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Speaker 1: Bulcan Intrilliance.

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Speaker 2: I'm Joel Webber and I'm Eric Belchunas.

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Speaker 1: So, Eric, it's August. We've been desperate to find guests

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Speaker 1: to uh to join us on the podcast, and then

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Speaker 1: somebody got a new job, Dave Nadig, and we were like,

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Speaker 1: you know what, he's gonna go to ETF dot com.

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Speaker 1: We should bring the competition on the podcast. Let him

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Speaker 1: promote himself a little bit, kick some themes around. Also,

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Speaker 1: get somebody who works for you who can't say no, Athanasia,

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Speaker 1: Sarah Fagas, and and basically we'll run through some headlines.

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Speaker 1: How does that sound?

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Speaker 2: That sounds good to me?

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Speaker 1: Okay, so I gave it all away already, but we're

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Speaker 1: gonna have Athanasio, Sarah Fegas of Bloomberg Intelligence, and Dave Nadik,

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Speaker 1: who's now the president and director of research of ETF

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Speaker 1: dot com, a site that no doubt he's gonna tell

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Speaker 1: us all about because he's been there for multiple jobs

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Speaker 1: through the years. But Eric, the biggest thing is that

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Speaker 1: there's been a ton of the interesting headlines about ETFs

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Speaker 1: su late.

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Speaker 2: Yeah, Bloomberg News has been on fire. And not to

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Speaker 2: pat ourselves on the back, but so is bi and

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Speaker 2: there's a lot of things to just go through. So

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Speaker 2: we had all these ideas for topics, but there's no

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Speaker 2: way they would take three months to do separately. So

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Speaker 2: we're gonna cram a lot of the recent news activity

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Speaker 2: into sort of one of our McLachlin group type episodes

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Speaker 2: where we or maybe a ESPN first take would be

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Speaker 2: a more modern example, but where we just roundtable these

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Speaker 2: things and just real quick. Jow, I go, I gotta

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Speaker 2: say something. I think we've been doing this for like

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Speaker 2: ten years. ETFs this year are on pace to take

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Speaker 2: into trillion dollars for the second year in a row.

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Speaker 2: And I put out on X earlier that the name

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Speaker 2: of this podcast has aged very well, so good job

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Speaker 2: you picked it. I wanted to call it data mail line,

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Speaker 2: and I'm glad we want with trillions.

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Speaker 1: YEP, I will take credit for that. It's time on

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Speaker 1: Trillions Roundtable. Athanasios, Dave, welcome back to Trillions.

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Speaker 3: Thanks for having me.

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Speaker 4: Thanks, even though I couldn't say no, glad to be back,

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Speaker 4: that's true, h.

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Speaker 1: Dave, congrats on the new role.

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Speaker 3: Thank you very much. It does feel a little bit

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Speaker 3: like a like a return. I left as CEO and

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Speaker 3: I'm back as president. So you know, nothing nothing changes

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Speaker 3: but stays the same.

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Speaker 1: Is that is that better or different or what? Yeah?

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Speaker 3: Like, what's better is that? The better is that the

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Speaker 3: new CEO is Matt Middleton, who you may know from

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Speaker 3: running the future Proof conference series, who really knows what

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Speaker 3: he's doing when it comes to making big events that

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Speaker 3: move the needle. And that's what we're gonna do. We're

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Speaker 3: gonna do a lot of multimedia content. We're gonna build

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Speaker 3: content around ETFs people can trust, like some people may

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Speaker 3: be around this table, and we're gonna put on a

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Speaker 3: big event. That's what we're gonna do. It's gonna be fun.

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Speaker 2: Yeah, Joel, let me just chime in here, because you know,

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Speaker 2: one of the reasons I got excited about ATS was

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Speaker 2: Dave Nating and Matt Hogan had a podcast when they

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Speaker 2: were on Index when they called it Index Universe, which

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Speaker 2: was later named ETF dot com. So Dave, honestly like

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Speaker 2: this is like twenty years ago, founded this website and

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Speaker 2: then they went to ETF dot com. And then people

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Speaker 2: started to slowly like disperse, you know, and they went

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Speaker 2: to ETF, Isshoers, other media companies, Crypto, you name it,

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Speaker 2: and ETF dot com you know, carried on, but you know,

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Speaker 2: and there's some good stories now and then, but it's

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Speaker 2: it's not nearly the magnet it was. And so to me,

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Speaker 2: this is like Steve Jobs returning to Apple, maybe on

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Speaker 2: a smaller scale, but similar situation here. So the pressure

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Speaker 2: is on Dave to come up with the iPod, the iPhone.

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Speaker 2: His third act better be good.

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Speaker 3: I'll be sure. I'll do my best. But look, the

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Speaker 3: ETF industry has changed. I think the the url that

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Speaker 3: is etf dot com can mean something different now than

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Speaker 3: it did twenty years ago, right, I think. I think

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Speaker 3: we've got and we're going to talk about it. We've

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Speaker 3: got over forty six hundred ETFs now, back then we

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Speaker 3: had four hundred and fifty. It's a different world, so

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Speaker 3: we'll make a different website, all right.

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Speaker 1: So we've got a handful of themes that we're going

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Speaker 1: to talk about. The first one that I want to

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Speaker 1: start with is a headline from Vildanna Hirich that really

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Speaker 1: made me sit up new this week. There are now

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Speaker 1: more ETFs in the United States than there are individual stocks.

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Speaker 1: So the number that she has in the story, there

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Speaker 1: are forty three hundred exchange traded funds versus forty two

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Speaker 1: hundred stocks. Ethan, Yeah, I mean, I guess what do

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Speaker 1: you what do you think of that?

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Speaker 4: It's yeah, definitely mind blowing, but I guess it was

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Speaker 4: if you just kind of look at the nature of

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Speaker 4: the stuff that's being brought out now, so like it's

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Speaker 4: a lot of single stock stuff. So you have like Tesla,

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Speaker 4: then you have so many ETFs like long own like

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Speaker 4: long Tesla, then short Tesla, then option income Tesla, so

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Speaker 4: on one ticker you have like twenty ETFs that are

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Speaker 4: being launched. So I guess it's not it probably would

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Speaker 4: have happened eventually, but it's definitely a really surprising stat

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Speaker 4: that there are more ETFs than stocks. And maybe the

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Speaker 4: bigger problem is we just don't have enough stocks, right,

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Speaker 4: Maybe that's a whole other debate, but like we're just

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Speaker 4: there's so few stocks and so many products being launched

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Speaker 4: off of like a very you know, tight list.

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Speaker 2: Just real quick on that you had to piece out

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Speaker 2: a note about ETFs being the new IPO and the

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Speaker 2: exchange is really just trying to get ETFs now more

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Speaker 2: than companies to list.

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Speaker 4: Yeah, we looked at that, and I think you know,

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Speaker 4: if you look, there's not a lot of IPOs anymore, right,

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Speaker 4: and you look at something like I hate to admit it,

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Speaker 4: but like I bit right, that is worth more to

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Speaker 4: NASAC than like an IPO trades more than a lot

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Speaker 4: of new IPOs. So I get why the exchanges they're

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Speaker 4: they're backing, like the share class ruling and things like that,

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Speaker 4: Like if there's not IPO's coming, they ETFs are just

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Speaker 4: as good. So and just given how much you know,

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Speaker 4: the percentage of trading that's going up in ETFs, I

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Speaker 4: get that they want to really lean into this and

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Speaker 4: sort of fill that gap for the drought and IPOs.

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Speaker 3: Yeah, I'd add a couple of things there. One, You're right,

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Speaker 3: they're not enough companies ipoing. So that's a that's a

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Speaker 3: whole problem by itself that has nothing to do with ETFs.

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Speaker 3: That's just how we structure the capital markets right now,

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Speaker 3: So all the interesting capital formation actually happens privately, and

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Speaker 3: then when things are big enough, they ipo straight into indexes. Right,

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Speaker 3: That's that's the pattern that we've seen over and over.

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Speaker 3: But you know, I'm not sure that I'd be a

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Speaker 3: lot of hand wavy about the fact that they're now

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Speaker 3: more ETFs, Like I think samro made the comment this

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Speaker 3: morning on Twitter, they're also more recipes than there are ingredients,

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Speaker 3: and I think that's also true. I mean, look, we

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Speaker 3: have one hundred and fifty thousand indexes tracked by the

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Speaker 3: Index Industry Association. Obviously that's insane. But you can just

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Speaker 3: add one stock, get rid of another, and now you

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Speaker 3: have a brand new index, right, So of course we're

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Speaker 3: going to end up with that proliferation. And I think

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Speaker 3: they're issues, right. It makes figuring out what ETF to

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Speaker 3: buy a lot harder than it was twenty years ago.

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Speaker 1: As we were saying, yeah, actually, I find that I

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Speaker 1: find that to be like this prevailing problem just in

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Speaker 1: my life in general, Like I call it the bread

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Speaker 1: ale as my wife loot tests like you get in

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Speaker 1: the bread ale, and it's like, how am I supposed

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Speaker 1: to make a decision? All of these things are basically

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Speaker 1: the same.

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Speaker 2: Yeah, isn't that the paradox of choice? I think that's

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Speaker 2: the term for it. So I agree, it's just the

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Speaker 2: way it goes when something's successful, and especially in asset management,

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Speaker 2: if the fish are biting in a certain you know, lake,

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Speaker 2: they're going to launch products to try to get bites.

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Speaker 2: So it's a natural part of capitalism. I did look

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Speaker 2: and there are almost six thousand mutual funds, so there's

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Speaker 2: been more mutual funds than stocks for thirty years. The

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Speaker 2: ETFs of the four thousand and whatever five hundred, there are,

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Speaker 2: half of them are below one hundred million dollars. So

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Speaker 2: most of these live in oblivion, and only a couple

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Speaker 2: really catch on. And so the UH I think in

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Speaker 2: my first book, I've used the metaphor of there are

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Speaker 2: I forget how many notes. There are like seven notes,

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Speaker 2: and then there's a you know, maybe a couple hundred chords,

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Speaker 2: but there's like one hundred million songs right right, or

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Speaker 2: as met Favor puts it, there's definitely more words than letters.

