WEBVTT - The Secrets of an ETF Master Picker 0:00:05.800 --> 0:00:13.160 Welcome to trillions. I'm Joel Webber and I'm Eric. Eric. 0:00:13.360 --> 0:00:15.760 We've got a guest. This is when that you brought in? 0:00:15.840 --> 0:00:19.520 Who is he? Gary Stringer? Um? When I wrote the 0:00:19.520 --> 0:00:21.560 E t F book, correct, you've heard about it? Yeah, 0:00:21.600 --> 0:00:23.000 we I plug it all the time on the show. 0:00:23.040 --> 0:00:24.560 But I was basically writing a book on e t 0:00:24.720 --> 0:00:27.600 F s and most of the big investors I interviewed 0:00:27.920 --> 0:00:30.800 only use s P y H y G. You know, pensions, 0:00:30.880 --> 0:00:33.320 endowments and a lot of retails stick to those. But 0:00:33.320 --> 0:00:35.840 there's a group of investors that goes deep in the toolbox. 0:00:36.440 --> 0:00:38.560 To me there they remind me of you ever go 0:00:38.600 --> 0:00:41.159 to the video store, and of course like the old 0:00:41.240 --> 0:00:43.159 day where you get a little token and give it 0:00:43.200 --> 0:00:45.400 for any millennials listening just google it, may watch a 0:00:45.400 --> 0:00:48.559 YouTube video. It was a fascinating place. But there'd be 0:00:48.560 --> 0:00:51.880 a shelf that'd be like um staff picks, and you'd 0:00:51.920 --> 0:00:53.960 go in there like if you're done all the new releases, 0:00:53.960 --> 0:00:55.920 you couldn't find anything. Sometimes the staff pick would have 0:00:55.960 --> 0:00:57.640 a gem in there. A lot of them were good, right, 0:00:58.080 --> 0:01:00.680 and maybe movies you might not have heard of foreign film. 0:01:00.680 --> 0:01:02.720 This is what E t F strategists are to e 0:01:02.800 --> 0:01:05.400 t F s. They go deep in the toolbox. All 0:01:05.440 --> 0:01:08.520 they do is pick e t fs, trade ETFs and 0:01:08.520 --> 0:01:11.400 so they're kind of aficionados and they'll go and they'll 0:01:11.400 --> 0:01:13.240 spend the whole spectrum. So when I did my book, 0:01:13.720 --> 0:01:15.240 when I got into the section on each as a 0:01:15.280 --> 0:01:17.919 class and each category, I had a lot of quotes 0:01:17.920 --> 0:01:19.759 that I would use from E t F strategist because 0:01:19.800 --> 0:01:21.840 you could throw out any ticker at them and then 0:01:21.880 --> 0:01:23.800 have an opinion on it. Yeah it does this, but 0:01:23.840 --> 0:01:25.640 it's a little expensive, blah blah blah. They have an 0:01:25.640 --> 0:01:28.440 instant review for you. So they were really valuable as 0:01:28.440 --> 0:01:30.520 I was going through each as a class and category 0:01:30.560 --> 0:01:32.920 to like put a quote in there from one of 0:01:32.959 --> 0:01:36.800 the users, I think it really enhanced the reading experience hopefully. 0:01:36.880 --> 0:01:40.040 And Gary was one of the best interviews I had. So, 0:01:40.160 --> 0:01:41.959 how what are we going to talk to him about? Well, 0:01:42.160 --> 0:01:44.840 he has over a hundred million in assets, so he 0:01:44.840 --> 0:01:48.360 has to file a thirteen F so at Stringer Asset Management, 0:01:48.360 --> 0:01:52.720 that's he's the president and CEO of So we went 0:01:52.760 --> 0:01:54.920 through his thirteen F and just we've we're gonna pick 0:01:54.960 --> 0:01:56.600 some ETFs out that he has and just find out 0:01:56.600 --> 0:01:58.480 why is why does he own them? So I think 0:01:58.480 --> 0:02:01.400 for for this episode, it's just a um for any 0:02:01.440 --> 0:02:03.440 investor out there to sort of go into the mind 0:02:03.440 --> 0:02:06.000 of a master user find out why they picked them, 0:02:06.040 --> 0:02:09.880 both the macro reason and the product reason. This time, 0:02:09.919 --> 0:02:12.720 I'm trillions E t F picks with a master E 0:02:12.840 --> 0:02:16.520 t F picker, Gary, Welcome Trillions. How did you get 0:02:16.560 --> 0:02:19.840 into E t F? We were managing assets at a 0:02:19.840 --> 0:02:24.079 regional broker dealer and found that the biggest way to 0:02:24.200 --> 0:02:26.920 for us to add value was to get the general 0:02:26.960 --> 0:02:30.160 calls as good as we could, for example, countries, sectors. 