WEBVTT - The Single-Stock ETF Era Is Born 0:00:06.280 --> 0:00:08.920 We can trillions. I'm Joel Webber and I'm Eric belt Junas. 0:00:11.960 --> 0:00:14.520 Got to see Eric, to see you two in person, 0:00:14.560 --> 0:00:17.239 like the third time, I think since in pandemic days. 0:00:17.360 --> 0:00:19.320 It's great, though I think it's more than that, but 0:00:19.360 --> 0:00:23.160 who's counting. Uh So, there have been some headlines recently 0:00:23.280 --> 0:00:26.800 and some e t F s that just launched, and 0:00:26.920 --> 0:00:31.120 those headlines and these ETFs really fascinate me because we've 0:00:31.160 --> 0:00:33.599 never talked about this before and it seems like a 0:00:33.600 --> 0:00:36.440 great time to do. So, Yeah, a whole new category 0:00:36.520 --> 0:00:38.280 has been born. We weren't sure it was going to happen, 0:00:38.680 --> 0:00:41.880 but this is a category of ETFs that are linked 0:00:41.920 --> 0:00:44.560 to single stocks, which is almost I think silly to 0:00:44.640 --> 0:00:47.360 some people. For example, in e t F the tracks 0:00:47.840 --> 0:00:50.839 uh Tesla to some degree either leveraged or inverse or 0:00:50.880 --> 0:00:54.600 ETF tracks Nike or Google. Um. There are reasons for 0:00:54.720 --> 0:00:57.640 it we'll get into, but the SEC has approved these, 0:00:58.360 --> 0:01:01.200 not completely the way they are filed, but close enough 0:01:01.320 --> 0:01:04.600 that I do believe we're going to see hundreds, if 0:01:04.680 --> 0:01:07.000 not thousands of e t s because there's four thousand 0:01:07.040 --> 0:01:09.640 stocks and there's many things you can do. And so 0:01:10.000 --> 0:01:11.760 the first one was launched last week or a bunch 0:01:11.800 --> 0:01:13.959 of them, and the one that I had a feeling 0:01:14.000 --> 0:01:16.440 would be the biggest hit was the biggest hit Inverse 0:01:16.480 --> 0:01:19.440 Tesla TSLQ. The volume one. It went from six million 0:01:19.520 --> 0:01:21.880 day one twelve million day two. It's rare to get 0:01:21.880 --> 0:01:24.119 twelve million that new, and it's rare to have volume grow. 0:01:24.680 --> 0:01:26.360 Usually day one is a big splash and then it 0:01:26.440 --> 0:01:28.600 goes down. That tells me this is going to be 0:01:28.800 --> 0:01:31.120 a pretty big hit product. So once there's a hit, 0:01:31.520 --> 0:01:34.920 that's only going to encourage more people to file. So, uh, 0:01:35.080 --> 0:01:38.240 this is a really exciting and maybe an area that 0:01:38.720 --> 0:01:41.600 really requires some explanation for someone out there going, why 0:01:41.640 --> 0:01:43.000 do you need an e t F for a stock? 0:01:43.880 --> 0:01:46.080 So joining us on this episode, we've got Matt Tuttle, 0:01:46.200 --> 0:01:49.680 who's the managing director of Access Investments, one of the 0:01:49.720 --> 0:01:52.560 companies that's begun putting out these single stock etts, as 0:01:52.600 --> 0:01:56.000 well as Katie Greifield, reporter with Bloomberg News who's been 0:01:56.040 --> 0:02:05.919 covering these launches, this time on Trilliance Single stock et s. Matt, Katie, 0:02:05.920 --> 0:02:09.919 welcome to Trilliance. Thank you for having me. Matt. Let's 0:02:09.960 --> 0:02:12.679 start with you, why does the world needs single stock ets? 0:02:13.040 --> 0:02:17.320 The world definitely needs single stock ETF. So I've been 0:02:17.360 --> 0:02:20.519 trading since the eighties, and you know, back in the day, 0:02:20.639 --> 0:02:23.840 you'd always I wish this existed, I wish that existed, 0:02:24.400 --> 0:02:26.160 and you know, it was never in a position to 0:02:26.240 --> 0:02:29.239 actually make that happen. And and now I am. So 0:02:30.280 --> 0:02:33.239 you know, I talked to retail investors on Twitter and 0:02:33.639 --> 0:02:37.120 you know, in through email all the time, and you know, 0:02:37.200 --> 0:02:39.239 there's a couple of things they really like to do. 0:02:39.480 --> 0:02:42.400 They like to trade on margin, they like options, and 0:02:42.520 --> 0:02:47.079 they typically are agnostic between being longer short a single name. 0:02:47.600 --> 0:02:51.800 So what single stock ETFs do is it gives investors 0:02:51.919 --> 0:02:56.000 a way to easily kind of express those options in 0:02:56.080 --> 0:02:59.680 a nice package. So not everybody likes to trade options. 