1 00:00:05,720 --> 00:00:07,800 Speaker 1: Well Care trillions. I'm Joel Weber and I'm Eric bel 2 00:00:07,880 --> 00:00:15,360 Speaker 1: Tunis Eric. Now that is the beginning of the year. 3 00:00:15,840 --> 00:00:22,160 Speaker 1: I feel like I need to speak with a financial advisor. Yeah. Yeah, 4 00:00:22,200 --> 00:00:26,440 Speaker 1: there's so much going on, and what is going on? 5 00:00:26,680 --> 00:00:30,120 Speaker 1: I mean, Bitcoin Tesla, what in the hell is happening 6 00:00:30,200 --> 00:00:34,960 Speaker 1: right now? There's a new political lance gap, so that 7 00:00:35,320 --> 00:00:38,400 Speaker 1: so so I figured, uh, we We've had a gentleman 8 00:00:38,440 --> 00:00:42,400 Speaker 1: on before named Barry Ritt Holtz who's a Bloomberg opinion 9 00:00:42,440 --> 00:00:46,479 Speaker 1: columnist has a podcast with Bloomberg called Masters in Business, 10 00:00:46,560 --> 00:00:49,839 Speaker 1: and he's also the head of Holts Wealth Management. And 11 00:00:49,840 --> 00:00:52,080 Speaker 1: I was like, oh, yeah, Barry, we can solve this problem. 12 00:00:52,159 --> 00:00:55,800 Speaker 1: Let's dr Barry. Barry is great. You can throw anything 13 00:00:55,840 --> 00:00:58,840 Speaker 1: at him and he's probably has three opinions on it um. 14 00:00:58,880 --> 00:01:01,800 Speaker 1: And that's exactly the kind of thing we want to do, 15 00:01:01,920 --> 00:01:03,840 Speaker 1: is just bring up these things we're seeing and just 16 00:01:03,920 --> 00:01:06,720 Speaker 1: get his take. And he does not have a shortage 17 00:01:06,720 --> 00:01:08,960 Speaker 1: of takes, and they're usually good and they usually get 18 00:01:09,000 --> 00:01:11,440 Speaker 1: your thinking. And so you know, it's a good top 19 00:01:11,480 --> 00:01:15,360 Speaker 1: of the year guest. And if you are interested in 20 00:01:15,480 --> 00:01:20,720 Speaker 1: listening to prayer conversations with Barry, We've did a Use 21 00:01:20,800 --> 00:01:25,800 Speaker 1: Your Disillusion Volume one and two episode a while back, 22 00:01:26,120 --> 00:01:29,080 Speaker 1: and we basically just went really long on that one. 23 00:01:29,440 --> 00:01:31,480 Speaker 1: We'll try to keep this one a little shorter though. 24 00:01:32,040 --> 00:01:35,560 Speaker 1: That was the first and only episode that was two episodes. 25 00:01:35,600 --> 00:01:38,679 Speaker 1: It was we could not contain Barry into one episode. 26 00:01:39,240 --> 00:01:41,600 Speaker 1: But this time we're gonna do it right. We're gonna 27 00:01:41,680 --> 00:01:44,600 Speaker 1: keep keep it to one, aren't we. Yes, we are, well, 28 00:01:44,680 --> 00:01:52,320 Speaker 1: we're gonna try our damnedest this time on Trillions. Welcome 29 00:01:52,320 --> 00:01:59,960 Speaker 1: to the Jungle of with Barry rid holes Berry. Welcome 30 00:02:00,000 --> 00:02:03,120 Speaker 1: actor Trillions. Well, thanks for having me again. Okay, we 31 00:02:03,200 --> 00:02:05,840 Speaker 1: got to talk about the fact that this is uh 32 00:02:06,000 --> 00:02:09,720 Speaker 1: the beginning of a new year with a completely different 33 00:02:09,840 --> 00:02:14,080 Speaker 1: political landscape than we've had for a bit, which is, 34 00:02:14,240 --> 00:02:17,919 Speaker 1: you know, a democratic uh sweep. Uh So, So, Barry, 35 00:02:17,919 --> 00:02:20,720 Speaker 1: what how are you talking to investors and to to 36 00:02:20,800 --> 00:02:24,639 Speaker 1: prepare them for this new world? So first off, the 37 00:02:25,240 --> 00:02:32,360 Speaker 1: data about is so amazing and compelling that I think 38 00:02:32,400 --> 00:02:37,280 Speaker 1: it's going to, if not influence the incoming Biden administration 39 00:02:37,520 --> 00:02:40,639 Speaker 1: at the very least, it will look it will confirm 40 00:02:40,760 --> 00:02:44,520 Speaker 1: their priors. It will it will basically give them license 41 00:02:44,560 --> 00:02:46,840 Speaker 1: to do what they wanted to do anyway, and the 42 00:02:46,919 --> 00:02:51,359 Speaker 1: data is this externality hits the market, the economy collapse 43 00:02:51,440 --> 00:02:54,840 Speaker 1: that it's worst. GDP was probably cut in half. We 44 00:02:54,880 --> 00:02:58,680 Speaker 1: saw the single biggest drop in the markets, the single 45 00:02:58,720 --> 00:03:03,240 Speaker 1: biggest spike unemployment in the shortest period of time. And 46 00:03:03,280 --> 00:03:07,480 Speaker 1: then Congress that normally can't agree on renaming the library 47 00:03:08,000 --> 00:03:10,800 Speaker 1: past the first Cares Act. It was what two point 48 00:03:10,840 --> 00:03:16,080 Speaker 1: one trillion dollars um versus you know, six or seven 49 00:03:16,120 --> 00:03:19,519 Speaker 1: hundred eight hundred billion for the financial crisis that was 50 00:03:19,639 --> 00:03:23,400 Speaker 1: doled out over four months for years. This was eight months. 51 00:03:24,040 --> 00:03:27,480 Speaker 1: And what's amazing is you can really see it in 52 00:03:27,520 --> 00:03:30,359 Speaker 1: the economic data. So year of a year we saw 53 00:03:30,400 --> 00:03:36,320 Speaker 1: a one trillion plus increase in the after tax personal 54 00:03:36,360 --> 00:03:41,280 Speaker 1: income of Americans compared to the previous year. That's an 55 00:03:41,320 --> 00:03:44,680 Speaker 1: eight percent gain over like eight or nine months from 56 00:03:44,720 --> 00:03:49,720 Speaker 1: like March to November, same period versus giant increase. How 57 00:03:49,720 --> 00:03:55,440 Speaker 1: does that manifest itself? Um savings rates go up. Not 58 00:03:55,560 --> 00:03:59,160 Speaker 1: only does retail sales go higher, they go above the 59 00:03:59,200 --> 00:04:03,240 Speaker 1: pre pandemic level. They spiked up, and credit card delinquencies 60 00:04:03,240 --> 00:04:05,760 Speaker 1: are now at you know, if not all time lows, 61 00:04:06,280 --> 00:04:09,360 Speaker 1: really close to it. And that's what you know the 62 00:04:09,360 --> 00:04:11,320 Speaker 1: old joke. I think it was Warren Buffett who said, 63 00:04:11,320 --> 00:04:13,040 Speaker 1: give me a trillion dollars, I'll throw you a hell 64 00:04:13,080 --> 00:04:16,200 Speaker 1: of a party. Um, hey, here's a trillion dollars and 65 00:04:16,240 --> 00:04:18,719 Speaker 1: they threw a hell of a party. What does that 66 00:04:18,920 --> 00:04:23,080 Speaker 1: mean going forward? Well, it means that the Biden administration 67 00:04:23,160 --> 00:04:27,479 Speaker 1: now has carte blanche first for the Cares Act three. Right, 68 00:04:27,520 --> 00:04:30,280 Speaker 1: we just had a you know, a mini Cares Act, 69 00:04:30,279 --> 00:04:33,599 Speaker 1: a trillion dollars. They're gonna do another two trillion dollars, 70 00:04:34,279 --> 00:04:36,760 Speaker 1: part of which is going to include four hundred billion 71 00:04:36,760 --> 00:04:40,480 Speaker 1: dollars for the vaccine rollout for the States. Another part 72 00:04:40,480 --> 00:04:42,240 Speaker 1: of that is going to be a two thousand dollar 73 00:04:42,360 --> 00:04:46,000 Speaker 1: check for everybody. Um, they'll problem I'm guessing that there'll 74 00:04:46,000 --> 00:04:49,760 Speaker 1: be a national mask mandate and a temporary lockdown while 75 00:04:49,839 --> 00:04:52,840 Speaker 1: vaccines go out. And you can't fix the economy until 76 00:04:52,880 --> 00:04:55,720 Speaker 1: you fix the pandemic. A lot of my friends on 77 00:04:55,760 --> 00:04:58,719 Speaker 1: the right, um, completely couldn't wrap their head around that. 78 00:04:58,960 --> 00:05:04,400 Speaker 1: And uh, I think the data absolutely shows that. But 79 00:05:04,640 --> 00:05:08,440 Speaker 1: it's not just the pandemic. You're gonna see a long 80 00:05:08,520 --> 00:05:13,159 Speaker 1: overdue infrastructure bill. I don't know, four billions, four trillion, 81 00:05:13,240 --> 00:05:16,800 Speaker 1: five trillion, six trillion over a decade. If they were smart, 82 00:05:16,880 --> 00:05:19,960 Speaker 1: they would fund this with fifty or a hundred year bonds. 