0:02:30.440 --> 0:02:32.480 How do we want to be tilted? And what we 0:02:32.560 --> 0:02:34.280 found over time is a very efficient way to do 0:02:34.320 --> 0:02:37.239 that is via E t S versus other investment types. 0:02:37.880 --> 0:02:40.280 And how long have you been managing what was a 0:02:40.360 --> 0:02:44.240 hundred million actually were over seven thirty million. Now I'm 0:02:44.240 --> 0:02:48.000 just saying they're over That's not nothing. How did you 0:02:48.040 --> 0:02:52.320 get into this? Via managing money within the regional broker dealer? 0:02:52.560 --> 0:02:56.400 Our firm was eventually purchased and gave us an opportunity 0:02:56.440 --> 0:02:59.280 to go out independent as an independent organization, So we 0:02:59.320 --> 0:03:01.560 took our tool box, our research, our team with us 0:03:01.840 --> 0:03:04.000 and started as an independent esset management firm, but it 0:03:04.000 --> 0:03:06.800 all started with managing money within a regional broker dealer 0:03:06.880 --> 0:03:10.040 for individuals and families. Now, just to be clear, though, 0:03:10.080 --> 0:03:13.080 when we interview advisors there tend to be buy and 0:03:13.120 --> 0:03:16.280 hold a couple of Vanguard ETFs, You're a whole different situation. 0:03:16.360 --> 0:03:19.840 You're you're trying to outperform and do better than a 0:03:19.880 --> 0:03:22.480 buying whole portfolio. Right, So in a way, you're an 0:03:22.480 --> 0:03:24.720 E T F picker in the way people know a 0:03:24.760 --> 0:03:28.320 stock picker, right, very similar or a top down work 0:03:28.320 --> 0:03:31.799 we do earlier goal is to try to achieve better 0:03:31.919 --> 0:03:34.040 risk adjusted results. So to help people do better. You know, 0:03:34.080 --> 0:03:36.720 you all seen the studies that suggest that individuals capture 0:03:36.720 --> 0:03:38.600 only a fraction in the market opportunity. We believe a 0:03:38.600 --> 0:03:40.520 lot of that has to do with behavior finance and risk. 0:03:40.760 --> 0:03:44.240 Markets are scary. When market volatile, people panic. So if 0:03:44.320 --> 0:03:46.800 we can develop a strategy that can help people get 0:03:46.840 --> 0:03:49.760 from here to there with a smoother ride, that risk 0:03:49.800 --> 0:03:52.080 managed component is super important to us. It's all based 0:03:52.120 --> 0:03:54.520 on behavioral finance, and we can do that with ets 0:03:54.560 --> 0:03:56.640 through risk manage strategies. We end up with a result 0:03:56.720 --> 0:03:59.880 that's at least better than the market with twenty less risk. 0:04:00.480 --> 0:04:02.560 And if you look at that seven million plus that 0:04:02.600 --> 0:04:05.200 you guys are managing, what portion of that is in ETFs? 0:04:05.240 --> 0:04:07.640 All of it? All of it? Like I said, man, 0:04:07.680 --> 0:04:10.320 they're all in Wow. Okay, So break it down, like 0:04:10.320 --> 0:04:13.280 what how does that? How does that portfolio look like? 0:04:14.160 --> 0:04:17.679 We run a series of five strategies from global equity 0:04:17.960 --> 0:04:20.760 all the way down to an income portfolio. The same 0:04:20.800 --> 0:04:23.160 themes are pac Investors can kind of pick and choose 0:04:23.160 --> 0:04:24.839 which one they want to be in, and you can allocate, 0:04:24.920 --> 0:04:28.719 so if you want something and something else exactly right. Yes, 0:04:29.520 --> 0:04:31.800 So I thought we would just go through and throw 0:04:31.839 --> 0:04:33.360 e T F s at him and find out why 0:04:33.360 --> 0:04:35.800 he owns them. Do it? Okay? And so you guys 0:04:35.839 --> 0:04:38.360 pulled the thirteen F which thirteen F is this? Gary 0:04:38.400 --> 0:04:39.880 had a couple you want to talk about. We go 0:04:39.880 --> 0:04:42.080 through those, and then I asked my team for ones 0:04:42.120 --> 0:04:44.120 in his thirteen F that intrigued them and we'll throw 0:04:44.120 --> 0:04:48.479 those and this is Q four Q three Okay, So 0:04:48.600 --> 0:04:50.440 