0:02:59.720 --> 0:03:01.600 I mean I personally don't. It's kind of a pain 0:03:01.680 --> 0:03:04.960 in the butt. Um. Not everyone likes to or can 0:03:05.000 --> 0:03:09.520 access margin um, and not everybody likes to or can 0:03:09.600 --> 0:03:12.519 go short. You can't short in an IRA retirement plan. 0:03:13.000 --> 0:03:15.240 So it just gives investors another way if they've got 0:03:15.320 --> 0:03:18.320 a bullish opinion or a bearish opinion on a stock, 0:03:18.680 --> 0:03:21.960 to express that view. What were the hurdles to bring 0:03:22.320 --> 0:03:25.720 to bring this to market? Because, as Eric mentioned, uh 0:03:26.200 --> 0:03:29.600 SEC didn't totally go for this at the start. So 0:03:30.120 --> 0:03:34.839 these are complex products obviously, and leverage and inverse ETFs. 0:03:34.920 --> 0:03:38.240 I mean, we all know that they provide the return 0:03:38.320 --> 0:03:41.320 in a single day. Once you start compounding the returns, 0:03:41.960 --> 0:03:44.320 you know, what you end up getting, you know, may 0:03:44.400 --> 0:03:47.400 not be exactly what you expect, and so there really 0:03:48.280 --> 0:03:50.680 there is education, but there needs to be a lot 0:03:50.760 --> 0:03:53.440 more education for investors on you know, if you hold 0:03:53.480 --> 0:03:56.040 onto this for a longer period of time, you know 0:03:56.160 --> 0:03:59.400 there could be issues. So you know, the SEC to 0:03:59.480 --> 0:04:03.280 address that came out with their new Derivatives rule, which 0:04:03.520 --> 0:04:10.440 you know expectedly is not designed with single asset ETFs 0:04:10.520 --> 0:04:14.200 in mind. So you know, I think the biggest hurdle 0:04:14.320 --> 0:04:16.840 that that we had there was just making sure that 0:04:16.960 --> 0:04:20.560 these fit within the rules as they were designed. Um 0:04:20.680 --> 0:04:22.680 let me jump in there, because when you filed, you 0:04:22.880 --> 0:04:25.640 originally filed for also a two x tesla, which to 0:04:25.720 --> 0:04:27.680 me is somewhat of the holy grail. I think that 0:04:27.800 --> 0:04:30.160 anything around tesla, I think is going to sell. You 0:04:30.320 --> 0:04:33.240 ended up coming out with a one point one x tesla, 0:04:33.320 --> 0:04:36.479 which is just a little tiny dose of leverage. Mean 0:04:36.480 --> 0:04:39.760 it's almost unnoticeable. And then but they allowed you to 0:04:39.880 --> 0:04:42.520 come out with two x fiser and you know, my 0:04:42.720 --> 0:04:45.200 colleague James Stafford looked at that and what he did 0:04:45.320 --> 0:04:47.880 is he looked the volatility of the stocks, and if 0:04:47.960 --> 0:04:51.600 you work in that leverage, you realize that it looked 0:04:51.640 --> 0:04:54.880 like the SEC was looking at standard deviation and saying, well, 0:04:55.400 --> 0:04:57.679 we're okay with two x visor because it's not that volatile, 0:04:57.760 --> 0:05:00.400 but Tesla will't willing go a tiny bit of leverage. 0:05:00.680 --> 0:05:03.960 Are they actually using volatility as a way way to 0:05:04.080 --> 0:05:07.440 sort of regulate these things? So to an extent, they're 0:05:07.480 --> 0:05:10.760 not looking specifically at standard deviation, but they've they've got 0:05:10.839 --> 0:05:14.960 a calculation that we've got to fit these into. So 0:05:15.360 --> 0:05:18.520 when we initially filed, we said, you know, we'll file 0:05:18.600 --> 0:05:21.520 for two acts, you know, because that's the maximum we 0:05:21.600 --> 0:05:23.960 know we can do, and then we'll go through the 0:05:24.040 --> 0:05:28.800 process and see, you know kind of where we end up. Um, 0:05:29.480 --> 0:05:31.800 you