WEBVTT - Protecting Your Portfolio With ETFs 0:00:05.559 --> 0:00:06.280 Oakner chains. 0:00:06.280 --> 0:00:11.520 I'm Joel Webber and I'm Eric Belchernas. 0:00:11.600 --> 0:00:14.480 Okay, so I'm running through things that are at all 0:00:14.520 --> 0:00:20.400 time highs. Stock market, US, stock market, zitcoin, gold, everything 0:00:20.440 --> 0:00:22.759 just keep going up. What are people supposed to do 0:00:22.800 --> 0:00:23.840 when things only go up? 0:00:23.920 --> 0:00:27.319 Eric, Well, first of all, just appreciate it. There's so 0:00:27.440 --> 0:00:31.040 much angst out there, these columnists and the economists, and 0:00:31.400 --> 0:00:33.760 everyone's like trying to be like, well, it's just something's wrong. 0:00:33.760 --> 0:00:36.440 And I'm like, everything is going pretty good and enjoy 0:00:36.520 --> 0:00:39.360 while lasts. But this is probably as good as it gets. 0:00:39.760 --> 0:00:43.920 It can't last forever. It never does. So the question 0:00:44.120 --> 0:00:47.599 is what will derail this? The higher the markets go, 0:00:48.159 --> 0:00:50.120 the less it takes right because there's a lot of 0:00:50.120 --> 0:00:53.360 people with itchy trigger fingers, like, well, if this little 0:00:53.400 --> 0:00:56.200 thing happens, they're more likely to take some profits quickly 0:00:56.800 --> 0:00:59.560 then rather wait. So we'll see what that is. But 0:00:59.600 --> 0:01:02.160 I think the more things go to all time highs, 0:01:02.200 --> 0:01:04.360 and the more everything is at all time highs, this 0:01:04.520 --> 0:01:07.440 is interesting. Gold and stocks rarely are going up together. 0:01:08.240 --> 0:01:12.520 I think that really makes people nervous. But at the 0:01:12.560 --> 0:01:15.959 same time, I am pretty happy. My four one k 0:01:16.120 --> 0:01:16.759 is loving this. 0:01:17.440 --> 0:01:20.319 So really though, how are people supposed to navigate this? 0:01:21.280 --> 0:01:23.640 That's the thing like as the markets go up, more 0:01:23.640 --> 0:01:26.560 and more people are starting to think, Okay, what can 0:01:26.600 --> 0:01:29.280 I use as a little bit of insurance just in 0:01:29.319 --> 0:01:32.880 case things go south quickly? And there are various vehicles 0:01:32.959 --> 0:01:35.119 need to have market that are really good for this. 0:01:35.959 --> 0:01:38.280 The problem is a lot of them come with like 0:01:38.640 --> 0:01:40.680 it's like you got to read the owner's manual on these. 0:01:41.040 --> 0:01:46.200 So there's a lot of options, but some are really powerful, 0:01:46.440 --> 0:01:49.520 but they need explaining. And I think it's a good 0:01:49.520 --> 0:01:51.840 time to go through these things because you just sense 0:01:51.880 --> 0:01:54.720 something that's going to happen soon, and instead of talking 0:01:54.720 --> 0:01:56.880 about these things after it happens, we should talk about 0:01:56.880 --> 0:01:58.080 them right now. 0:01:58.280 --> 0:01:58.640 All right. 0:01:58.680 --> 0:02:01.240 Well, to help us our inks, we're going to be 0:02:01.280 --> 0:02:05.080 joined by Bernard Goiter, who's an options reporter with Bloomberg News, 0:02:05.080 --> 0:02:08.679 as well as Suzanne Woolley, who's personal finance reporter with 0:02:08.720 --> 0:02:09.320 Blimberg News. 0:02:10.960 --> 0:02:16.680 This time on train's protecting your Portfolio with ETFs. Bernard Susanne, 0:02:16.680 --> 0:02:17.519 Welcome to Trillians. 0:02:17.800 --> 0:02:19.079 Thank you, good to be here. 0:02:19.160 --> 0:02:20.680 Bernard. I want to start with you because you just 0:02:21.120 --> 0:02:25.200 published a story recently investors pile into funds betting on 0:02:25.280 --> 0:02:30.320 elusive market volatility. Volatility has There was a little bit 0:02:30.320 --> 0:02:34.560 of that in April, I think when Trump unveiled some 0:02:34.960 --> 0:02:39.240 tariffs or talk of tariffs. Since then kind of disappeared. 