throw throw one out at him. All right, let's we're 0:04:50.440 --> 0:04:53.240 gonna start basic. And honestly, I'm surprised at this one 0:04:53.320 --> 0:04:55.680 is a basic pick that an institution would use, which 0:04:55.680 --> 0:05:00.000 is XLV. It's the spider healthcare sector e t f UM. 0:05:00.000 --> 0:05:02.359 I would expect it something a little more obscure from you, Gary, 0:05:02.440 --> 0:05:05.560 why XLV, Well, why healthcare? But why this one, which 0:05:05.600 --> 0:05:08.040 is the popular, big liquid one. Yeah. So it's interesting 0:05:08.120 --> 0:05:11.560 you say that because our previous healthcare plays have been 0:05:11.640 --> 0:05:14.880 more defined, more specific things like medical devices, for example. 0:05:15.080 --> 0:05:16.800 But we did very well in medical devices over a 0:05:16.800 --> 0:05:18.599 short period of time, and it just got to be expensive. 0:05:18.640 --> 0:05:20.480 A lot of good news priced in, and at the 0:05:20.520 --> 0:05:23.320 same time, we saw a lot of political risk coming in. 0:05:23.680 --> 0:05:27.279 As you approach an election year, both sides of the 0:05:27.320 --> 0:05:29.400 aisle like to beat up on big pharma and all 0:05:29.400 --> 0:05:31.919 of these healthcare companies um and so we tend to 0:05:31.920 --> 0:05:34.760 shy away from from it coming into this. But we 0:05:34.760 --> 0:05:36.360 think so much of the risk is already priced in. 0:05:36.360 --> 0:05:39.560 In fact, the broad healthcare sector has been lagging or 0:05:39.600 --> 0:05:42.320 the price performance, yet it is the top sector in 0:05:42.360 --> 0:05:45.520 the SMB five hundred for revenue growth over last twelve months, 0:05:45.520 --> 0:05:47.599 so it's it's literally the best performing sector from a 0:05:47.600 --> 0:05:50.039 fundamental basis and one of the worst sectors from a 0:05:50.040 --> 0:05:52.719 performance basis. So we picked up the broad one because 0:05:52.720 --> 0:05:55.640 it does have uh still exposure to some of the 0:05:55.640 --> 0:05:57.440 areas that we continue to like, but it also has 0:05:57.440 --> 0:06:00.480 a nice exposure to things like pharmaceuticals, which is one 0:06:00.480 --> 0:06:02.520 of the biggest parts of the broad space. We don't 0:06:02.520 --> 0:06:04.840 want to do a pure play pharma because there is 0:06:04.920 --> 0:06:07.680 risk associated that with that, especially coming into an election year, 0:06:07.880 --> 0:06:10.000 so we went broad based. We went from being very 0:06:10.480 --> 0:06:12.760 precise to something more broad to be able to capture 0:06:12.800 --> 0:06:15.919 the broader valuation opportunity. And so how often will you 0:06:16.000 --> 0:06:18.880 just be in something like XLV versus you know, three 0:06:18.960 --> 0:06:23.040 or four other healthcare picks, So it really depends with 0:06:23.120 --> 0:06:25.680 the markets giving us. At this point, we felt like 0:06:25.720 --> 0:06:27.760 it was made more sense to be a little bit broader. 0:06:28.080 --> 0:06:30.320 But usually when we're doing something like that, we will 0:06:30.360 --> 0:06:34.200 get more specific. One of the raps on healthcare tastes 0:06:34.200 --> 0:06:35.839 back in the day was that they're too farma heavy. 0:06:36.320 --> 0:06:38.000 It looks like at one point they were fifty I 0:06:38.000 --> 0:06:41.120 think XLV looks like it's but you like that it's 0:06:41.160 --> 0:06:44.120 that at that into pharmat that's part of the that's 0:06:44.120 --> 0:06:47.080 a feature. Okay, that's exactly right, that's part of our thesis. 