83 00:05:20,000 --> 00:05:22,080 Speaker 1: I don't know how smart these guys are, but that's 84 00:05:22,120 --> 00:05:24,480 Speaker 1: what I would do. We we may have actually said 85 00:05:24,480 --> 00:05:27,080 Speaker 1: that exact same thing last time I was on This time, 86 00:05:27,120 --> 00:05:29,800 Speaker 1: we're gonna get an infrastructure bill. There's gonna be a 87 00:05:29,839 --> 00:05:34,760 Speaker 1: green new deal with extended UM tax credits for solar 88 00:05:34,839 --> 00:05:37,839 Speaker 1: and e vs, and maybe even smart roads with implanted 89 00:05:37,920 --> 00:05:41,400 Speaker 1: RF devices so self driving cars don't have to rely on, 90 00:05:41,880 --> 00:05:44,599 Speaker 1: you know, crappy little cameras to see where they're going. 91 00:05:44,839 --> 00:05:47,960 Speaker 1: They'll know exactly where they're going just a giant rollout. 92 00:05:48,040 --> 00:05:51,839 Speaker 1: Oh and ps, we're also going to see a massive 93 00:05:51,880 --> 00:05:56,400 Speaker 1: expansion of Obamacare. When we added thirty five to forty 94 00:05:56,600 --> 00:05:59,760 Speaker 1: million people to the role of to the roles of 95 00:06:00,080 --> 00:06:05,000 Speaker 1: sured the first Obamacare, it had a huge impact on 96 00:06:05,440 --> 00:06:09,920 Speaker 1: healthcare and hospital and pharmaceuticals and that entire sector, which 97 00:06:09,960 --> 00:06:15,120 Speaker 1: is a huge chunk of UM retail sales. This time, 98 00:06:15,240 --> 00:06:17,960 Speaker 1: maybe we had another twenty to twenty five million people 99 00:06:18,240 --> 00:06:23,280 Speaker 1: similarly going to impact UH, the economy and retail sales. 100 00:06:23,560 --> 00:06:26,800 Speaker 1: All of those things cares at three. The infrastructure deal 101 00:06:26,880 --> 00:06:30,680 Speaker 1: the Green New Deal. The expansion of Obamacare means that 102 00:06:30,720 --> 00:06:34,760 Speaker 1: we're looking at a massive multi year stimulus, which, as 103 00:06:34,800 --> 00:06:38,120 Speaker 1: we learned in twenty it turned out that John Maynard 104 00:06:38,200 --> 00:06:43,400 Speaker 1: Keynes was right, and when demand falls off, it's very 105 00:06:43,480 --> 00:06:47,040 Speaker 1: easy for the government to replace it by substituting their 106 00:06:47,080 --> 00:06:50,240 Speaker 1: own spending. For what you would normally see from households 107 00:06:50,240 --> 00:06:54,600 Speaker 1: and businesses, there's some offsetting costs. You're gonna see everybody 108 00:06:54,640 --> 00:06:56,520 Speaker 1: making more than four k is going to see their 109 00:06:56,520 --> 00:06:58,719 Speaker 1: tap top tax rate pick up a couple of percent. 110 00:06:59,440 --> 00:07:03,040 Speaker 1: You're gonna the corporate tax rate probably go back towards 111 00:07:04,320 --> 00:07:06,880 Speaker 1: I don't know if it'll get to tht I'm more 112 00:07:06,920 --> 00:07:10,920 Speaker 1: interested in the alternative minimum tax for corporations. So if 113 00:07:10,920 --> 00:07:14,040 Speaker 1: you're an Apple or a Facebook and you're making hundreds 114 00:07:14,080 --> 00:07:17,440 Speaker 1: of billions or Microsoft, you can't pay like no taxes. 115 00:07:17,480 --> 00:07:21,560 Speaker 1: There'll be a twelve percent. Hey, you report your profits 116 00:07:21,600 --> 00:07:25,080 Speaker 1: to the your shareholders. That's what we're gonna attack you on. 117 00:07:25,320 --> 00:07:27,760 Speaker 1: So that's the that's gonna be the trade offs we'll see. 118 00:07:28,320 --> 00:07:30,480 Speaker 1: So you just laid out a lot of spending, a 119 00:07:30,480 --> 00:07:33,120 Speaker 1: lot of stimulus. That's your vision of the future. It's 120 00:07:33,200 --> 00:07:36,280 Speaker 1: very it's very clear, How do you shift portfolios or 121 00:07:36,520 --> 00:07:39,520 Speaker 1: or do you not? You just know all this and 122 00:07:39,600 --> 00:07:42,120 Speaker 1: know that that's why you're in you know, the Vanguard 123 00:07:42,240 --> 00:07:46,840 Speaker 1: Total Market Fund and you know whatever else? Or do 124 00:07:46,880 --> 00:07:49,040 Speaker 1: you tweak things? Do you add an infrastructure e t 125 00:07:49,160 --> 00:07:50,880 Speaker 1: F onto it or a clean energy e t F. 126 00:07:50,960 --> 00:07:55,600 Speaker 1: Those have been seeing some flows. No. So basically the 127 00:07:56,560 --> 00:08:01,520 Speaker 1: big philosophy we try and share with our clients and 128 00:08:01,600 --> 00:08:04,960 Speaker 1: investors is this, there's a lot of noise, there's a 129 00:08:05,000 --> 00:08:09,000 Speaker 1: lot of cross currents. You should leave I I wasn't 130 00:08:09,040 --> 00:08:12,560 Speaker 1: exaggerating when I said own a globally diversified portfolio of 131 00:08:12,600 --> 00:08:15,640 Speaker 1: low cost ETFs. Hey, maybe I'll add rebalance once a 132 00:08:15,720 --> 00:08:18,960 Speaker 1: year and then leave it the hell alone. But were 133 00:08:19,120 --> 00:08:22,680 Speaker 1: you mentioned the behavioral side. How do you train people 134 00:08:22,800 --> 00:08:26,120 Speaker 1: to leave it the hell alone? Well, you give them 135 00:08:26,320 --> 00:08:30,239 Speaker 1: a data based explanation of what's going on in the world, 136 00:08:30,880 --> 00:08:35,640 Speaker 1: so they're comfortable with leaving it alone. Because when things 137 00:08:35,679 --> 00:08:40,160 Speaker 1: don't make sense, they want to sell. When when there 138 00:08:40,200 --> 00:08:44,840 Speaker 1: are cross currents and there's confusion and there's noise, hey 139 00:08:45,000 --> 00:08:49,360 Speaker 1: I don't really understand this, Maybe I should sell. And 140 00:08:49,800 --> 00:08:52,280 Speaker 1: you know, one of the most popular pieces I wrote 141 00:08:52,320 --> 00:08:58,200 Speaker 1: for Bloomberg opinion this year was explaining why, hey, maybe 142 00:08:58,360 --> 00:09:02,439 Speaker 1: mr market isn't so rational after all. And we looked 143 00:09:02,480 --> 00:09:06,000 Speaker 1: at all the components of the SMP five hundred index 144 00:09:06,720 --> 00:09:09,280 Speaker 1: to figure out to answer the question that we got 145 00:09:09,280 --> 00:09:12,840 Speaker 1: over and over from clients. This market doesn't make sense. 