stuff 76 00:04:07,280 --> 00:04:10,920 Speaker 2: because when I was at the Money Show, I was 77 00:04:10,960 --> 00:04:14,200 Speaker 2: doing a presentation in the booth area, which is sort 78 00:04:14,240 --> 00:04:15,920 Speaker 2: of like you're like a carnival barker. It's actually a 79 00:04:15,920 --> 00:04:17,839 Speaker 2: good practice for presenting because you're like have to like 80 00:04:18,000 --> 00:04:20,960 Speaker 2: real people in like, hey, step right up, it's the 81 00:04:21,000 --> 00:04:24,240 Speaker 2: whole thing. Anyway, I'm going through flavors of hot sauce 82 00:04:24,480 --> 00:04:26,599 Speaker 2: and I get to the yield max, which is like 83 00:04:26,640 --> 00:04:29,960 Speaker 2: income hot sauce, and I got like twelve people there. 84 00:04:30,000 --> 00:04:32,200 Speaker 2: But when I start showing these yields, they're like eighty 85 00:04:32,320 --> 00:04:35,400 Speaker 2: ninety one hundred percent. I don't even know if people 86 00:04:35,400 --> 00:04:37,280 Speaker 2: could see it. I think they just sensed it like 87 00:04:37,360 --> 00:04:40,640 Speaker 2: permones and that my crowd doubled and. 88 00:04:40,600 --> 00:04:42,400 Speaker 4: It was I mean, I'm about to walk over to you. 89 00:04:42,400 --> 00:04:43,800 Speaker 4: You're like really enticing me. 90 00:04:45,040 --> 00:04:47,239 Speaker 3: It was then that Carnival Barker future. 91 00:04:47,400 --> 00:04:50,960 Speaker 2: And these are older people. So I think everybody loves 92 00:04:51,080 --> 00:04:54,960 Speaker 2: income and yield. I think the psychological feeling is you're 93 00:04:55,000 --> 00:04:57,599 Speaker 2: getting a paid like a check sent to you, and 94 00:04:57,640 --> 00:05:01,160 Speaker 2: it feels good. It's like, now it's complicated because in 95 00:05:01,200 --> 00:05:04,799 Speaker 2: some cases that's extra on top of what the market does, 96 00:05:05,000 --> 00:05:07,040 Speaker 2: like your S and P. It's a you know, income 97 00:05:07,200 --> 00:05:10,600 Speaker 2: is like dividends on top of your return. But in 98 00:05:10,640 --> 00:05:13,560 Speaker 2: some cases it's like you're giving up all your return 99 00:05:13,839 --> 00:05:15,680 Speaker 2: to give that yield. So it's almost like you're just 100 00:05:15,880 --> 00:05:19,520 Speaker 2: designed to pay yourself in yield or income instead of 101 00:05:19,560 --> 00:05:21,760 Speaker 2: just cashing out after ten years in total return. So 102 00:05:22,800 --> 00:05:26,840 Speaker 2: it's psychological I think in a way when it comes 103 00:05:26,880 --> 00:05:28,520 Speaker 2: to those really high yield ones. 104 00:05:28,600 --> 00:05:31,880 Speaker 3: Okay, so wait, let's just pause and break down what 105 00:05:32,000 --> 00:05:34,840 Speaker 3: the playbook for these ETFs in the sort of the 106 00:05:35,480 --> 00:05:40,400 Speaker 3: kool aid that the thin influencer crowd is using. 107 00:05:40,400 --> 00:05:41,560 Speaker 1: What does that playbook look like? 108 00:05:41,800 --> 00:05:44,599 Speaker 4: Yeah, so it generally looks something like this, where you're 109 00:05:44,640 --> 00:05:49,400 Speaker 4: investing your money into these ETFs, whether it's a variety 110 00:05:49,440 --> 00:05:52,000 Speaker 4: of them or specifically yield max is one issue that 111 00:05:52,040 --> 00:05:54,280 Speaker 4: has the most popular products or some of the most 112 00:05:54,320 --> 00:05:58,400 Speaker 4: popular products. Maybe you invest a bunch of your money 113 00:05:58,440 --> 00:06:01,960 Speaker 4: into a couple of their each, But then you're getting 114 00:06:01,960 --> 00:06:06,240 Speaker 4: those payouts. The issuers are making them have been making 115 00:06:06,279 --> 00:06:08,400 Speaker 4: them more frequent. So there are some where you can 116 00:06:08,440 --> 00:06:12,039 Speaker 4: get weekly payouts, but let's say you're getting them monthly. 