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Speaker 2: So I don't care. I think it's just a sign

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Speaker 2: of the industry growing. But I agree it is harder

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Speaker 2: and hard to make a choice. I think that gives

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Speaker 2: all of us here some job security, which is good.

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Speaker 3: It's going to get so much worse too. Between the

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Speaker 3: single stockraft that you were pointing out, you know, there's

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Speaker 3: going to be seven to twenty ETFs for every single

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Speaker 3: ticker at some point, and we've got the share class

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Speaker 3: conversions coming down the pipe, which could be anywhere from

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Speaker 3: zero to a couple thousand new ETFs, depending on how

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Speaker 3: aggressive that industry wants to get.

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Speaker 2: Yeah, I mean, Dave Nadig, where do you think we

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Speaker 2: end up? Like, if you had to pick a plateau number,

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Speaker 2: what would you pick?

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Speaker 3: Eight thousand?

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Speaker 2: Okay? How about you?

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Speaker 3: I mean, if if you figure every stock in the

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Speaker 3: S and P five hundred is going to have a

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Speaker 3: few varieties, right, at least a leveraged, at least a

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Speaker 3: covered call strategy, probably a short So there's probably two

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Speaker 3: to three thousand ETFs just on the Stingle stock you know,

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Speaker 3: Djen Shenanigan side, and then the four thousand we've already gotten,

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Speaker 3: not one thousand or two that are going to showup

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Speaker 3: because people want to, you know, do the share class

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Speaker 3: spoking end thing? Eight thousand?

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Speaker 2: I'm you know we last time we had Joe on

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Speaker 2: we had that note that we wrote earlier in the year.

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Speaker 2: No no industry for old analysts, because Dave, you and

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Speaker 2: Ethan are very similar that when there's one of these

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Speaker 2: crazy like you know, single stock covered call yield max

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Speaker 2: that launches, especially if they combined two or three things

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Speaker 2: like now there's a two x buffer.

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Speaker 3: Stock and withering idiots with drool running out of our mouths.

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Speaker 2: I understand Ethan puts the picture of Tommy Lee Jones

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Speaker 2: looking over the paper in No Country for old men,

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Speaker 2: Like what? Anyway, I get it. I'm probably the most

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Speaker 2: liberal of you guys because I just find the trading

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Speaker 2: wing of the ETF tent okay, given that there are

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Speaker 2: plenty of ways to gamble. This is America, it's a

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Speaker 2: you know, it's just I think I just look at

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Speaker 2: the ETF as a technology, not as an index fund,

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Speaker 2: and I think that's where I might be more liberal.

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Speaker 3: I think you and I agree more than we disagree

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Speaker 3: on this. I'm not anti people trading these vehicles to

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Speaker 3: run their cowboy accounts or hedge funds using them to

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Speaker 3: run their exposures. But they're good and bad ones of

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Speaker 3: those two rights. That's really I think the key thing

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Speaker 3: is that there are good single stock leverage funds and

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Speaker 3: there are bad single stock leverage funds. And it tends

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Speaker 3: to have to do with things like how much got

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Speaker 3: buried in the swap contract. You're not paying attention to

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Speaker 3: how much do these things actually cost? Do they trade it?

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Speaker 3: Two percent spreads on high vol days, like there are

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Speaker 3: good and bad ones even in the hottest of hot sauce.

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Speaker 2: And I would argue there are good of bad ones,

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Speaker 2: even the most in the most vanilla areas.

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Speaker 3: Yeah, yeah, there's the wrong s and P five hundred

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Speaker 3: ETF to buy. Which one is that, Dave? The one

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Speaker 3: that costs too much? Probably Shi, I.

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Speaker 2: Will say it's Hi. Yeah, it probably is. Spy. In

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Speaker 2: the mutual fund world, the second ever index mutual fund

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Speaker 2: as well as Fargo, and that still charges like thirty

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Speaker 2: five to forty BIPs.

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Speaker 3: There's there's still a two percent SMP mutual fund trading.

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Speaker 3: It's got hundreds of millions of dollars in it, like

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Speaker 3: it should be illegal by design. I don't know, Okay.

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Speaker 3: Topic number two.

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Speaker 1: This is a headline a note from James uh A

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Speaker 1: Safer at Bloomberg Intelligence headline, Passive ownership is rising and

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Speaker 1: more complex than meets the eye, Dave, Is that true?

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Speaker 3: Yes? Both of those things are true. You guys track

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Speaker 3: the passive stuff better than most people. I mean, what

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Speaker 3: are you got thirty five percent measurable, fifty percent probable

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Speaker 3: something like that?

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Speaker 2: Well, well it's a lot. Let's just define passive. In

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Speaker 2: James's note, it's he says the average stock has twenty

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Speaker 2: percent of its shares owned by passive, which is defined

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Speaker 2: by the way as index something ETF or mutual fund,

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Speaker 2: which can include smart beta. So it's a pretty wide array.

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Speaker 3: Yeah, but that misses the problem with that institutional separate recounts.

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Speaker 2: So where should we go twenty to what thirty?

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Speaker 3: I would say, thirty five, thirty five?

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Speaker 2: Okay, let's say it's thirty five.

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Speaker 3: The academic research points okay, the thirty five to forty range.

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Speaker 2: So your take is should we worry?

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Speaker 3: So my take is, yes, it matters, but not for

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Speaker 3: the reasons everybody thinks it does. It's too complicated to

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Speaker 3: be a blanket good or bad. What really matters is

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Speaker 3: the flow in and out of these big block products.

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Speaker 3: It actually doesn't matter whether they're quote unquote index. But

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Speaker 3: if you build a giant block trade based on cap weighting,

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Speaker 3: that has real impacts on price discovery because the elasticity

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Speaker 3: of big stocks is different than elasticity of small stocks.

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Speaker 3: So you end up with this kind of runaway winner,

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Speaker 3: runaway loser problem at the top of the cap table,

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Speaker 3: which we see every week when we get allocations into

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Speaker 3: TDFs and the four andin K money flowing in, all

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Speaker 3: of which can turn around. Everybody could decide to pull

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Speaker 3: all their money out of their target day funds and

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Speaker 3: buy cash tomorrow. Right, So sentiment overrules all of this.

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Speaker 3: But until you see some of those numbers change, the

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Speaker 3: constant drumbeat of money flowing through passive into the market

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Speaker 3: does disturb price discovery. And there's been some amazing deep

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Speaker 3: academic research in the last eighteen months on this that's

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Speaker 3: pretty difficult to argue with. I mean, it's not fufu ideas.

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Speaker 3: It's like, no, we looked at millions of data points

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Speaker 3: over twenty years, and you can kind of prove it.

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Speaker 3: Things like bitcoin are great. Sort Petrie dishes for this

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Speaker 3: because you know, absolutely limited supply flow is the only

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Speaker 3: thing that changes price. It's kind of proved all our points.

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Speaker 2: Well, I get that. And obviously a bunch of money

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Speaker 2: is going in and buying vou and voo like products.

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Speaker 2: It's going to push the prices up there, that's a fact.

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Speaker 2: But the voo waitings are totally determined by active Because

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Speaker 2: Athanasios I'll turn to you on this, he did a

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Speaker 2: deep dive and found that, you know, when Tesla has

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Speaker 2: a bad earnings, it sells off, its market cap goes down.

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Speaker 2: Navidia was the one hundred and fiftieth stock in the

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Speaker 2: S and P only like five years ago, and it's

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Speaker 2: index didn't do that. Active likes Navidia and it hates Macy's,

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Speaker 2: which got kicked out of the S and P.

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Speaker 3: So for sure, but I'm not saying that that's the

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Speaker 3: reason in Nvidia rockets to the top. I'm saying it's

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Speaker 3: the reason that the market in general becomes slowly more

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Speaker 3: top heavy because the incremental dollar goes into a stock

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Speaker 3: like Nvidia, which is much less elastic than public storage ink. Right,

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Speaker 3: So public storage inc. Anybody can swap that out for

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Speaker 3: another industrial Nobody cares. If you don't have Nvidia in

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Speaker 3: your portfolio, have a problem as an active manager. So

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Speaker 3: that for that reason, a dollar going into Invidia moves

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Speaker 3: in video more than a dollar going into a company

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Speaker 3: at the bottom of the cap table. And that's math.

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Speaker 3: We can prove that that's just actually what's happened. So yes,

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Speaker 3: price discovery still happens, but it actually happens violently with

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Speaker 3: a smaller number of players, which rockets things either up

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Speaker 3: or down, and then the next thing that comes in

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Speaker 3: reinforces that either up or down.

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Speaker 4: I think you brought up a good point, and honestly,

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Speaker 4: I don't want to cop out. I don't think anyone knows.

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Speaker 4: I've seen good research on both sides. I get that

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Speaker 4: the system is structurally set up that yet flows are

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Speaker 4: going to come in. It's going to keep going to

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Speaker 4: these stocks. I'm not fully convinced that it's like a

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Speaker 4: problem yet. I think there's still too many like holes

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Speaker 4: you can poke in it.

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Speaker 3: Oh, I don't think anybody should do anything about it.

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Speaker 3: Like I don't think the answer is don't buy passive.

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Speaker 3: I think that this actually means, for the love of God,

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Speaker 3: stay in cap weighted products and stay invested. Because these

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Speaker 3: are tailwinds to the market. They can whipsaw. But I

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Speaker 3: actually can't point to the thing that's going to make

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Speaker 3: it whipsaw. It's not the it's not old people retiring

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Speaker 3: that's not going to do it. That's actually going to

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Speaker 3: help because all those young people who inherit it buy

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Speaker 3: more right. So I don't think this means you do

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Speaker 3: something different. I think it explains what we've been witnessing

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Speaker 3: for the last ten years.