0:02:39.280 --> 0:02:41.960 So so what are we starting to see show up 0:02:42.000 --> 0:02:42.639 in markets now? 0:02:42.960 --> 0:02:47.320 Yeah, well, people are basically trying to allocate to what 0:02:47.440 --> 0:02:51.680 happens if volatility comes back. There's another April situation where 0:02:51.720 --> 0:02:54.680 there's suddenly a big spike in volatility. And I kind 0:02:54.720 --> 0:02:57.720 of think of volatility in quiet binary wand markets like 0:02:57.800 --> 0:03:01.960 it's either kind of everything's very very quiet or everything's extreme. 0:03:02.120 --> 0:03:03.960 And part of this is going back to this idea 0:03:03.960 --> 0:03:06.800 about how easy is it to trade? And in periods 0:03:06.840 --> 0:03:09.800 when everything's fine, kind of like it is now and 0:03:10.400 --> 0:03:13.559 the VIX, which is one of the indicators of polatility, 0:03:13.639 --> 0:03:16.280 is below about twenty, it's really easy to trade. There's 0:03:16.280 --> 0:03:19.680 a lot of liquidity everywhere, and then when stuff gets choppy, 0:03:19.880 --> 0:03:23.119 sometimes that liquidity pulls back. It's harder to trade, it's 0:03:23.120 --> 0:03:26.600 more expensive to hedge, and yeah, the VIX goes up, 0:03:26.840 --> 0:03:30.960 and in those situations that that's when, Yeah, that's when 0:03:30.960 --> 0:03:33.079 it kind of gets exciting, right in terms of being 0:03:33.080 --> 0:03:35.880 a volatives reporter. So at the moment, things are kind 0:03:35.880 --> 0:03:37.720 of quiet and it's a little little dull, but back 0:03:37.720 --> 0:03:40.080 in April, like things get really exciting. 0:03:39.800 --> 0:03:42.200 Dull, you also get a lot more clicks. Yeah, it's 0:03:42.240 --> 0:03:43.760 like the weather channel, you know, you only tune in 0:03:43.760 --> 0:03:45.960 when there's a hurricane. It's like dead for us too. 0:03:46.400 --> 0:03:49.800 Okay, So what's going on beneath the surface and where 0:03:49.800 --> 0:03:53.000 our investors? And these aren't retail investors so much as 0:03:53.080 --> 0:03:55.280 professional ones where they turned to allocate. 0:03:55.320 --> 0:03:58.640 I'd say that some of these probably are. There's probably 0:03:58.640 --> 0:04:01.920 some retail guys involved in because the real professionals will 0:04:01.920 --> 0:04:05.360 be directly using futures and options and all that kind 0:04:05.400 --> 0:04:10.080 of stuff. So those investors are generally kind of they 0:04:10.160 --> 0:04:12.920 spent post a prop kind of worried about this return 0:04:12.960 --> 0:04:15.600 of fear. And I think now we're in the greed stage, 0:04:15.680 --> 0:04:18.400 so people are allocating to like upside, that's become the 0:04:18.400 --> 0:04:20.919 big thing. That's why volatility isn't really here, because everyone's 0:04:20.960 --> 0:04:23.240 just like getting greedy and being like, okay, but what 0:04:23.320 --> 0:04:25.680 happens if the SMB goes to seven thousand and eight thousand, 0:04:25.880 --> 0:04:28.599 what happens next? Kind of thing? And this is why 0:04:28.600 --> 0:04:31.160 people have been talking about this hated rally because they 0:04:31.200 --> 0:04:33.640 hadn't really allocated to it, but the rally happened anyway, 0:04:33.680 --> 0:04:35.440 and a lot of people missed out, so they're like, Okay, 0:04:35.480 --> 0:04:37.839 let's let's go all in. So that's why you see 0:04:37.880 --> 0:04:42.440 stuff like lever dcfs where you're kind of doubling up. 0:04:42.680 --> 0:04:45.080 That those kind of things become popular. And there's also 0:04:45.400 --> 0:04:49.680 September was the biggest ever month for options in history basically, 0:04:49.800 --> 0:04:52.120 like that that was and that was a quiet, relatively 0:04:52.200 --> 0:04:54.479 quiet month from a volatility point of view, but the 0:04:54.600 --> 0:04:57.719 number of options it was over I think over sixty 0:04:57.960 --> 0:05:02.200 million options contracts traded in the US market. It's been 0:05:02.200 --> 0:05:04.640 a really kind of busy time eruptions. But people aren't 0:05:04.680 --> 0:05:08.560 necessarily that they're hedging, but they're also betting things are 0:05:08.600 --> 0:05:10.080 going to keep getting better. So there's a bit of 0:05:10.080 --> 0:05:11.600 a balance between those two forces. 