117 00:06:12,160 --> 00:06:15,440 Speaker 4: And so we spoke with a number of people who 118 00:06:15,680 --> 00:06:19,080 Speaker 4: get anywhere from five hundred dollars a month in these 119 00:06:19,120 --> 00:06:22,880 Speaker 4: payouts to somebody who's looking to get nine thousand dollars 120 00:06:22,960 --> 00:06:27,360 Speaker 4: a month and then using them to pay for all 121 00:06:27,400 --> 00:06:31,480 Speaker 4: of their bills basically, so they're paying for gas, electricity, 122 00:06:31,600 --> 00:06:34,640 Speaker 4: like it's coming out of those accounts. One guy we 123 00:06:34,680 --> 00:06:38,080 Speaker 4: spoke with got a new use car as I called it, 124 00:06:38,440 --> 00:06:41,080 Speaker 4: and like the car payments are being made thanks to 125 00:06:41,920 --> 00:06:47,040 Speaker 4: or via these I should say, via these dividend payouts. Yeah, exactly, mortgages, 126 00:06:47,240 --> 00:06:50,520 Speaker 4: you know. So they're sort of it's like a they've 127 00:06:50,560 --> 00:06:55,279 Speaker 4: built a life around, like their life revolves around these payouts. 128 00:06:55,360 --> 00:06:57,159 Speaker 3: And when you talk to them, were they taking like 129 00:06:57,279 --> 00:07:00,480 Speaker 3: money that was would otherwise be like retired or are 130 00:07:00,520 --> 00:07:03,120 Speaker 3: they taking like whatever their paychecks look like and shoveling 131 00:07:03,160 --> 00:07:06,360 Speaker 3: into this Just to supersize, this is. 132 00:07:06,320 --> 00:07:11,120 Speaker 4: A really good question because that guy, he actually he 133 00:07:11,160 --> 00:07:13,960 Speaker 4: told us he cashed out his wife's retirement account. 134 00:07:14,080 --> 00:07:15,840 Speaker 1: Does she know that? She does know that? 135 00:07:15,880 --> 00:07:17,600 Speaker 4: I asked. I asked him the same question, I said, 136 00:07:17,600 --> 00:07:20,680 Speaker 4: don't make me call her? Is she aware that she owns? 137 00:07:20,840 --> 00:07:24,200 Speaker 4: Because then he used that money to buy some of 138 00:07:24,240 --> 00:07:29,800 Speaker 4: these some yield max CTFs. Actually, but he has a 139 00:07:29,840 --> 00:07:32,880 Speaker 4: day job also, and he has a regular retirement account 140 00:07:32,960 --> 00:07:34,920 Speaker 4: on the side, So it's it's a mixture. I think 141 00:07:34,920 --> 00:07:37,920 Speaker 4: it just it depends on the person and their risk tolerance. 142 00:07:38,320 --> 00:07:41,720 Speaker 4: The nine thousand dollars figure I mentioned is somebody we 143 00:07:41,760 --> 00:07:45,480 Speaker 4: spoke with who recently moved across the country and was 144 00:07:45,560 --> 00:07:47,960 Speaker 4: having a hard time finding a job and then sort 145 00:07:48,000 --> 00:07:51,880 Speaker 4: of like Eric described, became enticed by these high payouts 146 00:07:51,920 --> 00:07:56,000 Speaker 4: and decided to you know, he's I think he sold 147 00:07:56,160 --> 00:07:57,880 Speaker 4: some of his cars in his house and he put 148 00:07:57,920 --> 00:08:03,120 Speaker 4: that money towards some of these. So it's really interesting. 149 00:08:03,200 --> 00:08:07,480 Speaker 4: It's sort of astounding what they've been able to build 150 00:08:07,600 --> 00:08:12,200 Speaker 4: and how they've built their lives, like their daily functioning around. 151 00:08:12,360 --> 00:08:15,640 Speaker 3: Pctf total change in terms of like cash flow and 152 00:08:15,680 --> 00:08:17,560 Speaker 3: how probably Normanies might think. 153 00:08:17,440 --> 00:08:18,160 Speaker 1: About cash flow. 154 00:08:18,720 --> 00:08:23,360 Speaker 3: Eric to get these returns eight seventy ninety one hundred 155 00:08:23,360 --> 00:08:28,520 Speaker 3: percent returns, what is different about how how these products 156 00:08:28,520 --> 00:08:30,080 Speaker 3: are actually functioning. 157 00:08:29,840 --> 00:08:33,640 Speaker 2: West to put it, it's a spectrum. But generally speaking, 158 00:08:34,320 --> 00:08:38,079 Speaker 2: they're writing call options just outside of the money. So 159 00:08:38,160 --> 00:08:41,040 Speaker 2: let's say Tesla's one hundred dollars, they're writing a call 160 00:08:41,040 --> 00:08:42,800 Speaker 2: option at like one hundred and one or one hundred 161 00:08:42,800 --> 00:08:46,200 Speaker 2: and two dollars. You pay a lot for that, So 162 00:08:46,240 --> 00:08:47,920 Speaker 2: I'm getting a lot of money from you to buy that, 163 00:08:47,960 --> 00:08:49,800 Speaker 2: because that means if Tessa goes up even a little 164 00:08:50,280 --> 00:08:52,360 Speaker 2: or a lot, you can