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Speaker 2: Yeah, I would also just say that one thing that

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Speaker 2: may change this, and probably it's also good for everybody,

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Speaker 2: is that active is getting cheaper. And so the more

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Speaker 2: that the capital groups and fidelities and trows lower their fees,

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Speaker 2: the more they see organic flows. I think advisors do

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Speaker 2: want active, they just want to pay us a lighter

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Speaker 2: fee for it, and that would obviously introduce more price

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Speaker 2: discovery based on fundamentals because those active funds do hold

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Speaker 2: different stocks with different weightings. So in a way, and

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Speaker 2: we debate this with Mike Green from Simplify all the time,

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Speaker 2: one of the things that is just an inconvenient truth

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Speaker 2: here is that active managers were caught in a very

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Speaker 2: disruptible position charging one percent for mostly Beta and Vanguard

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Speaker 2: disrupted the crap out of them. They never passed on

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Speaker 2: economies of scale during the fifty years they had a

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Speaker 2: chance to, and if they had, they'd have more upperformance,

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Speaker 2: more customer goodwill. But because they didn't, I find that

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Speaker 2: sin is still haunting them. But as they adapt, Yeah,

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Speaker 2: it as they adapt, though, and money shifts back to active,

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Speaker 2: because active's taken in twenty five percent of the flows

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Speaker 2: this year, some of this will possibly be sorted out

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Speaker 2: by the market.

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Speaker 3: Yeah, and look, we've got folks like Baron coming in.

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Speaker 3: I mean, the thing that's shocking to me is that

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Speaker 3: we've got classes of active managers that have been crushing

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Speaker 3: it for one, three, five, ten, twenty, like Barn like

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Speaker 3: bridge Haven. Like there's a bunch of active managers you

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Speaker 3: can look at and be like, no, they've done everything

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Speaker 3: they said they were going to do and they're crushing

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Speaker 3: and they all have outflows. Yeah, well, bananas.

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Speaker 2: The Barren guy coming into ETFs is capitulation. I bet

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Speaker 2: he didn't want to. But Joel, this is the only

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Speaker 2: in fifteen years to beat the cues. Beating the cues

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Speaker 2: is like it's like beating Michael Jordan his prime, Like,

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Speaker 2: how did you do that? Right? And uh, it brings me.

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Speaker 2: I always think of that quote from the Tim Burton Batman.

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Speaker 2: Remember when Michael Keaton's like, oh, you want to get nuts,

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Speaker 2: let's get nuts.

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Speaker 3: Yeah, let's go.

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Speaker 2: You got to get more crazy than the cues And

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Speaker 2: he did, Oh yes he did. It's like it's the half.

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Speaker 2: The half the mutual fun is Elon Musk companies. It's

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Speaker 2: like SpaceX and Tesla. So that's part of I think

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Speaker 2: what worked is discarding the CFA brain and getting a

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Speaker 2: little crazy and Baron did it. Now he's coming into ETFs,

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Speaker 2: we'll see what happens. Like the timing is interesting. Would

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Speaker 2: this be a signal that maybe now is the time

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Speaker 2: that he underperforms? I don't know. But also he's coming

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Speaker 2: in at one percent. I think that's a pretty hefty fee.

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Speaker 3: Did we get it? Did we get an actual fee?

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Speaker 3: I didn't see that.

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Speaker 2: That's what Katie Greifeld reported. I think it was like

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Speaker 2: one of them was seventy BIPs, one was one percent.

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Speaker 2: Either way, those are all that said. If he has

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Speaker 2: active share of like ninety five or percent of review, yeah,

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Speaker 2: then it's in this sort of arch thematic bucket. People

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Speaker 2: pay more, people have less price sensitivity for stuff that

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Speaker 2: has a high active here.

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Speaker 3: Even a one percent, it's a bargain compared to like

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Speaker 3: the age some of his mutual fund shared classes are

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Speaker 3: one point nine. Yeah, So like there's some real bang

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Speaker 3: expensive stuff out there.

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Speaker 2: Yeah. And like, by the way, Tom Lee also had

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Speaker 2: great success with Granny the Granny shots ETF. Now he's

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Speaker 2: launching two new ones. Dan ives have come in, so

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Speaker 2: it's not just that big old school manager getting cheaper.

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Speaker 2: You've got these stars, you know, I say, yeah, one

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Speaker 2: of our themes is ETFs Go Hollywood. Some of these

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Speaker 2: star managers are coming in. And I'm going to say

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Speaker 2: right now in the show, I believe Bill Ackman will

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Speaker 2: launch an ETF at some point. I don't think Buffett will.

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Speaker 2: I think he's he Berkshire's kind of that for him.

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Speaker 2: But I do think if you are in this industry

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Speaker 2: and you want to be where the fisher biding, you

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Speaker 2: kind of have to come into ETFs now, especially Tom

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Speaker 2: Lee in particular, seeing the success he's had. Two billion

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Speaker 2: in less than a year is pretty good, and his

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Speaker 2: fee isn't cheap either, So that's a good sign I

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Speaker 2: think for active and maybe the people who are worried

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Speaker 2: about passive growing so much.

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Speaker 1: Okay, next topic, Eric, this one's gonna put you in

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Speaker 1: the hot seat. Magnificent seven. Question mark was the beginning

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Speaker 1: of a note, the headline for a note that you wrote,

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Speaker 1: think of them more as the Magnificent seventy. Okay, I'm

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Speaker 1: really interested in this because you can't you can't talk

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Speaker 1: about markets without talking about AI and the Magnificent seven.

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Speaker 1: Right now, there's four hundred and ninety three other companies,

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Speaker 1: except you say, maybe maybe that math is off, maybe

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Speaker 1: there's maybe there's many more that should be considered magnificent

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Speaker 1: seven companies. What's you're reasoning?

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Speaker 2: Yeah, so, and you brought Sam ro up earlier. I

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Speaker 2: actually got this idea from him. He talked about the

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Speaker 2: idea that many of these companies are like multiple companies

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Speaker 2: inside of one, and I thought, yeah, you know, he's right,

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Speaker 2: Like it feels right that. So I look, did the

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Speaker 2: amount of acquisitions the mag seven companies have made, and

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Speaker 2: it's eight hundred and fifty eight between the seven of them,

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Speaker 2: Google and Microsoft are like two fifty each. Yeah, here's

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Speaker 2: the thing. Like one of Google's acquisition was YouTube. That's

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Speaker 2: one of two fifty. YouTube would be the nineteenth biggest

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Speaker 2: thought in America if it were spun off. And so

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Speaker 2: the amount of brand names, actual capital cash these companies.

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Speaker 2: I talk to our analyst on Rugrana who covers some

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Speaker 2: of these tech stocks, and he says, they're like countries,

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Speaker 2: they're that big. So I almost think you kind of

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Speaker 2: have to throw your CFA brain out a little bit

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Speaker 2: here too. The mag seven should be looked at as

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Speaker 2: seventy So if.

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Speaker 3: You, well, isn't this GE, I mean, are we just

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Speaker 3: basically talking about Jack Welchi or a GE where it's like,

431
00:21:48,160 --> 00:21:49,840
Speaker 3: are you a finance company? Are you a tech company?

432
00:21:49,920 --> 00:21:52,280
Speaker 3: Or you defense contract with Berkshire? Yes, we're all of

433
00:21:52,280 --> 00:21:52,760
Speaker 3: those things.

434
00:21:52,880 --> 00:21:53,760
Speaker 2: Yes, well Berkshire.

435
00:21:53,800 --> 00:21:56,800
Speaker 3: I see more as like actually kind of a holding company, true,

436
00:21:56,960 --> 00:22:00,840
Speaker 3: versus something like Microsoft, which actually integrates these things and

437
00:22:00,880 --> 00:22:03,159
Speaker 3: like and I think they are like countries. I mean

438
00:22:03,240 --> 00:22:06,320
Speaker 3: Microsoft is also doing things like building water systems, like

439
00:22:06,400 --> 00:22:09,960
Speaker 3: it's crazy buying nuclear Yeah.

440
00:22:10,280 --> 00:22:12,439
Speaker 2: Yeah, I went back and looked at GE, and I

441
00:22:12,440 --> 00:22:16,080
Speaker 2: think they're total acquisitions. I you know, I don't want

442
00:22:16,080 --> 00:22:17,280
Speaker 2: to get hate mail if I'm wrong, But I think

443
00:22:17,320 --> 00:22:18,440
Speaker 2: it was like sixty.

444
00:22:18,119 --> 00:22:21,200
Speaker 3: Five, So it was it was a lot not this wasn't.

445
00:22:21,000 --> 00:22:23,520
Speaker 2: On the same level. But let's just say we consider

446
00:22:23,560 --> 00:22:26,320
Speaker 2: them to be seventy companies, all of a sudden, they're

447
00:22:26,359 --> 00:22:28,520
Speaker 2: thirty four percent waiting in the S and P. Isn't

448
00:22:28,560 --> 00:22:31,280
Speaker 2: that bad? So I guess part of the reason I

449
00:22:31,320 --> 00:22:34,239
Speaker 2: wrote this was Ethan and I talk about this all

450
00:22:34,280 --> 00:22:37,639
Speaker 2: the time in the team. It's I just not into

451
00:22:37,720 --> 00:22:40,639
Speaker 2: scaring people out of these companies. There's so many people

452
00:22:40,760 --> 00:22:43,600
Speaker 2: like it's time to rotate. These companies are valued. I'm like, yeah,

453
00:22:43,600 --> 00:22:46,160
Speaker 2: but people said that two hundred percent ago. And these

454
00:22:46,200 --> 00:22:52,040
Speaker 2: companies kick so much ass that you can't not own them,

455
00:22:52,080 --> 00:22:55,520
Speaker 2: Like these are the leaders of the world in what

456
00:22:55,640 --> 00:22:58,800
Speaker 2: they do, and it just seems crazy to me. This

457
00:22:58,840 --> 00:23:01,560
Speaker 2: is where I think you never want to go full CFA.

458
00:23:01,680 --> 00:23:04,840
Speaker 2: You only go half CFA. You know what I mean.

459
00:23:05,400 --> 00:23:08,320
Speaker 2: If you fill CFA, you will lose and lag and

460
00:23:08,359 --> 00:23:09,000
Speaker 2: be miserable.

461
00:23:10,080 --> 00:23:13,119
Speaker 3: I agree that I think this is a useful framework.

