1 00:00:05,800 --> 00:00:13,160 Speaker 1: Welcome to trillions. I'm Joel Webber and I'm Eric. Eric. 2 00:00:13,360 --> 00:00:15,760 Speaker 1: We've got a guest. This is when that you brought in? 3 00:00:15,840 --> 00:00:19,520 Speaker 1: Who is he? Gary Stringer? Um? When I wrote the 4 00:00:19,520 --> 00:00:21,560 Speaker 1: E t F book, correct, you've heard about it? Yeah, 5 00:00:21,600 --> 00:00:23,000 Speaker 1: we I plug it all the time on the show. 6 00:00:23,040 --> 00:00:24,560 Speaker 1: But I was basically writing a book on e t 7 00:00:24,720 --> 00:00:27,600 Speaker 1: F s and most of the big investors I interviewed 8 00:00:27,920 --> 00:00:30,800 Speaker 1: only use s P y H y G. You know, pensions, 9 00:00:30,880 --> 00:00:33,320 Speaker 1: endowments and a lot of retails stick to those. But 10 00:00:33,320 --> 00:00:35,840 Speaker 1: there's a group of investors that goes deep in the toolbox. 11 00:00:36,440 --> 00:00:38,560 Speaker 1: To me there they remind me of you ever go 12 00:00:38,600 --> 00:00:41,159 Speaker 1: to the video store, and of course like the old 13 00:00:41,240 --> 00:00:43,159 Speaker 1: day where you get a little token and give it 14 00:00:43,200 --> 00:00:45,400 Speaker 1: for any millennials listening just google it, may watch a 15 00:00:45,400 --> 00:00:48,559 Speaker 1: YouTube video. It was a fascinating place. But there'd be 16 00:00:48,560 --> 00:00:51,880 Speaker 1: a shelf that'd be like um staff picks, and you'd 17 00:00:51,920 --> 00:00:53,960 Speaker 1: go in there like if you're done all the new releases, 18 00:00:53,960 --> 00:00:55,920 Speaker 1: you couldn't find anything. Sometimes the staff pick would have 19 00:00:55,960 --> 00:00:57,640 Speaker 1: a gem in there. A lot of them were good, right, 20 00:00:58,080 --> 00:01:00,680 Speaker 1: and maybe movies you might not have heard of foreign film. 21 00:01:00,680 --> 00:01:02,720 Speaker 1: This is what E t F strategists are to e 22 00:01:02,800 --> 00:01:05,400 Speaker 1: t F s. They go deep in the toolbox. All 23 00:01:05,440 --> 00:01:08,520 Speaker 1: they do is pick e t fs, trade ETFs and 24 00:01:08,520 --> 00:01:11,400 Speaker 1: so they're kind of aficionados and they'll go and they'll 25 00:01:11,400 --> 00:01:13,240 Speaker 1: spend the whole spectrum. So when I did my book, 26 00:01:13,720 --> 00:01:15,240 Speaker 1: when I got into the section on each as a 27 00:01:15,280 --> 00:01:17,919 Speaker 1: class and each category, I had a lot of quotes 28 00:01:17,920 --> 00:01:19,759 Speaker 1: that I would use from E t F strategist because 29 00:01:19,800 --> 00:01:21,840 Speaker 1: you could throw out any ticker at them and then 30 00:01:21,880 --> 00:01:23,800 Speaker 1: have an opinion on it. Yeah it does this, but 31 00:01:23,840 --> 00:01:25,640 Speaker 1: it's a little expensive, blah blah blah. They have an 32 00:01:25,640 --> 00:01:28,440 Speaker 1: instant review for you. So they were really valuable as 33 00:01:28,440 --> 00:01:30,520 Speaker 1: I was going through each as a class and category 34 00:01:30,560 --> 00:01:32,920 Speaker 1: to like put a quote in there from one of 35 00:01:32,959 --> 00:01:36,800 Speaker 1: the users, I think it really enhanced the reading experience hopefully. 36 00:01:36,880 --> 00:01:40,040 Speaker 1: And Gary was one of the best interviews I had. So, 37 00:01:40,160 --> 00:01:41,959 Speaker 1: how what are we going to talk to him about? Well, 38 00:01:42,160 --> 00:01:44,840 Speaker 1: he has over a hundred million in assets, so he 39 00:01:44,840 --> 00:01:48,360 Speaker 1: has to file a thirteen F so at Stringer Asset Management, 40 00:01:48,360 --> 00:01:52,720 Speaker 1: that's he's the president and CEO of So we went 41 00:01:52,760 --> 00:01:54,920 Speaker 1: through his thirteen F and just we've we're gonna pick 42 00:01:54,960 --> 00:01:56,600 Speaker 1: some ETFs out that he has and just find out 43 00:01:56,600 --> 00:01:58,480 Speaker 1: why is why does he own them? So I think 44 00:01:58,480 --> 00:02:01,400 Speaker 1: for for this episode, it's just a um for any 45 00:02:01,440 --> 00:02:03,440 Speaker 1: investor out there to sort of go into the mind 46 00:02:03,440 --> 00:02:06,000 Speaker 1: of a master user find out why they picked them, 47 00:02:06,040 --> 00:02:09,880 Speaker 1: both the macro reason and the product reason. This time, 48 00:02:09,919 --> 00:02:12,720 Speaker 1: I'm trillions E t F picks with a master E 49 00:02:12,840 --> 00:02:16,520 Speaker 1: t F picker, Gary, Welcome Trillions. How did you get 50 00:02:16,560 --> 00:02:19,840 Speaker 1: into E t F? We were managing assets at a 51 00:02:19,840 --> 00:02:24,079 Speaker 1: regional broker dealer and found that the biggest way to 52 00:02:24,200 --> 00:02:26,920 Speaker 1: for us to add value was to get the general 53 00:02:26,960 --> 00:02:30,160 Speaker 1: calls as good as we could, for example, countries, sectors. 54 00:02:30,440 --> 00:02:32,480 Speaker 1: How do we want to be tilted? And what we 55 00:02:32,560 --> 00:02:34,280 Speaker 1: found over time is a very efficient way to do 56 00:02:34,320 --> 00:02:37,239 Speaker 1: that is via E t S versus other investment types. 57 00:02:37,880 --> 00:02:40,280 Speaker 1: And how long have you been managing what was a 58 00:02:40,360 --> 00:02:44,240 Speaker 1: hundred million actually were over seven thirty million. Now I'm 59 00:02:44,240 --> 00:02:48,000 Speaker 1: just saying they're over That's not nothing. How did you 60 00:02:48,040 --> 00:02:52,320 Speaker 1: get into this? Via managing money within the regional broker dealer? 61 00:02:52,560 --> 00:02:56,400 Speaker 1: Our firm was eventually purchased and gave us an opportunity 62 00:02:56,440 --> 00:02:59,280 Speaker 1: to go out independent as an independent organization, So we 63 00:02:59,320 --> 00:03:01,560 Speaker 1: took our tool box, our research, our team with us 64 00:03:01,840 --> 00:03:04,000 Speaker 1: and started as an independent esset management firm, but it 65 00:03:04,000 --> 00:03:06,800 Speaker 1: all started with managing money within a regional broker dealer 66 00:03:06,880 --> 00:03:10,040 Speaker 1: for individuals and families. Now, just to be clear, though, 67 00:03:10,080 --> 00:03:13,080 Speaker 1: when we interview advisors there tend to be buy and 68 00:03:13,120 --> 00:03:16,280 Speaker 1: hold a couple of Vanguard ETFs, You're a whole different situation. 69 00:03:16,360 --> 00:03:19,840 Speaker 1: You're you're trying to outperform and do better than a 70 00:03:19,880 --> 00:03:22,480 Speaker 1: buying whole portfolio. Right, So in a way, you're an 71 00:03:22,480 --> 00:03:24,720 Speaker 1: E T F picker in the way people know a 72 00:03:24,760 --> 00:03:28,320 Speaker 1: stock picker, right, very similar or a top down work 73 00:03:28,320 --> 00:03:31,799 Speaker 1: we do earlier goal is to try to achieve better 74 00:03:31,919 --> 00:03:34,040 Speaker 1: risk adjusted results. So to help people do better. You know, 75 00:03:34,080 --> 00:03:36,720 Speaker 1: you all seen the studies that suggest that individuals capture 76 00:03:36,720 --> 00:03:38,600 Speaker 1: only a fraction in the market opportunity. We believe a 77 00:03:38,600 --> 00:03:40,520 Speaker 1: lot of that has to do with behavior finance and risk. 78 00:03:40,760 --> 00:03:44,240 Speaker 1: Markets are scary. When market volatile, people panic. So if 79 00:03:44,320 --> 00:03:46,800 Speaker 1: we can develop a strategy that can help people get 80 00:03:46,840 --> 00:03:49,760 Speaker 1: from here to there with a smoother ride, that risk 81 00:03:49,800 --> 00:03:52,080 Speaker 1: managed component is super important to us. It's all based 82 00:03:52,120 --> 00:03:54,520 Speaker 1: on behavioral finance, and we can do that with ets 83 00:03:54,560 --> 00:03:56,640 Speaker 1: through risk manage strategies. We end up with a result 84 00:03:56,720 --> 00:03:59,880 Speaker 1: that's at least better than the market with twenty less risk. 85 00:04:00,480 --> 00:04:02,560 Speaker 1: And if you look at that seven million plus that 86 00:04:02,600 --> 00:04:05,200 Speaker 1: you guys are managing, what portion of that is in ETFs? 87 00:04:05,240 --> 00:04:07,640 Speaker 1: All of it? All of it? Like I said, man, 88 00:04:07,680 --> 00:04:10,320 Speaker 1: they're all in Wow. Okay, So break it down, like 89 00:04:10,320 --> 00:04:13,280 Speaker 1: what how does that? How does that portfolio look like? 90 00:04:14,160 --> 00:04:17,679 Speaker 1: We run a series of five strategies from global equity 91 00:04:17,960 --> 00:04:20,760 Speaker 1: all the way down to an income portfolio. The same 92 00:04:20,800 --> 00:04:23,160 Speaker 1: themes are pac Investors can kind of pick and choose 93 00:04:23,160 --> 00:04:24,839 Speaker 1: which one they want to be in, and you can allocate, 94 00:04:24,920 --> 00:04:28,719 Speaker 1: so if you want something and something else exactly right. Yes, 95 00:04:29,520 --> 00:04:31,800 Speaker 1: So I thought we would just go through and throw 96 00:04:31,839 --> 00:04:33,360 Speaker 1: e T F s at him and find out why 97 00:04:33,360 --> 00:04:35,800 Speaker 1: he owns them. Do it? Okay? And so you guys 98 00:04:35,839 --> 00:04:38,360 Speaker 1: pulled the thirteen F which thirteen F is this? Gary 99 00:04:38,400 --> 00:04:39,880 Speaker 1: had a couple you want to talk about. We go 100 00:04:39,880 --> 00:04:42,080 Speaker 1: through those, and then I asked my team for ones 101 00:04:42,120 --> 00:04:44,120 Speaker 1: in his thirteen F that intrigued them and we'll throw 102 00:04:44,120 --> 00:04:48,479 Speaker 1: those and this is Q four Q three Okay, So 103 00:04:48,600 --> 00:04:50,440 Speaker 1: throw throw one out at him. All right, let's we're 104 00:04:50,440 --> 00:04:53,240 Speaker 1: gonna start basic. And honestly, I'm surprised at this one 105 00:04:53,320 --> 00:04:55,680 Speaker 1: is a basic pick that an institution would use, which 106 00:04:55,680 --> 00:05:00,000 Speaker 1: is XLV. It's the spider healthcare sector e t f UM. 107 00:05:00,000 --> 00:05:02,359 Speaker 1: I would expect it something a little more obscure from you, Gary, 108 00:05:02,440 --> 00:05:05,560 Speaker 1: why XLV, Well, why healthcare? But why this one, which 109 00:05:05,600 --> 00:05:08,040 Speaker 1: is the popular, big liquid one. Yeah. So it's interesting 110 00:05:08,120 --> 00:05:11,560 Speaker 1: you say that because our previous healthcare plays have been 111 00:05:11,640 --> 00:05:14,880 Speaker 1: more defined, more specific things like medical devices, for example. 