call it and you instantly 165 00:08:52,360 --> 00:08:55,280 Speaker 2: book a profit. That means if Tesla does go up, 166 00:08:55,800 --> 00:08:58,360 Speaker 2: the call option gets exercised and you get none of 167 00:08:58,400 --> 00:09:01,800 Speaker 2: Tessa's upside, but you get premium from the person who 168 00:09:01,840 --> 00:09:04,520 Speaker 2: you sold the option to. So you essentially writing off 169 00:09:04,559 --> 00:09:09,840 Speaker 2: your entire future of return to get income. Now that's 170 00:09:09,840 --> 00:09:12,640 Speaker 2: really what it is. Somebody who owns Tesla and didn't 171 00:09:12,679 --> 00:09:16,040 Speaker 2: do any of this would just reimagine the total return 172 00:09:16,080 --> 00:09:18,280 Speaker 2: they got just say well, if that was income, I 173 00:09:18,320 --> 00:09:21,040 Speaker 2: would have gotten the same thing. So again, this is 174 00:09:21,080 --> 00:09:24,000 Speaker 2: somewhat psychological. Some people just like to see it as income. 175 00:09:24,240 --> 00:09:26,880 Speaker 2: The guy we spoke to a couple like two years ago, 176 00:09:26,920 --> 00:09:29,280 Speaker 2: maybe we had one of these twenty somethings on to 177 00:09:29,320 --> 00:09:31,560 Speaker 2: talk about this, he said he used that income to 178 00:09:31,600 --> 00:09:33,800 Speaker 2: get a mortgage, like it was part of his income. 179 00:09:33,840 --> 00:09:34,400 Speaker 1: So I get it. 180 00:09:34,440 --> 00:09:36,440 Speaker 2: I think Also one of the lines in here that 181 00:09:36,480 --> 00:09:39,240 Speaker 2: I thought was really great was I've always had what 182 00:09:39,280 --> 00:09:43,720 Speaker 2: they call the shiny object syndrome, so shiny objects hot sauce. 183 00:09:44,080 --> 00:09:46,280 Speaker 2: It's a very viable area of the ETF world. At 184 00:09:46,360 --> 00:09:48,920 Speaker 2: least he's honest with himself. And I got to give 185 00:09:48,960 --> 00:09:52,160 Speaker 2: you credit for finding these people, because a lot of 186 00:09:52,160 --> 00:09:54,959 Speaker 2: times these articles are written from Ivory Tower folks and 187 00:09:55,000 --> 00:09:58,400 Speaker 2: they're like, look at all these degens, these idiots. They 188 00:09:58,400 --> 00:10:02,160 Speaker 2: don't know. I'm a real street guy, know everything. These 189 00:10:02,160 --> 00:10:05,520 Speaker 2: are idiots, And like you never get to hear from 190 00:10:05,520 --> 00:10:07,400 Speaker 2: the actual people trading them, and you hear from them, 191 00:10:07,400 --> 00:10:10,320 Speaker 2: You're like, Okay, these guys they know more about this 192 00:10:10,440 --> 00:10:13,160 Speaker 2: than you think they or they know the risks and 193 00:10:13,200 --> 00:10:16,960 Speaker 2: they're deciding to take it anyway. I really appreciate you 194 00:10:17,040 --> 00:10:19,400 Speaker 2: getting them in the article. So how did you get 195 00:10:19,400 --> 00:10:24,680 Speaker 2: a twenty seven year old like YouTube income addict to 196 00:10:24,800 --> 00:10:25,240 Speaker 2: talk to you? 197 00:10:33,120 --> 00:10:36,440 Speaker 4: So, yield Max actually the issue behind some of the 198 00:10:36,480 --> 00:10:39,280 Speaker 4: most popular products. As I mentioned, they actually had an 199 00:10:39,320 --> 00:10:45,040 Speaker 4: event at NAZAC where they invited a bunch of these 200 00:10:45,200 --> 00:10:50,000 Speaker 4: influencers and Deniza and I attended it and it was 201 00:10:50,120 --> 00:10:54,000 Speaker 4: a closing bell ringing and we talked to so many 202 00:10:54,040 --> 00:10:58,360 Speaker 4: people who love these funds. Eli actually he does not 203 00:10:58,440 --> 00:11:02,240 Speaker 4: invest in yield mass. He takes a more traditional route. 204 00:11:02,840 --> 00:11:05,480 Speaker 4: I think he invests a lot of his money in 205 00:11:05,600 --> 00:11:09,199 Speaker 4: the big Schwab dividend ETF, which is like the biggest, 206 00:11:10,280 --> 00:11:14,560 Speaker 4: one of the most established, like old school dividend ETFs. 207 00:11:15,520 --> 00:11:18,760 Speaker 4: But yeah, it ran the gamut and some people really 208 00:11:18,880 --> 00:11:22,280 Speaker 4: like the super high yielding stuff, the ninety plus percent 209 00:11:22,360 --> 00:11:25,599 Speaker 4: or eighty plus percent. But we met a lot of 210 00:11:25,640 --> 00:11:28,600 Speaker 4: them at that event. And then the other thing is, 211 00:11:28,640 --> 00:11:32,680 Speaker 4: I mean they're online, so you can find their YouTube videos. 