know, without giving away the secret sauce, because I 0:05:31.839 --> 0:05:34.440 don't know that other people have kind of figured this out. 0:05:35.240 --> 0:05:38.080 You know, you've you've basically got to fit it within 0:05:39.040 --> 0:05:41.960 those derivative rules and the more volatile stock. I mean, 0:05:42.080 --> 0:05:45.960 Tesla has a standard deviation over four where I don't 0:05:46.000 --> 0:05:48.040 remember what visor is off the top of my head, 0:05:48.080 --> 0:05:50.960 but it's nowhere near for you know, the more volatile 0:05:51.000 --> 0:05:53.040 the stock, the tougher it's going to be to kind 0:05:53.040 --> 0:05:55.680 of fitted into that box. And again going back to 0:05:56.360 --> 0:06:00.200 the rules aren't designed for a single asset. And so mean, 0:06:00.440 --> 0:06:03.560 I've tweeted about these launches. Eric has tweet about these launches. 0:06:03.760 --> 0:06:07.240 It's spurred a lot of pearl clutching on Twitter, like 0:06:07.680 --> 0:06:11.080 just a lot of people saying, oh, this is the top, 0:06:11.160 --> 0:06:13.160 even though it feels like maybe worth the bottom. But 0:06:13.200 --> 0:06:15.080 in any case, one of the tweets that did catch 0:06:15.160 --> 0:06:16.920 my eye, which was interesting, you know, you mentioned that 0:06:17.360 --> 0:06:19.200 these e t f s, the inverse et f s 0:06:19.240 --> 0:06:23.720 could be access for people who can't short otherwise too 0:06:24.160 --> 0:06:26.640 short of stock express that bearsh view. And someone made 0:06:26.680 --> 0:06:29.520 the point on Twitter that people might use this to 0:06:29.640 --> 0:06:32.440 get around having to set up a margin account, like 0:06:32.520 --> 0:06:35.479 maybe there's a reason why they're not able to short. 0:06:35.920 --> 0:06:38.520 Oh sure, I mean, you know, margin is is one 0:06:38.680 --> 0:06:41.680 big thing you know that went into this more on 0:06:41.760 --> 0:06:44.280 the longside, but certainly on the short side as well. 0:06:44.880 --> 0:06:46.880 I mean a lot of times people don't like margin. 0:06:47.080 --> 0:06:49.920 Sometimes you can't I mean, I invest in in all 0:06:50.040 --> 0:06:54.760 my own products, and those aren't margin able, So I mean, 0:06:54.839 --> 0:06:58.479 I can't buy on margin unless I invest in other things, 0:06:58.560 --> 0:07:00.839 So not everyone can do it. So yeah, I mean, 0:07:00.920 --> 0:07:03.840 it's totally a way to get around that. Um, let 0:07:03.920 --> 0:07:06.240 me just ask you what it holds. So if you 0:07:06.320 --> 0:07:10.720 were to go into the access capital markets desk in 0:07:10.760 --> 0:07:14.000 the portfolio design team at your office, just explain to 0:07:14.080 --> 0:07:16.720 me what is in the holdings. Will use the inverse 0:07:16.800 --> 0:07:19.120 Tesla E t F as an example, since that's the 0:07:19.160 --> 0:07:21.800 biggest one Tesla Q and and also in addition to 0:07:21.880 --> 0:07:23.520 what it holds, like how does this work exactly? What 0:07:23.600 --> 0:07:26.240 are those people doing so and in the answer is 0:07:26.280 --> 0:07:29.160 the same thing that they hold swaps. So we've got 0:07:29.520 --> 0:07:32.960 counterparties that we go out to, and so in the 0:07:33.040 --> 0:07:35.640 case of Tesla, we say, hey, we need a swap 0:07:35.760 --> 0:07:40.200 that gives us, you know, basically looks and smells and 0:07:40.320 --> 0:07:43.360 feels like we're short x amount of shares of Tesla, 0:07:43.880 --> 0:07:46.720 and being a levertor and inverse CTF, we need to 0:07:46.800 --> 0:07:50.880 rebalance that every single day because the moment Tesla or 0:07:51.200 --> 0:07:54.480 anything opens for trading, we're out of balance. So we 0:07:54.560 --> 0:07:56.640 got to get back into balance by the end of 0:07:56.680 --> 0:07:59.320 the day. So every day we're calling up our counter 0:07:59.400 --> 0:08:01.880 parties and we got spreadsheets that we said, you know, 0:08:01.880 --> 0:08:04.320 all right, I need to short a hundred shares of Tesla. 