112 00:05:15,080 --> 00:05:16,800 Speaker 1: But we did very well in medical devices over a 113 00:05:16,800 --> 00:05:18,599 Speaker 1: short period of time, and it just got to be expensive. 114 00:05:18,640 --> 00:05:20,480 Speaker 1: A lot of good news priced in, and at the 115 00:05:20,520 --> 00:05:23,320 Speaker 1: same time, we saw a lot of political risk coming in. 116 00:05:23,680 --> 00:05:27,279 Speaker 1: As you approach an election year, both sides of the 117 00:05:27,320 --> 00:05:29,400 Speaker 1: aisle like to beat up on big pharma and all 118 00:05:29,400 --> 00:05:31,919 Speaker 1: of these healthcare companies um and so we tend to 119 00:05:31,920 --> 00:05:34,760 Speaker 1: shy away from from it coming into this. But we 120 00:05:34,760 --> 00:05:36,360 Speaker 1: think so much of the risk is already priced in. 121 00:05:36,360 --> 00:05:39,560 Speaker 1: In fact, the broad healthcare sector has been lagging or 122 00:05:39,600 --> 00:05:42,320 Speaker 1: the price performance, yet it is the top sector in 123 00:05:42,360 --> 00:05:45,520 Speaker 1: the SMB five hundred for revenue growth over last twelve months, 124 00:05:45,520 --> 00:05:47,599 Speaker 1: so it's it's literally the best performing sector from a 125 00:05:47,600 --> 00:05:50,039 Speaker 1: fundamental basis and one of the worst sectors from a 126 00:05:50,040 --> 00:05:52,719 Speaker 1: performance basis. So we picked up the broad one because 127 00:05:52,720 --> 00:05:55,640 Speaker 1: it does have uh still exposure to some of the 128 00:05:55,640 --> 00:05:57,440 Speaker 1: areas that we continue to like, but it also has 129 00:05:57,440 --> 00:06:00,480 Speaker 1: a nice exposure to things like pharmaceuticals, which is one 130 00:06:00,480 --> 00:06:02,520 Speaker 1: of the biggest parts of the broad space. We don't 131 00:06:02,520 --> 00:06:04,840 Speaker 1: want to do a pure play pharma because there is 132 00:06:04,920 --> 00:06:07,680 Speaker 1: risk associated that with that, especially coming into an election year, 133 00:06:07,880 --> 00:06:10,000 Speaker 1: so we went broad based. We went from being very 134 00:06:10,480 --> 00:06:12,760 Speaker 1: precise to something more broad to be able to capture 135 00:06:12,800 --> 00:06:15,919 Speaker 1: the broader valuation opportunity. And so how often will you 136 00:06:16,000 --> 00:06:18,880 Speaker 1: just be in something like XLV versus you know, three 137 00:06:18,960 --> 00:06:23,040 Speaker 1: or four other healthcare picks, So it really depends with 138 00:06:23,120 --> 00:06:25,680 Speaker 1: the markets giving us. At this point, we felt like 139 00:06:25,720 --> 00:06:27,760 Speaker 1: it was made more sense to be a little bit broader. 140 00:06:28,080 --> 00:06:30,320 Speaker 1: But usually when we're doing something like that, we will 141 00:06:30,360 --> 00:06:34,200 Speaker 1: get more specific. One of the raps on healthcare tastes 142 00:06:34,200 --> 00:06:35,839 Speaker 1: back in the day was that they're too farma heavy. 143 00:06:36,320 --> 00:06:38,000 Speaker 1: It looks like at one point they were fifty I 144 00:06:38,000 --> 00:06:41,120 Speaker 1: think XLV looks like it's but you like that it's 145 00:06:41,160 --> 00:06:44,120 Speaker 1: that at that into pharmat that's part of the that's 146 00:06:44,120 --> 00:06:47,080 Speaker 1: a feature. Okay, that's exactly right, that's part of our thesis. 147 00:06:47,120 --> 00:06:49,200 Speaker 1: We wanted to pick up more farm exposure, but we 148 00:06:49,240 --> 00:06:50,760 Speaker 1: didn't want to pick up all the farm and we 149 00:06:50,800 --> 00:06:53,360 Speaker 1: didn't want to be just pharma. And have you done 150 00:06:53,360 --> 00:06:55,680 Speaker 1: that before? And like, what other ETFs have you used 151 00:06:55,680 --> 00:06:58,320 Speaker 1: in the to concentrate a healthcare butt. So the last 152 00:06:58,360 --> 00:07:01,080 Speaker 1: one we used was I HI, which is medical to vices. Uh. 153 00:07:01,120 --> 00:07:03,039 Speaker 1: Previously actually a couple of years ago, we use the 154 00:07:03,040 --> 00:07:07,839 Speaker 1: pure pharma. This I h I is unbelievable. I think 155 00:07:08,000 --> 00:07:11,680 Speaker 1: it's like doubling the SMP. It's just medical devices. And 156 00:07:11,800 --> 00:07:13,160 Speaker 1: you were telling me he was on E T F 157 00:07:13,160 --> 00:07:15,440 Speaker 1: i Q a couple of months ago. His reasoning for 158 00:07:15,480 --> 00:07:19,320 Speaker 1: this was fascinating. Why I H I instead of another 159 00:07:19,480 --> 00:07:22,240 Speaker 1: sliver or slice of the healthcare space, like say biotech, 160 00:07:22,240 --> 00:07:23,800 Speaker 1: which is where most people go if they want to 161 00:07:23,960 --> 00:07:26,760 Speaker 1: jacked up version of healthcare. Yeah, biotech though, is a 162 00:07:26,800 --> 00:07:29,720 Speaker 1: real way You're you're either gonna crush it or get crushed. Right, 163 00:07:29,760 --> 00:07:32,040 Speaker 1: that's really ah, that's really the way that's gonna go 164 00:07:32,040 --> 00:07:33,840 Speaker 1: in And for us that that kind of play doesn't 165 00:07:33,840 --> 00:07:35,240 Speaker 1: make a lot of sense, especially for our client base. 166 00:07:35,280 --> 00:07:37,680 Speaker 1: But when you think about medical devices, we have the 167 00:07:37,680 --> 00:07:42,160 Speaker 1: world's wealthiest country with an aging population, uh, and so 168 00:07:42,320 --> 00:07:44,600 Speaker 1: people are going to do things like get artificial hips 169 00:07:44,600 --> 00:07:47,440 Speaker 1: and knees done right and all the equipment that goes 170 00:07:47,480 --> 00:07:49,920 Speaker 1: along with it, really regardless of what the economy is 171 00:07:49,920 --> 00:07:54,000 Speaker 1: doing right. And so it's a great fundamentals and it's 172 00:07:54,080 --> 00:07:57,280 Speaker 1: much less politically sensitive than say pharma. You know, you 173 00:07:57,280 --> 00:08:00,680 Speaker 1: don't hear about politicians stumping about the price artificial hips 174 00:08:00,720 --> 00:08:04,200 Speaker 1: and knees. What you're gonna need? Isn't that cool? Yes? 175 00:08:04,680 --> 00:08:07,680 Speaker 1: I like that? Um, And you know, the Vanguard Healthcare 176 00:08:07,720 --> 00:08:10,840 Speaker 1: owns three and sixty healthcare stocks. The spider one that 177 00:08:10,880 --> 00:08:13,840 Speaker 1: you have is sixty one. You want the concentration, though, 178 00:08:13,880 --> 00:08:15,880 Speaker 1: you don't want it spread out because the Vanguard we 179 00:08:15,920 --> 00:08:18,480 Speaker 1: call cheap and deep, but maybe that would be better 180 00:08:18,520 --> 00:08:23,000 Speaker 1: long term, whereas x LV better for more pop. Yeah, 181 00:08:23,000 --> 00:08:25,000 Speaker 1: that was really our thesis because again we wanted to 182 00:08:25,000 --> 00:08:27,640 Speaker 1: pick up the pharmacide but not not too much. It's 183 00:08:27,680 --> 00:08:30,920 Speaker 1: sort of like not too hot, not too cold. It 184 00:08:31,040 --> 00:08:32,240 Speaker 1: was just a nice fit for us for what we 185 00:08:32,280 --> 00:08:34,080 Speaker 1: were looking for. And some of those things be so 186 00:08:34,160 --> 00:08:37,160 Speaker 1: spread out. So what is the turnover like for you guys? 187 00:08:37,240 --> 00:08:39,600 Speaker 1: I mean, you have this one bet now you've transitioned 188 00:08:39,640 --> 00:08:42,400 Speaker 1: to something else based on sort of the outlook and 189 00:08:42,440 --> 00:08:45,400 Speaker 1: the political environment, but like how often what's the turn like? 190 00:08:45,880 --> 00:08:48,920 Speaker 1: So on average, in our global equity portfolio, for example, 191 00:08:48,960 --> 00:08:51,239 Speaker 1: you're gonna have more turnover there than in our balance strategies. 192 00:08:51,679 --> 00:08:54,200 Speaker 1: Uh since ince option over a decade ago, it's average 193 00:08:54,200 --> 00:08:56,280 Speaker 1: about eighty five percent a year. What tends to happen 194 00:08:56,320 --> 00:08:58,120 Speaker 1: is and so on average we end up trading about 195 00:08:58,160 --> 00:08:59,760 Speaker 1: once a month or so, but that doesn't mean we 196 00:08:59,800 --> 00:09:01,240 Speaker 1: trade to a month. What tends to happen is the 197 00:09:01,240 --> 00:09:04,360 Speaker 1: market will give us an opportunity, will position for that opportunity, 198 00:09:04,440 --> 00:09:06,160 Speaker 1: and then things will work itself out, and then it 199 00:09:06,280 --> 00:09:09,400 Speaker 1: sounded reposition all right, Ready for the next one, which 200 00:09:09,440 --> 00:09:12,439 Speaker 1: is sort of the opposite situation. Q Tech q T 201 00:09:12,559 --> 00:09:14,160 Speaker 1: e C, which is the first trust and as that 202 00:09:14,240 --> 00:09:16,880 Speaker 1: one hundred, So it's like the cues, except that equal 203 00:09:16,920 --> 00:09:20,199 Speaker 1: weights them, and so every one of the hundred stocks 204 00:09:20,240 --> 00:09:23,360 Speaker 1: gets a one percent waiting. But a couple of things here. 205 00:09:23,360 --> 00:09:25,840 Speaker 1: First of all, most the cues is kind of like 206 00:09:25,880 --> 00:09:28,360 Speaker 1: the ipso facto FANG E T F because it's very 207 00:09:28,360 --> 00:09:31,679 Speaker 1: heavily weighted in those names. This unfangs it a little bit. 208 00:09:31,720 --> 00:09:33,680 Speaker 1: Is that was that your goal here was to unfanged 209 00:09:33,679 --> 00:09:35,559 Speaker 1: the cues or what are you going after here? Because 210 00:09:35,760 --> 00:09:38,160 Speaker 1: part of the NASTAC also has non tech in in 211 00:09:38,240 --> 00:09:40,960 Speaker 1: as well, you wanted that exposure, Well, what we wanted 212 00:09:41,000 --> 00:09:43,880 Speaker 1: in this one and this is UH specifically more tech 213 00:09:43,960 --> 00:09:48,160 Speaker 1: tech oriented. We liked the technology sector, but kind of 214 00:09:48,200 --> 00:09:50,640 Speaker 1: similar to where we talked about why we picked XLB 215 00:09:50,840 --> 00:09:55,400 Speaker 1: with its broad exposure heavy on pharma q tech because 216 00:09:55,400 --> 