462
00:23:13,240 --> 00:23:17,000
Speaker 3: I think you're correct in that. From an economic perspective,

463
00:23:17,040 --> 00:23:19,680
Speaker 3: thinking about Microsoft as being a singular company the same

464
00:23:19,680 --> 00:23:24,040
Speaker 3: way that John Deere is a singular company is wrong. However,

465
00:23:24,359 --> 00:23:28,080
Speaker 3: it's a single security, and so from a risk management,

466
00:23:28,200 --> 00:23:33,360
Speaker 3: market structure, capital flow perspective, MSFT is still a single stock.

467
00:23:33,880 --> 00:23:37,280
Speaker 3: And when some big whale decides to fat finger an

468
00:23:37,280 --> 00:23:41,400
Speaker 3: options trade and it gets tanked by nine percent, which

469
00:23:41,400 --> 00:23:44,320
Speaker 3: seems like a ridiculous amount of value to extract from

470
00:23:44,359 --> 00:23:47,440
Speaker 3: the market, it's because it's still just one stock. There

471
00:23:47,520 --> 00:23:50,440
Speaker 3: is some danger in having more and more and more

472
00:23:50,480 --> 00:23:55,320
Speaker 3: economic activity in fewer and fewer tradable tickers. That's a

473
00:23:55,359 --> 00:23:57,880
Speaker 3: different problem than are these companies too big, and will

474
00:23:57,880 --> 00:24:01,119
Speaker 3: they be bad economically? I'm with you on that. I

475
00:24:01,160 --> 00:24:04,440
Speaker 3: think the AI thing is an interesting use case here

476
00:24:04,560 --> 00:24:06,639
Speaker 3: because I think you can make the case that the

477
00:24:06,720 --> 00:24:10,919
Speaker 3: benefits of AI may actually benefit the bottom two fifty

478
00:24:10,920 --> 00:24:12,919
Speaker 3: in the S and P more than the top two fifty,

479
00:24:13,280 --> 00:24:16,440
Speaker 3: because that's where the boring, low hanging fruit of Like,

480
00:24:16,880 --> 00:24:20,000
Speaker 3: can we, you know, replace these three boring processes in

481
00:24:20,000 --> 00:24:22,600
Speaker 3: a back office with an AI. I think that's going

482
00:24:22,680 --> 00:24:24,960
Speaker 3: to happen more there than Nvidia is going to have

483
00:24:24,960 --> 00:24:26,760
Speaker 3: blowout earnings for eight quarters?

484
00:24:27,320 --> 00:24:29,520
Speaker 1: Eric, what are those seventy? And how do you get it?

485
00:24:29,680 --> 00:24:29,800
Speaker 3: No?

486
00:24:29,800 --> 00:24:32,080
Speaker 2: No, what I'm saying is if you opened up Google,

487
00:24:32,840 --> 00:24:35,280
Speaker 2: you're going to find YouTube a cloud company. I mean

488
00:24:35,480 --> 00:24:39,120
Speaker 2: I'm talking Google has about seven to ten actual legitimate

489
00:24:39,680 --> 00:24:40,600
Speaker 2: large caps within it.

490
00:24:40,720 --> 00:24:42,080
Speaker 3: Yeah, you're buying a conglomerate.

491
00:24:42,200 --> 00:24:46,480
Speaker 2: Yeah, you're buying again like at Arog says a small country.

492
00:24:46,840 --> 00:24:49,440
Speaker 2: I mean, if you look at the market cap, these

493
00:24:49,480 --> 00:24:51,840
Speaker 2: would be bigger than most of the countries on Earth.

494
00:24:54,280 --> 00:24:56,920
Speaker 2: But to Dave's point, I wrote in my note that

495
00:24:56,920 --> 00:25:00,240
Speaker 2: that isn't to say this is not antitrust issue, and

496
00:25:00,280 --> 00:25:02,960
Speaker 2: that may be a fact these companies, you know, how

497
00:25:03,000 --> 00:25:05,639
Speaker 2: big should they get should they get broken up? I

498
00:25:05,640 --> 00:25:08,840
Speaker 2: feel like that's a fine debate to have because should

499
00:25:08,840 --> 00:25:11,880
Speaker 2: Google have that much going on inside of it? That's

500
00:25:11,920 --> 00:25:15,000
Speaker 2: just different to me than index concentration in terms of

501
00:25:15,040 --> 00:25:19,440
Speaker 2: what you're buying that. So it's a very interesting, complicated issue.

502
00:25:19,720 --> 00:25:21,920
Speaker 2: But I just wanted to get people to look at it,

503
00:25:22,080 --> 00:25:26,080
Speaker 2: you know, from this alternative way. And I wasn't alone,

504
00:25:26,480 --> 00:25:29,919
Speaker 2: although he's biased. Dave Masa from Roundhill, who has the

505
00:25:29,920 --> 00:25:34,640
Speaker 2: ETF MAGS, he wrote a piece similar about there being

506
00:25:34,680 --> 00:25:37,640
Speaker 2: more more to it and the valuations, you know, might

507
00:25:37,680 --> 00:25:40,520
Speaker 2: be worth it given how many other companies are inside.

508
00:25:40,560 --> 00:25:44,280
Speaker 2: So I sort of ripped off from both those guys

509
00:25:44,840 --> 00:25:47,679
Speaker 2: in my note, although none of them mentioned the amount

510
00:25:47,720 --> 00:25:50,280
Speaker 2: of total acquisitions, which again I thought I was going

511
00:25:50,320 --> 00:25:52,560
Speaker 2: to find like twenty to thirty in each and I

512
00:25:52,600 --> 00:25:54,280
Speaker 2: was like, oh my god, eight fifty.

513
00:25:54,440 --> 00:25:56,480
Speaker 3: Now a lot of those are really small companies that

514
00:25:56,520 --> 00:25:58,600
Speaker 3: were part of a tech stack, right, true, like a

515
00:25:58,600 --> 00:26:02,760
Speaker 3: lot or companies got bought, but because their calendar plugin was.

516
00:26:02,760 --> 00:26:06,680
Speaker 2: Crazy, you know, no, I hear you, But I went

517
00:26:06,680 --> 00:26:08,760
Speaker 2: into Google. They bought some company I never heard of

518
00:26:08,800 --> 00:26:11,280
Speaker 2: for thirteen billion dollars. Oh, you know, the numbers of

519
00:26:11,520 --> 00:26:14,680
Speaker 2: cloud stuff like like, there's stuff. I agree, there's small

520
00:26:14,720 --> 00:26:18,240
Speaker 2: stuff that is bullsh doesn't count, but there's some big

521
00:26:18,280 --> 00:26:20,880
Speaker 2: stuff we never even heard of the company, like Slack yes,

522
00:26:22,920 --> 00:26:26,639
Speaker 2: and like ways you know that app which I used constantly, constantly,

523
00:26:26,720 --> 00:26:27,280
Speaker 2: I forget.

524
00:26:27,040 --> 00:26:27,920
Speaker 3: Where owns that?

525
00:26:29,040 --> 00:26:29,359
Speaker 1: Google?

526
00:26:29,440 --> 00:26:30,320
Speaker 3: Google? Google owns that?

527
00:26:30,400 --> 00:26:30,560
Speaker 1: Now?

528
00:26:30,680 --> 00:26:33,720
Speaker 3: Yeah, I can't keep it has forever?

529
00:26:33,880 --> 00:26:39,159
Speaker 1: Okay, next topic, Katie Greifel's headline earlier in August, Vanguard

530
00:26:39,240 --> 00:26:46,000
Speaker 1: plans for its costliest ETFs yet an active push. Uh Ethan,

531
00:26:46,440 --> 00:26:49,080
Speaker 1: I want to talk to you. The new number one

532
00:26:49,119 --> 00:26:53,600
Speaker 1: at Vanguard is point four zero percent, followed by zero

533
00:26:53,600 --> 00:26:57,160
Speaker 1: point three five percent. This is on top of their

534
00:26:57,200 --> 00:27:01,320
Speaker 1: current costlyest ETF, which is point three Yeah. I love

535
00:27:01,440 --> 00:27:03,520
Speaker 1: And what do you make of this push into active?

536
00:27:03,680 --> 00:27:06,800
Speaker 4: They're playing offense now right, Like we looked at, Vanguard

537
00:27:06,800 --> 00:27:09,240
Speaker 4: doesn't launch ETFs that often, and so this year I

538
00:27:09,280 --> 00:27:11,200
Speaker 4: think it's the most they've had in like ten years.

539
00:27:11,800 --> 00:27:15,880
Speaker 4: Obviously they have a new CEO. But there we were

540
00:27:15,880 --> 00:27:19,000
Speaker 4: looking at this last week. I think if Blackrock didn't

541
00:27:19,000 --> 00:27:22,040
Speaker 4: have the bitcoin and crypto stuff, Vanguard would only be

542
00:27:22,080 --> 00:27:25,639
Speaker 4: like forty billion behind them. So that gap is gonna close.

543
00:27:26,760 --> 00:27:29,800
Speaker 4: But yeah, I think, you know, they're they're you know,

544
00:27:29,840 --> 00:27:32,800
Speaker 4: they're still a large active manager, right, so it kind

545
00:27:32,840 --> 00:27:34,400
Speaker 4: of guess it kind of makes sense that they're they're

546
00:27:34,400 --> 00:27:36,000
Speaker 4: pushing into that, but.

547
00:27:35,920 --> 00:27:37,920
Speaker 1: They have active in the name now. These are called

548
00:27:38,119 --> 00:27:42,320
Speaker 1: the Vanguard Wellington Dividend Growth Active ETF. That's like, this

549
00:27:42,440 --> 00:27:45,640
Speaker 1: is like how Vanguard became Fidelity and Fidelity became Vanguard.