0:05:12.440 --> 0:05:15.479 And I want to go over the vix ETFs and 0:05:15.520 --> 0:05:17.520 their flows, which I think is what caught your attention 0:05:18.080 --> 0:05:20.520 in the past month, Like basically all of them have 0:05:20.560 --> 0:05:22.480 taken in a good amount of money, They've they've grown 0:05:22.480 --> 0:05:24.799 their assets by about twenty percent in the past month 0:05:25.240 --> 0:05:28.479 and year to date, they've grown their assets by fifty percent. Now, 0:05:28.880 --> 0:05:32.120 a lot of these ETFs are a lot like buying insurance. 0:05:32.560 --> 0:05:34.880 You're kind of expecting the money to just go away 0:05:35.160 --> 0:05:39.560 unless the hurricane comes, and so the total assets in 0:05:39.600 --> 0:05:42.560 these is always deterior's like a melting ice cube. But anyway, 0:05:42.560 --> 0:05:45.480 two billion and uri date flows for these vixytps, especially 0:05:45.560 --> 0:05:48.600 after all that's happened, and you know, they went through 0:05:48.640 --> 0:05:50.839 a lot of bad press over the years. The reason 0:05:50.839 --> 0:05:54.320 they're the reason they're complicated as a hedge is that 0:05:54.880 --> 0:05:57.839 they don't track the vix directly. Nothing can at tracks 0:05:57.880 --> 0:06:00.599 futures and you have to roll those, and the cost 0:06:00.680 --> 0:06:03.719 to roll can be really high, like up to forty 0:06:03.760 --> 0:06:07.560 fifty percent a year, sometimes more. And so people buy these, 0:06:07.600 --> 0:06:11.000 I think as a hedge and then they get out 0:06:11.040 --> 0:06:13.479 of them if it didn't come. But to me, it's 0:06:13.880 --> 0:06:16.839 I guess very akin to buying insurance that will pay 0:06:16.839 --> 0:06:17.560 off big time. 0:06:18.080 --> 0:06:20.840 And when you think about how to rate stuff like 0:06:20.880 --> 0:06:24.760 this for the for the movies, right, our traffic. 0:06:24.480 --> 0:06:25.960 Lights system, yeah, traffic light system. 0:06:26.080 --> 0:06:29.080 Yeah, these are all red lights hardcore. Anything that rolls 0:06:29.120 --> 0:06:34.400 futures is a red light, automatically red light. There is well, 0:06:34.440 --> 0:06:36.320 we were going to have a skull and crossbones, yeah, 0:06:36.360 --> 0:06:38.360 which would be the equivalent of like an NC seventeen 0:06:38.400 --> 0:06:43.040 movie ETF style. There was a two X VIX would 0:06:43.080 --> 0:06:45.320 be one of the very few ETFs that would be 0:06:45.400 --> 0:06:49.000 double crossbones. And the reason for that is not it's 0:06:49.040 --> 0:06:53.320 leveraged and it rolls futures. So all of these vixytps, 0:06:53.360 --> 0:06:55.760 if you look at their like lifetime return, they're all down. 0:06:55.680 --> 0:06:57.839 Nine nine persaw on a Swiss ball. 0:06:58.480 --> 0:07:03.240 Yeah, I mean it. The look just rolling futures, whether 0:07:03.279 --> 0:07:06.200 it's Oil or VIX, is just something not many people 0:07:06.240 --> 0:07:09.400 are aware of. And in VIX it's the roll costs 0:07:09.400 --> 0:07:12.080 are so high that you just hate someone to go 0:07:12.120 --> 0:07:14.280 in thinking that, oh, I'm buying the VIX. You're not, 0:07:14.320 --> 0:07:17.440 You're buying VIX futures ETFs that roll them. And then 0:07:17.560 --> 0:07:19.160 on top of that, there was one that was an 0:07:19.200 --> 0:07:24.400 ETN which automatically gets two points two leverage. TVX was 0:07:24.440 --> 0:07:27.160 the ultimate highest score in our system. We got seventeen dings. 