Animal Spirits Podcast - Talk Your Book: A Bull Market in Tickers

Episode Date: March 6, 2023

On today's show, we are joined by Ed Egilinsky, Managing Director and Head of Alternatives at Direxion to discuss how to use leveraged ETFs, the cost of leverage, exciting thematics in 2023, and much more! Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   (Wealthcast Media, an affiliate of Ritholtz Wealth Management, received compensation from the sponsor of this advertisement. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information.) Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by direction to learn more about investing in their ETFs. Visit Direction with an X-I-O-N.com. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holtz wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Rithold's wealth management may maintain

positions in the securities discussed in this podcast. On today's show, we had Ed Aguilinski from Direction, and I think you're going to enjoy this conversation. He's, is a firecracker way to describe somebody? Is that fair game? He's got spunk. Personality. He's got energy. And what I like about what they're doing is these products, they generate a lot of, I don't of controversies the right word, but maybe there's a lot on the education aspect or of the potential misunderstanding of how leverage works and where it fits inside a portfolio and how you should think about holding them if you do. And to their credit, I think they're very upfront and center about making sure that their users or their investors and clients are educated in what

they buy before they buy it. Well, to your point that you said in the show, obviously there's the money that flows into some of these products is a lot of money, especially for the ETF space, when you think about some funds that never really get off the ground, there obviously is demand for some of this stuff and to have leverage or to have some sort of niche strategy. I really wish we could see where the money is coming from. We spoke about the Tesla one and a half time bull product, and there's way more dollars in there than I would have originally thought. And I just can't believe that that's all retail money.

I mean, obviously it's not all retail money. But what would you think, Ben? The mix between retail and institutional here, is that you're saying? Yeah. That's a good question because you never know how many. How many hedge funds are using these things to change their risk profile without, as Ed mentioned, taking on more costly leverage or doing a huge overhaul in the portfolio when you can just do this to sort of offset some risk? You can't know if these are just speculative trades or if there are hedges or maybe a little bit of both. Yeah, it's interesting to hear how it's like a malt to the flame in terms of what people are looking for, whether they want to hedge rising rates or falling rates or rising stock market, falling stock market.

and how once the trend catches on, how the money just flows in a hurry to these things. We spoke about, was it SPDN, the bearish S&P 500 ETF? If anybody wants to calculate the dollar weighted performance, I'd love to know because just eyeball on the chart, it looks like people increase their bets against the S&P 500 throughout all of 2022 and sharply reversed in 2023. So it looks like maybe that was a good trade in aggregate. I guess if you're using a trend rule on that, that would make sense. Anyway, we get into a lot of tickers.

Credit to Ed, I think you broke the record. I think you broke the Animal Spirits record for most tickers mentioned on the show. So I hope you enjoy our conversation with Ed Aguilinski from Direction. Welcome to Animal Spirits. We are joined today by Ed Aguilinski. Ed is the managing director at Direction. Thank you for joining us, Ed. Yeah, thanks, Michael.

Thanks for having me. I don't know if I told you this last time you were on, but when I first started trading, which was, I guess, 2009 or so, the first vehicle that I used was F-A-Z, which makes sense. After the banks fall 90%, you want to short them, right? No, I'm just kidding. I was completely just a little bit late, and I used to refer to direction as direction as direction. I think it took me a couple of years. Am I the only idiot who pronounced it direction?

No, actually, most people, and including my interview, although hopefully this won't go too public. I disclose that now. So you don't mind being French. It's just that we happen to not be. It's just to play on words. All right. So on Animal Spirits earlier in the day, Ben and I were recording, we were talking about

this new thing called Zero Days to Expiration Options. And this is a new way for people to get leverage. And direction is, at least in my mind, synonymous with leverage. I know that you have thematic products, which we're going to talk about. But let's just start with the basics. So you've got these leverage strategies that do the daily reset. You'll talk about decay and why they're not buying home. vehicles, but could you just let us under the hood and explain to us, how are you getting this

daily reset? What sort of option strategies is direction employing to get that sort of leverage? Yeah, so let's just take a step back. These are structured as exchange traded funds or ETFs. We're not using at all options to obtain the leverage. So when we create, let's say a triple leverage like FAS or FAS, which is triple leverage on the financials, for example, in the of our bull fund, which are designed, of course, to be short-term trading vehicles for active traders, we're going to own either a basket of stocks or the physical ETF in conjunction with what's called a swap. That swap is a derivative that enables us to provide that leverage on a daily basis, whatever that leverage point is. One thing to note is the word daily is within our