0:06:47.120 --> 0:06:49.200 We wanted to pick up more farm exposure, but we 0:06:49.240 --> 0:06:50.760 didn't want to pick up all the farm and we 0:06:50.800 --> 0:06:53.360 didn't want to be just pharma. And have you done 0:06:53.360 --> 0:06:55.680 that before? And like, what other ETFs have you used 0:06:55.680 --> 0:06:58.320 in the to concentrate a healthcare butt. So the last 0:06:58.360 --> 0:07:01.080 one we used was I HI, which is medical to vices. Uh. 0:07:01.120 --> 0:07:03.039 Previously actually a couple of years ago, we use the 0:07:03.040 --> 0:07:07.839 pure pharma. This I h I is unbelievable. I think 0:07:08.000 --> 0:07:11.680 it's like doubling the SMP. It's just medical devices. And 0:07:11.800 --> 0:07:13.160 you were telling me he was on E T F 0:07:13.160 --> 0:07:15.440 i Q a couple of months ago. His reasoning for 0:07:15.480 --> 0:07:19.320 this was fascinating. Why I H I instead of another 0:07:19.480 --> 0:07:22.240 sliver or slice of the healthcare space, like say biotech, 0:07:22.240 --> 0:07:23.800 which is where most people go if they want to 0:07:23.960 --> 0:07:26.760 jacked up version of healthcare. Yeah, biotech though, is a 0:07:26.800 --> 0:07:29.720 real way You're you're either gonna crush it or get crushed. Right, 0:07:29.760 --> 0:07:32.040 that's really ah, that's really the way that's gonna go 0:07:32.040 --> 0:07:33.840 in And for us that that kind of play doesn't 0:07:33.840 --> 0:07:35.240 make a lot of sense, especially for our client base. 0:07:35.280 --> 0:07:37.680 But when you think about medical devices, we have the 0:07:37.680 --> 0:07:42.160 world's wealthiest country with an aging population, uh, and so 0:07:42.320 --> 0:07:44.600 people are going to do things like get artificial hips 0:07:44.600 --> 0:07:47.440 and knees done right and all the equipment that goes 0:07:47.480 --> 0:07:49.920 along with it, really regardless of what the economy is 0:07:49.920 --> 0:07:54.000 doing right. And so it's a great fundamentals and it's 0:07:54.080 --> 0:07:57.280 much less politically sensitive than say pharma. You know, you 0:07:57.280 --> 0:08:00.680 don't hear about politicians stumping about the price artificial hips 0:08:00.720 --> 0:08:04.200 and knees. What you're gonna need? Isn't that cool? Yes? 0:08:04.680 --> 0:08:07.680 I like that? Um, And you know, the Vanguard Healthcare 0:08:07.720 --> 0:08:10.840 owns three and sixty healthcare stocks. The spider one that 0:08:10.880 --> 0:08:13.840 you have is sixty one. You want the concentration, though, 0:08:13.880 --> 0:08:15.880 you don't want it spread out because the Vanguard we 0:08:15.920 --> 0:08:18.480 call cheap and deep, but maybe that would be better 0:08:18.520 --> 0:08:23.000 long term, whereas x LV better for more pop. Yeah, 0:08:23.000 --> 0:08:25.000 that was really our thesis because again we wanted to 0:08:25.000 --> 0:08:27.640 pick up the pharmacide but not not too much. It's 0:08:27.680 --> 0:08:30.920 sort of like not too hot, not too cold. It 0:08:31.040 --> 0:08:32.240 was just a nice fit for us for what we 0:08:32.280 --> 0:08:34.080 were looking for. And some of those things be so 0:08:34.160 --> 0:08:37.160 spread out. So what is the turnover like for you guys? 0:08:37.240 --> 0:08:39.600 I mean, you have this one bet now you've transitioned 0:08:39.640 --> 0:08:42.400 to something else based on sort of the outlook and 0:08:42.440 --> 0:08:45.400 the political environment, but like how often what's the turn like? 0:08:45.880 --> 0:08:48.920 So on average, in our global equity portfolio, for example, 0:08:48.960 --> 0:08:51.239 you're gonna have more turnover there than in our balance strategies. 0:08:51.679 --> 0:08:54.200 Uh since ince option over a decade ago, it's average 0:08:54.200 --> 0:08:56.280 about eighty five percent a year. What tends to happen 0:08:56.320 --> 0:08:58.120 is and so on average we end up trading about 0:08:58.160 --> 0:08:59.760 once a month or so, but that doesn't mean we 0:08:59.800 --> 0:09:01.240 trade to a month. What tends to happen is the 0:09:01.240 --> 0:09:04.360 market will give us an opportunity, will position for that opportunity, 0:09:04.440 --> 0:09:06.160 and then things will work itself out, and then it 0:09:06.280 --> 0:09:09.400 sounded reposition all right, Ready for the next one, which 0:09:09.440 --> 0:09:12.439 is sort of the opposite situation. Q Tech q T 0:09:12.559 --> 0:09:14.160 e C, which is the first trust and as that 0:09:14.240 --> 0:09:16.880 one hundred, So it's like the cues, except that equal 0:09:16.920 --> 