0:07:28.000 --> 0:07:31.760 That's the most you can get. Basically anything over five 0:07:31.960 --> 0:07:34.280 is right it r. So if we got seventeen, I 0:07:34.280 --> 0:07:37.119 mean it's literally like remember Faces a Death, that movie 0:07:37.360 --> 0:07:39.280 like from the eighties. I think you couldn't get in the. 0:07:39.320 --> 0:07:41.200 Video store, no, because I never found it. 0:07:41.200 --> 0:07:45.000 It's like that TVX was that movie and TVX was 0:07:45.720 --> 0:07:49.720 rolled futures leverage and an ETN that said it blew up, 0:07:51.000 --> 0:07:53.280 it went away. A lot of these come and gone now, 0:07:53.320 --> 0:07:57.040 but they've they're ba they're reincarnating some of these ETFs. 0:07:57.080 --> 0:07:59.520 So now we do have another two xvix and the 0:07:59.560 --> 0:08:02.480 whole fan is there. But again it's a very small market. 0:08:02.520 --> 0:08:04.680 This is for a niche audience, but they still are 0:08:04.800 --> 0:08:05.320 very active. 0:08:05.600 --> 0:08:08.000 Well, what's interesting, So to quantify that kind of skull 0:08:08.000 --> 0:08:13.520 and crossbones, you vixsy todate performance down seventy percent minus seventy. 0:08:13.680 --> 0:08:15.720 That's where the volatility is. 0:08:15.840 --> 0:08:19.240 Exactly, but if it could go up hundred to two 0:08:19.280 --> 0:08:21.960 hundred percent in a week, so it's it's pure. This 0:08:22.040 --> 0:08:24.000 is kind of pure, pure gambling stuff. 0:08:24.120 --> 0:08:27.160 Yeah, let me jump in real quick here to just 0:08:27.160 --> 0:08:30.080 just finish this off, because people need to know this. 0:08:30.640 --> 0:08:33.800 Why would you buy something that rolls futures and loses 0:08:34.280 --> 0:08:37.400 seventy eighty percent a year and doesn't do anything. Well, 0:08:37.440 --> 0:08:40.640 here's why. When the market drops and there's a bad day. 0:08:40.800 --> 0:08:43.199 So let's look at April second to the fourth, that's 0:08:43.240 --> 0:08:48.439 when the tariff tantrum was in the most palpable. Palpable 0:08:48.800 --> 0:08:52.920 market's down ten percent in two days. The negative three 0:08:53.040 --> 0:08:55.400 XS and P is up thirty percent. Makes sense, right? 0:08:56.320 --> 0:08:59.480 The VIX just one time, VIX is up fifty percent. 0:09:00.120 --> 0:09:02.199 The two X VIX is up one hundred and seven 0:09:02.240 --> 0:09:07.080 percent in two days. So when it works, it works. 0:09:07.679 --> 0:09:10.960 I call it the jackpot mode, and that's why people 0:09:11.040 --> 0:09:11.680 keep using them. 0:09:11.720 --> 0:09:14.040 Suzanne, how do you feel about all of this as 0:09:14.080 --> 0:09:15.240 a personal finance reporter? 0:09:15.640 --> 0:09:20.280 Well, my first thought is does the world understand the 0:09:20.440 --> 0:09:23.880 term role? We're throwing around role? And I know that 0:09:24.160 --> 0:09:27.360 Bernard defined it really well in his recent peace, But 0:09:27.840 --> 0:09:31.360 is that a term that we think everyone is familiar with. 0:09:32.840 --> 0:09:34.560 Let's let's break it down. Yeah. 0:09:35.160 --> 0:09:38.720 So basically what we're talking about here is the VIX 0:09:39.080 --> 0:09:41.840 is a projection about what the market thinks is going 0:09:41.880 --> 0:09:45.440 to happen in one month's time. So you're constantly pushing 0:09:45.480 --> 0:09:49.359 that out one month. And the way that these ETFs 0:09:49.520 --> 0:09:54.959 use use futures is that constantly it's like a seesaw, 0:09:55.600 --> 0:09:59.160 and you have you start with one future on the 0:09:59.280 --> 0:10:01.280 xpree and as you get nearer, you have to buy 0:10:01.320 --> 0:10:03.280 one and sell the other to keep that kind of 0:10:03.320 --> 0:10:07.600 seesaw balanced. And what's really ironic about these products in 0:10:07.600 --> 0:10:09.880 particular is that they're kind of doing this in kind 0:10:09.880 --> 0:10:13.120 of a funky small futures market. And futures are not 0:10:13.200 --> 0:10:15.520 like ETFs. They're not based on like what the actual 0:10:15.600 --> 0:10:17.800 value of that thing is. It's purely based on the 0:10:17.840 --> 0:10:21.800 supply and demand from the market for that financial contract. 