212 00:11:32,920 --> 00:11:34,880 Speaker 2: By the way, let me just readolf. I'm going to go. 213 00:11:35,320 --> 00:11:37,480 Speaker 2: Here's yield Max's product line. First of all, yield max 214 00:11:37,520 --> 00:11:40,520 Speaker 2: has seventeen billion. That's a lot for an indie issuer. 215 00:11:41,120 --> 00:11:43,400 Speaker 2: They only had one or two billion to start the year, 216 00:11:44,920 --> 00:11:46,760 Speaker 2: and that's how fast they've grown. 217 00:11:46,880 --> 00:11:48,199 Speaker 1: So they're here. 218 00:11:48,240 --> 00:11:51,040 Speaker 2: I'm gonna sort by yield two hundred and fifteen percent, 219 00:11:51,360 --> 00:11:54,880 Speaker 2: one hundred and nineteen percent, one hundred and seventy three percent. 220 00:11:54,920 --> 00:11:56,240 Speaker 2: I mean, these are outrageous. 221 00:11:56,360 --> 00:11:56,640 Speaker 1: I mean. 222 00:11:57,320 --> 00:11:59,599 Speaker 2: And a lot of these products, like MSTY which is 223 00:11:59,640 --> 00:12:03,160 Speaker 2: the micro strategy that's taken five billion this year and 224 00:12:03,200 --> 00:12:06,319 Speaker 2: it yields one hundred and sixty six percent, but it's 225 00:12:06,360 --> 00:12:09,120 Speaker 2: your date return is thirteen percent. I imagine that's lagging 226 00:12:09,160 --> 00:12:10,840 Speaker 2: micro strategy by a ton. 227 00:12:11,200 --> 00:12:13,800 Speaker 4: Well, to be fair to the issuers, what they'll tell 228 00:12:13,840 --> 00:12:17,560 Speaker 4: you is they will They are not claiming that they're 229 00:12:17,559 --> 00:12:19,720 Speaker 4: going to help you beat the market or you know, 230 00:12:19,760 --> 00:12:22,360 Speaker 4: stay on par with the market. There if they say 231 00:12:22,400 --> 00:12:24,920 Speaker 4: to you, if you want to do that, don't buy 232 00:12:25,120 --> 00:12:28,160 Speaker 4: yield Max products. Don't buy these are not meant for that. 233 00:12:28,200 --> 00:12:30,880 Speaker 4: These are meant for those payouts, and some people just 234 00:12:30,960 --> 00:12:31,800 Speaker 4: want the payouts. 235 00:12:32,559 --> 00:12:35,360 Speaker 2: So walk us through if you're But by the way, 236 00:12:35,400 --> 00:12:37,880 Speaker 2: can I just say something So there's these things called 237 00:12:37,920 --> 00:12:40,360 Speaker 2: strips that were made up back in the day by 238 00:12:40,360 --> 00:12:43,280 Speaker 2: Wall Street guys where they would strip out the coupon 239 00:12:43,320 --> 00:12:46,000 Speaker 2: payment from the bond, and so if you want to 240 00:12:46,120 --> 00:12:48,640 Speaker 2: just the bond and the principle, it jacks up your 241 00:12:48,679 --> 00:12:50,640 Speaker 2: interest rate duration. And if you want the strips, it 242 00:12:50,679 --> 00:12:54,240 Speaker 2: just gives you the cash flow. And there's a lot 243 00:12:54,280 --> 00:12:56,600 Speaker 2: of institutions that might just want the dividends from the 244 00:12:56,640 --> 00:12:58,959 Speaker 2: S and P versus the return, some for tax reasons. 245 00:12:59,480 --> 00:13:03,840 Speaker 2: In other words, if you haven't, there's totally an institutional 246 00:13:03,840 --> 00:13:06,360 Speaker 2: investor who might do this, and it all it sounds 247 00:13:06,360 --> 00:13:09,079 Speaker 2: so like, oh, that's great, that's serious. But just because 248 00:13:09,080 --> 00:13:10,600 Speaker 2: a twenty seven year old does it, and it's in 249 00:13:10,600 --> 00:13:13,000 Speaker 2: the ETF world, I feel like sometimes it gets overly slammed. 250 00:13:13,360 --> 00:13:13,840 Speaker 1: But it's not. 251 00:13:14,640 --> 00:13:17,960 Speaker 2: Wallstreet's been doing this forever. They take this out of this, 252 00:13:18,120 --> 00:13:20,720 Speaker 2: put this in this. It's just it's just it's like, 253 00:13:21,040 --> 00:13:22,080 Speaker 2: cook's all stuff up. 254 00:13:22,120 --> 00:13:22,800 Speaker 1: That's what they do. 255 00:13:22,920 --> 00:13:25,360 Speaker 3: The difference is to have retail being able to do 256 00:13:25,400 --> 00:13:28,960 Speaker 3: this on their own with their own portfolios. 