0:08:04.640 --> 0:08:07.640 Now I need two hundred. Now it's one fifty. And 0:08:07.760 --> 0:08:10.120 we tell the counter parties at the end of the day, hey, look, 0:08:10.280 --> 0:08:13.000 we need to short another hundred shares of Tesla. Now. 0:08:13.160 --> 0:08:16.360 Sometimes the stock gets so bad it is expensive to 0:08:16.520 --> 0:08:20.520 borrow too short. Is that borrow cost embedded in the 0:08:20.640 --> 0:08:23.240 swap price or where? How's that work? Yeah, the borrow 0:08:23.320 --> 0:08:26.480 costs gets embedded in the swap price. And and and 0:08:26.600 --> 0:08:29.560 that's an important point. I mean, sometime some people on 0:08:29.640 --> 0:08:31.840 Twitter have said, well, you know, if if we buy 0:08:31.920 --> 0:08:35.400 the inverse, we don't pay the cost of shorting. You do. 0:08:36.360 --> 0:08:39.480 But you know there's a chance that, in a very 0:08:39.520 --> 0:08:42.959 good chance, we're getting better pricing on that than you 0:08:43.000 --> 0:08:46.800 know you are in your schwab account. You know, Eric 0:08:47.000 --> 0:08:50.839 tesla Q has an amazing backstory. It's been a cover 0:08:50.960 --> 0:08:54.800 of Bloomberg Business Week. Actually, the the Twitter group that 0:08:54.880 --> 0:08:58.480 basically assembled around that that cash tag and was very 0:08:58.600 --> 0:09:02.959 vocal anti e Lawn, anti Tesla. And I'm curious, you know, 0:09:03.280 --> 0:09:05.800 we're early on this launch. But how does this launch 0:09:06.240 --> 0:09:10.199 rank in terms of all time great ETF introductions. It's 0:09:10.240 --> 0:09:13.280 probably the best intro launched since bidd Oh I think. 0:09:13.400 --> 0:09:15.880 I mean, there's a couple other dicel ones, but to 0:09:15.960 --> 0:09:18.600 go from six million to twelve again, that that's unusually. 0:09:18.760 --> 0:09:20.959 The other one I'm thinking of as you vix when 0:09:21.000 --> 0:09:23.520 they relaunched the t VIX and x I v under 0:09:23.600 --> 0:09:25.880 new names. But I look back, even those were like 0:09:25.960 --> 0:09:28.400 three million the first day and then maybe four the second, 0:09:28.440 --> 0:09:31.880 but those have also built. It's what you want is 0:09:32.000 --> 0:09:34.160 something that builds slowly. Reminds me of the movie office. 0:09:34.200 --> 0:09:36.800 Space kind of didn't do that much of the box office, 0:09:36.880 --> 0:09:39.199 but the rentals just kept creeping up over time because 0:09:39.280 --> 0:09:41.439 people word of mouth. They were like, you've got to 0:09:41.480 --> 0:09:44.200 watch this movie. That happens sometimes that's what you want. 0:09:44.280 --> 0:09:46.120 That That is how you get a classic, That's how 0:09:46.160 --> 0:09:48.240 you get volume. So to me, this is probably one 0:09:48.240 --> 0:09:59.320 of the better launches of the last couple of years. Well, Matt, 0:09:59.480 --> 0:10:02.480 to that end, you had this audience built in which 0:10:02.720 --> 0:10:04.880 was already familiar with this idea, and then you had 0:10:04.920 --> 0:10:08.280 this idea for the product, which came first the recognition 0:10:08.320 --> 0:10:10.800 of the audience or the idea for the product, the 0:10:10.920 --> 0:10:13.599 idea for the product. So I mean, you know, we 0:10:13.880 --> 0:10:17.160 kind of we We did Stark back last year, then 0:10:17.280 --> 0:10:20.439 we followed that up with Tark, and the idea was 0:10:20.520 --> 0:10:23.520 to follow that up with with Tesla. We just felt 0:10:23.600 --> 0:10:27.880 like all of those fit into a real nice bucket 0:10:28.120 --> 0:10:30.440 and and appealed to a lot of the same type 0:10:30.480 --> 0:10:32.760 of people. And so, like Eric said, I mean, this 0:10:32.920 --> 0:10:36.640 is an entirely new category. As Eric would say, it's 0:10:36.679 --> 0:10:39.240 a vanguard free zone. So if you look at the 0:10:40.040 --> 0:10:42.720 the access uh single stock ETFs that are out there 0:10:42.760 --> 0:10:45.240 so far, I think they charged