146 00:09:13,559 --> 00:09:16,400 Speaker 1: I look around, the economy isn't going to hell? How 147 00:09:16,400 --> 00:09:19,000 Speaker 1: can the stock market keep going up? There's something wrong here. 148 00:09:19,600 --> 00:09:22,600 Speaker 1: And when you look around at at why the economy 149 00:09:22,600 --> 00:09:25,360 Speaker 1: looks like how well your local dry cleaner is doing 150 00:09:25,400 --> 00:09:27,800 Speaker 1: a third of the business, they were all the little 151 00:09:27,840 --> 00:09:31,720 Speaker 1: restaurants are closing, the bars are closing, the retailers. Even 152 00:09:31,760 --> 00:09:34,640 Speaker 1: the gas station isn't doing well. Gases like a buck nineties, 153 00:09:34,640 --> 00:09:39,520 Speaker 1: so everything is so cheap. Their personal experience is the 154 00:09:39,520 --> 00:09:44,040 Speaker 1: economy is terrible, but that's not what drives the market. 155 00:09:44,120 --> 00:09:46,600 Speaker 1: When we look at we took apart to the SMP 156 00:09:46,720 --> 00:09:51,280 Speaker 1: five index and found top ten names are sent of 157 00:09:51,280 --> 00:09:54,559 Speaker 1: the index. And these are companies that are a global 158 00:09:54,640 --> 00:09:56,520 Speaker 1: They get most of them get half of more of 159 00:09:56,520 --> 00:09:59,719 Speaker 1: their business from overseas, where they admittedly did a much 160 00:09:59,720 --> 00:10:02,880 Speaker 1: better job than we in America did managing the pandemic, 161 00:10:03,360 --> 00:10:07,040 Speaker 1: and be they're perfectly set up for the work from 162 00:10:07,160 --> 00:10:13,079 Speaker 1: home environment. So Apple, Microsoft, Amazon, Netflix, go go down 163 00:10:13,120 --> 00:10:15,760 Speaker 1: the list of all those giant companies that are doing great. Hey, 164 00:10:15,800 --> 00:10:18,640 Speaker 1: the pandemic went for another ten years, they would be fine. 165 00:10:18,679 --> 00:10:21,480 Speaker 1: They don't care. But when you look at what's doing 166 00:10:21,520 --> 00:10:27,280 Speaker 1: really poorly, it's travel and hotels, and you know, your 167 00:10:27,440 --> 00:10:32,719 Speaker 1: most people's personal economic experience is not very well reflected 168 00:10:32,720 --> 00:10:35,280 Speaker 1: in the SMP five hundred, and in fact the number 169 00:10:35,320 --> 00:10:40,520 Speaker 1: that blows people away. Take the thirty worst industrial sectors um, 170 00:10:40,840 --> 00:10:43,640 Speaker 1: thirty words sectors in the SMP five, the little sub 171 00:10:44,000 --> 00:10:46,880 Speaker 1: industry groups and just throw them away, send them all 172 00:10:46,920 --> 00:10:51,160 Speaker 1: to zero. It takes two off of the SMP five hundred. 173 00:10:51,559 --> 00:10:56,080 Speaker 1: So it when you could explain to clients, hey, it 174 00:10:56,200 --> 00:10:59,920 Speaker 1: may seem that the market is irrational, but your personal 175 00:11:00,000 --> 00:11:04,240 Speaker 1: economic situation and what you're seeing around you is very 176 00:11:04,440 --> 00:11:10,320 Speaker 1: very um not publicly traded, it's very private, and so 177 00:11:10,440 --> 00:11:17,360 Speaker 1: therefore it's actually rational that the global, profitable, big cap 178 00:11:17,440 --> 00:11:21,400 Speaker 1: companies that are working um taking advantage of working from home, 179 00:11:22,000 --> 00:11:27,600 Speaker 1: are doing really well and therefore leave your damn portfolio alone. Okay, 180 00:11:27,760 --> 00:11:30,040 Speaker 1: so if I if I leave my portfolio alone, I'm 181 00:11:30,080 --> 00:11:35,520 Speaker 1: still living in a world that has gigantic infusions of cash. Yeah, stimulus, 182 00:11:35,600 --> 00:11:39,800 Speaker 1: stimulus coming fed doing what it's gonna do. How concerned 183 00:11:40,360 --> 00:11:45,840 Speaker 1: about you know this bubblicious environment? Are you so? Having 184 00:11:45,960 --> 00:11:51,520 Speaker 1: been a trader and lived through the nineties and two thousand, um, 185 00:11:51,559 --> 00:11:56,000 Speaker 1: this isn't this, this is this is still a fraction 186 00:11:56,040 --> 00:11:59,160 Speaker 1: of that, right, I remember when you would buy something 187 00:11:59,200 --> 00:12:03,680 Speaker 1: and that would go up there. Every sale was punished immediately. 188 00:12:04,240 --> 00:12:07,560 Speaker 1: It was it was just hey, from from I remember, 189 00:12:07,600 --> 00:12:11,240 Speaker 1: it was from my birthday in October untill the top 190 00:12:11,320 --> 00:12:16,200 Speaker 1: in March from the nasdack doubled. Right, we had the 191 00:12:16,240 --> 00:12:19,200 Speaker 1: best year in in a decade. The Nasdaq was up 192 00:12:19,240 --> 00:12:24,000 Speaker 1: forty So it's still not not even anywhere close to that. 193 00:12:24,040 --> 00:12:26,480 Speaker 1: And by the way, most of those companies that are 194 00:12:26,480 --> 00:12:29,839 Speaker 1: doing really well have giant revenues and giant cash on 195 00:12:29,880 --> 00:12:34,520 Speaker 1: the balance sheets and huge profits. That said, there are 196 00:12:34,559 --> 00:12:38,920 Speaker 1: all sorts of pockets of speculation. UM Bitcoin probably the 197 00:12:38,920 --> 00:12:42,760 Speaker 1: poster child speculation. Uh, someone smarter than me can explain 198 00:12:42,840 --> 00:12:47,240 Speaker 1: what it's fundamental intrinsic value is. Um. I like to 199 00:12:47,240 --> 00:12:50,440 Speaker 1: tell people the intrinsic value of a dollar is that 200 00:12:50,480 --> 00:12:53,199 Speaker 1: we it's are all. I'll admit it's a delusion it's 201 00:12:53,240 --> 00:12:57,080 Speaker 1: a collective delusion that a dollar has value. Plus it's 202 00:12:57,120 --> 00:13:00,360 Speaker 1: with Uncle Sam demands you pay your taxes in and 203 00:13:00,400 --> 00:13:02,600 Speaker 1: they have a standing army to enforce it. So it's 204 00:13:02,640 --> 00:13:08,360 Speaker 1: more than just an abstract thing. Bitcoin has become an 205 00:13:08,400 --> 00:13:14,320 Speaker 1: asset to speculate with um. The spacks clearly have gone, 206 00:13:14,559 --> 00:13:17,760 Speaker 1: you know, berserk And what was the thing Elon Musk 207 00:13:17,880 --> 00:13:20,800 Speaker 1: mentioned the other day? And the wrong company you know 208 00:13:20,840 --> 00:13:24,680 Speaker 1: went up fift These are all anecdotes, but you know 209 00:13:24,760 --> 00:13:28,439 Speaker 1: you see enough of them. Oh and did I mention Tesla? 210 00:13:29,600 --> 00:13:33,720 Speaker 1: Testlas looks a little bubblicious. I don't want to short 211 00:13:33,760 --> 00:13:37,360 Speaker 1: it yet, but I'm interested in it. I mean, the 212 00:13:37,440 --> 00:13:40,520 Speaker 1: trader in me says there's a there's some money to 213 00:13:40,559 --> 00:13:43,480 Speaker 1: be made on the downside there. I've just watched too 214 00:13:43,520 --> 00:13:45,800 Speaker 1: many people carry down on their shields to want to 215 00:13:46,000 --> 00:13:49,640 Speaker 1: step into that fray just yet. I don't want to. 216 00:13:49,679 --> 00:13:51,360 Speaker 1: I don't want to go deep on bitcoin. But do 217 00:13:51,400 --> 00:13:54,280 Speaker 1: you own any crypto? No? None. And by the way, 218 00:13:54,280 --> 00:13:55,960 Speaker 1: when clients come to me and say I want to 219 00:13:55,960 --> 00:13:58,520 Speaker 1: buy some crypto, it's like, all right, go buy some crypto. 