0:09:20.199 weights them, and so every one of the hundred stocks 0:09:20.240 --> 0:09:23.360 gets a one percent waiting. But a couple of things here. 0:09:23.360 --> 0:09:25.840 First of all, most the cues is kind of like 0:09:25.880 --> 0:09:28.360 the ipso facto FANG E T F because it's very 0:09:28.360 --> 0:09:31.679 heavily weighted in those names. This unfangs it a little bit. 0:09:31.720 --> 0:09:33.680 Is that was that your goal here was to unfanged 0:09:33.679 --> 0:09:35.559 the cues or what are you going after here? Because 0:09:35.760 --> 0:09:38.160 part of the NASTAC also has non tech in in 0:09:38.240 --> 0:09:40.960 as well, you wanted that exposure, Well, what we wanted 0:09:41.000 --> 0:09:43.880 in this one and this is UH specifically more tech 0:09:43.960 --> 0:09:48.160 tech oriented. We liked the technology sector, but kind of 0:09:48.200 --> 0:09:50.640 similar to where we talked about why we picked XLB 0:09:50.840 --> 0:09:55.400 with its broad exposure heavy on pharma q tech because 0:09:55.400 --> 0:09:59.480 it's equally weighted gets you more semiconductor exposure. So it's 0:09:59.520 --> 0:10:01.680 something like what percent semis. We didn't want to go 0:10:01.720 --> 0:10:04.480 on semis because that's volatile, right, there's a lot of 0:10:04.559 --> 0:10:06.560 risks there. It's it's you're gonna win or lose, similar 0:10:06.600 --> 0:10:10.480 to biotech. But of the technology sector, UH, semi conductors 0:10:10.559 --> 0:10:12.600 we think is though they rallied pretty strongly last year, 0:10:12.640 --> 0:10:15.400 they got crushed so badly or so hard that the 0:10:15.480 --> 0:10:18.480 valuations still look attractive. In fact, when we think the SMP, 0:10:18.720 --> 0:10:20.560 when we bought this, we thought the SMP was roughly 0:10:20.559 --> 0:10:23.720 ten percent overvalued. Semi conductors were still ten percent under 0:10:23.760 --> 0:10:26.040 their historical average, so just to get back to average 0:10:26.040 --> 0:10:28.400 ahead to come up ten percent from there. But again 0:10:28.440 --> 0:10:30.080 we didn't want to go so heavy in this in 0:10:30.120 --> 0:10:33.040 the semiconductors that we it's either a flippical point we're 0:10:33.040 --> 0:10:34.880 gonna get We're gonna crush it, or get crushed. We 0:10:34.880 --> 0:10:37.640 want to do it more broad based, but with semi 0:10:37.640 --> 0:10:39.840 conductor emphasis. So one theme that I'm kind of noticing 0:10:39.880 --> 0:10:41.480 here is that you actually are you kind of using 0:10:41.559 --> 0:10:44.000 e t f s with built in hedges almost where 0:10:44.000 --> 0:10:47.640 it's like you get a concentration, but not all of 0:10:47.720 --> 0:10:50.360 the concentration that you would get maybe with a different ticker. Well, 0:10:50.400 --> 0:10:52.360 that's correct, and so there's a theme that that, Um, 0:10:52.400 --> 0:10:54.000 I think it's warm. Buffett one said we'd rather be 0:10:54.080 --> 0:10:56.559 generally right than precisely wrong. Um, so we try to 0:10:56.559 --> 0:10:59.640 play off a Buffet quote. It's good a quote he 0:10:59.679 --> 0:11:03.200 has on the wall. Are there other ones that you 0:11:03.240 --> 0:11:05.720 guys are using right now that sort of are part 0:11:05.720 --> 0:11:07.520 of that same trend? Now you have a dividend one 0:11:07.559 --> 0:11:09.280 which a lot of people are into divid ets. They 0:11:09.280 --> 0:11:11.120 don't get a lot of coverage because they're kind of boring, 0:11:11.440 --> 0:11:15.160 but they're huge. Yeah, so d grow d g R. Oh, 0:11:15.160 --> 0:11:17.679 it's the I shares Core dividend growth ETF only charges 0:11:17.679 --> 0:11:20.600 eight basis points, so very cheap ten billion dollars. Why 0:11:20.640 --> 0:11:23.120 do you like this? One well because is boring. Actually, 0:11:23.520 --> 0:11:26.160 it's one of our themes that we're playing in this environment. Um. 0:11:26.200 --> 0:11:28.440 It happens to be our macro view from the top 0:11:28.480 --> 0:11:31.679 down in our bottom up work suggests that we're just 0:11:31.720 --> 