257 00:13:28,320 --> 00:13:30,520 Speaker 2: Agree, which is why we have the equivalent of a 258 00:13:30,720 --> 00:13:33,680 Speaker 2: movie rating system for ETFs. These would probably be PG thirteen, 259 00:13:33,760 --> 00:13:35,760 Speaker 2: I imagine I'd have to look at our system or 260 00:13:35,800 --> 00:13:37,880 Speaker 2: maybe even are based on the like. 261 00:13:37,880 --> 00:13:40,480 Speaker 1: Complications NC seventeen rating In there, we do the. 262 00:13:40,760 --> 00:13:44,680 Speaker 2: That's reserved for like triple leveraged ETFs that are that 263 00:13:44,760 --> 00:13:46,600 Speaker 2: are etns and role future. 264 00:13:46,280 --> 00:13:48,079 Speaker 1: Could you leverage dividends like this? 265 00:13:48,679 --> 00:13:48,959 Speaker 2: Sure? 266 00:13:51,240 --> 00:13:54,439 Speaker 1: Three x that one? Five? Okay, Phil Donald? 267 00:13:54,800 --> 00:13:56,960 Speaker 4: If I can add one thing just in terms of 268 00:13:57,000 --> 00:13:59,079 Speaker 4: the flows and how much money is coming in, because 269 00:13:59,240 --> 00:14:02,560 Speaker 4: Eric mentioned how much yield Max has now after that event, 270 00:14:03,600 --> 00:14:05,439 Speaker 4: I think what happened is a lot of the influencers 271 00:14:05,480 --> 00:14:07,960 Speaker 4: went home and made videos about the event, and yield 272 00:14:08,000 --> 00:14:09,680 Speaker 4: Max got over five billion dollars. 273 00:14:09,880 --> 00:14:10,160 Speaker 1: Wow. 274 00:14:10,880 --> 00:14:13,840 Speaker 2: So that's also a whole influencer thing. By the way, 275 00:14:14,040 --> 00:14:16,440 Speaker 2: And I was just in Brazil and somebody was telling 276 00:14:16,480 --> 00:14:18,319 Speaker 2: me there that like the whole market there is run 277 00:14:18,360 --> 00:14:21,960 Speaker 2: by influencers. Like I think we we're in the we're 278 00:14:21,960 --> 00:14:24,000 Speaker 2: in the legacy media, i'd call us. Maybe we're a 279 00:14:24,000 --> 00:14:27,920 Speaker 2: little more advanced. But the amount of like views and 280 00:14:27,960 --> 00:14:30,520 Speaker 2: stuff going on, Like I see a YouTube channel, I'm like, 281 00:14:30,840 --> 00:14:33,640 Speaker 2: oh my god, that's that's more than like CNN gets 282 00:14:33,640 --> 00:14:36,000 Speaker 2: for some of their shows, Like it's really pervasive. 283 00:14:37,280 --> 00:14:42,520 Speaker 3: Build What other ETFs we mentioned the Shop one and 284 00:14:42,520 --> 00:14:47,040 Speaker 3: and Misty which is strategy centric. What other ETFs does 285 00:14:47,080 --> 00:14:47,600 Speaker 3: the crowd? 286 00:14:48,440 --> 00:14:48,800 Speaker 1: Uh? 287 00:14:49,400 --> 00:14:52,200 Speaker 3: Adore you do you do? 288 00:14:52,280 --> 00:14:54,160 Speaker 4: You want me to talk about jetpy here. Sure, is 289 00:14:54,160 --> 00:14:55,000 Speaker 4: that what you're trying to get? 290 00:14:55,320 --> 00:14:56,000 Speaker 1: We can do jefpy. 291 00:14:56,240 --> 00:14:57,960 Speaker 3: I know there's a couple other ones, but were you 292 00:14:58,000 --> 00:15:01,200 Speaker 3: thinking of one other one? What the pantheon of dividend 293 00:15:01,360 --> 00:15:04,560 Speaker 3: ETFs and what are what's everyone's favorites? 294 00:15:05,120 --> 00:15:09,200 Speaker 4: Well, Jefpi is a product from JP Morgan launched a 295 00:15:09,200 --> 00:15:12,960 Speaker 4: couple of years ago that when the market sold off 296 00:15:13,000 --> 00:15:18,400 Speaker 4: in twenty twenty two, jefpy actually did better. It's than 297 00:15:18,440 --> 00:15:21,040 Speaker 4: the market. The market lost like twenty percent that year, 298 00:15:21,840 --> 00:15:25,560 Speaker 4: and it has a maybe what we might call a 299 00:15:25,600 --> 00:15:29,960 Speaker 4: more conservative payout of around eight percent. But it is 300 00:15:30,160 --> 00:15:32,840 Speaker 4: but if we want to sort of contextualize it within 301 00:15:33,080 --> 00:15:37,560 Speaker 4: this conversation, it also if you look overall, it's lagging 302 00:15:37,560 --> 00:15:40,520 Speaker 4: the market by a lot. So if you had been 303 00:15:40,560 --> 00:15:42,920 Speaker 4: invested in the market, you maybe you know your returns 304 00:15:42,920 --> 00:15:45,640 Speaker 4: would be looking better. But again, the people who are 305 00:15:45,720 --> 00:15:49,000 Speaker 4: running jefpy, they'll tell you it it's not meant to 306 00:15:49,000 --> 00:15:49,920 Speaker 4: be beating the market. 