ETFs. Why is that? Because the daily reset of leverage, we will design to track. that underlying index, whatever it is for a given single day. But after that, depending on the path of that underlying index, there's going to be compounding that could impact you positively or negatively. So timing matters with this. The trend matters in your direction in terms of how that compounding impact could result into either gains or losses depending on your timing. So, Ed, for those who did not take level two or three of the CFA exam, what is a swap? Swap is just basically a derivative. It's an exchange of payment. In this case, we're giving a counterparty our assets to provide leverage exposure to whatever that underlying index is. In return, we're paying a fee for that. When you look at it, this is probably a cost-efficient way to get exposure to leverage. A lot of your listeners, if they use margin, rates are going up that could adversely affect them. Here, you could get different. different leverage points, whether one and a half two or three X on the bull side or inverse on the

short side at various leverage degrees at 95 basis points, in addition to a little bit of that cost of those swaps. So at the end of the day, I think these are cost efficient vehicles, but they're short-term trading vehicles as well. And on the inverse side, we'll talk about this a little later. Shorting might even be more difficult for the typical client. Borrow costs, whether or not their accounts are even eligible for that through an ETF now packaged ETF. You can take a short position so you don't have the unlimited liability. And in an ETF wrapper, your liability is limited to your initial investment. So these are clean ways to invest in leverage or inverse, but you have to be careful with the daily reset and the compounding. I'm curious how the trend in

the market has been impacting things because obviously one of the things we see is that after a huge upswing, people look back and go, ah, I should have had some leverage on. I'm going to go into the bullish stuff. And after you have a huge down swing like 2022, maybe if you were thinking, I should have been shorter, I should be more bearish. Do you see that in your flows where a year like last year caused a lot more people to use the more bearish product and try to play the market on the short side? We definitely saw that like SPDN, for example, our non-leveraged inverse of the S&P 500. We saw a lot of interest both in retail and institutional investors that were using it either to reduce beta within a client's portfolio or an outright short trade without the leverage

aspect of it because it's a non-leverage inverse SPDN. But we did see flows, though, in different bull funds trying to catch the falling knife, so to speak. And there were periods of time where the equity markets last year showed some upside. So you just had a time that well. So we saw massive inflows both in our bull and bear, S-O-X-L, S-O-X-S, which are triple-leverage bull-and-bear semiconductor based on tracking the ice semiconductor index. Biotech had a terrible year last year, but there were little spurts where people would try and take advantage of the upside, and that's through Lab U or on the short side Lab D as well as our triple leverage biotech based on the S&P biotech index as well.

Hey, how do you have all these tickers? You have like a fact sheet right in front of you? Not at all. I've been here 11 years, so it just comes natural to me. That's for sure. It's like an eye charge, except I know in advance. When you look at the flows last year, you saw a lot of individuals trying to come in on the bull side, but you had some significant growth in terms of the inverse or short side

trying to basically play into the trend, which was mostly downward. So S-O-X-S, for example, or SPXS, which are a triple leverage S&P, bear and semiconductor saw massive inflows last year. In fact, due to performance and inflows got over a billion dollars each. So that's the one that's what happened. I'm sorry. I'm sorry. That's an animal spirit isn't. When you say something, you know, you don't want to brag. You say not to brag. Yeah, no, exactly. Not to brag. One of the few people that will be on this show that are agnostic. We have bull and bear fun. So the whole question for us or the whole importance is we have the tools. Your traders out there can

pick the direction. And volatility is really key. Directional volatility in either direction. That's really paramount. So I'm looking at this chart, SPDN. SPDN. It's the S&P 500 daily one-time bear. So when you're saying that there's no leverage here, does this mean that it tracks the inverse kind of perfectly? So if the S&P was down 19, this would be up. Well, how does that work actually in a down year? It's a good question. So, for example... You're just short, right? So you get the downward gain?