220 00:13:58,760 --> 00:14:00,520 Speaker 1: I don't care. I'm not gonna tell you not to. 221 00:14:01,200 --> 00:14:03,880 Speaker 1: Just don't mortgage the house and leverage up with crypto, 222 00:14:03,920 --> 00:14:06,320 Speaker 1: because he'll knows I was. I was just gonna end 223 00:14:06,679 --> 00:14:09,000 Speaker 1: I could tell you where equities will be a hundred 224 00:14:09,120 --> 00:14:11,960 Speaker 1: years from now, more or less. I have no idea 225 00:14:12,000 --> 00:14:14,319 Speaker 1: what crypto will be. Where will equities being in a 226 00:14:14,360 --> 00:14:19,640 Speaker 1: hundred years from now higher? That's not a hard bet 227 00:14:19,680 --> 00:14:22,320 Speaker 1: to make, right And if it's not higher, we have 228 00:14:23,000 --> 00:14:25,560 Speaker 1: you have to worry about clean water and air at 229 00:14:25,600 --> 00:14:28,920 Speaker 1: that point, right right, Well, you know a lot of 230 00:14:28,960 --> 00:14:31,760 Speaker 1: advisors are talking about working in crypto to the portfolio. 231 00:14:31,760 --> 00:14:34,680 Speaker 1: You see institutions getting into it. Is there any thought 232 00:14:34,720 --> 00:14:38,760 Speaker 1: that you might lose or upset clients if if it's 233 00:14:38,760 --> 00:14:45,040 Speaker 1: not part of the ritolds portfolio. You know, some of 234 00:14:45,040 --> 00:14:49,240 Speaker 1: the basic rules of investing are know what you are own, 235 00:14:50,440 --> 00:14:53,800 Speaker 1: know what it's worth, and understand how it fits into 236 00:14:53,840 --> 00:14:59,240 Speaker 1: a diversified portfolio. And if someone wants to take you know, 237 00:14:59,360 --> 00:15:03,720 Speaker 1: five percent two of their liquid net worth and by bitcoin, 238 00:15:04,520 --> 00:15:08,160 Speaker 1: um I would tell them two things. Write your password 239 00:15:08,200 --> 00:15:11,400 Speaker 1: down and put it in your bank vault. Because what 240 00:15:11,400 --> 00:15:15,920 Speaker 1: what is it? Something like twenty of bitcoin value has 241 00:15:15,960 --> 00:15:19,960 Speaker 1: been lost? That stop and think about that just for 242 00:15:20,000 --> 00:15:23,160 Speaker 1: a second. A fifth to a quarter of the value 243 00:15:23,160 --> 00:15:30,040 Speaker 1: of bitcoin is lost behind forgotten passwords or lost thumb drives, 244 00:15:30,080 --> 00:15:34,800 Speaker 1: So to me, that's not necessarily a Hopefully institutions will 245 00:15:34,800 --> 00:15:37,560 Speaker 1: be able to solve that. Maybe maybe Fidelity or somebody 246 00:15:37,560 --> 00:15:40,640 Speaker 1: else that is moving into that space will do it. 247 00:15:40,720 --> 00:15:43,600 Speaker 1: But that's kind of a warning. The other thing is, 248 00:15:45,080 --> 00:15:47,480 Speaker 1: you know, until you understand what it is, what it does, 249 00:15:47,600 --> 00:15:51,280 Speaker 1: and what it's you know purpose. I like the explanation 250 00:15:51,280 --> 00:15:54,360 Speaker 1: that it's a solution in search of a problem, but 251 00:15:54,440 --> 00:15:56,680 Speaker 1: none of that matters. If someone says to me, hey, 252 00:15:56,720 --> 00:15:59,360 Speaker 1: I want to own two or three percent of bitcoin, great, 253 00:15:59,400 --> 00:16:01,560 Speaker 1: we'll set up a side pocket for you, you you know, 254 00:16:01,560 --> 00:16:04,160 Speaker 1: a separate account. We won't charge you on it, and 255 00:16:04,280 --> 00:16:06,600 Speaker 1: it'll be here, and anytime you want to sell it 256 00:16:06,720 --> 00:16:10,840 Speaker 1: or buy more, you can do it. Just understand, assume 257 00:16:10,920 --> 00:16:14,560 Speaker 1: it goes to zero. That's how much you should put 258 00:16:14,560 --> 00:16:17,800 Speaker 1: into it, enough that it doesn't change your lifestyle. And 259 00:16:17,840 --> 00:16:27,680 Speaker 1: if it goes to a million, hey god bless Tesla. Okay, 260 00:16:27,800 --> 00:16:30,400 Speaker 1: we were looking at some numbers in my team and 261 00:16:30,720 --> 00:16:34,400 Speaker 1: there's some mind blowing stuff. Besides the price jump. Obviously 262 00:16:34,440 --> 00:16:38,040 Speaker 1: that's been parabolic. The volume in tesla um so for 263 00:16:38,120 --> 00:16:43,320 Speaker 1: twenty years, not nothing traded more than Spy. I think 264 00:16:43,360 --> 00:16:47,040 Speaker 1: Apple did on one days. Now, yeah, Tesla has now 265 00:16:47,040 --> 00:16:49,240 Speaker 1: traded more than Spy for twenty six out of less 266 00:16:49,280 --> 00:16:51,760 Speaker 1: twenty days, and in the past month it's traded a 267 00:16:51,880 --> 00:16:55,520 Speaker 1: trillion dollars. UM, what's going on here? Have you have 268 00:16:55,600 --> 00:17:00,400 Speaker 1: you ever seen anything like this? Is this the retail investor? Um? 269 00:17:00,400 --> 00:17:02,280 Speaker 1: What do you think will happen to Tesla? If we 270 00:17:02,280 --> 00:17:05,439 Speaker 1: were to you know, timestamp now and look back and 271 00:17:05,480 --> 00:17:08,600 Speaker 1: we're you know, we're five years down the road, what 272 00:17:08,680 --> 00:17:11,000 Speaker 1: call would you make? Where will Tesla be? And just 273 00:17:11,080 --> 00:17:14,640 Speaker 1: give me your general wide take on Tesla? So so 274 00:17:14,800 --> 00:17:19,240 Speaker 1: I have a hard time. UM. You know, you need 275 00:17:19,280 --> 00:17:22,840 Speaker 1: a certain distance from things to be objective. If you're 276 00:17:22,840 --> 00:17:25,280 Speaker 1: too far away, you don't understand anything about it, And 277 00:17:25,280 --> 00:17:28,200 Speaker 1: if you're too close, you know too much and it's 278 00:17:28,240 --> 00:17:32,240 Speaker 1: hard to see it. You guys know, I'm a car guy, 279 00:17:32,440 --> 00:17:40,200 Speaker 1: and while I'm both fascinated and intrigued by Tesla, the automobile, Tesla, 280 00:17:40,280 --> 00:17:44,399 Speaker 1: the company has not shown itself to be UM a 281 00:17:44,560 --> 00:17:50,840 Speaker 1: great automobile manufacturer. They are interesting cars with great technologies, 282 00:17:51,200 --> 00:17:56,120 Speaker 1: but terrible manufacturing. UM. And I understand why Tesla didn't 283 00:17:56,119 --> 00:18:00,200 Speaker 1: hook up with Ford or Toyota to manufacturer that the US, 284 00:18:02,080 --> 00:18:06,560 Speaker 1: But I don't know how long their lead is going 285 00:18:06,600 --> 00:18:11,720 Speaker 1: to stay. Keep them in the lead. So, uh, the 286 00:18:12,359 --> 00:18:14,679 Speaker 1: number of cars that are coming out of kind of fascinating, 287 00:18:15,359 --> 00:18:18,920 Speaker 1: the the initial ones. Everybody is following here. First off, 288 00:18:18,920 --> 00:18:23,159 Speaker 1: before we go into the details, Tesla one like hold 289 00:18:23,200 --> 00:18:26,760 Speaker 1: hold aside the company the stock. Elon Musk changed the 290 00:18:26,800 --> 00:18:32,920 Speaker 1: paradigm of automobiles for the right reason. Hey, uh, internal 291 00:18:32,920 --> 00:18:37,520 Speaker 1: combustion engines and and carbon based transportation is destroying the 292 00:18:37,560 --> 00:18:43,600 Speaker 1: planet and just impacting the them the climate. And so 293 00:18:43,720 --> 00:18:47,320 Speaker 1: therefore I'm going to introduce this electric car and everybody 294 00:18:47,359 --> 00:18:49,840 Speaker 1: better come along. We're gonna You're gonna be left behind. 295 00:18:50,520 --> 00:18:55,359 Speaker 1: And the rest of the car industry said, we're not 296 00:18:55,400 --> 00:18:59,760 Speaker 1: gonna let Musk do to us what Bezos did to retail, 297 00:19:00,040 --> 00:19:03,480 Speaker 1: and Bezos did to cloud computing, and Bezos did to 298 00:19:03,560 --> 00:19:07,919 Speaker 1: go down the list. So the paradigm has shifted. Elon 299 00:19:08,040 --> 00:19:13,240 Speaker 1: Musk has won the internal combustion versus electric car debate. 