a hundred fifteen basis 0:10:45.320 --> 0:10:49.559 points each. Obviously there is a very long line for 0:10:50.120 --> 0:10:52.560 other single stock ETFs to launch. I think there's over 0:10:52.720 --> 0:10:55.040 eighty filings, which is just insane, with a bunch of 0:10:55.120 --> 0:10:58.319 different issues too. Yes, exactly. So I mean does that 0:10:58.520 --> 0:11:01.480 fee have to come down? Do you anticipate that you're 0:11:01.480 --> 0:11:04.320 going to have to cut these fees? I mean anything 0:11:04.520 --> 0:11:07.840 is possible. And I mean, number one, let's see if 0:11:07.920 --> 0:11:12.640 these guys get their stuff to market. It's it's not easy, um, 0:11:13.360 --> 0:11:15.199 And you know, and us going through it for the 0:11:15.280 --> 0:11:18.400 first time, obviously it took longer than the seventy five 0:11:18.520 --> 0:11:21.560 days to get it done. Um So we'll see whether 0:11:21.640 --> 0:11:24.280 those come out, We'll see what they come out in pricing, 0:11:24.360 --> 0:11:26.280 We'll see what they what names they come out with, 0:11:26.559 --> 0:11:29.280 and you know, we'll we'll play that by year. But 0:11:29.400 --> 0:11:34.480 I would assume if this turns into a real massive market, 0:11:35.120 --> 0:11:38.120 then yeah, I mean you're gonna have v compression. You know, 0:11:38.600 --> 0:11:41.880 you can't have a you know, one point one five spy. 0:11:42.400 --> 0:11:45.240 So yeah, yeah, I mean this is a very good 0:11:45.320 --> 0:11:47.920 area if you're an asset manager because Vanguard will never 0:11:47.960 --> 0:11:49.800 play here. And the thing is, if you get out 0:11:49.840 --> 0:11:52.480 early and you get a liquid et f like if 0:11:52.559 --> 0:11:56.040 if tests, if t s LQ gets, say, start starting 0:11:56.040 --> 0:12:00.120 a DWO million like Sark does, even a copycat, is 0:12:00.240 --> 0:12:02.480 you're gonna have pricing power for a long time. Um. 0:12:02.679 --> 0:12:05.040 So that's why I do think you're gonna see so 0:12:05.200 --> 0:12:08.400 many people launchers. Ben Johnson put it, the spaghetti cannon 0:12:08.520 --> 0:12:11.360 is going to be probably like they're gonna we're gonna 0:12:11.400 --> 0:12:13.600 break this spaghetti cannon. That's how much it's gonna get used. 0:12:14.000 --> 0:12:15.599 And I will ask you, you know, we saw a 0:12:15.640 --> 0:12:17.840 spaghetti cannon. Is that a thing I haven't I haven't 0:12:17.840 --> 0:12:22.160 actually seen a spaghetti con cannon is like, is that similar? No, 0:12:22.360 --> 0:12:24.839 it's it's a it's a it's an imaginative thing that 0:12:24.960 --> 0:12:27.360 Ben Johnson The Morning Star came up with, um and 0:12:27.840 --> 0:12:30.640 Everybody's stolen. It's a great phrase which he just just 0:12:30.760 --> 0:12:33.079 describes like when there's something hot and ETFs, you just 0:12:33.120 --> 0:12:34.960 see so much spaghetti flying at the wall that it's 0:12:35.000 --> 0:12:38.160 almost like a cannon. It's not just throwing, it's like 0:12:38.320 --> 0:12:41.400 just just a giant water of spaghetti. And then you'll 0:12:41.400 --> 0:12:43.320 have a lot of things that don't make it um. 0:12:43.520 --> 0:12:45.120 One of the things I wanted to ask Matt though, 0:12:45.240 --> 0:12:48.480 was about this new category. Obviously you'll have like leverage 0:12:48.520 --> 0:12:51.200 and you'll have inverse on many stocks now. I also 0:12:51.240 --> 0:12:53.800 saw filing just last week for yield chairs, which are 0:12:54.200 --> 0:12:56.640 I believe, gonna do a follow a stock and then 0:12:56.679 --> 0:12:59.360 do a cover call strategy on top of it. I mean, 0:12:59.520 --> 0:13:02.560 it seems like the sky's the limit. We're just basically 0:13:02.840 --> 0:13:04.920 in like almost like a new country where people are 0:13:04.960 --> 0:13:06.720 gonna set up shop and do all kinds of stuff. 