0:10:22.280 --> 0:10:24.200 So if you have a ton of money flowing into 0:10:24.200 --> 0:10:27.360 these products, that makes the cost of doing that stuff 0:10:27.440 --> 0:10:30.679 more expensive because because the market's like, oh, people want 0:10:30.720 --> 0:10:33.920 to buy. People are scared, like volatinity is gonna go up, 0:10:33.960 --> 0:10:36.040 so we're going to make it more expensive to sell them, 0:10:36.360 --> 0:10:39.800 like that insurance. So the more the more demand there 0:10:39.840 --> 0:10:42.559 is for insurance, the more expensive that insurance gets. So 0:10:42.840 --> 0:10:45.240 these roll costs are getting worse and worse and worse 0:10:45.400 --> 0:10:48.240 the more money that goes into these particular products. Now, 0:10:48.280 --> 0:10:50.839 I don't think that happens as badly in other in 0:10:51.160 --> 0:10:53.840 other examples of these these kind of eats. The other 0:10:53.880 --> 0:10:56.720 one was bitcoin. You remember before the before you had 0:10:56.760 --> 0:11:00.480 like spot bitcoin ETFs, you had futures eats that were 0:11:00.520 --> 0:11:03.000 based on the futures market, but again they had very 0:11:03.240 --> 0:11:07.160 very similar structural problems where you have the fees, but 0:11:07.200 --> 0:11:08.960 you also have these roll costs and they're not really 0:11:09.000 --> 0:11:12.760 disclosed very well in the in the paperwork around around 0:11:12.800 --> 0:11:13.160 the ETFs. 0:11:13.200 --> 0:11:14.760 It's a big price for popularity. 0:11:15.000 --> 0:11:17.319 But you know the term role. I would just picture 0:11:17.760 --> 0:11:20.840 you're buying this future which is due. Let's say what 0:11:20.920 --> 0:11:24.240 month is now October. It's due in November. Now as 0:11:24.360 --> 0:11:28.040 October ends in November comes, people don't want to take delivery, 0:11:28.160 --> 0:11:31.199 whether it's oil or vix, whatever it is, nobody wants 0:11:31.240 --> 0:11:32.560 because they're just the in it for the investment. They 0:11:32.559 --> 0:11:34.720 don't want to get delivered anything. So they sell the 0:11:34.760 --> 0:11:37.319 future rate towards the end of the month and buy 0:11:37.400 --> 0:11:40.319 the next one, and sometimes they buy two months out. Well, 0:11:40.320 --> 0:11:43.560 the curve is always shaped where it's pricing a little 0:11:43.600 --> 0:11:46.360 more because there's more chance of volatility as you go 0:11:46.400 --> 0:11:49.319 further out, so you pay up every time you go 0:11:49.400 --> 0:11:52.720 from near month to the next month, unless there's a 0:11:52.720 --> 0:11:55.200 spike in volve, which then it goes in the opposite direction. 0:11:55.840 --> 0:11:58.520 And everybody it's like when the guys are selling umbrellas 0:11:58.520 --> 0:12:01.000 outside of Penn Station when it's raining all of a sudden, 0:12:01.000 --> 0:12:04.480 everybody wants then it's cheaper going out and you actually 0:12:04.480 --> 0:12:06.840 get paid to roll. But that's a very rare occasion. 0:12:07.240 --> 0:12:09.200 And the first thing is called a state of contango, 0:12:09.280 --> 0:12:11.200 and the second thing is called a state of backwardation. 0:12:11.640 --> 0:12:13.000 But I don't even want to introduce that. 0:12:14.520 --> 0:12:17.760 I have written stories in my past life where I've 0:12:17.800 --> 0:12:21.160 had to try and explain contango and backwardation, and I 0:12:21.200 --> 0:12:23.160 would like you to know that unwordle the New York 0:12:23.200 --> 0:12:26.920 Times game Contango. When I tried to use it in 0:12:26.960 --> 0:12:28.600 the game, it was not accepted. 0:12:30.000 --> 0:12:32.840 That's why they're all rated R instantly, because I mean, 0:12:33.280 --> 0:12:36.560 who even knows what that means. It's backwardation sounds like 0:12:36.640 --> 0:12:38.520 you know what after you taco bell. 0:12:40.480 --> 0:12:43.320 A contango is like it's a dance thing, but you 0:12:45.280 --> 0:12:47.040 it's a contango. It's not a real tango. 