What we do is it's on a daily basis. This is going to be compounding in a non-leverage vehicle on a long-only fund as well or an individual stock. The same thing will hold true on a non-leveraged inverse. The daily reset every day, there's going to be some compounding to a lesser effect to a 3x inverse. So, last week, for example, SPDN was down right around what the S&P was down for the year. but there could be some deviation there. It's just going to be much less deviation. You mean it was up for what

right? Yeah, it was up for the order. Exactly. S&P because it's an inverse, so the S&P was down about 18%. SPDN was probably up about 17. So right around there. But at the end of the day there's going to be some levels of compounding the direction mostly with the S&P was downward.

So that trend was up. In a non-leveraged inverse though, you may want to hold those a little longer or the potential to hold those longer because there's no leverage associated with it. So the compounding is going to be much more minimal over time than a two or three X bull or bare products. So that is why a lot of financial professionals are more apt to use that for clients in terms of either hedging out the beta or reducing the beta of a long portfolio, particularly large cap equity, or if they feel

that the market's going to go down and they don't want to have that leverage impact, if If they're wrong, here's a way to do that in a non-leveraged S&P. Plus ERISA counts, most people can't shorten their ERISA accounts with SPDN because it's an ETF, in a lot of cases they'd be eligible. I would make the argument that people don't need to be shorting stocks in their retirement account. That's just me. I'm a traditionalist.

You don't need to short stocks in retirement account. However, I'm looking at the total assets under management in this SPDN product. The reason why I ask is because the AUM started at $127 million to end 2021. shot up all the way to $773 million by the end of the year. It peaked on January 6th, and it has come down dramatically. So basically, almost straight up the total assets in 2022, and it backed off from a peak of 773 on January 6th down to 435 today. This is serious money, and I don't think that this is people trading their retirement accounts. This has to be professional investors. Is that the sense that you get? For SPDN, that has been mostly through

financial professionals, whether registered investment advisors or money managers. And that's why you might see more of those flows be more dramatic in nature, both to the upper downside because of the fact they're putting it as part of a portfolio allocation tactically for a period of time. We're also seeing a lot of financial professionals use SPDN because of the fact that it's a little more cost effective than our competitor out there that also offers a non-leverage inverse S&P. But we are basically 40 basis points cheaper. So for anybody using this tactically as a hedge or as an outright inverse trade, if they're holding it a little longer period of time, fees matter, and especially to the financial professional. So this is a little lower cost way to get that non-leverage inverse

S&P exposure through SPD. So you mentioned those other funds that shot up to a billion dollars whatever last year. You must just be used to this at this point where you have these funds that depending on the market environment or trend, we'll see a ton of money come in and then maybe a ton of money come out and then it goes into another thing where this probably happens with a lot of your products then. That's correct. On the leverage and inverse side, and that's what we want to do. That's what they're designed to do. We like to see turnover within a given ETF. We could have days, for example, where you could have a significant turnover. And that's what these are designed to do. They're designed to short-term trading vehicles where people need to really monitor these on a day-to-day basis.

assets reflect that in terms of flows. We could have a given ETF turn over completely in two to three days in terms of their total assets. And that's a sizable ETF. And why is that? Because people are using these the right way as trading tools and looking at it on an intraday and day-to-day basis. So we're used to it, and that's what they're designed for. Ben, I want to ask you a question. a little twist on this episode. So remember when they launched the Tesla levered product? The single share ETS, right? So they launched that back in, is this right?

August 2022. So this thing is not even a year old. How much money do you think is in this product? Again, think about what Tesla did since they launched it. Tesla had a 60% drawn on more? So what, $50 to $100 million in it? $372. And this is in the long?

Because you have... It's one and a half times Tesla bull. Who is... I mean, listen, credit to them. Whoever caught this caught a massive move in Tesla. This is crazy, no? Listen, we decided to look at single-stock ETFs. We launched five of the biggest megap names, including Tesla.