300 00:19:13,880 --> 00:19:18,000 Speaker 1: Now that he's won that, he has created a massive 301 00:19:18,040 --> 00:19:22,120 Speaker 1: amount of future competition for himself. So the Porsche take 302 00:19:22,240 --> 00:19:26,960 Speaker 1: Can Turbo comes out and it's spectacular. It's much better 303 00:19:27,000 --> 00:19:30,159 Speaker 1: than anything out of Tesla, except it's a hundred and 304 00:19:30,160 --> 00:19:35,720 Speaker 1: eighty six thousand dollars. It's it's a high end luxury, 305 00:19:35,840 --> 00:19:40,280 Speaker 1: very fast forward four seat e V. The question is, 306 00:19:40,320 --> 00:19:44,199 Speaker 1: can somebody come out and make a product that's competitive 307 00:19:44,280 --> 00:19:49,080 Speaker 1: with the Tesla UM with either the Model three UM 308 00:19:49,320 --> 00:19:54,560 Speaker 1: or or them the model uh at? Why? Or go 309 00:19:54,680 --> 00:19:57,800 Speaker 1: down the list? And we now have an answer. The 310 00:19:58,280 --> 00:20:01,920 Speaker 1: new Ford Mustang Maki is every bit as good as 311 00:20:02,040 --> 00:20:07,240 Speaker 1: anything from Tesla. It the reviews are spectacular. Everybody seems 312 00:20:07,240 --> 00:20:09,359 Speaker 1: to love it. The one thing people don't like is 313 00:20:09,400 --> 00:20:13,000 Speaker 1: the name Mustang. But you know, get over yourself. And 314 00:20:13,200 --> 00:20:16,800 Speaker 1: the argument now is, and I have this argument with 315 00:20:16,840 --> 00:20:19,080 Speaker 1: some mutual friends, Dave not Agan. I argue about this 316 00:20:19,119 --> 00:20:21,560 Speaker 1: all the time. You seem to think Tesla is a 317 00:20:21,560 --> 00:20:24,960 Speaker 1: car company. Their genius is the network of super fast 318 00:20:25,040 --> 00:20:30,680 Speaker 1: charging stations. Dave range anxiety was has always been nonsense 319 00:20:31,560 --> 00:20:35,119 Speaker 1: of all trips in a car are within you know, 320 00:20:35,359 --> 00:20:38,560 Speaker 1: fifty miles of the home. And if you're gonna take 321 00:20:38,600 --> 00:20:41,280 Speaker 1: any electric car and along the trip, well you may 322 00:20:41,320 --> 00:20:43,560 Speaker 1: have to do a little more planning in the Mustang 323 00:20:43,560 --> 00:20:47,240 Speaker 1: than the Tesla. But you know, so what and PS, 324 00:20:47,280 --> 00:20:50,840 Speaker 1: there's still a bajillion gasoline cars around, so this isn't 325 00:20:50,840 --> 00:20:54,040 Speaker 1: gonna be a problem. By the time the gasoline cars 326 00:20:54,119 --> 00:20:56,520 Speaker 1: go away. I don't know if it will be some 327 00:20:56,560 --> 00:21:00,080 Speaker 1: consortium a ford in Toyota and Volkswagen will have the 328 00:21:00,600 --> 00:21:04,880 Speaker 1: charging network equal to Tesla's. Maybe the government rolls went out. 329 00:21:04,920 --> 00:21:07,560 Speaker 1: Maybe a bunch of manufacturers agree in a standard and 330 00:21:07,600 --> 00:21:11,040 Speaker 1: they all use it interoperably. But I don't think that's 331 00:21:11,080 --> 00:21:16,480 Speaker 1: worth the massive premium that Tesla is getting. And PS, 332 00:21:16,520 --> 00:21:20,520 Speaker 1: there are startups like the Lucid Air is a spectacular car. 333 00:21:21,280 --> 00:21:24,280 Speaker 1: Um uh, the I'm gonna get the name wrong, the 334 00:21:24,320 --> 00:21:29,240 Speaker 1: Bolinger Bodinger, the suv and the pickup truck really interesting. PS. 335 00:21:29,359 --> 00:21:32,400 Speaker 1: The the GM Electric Hummer, Oh my god, that that's 336 00:21:32,400 --> 00:21:37,520 Speaker 1: a spectacular vehicle. So elon Muskwaden. We're all going electric. 337 00:21:38,080 --> 00:21:42,080 Speaker 1: And it's a matter of time before it becomes clear 338 00:21:42,240 --> 00:21:45,960 Speaker 1: that Tesla is not going to have a market share 339 00:21:46,080 --> 00:21:50,080 Speaker 1: of the electric market. Um and so at a certain point, 340 00:21:50,680 --> 00:21:53,040 Speaker 1: and and this is the difference between a company and 341 00:21:53,119 --> 00:21:55,600 Speaker 1: a stock. And this is why I have no interest 342 00:21:55,640 --> 00:22:00,160 Speaker 1: in shorting Tesla yet um the stock looks fantastic. Think 343 00:22:00,240 --> 00:22:02,800 Speaker 1: the companies on fire. It's just going higher and higher. 344 00:22:03,240 --> 00:22:06,879 Speaker 1: It's a great story. The narrative behind it is just 345 00:22:07,040 --> 00:22:12,640 Speaker 1: kicking everything else's ass. Eventually that'll probably come to an end, 346 00:22:13,080 --> 00:22:15,520 Speaker 1: and at a certain point the downside in Tesla is 347 00:22:15,560 --> 00:22:18,840 Speaker 1: going to be a great trade. But I don't think 348 00:22:18,840 --> 00:22:22,320 Speaker 1: we're there yet. We're maybe we're closer than further. I 349 00:22:22,320 --> 00:22:25,679 Speaker 1: don't know, but you know the three bullet points elon 350 00:22:25,760 --> 00:22:30,639 Speaker 1: musk one. Everybody's going e V. Tesla stock is on fire. 351 00:22:30,960 --> 00:22:34,440 Speaker 1: Anybody who shorts this is killing themselves. But one day 352 00:22:34,640 --> 00:22:36,639 Speaker 1: they'll say, oh, I wish I had a few pennies 353 00:22:36,720 --> 00:22:38,920 Speaker 1: left to still short this. It's a shame I went 354 00:22:39,000 --> 00:22:43,280 Speaker 1: broke in. Can I give you a fourth bullet point? 355 00:22:44,480 --> 00:22:49,200 Speaker 1: Cathy Wood might be even hotter than Tesla. So I 356 00:22:49,240 --> 00:22:52,240 Speaker 1: don't want to disc Cathy because I think she built 357 00:22:52,280 --> 00:22:57,840 Speaker 1: something spectacular. I um, I watched from a distance that 358 00:22:58,240 --> 00:23:03,679 Speaker 1: entire arc of her minority shareholder exercising the right to 359 00:23:03,840 --> 00:23:09,800 Speaker 1: buy that forced her to buy him out. Now, I 360 00:23:09,840 --> 00:23:11,919 Speaker 1: don't know if she goes on to be a hundred 361 00:23:11,920 --> 00:23:15,760 Speaker 1: billion or a trillion dollar company. I kind of think 362 00:23:15,800 --> 00:23:19,120 Speaker 1: that she may have top picked herself. When so, when 363 00:23:19,119 --> 00:23:22,720 Speaker 1: you see someone who's had just an amazing ride. I mean, 364 00:23:22,800 --> 00:23:26,520 Speaker 1: what was it six years ago? They were a hundred million, 365 00:23:26,560 --> 00:23:30,320 Speaker 1: two hundred million. That's when they went to Reliance as 366 00:23:30,359 --> 00:23:33,760 Speaker 1: their marketer. And there, this and that, and nobody expected 367 00:23:33,800 --> 00:23:37,080 Speaker 1: her to blow up to be a fifty billion dollar company. 