00:09:59,480 Speaker 1: it's equally weighted gets you more semiconductor exposure. So it's 217 00:09:59,520 --> 00:10:01,680 Speaker 1: something like what percent semis. We didn't want to go 218 00:10:01,720 --> 00:10:04,480 Speaker 1: on semis because that's volatile, right, there's a lot of 219 00:10:04,559 --> 00:10:06,560 Speaker 1: risks there. It's it's you're gonna win or lose, similar 220 00:10:06,600 --> 00:10:10,480 Speaker 1: to biotech. But of the technology sector, UH, semi conductors 221 00:10:10,559 --> 00:10:12,600 Speaker 1: we think is though they rallied pretty strongly last year, 222 00:10:12,640 --> 00:10:15,400 Speaker 1: they got crushed so badly or so hard that the 223 00:10:15,480 --> 00:10:18,480 Speaker 1: valuations still look attractive. In fact, when we think the SMP, 224 00:10:18,720 --> 00:10:20,560 Speaker 1: when we bought this, we thought the SMP was roughly 225 00:10:20,559 --> 00:10:23,720 Speaker 1: ten percent overvalued. Semi conductors were still ten percent under 226 00:10:23,760 --> 00:10:26,040 Speaker 1: their historical average, so just to get back to average 227 00:10:26,040 --> 00:10:28,400 Speaker 1: ahead to come up ten percent from there. But again 228 00:10:28,440 --> 00:10:30,080 Speaker 1: we didn't want to go so heavy in this in 229 00:10:30,120 --> 00:10:33,040 Speaker 1: the semiconductors that we it's either a flippical point we're 230 00:10:33,040 --> 00:10:34,880 Speaker 1: gonna get We're gonna crush it, or get crushed. We 231 00:10:34,880 --> 00:10:37,640 Speaker 1: want to do it more broad based, but with semi 232 00:10:37,640 --> 00:10:39,840 Speaker 1: conductor emphasis. So one theme that I'm kind of noticing 233 00:10:39,880 --> 00:10:41,480 Speaker 1: here is that you actually are you kind of using 234 00:10:41,559 --> 00:10:44,000 Speaker 1: e t f s with built in hedges almost where 235 00:10:44,000 --> 00:10:47,640 Speaker 1: it's like you get a concentration, but not all of 236 00:10:47,720 --> 00:10:50,360 Speaker 1: the concentration that you would get maybe with a different ticker. Well, 237 00:10:50,400 --> 00:10:52,360 Speaker 1: that's correct, and so there's a theme that that, Um, 238 00:10:52,400 --> 00:10:54,000 Speaker 1: I think it's warm. Buffett one said we'd rather be 239 00:10:54,080 --> 00:10:56,559 Speaker 1: generally right than precisely wrong. Um, so we try to 240 00:10:56,559 --> 00:10:59,640 Speaker 1: play off a Buffet quote. It's good a quote he 241 00:10:59,679 --> 00:11:03,200 Speaker 1: has on the wall. Are there other ones that you 242 00:11:03,240 --> 00:11:05,720 Speaker 1: guys are using right now that sort of are part 243 00:11:05,720 --> 00:11:07,520 Speaker 1: of that same trend? Now you have a dividend one 244 00:11:07,559 --> 00:11:09,280 Speaker 1: which a lot of people are into divid ets. They 245 00:11:09,280 --> 00:11:11,120 Speaker 1: don't get a lot of coverage because they're kind of boring, 246 00:11:11,440 --> 00:11:15,160 Speaker 1: but they're huge. Yeah, so d grow d g R. Oh, 247 00:11:15,160 --> 00:11:17,679 Speaker 1: it's the I shares Core dividend growth ETF only charges 248 00:11:17,679 --> 00:11:20,600 Speaker 1: eight basis points, so very cheap ten billion dollars. Why 249 00:11:20,640 --> 00:11:23,120 Speaker 1: do you like this? One well because is boring. Actually, 250 00:11:23,520 --> 00:11:26,160 Speaker 1: it's one of our themes that we're playing in this environment. Um. 251 00:11:26,200 --> 00:11:28,440 Speaker 1: It happens to be our macro view from the top 252 00:11:28,480 --> 00:11:31,679 Speaker 1: down in our bottom up work suggests that we're just 253 00:11:31,720 --> 00:11:33,960 Speaker 1: gonna be grinding it out with respect to a capital 254 00:11:33,960 --> 00:11:36,440 Speaker 1: appreciation of the markets with the markets moving higher, not 255 00:11:36,520 --> 00:11:38,040 Speaker 1: a whole lot of pop. We don't think left in 256 00:11:38,080 --> 00:11:39,959 Speaker 1: the markets, um. And we want a little bit of 257 00:11:40,040 --> 00:11:42,199 Speaker 1: quality tilt in case we get a shock. And so 258 00:11:42,440 --> 00:11:45,360 Speaker 1: this is an inexpensive way to get high quality companies 259 00:11:45,360 --> 00:11:47,440 Speaker 1: that consistently grow the difference. So it's not a high 260 00:11:47,440 --> 00:11:51,360 Speaker 1: dividend e t F. It's about consistent dividend growth. So 261 00:11:51,400 --> 00:11:53,400 Speaker 1: you have a very high quality companies that can go 262 00:11:53,440 --> 00:11:56,400 Speaker 1: ahead and continue to appreciate, but do a really good 263 00:11:56,480 --> 00:11:59,000 Speaker 1: job of protecting in volatile markets. And what are the 264 00:11:59,040 --> 00:12:01,319 Speaker 1: holdings like in there? It looks at the SMP. I mean, 265 00:12:01,320 --> 00:12:04,040 Speaker 1: it's basically and this is a great point because divid 266 00:12:04,040 --> 00:12:07,439 Speaker 1: and dtfs all sound the same, but the growers are 267 00:12:07,559 --> 00:12:11,000 Speaker 1: you're gonna have Microsoft's apples, Johnson and Johnson looks very 268 00:12:11,080 --> 00:12:13,040 Speaker 1: much like the SMP. In fact, the yield is only 269 00:12:13,080 --> 00:12:15,839 Speaker 1: two point two per cent so and the SMP is 270 00:12:15,880 --> 00:12:18,040 Speaker 1: one point seven, so you're not getting much yield. You 271 00:12:18,080 --> 00:12:21,000 Speaker 1: get that stability. Now the the high dividend, they'll go 272 00:12:21,040 --> 00:12:23,640 Speaker 1: after the high yielders, but you end up in utilities 273 00:12:23,640 --> 00:12:26,200 Speaker 1: and staples and overweight, but your yield will will go up, 274 00:12:26,200 --> 00:12:28,520 Speaker 1: so you sort of pick your poison. Sounds like you're 275 00:12:28,559 --> 00:12:31,480 Speaker 1: actually want the side benefit of the quality names in 276 00:12:31,559 --> 00:12:34,040 Speaker 1: here in the low ball. That's exactly right. And if 277 00:12:34,080 --> 00:12:35,920 Speaker 1: you went for the high dividend, to your point, you 278 00:12:36,000 --> 00:12:37,480 Speaker 1: might end up with a lot of utilities, which we 279 00:12:37,559 --> 00:12:40,439 Speaker 1: think are pretty expensive in here. It's a defensive play um, 280 00:12:40,480 --> 00:12:42,320 Speaker 1: but they're a little bit rich. Or with some of 281 00:12:42,320 --> 00:12:44,880 Speaker 1: the high yielding stuff, you end up with junk companies 282 00:12:45,120 --> 00:12:47,840 Speaker 1: who just haven't yet cut their dividend. So you've gotta 283 00:12:47,840 --> 00:12:50,120 Speaker 1: be careful about that. And were there ones that bier 284 00:12:50,200 --> 00:12:53,599 Speaker 1: beware that you would keep an eye on in that category, 285 00:12:54,080 --> 00:12:56,560 Speaker 1: there are a couple out there. Basically, anything that has 286 00:12:56,640 --> 00:12:58,560 Speaker 1: a yield that's too good to be true we tend 287 00:12:58,559 --> 00:13:00,080 Speaker 1: to stay away from because those things it's just a 288 00:13:00,080 --> 00:13:03,439 Speaker 1: matter of time before reckoning comes. Alright. Next one in 289 00:13:03,480 --> 00:13:07,840 Speaker 1: the list is BAB Now, I gotta be honest, I 290 00:13:07,880 --> 00:13:10,640 Speaker 1: thought this was the Build America Bond ETF, which there's 291 00:13:10,640 --> 00:13:12,760 Speaker 1: a couple of them. Remember that when Obama came up 292 00:13:12,800 --> 00:13:15,560 Speaker 1: with those UM, there there were three t F but 293 00:13:15,640 --> 00:13:18,880 Speaker 1: it's called the Investo Taxable Municipal Bond e tf UM. 294 00:13:18,920 --> 00:13:21,160 Speaker 1: So you tell me did this did this switch over 295 00:13:21,760 --> 00:13:25,520 Speaker 1: to become a more traditional muni from the Build America 296 00:13:25,520 --> 00:13:28,040 Speaker 1: bond one did? They had to broaden their scope because 297 00:13:28,040 --> 00:13:30,040 Speaker 1: there are only so many Build America bonds out there, 298 00:13:30,240 --> 00:13:33,120 Speaker 1: so they brought their scope to be more taxable munis, 299 00:13:33,120 --> 00:13:35,880 Speaker 1: which isn't so muni bonds are traditionally not taxible, right, 300 00:13:35,920 --> 00:13:38,800 Speaker 1: but then you have the taxable side, which offers higher yield, 301 00:13:39,160 --> 00:13:41,760 Speaker 1: so it out yields the like treasury. But it's still 302 00:13:42,240 --> 00:13:44,120 Speaker 1: very high quality. That's why we like it. It's got 303 00:13:44,120 --> 00:13:46,040 Speaker 1: some duration to it's some interest rate sensitivity to it, 304 00:13:46,160 --> 00:13:49,480 Speaker 1: so it's a really good equity market hedge UM, but 305 00:13:49,520 --> 00:13:52,280 Speaker 1: it's not as expensive, meaning it has a higher yield, 306 00:13:52,320 --> 00:13:55,240 Speaker 1: high quality yield than treasuries do. Yeah, if I'm looking 307 00:13:55,280 --> 00:13:57,440 Speaker 1: at the holdings here, I do see, uh, there are 308 00:13:57,440 --> 00:13:59,720 Speaker 1: some Build America bonds in here, so it's definitely still 309 00:14:00,040 --> 00:14:02,480 Speaker 1: still with those, and that's the thing we build America bonds, right, 310 00:14:02,840 --> 00:14:05,200 Speaker 1: every now and then this little corner of the media 311 00:14:05,240 --> 00:14:08,920 Speaker 1: market will really shine. Um. And it is the duration though, right, 312 00:14:08,960 --> 00:14:11,080 Speaker 1: So what's the duration on an e t F like this? 313 00:14:11,120 --> 00:14:13,960 Speaker 1: Meaning how much interest rate risk are you taking? Yeah, 314 00:14:13,960 --> 00:14:16,560 Speaker 1: so it's about ten years, so it's not super long. 315 00:14:16,640 --> 00:14:18,400 Speaker 1: Like you can stretch out even longer if you wanted to. 316 00:14:18,640 --> 00:14:20,880 Speaker 1: But we're not afraid of taking interest rate risk in 317 00:14:20,880 --> 00:14:23,120 Speaker 1: this environment. We don't think interest rates moved significtyly higher 318 00:14:23,120 --> 00:14:25,080 Speaker 1: from here, um, But we also don't think you're gonna 319 00:14:25,160 --> 00:14:27,200 Speaker 1: compensated if we're going way out in the curve. So, 320 00:14:27,240 --> 00:14:30,280 Speaker 1: for example, the broad market is about a duration of 321 00:14:30,360 --> 00:14:32,840 Speaker 1: six