0:11:33.960 gonna be grinding it out with respect to a capital 0:11:33.960 --> 0:11:36.440 appreciation of the markets with the markets moving higher, not 0:11:36.520 --> 0:11:38.040 a whole lot of pop. We don't think left in 0:11:38.080 --> 0:11:39.959 the markets, um. And we want a little bit of 0:11:40.040 --> 0:11:42.199 quality tilt in case we get a shock. And so 0:11:42.440 --> 0:11:45.360 this is an inexpensive way to get high quality companies 0:11:45.360 --> 0:11:47.440 that consistently grow the difference. So it's not a high 0:11:47.440 --> 0:11:51.360 dividend e t F. It's about consistent dividend growth. So 0:11:51.400 --> 0:11:53.400 you have a very high quality companies that can go 0:11:53.440 --> 0:11:56.400 ahead and continue to appreciate, but do a really good 0:11:56.480 --> 0:11:59.000 job of protecting in volatile markets. And what are the 0:11:59.040 --> 0:12:01.319 holdings like in there? It looks at the SMP. I mean, 0:12:01.320 --> 0:12:04.040 it's basically and this is a great point because divid 0:12:04.040 --> 0:12:07.439 and dtfs all sound the same, but the growers are 0:12:07.559 --> 0:12:11.000 you're gonna have Microsoft's apples, Johnson and Johnson looks very 0:12:11.080 --> 0:12:13.040 much like the SMP. In fact, the yield is only 0:12:13.080 --> 0:12:15.839 two point two per cent so and the SMP is 0:12:15.880 --> 0:12:18.040 one point seven, so you're not getting much yield. You 0:12:18.080 --> 0:12:21.000 get that stability. Now the the high dividend, they'll go 0:12:21.040 --> 0:12:23.640 after the high yielders, but you end up in utilities 0:12:23.640 --> 0:12:26.200 and staples and overweight, but your yield will will go up, 0:12:26.200 --> 0:12:28.520 so you sort of pick your poison. Sounds like you're 0:12:28.559 --> 0:12:31.480 actually want the side benefit of the quality names in 0:12:31.559 --> 0:12:34.040 here in the low ball. That's exactly right. And if 0:12:34.080 --> 0:12:35.920 you went for the high dividend, to your point, you 0:12:36.000 --> 0:12:37.480 might end up with a lot of utilities, which we 0:12:37.559 --> 0:12:40.439 think are pretty expensive in here. It's a defensive play um, 0:12:40.480 --> 0:12:42.320 but they're a little bit rich. Or with some of 0:12:42.320 --> 0:12:44.880 the high yielding stuff, you end up with junk companies 0:12:45.120 --> 0:12:47.840 who just haven't yet cut their dividend. So you've gotta 0:12:47.840 --> 0:12:50.120 be careful about that. And were there ones that bier 0:12:50.200 --> 0:12:53.599 beware that you would keep an eye on in that category, 0:12:54.080 --> 0:12:56.560 there are a couple out there. Basically, anything that has 0:12:56.640 --> 0:12:58.560 a yield that's too good to be true we tend 0:12:58.559 --> 0:13:00.080 to stay away from because those things it's just a 0:13:00.080 --> 0:13:03.439 matter of time before reckoning comes. Alright. Next one in 0:13:03.480 --> 0:13:07.840 the list is BAB Now, I gotta be honest, I 0:13:07.880 --> 0:13:10.640 thought this was the Build America Bond ETF, which there's 0:13:10.640 --> 0:13:12.760 a couple of them. Remember that when Obama came up 0:13:12.800 --> 0:13:15.560 with those UM, there there were three t F but 0:13:15.640 --> 0:13:18.880 it's called the Investo Taxable Municipal Bond e tf UM. 0:13:18.920 --> 0:13:21.160 So you tell me did this did this switch over 0:13:21.760 --> 0:13:25.520 to become a more traditional muni from the Build America 0:13:25.520 --> 0:13:28.040 bond one did? They had to broaden their scope because 0:13:28.040 --> 0:13:30.040 there are only so many Build America bonds out there, 0:13:30.240 --> 0:13:33.120 so they brought their scope to be more taxable munis, 0:13:33.120 --> 0:13:35.880 which isn't so muni bonds are traditionally not taxible, right, 0:13:35.920 --> 0:13:38.800 but then you have the taxable side, which offers higher yield, 0:13:39.160 --> 0:13:41.760 so it out yields the like treasury. But it's still 0:13:42.240 --> 0:13:44.120 very high quality. That's why we like it. It's got 0:13:44.120 --> 0:13:46.040 some