550
00:27:47,160 --> 00:27:52,720
Speaker 4: Like David alluded to, THETF dot com means different things now, right, Yeah,

551
00:27:52,760 --> 00:27:55,560
Speaker 4: this is yeah, that the whole era is changing. So

552
00:27:55,880 --> 00:27:58,400
Speaker 4: I love that they're playing, you know, offense. They're they're

553
00:27:58,440 --> 00:28:01,240
Speaker 4: getting more aggressive on the product front, you know, and

554
00:28:01,720 --> 00:28:03,920
Speaker 4: it's fine. You know, they've they've basically given away their

555
00:28:03,920 --> 00:28:07,040
Speaker 4: ETFs for free for such a long time. Now it

556
00:28:07,040 --> 00:28:08,520
Speaker 4: looks like, you know, they want they want to charge

557
00:28:08,560 --> 00:28:10,080
Speaker 4: a little bit more. They're probably still going to be

558
00:28:10,119 --> 00:28:12,600
Speaker 4: cheaper than most a lot of active stuff anyways, So

559
00:28:13,280 --> 00:28:14,560
Speaker 4: it's still kind of a win win.

560
00:28:14,680 --> 00:28:17,280
Speaker 3: But I'm a huge fan because it feels like, you know,

561
00:28:17,280 --> 00:28:19,400
Speaker 3: I'm a big fan of like bringing your authentic self

562
00:28:19,440 --> 00:28:21,639
Speaker 3: to work every day. I feel like Vanguard's finally bringing

563
00:28:21,760 --> 00:28:26,240
Speaker 3: the authentic Vanguard to market because Wellington's been just raking

564
00:28:26,440 --> 00:28:29,800
Speaker 3: in cash for them for decades. I mean, you talked

565
00:28:29,920 --> 00:28:32,480
Speaker 3: a little bit about about this in your book, you know,

566
00:28:32,520 --> 00:28:37,000
Speaker 3: the the active thing that lives inside the giant passive enterprise.

567
00:28:37,320 --> 00:28:38,800
Speaker 3: But I think at some point, I don't know whether

568
00:28:38,800 --> 00:28:41,440
Speaker 3: it was you guys or somebody else, did the rundown

569
00:28:41,480 --> 00:28:44,000
Speaker 3: on how much revenue they actually generate from the active

570
00:28:44,040 --> 00:28:46,520
Speaker 3: side of the business versus the ETF side of the

571
00:28:46,520 --> 00:28:48,840
Speaker 3: business before they got any of the active product over

572
00:28:49,080 --> 00:28:51,240
Speaker 3: and it was like four times as much money that

573
00:28:51,280 --> 00:28:54,520
Speaker 3: they make off the active products. It's like they're actually

574
00:28:54,800 --> 00:28:57,760
Speaker 3: huge in that business. So it's about f and time

575
00:28:57,880 --> 00:28:59,960
Speaker 3: that they show up and bring those products to the ETFE.

576
00:29:01,600 --> 00:29:04,440
Speaker 2: Two things on this one, I agree. Will they have

577
00:29:04,480 --> 00:29:07,520
Speaker 2: success though it's not a guarantee. Normally when Vanguard comes in,

578
00:29:07,560 --> 00:29:09,600
Speaker 2: you're like, oh, this is just going to take in

579
00:29:09,600 --> 00:29:12,120
Speaker 2: a billion dollars within a couple months. But they're really

580
00:29:12,200 --> 00:29:16,120
Speaker 2: late here. You know, they ranked nineteenth in active ETFs

581
00:29:16,200 --> 00:29:19,240
Speaker 2: and they're like one or two in everything. This is

582
00:29:19,280 --> 00:29:23,880
Speaker 2: a category they're ridiculously low in and everybody has come

583
00:29:23,880 --> 00:29:27,520
Speaker 2: in for the past ten years and vanguarded the category already.

584
00:29:27,560 --> 00:29:30,880
Speaker 2: So you got JP Morgan, Capitol Group, DFA Avantis. They're

585
00:29:30,920 --> 00:29:33,960
Speaker 2: all well below twenty basis points, if not ten in

586
00:29:34,040 --> 00:29:37,400
Speaker 2: some cases, so Vanguard comes in a little late. We

587
00:29:37,440 --> 00:29:39,480
Speaker 2: have a note that a recurring theme we talk about,

588
00:29:39,520 --> 00:29:44,400
Speaker 2: which is the Vanguard effect, has outrun Vanguard, and they're

589
00:29:44,440 --> 00:29:49,360
Speaker 2: actually stepping into a category that's already had the Vanguard effect, ironically,

590
00:29:49,400 --> 00:29:51,640
Speaker 2: and they're going to suffer from it. I think I

591
00:29:51,680 --> 00:29:54,360
Speaker 2: don't see these being that big. And Dave, I'd like

592
00:29:54,400 --> 00:29:56,920
Speaker 2: to ask you, do you think they'll ever make the

593
00:29:57,040 --> 00:29:59,280
Speaker 2: Wellington fund though, the one that's one hundred years old,

594
00:29:59,360 --> 00:30:01,800
Speaker 2: the one that Bogi save like a firstborn child, that

595
00:30:01,960 --> 00:30:04,440
Speaker 2: balance fund. Do you think they'll ever etfiz that because

596
00:30:04,480 --> 00:30:05,920
Speaker 2: it's not in this mix right now.

597
00:30:06,280 --> 00:30:08,760
Speaker 3: I I'm very skeptical. I'm with you. I don't think

598
00:30:08,760 --> 00:30:10,400
Speaker 3: these are going to be big money winners for them.

599
00:30:10,400 --> 00:30:12,200
Speaker 3: I don't think they're gonna get a ton of assets.

600
00:30:12,520 --> 00:30:15,040
Speaker 3: I think it's a service to those people who already

601
00:30:15,080 --> 00:30:17,880
Speaker 3: know the Wellington brand and are in those mutual funds

602
00:30:17,920 --> 00:30:20,360
Speaker 3: generally had a little bit more money. So I think

603
00:30:20,400 --> 00:30:23,760
Speaker 3: they'll get some transfer money from advisors. I think that's

604
00:30:23,800 --> 00:30:26,280
Speaker 3: what they'll get, and they may even get some from institutions.

605
00:30:26,320 --> 00:30:28,400
Speaker 3: Because some institutions use those, they have a pretty big

606
00:30:28,440 --> 00:30:31,200
Speaker 3: business on the active institutional side. So for people who

607
00:30:31,200 --> 00:30:34,160
Speaker 3: want a liquidity sleeve on a similar strategy, that whole shtick,

608
00:30:34,480 --> 00:30:37,880
Speaker 3: they'll get some traction. But I absolutely do not think

609
00:30:37,920 --> 00:30:40,600
Speaker 3: this is their next big thing. Like there's not going

610
00:30:40,680 --> 00:30:43,000
Speaker 3: to be hundreds and hundreds and hundreds of billions of

611
00:30:43,000 --> 00:30:44,200
Speaker 3: dollars in these things. No way.

612
00:30:44,800 --> 00:30:46,440
Speaker 4: Maybe you've looked at this, Eric, but let's say, if

613
00:30:46,440 --> 00:30:49,360
Speaker 4: you take out fees, is Vanguard like a good active manager,

614
00:30:49,800 --> 00:30:51,600
Speaker 4: Like would you rather like you say, if you were

615
00:30:51,760 --> 00:30:53,680
Speaker 4: to go active, would you rather want a capitol group

616
00:30:53,760 --> 00:30:55,520
Speaker 4: or a deals Okay, well, hold.

617
00:30:55,400 --> 00:30:58,120
Speaker 2: On fees are a matter because actually at work with

618
00:30:58,200 --> 00:31:01,760
Speaker 2: US S and P, they ran the number. Vanguard's beat

619
00:31:01,840 --> 00:31:06,200
Speaker 2: rate is higher, I see than the average company, and

620
00:31:06,240 --> 00:31:08,800
Speaker 2: it's directly related to fees. And the further out you go,

621
00:31:09,040 --> 00:31:11,280
Speaker 2: the higher that beat rate gets, because fees matter more

622
00:31:11,360 --> 00:31:14,320
Speaker 2: ten to fifteen years. This is why my Bogel effect book,

623
00:31:14,360 --> 00:31:17,920
Speaker 2: I premise that if the index, the index or index

624
00:31:17,960 --> 00:31:20,240
Speaker 2: fund was never an invention, if you just pretend we

625
00:31:20,360 --> 00:31:23,280
Speaker 2: live in a society without indexing, Vanguard would be the

626
00:31:23,320 --> 00:31:26,480
Speaker 2: biggest active manager six seven times over because they would

627
00:31:26,480 --> 00:31:29,240
Speaker 2: have brought their fees down, and that's like giving their

628
00:31:29,280 --> 00:31:33,040
Speaker 2: managers a huge head start in the race because they

629
00:31:33,040 --> 00:31:36,760
Speaker 2: have lower hurdle to overcome and over long stretches of time.

630
00:31:37,360 --> 00:31:39,320
Speaker 2: All the Vanguard funds would have been on the cover

631
00:31:39,400 --> 00:31:42,720
Speaker 2: of Forbes in Fortune as the top managers just because

632
00:31:42,720 --> 00:31:46,240
Speaker 2: they're cheap, because I call it bogo metrics instead of sabermetrics.

633
00:31:47,240 --> 00:31:50,160
Speaker 2: Even Bogel in his books, in his books, by the way,

634
00:31:50,160 --> 00:31:52,680
Speaker 2: he does brag about active a little bit, but he

635
00:31:52,680 --> 00:31:55,200
Speaker 2: he kind of brings the credit back to himself. He's like, yeah,

636
00:31:55,200 --> 00:31:57,840
Speaker 2: this guy ran this, he did okay, but honestly, I

637
00:31:57,920 --> 00:32:00,320
Speaker 2: made the fun cheap and I told him not a

638
00:32:00,320 --> 00:32:03,040
Speaker 2: lot of trading, and therefore that's why it really outperformed.

639
00:32:03,160 --> 00:32:06,920
Speaker 3: And he was not a man without ego in my experience.

640
00:32:07,200 --> 00:32:10,440
Speaker 2: So I always think, like the Vanguard secret is the cheapness.

641
00:32:10,480 --> 00:32:15,760
Speaker 2: But with these funds, they're forty there's a dozen cheaper. Yeah.