years, right, So this has more duration sensitivity to 322 00:14:32,880 --> 00:14:35,640 Speaker 1: it than the broad market, but it's not super long. 323 00:14:36,040 --> 00:14:37,920 Speaker 1: So when you look at the MUNI space, I tend 324 00:14:38,000 --> 00:14:40,640 Speaker 1: to think people going in for the tax exempt the 325 00:14:40,680 --> 00:14:43,080 Speaker 1: tax equivalent yield. The only thing I know about it 326 00:14:43,120 --> 00:14:44,640 Speaker 1: is like, that's why you do it. But you're not 327 00:14:44,680 --> 00:14:47,880 Speaker 1: buying this for that, correct, You're just you think the 328 00:14:47,920 --> 00:14:49,800 Speaker 1: return is there. We think the return is the vast 329 00:14:49,840 --> 00:14:51,880 Speaker 1: majority of our assets are tax sheltered in i A. 330 00:14:52,040 --> 00:14:54,280 Speaker 1: Rollovers and those kinds of things. The tax tax equivalent 331 00:14:54,320 --> 00:14:56,360 Speaker 1: yield isn't all that important to us, but the yield is, 332 00:14:56,360 --> 00:14:59,120 Speaker 1: and the high quality is, and it, like I've mentioned it, 333 00:14:59,240 --> 00:15:02,000 Speaker 1: out yields the duration treasury. So we're getting very high 334 00:15:02,040 --> 00:15:05,920 Speaker 1: quality fixed income um with a higher yield, largely because 335 00:15:05,960 --> 00:15:07,760 Speaker 1: it's not the most liquid space in the world, right 336 00:15:07,800 --> 00:15:11,160 Speaker 1: but still, uh, we'll take that. So will that be 337 00:15:11,200 --> 00:15:13,480 Speaker 1: when an example of something that you probably hold on 338 00:15:13,560 --> 00:15:16,800 Speaker 1: too longer and has a little bit less churn or 339 00:15:16,960 --> 00:15:20,040 Speaker 1: or or are you actually actively trading that throughout the 340 00:15:20,040 --> 00:15:22,040 Speaker 1: course of the year. That is something that we tend 341 00:15:22,120 --> 00:15:24,080 Speaker 1: to hold onto a little bit longer. Now, if we 342 00:15:24,200 --> 00:15:27,280 Speaker 1: if our viewpoint changed and we became concerned, and I 343 00:15:27,320 --> 00:15:30,440 Speaker 1: hope this happens, I hope that the global economy accelerates 344 00:15:30,760 --> 00:15:33,000 Speaker 1: and we're thinking, all right, long term intertrat is gonna 345 00:15:33,000 --> 00:15:34,960 Speaker 1: be higher because of accelerating economy. That would be great, 346 00:15:35,120 --> 00:15:36,960 Speaker 1: and we would back off of this. That's not our 347 00:15:36,960 --> 00:15:39,360 Speaker 1: core thesis. So for now, it's a tactical position for 348 00:15:39,440 --> 00:15:42,760 Speaker 1: us and most of our our allocations. And how often 349 00:15:42,800 --> 00:15:46,440 Speaker 1: are you reformulating your thesis? Is that part of your 350 00:15:46,480 --> 00:15:50,840 Speaker 1: monthly rebalancing. Well, we rereformulate in real time. It turns 351 00:15:50,840 --> 00:15:52,920 Speaker 1: out the markets in the economy don't work by a calendar. 352 00:15:53,440 --> 00:15:56,400 Speaker 1: We do have funny how that happens. Yeah, we do 353 00:15:56,480 --> 00:16:00,400 Speaker 1: have formal weekly and monthly conversations where the reports ge published, 354 00:16:00,400 --> 00:16:02,120 Speaker 1: the data gets published, and we review all the data. 355 00:16:02,480 --> 00:16:04,400 Speaker 1: But we can make changes at any time. So another 356 00:16:04,400 --> 00:16:07,120 Speaker 1: thing I'm noticing is that you seem to be more 357 00:16:07,360 --> 00:16:11,240 Speaker 1: US centric than maybe international. How do you think about that? 358 00:16:11,760 --> 00:16:15,000 Speaker 1: We are more US centric, especially these days. UM. A 359 00:16:15,000 --> 00:16:16,760 Speaker 1: couple of years ago, we were more excited about the 360 00:16:16,760 --> 00:16:18,840 Speaker 1: foreign markets. We thought there was a good opportunity there 361 00:16:18,840 --> 00:16:21,760 Speaker 1: from a valuation basis. And in seventeen, for example, the 362 00:16:21,760 --> 00:16:24,960 Speaker 1: Eurozone was growing at about two percent GDP growth, which 363 00:16:25,000 --> 00:16:27,200 Speaker 1: is roughly double what we think their long term potential is. 364 00:16:27,400 --> 00:16:29,280 Speaker 1: Now they're struggling for any growth at all, right, and 365 00:16:29,280 --> 00:16:31,120 Speaker 1: so we think the US grows at about two percent 366 00:16:31,480 --> 00:16:35,560 Speaker 1: and the Eurozone struggles to grow at one. Japan similarly. UM. So, 367 00:16:36,080 --> 00:16:39,000 Speaker 1: though there's a valuation opportunity over there, potentially, it's hard 368 00:16:39,040 --> 00:16:41,480 Speaker 1: to get excited about anything that unlocked that opportunity set. 369 00:16:41,520 --> 00:16:43,040 Speaker 1: So we would rather be in the US where we 370 00:16:43,080 --> 00:16:46,120 Speaker 1: get higher quality um and more stable outcomes. We think 371 00:16:46,240 --> 00:16:47,840 Speaker 1: there is an internationally TF I'd like to ask you 372 00:16:47,840 --> 00:16:50,400 Speaker 1: about in your portfolio DWM, which you don't see a lot. 373 00:16:50,680 --> 00:16:53,120 Speaker 1: You assume people have E E F A or I 374 00:16:53,360 --> 00:16:55,400 Speaker 1: F A or something like that. This is the Wisdom 375 00:16:55,400 --> 00:16:59,360 Speaker 1: Tree International Equity Fund and it looks like it's dividend weighted, correct, 376 00:16:59,360 --> 00:17:02,280 Speaker 1: Probably is it screen on dividends too? And why that 377 00:17:02,320 --> 00:17:04,600 Speaker 1: you want international with a little less edge? Well, so 378 00:17:06,240 --> 00:17:09,560 Speaker 1: the actually neither that either. So let's think about when 379 00:17:09,600 --> 00:17:14,200 Speaker 1: we're when we're investing overseas. Different countries have uh different 380 00:17:14,200 --> 00:17:16,639 Speaker 1: accounting methodologies, right, so a dollar of earnings in one 381 00:17:16,680 --> 00:17:19,439 Speaker 1: country might be different than a dollar earnings in another country, 382 00:17:19,480 --> 00:17:22,320 Speaker 1: but nothing speaks to earning stability, like can you make 383 00:17:22,520 --> 00:17:25,959 Speaker 1: a consistent dividend? And so that is a core holding 384 00:17:26,000 --> 00:17:28,199 Speaker 1: for us in our international exposure. It starts with that 385 00:17:28,359 --> 00:17:31,679 Speaker 1: very consistent dividends. The dividend is about making sure you 386 00:17:31,720 --> 00:17:35,200 Speaker 1: lock into companies that produce earnings exactly right. Wow, it's 387 00:17:35,240 --> 00:17:38,439 Speaker 1: cool stuff, right, I mean, he's blowing my mind. I 388 00:17:38,480 --> 00:17:42,880 Speaker 1: actually out of right field. Question Jedi is the right metaphor? 389 00:17:43,920 --> 00:17:46,000 Speaker 1: How many ETFs are there in the in the universe? 390 00:17:47,440 --> 00:17:49,040 Speaker 1: How many of those do you think you've dabbled in 391 00:17:50,240 --> 00:17:52,760 Speaker 1: or looked at at least oh jeez, yeah, well it's 392 00:17:52,760 --> 00:17:54,600 Speaker 1: a lot. So but what we do is we try 393 00:17:54,640 --> 00:17:56,880 Speaker 1: to approach the theme first and then try to find 394 00:17:56,920 --> 00:17:58,680 Speaker 1: an ETF that fits that theme. So over the years 395 00:17:58,760 --> 00:18:00,680 Speaker 1: we've touched a lot of them. But like a lot 396 00:18:00,680 --> 00:18:04,200 Speaker 1: of things with any growing industry or innovation, there's a 397 00:18:04,240 --> 00:18:06,360 Speaker 1: lot of stuff that comes out most but frankly isn't 398 00:18:06,359 --> 00:18:08,320 Speaker 1: gonna work. Most of it's not great, so you end 399 00:18:08,400 --> 00:18:11,359 Speaker 1: up with a few things that are really doable. But 400 00:18:11,440 --> 00:18:13,840 Speaker 1: that theme thing, I mean, it's such a prevalent part 401 00:18:13,920 --> 00:18:16,399 Speaker 1: of the E t F landscape now because I mean, 402 00:18:16,440 --> 00:18:18,440 Speaker 1: we talked about thematics all the time. They're they're great 403 00:18:18,480 --> 00:18:20,439 Speaker 1: talking points. So it's like you must just be like 404 00:18:20,480 --> 00:18:24,920 Speaker 1: swimming through cream as you like formulate feces and ideas, 405 00:18:25,000 --> 00:18:27,360 Speaker 1: and then it's just like, well, which flavor do we want? 406 00:18:27,520 --> 00:18:30,440 Speaker 1: It's like Basking and Robbins, And over the years it's 407 00:18:30,440 --> 00:18:33,000 Speaker 1: been good that there's been so much new product coming out, right, 408 00:18:33,200 --> 00:18:35,720 Speaker 1: so that gives us. If there's tenu ets that come out, 409 00:18:35,800 --> 00:18:38,399 Speaker 1: maybe one or two are actually really legit for us. 410 00:18:38,760 --> 00:18:40,840 Speaker 1: But the more that come out is the more opportunity 411 00:18:40,880 --> 00:18:43,080 Speaker 1: for us to capture some ideas. Okay, so actually I'm 412 00:18:43,119 --> 00:18:45,240 Speaker 1: just noticing that there's a couple of shares in here. 413 00:18:45,600 --> 00:18:48,880 Speaker 1: How do you bring something like a black rock offering 414 00:18:49,480 --> 00:18:51,640 Speaker 1: into the portfolio when a lot of these other ones 415 00:18:51,680 --> 00:18:54,720 Speaker 1: are from maybe smaller issuers. Again, it gets back to 416 00:18:54,720 --> 00:18:56,560 Speaker 1: the theme what are we trying to capture? And then 417 00:18:56,560 --> 00:18:58,960 Speaker 1: who's got the right products? You even think about it 418 00:18:59,000 --> 00:19:01,360 Speaker 1: from that end, it's sort of like, what's the product? Right? 419 00:19:01,480 --> 00:19:03,679 Speaker 1: You will use smaller shores if need be, Yes, you 420 00:19:03,680 --> 00:19:05,320 Speaker 1: have an index i Q product or you did M 421 00:19:05,359 --> 00:19:08,440 Speaker 1: and A correct that's pretty smaller shore, but they're not tiny. Okay, 422 00:19:08,520 --> 00:19:11,800 Speaker 1: let me let me look again. Okay, Uh, I'm gonna 423 00:19:11,840 --> 00:19:15,600 Speaker 1: go to flex share stocks in f R. What's that 424 00:19:15,920 --> 00:19:18,920 Speaker 1: You've got almost five percent in that? It's global infrastructure. 