0:12:47.120 --> 0:12:47.760 Oh I love it. 0:12:48.440 --> 0:12:51.439 So yeah. These are the terms that when you learn 0:12:51.520 --> 0:12:54.000 it it makes total sense and you but it takes 0:12:54.000 --> 0:12:56.959 a while. It'd be like sometimes when my auto mechanic 0:12:57.040 --> 0:13:00.680 explains stuff to me, I'm like, dude, fine, just spend 0:13:00.679 --> 0:13:04.439 the eight hundred bucks. This is what that sounds like. 0:13:04.520 --> 0:13:06.240 Sen Real people are still trying to forget to talk 0:13:06.240 --> 0:13:10.079 about reference. I know, so Suzanne come into this as 0:13:10.120 --> 0:13:11.400 the personal finance brain. 0:13:11.600 --> 0:13:15.080 Well, you know, I'm a big believer in personal finance 0:13:15.120 --> 0:13:19.120 of keeping it simple and so this kind of product 0:13:19.360 --> 0:13:21.440 I'm sure makes sense for a lot of people, but 0:13:21.480 --> 0:13:25.120 I just sort of feel like to be like the boring, 0:13:25.200 --> 0:13:29.360 sensible person. You know, there are a lot of actions 0:13:29.400 --> 0:13:31.959 you can take on your portfolio before you need to 0:13:31.960 --> 0:13:34.400 get involved in something like this that is very expensive, 0:13:34.880 --> 0:13:38.800 really hard to understand. Obviously appealing right now because people 0:13:38.880 --> 0:13:42.640 are leery of getting into equities, you know, but they still, 0:13:42.960 --> 0:13:44.920 you know, want to have some participation. And this is 0:13:44.960 --> 0:13:48.400 the word. The ability to sort of hedge your portfolio 0:13:48.679 --> 0:13:51.920 is a great way an advisor or broker or something 0:13:51.960 --> 0:13:55.400 can like hook you in to a product. But I 0:13:55.440 --> 0:13:57.080 just feel that there are a lot of basic things 0:13:57.160 --> 0:14:01.360 people can do, like boring old rebalancing, you know, maybe 0:14:01.400 --> 0:14:04.000 dollar cost averaging out of like mag seven and adding 0:14:04.040 --> 0:14:07.840 a little international and value to your portfolio, keeping a 0:14:07.840 --> 0:14:10.319 cast cushion so you don't have to sell into a downturn. 0:14:10.800 --> 0:14:15.439 I mean, I'm sure everyone's like fog asleep by now. 0:14:21.120 --> 0:14:24.760 Eric jesus Ann's point where we've been talking about our 0:14:24.880 --> 0:14:28.440 maybe NC seventeen stuff. What are some more PG options? 0:14:28.920 --> 0:14:31.520 Most people would use treasury bonds or a little bit 0:14:31.560 --> 0:14:33.680 of cash. I think money market funds are great because 0:14:33.680 --> 0:14:36.280 they're just not going to move, but some people do 0:14:36.320 --> 0:14:38.280 want things that will go up when the stocks go down, 0:14:38.280 --> 0:14:40.680 and long dated treasuries are usually pretty good. They went 0:14:40.760 --> 0:14:43.000 up thirty seven percent in two thousand and eight, but 0:14:43.640 --> 0:14:47.720 in twenty twenty two they went down with stocks, so 0:14:48.120 --> 0:14:53.320 they're they're probably the best organic hedge that's like PG. 0:14:54.160 --> 0:14:57.920 Gold is interesting, but that's zero correlated. Sometimes gold will 0:14:57.920 --> 0:14:59.480 go up with stocks like it is now. That's the 0:14:59.480 --> 0:15:01.920 thing about gold. People are buying it as a way 0:15:01.960 --> 0:15:05.000 to maybe hedge stocks and the basement as stocks keep 0:15:05.080 --> 0:15:09.200 going up. But if it's interesting that it's working as 0:15:09.240 --> 0:15:11.720 a high beta play right now because it's going up 0:15:11.760 --> 0:15:15.040 with stocks. But gold can sometimes go down with stocks. 