368 00:23:37,119 --> 00:23:42,400 Speaker 1: But she just bought them out with a note at 369 00:23:42,520 --> 00:23:45,359 Speaker 1: some ungodly price. It's undisclosed. I don't know if it's 370 00:23:45,400 --> 00:23:48,359 Speaker 1: fifty million, a hundred million. It's kind of weird. It 371 00:23:48,880 --> 00:23:53,200 Speaker 1: reminds me so God bless her for kicking ass. I 372 00:23:53,480 --> 00:23:56,679 Speaker 1: hope the farm goes to a hundred billion dollars. But 373 00:23:56,800 --> 00:24:01,000 Speaker 1: when we look back in hindsight and say, hey, Cathy 374 00:24:01,080 --> 00:24:04,200 Speaker 1: would financed a hundred million dollar buy out of her 375 00:24:04,240 --> 00:24:07,760 Speaker 1: firm after they raised fifty billion dollars and after a 376 00:24:07,840 --> 00:24:10,719 Speaker 1: hundred and sixty percent raise, we may look back at 377 00:24:10,720 --> 00:24:14,240 Speaker 1: that and say she is like the mutual fund buyers 378 00:24:14,280 --> 00:24:17,320 Speaker 1: that managed to top tick the hot funds, she may 379 00:24:17,320 --> 00:24:20,240 Speaker 1: have top ticked herself. I hope that doesn't happen. I 380 00:24:20,280 --> 00:24:23,520 Speaker 1: hope the fund does great. Um. I find her research 381 00:24:23,640 --> 00:24:27,399 Speaker 1: and her approach fascinating, but it would really make for 382 00:24:27,440 --> 00:24:32,200 Speaker 1: an ironic ending to that story. And like as an advisor. 383 00:24:32,320 --> 00:24:36,160 Speaker 1: You guys don't touch anything like that, anything that's highly concentrated, 384 00:24:36,359 --> 00:24:38,879 Speaker 1: you know, because we do talk about this idea of 385 00:24:38,920 --> 00:24:43,359 Speaker 1: a Barbell portfolio very low cost passive and then you 386 00:24:43,359 --> 00:24:46,439 Speaker 1: you know, put some hot sauce on top. And you know, 387 00:24:46,680 --> 00:24:50,080 Speaker 1: because the middle those middle closet indexing active managers seem 388 00:24:50,160 --> 00:24:53,119 Speaker 1: like it's just they're not nobody's interested in that anymore. 389 00:24:53,119 --> 00:24:57,320 Speaker 1: They want either cheap beta or shiny objects, right right, Well, well, 390 00:24:57,359 --> 00:25:00,920 Speaker 1: the you know, the closet indexers, what's the point. Come 391 00:25:00,960 --> 00:25:02,960 Speaker 1: for the high fees, stay for the under performance. It 392 00:25:03,200 --> 00:25:06,800 Speaker 1: does nothing for you. So so if you're gonna be 393 00:25:07,160 --> 00:25:10,840 Speaker 1: pretty um, if you're gonna be pretty beta, and maybe 394 00:25:10,920 --> 00:25:14,159 Speaker 1: you have a lean towards value or small cap or whatever. 395 00:25:14,840 --> 00:25:19,640 Speaker 1: To me, the more interesting aspect of the concentrated positions 396 00:25:20,359 --> 00:25:24,520 Speaker 1: is not us putting clients into a concentrated position, but 397 00:25:24,560 --> 00:25:28,000 Speaker 1: a client coming to us and saying, hey, I'm a 398 00:25:28,080 --> 00:25:33,520 Speaker 1: sea level executive at fill in the blank Exo, Mobile, Amazon, Google, Apple, 399 00:25:33,560 --> 00:25:36,720 Speaker 1: It doesn't matter, and while I love your concept of 400 00:25:36,720 --> 00:25:41,000 Speaker 1: a diversified portfolio, I don't want any more exposure to 401 00:25:41,440 --> 00:25:44,840 Speaker 1: fill in the blank, technology, energy, whatever it is. And 402 00:25:44,920 --> 00:25:48,320 Speaker 1: so That's one of the reasons we've been embracing UM 403 00:25:48,359 --> 00:25:51,919 Speaker 1: for those sort of clients. Direct indexing. We work with 404 00:25:51,960 --> 00:25:55,840 Speaker 1: O'Shaughnessy's product called Canvas, and we have about two million 405 00:25:55,880 --> 00:25:59,280 Speaker 1: dollars in that product and basically what and we with 406 00:25:59,480 --> 00:26:02,600 Speaker 1: one of the beta testers with them and and just 407 00:26:02,720 --> 00:26:06,280 Speaker 1: really blown away with how good the technology is. Basically, 408 00:26:06,320 --> 00:26:09,400 Speaker 1: we could take our core portfolios of you know, fifteen 409 00:26:09,480 --> 00:26:13,159 Speaker 1: mutual funds and give it to them and say replicate 410 00:26:13,280 --> 00:26:17,359 Speaker 1: these with all individual stocks and they run the holdings 411 00:26:17,359 --> 00:26:21,479 Speaker 1: through their their software and they say, here's stocks that 412 00:26:21,560 --> 00:26:26,760 Speaker 1: look exactly like your seventy thirty portfolio UM. And then 413 00:26:26,800 --> 00:26:31,200 Speaker 1: we get to say, okay, separate from this five million dollars. 414 00:26:31,200 --> 00:26:35,880 Speaker 1: This client has ten million dollars in Apple UM employee 415 00:26:35,920 --> 00:26:38,720 Speaker 1: stock options and another two million dollars in Apple stock 416 00:26:39,160 --> 00:26:43,200 Speaker 1: that he can't sell. So a, let's tune out Apple 417 00:26:43,400 --> 00:26:47,640 Speaker 1: from his holdings and be what else trades very much 418 00:26:47,920 --> 00:26:51,000 Speaker 1: like Apple that he doesn't need more exposure to, And 419 00:26:51,040 --> 00:26:53,639 Speaker 1: then we tune that out and so they get a 420 00:26:53,680 --> 00:26:59,720 Speaker 1: diversified portfolio without all of the hyper concentration that they 421 00:26:59,760 --> 00:27:02,240 Speaker 1: come to us. There's a couple of other things This 422 00:27:02,320 --> 00:27:05,399 Speaker 1: software does. The E s G aspect of it is 423 00:27:05,480 --> 00:27:10,840 Speaker 1: mind blowing. How specifically you can tune out different things, 424 00:27:11,280 --> 00:27:17,280 Speaker 1: whether it's gun manufacturers, or reduce the exposure to companies 425 00:27:17,280 --> 00:27:20,760 Speaker 1: that never have had a woman on their board of directors, 426 00:27:20,800 --> 00:27:25,119 Speaker 1: like you can really fine tune this. The software really 427 00:27:25,320 --> 00:27:28,040 Speaker 1: is just amazing and it's it's one of the better 428 00:27:28,160 --> 00:27:32,399 Speaker 1: E s G projects products I've I've ever seen. Okay, 429 00:27:32,480 --> 00:27:35,040 Speaker 1: a couple of questions on this, So customer dexting and 430 00:27:35,080 --> 00:27:38,920 Speaker 1: director next to get something we've been tracking UM Parametric 431 00:27:39,160 --> 00:27:42,480 Speaker 1: custom Core is the big one. It didn't really see 432 00:27:42,560 --> 00:27:45,240 Speaker 1: much in flows last year. You guys are definitely tip 433 00:27:45,280 --> 00:27:49,639 Speaker 1: of the spear type advisors. But it's I the E 434 00:27:49,840 --> 00:27:53,119 Speaker 1: T F and Vanguard and a couple. You can get 435 00:27:53,160 --> 00:27:56,280 Speaker 1: a whole portfolio for four basis points and you're not 436 00:27:56,359 --> 00:27:59,640 Speaker 1: making active bets, so there's no chance you're gonna underperform 437 00:27:59,720 --> 00:28:03,000 Speaker 1: because as you are the market, you're gonna take active 438 00:28:03,000 --> 00:28:07,240 Speaker 1: bets and pay up. Isn't that against where where it 439 00:28:07,280 --> 00:28:09,440 Speaker 1: all went? It all went from complex to simple. Isn't 440 00:28:09,440 --> 00:28:13,240 Speaker 1: this going the other under direction? Yes and no. So 441 00:28:13,240 --> 00:28:18,119 Speaker 1: so first I'm not of the camp that things direct 442 00:28:18,200 --> 00:28:23,359 Speaker 1: indexing eats passive. I think it's a very specific niche 443 00:28:23,600 --> 00:28:28,960 Speaker 1: with a very specific audience. UM, and the three key 444 00:28:29,040 --> 00:28:33,439 Speaker 1: audiences are a the concentrated equity position that you have 445 00:28:33,520 --> 00:28:36,560 Speaker 1: to work around. That's one be the E S G. 446 00:28:37,560 --> 00:28:40,600 