duration to it's some interest rate sensitivity to it, 0:13:46.160 --> 0:13:49.480 so it's a really good equity market hedge UM, but 0:13:49.520 --> 0:13:52.280 it's not as expensive, meaning it has a higher yield, 0:13:52.320 --> 0:13:55.240 high quality yield than treasuries do. Yeah, if I'm looking 0:13:55.280 --> 0:13:57.440 at the holdings here, I do see, uh, there are 0:13:57.440 --> 0:13:59.720 some Build America bonds in here, so it's definitely still 0:14:00.040 --> 0:14:02.480 still with those, and that's the thing we build America bonds, right, 0:14:02.840 --> 0:14:05.200 every now and then this little corner of the media 0:14:05.240 --> 0:14:08.920 market will really shine. Um. And it is the duration though, right, 0:14:08.960 --> 0:14:11.080 So what's the duration on an e t F like this? 0:14:11.120 --> 0:14:13.960 Meaning how much interest rate risk are you taking? Yeah, 0:14:13.960 --> 0:14:16.560 so it's about ten years, so it's not super long. 0:14:16.640 --> 0:14:18.400 Like you can stretch out even longer if you wanted to. 0:14:18.640 --> 0:14:20.880 But we're not afraid of taking interest rate risk in 0:14:20.880 --> 0:14:23.120 this environment. We don't think interest rates moved significtyly higher 0:14:23.120 --> 0:14:25.080 from here, um, But we also don't think you're gonna 0:14:25.160 --> 0:14:27.200 compensated if we're going way out in the curve. So, 0:14:27.240 --> 0:14:30.280 for example, the broad market is about a duration of 0:14:30.360 --> 0:14:32.840 six years, right, So this has more duration sensitivity to 0:14:32.880 --> 0:14:35.640 it than the broad market, but it's not super long. 0:14:36.040 --> 0:14:37.920 So when you look at the MUNI space, I tend 0:14:38.000 --> 0:14:40.640 to think people going in for the tax exempt the 0:14:40.680 --> 0:14:43.080 tax equivalent yield. The only thing I know about it 0:14:43.120 --> 0:14:44.640 is like, that's why you do it. But you're not 0:14:44.680 --> 0:14:47.880 buying this for that, correct, You're just you think the 0:14:47.920 --> 0:14:49.800 return is there. We think the return is the vast 0:14:49.840 --> 0:14:51.880 majority of our assets are tax sheltered in i A. 0:14:52.040 --> 0:14:54.280 Rollovers and those kinds of things. The tax tax equivalent 0:14:54.320 --> 0:14:56.360 yield isn't all that important to us, but the yield is, 0:14:56.360 --> 0:14:59.120 and the high quality is, and it, like I've mentioned it, 0:14:59.240 --> 0:15:02.000 out yields the duration treasury. So we're getting very high 0:15:02.040 --> 0:15:05.920 quality fixed income um with a higher yield, largely because 0:15:05.960 --> 0:15:07.760 it's not the most liquid space in the world, right 0:15:07.800 --> 0:15:11.160 but still, uh, we'll take that. So will that be 0:15:11.200 --> 0:15:13.480 when an example of something that you probably hold on 0:15:13.560 --> 0:15:16.800 too longer and has a little bit less churn or 0:15:16.960 --> 0:15:20.040 or or are you actually actively trading that throughout the 0:15:20.040 --> 0:15:22.040 course of the year. That is something that we tend 0:15:22.120 --> 0:15:24.080 to hold onto a little bit longer. Now, if we 0:15:24.200 --> 0:15:27.280 if our viewpoint changed and we became concerned, and I 0:15:27.320 --> 0:15:30.440 hope this happens, I hope that the global economy accelerates 0:15:30.760 --> 0:15:33.000 and we're thinking, all right, long term intertrat is gonna 0:15:33.000 --> 0:15:34.960 be higher because of accelerating economy. That would be great, 0:15:35.120 --> 0:15:36.960 and we would back off of this. That's not our 0:15:36.960 --> 0:15:39.360 core thesis. So for now, it's a tactical position for 0:15:39.440 --> 0:15:42.760 us and most of our our allocations. And how often 0:15:42.800 --> 0:15:46.440 are you reformulating your thesis? Is that part of your 0:15:46.480 --> 0:15:50.840 monthly rebalancing. Well, we rereformulate in real time. It turns 0:15:50.840 --> 0:15:52.920 out the markets in the economy don't work by a calendar. 