642
00:32:15,960 --> 00:32:19,360
Speaker 3: Yeah, although a lot of those funds are really very

643
00:32:19,480 --> 00:32:23,280
Speaker 3: low turnover, low active share, I mean like the advance

644
00:32:23,280 --> 00:32:25,400
Speaker 3: to stuff. Most of the active share on that is

645
00:32:25,440 --> 00:32:29,240
Speaker 3: measured and you know, ten fifteen percent, like I mean,

646
00:32:29,280 --> 00:32:31,480
Speaker 3: it's not a lot. It's compared to something like Ron

647
00:32:31,520 --> 00:32:34,080
Speaker 3: Parrin coming in with something that's just crazy and wild.

648
00:32:34,280 --> 00:32:35,959
Speaker 3: I agree. I think these are going to struggle at

649
00:32:35,960 --> 00:32:38,800
Speaker 3: this price point.

650
00:32:43,560 --> 00:32:48,640
Speaker 1: Next topic Isabella Lee, Bloomberg News reporter cross Assets often

651
00:32:48,680 --> 00:32:54,320
Speaker 1: on the show, writes tokenization boom. Wall Street still isn't biting.

652
00:32:54,560 --> 00:32:58,720
Speaker 1: GP Morgan says, So this is ultimately about the idea

653
00:32:58,760 --> 00:33:01,160
Speaker 1: that we're going to see the assets go on to

654
00:33:01,240 --> 00:33:05,880
Speaker 1: the blockchain. JP Morgan says that that's beginning to happen,

655
00:33:06,000 --> 00:33:09,640
Speaker 1: but really it's twenty five billion so far, and that's

656
00:33:09,760 --> 00:33:12,680
Speaker 1: really being driven by crypto NATA firms rather than Wall

657
00:33:12,720 --> 00:33:21,280
Speaker 1: Street incumbents. Dave, have we already reached peak blockchain here?

658
00:33:21,440 --> 00:33:27,280
Speaker 3: God? No, I think we're Mike Philbrick from Resolve posted

659
00:33:27,320 --> 00:33:29,480
Speaker 3: a thing saying like, where are we on the comparison

660
00:33:29,520 --> 00:33:32,560
Speaker 3: to the fiber rollout or the railroads or all of

661
00:33:32,640 --> 00:33:35,800
Speaker 3: that stuff, And I put up a picture of Stevenson's rocket, Like,

662
00:33:35,880 --> 00:33:39,080
Speaker 3: I think we are still at the very early innings

663
00:33:39,480 --> 00:33:42,040
Speaker 3: on both crypto and AI, and I think they are

664
00:33:42,160 --> 00:33:45,280
Speaker 3: related unfortunately, but like we're actually starting to see things

665
00:33:45,320 --> 00:33:50,160
Speaker 3: like bonds issued on chain held on chain, redeemed on

666
00:33:50,280 --> 00:33:54,160
Speaker 3: chain without ever touching secondary systems. That's like very recent.

667
00:33:54,240 --> 00:33:56,920
Speaker 3: It's really in the last month we've had some of

668
00:33:56,960 --> 00:34:02,880
Speaker 3: these entirely on chain but still fully regulated institutional securities,

669
00:34:02,960 --> 00:34:06,400
Speaker 3: issuance and settlement things going on. That's exciting, Like we

670
00:34:06,400 --> 00:34:08,640
Speaker 3: should all be excited about that. That's the future. We're

671
00:34:08,640 --> 00:34:12,040
Speaker 3: gonna get rid of DTCC eventually, right, So that I

672
00:34:12,040 --> 00:34:14,520
Speaker 3: think is just starting to kick in. That's part of

673
00:34:14,560 --> 00:34:18,319
Speaker 3: the I would call regulatory halo effect of this administration,

674
00:34:18,360 --> 00:34:20,360
Speaker 3: as people are now just trying things and figuring they

675
00:34:20,400 --> 00:34:23,440
Speaker 3: won't get sued into oblivion later, and that's great. I

676
00:34:23,480 --> 00:34:26,160
Speaker 3: think we're seeing the same thing with like the trial

677
00:34:26,200 --> 00:34:28,120
Speaker 3: that's going on in New Jersey to take all the

678
00:34:28,120 --> 00:34:30,680
Speaker 3: real estate records and put all that information on chain

679
00:34:30,760 --> 00:34:34,480
Speaker 3: so you can do like instantaneous real estate settlement. It's

680
00:34:34,480 --> 00:34:36,560
Speaker 3: all really cool. So I'm a seller on the idea

681
00:34:36,560 --> 00:34:39,240
Speaker 3: that somehow that part is peaked. That doesn't mean prices

682
00:34:39,239 --> 00:34:41,440
Speaker 3: don't come down and bitcoin could still be worth fifty grand.

683
00:34:41,480 --> 00:34:43,480
Speaker 3: What the heck do I know? But from a blockchain

684
00:34:43,480 --> 00:34:47,440
Speaker 3: in real world assets and tokenization perspective, I am very bullish,

685
00:34:47,680 --> 00:34:48,640
Speaker 3: very very bollish.

686
00:34:49,239 --> 00:34:52,440
Speaker 2: My take on this is if you're younger or in

687
00:34:52,480 --> 00:34:56,440
Speaker 2: a emerging market and you are have a wallet, you

688
00:34:56,480 --> 00:34:59,200
Speaker 2: have a digital wallet right now, and you've grown up

689
00:34:59,200 --> 00:35:02,640
Speaker 2: with it. I think tokens of stocks and ETFs will

690
00:35:02,680 --> 00:35:06,520
Speaker 2: be what you buy because the plot that's the universe

691
00:35:06,560 --> 00:35:09,160
Speaker 2: you want to be in. I just don't think that

692
00:35:09,360 --> 00:35:13,560
Speaker 2: is going to absorb the entire financial ecosystem. I think

693
00:35:13,600 --> 00:35:18,640
Speaker 2: it will be another avenue. And I think ets especially

694
00:35:18,640 --> 00:35:22,480
Speaker 2: in develop markets, simply because the customers are just so happy,

695
00:35:22,960 --> 00:35:24,840
Speaker 2: it's just tough to get people to move and if

696
00:35:24,840 --> 00:35:30,960
Speaker 2: they're happy campers. But anyone who's digitally native the ETF

697
00:35:31,040 --> 00:35:36,919
Speaker 2: industry and the all the exchanges and whatnot, who want

698
00:35:36,960 --> 00:35:41,600
Speaker 2: to get more money into stocks and ETFs should tokenize

699
00:35:41,600 --> 00:35:43,560
Speaker 2: this stuff. It's just another way to reach a new

700
00:35:43,600 --> 00:35:46,680
Speaker 2: audience who's used to this other way to get them,

701
00:35:46,680 --> 00:35:49,839
Speaker 2: which is a digital wallet. The good thing about that

702
00:35:50,000 --> 00:35:52,120
Speaker 2: is it does open them up to the whole world.

703
00:35:53,000 --> 00:35:55,480
Speaker 2: It does open them up twenty four to seven if

704
00:35:55,480 --> 00:35:57,759
Speaker 2: that's your thing, although I think that's a little overrated.

705
00:35:58,560 --> 00:36:01,800
Speaker 2: And so people who don't otherwise have access, which is

706
00:36:01,840 --> 00:36:04,799
Speaker 2: about half the world, can now easily buy shares of

707
00:36:04,840 --> 00:36:07,560
Speaker 2: Microsoft or voo or spy or whatever. So I'm all

708
00:36:07,600 --> 00:36:09,760
Speaker 2: for it. I just think that half of the world

709
00:36:10,080 --> 00:36:13,520
Speaker 2: has such a small percentage of the global money that

710
00:36:14,040 --> 00:36:16,560
Speaker 2: the motive to serve them is less than serving the

711
00:36:16,560 --> 00:36:19,840
Speaker 2: people who are already happy in low cost ETFs and whatnot.

712
00:36:19,880 --> 00:36:22,359
Speaker 2: And he'd be a mutual fund, so I just see

713
00:36:22,400 --> 00:36:26,239
Speaker 2: it as some If it does take over, it will

714
00:36:26,280 --> 00:36:29,560
Speaker 2: be twenty years from now when the wallet people grow

715
00:36:29,640 --> 00:36:32,319
Speaker 2: up and get all the money inherited, you know. So

716
00:36:32,360 --> 00:36:36,000
Speaker 2: this is very interesting. I'm evolving on it constantly. I

717
00:36:36,040 --> 00:36:38,280
Speaker 2: still think nature Acy should have kept his name ETF

718
00:36:38,320 --> 00:36:41,440
Speaker 2: Store at least for Do you have any plans to

719
00:36:41,520 --> 00:36:42,840
Speaker 2: change ETF dot com?

720
00:36:43,280 --> 00:36:45,040
Speaker 3: I think that would be dumb. I think that would.

721
00:36:44,880 --> 00:36:47,880
Speaker 2: Be good job. So I just think at least for

722
00:36:48,000 --> 00:36:51,840
Speaker 2: us we're middle aged, I would call us we're probably

723
00:36:51,880 --> 00:36:55,560
Speaker 2: good covering ETFs until we retire. I think the next

724
00:36:55,600 --> 00:36:58,440
Speaker 2: generation is going to figure out what to call themselves.

725
00:36:58,719 --> 00:37:00,319
Speaker 4: It would be a new job title, for sure.

726
00:37:00,960 --> 00:37:03,439
Speaker 3: I completely agree on the stock and I ETF side.

727
00:37:03,480 --> 00:37:06,080
Speaker 3: The problem is that the way we're talking about doing

728
00:37:06,160 --> 00:37:08,799
Speaker 3: it right now, even the people are doing it really well.