0:13:06.960 --> 0:13:09.920 How far can this go? I mean, you you hit 0:13:09.960 --> 0:13:12.320 the nail on the head. I think there's all sorts 0:13:12.360 --> 0:13:16.000 of different ways to slice and dice it. Um you know, 0:13:16.120 --> 0:13:19.760 covered calls, puts, you know, all sorts of things with 0:13:19.960 --> 0:13:23.640 different options, strategies. You know, I think at some point 0:13:23.960 --> 0:13:27.360 you you kind of do run your course, and you 0:13:27.440 --> 0:13:30.520 know there's only you know, there's only so much money 0:13:30.600 --> 0:13:33.640 floating around and only so much interest, So you know, 0:13:33.679 --> 0:13:35.760 I think it can get a little bit crazy. But 0:13:36.080 --> 0:13:38.440 you know what we'll say. Yeah, you know you mentioned 0:13:38.600 --> 0:13:41.040 Sark and target second ago, and I just want to 0:13:41.160 --> 0:13:43.719 rewind and go back to that, because what did you 0:13:43.880 --> 0:13:46.880 learn from introducing those that maybe informed tesla Q and 0:13:47.080 --> 0:13:50.160 and wherever else you could go? So I mean, and 0:13:50.280 --> 0:13:52.560 it really actually it goes back to so Go I mean, 0:13:52.679 --> 0:13:57.640 so Goa was our first inverse ETF, and inverse ETFs, 0:13:57.920 --> 0:14:01.400 like single stock ETFs, are not easy, and there's nobody 0:14:01.480 --> 0:14:04.559 around to tell you, hey, this is how you construct 0:14:04.600 --> 0:14:07.720 an inverse ETF. And obviously the players in the market 0:14:07.800 --> 0:14:11.959 we're not willing to to share unfortunately. So with so Good, 0:14:12.000 --> 0:14:14.160 we learned how to do an inverse ETF, which then 0:14:14.240 --> 0:14:18.599 made Sark very easy. And then you know, Tark the 0:14:18.720 --> 0:14:21.600 same thing. You know. The other the other part of 0:14:21.720 --> 0:14:24.680 that too was being able to get swap counterparties, which, 0:14:24.880 --> 0:14:29.680 since ARCA goes, is not easy like and not easy 0:14:29.720 --> 0:14:32.760 as an understatement. So you know, we learned how to 0:14:32.880 --> 0:14:36.000 do that. Um, I learned how to use Twitter. I mean, 0:14:36.080 --> 0:14:39.280 I'm I'm fifty three years old. A couple of years ago, 0:14:39.400 --> 0:14:40.880 or maybe even a year ago, I didn't even know 0:14:40.920 --> 0:14:44.240 what Twitter was. Uh so I learned how to do that, 0:14:44.480 --> 0:14:46.880 which is good because the Twitter guys like this stuff. 0:14:46.880 --> 0:14:49.280 I was gonna say, of all the times to introduce 0:14:49.320 --> 0:14:52.760 a Tesla cue products with Twitter and Muskin, you know, 0:14:52.880 --> 0:14:55.080 total fallout, it seems like a pretty good moment for that. 0:14:55.440 --> 0:14:57.960 Timing was not bad. How much time do you spend 0:14:58.000 --> 0:15:02.480 on Twitter now? It it depends. You know. It's good 0:15:02.560 --> 0:15:04.080 that I've got a dog who likes to go on 0:15:04.280 --> 0:15:07.080 really long walks, so I mean we could be out 0:15:07.160 --> 0:15:09.520 for like an hour and a half and you know 0:15:09.720 --> 0:15:12.840 I'm on Twitter then. Um. You know, during the day 0:15:12.880 --> 0:15:15.480 when I have time, I do wake up way earlier 0:15:15.560 --> 0:15:17.600 than I want to, so I tend to spend some 0:15:17.720 --> 0:15:21.720 time on Twitter then and I dream in tweets. It's 0:15:21.760 --> 0:15:27.000 not awful, You're all you do tweet a lot. Yeah, unfortunately, 0:15:27.080 --> 0:15:29.960 but in any case, we should talk about the SEC 0:15:30.560 --> 0:15:34.880 because there's been some worried noises coming out of some 0:15:35.000 --> 0:15:38.040 of the commissioners there. You had a commissioner Caroline Crenshaw. 0:15:38.480 --> 0:15:41.080 She called for the agency to a top new rules 0:15:41.200 --> 0:15:44.560 on single stock ETFs. Even Chair Ginsler said that the 0:15:44.640 --> 0:15:49.200 products present a particular risk, and yet they launched. But 0:15:49.560 --> 0:15:53.600 I'm curious if you're worried at all, even though you're 0:15:53.640 --> 0:15:57.160 out the door. I mean, what could the backlash be here? 0:15:58.120 --> 0:16:02.440 I mean, I'm not necessary severially from from the standpoint 0:16:02.680 --> 0:16:05.440 that you know, there are tons of LeVert and inverse 0:16:05.520 --> 0:16:07.880 things that are out there. And again it comes down 0:16:07.920 --> 0:16:11.200 to education. You know, like I said before, it's that 0:16:11.400 --> 0:16:14.640 glide path, the compounding of returns that's going to be different. 