0:15:53.440 --> 0:15:56.400 We do have funny how that happens. Yeah, we do 0:15:56.480 --> 0:16:00.400 have formal weekly and monthly conversations where the reports ge published, 0:16:00.400 --> 0:16:02.120 the data gets published, and we review all the data. 0:16:02.480 --> 0:16:04.400 But we can make changes at any time. So another 0:16:04.400 --> 0:16:07.120 thing I'm noticing is that you seem to be more 0:16:07.360 --> 0:16:11.240 US centric than maybe international. How do you think about that? 0:16:11.760 --> 0:16:15.000 We are more US centric, especially these days. UM. A 0:16:15.000 --> 0:16:16.760 couple of years ago, we were more excited about the 0:16:16.760 --> 0:16:18.840 foreign markets. We thought there was a good opportunity there 0:16:18.840 --> 0:16:21.760 from a valuation basis. And in seventeen, for example, the 0:16:21.760 --> 0:16:24.960 Eurozone was growing at about two percent GDP growth, which 0:16:25.000 --> 0:16:27.200 is roughly double what we think their long term potential is. 0:16:27.400 --> 0:16:29.280 Now they're struggling for any growth at all, right, and 0:16:29.280 --> 0:16:31.120 so we think the US grows at about two percent 0:16:31.480 --> 0:16:35.560 and the Eurozone struggles to grow at one. Japan similarly. UM. So, 0:16:36.080 --> 0:16:39.000 though there's a valuation opportunity over there, potentially, it's hard 0:16:39.040 --> 0:16:41.480 to get excited about anything that unlocked that opportunity set. 0:16:41.520 --> 0:16:43.040 So we would rather be in the US where we 0:16:43.080 --> 0:16:46.120 get higher quality um and more stable outcomes. We think 0:16:46.240 --> 0:16:47.840 there is an internationally TF I'd like to ask you 0:16:47.840 --> 0:16:50.400 about in your portfolio DWM, which you don't see a lot. 0:16:50.680 --> 0:16:53.120 You assume people have E E F A or I 0:16:53.360 --> 0:16:55.400 F A or something like that. This is the Wisdom 0:16:55.400 --> 0:16:59.360 Tree International Equity Fund and it looks like it's dividend weighted, correct, 0:16:59.360 --> 0:17:02.280 Probably is it screen on dividends too? And why that 0:17:02.320 --> 0:17:04.600 you want international with a little less edge? Well, so 0:17:06.240 --> 0:17:09.560 the actually neither that either. So let's think about when 0:17:09.600 --> 0:17:14.200 we're when we're investing overseas. Different countries have uh different 0:17:14.200 --> 0:17:16.639 accounting methodologies, right, so a dollar of earnings in one 0:17:16.680 --> 0:17:19.439 country might be different than a dollar earnings in another country, 0:17:19.480 --> 0:17:22.320 but nothing speaks to earning stability, like can you make 0:17:22.520 --> 0:17:25.959 a consistent dividend? And so that is a core holding 0:17:26.000 --> 0:17:28.199 for us in our international exposure. It starts with that 0:17:28.359 --> 0:17:31.679 very consistent dividends. The dividend is about making sure you 0:17:31.720 --> 0:17:35.200 lock into companies that produce earnings exactly right. Wow, it's 0:17:35.240 --> 0:17:38.439 cool stuff, right, I mean, he's blowing my mind. I 0:17:38.480 --> 0:17:42.880 actually out of right field. Question Jedi is the right metaphor? 0:17:43.920 --> 0:17:46.000 How many ETFs are there in the in the universe? 0:17:47.440 --> 0:17:49.040 How many of those do you think you've dabbled in 0:17:50.240 --> 0:17:52.760 or looked at at least oh jeez, yeah, well it's 0:17:52.760 --> 0:17:54.600 a lot. So but what we do is we try 0:17:54.640 --> 0:17:56.880 to approach the theme first and then try to find 0:17:56.920 --> 0:17:58.680 an ETF that fits that theme. So over the years 0:17:58.760 --> 0:18:00.680 we've touched a lot of them. But like a lot 0:18:00.680 --> 0:18:04.200 of things with any growing industry or innovation, there's a 0:18:04.240 --> 0:18:06.360 lot of stuff that comes out most but frankly isn't 0:18:06.359 --> 0:18:08.320 gonna work. Most of it's not great, so you end 0:18:08.400 --> 0:18:11.359 up with a few things that are really doable. But 0:18:11.440 --> 0:18:13.840 that theme thing, I mean, it's such a prevalent part 0:18:13.920 --> 0:18:16.399