The one common theme between all of those five pairs of stocks, as you just stated, Michael, one and a half bull and non-leverage inverse bear. Tesla, of course, is the most polarizing of those stocks. in terms of headlines, and people love to trade it. I just saw a stat the other day that Tesla's volume is double SPY over the last couple of weeks. And the volume in Tesla in a given single day has been greater than the next five stocks collectively over the last couple of weeks. I don't get it. I need answers. Who's doing this? Well, in this case, a lot of retail traders looking to trade short-term price movements based on headlines,

pre and post earnings. You just have a big crowd that follows Tesla and Elon Musk. As a result of that, people want to trade the bull and the bear side. We have some decent assets in the bear side as well. Where we're seeing this being used on the institutional side is, again, somebody that doesn't want to employ margin, the costs associated with it. This is lighter leverage associated on the bull side. But on the bear side, keep in mind, a lot of investors might have embedded gains, albeit not last year in the case of Tesla, Microsoft, Apple, Google, Amazon. Those are the five pairs we have. So when you look at it, there might be some individuals, particularly financial professionals, that say, you know what, I don't want to have these embedded gains from holding these on the

long side long term. Let me do a non-leverage inverse to hedge out some of that risk so I don't have to sell in a taxable account in particular. Do you see a spike in volatility around the earnings days for these companies as well where people want to make a directional bet that something after hours is going to go big one way or the other? Definitely, pre-imposed earnings for sure, or some headlines that take place. Look at Microsoft and Google, for example, the AI search race between the two. That type of headline news, where you saw a divergence in a couple of days between Microsoft's performance and the stock and Googles, are what people like to trade off of.

And of course, we have the one and a half times bull in Microsoft and the non-leverage bear. And the same thing with Google. And that's MSFU and MSFU and MSF. in the case of Microsoft, Bull and Bear, and GGLL and GGLS in the case of Google. We're going to break a record. We're going to break an animal spirits record for a number of tickers' match. We love it. Let's keep going.

Ed, I have a question. How does this impact the volume of the underlying? So, like, if you're trading in TSLL, so that's the bull one that I said, it's $375 million in assets, which is pretty stunning, a 372 to be precise as of this recording, how does trading in here impact the underlying or does it not because you're using derivatives? Well, the underlying is going to trade onto itself. What is key, though, with any of our leverage and inverse ETF, should bring up a good point, whether it's single stock or a broad basket of stocks is the underlying liquidity. And when you look at our products, all of our leverage and

inverse products, whether it's single stock or broader basket, are all equity or fixed income benchmarks. So again, when you look at our products, we're not a derivative of a derivative. What do I mean by that? Leverage on a commodity. Leverage on the VIX. So these are all actually underlying indices that we're tracking that are equity based made up of stocks or in the case of fixed income. In our case, looking at the 20 plus year treasury or the 7 to 10 year treasury using a combination of physical ETF in case of the bullside and a swap, which provides that leverage as well. Ed, you mentioned the cost of leverage. I think a lot of people who have like a Robin Hood account are probably surprised because a couple years ago, you were being

charged two or three percent to trade on margin. A lot of people thought that was a great deal when rates were lower. Now the rates are high, you're probably seeing margin rates of seven to eight percent. That's your cost of leverage you're talking about there. What is the difference in some of these strategies? Obviously, it's probably going to be different for an individual stock in the market as a whole, but what is the cost of leverage that you're employing here, typically? Well, keep in mind, it's 95 basis points on an annualized basis. So that's high relative to a cheap beta ETF. To me, it's competitive when you're looking at other alternatives to obtain that leverage,

plus your liabilities limited to your initial investment when you're putting it in an ETF. A lot of accounts may not even be eligible for margin, and those that are with rates rising, of course, those margin costs are going to be higher. Where are the costs for us, in addition to that 95 basis points? within that swap because we deal with some of the biggest banks that are providing us that leverage inverse exposure on a daily basis. And as a result of that, there's some fees associated with it. It's still cost efficient relative to what you can do now to leverage yourself from a