729
00:37:08,840 --> 00:37:11,400
Speaker 3: And i'd probably highlight wisdom Tree prime as the folks

730
00:37:11,440 --> 00:37:13,440
Speaker 3: I think have kind of figured this out the best,

731
00:37:13,840 --> 00:37:15,759
Speaker 3: like have your own wallet, put gold in it, put

732
00:37:15,760 --> 00:37:18,279
Speaker 3: crypto in it, and then put some tokenized funds in

733
00:37:18,360 --> 00:37:20,680
Speaker 3: alongside of it, so you kind of create a whole

734
00:37:20,719 --> 00:37:24,480
Speaker 3: on app ecosystem. Even that, I think the problem is

735
00:37:24,480 --> 00:37:28,480
Speaker 3: you're still rapping Tesla shares, you're still wrapping VU and

736
00:37:28,640 --> 00:37:32,120
Speaker 3: if you're wrapping something, you're not actually changing anything. You're

737
00:37:32,160 --> 00:37:35,640
Speaker 3: adding a layer of complexity and failure to an existing

738
00:37:35,640 --> 00:37:38,480
Speaker 3: ecosystem that's got pretty good backstops for things like a

739
00:37:38,480 --> 00:37:41,799
Speaker 3: blown trade or a fat finger. So I think we'll

740
00:37:41,840 --> 00:37:44,640
Speaker 3: head that direction. But until we get serious about solving

741
00:37:44,719 --> 00:37:47,960
Speaker 3: the plumbing, like until this comes from the NSCC or

742
00:37:47,960 --> 00:37:51,480
Speaker 3: the DCCC, it's kind of just fairytale land.

743
00:37:51,760 --> 00:37:53,800
Speaker 4: Remember when they first start talking about like the metaverse

744
00:37:54,040 --> 00:37:56,120
Speaker 4: and they were like showing those like kind of like

745
00:37:56,160 --> 00:37:59,120
Speaker 4: those lame like videos of like like you couldn't really

746
00:37:59,200 --> 00:38:01,520
Speaker 4: see and this kind of how I still see tokenization,

747
00:38:02,120 --> 00:38:05,600
Speaker 4: Like ETFs are already so frictionless, Like what are you gonna

748
00:38:05,719 --> 00:38:07,920
Speaker 4: how much of the process actually going to get improved

749
00:38:08,200 --> 00:38:11,200
Speaker 4: unless Microsoft is launching tokens like you said, but to

750
00:38:11,200 --> 00:38:13,640
Speaker 4: buy a token on Microsoft Stock. I just don't see

751
00:38:13,640 --> 00:38:15,600
Speaker 4: the point. So you're you're adding layers again.

752
00:38:15,640 --> 00:38:17,799
Speaker 2: It would be for people who don't have access to

753
00:38:17,800 --> 00:38:21,160
Speaker 2: brokerage accounts but have Internet access, which is the stable

754
00:38:21,160 --> 00:38:23,520
Speaker 2: coin argument. So in other words, to me, the token

755
00:38:23,600 --> 00:38:26,279
Speaker 2: argument is very similar to the stable coin argument. It's

756
00:38:26,280 --> 00:38:30,360
Speaker 2: for the same audience, but that's a small percentage of

757
00:38:30,400 --> 00:38:32,480
Speaker 2: the global money. The other thing that was brought up

758
00:38:32,560 --> 00:38:35,520
Speaker 2: was and because of this crypto book I'm working on,

759
00:38:35,800 --> 00:38:39,400
Speaker 2: we interviewed Jim Bianco, who has been somewhat hesitant of

760
00:38:39,400 --> 00:38:42,839
Speaker 2: the bitcoin ETFs, and he said that the more the

761
00:38:42,840 --> 00:38:46,720
Speaker 2: ETFs get popular, they'll it hurts the bitcoin case because

762
00:38:46,719 --> 00:38:49,719
Speaker 2: it keeps people in the regular system as opposed to

763
00:38:49,840 --> 00:38:53,840
Speaker 2: moving on chain, and that is an interesting point. But

764
00:38:53,960 --> 00:38:56,360
Speaker 2: I also think that point shows you just how badass

765
00:38:56,360 --> 00:38:59,359
Speaker 2: the ETFs are and how convenient they are that people

766
00:38:59,360 --> 00:39:02,200
Speaker 2: would rather just click by then go on to this

767
00:39:02,239 --> 00:39:06,080
Speaker 2: new thing. So the blockchain world, also, I think, has

768
00:39:06,120 --> 00:39:08,360
Speaker 2: a lot of work to do to get the interface

769
00:39:08,440 --> 00:39:10,560
Speaker 2: is a little easier because you've got to make it

770
00:39:10,640 --> 00:39:13,680
Speaker 2: McDonald's easy to get a wallet and move your money.

771
00:39:13,960 --> 00:39:15,960
Speaker 2: I've tried it. It's not that easy. There is some

772
00:39:16,000 --> 00:39:18,080
Speaker 2: friction to it. You can do it, but it's not

773
00:39:18,160 --> 00:39:19,200
Speaker 2: McDonald's easy yet.

774
00:39:19,640 --> 00:39:21,560
Speaker 3: Nobody's gonna move. They're just going to get it on

775
00:39:21,600 --> 00:39:24,279
Speaker 3: their existing platform, right, I as a Schwab customer, I'm

776
00:39:24,360 --> 00:39:26,000
Speaker 3: just going to wake up in a year and I'll

777
00:39:26,000 --> 00:39:28,200
Speaker 3: be able to do all of this with my Schwab

778
00:39:28,239 --> 00:39:30,600
Speaker 3: app on my phone without having had to do anything

779
00:39:30,600 --> 00:39:33,480
Speaker 3: except click okay on another terms of service. I didn't read.

780
00:39:33,560 --> 00:39:36,800
Speaker 1: Okay, last story that we're going to talk about. Last topic.

781
00:39:37,760 --> 00:39:42,280
Speaker 1: Amazing headline from Bloomberg News nuclear weapons pass esg test

782
00:39:42,400 --> 00:39:48,279
Speaker 1: as war redefines ethical investing. WHOA, there's lots unpacked there.

783
00:39:49,000 --> 00:39:50,560
Speaker 3: I saw that headline and I was like, this has

784
00:39:50,600 --> 00:39:51,359
Speaker 3: got Eric all.

785
00:39:52,400 --> 00:39:55,480
Speaker 2: Oh yeah, iled it on a Sunday night, and I

786
00:39:55,520 --> 00:39:57,880
Speaker 2: really don't do I don't not use Twitter on Sunday

787
00:39:57,920 --> 00:40:00,040
Speaker 2: nights because I don't want that my brain when I

788
00:40:00,080 --> 00:40:02,279
Speaker 2: trying to get the most important night's sleep. But I

789
00:40:02,719 --> 00:40:03,560
Speaker 2: couldn't resist.

790
00:40:04,040 --> 00:40:06,719
Speaker 1: Okay, here's the lead, Dave, and I'll let you take

791
00:40:06,760 --> 00:40:10,320
Speaker 1: it from here. The deadliest weapons ever manufactured are becoming

792
00:40:10,320 --> 00:40:14,560
Speaker 1: a regular feature of Europe's nearly nine trillion dollar ESG

793
00:40:14,719 --> 00:40:16,800
Speaker 1: fund industry. How does that make you feel.

794
00:40:19,280 --> 00:40:22,720
Speaker 3: Well. Look, Eric and I have debated ESG many times

795
00:40:22,719 --> 00:40:24,799
Speaker 3: in many forums over the years, and I've always been

796
00:40:24,800 --> 00:40:26,800
Speaker 3: a little bit more on pro and Eric's been always

797
00:40:26,800 --> 00:40:28,840
Speaker 3: been a little bit more skeptical. So I was reading

798
00:40:28,880 --> 00:40:31,160
Speaker 3: this and I was like, Okay, Eric, I can't wait

799
00:40:31,200 --> 00:40:34,439
Speaker 3: to read Eric's crow about this. Look. I think where

800
00:40:34,480 --> 00:40:37,799
Speaker 3: we probably agree is trying to one size fits all

801
00:40:37,920 --> 00:40:42,440
Speaker 3: something like a values based investment system just doesn't actually work.

802
00:40:42,960 --> 00:40:45,600
Speaker 3: And I think we mostly agreed on that part for

803
00:40:45,680 --> 00:40:48,640
Speaker 3: a long time. I do think it's very easy to

804
00:40:48,640 --> 00:40:51,480
Speaker 3: say nobody cares about ESGA, it's all scam, And I

805
00:40:51,520 --> 00:40:54,239
Speaker 3: would point out that we just had a quarter of

806
00:40:54,280 --> 00:40:57,200
Speaker 3: a trillion dollars issued in green bonds that are all

807
00:40:57,200 --> 00:40:59,640
Speaker 3: certified and going to climate projects in the first half

808
00:40:59,719 --> 00:41:02,280
Speaker 3: first quarter of this year. So we've got a trillion

809
00:41:02,360 --> 00:41:05,720
Speaker 3: dollars a year in new security issuance that is the

810
00:41:05,760 --> 00:41:09,200
Speaker 3: most woke green stuff you can imagine. So to say

811
00:41:09,239 --> 00:41:12,319
Speaker 3: it's a dead industry would deny the fact that it's

812
00:41:12,320 --> 00:41:15,719
Speaker 3: actually the hottest part of the bond issuance market that

813
00:41:15,760 --> 00:41:18,480
Speaker 3: has nothing to do with ETFs owning a bunch of equities.

814
00:41:18,880 --> 00:41:21,560
Speaker 3: And I think for most people if they've got got

815
00:41:21,600 --> 00:41:24,520
Speaker 3: real wealth, whether they're a sovereign wealth fund or just

816
00:41:24,600 --> 00:41:27,680
Speaker 3: a millionaire, you're better off in a DII or a

817
00:41:27,719 --> 00:41:30,799
Speaker 3: separate manage, separately managed account type process, because then you

818
00:41:30,840 --> 00:41:32,879
Speaker 3: can say, Okay, it's a little ridiculous, I don't want

819
00:41:32,880 --> 00:41:35,960
Speaker 3: to buy nuclear weapons in my ESG fund. Or maybe

820
00:41:36,000 --> 00:41:37,880
Speaker 3: you say, hey, you know what I'm really doing is

821
00:41:37,920 --> 00:41:40,919
Speaker 3: I'm voting based on my political ethos, and yeah, right

822
00:41:40,960 --> 00:41:43,000
Speaker 3: now I do want to do that. But I don't

823
00:41:43,000 --> 00:41:45,320
Speaker 3: think you can package that up into some like MSCI

824
00:41:45,480 --> 00:41:48,400
Speaker 3: index and say this is for everybody. I think that's ridiculous.