307 00:15:50,200 --> 00:15:52,760 Speaker 2: That analysis I just did on where the call option 308 00:15:52,840 --> 00:15:55,280 Speaker 2: is written, I think jefpy they're writing that call option 309 00:15:55,520 --> 00:15:57,880 Speaker 2: way more out of the money. So in that example 310 00:15:57,920 --> 00:15:59,840 Speaker 2: of Tesla, it would have to go up a lot 311 00:16:00,080 --> 00:16:03,440 Speaker 2: before the call got exercised. So it's where in the 312 00:16:03,480 --> 00:16:06,000 Speaker 2: money you write the option you able to sort of 313 00:16:06,040 --> 00:16:10,120 Speaker 2: fine tune whether you want in come a little a 314 00:16:10,440 --> 00:16:14,680 Speaker 2: little more or like steroids. And that's really that's why 315 00:16:14,840 --> 00:16:17,440 Speaker 2: it is a spectrum. And you can look if I'm 316 00:16:17,720 --> 00:16:21,080 Speaker 2: actually sorted all ETFs by yield, and it really it 317 00:16:21,200 --> 00:16:24,720 Speaker 2: cascades down from two hundred percent to zero pretty nicely, 318 00:16:24,800 --> 00:16:27,600 Speaker 2: so you can really just find like where your right 319 00:16:27,680 --> 00:16:29,880 Speaker 2: yield is for how much upside you want to give up. 320 00:16:29,880 --> 00:16:31,960 Speaker 2: But just know, at the end of the day, whether 321 00:16:32,000 --> 00:16:34,400 Speaker 2: it's a Wall Street institution or these people, there is 322 00:16:34,440 --> 00:16:37,080 Speaker 2: no free lunch. You're probably going to give up something 323 00:16:37,120 --> 00:16:38,760 Speaker 2: to get something that's really cool looking. 324 00:16:38,800 --> 00:16:41,640 Speaker 3: Well, just to break that down and be really simple 325 00:16:41,640 --> 00:16:43,600 Speaker 3: about it, what else are you giving up? 326 00:16:46,000 --> 00:16:49,520 Speaker 2: You're giving up upside plus the cost of the ETF. Right, 327 00:16:49,600 --> 00:16:50,840 Speaker 2: if you did this on your own, you want to 328 00:16:50,880 --> 00:16:56,720 Speaker 2: pay the expense ratio. But really it's in these steroid ones. 329 00:16:57,400 --> 00:17:01,160 Speaker 2: It's all the upside. And the with that is the 330 00:17:01,200 --> 00:17:04,719 Speaker 2: total return of a stock. It's unlimited. I mean not 331 00:17:04,760 --> 00:17:06,639 Speaker 2: that they go up forever, but they could go up 332 00:17:06,640 --> 00:17:08,679 Speaker 2: a lot, and you've just given up all of that 333 00:17:10,080 --> 00:17:14,560 Speaker 2: for a payout. So I think in many cases people 334 00:17:14,600 --> 00:17:17,880 Speaker 2: if you if if you just imagined the total return 335 00:17:18,280 --> 00:17:22,040 Speaker 2: of a stock and then like in your mind you said, okay, 336 00:17:22,040 --> 00:17:23,960 Speaker 2: well if I if I did get this into into 337 00:17:24,040 --> 00:17:27,119 Speaker 2: like four payouts, it would be x, and then just 338 00:17:27,160 --> 00:17:30,200 Speaker 2: imagine you got the money but you didn't that that's 339 00:17:30,200 --> 00:17:33,200 Speaker 2: the same thing. I mean, you could just it's look, 340 00:17:33,520 --> 00:17:35,560 Speaker 2: there's there's a return in the market. It's like, how 341 00:17:35,560 --> 00:17:37,120 Speaker 2: do you want that delivered to you? Do you want 342 00:17:37,119 --> 00:17:38,639 Speaker 2: to just get it all one lump sum when you 343 00:17:38,960 --> 00:17:42,879 Speaker 2: are done? Most people like that because they'd rather, you know, 344 00:17:43,119 --> 00:17:45,359 Speaker 2: use their paycheck to like make their day to day 345 00:17:45,400 --> 00:17:47,840 Speaker 2: stuff and then like, oh, I have this whole return 346 00:17:47,880 --> 00:17:50,440 Speaker 2: waiting for me when I retire. That's generally what people do. 347 00:17:50,800 --> 00:17:53,240 Speaker 2: This is a new way. And this is another quote 348 00:17:53,240 --> 00:17:55,560 Speaker 2: I found really good in your article, which is the 349 00:17:55,600 --> 00:17:59,719 Speaker 2: guy said, my granddad worked in a factory. 