0:15:15.080 --> 0:15:18.000 It's not totally reliable. It's more like a rebel. It 0:15:18.080 --> 0:15:20.000 just does whatever the hell it wants, which is kind 0:15:20.000 --> 0:15:21.960 of cool for a portfolio because you get diversified. And 0:15:21.960 --> 0:15:26.080 bitcoin is probably in between stocks and gold. It's definitely 0:15:26.080 --> 0:15:27.960 more risky, but it's come down a little some days 0:15:28.000 --> 0:15:30.280 it'll go up when stocks are down. So I just 0:15:30.320 --> 0:15:34.160 think that's why people are out there examining all this stuff, 0:15:34.160 --> 0:15:37.320 because they do want to have diversification, which I do 0:15:37.400 --> 0:15:40.480 believe is the only free lunch. That said, I think 0:15:40.480 --> 0:15:43.480 where the chainsaws and the NC seventeen stuff can come 0:15:43.480 --> 0:15:46.600 in handy is if you have a feeling that in 0:15:46.680 --> 0:15:49.600 the next week something real big is going to happen, 0:15:50.280 --> 0:15:52.440 then you would just put a little bit of Vicks 0:15:52.480 --> 0:15:55.000 in your portfolio. And you only need a little because 0:15:55.040 --> 0:15:57.680 it will go up like five eight times the market 0:15:57.680 --> 0:16:01.000 going down and hedge everything, but you got to sell 0:16:01.000 --> 0:16:03.440 it after the time comes up, whether that thing happened 0:16:03.480 --> 0:16:07.440 or it didn't. My dad had this fame experience famously. 0:16:07.720 --> 0:16:09.480 He thought did a whole episode about this. 0:16:09.560 --> 0:16:12.320 He thought Hillary Clinton was going to win in twenty sixteen, 0:16:12.560 --> 0:16:14.080 and he thought the market was going to go tank, 0:16:14.400 --> 0:16:16.120 and he goes, how can I play this. I'm sure 0:16:16.160 --> 0:16:20.960 of it. My dad's like a huge college football gambler. 0:16:21.000 --> 0:16:24.280 So I said, okay, well, look, if you believe this, 0:16:24.360 --> 0:16:27.640 it's going to put in t vix. TVIX will pay 0:16:27.680 --> 0:16:30.440 off big if you're right. Trump won and the market 0:16:30.440 --> 0:16:33.400 went up, and he forgot to sell it. So all 0:16:33.440 --> 0:16:35.680 three things went wrong, and then he called me every 0:16:35.720 --> 0:16:37.560 like six months and said, what is this thing that 0:16:37.600 --> 0:16:40.240 like loses fifty percent every month? And I'm like, I 0:16:40.280 --> 0:16:42.920 told you to sell it. So, if you're the kind 0:16:42.920 --> 0:16:47.120 of person here doesn't pay attention to your portfolio, don't 0:16:47.200 --> 0:16:49.320 use any of those things. Just use the PG. But 0:16:49.360 --> 0:16:52.960 if you are a trader, they again that jackpot mode 0:16:53.680 --> 0:16:56.480 will go really far in hedging your portfolio, and that's 0:16:56.480 --> 0:16:58.360 why the pros do like to use it. 0:16:58.760 --> 0:17:00.520 All right, So the thing that we haven't talked about 0:17:00.560 --> 0:17:04.800 yet buffers. What's the state of play on buffers? 0:17:04.880 --> 0:17:07.439 What's their rating? Where inflows look like? 0:17:07.880 --> 0:17:12.080 Yeah, so these would be PG PG thirteen. We debate 0:17:12.119 --> 0:17:13.280 that on the team a lot, but let's just say 0:17:13.320 --> 0:17:15.520 they're PG thirteen because they use derivatives and they're a 0:17:15.520 --> 0:17:17.000 little complicated and you have. 0:17:17.080 --> 0:17:17.840 To do they do. 0:17:18.440 --> 0:17:23.399 They basically use options to target an outcome. So like 0:17:23.480 --> 0:17:25.280 if you have to buy in on when the buffer 0:17:25.280 --> 0:17:27.119 comes out, so the ETF comes out October first, you 0:17:27.119 --> 0:17:29.320 buy it on October first, and it basically says something 0:17:29.359 --> 0:17:32.920 like this, if the market goes down five percent, that's 0:17:32.960 --> 0:17:36.080 on you. If it goes down further, the buffer will 0:17:36.080 --> 0:17:39.800 cover it. Other times it'll say we'll take the first 0:17:39.800 --> 0:17:43.560 five percent, you eat everything after. And in order to 0:17:43.840 --> 0:17:46.879 arrange these downsides, you have to give up some upside. 