825
00:41:49,520 --> 00:41:52,920
Speaker 2: I agree. This was taking something that was subjective even

826
00:41:52,920 --> 00:41:57,080
Speaker 2: between index makers, let alone people and investors, and making

827
00:41:57,120 --> 00:42:03,479
Speaker 2: it objective. What is good? Is a nuclear weapon good

828
00:42:03,520 --> 00:42:08,160
Speaker 2: if you're taking out a bad guy? Well? Yeah, well

829
00:42:08,200 --> 00:42:11,280
Speaker 2: then isn't the fossil fuel good that supplies that nuclear

830
00:42:11,320 --> 00:42:13,400
Speaker 2: weapon or the tanks that you're going to get the

831
00:42:13,400 --> 00:42:16,200
Speaker 2: bad guys? What about the smokes the soldiers need or

832
00:42:16,200 --> 00:42:18,359
Speaker 2: the alcohol they need to drink after they have trauma? Like,

833
00:42:18,840 --> 00:42:21,040
Speaker 2: if you want to go to the line nothing is

834
00:42:21,320 --> 00:42:24,080
Speaker 2: ESG or everything is ZESG. You can take this to

835
00:42:24,840 --> 00:42:26,640
Speaker 2: a place where I think you throw your hands up

836
00:42:26,680 --> 00:42:28,719
Speaker 2: and go screw it. I'm just gonna buy the S

837
00:42:28,760 --> 00:42:32,520
Speaker 2: and P five hundred. The problem, the reason I have

838
00:42:32,560 --> 00:42:37,160
Speaker 2: some touchdown dance with this is that the problem I

839
00:42:37,160 --> 00:42:41,120
Speaker 2: had with ESG wasn't that it existed. It should have

840
00:42:41,160 --> 00:42:44,480
Speaker 2: just pitched itself as another form of active Hey, we're

841
00:42:44,480 --> 00:42:46,320
Speaker 2: gonna pick stocks based on this stuff. We may or

842
00:42:46,360 --> 00:42:48,840
Speaker 2: may not perform. I'd have no problem with that. The

843
00:42:48,920 --> 00:42:50,920
Speaker 2: problem was it was sort of pitched in the media

844
00:42:51,040 --> 00:42:53,640
Speaker 2: has a lot to blame for this as like this

845
00:42:53,800 --> 00:42:56,239
Speaker 2: new thing that was going to take over. It was

846
00:42:56,280 --> 00:42:58,400
Speaker 2: gonna make everybody feel good. It was the wave of

847
00:42:58,440 --> 00:43:01,160
Speaker 2: the future, and it was all got your morals mixed

848
00:43:01,239 --> 00:43:04,600
Speaker 2: up in it. And the European government in particular, they've

849
00:43:04,719 --> 00:43:08,880
Speaker 2: really pushed people into ESG. And the problem with getting

850
00:43:08,920 --> 00:43:11,520
Speaker 2: all virtue signally out there is that at some point

851
00:43:11,560 --> 00:43:13,880
Speaker 2: you're going to be a hypocrite. Now Europe wants to

852
00:43:13,920 --> 00:43:19,120
Speaker 2: build up its defense industries because it's not NATO is uncertain,

853
00:43:19,200 --> 00:43:21,799
Speaker 2: and it has Russia right next to it, and so

854
00:43:21,840 --> 00:43:25,440
Speaker 2: the war in Ukraine has made Europe into defense. But

855
00:43:25,520 --> 00:43:28,759
Speaker 2: the people that are they want the money from are like, wait,

856
00:43:28,920 --> 00:43:31,160
Speaker 2: we can't buy those thucks because they're not ESG. You

857
00:43:31,239 --> 00:43:34,400
Speaker 2: told us that we have to be ESG. And then

858
00:43:34,440 --> 00:43:39,040
Speaker 2: Europe's like no, no, no, wait, it's okay now because

859
00:43:39,280 --> 00:43:41,960
Speaker 2: these are we're fighting Russians, you know. It's just like

860
00:43:42,880 --> 00:43:45,319
Speaker 2: I just think that once you get on your moral

861
00:43:45,400 --> 00:43:48,480
Speaker 2: high horse, you're destined to fall. And I just say,

862
00:43:48,800 --> 00:43:51,160
Speaker 2: don't get on the moral high horse. Just say that

863
00:43:51,400 --> 00:43:54,480
Speaker 2: these are new metrics to track companies. This fund is

864
00:43:54,480 --> 00:43:56,800
Speaker 2: going to pick based on them. Look at the holdings

865
00:43:57,000 --> 00:43:59,400
Speaker 2: you may or may not perform. I'm fine with that

866
00:43:59,520 --> 00:44:03,680
Speaker 2: sales pace. But I think ESG got hijacked by this

867
00:44:03,800 --> 00:44:06,960
Speaker 2: moral morality issue. And I think part of it was

868
00:44:07,000 --> 00:44:12,879
Speaker 2: because people who normally would vote for these things if

869
00:44:12,920 --> 00:44:16,480
Speaker 2: their party isn't in power, they feel like powerless. So

870
00:44:16,520 --> 00:44:19,160
Speaker 2: they applied a lot of that wanting power to the

871
00:44:19,200 --> 00:44:22,440
Speaker 2: corporate world. And I just think this isn't the right avenue,

872
00:44:22,480 --> 00:44:24,680
Speaker 2: Like an index fund is not the right avenue to

873
00:44:24,719 --> 00:44:27,759
Speaker 2: fix some of these problems. In my opinion, I think

874
00:44:27,760 --> 00:44:31,960
Speaker 2: the other locally and in your government, you need completely

875
00:44:32,000 --> 00:44:35,160
Speaker 2: new rules around types of energy and all this stuff.

876
00:44:35,200 --> 00:44:38,279
Speaker 2: So I just find that the other thing is that

877
00:44:38,360 --> 00:44:41,359
Speaker 2: Dave mention is the bonds. Also, bonds are a better

878
00:44:41,400 --> 00:44:44,279
Speaker 2: way to be ESG in my opinion, because if you're

879
00:44:44,320 --> 00:44:48,560
Speaker 2: getting more money from bonds that are green, that's directly

880
00:44:48,600 --> 00:44:54,160
Speaker 2: going to impact your financial situation. If your stock happens

881
00:44:54,200 --> 00:44:56,560
Speaker 2: to be sold by an ESG fund and then bought

882
00:44:56,600 --> 00:44:59,239
Speaker 2: by a value investor, it doesn't really matter. It's just

883
00:44:59,280 --> 00:45:02,480
Speaker 2: the stock trading on the secondary market, indifferent than your operations.

884
00:45:02,880 --> 00:45:05,960
Speaker 2: So I will say just a couple things. Bonds are

885
00:45:05,960 --> 00:45:07,600
Speaker 2: the better way to be ESG if you're going to

886
00:45:07,640 --> 00:45:11,359
Speaker 2: do it locally even better, voting even better. And then

887
00:45:11,480 --> 00:45:13,719
Speaker 2: if you're gonna invest, just know that this is an

888
00:45:13,800 --> 00:45:18,000
Speaker 2: active strategy that will underperform and outperform, and you better

889
00:45:18,080 --> 00:45:20,240
Speaker 2: be prepared for that. And that's all we're saying.

890
00:45:20,719 --> 00:45:23,280
Speaker 3: Yep, I think we agree. I think it's an active

891
00:45:23,280 --> 00:45:26,880
Speaker 3: management decision that people make, and hey, sometimes it works out. DSi,

892
00:45:26,920 --> 00:45:29,000
Speaker 3: which is the oldest DTF we've got in the space,

893
00:45:29,239 --> 00:45:31,200
Speaker 3: actually has beaten the S and P since inception by

894
00:45:31,200 --> 00:45:33,680
Speaker 3: a couple percent, So you can't say it's a horrible,

895
00:45:33,719 --> 00:45:37,720
Speaker 3: horrible idea, but it's absolutely an active bet. And in general,

896
00:45:37,880 --> 00:45:40,239
Speaker 3: I think most people are better off leaving their politics

897
00:45:40,239 --> 00:45:43,000
Speaker 3: out of their brokerage account. You know, and you know,

898
00:45:43,040 --> 00:45:45,080
Speaker 3: I'm pretty vocal about the stuff I believe, and I

899
00:45:45,120 --> 00:45:48,919
Speaker 3: don't buy ESG products. I just invest in a very

900
00:45:49,080 --> 00:45:51,239
Speaker 3: very boring way because it seems to work.

901
00:45:52,080 --> 00:45:54,560
Speaker 2: Rick Ferry is like, just buy a cheap index fund,

902
00:45:54,640 --> 00:45:56,839
Speaker 2: use the money you would have spent on the ESG

903
00:45:57,000 --> 00:45:59,440
Speaker 2: fund and take that cash and do it.

904
00:46:00,200 --> 00:46:01,239
Speaker 3: No kid hungry or something.

905
00:46:01,320 --> 00:46:05,600
Speaker 1: Yeah, you go, all right, We're gonna leave it there

906
00:46:06,000 --> 00:46:10,439
Speaker 1: at the nacios. Dave, thanks for joining us on Trillions. Dave,

907
00:46:10,520 --> 00:46:11,600
Speaker 1: congrats in the new game.

908
00:46:11,680 --> 00:46:13,279
Speaker 4: Thank you, thanks having me on.

909
00:46:18,560 --> 00:46:21,160
Speaker 1: Thanks for listening to Trillions. Until next time. You can

910
00:46:21,160 --> 00:46:25,520
Speaker 1: find us on the Bloomberg terminal, Bloomberg dot com, Apple Podcasts, Spotify,

911
00:46:26,120 --> 00:46:28,120
Speaker 1: or wherever else you'd like to listen. We'd love to

912
00:46:28,160 --> 00:46:30,279
Speaker 1: hear from you. Hit us up on social I'm at

913
00:46:30,360 --> 00:46:33,880
Speaker 1: Joel Weber Show, He's at Eric Balcina's. Trillions is produced

914
00:46:33,880 --> 00:46:37,800
Speaker 1: by Magnus Hendrickson. Brendan Newman is our executive producer. Sage

915
00:46:37,800 --> 00:46:39,680
Speaker 1: Bauman is the head of Bloomberg Podcast