350 00:17:59,520 --> 00:18:00,000 Speaker 1: His whole life. 351 00:18:00,880 --> 00:18:02,800 Speaker 2: I don't want to lock away that capitol until I'm 352 00:18:02,800 --> 00:18:07,720 Speaker 2: sixty five. So there's a little Henry Hill Goodfella's situation 353 00:18:07,840 --> 00:18:09,800 Speaker 2: going on here, which is, if you remember the Goodfellas, 354 00:18:09,800 --> 00:18:12,440 Speaker 2: He's like, look at all those suckers going to work 355 00:18:12,440 --> 00:18:15,480 Speaker 2: in their nine to five job. The mob was at 356 00:18:15,720 --> 00:18:18,800 Speaker 2: a better, easier way to make a living, and that 357 00:18:19,040 --> 00:18:21,639 Speaker 2: was the choice he made. At the beginning of the movie, 358 00:18:22,320 --> 00:18:25,360 Speaker 2: that seems to be what's happening here. Like, that's why 359 00:18:25,400 --> 00:18:28,480 Speaker 2: I say like this, this granddad guy that gets kind 360 00:18:28,480 --> 00:18:30,159 Speaker 2: of like slammed at the early I bet he was 361 00:18:30,160 --> 00:18:33,000 Speaker 2: probably pretty happy and he certainly didn't have any you know, 362 00:18:34,000 --> 00:18:36,360 Speaker 2: how do you live your life? Like, if you look 363 00:18:36,520 --> 00:18:39,680 Speaker 2: live your life looking for shortcuts, sometimes you're gonna get 364 00:18:39,680 --> 00:18:42,040 Speaker 2: burned or regret or haunted. And that's why I gotta 365 00:18:42,040 --> 00:18:44,720 Speaker 2: be careful with this stuff. The granddad who worked in 366 00:18:44,760 --> 00:18:49,320 Speaker 2: a factory and then got a big payday when he retired. 367 00:18:50,119 --> 00:18:50,720 Speaker 1: Again, that's it. 368 00:18:50,920 --> 00:18:53,439 Speaker 2: I'm not I don't I wouldn't be too judgmental of 369 00:18:53,480 --> 00:18:53,960 Speaker 2: that life. 370 00:18:54,080 --> 00:18:56,920 Speaker 3: Yeah, we need Eric needs a like a rocking chair 371 00:18:56,920 --> 00:18:59,240 Speaker 3: and a porch, that'd be like and then he can, 372 00:18:59,320 --> 00:19:02,080 Speaker 3: you know, do his carnival carnival routine from. 373 00:19:02,000 --> 00:19:04,040 Speaker 4: Them by misty and then used the payouts to get 374 00:19:04,080 --> 00:19:07,640 Speaker 4: your right up. But I think this is really important 375 00:19:07,640 --> 00:19:13,080 Speaker 4: because the economic factors, you know, the post pandemic world inflation, 376 00:19:13,840 --> 00:19:16,439 Speaker 4: people having a really a lot of a lot of 377 00:19:16,440 --> 00:19:19,080 Speaker 4: these people are really young. Not to say that they're 378 00:19:19,119 --> 00:19:22,159 Speaker 4: the ones we quoted are having hard time finding jobs, 379 00:19:22,160 --> 00:19:25,080 Speaker 4: but in general, there's a lot of young people struggling 380 00:19:25,160 --> 00:19:28,600 Speaker 4: to find entry level positions. I mean, we all know, 381 00:19:28,880 --> 00:19:31,520 Speaker 4: you know, what's what's going on, and I think it's 382 00:19:31,560 --> 00:19:34,680 Speaker 4: important to think about some of those factors that might 383 00:19:34,880 --> 00:19:36,720 Speaker 4: drive people towards these. 384 00:19:36,720 --> 00:19:38,800 Speaker 3: Where they're basically just looking at the system and being like, 385 00:19:38,840 --> 00:19:40,879 Speaker 3: the system is not working for me to find a 386 00:19:40,920 --> 00:19:41,600 Speaker 3: way to make it work. 387 00:19:41,880 --> 00:19:44,080 Speaker 4: Or your employer calling you back to the office five 388 00:19:44,160 --> 00:19:47,080 Speaker 4: days a week when you know you because one of 389 00:19:47,119 --> 00:19:50,280 Speaker 4: the people we did interviews said, you know, they called 390 00:19:50,320 --> 00:19:52,040 Speaker 4: me back and I knew I could do it from home. 391 00:19:52,359 --> 00:19:55,040 Speaker 4: I want more flexibility. I want to be able to 392 00:19:55,040 --> 00:19:59,040 Speaker 4: go see my baby next you know, next to my office. 