margin account standpoint. And shorting, most people don't even have the ability to do that. Don't want the unlimited liability. Don't want the borrow costs. Again, here's a way to do it in a packaged ETF. There's been a lot of volatility and interest rates, which is something that had not happened in a long time. Are people using fixed income products to gain leverage that way? Are there any thematic interesting things going on in the fixed income market? What do you see there? Well, look at today, for example, look at the CPI numbers. It's what I'm saying. Yeah, it came in a little hotter than what they anticipated. So maybe the Fed is not going to be as Dovish's people are thinking, or maybe there's going to be more rate hikes than anticipated,

regardless, trading off that news, we have a number of ETFs people could use, both on the long end of the curve, the 20-plus-year treasury, as well as a little bit on the shorter end of the curve, the 7-10 year. So we have what's called TMF and TMV, which is our triple leverage 20-plus year treasury. How we getting exposure to that? A lot of your listeners are familiar with TLT, so we own TLT, the physical ETF, and in the case of the bull, a swap on that TLT to provide the leverage. And on the inverse side, which is TMV, that's the inverse 20 plus your treasury, triple leverage. We own a swap on TLT.

And then we have the 70 years. There's $1.3 billion in these two 20 years. There's $870 in the bull and $500 million. I mean, these are, again, I'm astounded. These are big, big numbers. Michael, Ed broke the right. record for tickers, you're breaking the record for AUM, mentioned. We've got to balance the other round.

Clearly, I know that a lot of people have issue or misunderstandings or, but whatever. Listen, the point is, there is demand for this. Clearly, there is a lot of demand for this. Both institutionally and retail. I will say one thing, Michael and Ben, most people when they hear a bull fund triple leverage, first of all, short term in this case, this is bullish, let's say TMF on a 20 plus year treasury, what does that mean? Well, you want bond prices to rise in that case. That means rates going down. People have to understand that, number one. They shouldn't be invested in these if they don't

understand the inverse relationship between bond price and yield. So when somebody's looking at these vehicles, they have to understand their short-term trading vehicles that you're betting on which direction in this case, the 20-plus year is going. And TMF is representing bull, which means that you want rates going down, TMV representing inverse or bare. where you want rates to rise, bond prices to fall. You have to know these mechanisms, and any sophisticated trader going in needs to know how that relationship works with bonds before they should ever consider, forget investing in a triple leverage

before they should invest in bond ETFs in general. We have a lot of retail and a lot of institutions, sophisticated, high-velocity traders in the case of retail. Education is the most important things for us, Michael and Ben. And at the end of the day, our website does an excellent job of videos discussing daily resetting of leverage, the impact of compounding, the time you hold it matters. All of these things people should understand before even contemplating investing in leverage and inverse in general.

Yeah, it's such a great point. I think maybe we take for granted the fact that we know that volatility is a tax in your returns. So the more magnified the leverage, especially on a daily basis. So I probably wrote several articles in 2015 warning about or. like what people need to know before they put these sort of trades on. So again, I think it's probably something that we take for granted. Are you still having these conversations with newer investors or do you think the conversations you're having are for the most part people

that understand the product or is it somewhere in between? It's somewhere in between, but the most important thing from my perspective and the firm's perspective is education. These are not for everybody. These are not set and forgetted vehicles. These are for active traders, whether they are institutional or sophisticated retail clients. And if they don't understand the mechanisms behind it. We're the first to say, do not invest in these vehicles. These are not appropriate for you. So the majority of individuals, this is not appropriate for. So we've spoken a lot. We spent the majority of this conversation talking about leverage, but you also have a big suite of thematic ETFs. What are you, who cares about you?