0:17:46.920 --> 0:17:49.320 So the more downside protection you get, the more upside 0:17:49.320 --> 0:17:51.880 you give up. And a lot of older investors, that's 0:17:51.880 --> 0:17:54.240 what we call these boomer candy. They love this stuff 0:17:54.280 --> 0:17:56.400 because they're willing to give up some of that upside 0:17:56.840 --> 0:17:59.400 to sleep at night with the downside these would be. 0:18:00.240 --> 0:18:02.560 These are popular because they guaranteed, as I just said, 0:18:02.600 --> 0:18:06.439 even treasuries don't guarantee a hedge. These lock it in. 0:18:07.240 --> 0:18:09.440 The problem is they do they're pricey. You know, a 0:18:09.440 --> 0:18:11.800 lot of them are not over ninety basis points. You 0:18:11.840 --> 0:18:13.919 don't get the dividend as part of the buffer, so 0:18:14.040 --> 0:18:16.480 you do give up some things. But I think peace 0:18:16.520 --> 0:18:18.880 of mind is something people are really willing to pay 0:18:18.920 --> 0:18:20.720 up for, and that's why they're a huge hit. 0:18:21.200 --> 0:18:23.719 And I think that should be marketed as boomer candy 0:18:24.240 --> 0:18:25.720 because I think that's kind of brilliant. 0:18:26.520 --> 0:18:29.560 It has stuck. I introduced this. I I'd say one 0:18:29.600 --> 0:18:32.320 of every ten phrases I try out actually works, and 0:18:32.359 --> 0:18:34.760 that was one of them. JP Morgan. I think even 0:18:34.760 --> 0:18:37.359 made T shirts with it for one conference. Yeah, and 0:18:37.400 --> 0:18:40.080 then todd Son made me a boomer candy m and 0:18:40.200 --> 0:18:41.560 ms where he brought a jar of M and ms 0:18:41.600 --> 0:18:44.919 he put like dividend income premium income buffer and so 0:18:45.000 --> 0:18:47.440 he made literal boomer candy. It's a whole thing. 0:18:47.720 --> 0:18:49.040 Yeah, Yeah, you had them on the show. 0:18:49.119 --> 0:18:50.679 I know, we don't hang out as much as we 0:18:50.760 --> 0:18:53.840 used to for her all the time, and she would 0:18:54.480 --> 0:18:58.199 you'd get a kick out of all he wrote. She 0:18:58.359 --> 0:19:00.840 was the editor of the radio how to invest based 0:19:00.880 --> 0:19:01.840 on radiohead lyrics. 0:19:02.200 --> 0:19:07.320 Yes, that was awesome, true, Bernard, are you seeing buffers 0:19:07.320 --> 0:19:09.480 show up in any of your data yet or is 0:19:09.520 --> 0:19:16.359 it more like the vix is so different and odd 0:19:16.400 --> 0:19:18.520 that people are like, that's the thing that so just 0:19:18.720 --> 0:19:20.120 like real boom boomer can. 0:19:20.359 --> 0:19:21.639 Just so it's like boomer crack. 0:19:21.760 --> 0:19:23.560 Because I know you we talked a lot about like 0:19:24.119 --> 0:19:26.000 can I just get really nerdy abountions for a second. 0:19:26.240 --> 0:19:29.040 What's fascinating about these buffers is they've started to kind 0:19:29.080 --> 0:19:31.560 of show up in the big options market. So you 0:19:31.600 --> 0:19:34.040 get a ton of like people who are trading options 0:19:34.160 --> 0:19:35.240 talking about. 0:19:35.000 --> 0:19:36.280 The JP Morgan roll. 0:19:36.480 --> 0:19:40.640 Is this really exciting? Event where because this these things 0:19:40.720 --> 0:19:42.200 kind of target what's going to happen in the market 0:19:42.240 --> 0:19:44.560 in three months time, and what ends up happening is 0:19:44.560 --> 0:19:46.399 the market kind of like looks at this as a 0:19:46.600 --> 0:19:48.639 bit of a target kind of what's going to happen, 0:19:49.200 --> 0:19:51.119 and they and they and they kind of all the 0:19:51.200 --> 0:19:53.280 all the Wall Street banks and market makers are kind 0:19:53.320 --> 0:19:56.960 of positioning around these these flows. The other thing is 0:19:56.960 --> 0:19:59.200 that there's a there's kind of a sense of like 0:19:59.560 --> 0:20:04.920 there's that these guys might be getting the BUFFERYTF providers 0:20:05.119 --> 0:20:07.320