Speaker 1: Um investor who really wants the ability to fine tune 447 00:28:40,640 --> 00:28:44,520 Speaker 1: it in a lot of ways and see the high 448 00:28:44,680 --> 00:28:48,920 Speaker 1: income as opposed to high asset investor who has a 449 00:28:49,040 --> 00:28:54,240 Speaker 1: giant tax bill. The tax lost harvesting ability when you 450 00:28:54,280 --> 00:28:58,440 Speaker 1: have two thousand stocks as opposed to twelve mutual funds, 451 00:28:59,120 --> 00:29:02,400 Speaker 1: it's world's apart. It's it's you know, hundreds and hundreds 452 00:29:02,440 --> 00:29:06,240 Speaker 1: of basis points versus I could squeeze twenty or thirty 453 00:29:06,240 --> 00:29:11,360 Speaker 1: basis points swapping this total market funds for that total 454 00:29:11,440 --> 00:29:15,600 Speaker 1: market funds. This is just a huge, huge um source 455 00:29:15,640 --> 00:29:18,880 Speaker 1: of tax alpha. If I could use a horrific cliche 456 00:29:20,440 --> 00:29:23,000 Speaker 1: and so I agree the tax alpha and it makes 457 00:29:23,000 --> 00:29:25,000 Speaker 1: so much sense. The E S G is hard to 458 00:29:25,120 --> 00:29:27,200 Speaker 1: argue with because E S G. E T s aren't 459 00:29:27,200 --> 00:29:29,200 Speaker 1: going to cut it if you have specific views, because 460 00:29:29,200 --> 00:29:33,720 Speaker 1: it's a copy cutter approach. So subjectivity is great. UM, 461 00:29:33,840 --> 00:29:37,200 Speaker 1: that's I get that the tax alpha. At first, you're 462 00:29:37,200 --> 00:29:40,320 Speaker 1: gonna run out of losses to use at some point 463 00:29:40,440 --> 00:29:43,160 Speaker 1: and if a bear market hits, what the e t 464 00:29:43,400 --> 00:29:46,200 Speaker 1: s and the mutual funds that can that advantage should 465 00:29:46,200 --> 00:29:49,320 Speaker 1: go away, and then your left giving all your money 466 00:29:49,320 --> 00:29:52,040 Speaker 1: to one company? Does that? Is that a little concerning? 467 00:29:52,120 --> 00:29:54,240 Speaker 1: Like whereas when I go food shopping, I like to 468 00:29:54,240 --> 00:29:57,000 Speaker 1: get different brands, so I don't want to give my 469 00:29:57,080 --> 00:30:00,080 Speaker 1: whole I don't know, there's something about having choy some 470 00:30:00,240 --> 00:30:03,160 Speaker 1: different brands and sure, um, well that's why I said, 471 00:30:03,200 --> 00:30:06,120 Speaker 1: I don't. I don't see us with one eight billion 472 00:30:06,240 --> 00:30:08,719 Speaker 1: and I have two million in this. I don't see 473 00:30:09,160 --> 00:30:13,200 Speaker 1: the whole thing rotating over to that anytime soon. That said, 474 00:30:14,000 --> 00:30:20,440 Speaker 1: the complexity is certainly an aspect there. The software covers it. 475 00:30:20,960 --> 00:30:24,880 Speaker 1: The cost and credit O'Shaughnessy with something very very clever 476 00:30:24,960 --> 00:30:27,080 Speaker 1: that they did. They said, if you set this up 477 00:30:27,120 --> 00:30:29,760 Speaker 1: as pure beta, there's no cost to it. We're only 478 00:30:29,760 --> 00:30:33,080 Speaker 1: going to charge you for the active share. So our 479 00:30:33,120 --> 00:30:38,640 Speaker 1: portfolios are about a twenty lean towards value and small cap, 480 00:30:39,080 --> 00:30:43,920 Speaker 1: and so you're only paying a fee on that um 481 00:30:44,000 --> 00:30:49,240 Speaker 1: and you're you're basically getting it no charge because the 482 00:30:49,280 --> 00:30:53,680 Speaker 1: transactions are free, the holding is free, and so yes, 483 00:30:53,800 --> 00:30:57,880 Speaker 1: you're adding a level of complexity, but surprisingly you are 484 00:30:57,960 --> 00:31:01,600 Speaker 1: not increasing the fees, so it's not six BIPs, but 485 00:31:01,800 --> 00:31:04,320 Speaker 1: it'll end up being you know, twenty or thirty BIPs, 486 00:31:04,400 --> 00:31:07,800 Speaker 1: which is pretty reasonable. And that's before you know the 487 00:31:07,880 --> 00:31:11,440 Speaker 1: tax advantage. So I don't see a cost penalty with 488 00:31:11,520 --> 00:31:16,800 Speaker 1: this if you're that type of client who's got a 489 00:31:16,840 --> 00:31:20,040 Speaker 1: bigger income and a lot of tax um issues they're 490 00:31:20,080 --> 00:31:22,680 Speaker 1: dealing with. So Barry, I just want to get your 491 00:31:22,680 --> 00:31:25,120 Speaker 1: take on this too, which is that obviously Vanguard is 492 00:31:25,120 --> 00:31:27,600 Speaker 1: getting bigger and black Rock to do oppoly. They now 493 00:31:27,680 --> 00:31:32,360 Speaker 1: want about of most stocks with a concern. I think 494 00:31:32,360 --> 00:31:34,920 Speaker 1: that distortion concerns have died down a little bit, like 495 00:31:35,040 --> 00:31:37,040 Speaker 1: you know, because they're seeing stocks go up and down. 496 00:31:37,040 --> 00:31:40,040 Speaker 1: So clearly Active is in control. But what is bubbling 497 00:31:40,120 --> 00:31:43,400 Speaker 1: up is how are they voting? And should two companies 498 00:31:43,440 --> 00:31:46,240 Speaker 1: have that much power in their voting? And I guess, 499 00:31:46,240 --> 00:31:49,280 Speaker 1: as somebody who owns Vanguard and just watches this stuff, 500 00:31:49,920 --> 00:31:52,000 Speaker 1: what do you do? You think they have too much power? 501 00:31:52,040 --> 00:31:54,520 Speaker 1: And if they do, what should be done? So we 502 00:31:54,600 --> 00:31:58,200 Speaker 1: own Van Garden black Rock also, and I just saw 503 00:31:58,400 --> 00:32:01,320 Speaker 1: the other day the crossed I think the Financial Times 504 00:32:01,360 --> 00:32:05,400 Speaker 1: reported um Vanguard crossed seven trillion, which is a pretty 505 00:32:05,400 --> 00:32:11,080 Speaker 1: big milestone. Um, do they have too much power? Well, well, 506 00:32:11,120 --> 00:32:14,400 Speaker 1: first of all, any investor who wants to vote their 507 00:32:14,440 --> 00:32:20,440 Speaker 1: own you know, um individual proxies can we just know 508 00:32:21,600 --> 00:32:25,240 Speaker 1: from experience, nobody does that. Nobody really cares so um 509 00:32:25,360 --> 00:32:29,520 Speaker 1: or or or they don't care enough to vote the proxy. 510 00:32:29,640 --> 00:32:31,920 Speaker 1: And so when you look at black Rock and you 511 00:32:31,920 --> 00:32:37,200 Speaker 1: look at Vanguard as fiduciaries for their clients, the you 512 00:32:37,240 --> 00:32:40,640 Speaker 1: know the I want to reframe the question. The better 513 00:32:40,680 --> 00:32:44,600 Speaker 1: way to my response to that question is another question, 514 00:32:44,640 --> 00:32:48,680 Speaker 1: which is do you think that black Rock and Vanguard 515 00:32:49,280 --> 00:32:55,280 Speaker 1: with six of the outstanding equities seven trillion for Vanguard, 516 00:32:55,360 --> 00:32:59,000 Speaker 1: what what is black Rock? Eight points something trillion? Does 517 00:32:59,080 --> 00:33:04,560 Speaker 1: anybody believe for a moment they want to get into 518 00:33:04,600 --> 00:33:11,840 Speaker 1: the business of voting proxies against the interest of their investors. No, 519 00:33:12,360 --> 00:33:16,480 Speaker 1: this isn't the arguments the Milton Friedman argument that no, 520 00:33:17,440 --> 00:33:21,400 Speaker 1: banks and brokers would never behave ridiculously and blow themselves 521 00:33:21,520 --> 00:33:25,080 