425 00:19:19,440 --> 00:19:21,119 Speaker 1: So the idea being here, So we talked about how 426 00:19:21,119 --> 00:19:24,440 Speaker 1: we're not real excited about an acceleration in global economic 427 00:19:24,480 --> 00:19:26,920 Speaker 1: growth when we talk about like Europe and things like that. Um, 428 00:19:27,240 --> 00:19:30,359 Speaker 1: this is an e t F that and specifically focus 429 00:19:30,400 --> 00:19:34,359 Speaker 1: on infrastructure but not capital or not economically sensitive. So 430 00:19:34,359 --> 00:19:36,120 Speaker 1: it's not like the caterpillars of the world. But these 431 00:19:36,119 --> 00:19:39,640 Speaker 1: are things like global utilities companies, national railroads, cell phone towers, 432 00:19:40,080 --> 00:19:42,480 Speaker 1: these types of things that if the economy, they're gonna 433 00:19:42,520 --> 00:19:45,040 Speaker 1: going to continue to generate consistent earning. Was gonna say, 434 00:19:45,200 --> 00:19:47,880 Speaker 1: sounds like your health care strategy, which is like it's 435 00:19:47,920 --> 00:19:51,160 Speaker 1: like the hips, the artificial hips of America. That's right, 436 00:19:51,200 --> 00:19:53,320 Speaker 1: that's right. Canadian Railroad is gonna do just fine. Japan 437 00:19:53,400 --> 00:19:56,119 Speaker 1: Railroad is gonna do just fine in almost regardless of 438 00:19:56,119 --> 00:19:59,320 Speaker 1: the economic So if the economy accelerates globally, these companies 439 00:19:59,359 --> 00:20:01,840 Speaker 1: will lag, the prices will lag. But if we're talking 440 00:20:01,840 --> 00:20:04,800 Speaker 1: about a choppy or even a difficult environment, these guys 441 00:20:04,800 --> 00:20:13,320 Speaker 1: hold up really well. Two of your biggest holdings are 442 00:20:13,359 --> 00:20:15,359 Speaker 1: the I shares m t u M, which is momentum, 443 00:20:15,480 --> 00:20:18,320 Speaker 1: and the us m V, which is the minimum altility. 444 00:20:19,240 --> 00:20:22,280 Speaker 1: When you go out and you you know, mingle with quants, 445 00:20:22,600 --> 00:20:24,960 Speaker 1: you know, you quickly realize that the I shares will 446 00:20:24,960 --> 00:20:28,160 Speaker 1: put a little beta into there because their sector constrained, 447 00:20:28,200 --> 00:20:30,240 Speaker 1: they don't move that much different than the SMP. But 448 00:20:30,280 --> 00:20:33,240 Speaker 1: then hardcore quants will say, we you're not really capturing 449 00:20:33,280 --> 00:20:35,800 Speaker 1: any kind of factor here. Maybe a little it's like 450 00:20:35,880 --> 00:20:38,960 Speaker 1: diet quant but you like do you like that beta 451 00:20:39,040 --> 00:20:40,560 Speaker 1: in there. Is that why you pick them or is 452 00:20:40,600 --> 00:20:43,400 Speaker 1: it more about the liquidity or the cost. So there's 453 00:20:43,440 --> 00:20:45,639 Speaker 1: a couple of things to that. So, especially if we're 454 00:20:45,640 --> 00:20:47,200 Speaker 1: talking about M t U M, which is very different 455 00:20:47,240 --> 00:20:49,240 Speaker 1: from US M V M t U M is a 456 00:20:49,320 --> 00:20:51,920 Speaker 1: momentum strategy, right. One of the challenges with momentum strategies 457 00:20:52,080 --> 00:20:54,480 Speaker 1: is when you have a momentum crash, that's awful violent 458 00:20:54,720 --> 00:20:57,840 Speaker 1: these strategies, if they're unconstrained, completely unconstrained, you end up 459 00:20:57,840 --> 00:21:00,800 Speaker 1: loading up in whatever single single factor or two or 460 00:21:00,880 --> 00:21:02,720 Speaker 1: driving the market at that time. So you might be 461 00:21:02,800 --> 00:21:06,680 Speaker 1: six technology or real heavy and biotech, and that looks 462 00:21:06,680 --> 00:21:08,680 Speaker 1: great for a couple of quarters, and if that turns 463 00:21:08,680 --> 00:21:11,160 Speaker 1: against you, it blows up right. And so we liked 464 00:21:11,200 --> 00:21:13,560 Speaker 1: M t U M because it takes those momentum names 465 00:21:13,600 --> 00:21:16,800 Speaker 1: but inversely waits them relative to volatility, so it ends 466 00:21:16,840 --> 00:21:18,919 Speaker 1: up with a smoother ride over time. You're still capturing 467 00:21:18,920 --> 00:21:22,040 Speaker 1: that momentum factor, but it's as much smoother ride than 468 00:21:22,320 --> 00:21:24,800 Speaker 1: some of the other things that are completely unconstrained. Understood, 469 00:21:24,840 --> 00:21:28,640 Speaker 1: and then what about rebalancing, because momentum mtum sometimes will 470 00:21:28,680 --> 00:21:31,880 Speaker 1: notice that it rebalances a little oddly around a uh, 471 00:21:32,080 --> 00:21:34,400 Speaker 1: something that changed in the market. Um, I think over 472 00:21:34,440 --> 00:21:36,920 Speaker 1: the long runs trying to capture it. But how important 473 00:21:37,040 --> 00:21:39,760 Speaker 1: is the rebalancing frequency? I think most are quarterly, but 474 00:21:39,800 --> 00:21:42,920 Speaker 1: some are semi annually, some are annually. How important is 475 00:21:42,960 --> 00:21:44,639 Speaker 1: that for you? When you select one it sounds like 476 00:21:44,640 --> 00:21:48,240 Speaker 1: you maybe even do monthly. Well. For us, it depends 477 00:21:48,280 --> 00:21:50,080 Speaker 1: on the strategy that we're trying to capture, right, So 478 00:21:50,119 --> 00:21:52,760 Speaker 1: we're always looking at our portfolios and what's coming out, 479 00:21:53,000 --> 00:21:55,639 Speaker 1: and then you have the ets rebalance and some of 480 00:21:55,680 --> 00:21:58,679 Speaker 1: them it's not as important if they're more sort of 481 00:21:59,320 --> 00:22:01,080 Speaker 1: like like some of the dividend ordinany ones we we 482 00:22:01,119 --> 00:22:03,440 Speaker 1: talked about that are just kind of or d g 483 00:22:03,600 --> 00:22:05,320 Speaker 1: r oh where you're just trying to capture a good 484 00:22:05,320 --> 00:22:07,840 Speaker 1: dividate grower. That thing doesn't need to be rebounced all 485 00:22:07,880 --> 00:22:10,040 Speaker 1: that often, but you have something like momentum that needs 486 00:22:10,040 --> 00:22:12,359 Speaker 1: to be rebound more frequently, so that m TM gets 487 00:22:12,359 --> 00:22:14,680 Speaker 1: rebalanced twice a year. And then they have these ad 488 00:22:14,680 --> 00:22:18,320 Speaker 1: hoc rebalances, and that is very important to us, because, um, 489 00:22:18,400 --> 00:22:21,440 Speaker 1: you like the ad hoc rebalances. Well, we think it's 490 00:22:21,480 --> 00:22:24,000 Speaker 1: important to acknowledge that the market's changing and that the 491 00:22:24,040 --> 00:22:25,480 Speaker 1: et F has a change with it when you're looking 492 00:22:25,480 --> 00:22:27,280 Speaker 1: at a momentum thing. But it's also important for look 493 00:22:27,280 --> 00:22:29,560 Speaker 1: at a portfolio construction that we have to read then 494 00:22:29,920 --> 00:22:32,280 Speaker 1: dig under the hood again to look at our our 495 00:22:32,359 --> 00:22:36,000 Speaker 1: allocations overall and how that rebalancing affects our positioning, because 496 00:22:36,040 --> 00:22:38,440 Speaker 1: you don't want to end up with your thesis exactly, 497 00:22:38,480 --> 00:22:40,240 Speaker 1: and you don't want to end up with an unintended 498 00:22:40,240 --> 00:22:42,520 Speaker 1: bet somewhere. I mean, it's hard enough to be successful investor, 499 00:22:42,520 --> 00:22:44,760 Speaker 1: and then when you have unintended bets because you weren't 500 00:22:44,760 --> 00:22:47,159 Speaker 1: paying attention to rebalancing of one of your bigger holdings, 501 00:22:47,240 --> 00:22:49,919 Speaker 1: that's problematic. Yeah, So what about like a like a 502 00:22:49,960 --> 00:22:52,520 Speaker 1: smart beta offering? Like how much of that do you 503 00:22:52,520 --> 00:22:54,920 Speaker 1: have in your portfolio right now? We do a fair 504 00:22:54,960 --> 00:22:56,399 Speaker 1: amount in the smart beta world. So it depends on 505 00:22:56,400 --> 00:22:58,080 Speaker 1: how you define it. But some people will say momentum 506 00:22:58,160 --> 00:23:00,320 Speaker 1: is a smart beta et F. We also have multi 507 00:23:00,320 --> 00:23:02,840 Speaker 1: factor stuff UM and us m V and those those 508 00:23:02,840 --> 00:23:04,679 Speaker 1: types of things. And if you have VTV, which is 509 00:23:04,680 --> 00:23:07,880 Speaker 1: the Vanguard value, right, which would I don't know barely 510 00:23:07,920 --> 00:23:10,760 Speaker 1: be smart beta. I mean, this is VTV is as 511 00:23:11,160 --> 00:23:13,720 Speaker 1: close to beta as you could possibly get it with 512 00:23:13,760 --> 00:23:16,840 Speaker 1: a value fund, right, which that's intriguing to me. Normally 513 00:23:16,880 --> 00:23:19,520 Speaker 1: i'd picture an advisor putting grammar on this because they 514 00:23:19,560 --> 00:23:21,520 Speaker 1: would never get fired because it will always be around 515 00:23:21,560 --> 00:23:23,840 Speaker 1: the SMP. But you, I would I would think you'd 516 00:23:23,840 --> 00:23:26,320 Speaker 1: go to something a little more exotic, But but you 517 00:23:26,359 --> 00:23:28,240 Speaker 1: like it. We do like it because it's a long 518 00:23:28,320 --> 00:23:30,840 Speaker 1: term core holding for us. It allows us to maintain 519 00:23:30,880 --> 00:23:33,040 Speaker 1: a long term value bias, and we have a we 520 00:23:33,040 --> 00:23:35,280 Speaker 1: have a tilt towards value anyway, and some of these 521 00:23:35,280 --> 00:23:38,320 Speaker 1: things that are more exotic or more pure play value 522 00:23:38,720 --> 00:23:41,159 Speaker 1: are gonna work really good when their time is right, 523 00:23:41,240 --> 00:23:42,919 Speaker 1: and then when their time is not right, they're not 524 00:23:42,960 --> 00:23:45,000 Speaker 1: working at all. And so we like the v The 525 00:23:45,080 --> 00:23:47,200 Speaker 1: VTV is a long term core holding for us. We've 526 00:23:47,200 --> 00:23:49,680 Speaker 1: owned that thing for for forever and have a very 527 00:23:49,720 --> 00:23:52,960 Speaker 1: low cause basis in it. Um. But so, for example, 528 00:23:53,000 --> 00:23:54,800 Speaker 1: if the economy is to accelerate, like maybe we're coming 529 00:23:54,840 --> 00:23:57,200 Speaker 1: out of a recession and and things are trying to turn, 530 00:23:57,359 --> 00:24:00,000 Speaker 1: that's when you want that pure beta or pure play 531 00:24:00,200 --> 