393 00:19:59,160 --> 00:20:01,040 Speaker 4: I want to be able to go to all ask 394 00:20:01,119 --> 00:20:04,800 Speaker 4: if I want to, you know, tomorrow, for example. And 395 00:20:04,840 --> 00:20:06,919 Speaker 4: then they'll come back and be self employed, because a 396 00:20:06,920 --> 00:20:08,760 Speaker 4: lot of people are thinking of it, as you know, 397 00:20:08,800 --> 00:20:10,359 Speaker 4: being self employed. 398 00:20:10,640 --> 00:20:13,240 Speaker 2: So real quick on this issue of young people feeling 399 00:20:13,280 --> 00:20:16,040 Speaker 2: like the system doesn't work for them, especially trying to 400 00:20:16,040 --> 00:20:18,120 Speaker 2: get a house. That's a real biggie. It's really hard 401 00:20:18,160 --> 00:20:20,239 Speaker 2: to get a house. People are in the thirties are 402 00:20:20,240 --> 00:20:23,040 Speaker 2: even struggling. This is a big theme in the crypto 403 00:20:23,040 --> 00:20:25,520 Speaker 2: book I'm Working Control, which is it's really helped me 404 00:20:26,000 --> 00:20:28,480 Speaker 2: come around and really understand crypto. It's the same appeal 405 00:20:29,240 --> 00:20:32,959 Speaker 2: because in this case it's inflation and you can't really 406 00:20:33,440 --> 00:20:36,000 Speaker 2: catch inflation. They say it's two percent, but it feels 407 00:20:36,080 --> 00:20:40,000 Speaker 2: like more. And the idea of what you used to 408 00:20:40,040 --> 00:20:42,119 Speaker 2: be able to get for working a regular nine to 409 00:20:42,160 --> 00:20:44,720 Speaker 2: five job, it's not the same. And so I think 410 00:20:44,760 --> 00:20:47,600 Speaker 2: crypto and bitcoin have appealed to that generation for the 411 00:20:47,640 --> 00:20:50,439 Speaker 2: same reason. So there's a lot going on here. I 412 00:20:50,440 --> 00:20:53,280 Speaker 2: think there'd be a pretty good ven diagram of like 413 00:20:53,520 --> 00:20:57,080 Speaker 2: the catalyst for this and the catalyst for crypto, which 414 00:20:57,119 --> 00:21:00,840 Speaker 2: is something that is that feeling. There's Henry Hill one, 415 00:21:00,880 --> 00:21:02,520 Speaker 2: which is I just rather have a life of crime. 416 00:21:02,920 --> 00:21:04,919 Speaker 2: That's you could probably be like, well that's probably not 417 00:21:04,920 --> 00:21:06,600 Speaker 2: a good idea, but then there's the. 418 00:21:06,600 --> 00:21:09,600 Speaker 1: Whole probably probably. 419 00:21:12,920 --> 00:21:14,359 Speaker 2: I mean, in the end, he did fine, he did 420 00:21:14,400 --> 00:21:17,959 Speaker 2: go in the witness protection program. Paulie went to jail, though. 421 00:21:18,000 --> 00:21:20,600 Speaker 2: I think so moral of the story is be a 422 00:21:20,680 --> 00:21:23,680 Speaker 2: guy in the bottom, don't be the main guy anyway. 423 00:21:23,400 --> 00:21:26,280 Speaker 3: You're dead if you're at the bottom, man, I think 424 00:21:26,359 --> 00:21:29,320 Speaker 3: we can leave that comparisons. 425 00:21:29,720 --> 00:21:33,720 Speaker 2: But the legitimacy of not feeling like you're able to 426 00:21:33,760 --> 00:21:36,639 Speaker 2: get the same deal American dream style that your parents 427 00:21:36,640 --> 00:21:39,840 Speaker 2: and grandparents got, that's real and I think that is 428 00:21:39,920 --> 00:21:44,920 Speaker 2: part of this silent tax of inflation. That it's hard 429 00:21:45,000 --> 00:21:46,440 Speaker 2: to put your finger on it, but if you're a 430 00:21:46,440 --> 00:21:48,040 Speaker 2: young person, you feel it all right. 431 00:21:48,040 --> 00:21:49,880 Speaker 1: Ho Dona, thanks so much for joining us on Trillions. 432 00:21:50,200 --> 00:21:51,199 Speaker 4: Thanks so much for having me. 433 00:21:57,880 --> 00:22:00,280 Speaker 3: Thanks for listening to Trillions and telling that next time 434 00:22:00,280 --> 00:22:02,960 Speaker 3: you can find us on the Bloomberg terminal, Bloomberg dot com, 435 00:22:03,119 --> 00:22:06,720 Speaker 3: Apple Podcasts, Spotify, or wherever else you'd like to listen. 436 00:22:07,000 --> 00:22:08,520 Speaker 3: I'd love to hear from you. Hit us up on 437 00:22:08,560 --> 00:22:11,919 Speaker 3: social I'm at Joe Weber Show, He's at Eric Balcinus. 438 00:22:12,280 --> 00:22:15,520 Speaker 3: Trillions is produced by Magnus Hendrickson. Sage Baumans is the 439 00:22:15,560 --> 00:22:16,680 Speaker 3: head of Bloomberg Podcasts.