Speaker 1: up by using leverage um, and therefore they don't need 522 00:33:25,120 --> 00:33:28,440 Speaker 1: to be they don't need to be regulated. That argument 523 00:33:28,560 --> 00:33:31,920 Speaker 1: is very, very different, because they're engaging in a risky 524 00:33:31,960 --> 00:33:37,600 Speaker 1: behavior for further profit. This is hey, maybe there, This 525 00:33:37,680 --> 00:33:44,440 Speaker 1: is what the legal law the law review community, in 526 00:33:44,560 --> 00:33:48,520 Speaker 1: desperate need of topics to write about, has been, you 527 00:33:48,560 --> 00:33:53,560 Speaker 1: know about and and it's kind of silly stuff. I mean, 528 00:33:53,640 --> 00:33:56,480 Speaker 1: I guess there is a risk that a big private 529 00:33:56,520 --> 00:34:00,920 Speaker 1: company like Vanguard or a big publicly traded company like 530 00:34:01,000 --> 00:34:06,280 Speaker 1: black Rock, maybe they might in a given instance abuse 531 00:34:06,440 --> 00:34:11,319 Speaker 1: their seven percent market share and vote a proxy in 532 00:34:11,360 --> 00:34:15,200 Speaker 1: a way on a given company that is against their 533 00:34:15,280 --> 00:34:22,520 Speaker 1: interests but against the investor's interest. But why why are 534 00:34:22,600 --> 00:34:24,719 Speaker 1: they going to go down that rabbit hole? They own 535 00:34:26,040 --> 00:34:33,120 Speaker 1: some percentage of twenty companies like Now, that's why you 536 00:34:33,160 --> 00:34:36,160 Speaker 1: get these letters as to why from Larry Fink as 537 00:34:36,160 --> 00:34:37,920 Speaker 1: to why you should be more green and you should 538 00:34:37,920 --> 00:34:41,960 Speaker 1: have a diverse portfolio board of directors, And he's doing 539 00:34:42,000 --> 00:34:47,279 Speaker 1: it by letters because he can't do it by proxy. Otherwise, 540 00:34:48,520 --> 00:34:51,160 Speaker 1: as our colleague Matt Levin would say, that would be 541 00:34:51,680 --> 00:34:55,120 Speaker 1: you know, the basis of securities litigation. You're giving an 542 00:34:55,120 --> 00:34:58,560 Speaker 1: excuse for lawyers to sue you because you're not operating 543 00:34:58,600 --> 00:35:01,319 Speaker 1: in your in your client's best interest. So that's a 544 00:35:01,360 --> 00:35:04,520 Speaker 1: long answer to I don't really see that as as 545 00:35:04,560 --> 00:35:08,839 Speaker 1: a realistic um thing that's going to happen, and the 546 00:35:08,920 --> 00:35:12,239 Speaker 1: first time it were to happen, the outcry would be 547 00:35:12,320 --> 00:35:15,920 Speaker 1: so you know loud, it would never happen again. There 548 00:35:15,920 --> 00:35:19,400 Speaker 1: would be new restrictions put in place internally. But you 549 00:35:19,480 --> 00:35:22,839 Speaker 1: have a really nice business. Why mess with it for 550 00:35:22,880 --> 00:35:28,680 Speaker 1: something as stupid as a proxy vote? Who cares? Okay, 551 00:35:28,719 --> 00:35:33,600 Speaker 1: here's my question. When we get back two normal times, 552 00:35:33,760 --> 00:35:37,320 Speaker 1: whatever that looks like, what's the thing from this time 553 00:35:38,040 --> 00:35:42,680 Speaker 1: that you want to make sure that you retain. So 554 00:35:42,800 --> 00:35:45,200 Speaker 1: there's a couple of things we we've talked about this, 555 00:35:45,400 --> 00:35:52,680 Speaker 1: my wife and I, my partners and I. First, UM, 556 00:35:54,120 --> 00:35:55,920 Speaker 1: I've lived in New York my whole life, and the 557 00:35:55,960 --> 00:36:00,080 Speaker 1: winters here are less than desirable. And while I'm not 558 00:36:00,200 --> 00:36:04,400 Speaker 1: a giant fan of Florida, I've always fantasized of just 559 00:36:04,480 --> 00:36:07,440 Speaker 1: going someplace warm and sunny for a month or two 560 00:36:08,080 --> 00:36:12,040 Speaker 1: and working remote. And I always wondered if that was doable, 561 00:36:12,120 --> 00:36:15,960 Speaker 1: and and now we all know it's completely doable. Um. 562 00:36:16,120 --> 00:36:20,240 Speaker 1: The more r I A related aspect to that, UM 563 00:36:21,239 --> 00:36:24,600 Speaker 1: we've discussed internally. My partner JESSH. Brown wrote a long 564 00:36:25,280 --> 00:36:29,320 Speaker 1: blog post about this. You now know as an r 565 00:36:29,400 --> 00:36:33,640 Speaker 1: I A that local doesn't mean anything. You have a 566 00:36:33,760 --> 00:36:38,920 Speaker 1: national potential client base because nobody saw anybody for the 567 00:36:38,920 --> 00:36:42,200 Speaker 1: past nine months and everything worked fine, and so whatever 568 00:36:42,280 --> 00:36:46,840 Speaker 1: hesitancy there was about I need a local advisor, that's gone. 569 00:36:47,040 --> 00:36:51,360 Speaker 1: Because if we're doing this over Zoom or Google Hangout 570 00:36:51,480 --> 00:36:57,040 Speaker 1: or whatever your preferred technology is, if I'm down the 571 00:36:57,080 --> 00:36:59,480 Speaker 1: block or across the country, it's meaningless. And I think 572 00:36:59,520 --> 00:37:05,080 Speaker 1: that's gonna potentially change the industry to some degree. Um, 573 00:37:05,239 --> 00:37:08,600 Speaker 1: the the ability to hire people remotely that I don't 574 00:37:08,600 --> 00:37:11,160 Speaker 1: have to come into the office every day, So I think, 575 00:37:11,360 --> 00:37:15,359 Speaker 1: I think that's going to be a change. And then 576 00:37:15,400 --> 00:37:17,799 Speaker 1: the other thing you kind of come to realize is 577 00:37:17,840 --> 00:37:21,440 Speaker 1: the advantage of just a clean sheet of paper and 578 00:37:21,560 --> 00:37:24,600 Speaker 1: just saying to yourself, Hey, I have to drop all 579 00:37:24,680 --> 00:37:28,319 Speaker 1: my assumptions. I can't assume that I have to be 580 00:37:28,360 --> 00:37:30,920 Speaker 1: in the office five days a week. I can't assume 581 00:37:31,320 --> 00:37:33,840 Speaker 1: that clients want to meet us all the time. I 582 00:37:33,880 --> 00:37:36,239 Speaker 1: can't assume that we have to have, you know, a 583 00:37:36,280 --> 00:37:38,839 Speaker 1: big office in the city. That I think a lot 584 00:37:38,880 --> 00:37:45,080 Speaker 1: of fundamental assumptions that had inertia and a general rational 585 00:37:45,200 --> 00:37:50,600 Speaker 1: for their existence. Um, get get a clean um review 586 00:37:50,680 --> 00:37:54,440 Speaker 1: because it's clear that a lot of our assumptions about 587 00:37:54,480 --> 00:38:00,319 Speaker 1: everything turn out to be wrong. Very ahole. Thanks joining 588 00:38:00,360 --> 00:38:09,680 Speaker 1: us on Trillians. As always, Thanks guys, thanks for listening 589 00:38:09,760 --> 00:38:12,200 Speaker 1: to Trillions. Until next time. You can find us on 590 00:38:12,239 --> 00:38:17,160 Speaker 1: the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, and 591 00:38:17,200 --> 00:38:19,480 Speaker 1: wherever else you like to listen. We'd love to hear 592 00:38:19,520 --> 00:38:22,600 Speaker 1: from you. We're on Twitter, I'm at Joel Webber Show, 593 00:38:22,920 --> 00:38:26,520 Speaker 1: He's at Eric Baltunas, and you can find Barry at 594 00:38:26,680 --> 00:38:30,560 Speaker 1: rid Holes. This episode of Trillions was produced by Magnus Hendrickson. 595 00:38:31,080 --> 00:38:34,480 Speaker 1: Francesca Levy is the head of Bloomberg Podcast. Bye.