0:16:15.160 --> 0:16:18.160 You know, I don't think these present any danger in 0:16:18.280 --> 0:16:21.480 any way, shape or form. There's no market risk and 0:16:21.920 --> 0:16:24.400 you know, and and a lot of it seems kind 0:16:24.400 --> 0:16:28.800 of disingenuous where you know, hey, these single stock and 0:16:28.880 --> 0:16:32.520 inverse ETFs, you know that's risky. But like buying r 0:16:32.760 --> 0:16:35.720 K in February of you know, two thousand twenty one 0:16:35.760 --> 0:16:38.480 at the top that that's fine. You know, there there's 0:16:38.960 --> 0:16:41.080 you know, there's a lot of stuff out there in 0:16:41.160 --> 0:16:46.320 the marketplace. That's that's extremely risky, and you know, I 0:16:46.440 --> 0:16:49.840 just think it's an educational issue more than anything. Um. 0:16:50.160 --> 0:16:54.160 So you have t SLQ and you've got SARK. Have 0:16:54.320 --> 0:16:57.800 you had any feedback from either Elon or Cathy based 0:16:57.880 --> 0:16:59.920 on the fact that you have these products going the 0:17:00.040 --> 0:17:03.080 other direction? I know Ellen is in particular sensitive to 0:17:03.160 --> 0:17:06.240 the shorts. Um Kathy. Also, you've got TARK, so you're 0:17:06.280 --> 0:17:09.080 kind of almost building a little You're adding to the 0:17:09.160 --> 0:17:11.720 ecosystem around that fund, which I argue is good because 0:17:11.720 --> 0:17:14.080 it draws more volume in. But maybe she was there 0:17:14.119 --> 0:17:15.960 any I guess between those two people, if you heard 0:17:15.960 --> 0:17:21.199 anything from them on either of these So Ellen, no, Um, Kathy. 0:17:21.320 --> 0:17:25.920 I can't talk about um. But one interesting thing, Tark 0:17:26.600 --> 0:17:29.320 actually helps her from the standpoint of every dollar we 0:17:29.400 --> 0:17:32.920 get into Tark eventually goes back to her because we've 0:17:32.960 --> 0:17:36.160 got to go buy a swap and then the counterparty 0:17:36.200 --> 0:17:39.399 has to hedge themselves by buying ARC, so you know 0:17:39.520 --> 0:17:50.280 that that's actually a net positive for them. Somebody had 0:17:50.320 --> 0:17:53.679 this idea with Tark that Kathy should just buy Tark, 0:17:54.280 --> 0:17:56.119 which would with then you'd have to go out and 0:17:56.200 --> 0:17:59.040 buy shares of ARC, which would then buy more Tark 0:17:59.119 --> 0:18:02.080 and create this upward spiral in the shares of arc 0:18:02.240 --> 0:18:04.440 is that am My is my head just not smart 0:18:04.520 --> 0:18:06.639 enough to understand why that would or wouldn't work. I 0:18:06.720 --> 0:18:09.399 mean I saw that in my brain hurt trying to 0:18:09.920 --> 0:18:12.560 kind of figure that out. You know, so I I, 0:18:12.920 --> 0:18:15.680 I don't think it's gonna happen. Then. Now the best 0:18:15.760 --> 0:18:19.479 thing I saw someone on Twitter took her Holdings thing 0:18:19.560 --> 0:18:21.800 that she sends out every day and mocked it up 0:18:22.359 --> 0:18:26.080 and had a sark and it looked totally real. And 0:18:26.160 --> 0:18:27.920 I saw that on Twitter and I was like, oh 0:18:28.000 --> 0:18:32.119 my god, no, that's fake. But it threw me for 0:18:32.200 --> 0:18:34.879 a second. Okay, so we're ultimately talking about some stuff 0:18:34.880 --> 0:18:36.800 here that that it does get a little wonky. And 0:18:36.920 --> 0:18:39.680 you know, Eric has a traffic light system that he's 0:18:39.720 --> 0:18:43.040 developed at Bloomberg Intelligence to sort of help investors make 0:18:43.119 --> 0:18:46.119 sense of where E T F s of fall. And 0:18:46.440 --> 