00:24:03,880 Speaker 1: value style and when if that's our thesis, we will 532 00:24:03,920 --> 00:24:07,000 Speaker 1: move into that. But that's not our thesis right now. UM, 533 00:24:07,000 --> 00:24:09,280 Speaker 1: and Joel, I have one for you. Um, this is 534 00:24:09,320 --> 00:24:11,960 Speaker 1: one that Tom from our team actually wanted to bring up, 535 00:24:12,000 --> 00:24:15,760 Speaker 1: which is ao Tom saraphagus. Yeah. Um, you know you 536 00:24:15,760 --> 00:24:18,280 Speaker 1: always ask about why isn't there an ETF just does everything? Yeah, 537 00:24:19,160 --> 00:24:21,399 Speaker 1: that's what a okay does. It's a it's a okay 538 00:24:21,440 --> 00:24:23,880 Speaker 1: is a kind of a great ticker name. So it's 539 00:24:23,880 --> 00:24:27,439 Speaker 1: a conservative core conservative allocations, an ascid allocation ETF. So 540 00:24:27,480 --> 00:24:30,280 Speaker 1: it holds basically like seven other e t f s, 541 00:24:30,560 --> 00:24:34,280 Speaker 1: the track bonds, stocks, small caps, midcaps. So in a 542 00:24:34,320 --> 00:24:37,560 Speaker 1: way it's full Yeah, the meta e t F. Aren't 543 00:24:37,560 --> 00:24:39,919 Speaker 1: you the ascid allocator? So why would you own an 544 00:24:39,920 --> 00:24:44,920 Speaker 1: ascid allocation ETF for that one? In particular, we own 545 00:24:44,920 --> 00:24:47,840 Speaker 1: that for a particular investor who's rather limited in what 546 00:24:47,880 --> 00:24:50,720 Speaker 1: we can own, and so it fills us a spot 547 00:24:50,760 --> 00:24:53,920 Speaker 1: for us where in our full blown ETFs strategies we 548 00:24:53,960 --> 00:24:56,240 Speaker 1: actually don't own it. We do own some other acid 549 00:24:56,280 --> 00:24:58,359 Speaker 1: allocation e t F s um that a little more 550 00:24:58,440 --> 00:25:01,240 Speaker 1: esoteric um things like m D I V and I yield. 551 00:25:01,359 --> 00:25:03,639 Speaker 1: Let's talk about MDEV real quick, because this is a 552 00:25:03,720 --> 00:25:07,280 Speaker 1: multi asset income ETF, which sounds you know, boring and convoluted. 553 00:25:07,320 --> 00:25:09,280 Speaker 1: But really it's the way I would phrase it is 554 00:25:09,320 --> 00:25:12,880 Speaker 1: it's like um all of the above for yield goes 555 00:25:12,920 --> 00:25:16,399 Speaker 1: into junk bonds. Uh, you know, dividend stocks, you know 556 00:25:16,400 --> 00:25:18,320 Speaker 1: everything that has like a nice yield. It kind of 557 00:25:18,359 --> 00:25:21,320 Speaker 1: just does it all in one shot. And you like that. 558 00:25:21,880 --> 00:25:23,280 Speaker 1: We do like that when that one's got a little 559 00:25:23,320 --> 00:25:25,920 Speaker 1: more zing to, a little more beta to it because 560 00:25:25,920 --> 00:25:28,280 Speaker 1: it picks up things like um M LPs and the like, 561 00:25:28,480 --> 00:25:30,120 Speaker 1: and so it's got a it's got a healthy yield 562 00:25:30,160 --> 00:25:32,360 Speaker 1: of about six percent. So we look at this as 563 00:25:32,400 --> 00:25:34,760 Speaker 1: something that can capture our forecast for equity returns for 564 00:25:34,760 --> 00:25:37,080 Speaker 1: example going forward is about seven percent total ry to 565 00:25:37,119 --> 00:25:39,760 Speaker 1: return M D I V gives us about six percent 566 00:25:39,800 --> 00:25:42,480 Speaker 1: of that just out of yield. And uh, now it's 567 00:25:42,600 --> 00:25:44,480 Speaker 1: it's gonna have some volatility to it. We think it 568 00:25:44,480 --> 00:25:47,280 Speaker 1: will get us probably about seventy of the risk of 569 00:25:47,320 --> 00:25:50,720 Speaker 1: the market. But it's capturing something like the potential return 570 00:25:50,720 --> 00:25:52,400 Speaker 1: of the market. So we like that. And it's got 571 00:25:52,400 --> 00:25:55,440 Speaker 1: a relatively low correlation. It's about a point eight correlation 572 00:25:55,480 --> 00:25:58,280 Speaker 1: to the broad equity market, so it gives diversification benefit. 573 00:25:58,320 --> 00:26:00,080 Speaker 1: Why do you think an a OK type et F 574 00:26:00,240 --> 00:26:02,160 Speaker 1: or an m did frankly, but let's stick with it. Okay, 575 00:26:02,240 --> 00:26:05,320 Speaker 1: Why aren't these more popular? Is it because advisors they 576 00:26:05,400 --> 00:26:10,240 Speaker 1: kind of disintermediate a layer there, Because Joel wonders this 577 00:26:10,280 --> 00:26:13,000 Speaker 1: all the time, Like and Rick ferry Um who's an 578 00:26:13,000 --> 00:26:16,040 Speaker 1: advisor himself, thinks there's a market that hasn't been tapped 579 00:26:16,080 --> 00:26:17,320 Speaker 1: yet for these. But I'm like, they're out there and 580 00:26:17,320 --> 00:26:20,440 Speaker 1: they don't have much money. My thesis actually is that 581 00:26:21,320 --> 00:26:25,040 Speaker 1: everyone has somebody in the middle, so that stuff doesn't 582 00:26:25,119 --> 00:26:28,119 Speaker 1: quite get picked up because you're gonna put me in 583 00:26:28,119 --> 00:26:31,719 Speaker 1: another things that could be um And maybe it's just 584 00:26:32,320 --> 00:26:35,120 Speaker 1: people who make look like it's too easy, right? Why 585 00:26:35,119 --> 00:26:37,119 Speaker 1: would you pick one et F that does all this stuff? 586 00:26:37,240 --> 00:26:38,960 Speaker 1: But to us, we really like that because that covers 587 00:26:38,960 --> 00:26:40,680 Speaker 1: a lot of ground for us, because I don't want 588 00:26:40,680 --> 00:26:42,960 Speaker 1: to own to present positions and m LPs and to 589 00:26:43,040 --> 00:26:44,600 Speaker 1: present positions in this and that I can own one 590 00:26:44,600 --> 00:26:45,840 Speaker 1: broad e t F that I know what's gonna do. 591 00:26:45,880 --> 00:26:47,879 Speaker 1: It's gonna cover that ground for us and get us 592 00:26:47,920 --> 00:26:51,399 Speaker 1: that that consistent return with less risk with one ticker symbol. 593 00:26:51,400 --> 00:26:52,399 Speaker 1: So that makes a lot of sense, and then we 594 00:26:52,400 --> 00:26:54,520 Speaker 1: could build around it, give us room to do things 595 00:26:54,520 --> 00:26:56,920 Speaker 1: like q Tech and I h I when we own 596 00:26:57,359 --> 00:27:00,240 Speaker 1: own it. So how often do you have you mentioned 597 00:27:00,320 --> 00:27:03,720 Speaker 1: this is one particular investor that you basically built a 598 00:27:03,760 --> 00:27:06,400 Speaker 1: separate strategy for. How often do you do something like that? 599 00:27:07,000 --> 00:27:08,720 Speaker 1: Very rarely? They were a big investor for us and 600 00:27:08,760 --> 00:27:10,800 Speaker 1: a put investor for us. So somebody comes knocking on 601 00:27:10,880 --> 00:27:14,440 Speaker 1: the door like that, you're gonna take it and say, hey, okay, 602 00:27:14,560 --> 00:27:17,040 Speaker 1: uh so I'm notssing though that it seems like you're 603 00:27:17,040 --> 00:27:19,840 Speaker 1: long only? Are you short anything? Because that would be revealed. 604 00:27:20,000 --> 00:27:21,720 Speaker 1: You know, the long only stuff is what's going to 605 00:27:21,800 --> 00:27:23,639 Speaker 1: come out in the thirteen f But do you have shorts? 606 00:27:24,040 --> 00:27:25,800 Speaker 1: We don't have shorts. We do use from time to 607 00:27:25,840 --> 00:27:29,080 Speaker 1: time ETFs that do long short within them, but our 608 00:27:29,119 --> 00:27:31,760 Speaker 1: broad clientele really don't want us to do anything in verse. 609 00:27:32,520 --> 00:27:35,000 Speaker 1: And so what about other exotic stuff that Eric would 610 00:27:35,040 --> 00:27:38,560 Speaker 1: put on his red light system. You don't do leverage, right, 611 00:27:38,720 --> 00:27:40,679 Speaker 1: We do not do. Do you do any commodities that 612 00:27:40,720 --> 00:27:44,560 Speaker 1: hold futures? We can? We haven't lately. Um, we just 613 00:27:44,560 --> 00:27:46,400 Speaker 1: don't think it's a time at the time is right 614 00:27:46,400 --> 00:27:48,399 Speaker 1: to own those. Do you do you own senior loans 615 00:27:48,440 --> 00:27:51,240 Speaker 1: or junk bonds? We do not we have in the past. 616 00:27:51,320 --> 00:27:54,760 Speaker 1: We don't have EUROPG and G it's like with a 617 00:27:54,800 --> 00:27:57,720 Speaker 1: little yellow he's uh, he's he sticks to the family movies. 618 00:27:58,040 --> 00:27:59,840 Speaker 1: Well for now that we have like for example, for 619 00:27:59,880 --> 00:28:03,800 Speaker 1: an stop Friday night, let's ask about his personal account. 620 00:28:05,480 --> 00:28:08,040 Speaker 1: We have owned high yield in the past. Last time 621 00:28:08,080 --> 00:28:11,120 Speaker 1: we owned hig yield in a big way was when 622 00:28:11,119 --> 00:28:13,639 Speaker 1: we are work suggested that the price of oil is 623 00:28:13,680 --> 00:28:17,200 Speaker 1: vulnerable and how yield that market is something like energy related, 624 00:28:17,240 --> 00:28:18,960 Speaker 1: So we didn't want to own that going into it. 625 00:28:19,119 --> 00:28:21,000 Speaker 1: And we still think that sector is vulnerable, so we're 626 00:28:21,000 --> 00:28:23,080 Speaker 1: not gonna own it now, and we think we're shorter 627 00:28:23,119 --> 00:28:25,440 Speaker 1: inter strates are now we're not getting compensated very well 628 00:28:25,480 --> 00:28:27,720 Speaker 1: for taking uh, the senior loan risk, But we did 629 00:28:28,119 --> 00:28:30,480 Speaker 1: years ago when the FED just started hiking interest rates. 630 00:28:30,520 --> 00:28:33,000 Speaker 1: The market price in the probability that the FED was 631 00:28:33,000 --> 00:28:34,679 Speaker 1: going to continue to do that, we thought it was 632 00:28:34,720 --> 00:28:37,040 Speaker 1: a lock. So we wanted to use that variable rate 633 00:28:37,040 --> 00:28:38,440 Speaker 1: that floating right on the short end of the curve, 634 00:28:38,440 --> 00:28:40,200 Speaker 1: and we did pretty well with it at that time. 635 00:28:40,280 --> 00:28:42,680 Speaker 1: You know you you said something interesting that I'm interested about. 636 00:28:42,760 --> 00:28:46,240 Speaker 1: Do you eat your own cooking? Yes? Everything I own 637 00:28:46,280 --> 00:28:47,840 Speaker 1: our clients own. In fact, I'm just invested in the 638 00:28:47,840 --> 00:28:50,400 Speaker 1: same portfolios our clients are invested in. So now we're 639 00:28:50,400 --> 00:28:52,800 Speaker 1: each we're gonna ask you about an idea that that 640 00:28:52,840 --> 00:28:54,560 Speaker 1: we're kind of intrigued with and see what you think 641 00:28:55,280 --> 00:28:58,040 Speaker 1: as the master user. Here. One thing I'm just I 642 00:28:58,120 --> 00:29:02,120 Speaker 1: can't help be super intrigued about is uranium miners because 643 00:29:02,440 --> 00:29:05,040 Speaker 1: you know, nuclear power according to Bill Gates and a 644 00:29:05,040 --> 00:29:07,240 Speaker 1: lot of people starting to read more about this. If 645 00:29:07,280 --> 00:29:09,800 Speaker 1: you want to fight climate change, but yet you want 646 00:29:09,840 --> 00:29:12,400 Speaker 1: economic growth and nobody wants to like stop moving around, 647 00:29:12,960 --> 00:29:15,280 Speaker 1: it kind of needs something to help out wind and solar, right, 648 00:29:15,480 --> 00:29:19,840 Speaker 1: So nuclear is a clean, cheap seven method, and I 649 00:29:19,880 --> 00:29:22,160 Speaker 1: get that has to get over this public relations hurdle. 650 00:29:22,560 --> 00:29:24,240 Speaker 1: But a new E t F came out U R 651 00:29:24,400 --> 00:29:27,040 Speaker 1: n M. And there's also you are a after an 652 00:29:27,080 --> 00:29:30,320 Speaker 1: eight downturn in the market over the past eight years, 653 00:29:30,320 --> 00:29:32,440 Speaker 1: and I've never seen an e t F come out 654 00:29:32,440 --> 00:29:35,440 Speaker 1: with a back test quote unquote that bad. The whole 655 00:29:35,440 --> 00:29:38,600 Speaker 1: thing made be intrigued in that A, Um, here's a 656 00:29:39,360 --> 00:29:42,520 Speaker 1: of story, and B it's been beaten up so much 657 00:29:42,560 --> 00:29:44,800 Speaker 1: that the smallest little catalyst seems like it could be 658 00:29:44,880 --> 00:29:49,880 Speaker 1: massive upside thoughts. So that's a very specific, particular idea. 659 00:29:49,880 --> 00:29:51,800 Speaker 1: And if we think about our client based being individuals 660 00:29:51,800 --> 00:29:55,760 Speaker 1: and families, not that nerdy right right, And and if 661 00:29:55,760 --> 00:29:57,520 Speaker 1: we do that, so let's say we go ahead and 662 00:29:57,560 --> 00:29:59,960 Speaker 1: invest in that and it works great, you know that's 663 00:30:00,000 --> 00:30:02,040 Speaker 1: what they expect of us. But if it doesn't work, 664 00:30:02,520 --> 00:30:04,280 Speaker 1: now I've got something. Why did you put me in? What? 665 00:30:04,640 --> 00:30:07,400 Speaker 1: Why am I in Urania? Right? And so for us 666 00:30:07,440 --> 00:30:10,120 Speaker 1: it's such a specific particular thing. And how much of 667 00:30:10,120 --> 00:30:11,960 Speaker 1: that would you really own in a portfolio? Is it 668 00:30:12,000 --> 00:30:14,160 Speaker 1: really going to add that much to the contribution to 669 00:30:14,240 --> 00:30:17,200 Speaker 1: the overall return of a strategy? Um? For us, when 670 00:30:17,240 --> 00:30:18,840 Speaker 1: we think about all those kinds of things, that's gonna 671 00:30:18,840 --> 00:30:22,360 Speaker 1: be so specific. It's an interesting academic exercise, um, But 672 00:30:22,440 --> 00:30:23,760 Speaker 1: it's hard to say, hey, I want to own ten 673 00:30:23,800 --> 00:30:25,720 Speaker 1: percent of your portfolio and I right your Okay. So 674 00:30:25,800 --> 00:30:28,320 Speaker 1: here's a different one. And we we did a sort 675 00:30:28,320 --> 00:30:31,040 Speaker 1: of a game show last spring where we had a 676 00:30:31,160 --> 00:30:34,720 Speaker 1: bunch of people pitch an idea that we think would 677 00:30:34,720 --> 00:30:36,400 Speaker 1: make for a good d t F or that person 678 00:30:36,440 --> 00:30:38,240 Speaker 1: would think for a good DTF the one that I'm 679 00:30:38,240 --> 00:30:42,200 Speaker 1: actually interested in his millennials, right, Like here's a gigantic generation, 680 00:30:42,240 --> 00:30:44,600 Speaker 1: bigger than the boomers. So if you believe that's part 681 00:30:44,600 --> 00:30:47,280 Speaker 1: of the thesis, these are going to be massive consumers. 682 00:30:48,000 --> 00:30:50,800 Speaker 1: Will you that seems like a long term play that 683 00:30:50,800 --> 00:30:52,760 Speaker 1: you could get into. How would you approach something like that? 684 00:30:52,880 --> 00:30:55,760 Speaker 1: We actually did approach uh, the millennial generation a couple 685 00:30:55,800 --> 00:30:59,360 Speaker 1: of years ago when we thought about I remember during 686 00:30:59,400 --> 00:31:02,600 Speaker 1: the global financial crisis two nine. The whole story was, 687 00:31:02,880 --> 00:31:04,760 Speaker 1: you know, these people are graduating college and they can't 688 00:31:04,760 --> 00:31:07,080 Speaker 1: find jobs, right, so they had the boomerang generation. People 689 00:31:07,120 --> 00:31:09,200 Speaker 1: have been back into their parents basement. Well that was 690 00:31:09,200 --> 00:31:11,320 Speaker 1: ten years ago. So now you're thirty years old living 691 00:31:11,320 --> 00:31:13,360 Speaker 1: a mom's basement, right, and so you're not gonna keep 692 00:31:13,400 --> 00:31:15,240 Speaker 1: doing that. So we thought, Okay, they don't have money 693 00:31:15,360 --> 00:31:18,880 Speaker 1: to buy holms, so what's the next best thing? Apartments 694 00:31:19,120 --> 00:31:22,000 Speaker 1: multi family housing. So we picked up on our easy 695 00:31:22,000 --> 00:31:23,960 Speaker 1: which is the mortgage that's heavily invested in that, and 696 00:31:23,960 --> 00:31:26,000 Speaker 1: that did fairly well for us that way. You know, 697 00:31:26,040 --> 00:31:29,080 Speaker 1: the millennials also that e t F sounds gimmicky, but 698 00:31:29,120 --> 00:31:31,000 Speaker 1: when you think about it, I think every company there 699 00:31:31,000 --> 00:31:34,360 Speaker 1: has to have of its revenue from millennials. And you 700 00:31:34,400 --> 00:31:37,320 Speaker 1: know how tech savvy and and picky. They are. I 701 00:31:37,440 --> 00:31:40,640 Speaker 1: think if you can serve them, you know, you probably 702 00:31:40,680 --> 00:31:44,200 Speaker 1: are gonna eventually bring over other people from other demographics. 703 00:31:44,200 --> 00:31:46,920 Speaker 1: That's and it has done pretty well. Although the problem 704 00:31:47,000 --> 00:31:49,800 Speaker 1: with comparing a millennial ETF. It beat the SMP over 705 00:31:49,840 --> 00:31:52,240 Speaker 1: many periods, but then you throw in the Russell growth 706 00:31:52,640 --> 00:31:54,760 Speaker 1: and it does now perform that. Like, that's a tough 707 00:31:54,800 --> 00:31:56,480 Speaker 1: part about some of these themes. If you if you 708 00:31:56,480 --> 00:31:59,520 Speaker 1: slap on the growth index, almost nothing beats it. It's like, well, 709 00:31:59,560 --> 00:32:02,120 Speaker 1: what's the point anyway? That's exactly right. Yeah, so when 710 00:32:02,120 --> 00:32:04,040 Speaker 1: you actually dig in do that kind of work, you've 711 00:32:04,040 --> 00:32:06,160 Speaker 1: got this cute theme, or I can do it using 712 00:32:06,200 --> 00:32:08,080 Speaker 1: the broad growth and get it like five basis points 713 00:32:08,080 --> 00:32:10,280 Speaker 1: and be done. Okay, So I just want to kick 714 00:32:10,280 --> 00:32:12,520 Speaker 1: the tires on this a little bit more because you know, 715 00:32:12,800 --> 00:32:16,360 Speaker 1: we've we've got to interview Jack Bogel Buy and hold 716 00:32:16,400 --> 00:32:21,040 Speaker 1: guy kind of anti et fs. You're almost exact opposite. 717 00:32:21,400 --> 00:32:28,000 Speaker 1: We're very t f s and we're treating not constantly 718 00:32:28,080 --> 00:32:34,120 Speaker 1: but frequently right and using you know, uh ccs to 719 00:32:34,360 --> 00:32:37,960 Speaker 1: sort of inform how how your performance might be able 720 00:32:38,000 --> 00:32:41,320 Speaker 1: to beat the market. Right, what do you have to 721 00:32:41,360 --> 00:32:44,640 Speaker 1: say through you know the large swath of the world 722 00:32:44,680 --> 00:32:47,000 Speaker 1: who just as a buy and hold investor and maybe 723 00:32:47,080 --> 00:32:51,160 Speaker 1: using still right. So Bogel has been a great inspiration 724 00:32:51,200 --> 00:32:52,840 Speaker 1: for us over the years, and a couple of things 725 00:32:52,840 --> 00:32:54,680 Speaker 1: that he said, like, for example, he talks about how 726 00:32:54,840 --> 00:32:56,440 Speaker 1: most of the marketing stuff we we see out there's 727 00:32:56,440 --> 00:32:58,680 Speaker 1: bogus right, it's all malarky. A lot of it is, 728 00:32:58,760 --> 00:33:01,000 Speaker 1: and we actually agree with that. A lot of the 729 00:33:01,120 --> 00:33:03,640 Speaker 1: stuff that he's he's talked about and he's inspired us 730 00:33:03,680 --> 00:33:05,640 Speaker 1: to be a little more cynical the way we look 731 00:33:05,680 --> 00:33:08,520 Speaker 1: at the world and not necessarily accept what you might 732 00:33:08,560 --> 00:33:10,840 Speaker 1: the researchers might might give you. Now, the challenge with 733 00:33:10,880 --> 00:33:13,520 Speaker 1: being a buy and hold investor only is that people 734 00:33:13,720 --> 00:33:16,040 Speaker 1: don't actually do that. If you look at the average 735 00:33:16,080 --> 00:33:17,960 Speaker 1: holding time for a mutual fund over the years, it's 736 00:33:17,960 --> 00:33:21,760 Speaker 1: something like eighteen months. Because markets are volatile and people 737 00:33:21,920 --> 00:33:24,800 Speaker 1: get scared and they end up bailing at the wrong time. 738 00:33:24,880 --> 00:33:27,280 Speaker 1: So a lot of our tactical work is to act 739 00:33:27,280 --> 00:33:30,240 Speaker 1: as behavior relief valve to help our investors stay the course. 