0:18:48.680 you know, there's an amazing episode of Trillions that we 0:18:49.119 --> 0:18:52.439 we recorded with our dads once upon a time, and um, 0:18:52.600 --> 0:18:54.320 if you listen to that, you'll learn that you know, 0:18:54.520 --> 0:18:59.920 Eric's dad all in on on lever and and levered oil, 0:19:00.560 --> 0:19:04.800 and you know ended up juggling some chainsaws that probably 0:19:04.920 --> 0:19:08.600 hurt himself. And so Eric, I'm wondering how how red 0:19:09.000 --> 0:19:12.560 does b I rank these products? So these would actually 0:19:12.640 --> 0:19:16.080 be yellow. Um we haven't ranked TSLQ do every quarter, 0:19:16.200 --> 0:19:18.679 but um, I know SARK would be a yellow. If 0:19:18.720 --> 0:19:21.560 you go one time inverse, we don't find that too 0:19:22.200 --> 0:19:24.880 too awful, too dangerous. It's when you go to three 0:19:25.080 --> 0:19:27.720 x anything that's when the daily resetting of the leverage 0:19:27.760 --> 0:19:29.479 can really hurt your daily inverse. Like if you look 0:19:29.520 --> 0:19:31.480 at s H which is the one time in verse SMP, 0:19:32.160 --> 0:19:35.200 you largely get the opposite the SMP medium term as well. 0:19:35.560 --> 0:19:37.840 It's not perfect, but it's not like a three X 0:19:37.920 --> 0:19:40.200 where you could actually get the call right. Because of 0:19:40.280 --> 0:19:43.040 some volatility, you actually lose money. That's where they're red. 0:19:43.160 --> 0:19:45.040 So we would do yellow. If they come out with 0:19:45.119 --> 0:19:47.080 two X TESLA, that would be read. Anytime you go 0:19:47.160 --> 0:19:49.640 to X anything, we read, so right now you're yellow 0:19:49.720 --> 0:19:52.240 unless I can find something else. Um Like if you 0:19:52.359 --> 0:19:54.560 roll futures or the taxes weird, it might bump them 0:19:54.640 --> 0:19:56.440 up to a red. But that's how we look at it. 0:19:56.560 --> 0:19:59.119 So that makes sense. So what would your what are 0:19:59.119 --> 0:20:00.800 you gonna tell your dad. When your dad calls you 0:20:00.880 --> 0:20:05.320 about this product, all in, tell him, I'm gonna I'm 0:20:05.320 --> 0:20:07.439 going to tell him stick to your big oil stocks. 0:20:07.480 --> 0:20:10.200 He likes big oil companies and a couple like he 0:20:10.240 --> 0:20:12.000 likes a T and T for some reason. Like just 0:20:12.040 --> 0:20:14.399 stick to those. It's fine. Your your dad actually called 0:20:14.440 --> 0:20:17.480 me and I told him to go all in. My 0:20:17.600 --> 0:20:19.840 dad bet on the British Open like, I mean, he's like, so, 0:20:19.920 --> 0:20:21.480 I was like, you have enough going on? Okay, just 0:20:21.680 --> 0:20:24.760 you know he lost though he had Royal Michael Royan. 0:20:24.880 --> 0:20:27.760 He almost wanted. I mean it was brutal. Yeah. I 0:20:27.840 --> 0:20:30.240 do have a question sort of. You know, we're talking 0:20:30.280 --> 0:20:32.960 about how crazy and wild the space could become. But 0:20:33.040 --> 0:20:35.760 could you ever just see a single stock E t 0:20:35.960 --> 0:20:39.879 F that isn't leveraged or inverse that literally just holds 0:20:40.359 --> 0:20:43.560 the stock or is that actually just pointless? To me? 0:20:43.760 --> 0:20:47.240 That would be pointless. I can't imagine that that anyone 0:20:47.280 --> 0:20:50.320 want to do it or or even try it. Yeah, 0:20:50.320 --> 0:20:53.640 I think, um, that's what they call a bad idea. Yeah, 0:20:54.359 --> 0:20:57.840 I will say to the launch it, give it a shot, 0:20:58.880 --> 0:21:01.240 or just an E t F to try spy just 0:21:01.640 --> 0:21:07.000 yeah we're spy. Yeah, Well, look the inverse ones make 0:21:07.080 --> 0:21:09.720 a ton of sense. I remember I've received multiple people 0:21:09.760 --> 0:21:12.200 over the past couple of years that have said, can 0:21:12.240 --> 0:21:15.280 you tell the issuers to launch an SMP fix Tesla 0:21:16.000 --> 0:21:18.680 just because they just they want to hedge out Elon's 0:21:18.760 --> 0:21:21.440