740 00:33:30,600 --> 00:33:33,840 Speaker 1: So I appreciate Mr Bogle's viewpoints on how there's a 741 00:33:33,840 --> 00:33:36,080 Speaker 1: lot of marketing bs out there and I get that. 742 00:33:36,400 --> 00:33:39,560 Speaker 1: I think that's right. Um, but we've demonstrated over more 743 00:33:39,560 --> 00:33:41,440 Speaker 1: than a decade that we can perform as good as 744 00:33:41,440 --> 00:33:43,480 Speaker 1: a market while taking less risk and help people stay 745 00:33:43,480 --> 00:33:46,160 Speaker 1: the course. So, speaking of which, over that decade, what's 746 00:33:46,160 --> 00:33:50,840 Speaker 1: performers been like for our our core three portfolios that 747 00:33:50,840 --> 00:33:55,280 Speaker 1: we launched, Um, actually in September, I'm sorry, two eight 748 00:33:55,520 --> 00:33:57,800 Speaker 1: is when that track record starts. Each of those strategies 749 00:33:57,800 --> 00:34:00,520 Speaker 1: has outperformed their respective benchmarks while taking between ten and 750 00:34:01,160 --> 00:34:03,920 Speaker 1: less risk. And that's the key, if you can smooth 751 00:34:03,920 --> 00:34:07,240 Speaker 1: the ride for people and help folks especially in down periods. 752 00:34:07,560 --> 00:34:09,440 Speaker 1: You know Richard Taylor when the Nobel Prize for his 753 00:34:09,440 --> 00:34:12,080 Speaker 1: working behavior economics, and one of his key thesis is 754 00:34:12,160 --> 00:34:14,719 Speaker 1: that downside volatility affects people at least twice as much 755 00:34:14,719 --> 00:34:16,560 Speaker 1: of the befort have a gain. So protecting in the 756 00:34:16,640 --> 00:34:19,239 Speaker 1: downside is at least it's worth at least twice as 757 00:34:19,280 --> 00:34:21,080 Speaker 1: much as being able to outperform on the upside. Right, 758 00:34:21,120 --> 00:34:23,040 Speaker 1: So if we can protect on the downside, that's what 759 00:34:23,120 --> 00:34:26,839 Speaker 1: helps people stay the course and achieve these long term results. Well, 760 00:34:26,880 --> 00:34:29,760 Speaker 1: the buin whole thing works great in a classroom in academia, 761 00:34:29,880 --> 00:34:31,880 Speaker 1: in the world. World people don't do that. And on 762 00:34:31,920 --> 00:34:35,000 Speaker 1: the flip side to Bogel's complaints, there's the hedge fund 763 00:34:35,000 --> 00:34:37,480 Speaker 1: guy complaint I call it, which is, uh, e t 764 00:34:37,640 --> 00:34:39,600 Speaker 1: f s are going to blow up their systemic risk 765 00:34:39,719 --> 00:34:42,600 Speaker 1: passive makes everything dumb. They're distorting fundamentals. You've heard them 766 00:34:42,600 --> 00:34:45,279 Speaker 1: all or you are a user of these. Does any 767 00:34:45,280 --> 00:34:48,080 Speaker 1: of that affect you as any of it true? Um, 768 00:34:48,160 --> 00:34:50,120 Speaker 1: you know, as somebody who's actually putting other people's money 769 00:34:50,160 --> 00:34:51,359 Speaker 1: in it. What do you think when you hear that 770 00:34:51,640 --> 00:34:53,799 Speaker 1: there are narrow parts of the market where you can 771 00:34:53,840 --> 00:34:55,560 Speaker 1: get trapped holding an e t F. You might remember 772 00:34:55,560 --> 00:34:57,480 Speaker 1: the junior gold miners a couple of years ago got 773 00:34:57,480 --> 00:34:59,480 Speaker 1: locked up. But how big is that market? You know, 774 00:34:59,520 --> 00:35:01,640 Speaker 1: the et F is going to dominate that more so. 775 00:35:01,800 --> 00:35:03,959 Speaker 1: But the broader based e t F that's not an issue. 776 00:35:04,000 --> 00:35:07,520 Speaker 1: And in fact, it's just another market participant. You always 777 00:35:07,520 --> 00:35:10,440 Speaker 1: have buyers and sellers participating in the market. And if 778 00:35:10,480 --> 00:35:12,080 Speaker 1: you look at it taking a step back, the market 779 00:35:12,120 --> 00:35:14,520 Speaker 1: is driven by the large institutions and the big mutual 780 00:35:14,560 --> 00:35:17,040 Speaker 1: funds that together combine make the market. So just one 781 00:35:17,080 --> 00:35:20,759 Speaker 1: more entrance isn't broadly speaking, isn't going to be that impactful. 782 00:35:20,800 --> 00:35:23,920 Speaker 1: So at four trillion dollars roughly the et F landscape, 783 00:35:23,960 --> 00:35:27,640 Speaker 1: and it's got a pretty big parabolic growth rate. But 784 00:35:27,719 --> 00:35:30,480 Speaker 1: mutual funds are still right around three are thirty trillion, 785 00:35:30,880 --> 00:35:34,400 Speaker 1: and the global liquidity is around three hundred trillion. So 786 00:35:34,920 --> 00:35:37,000 Speaker 1: what are we talking about. We're talking about marginal stuff. 787 00:35:37,040 --> 00:35:39,440 Speaker 1: And anytime something locks up, like junior goal miners, it 788 00:35:39,520 --> 00:35:41,600 Speaker 1: hits the press and everybody gets excited about it. But 789 00:35:42,120 --> 00:35:44,080 Speaker 1: sp y doesn't have that problem. The big broader things 790 00:35:44,080 --> 00:35:45,840 Speaker 1: that we invest and don't have that problem. Yeah, we 791 00:35:45,880 --> 00:35:48,160 Speaker 1: call it the big fish in the small pond phenomenon. 792 00:35:48,200 --> 00:35:49,799 Speaker 1: Every now and then, like an xt I V, something 793 00:35:49,880 --> 00:35:51,799 Speaker 1: just gets a little bit bigger than the issue where 794 00:35:51,800 --> 00:35:54,040 Speaker 1: thought it would and it owns a little too much 795 00:35:54,080 --> 00:35:56,759 Speaker 1: of the stocks s d Y that dividend aristocrat one 796 00:35:56,800 --> 00:35:59,359 Speaker 1: recently had it. But largely I would agree with you. 797 00:35:59,400 --> 00:36:02,400 Speaker 1: I think sometimes times, uh, you cannot perform. So I 798 00:36:02,440 --> 00:36:04,359 Speaker 1: don't know. It sounds like sour grapes to me. But 799 00:36:05,320 --> 00:36:09,200 Speaker 1: also I think showed the sell off was pretty violent 800 00:36:09,239 --> 00:36:12,439 Speaker 1: in some parts of the FED wasn't having the markets back, 801 00:36:12,440 --> 00:36:14,880 Speaker 1: and they seem to work fine. We saw in two 802 00:36:14,880 --> 00:36:16,440 Speaker 1: thousand eight two, which is the biggest crisis and it 803 00:36:16,520 --> 00:36:18,480 Speaker 1: US ever seen since a great depression, and they held 804 00:36:18,520 --> 00:36:21,279 Speaker 1: up just fine. What are we not talking about that 805 00:36:21,320 --> 00:36:24,560 Speaker 1: we should be talking about right now with the t s, yeah, 806 00:36:24,680 --> 00:36:29,680 Speaker 1: or or just in your investing philosophy. So, um, there's 807 00:36:29,719 --> 00:36:31,160 Speaker 1: some risks out there that we're paying a lot of 808 00:36:31,200 --> 00:36:33,879 Speaker 1: attention to. And uh, you mentioned the FED didn't really 809 00:36:33,880 --> 00:36:37,879 Speaker 1: have the markets back in December. Um, we're a little 810 00:36:37,880 --> 00:36:39,279 Speaker 1: bit concerned that the FED is a little bit sleep 811 00:36:39,280 --> 00:36:40,520 Speaker 1: at the wheel right now. We'd like to see them 812 00:36:40,520 --> 00:36:42,840 Speaker 1: cut interest rates for because we can't forget that the 813 00:36:43,120 --> 00:36:45,160 Speaker 1: yield curve inverted last year and that's a one in 814 00:36:45,239 --> 00:36:48,520 Speaker 1: two year lead time, so we're still in that cautionary window. Um. 815 00:36:48,560 --> 00:36:50,359 Speaker 1: So the markets at all time highs. There's a lot 816 00:36:50,400 --> 00:36:52,200 Speaker 1: of risk out there, and we think uncertainty is doing 817 00:36:52,239 --> 00:36:54,239 Speaker 1: nothing but increasing for the new yar term. And so 818 00:36:54,360 --> 00:36:56,600 Speaker 1: ets are actually a great way to to be able 819 00:36:56,600 --> 00:36:59,120 Speaker 1: to participate in the upside while managing that risk. And 820 00:36:59,160 --> 00:37:01,759 Speaker 1: you can quickly pair act which is what works. Do 821 00:37:01,760 --> 00:37:03,759 Speaker 1: you have a Bernie Sanders et F just in case, 822 00:37:04,719 --> 00:37:07,400 Speaker 1: just in case he starts to climb a Polese and whatnot? 823 00:37:07,560 --> 00:37:09,560 Speaker 1: You what are you gonna go to g l D. 824 00:37:10,160 --> 00:37:13,279 Speaker 1: Actually no, if if if the market gives us an opportunity, 825 00:37:13,600 --> 00:37:16,240 Speaker 1: like the market pulls back because of Bernie Sanders election, 826 00:37:16,320 --> 00:37:18,960 Speaker 1: we would buy that. We would buy just basic beta 827 00:37:19,320 --> 00:37:21,680 Speaker 1: because our work shows that who's in the White House 828 00:37:21,880 --> 00:37:24,440 Speaker 1: really doesn't have a broad effect on the global on 829 00:37:24,480 --> 00:37:26,759 Speaker 1: the economy, and then therefore the markets. Now, certainly you 830 00:37:26,800 --> 00:37:29,839 Speaker 1: can affect individual sectors and industries, so you probably don't 831 00:37:29,840 --> 00:37:31,279 Speaker 1: want to be in the energy space in a big 832 00:37:31,280 --> 00:37:33,960 Speaker 1: way under a Bernie Sanders kind of environment. Um, but 833 00:37:34,080 --> 00:37:36,520 Speaker 1: everything else let's just fine to us. Okay, I can't 834 00:37:36,800 --> 00:37:39,560 Speaker 1: think of a better person to ask my closing question too, 835 00:37:39,680 --> 00:37:44,080 Speaker 1: which is what is your favorite ticker? Oh? That's probably would? 836 00:37:45,000 --> 00:37:48,719 Speaker 1: Oh interesting inspired choice, which, by the way, is the 837 00:37:48,760 --> 00:37:50,959 Speaker 1: timbo et F And there's an other one called cut, 838 00:37:51,000 --> 00:37:54,640 Speaker 1: which is a it's right up there. Yeah, but he goes, 839 00:37:54,680 --> 00:37:59,200 Speaker 1: would why would? Uh? Hey, you know what it is? Right, 840 00:37:59,239 --> 00:38:01,200 Speaker 1: It's like even tan you have to think about it 841 00:38:01,239 --> 00:38:02,959 Speaker 1: for a second. What does that mean? Well, what I'm buying? 842 00:38:02,960 --> 00:38:06,759 Speaker 1: What I'm buying November? All right, Gary, thanks for joining 843 00:38:06,840 --> 00:38:17,360 Speaker 1: us on trillance. Thanks for having me this pleasure. Thanks 844 00:38:17,360 --> 00:38:19,839 Speaker 1: for listening. To Trillions until next time. You can find 845 00:38:19,880 --> 00:38:23,320 Speaker 1: us on the Bloomberg terminal, Bloomberg dot com, Apple podcast, Spotify, 846 00:38:23,480 --> 00:38:25,600 Speaker 1: and whoever else you'd like to listen. We love to 847 00:38:25,640 --> 00:38:28,680 Speaker 1: hear from you. We're on Twitter, I'm at Joel Webber Show, 848 00:38:28,920 --> 00:38:31,640 Speaker 1: He's at Eric fall Tunas, and you can find Gary 849 00:38:31,800 --> 00:38:35,359 Speaker 1: at Asset Stringer. This episode of Trillions was produced by 850 00:38:35,360 --> 00:38:41,680 Speaker 1: Magnus and Rickson. Francesca Levie is the head of Bloomberg Podcast. Bye.