What are your investors most excited about in 2023? Well, it's a carryover in some cases in 2022. People are still concerned about inflation. Certainly the CPI today would make that prediction and maybe come true again, maybe in different areas because precious metal didn't participate last year. But we have a tactical commodity strategy com, COM. It's a broad-based commodity strategy. It's not just static long, though, like the traditional commodity benchmarks, the GSCIs or the Dow Jones Bloomberg commodity Index. It'll be longer commodity on cash with a commodity based on price trends. So we license the rules-based index from auspice capital. It's the Ospice Broad Commodity Excess Return Index. So it's tactical in nature, but it's rules-based. Right now along five out of the 12

commodities, for example, we're not in the energy complex at all. It's not because Ed woke up and felt that way. It's based on price trends. Crude, heating oil, natural gas, gasoline, all are showing a downward price trend. So that's a unique thing that a lot of individuals like to diversify their portfolio. And let's talk about 2022. Not many things worked last year. Cash, shortsellers, and some alternatives like commodities and managed futures. Those traditional flight to safeties failed you miserably, unfortunately last year, which was, of course, bonds and gold. Some other areas of note, when you look at an equal weight NASDAQ 100, we have QQQE. A lot of individuals are concerned, both on the retail and institutional side, the heavy weighting of those mega-cap stocks that

make up the S&P and the NASDAQ 100. So we're getting much more interest in that equal weight approach where all 100 stocks in the NASDAQ, I'm not a math major, but all of them are 1% each. So Apple has the same weighting as the 100 stock within the NASDAQ 100 until recently that was lucid boaters. So people are looking for different ways to generate alpha or diversify a portfolio. So an equal weight NASDAQ 100 is what people are gravitating to now because of the fact they feel the mega cap stocks may not lead this next rally up. And they have such a big percentage of it between the S&P 500 and the market cap waiting NASDAQ 100. The other area also, I'm sure a lot of people own ARC, and I respect Kathy Wood. But that being said, innovative ETFs have definitely been

out of favor. I was going to ask about that, because that's the thematic that most people have lodged onto recently. Did people flow out all the tech stuff last year? Pretty good. Well, we have moonshots, which is our version of an innovative ETF. It's a little bit different than ARC. It's not actively managed. We license an index from S&P Kencho. They're more early to mid-stage companies in terms of their growth cycle. They're not necessarily mega-cap names. They're equally weighted as well. So if you want to play the genetic engineering, the autonomous vehicles, the drones, alternative energy, here's a way to do it in a discipline, rules-based index. approach where there's not a high degree of overlap to ARC. So ours is M-O-O-O-N. We're seeing a lot of interest re-emerge this year. It's up significantly after a real tough year with a lot of those innovative ETFs. And with higher interest rates, a lot of those companies that are more heavily debt-ridden, that might cause them to struggle a little bit. And as a result of that, it was a difficult year for a lot of growth stocks, particularly smaller-cap growth stocks and innovative

ETFs in general. Hydrogen, alternative energy, the Inflation Reduction Act, looking at the continued push globally for that. You've seen a little bit of a resurgence in areas like hydrogen, for example, this year thus far. It's still early in the year. But if somebody has a three to five year time horizon, doesn't know which stocks to own, doesn't know which sub-themes in the innovative space to own. Why don't own a basket of those diversified with different sub-themes within one package vehicle, instead of owning individual stocks, which may be more feaster famine, even than a broader basket collectively. So I just Googled something while I was listening to you talk.

You've got a nanotechnology, ETF, and I've got to be honest, don't know what nanotechnology is, but it reminds me of there's a new Ant Man coming out, Quantumania. Maybe this will take off. So apparently, according to Google, nanotechnology was created by Richard Feynman. How about that? That's even a stat I didn't know. So you see, Michael, I'll learn something new every day. Again, we wanted to try and be a little innovative in the areas that a lot of your traditional

managers or traditional ETF shops wouldn't be in. But when I look at focus for us, it would be in moonshots, M-O-O-N, QQQE, Com. Those are the ones that have tended to where people are starting or have been gravitating to. When I look at something like nanotechnology, we thought that with everything that was going on, unfortunately, with the pandemic, maybe there'd be more interest there. Unfortunately, there really has not been that type of interest. And maybe it's too granular also. At some point, there's only so many pieces of the pie that you could allocate to.

That question, though, remains to be seen what resonates and what doesn't, because there's a lot of things that have been more granular in nature in terms of thematics that have raised a lot of money. Well, you mentioned that you're kind of agnostic. Wait, Ben, you don't call Edda for using the word granular. Sorry, I thought you slipped in that one in the chat here. Michael's favorite word to make himself sound smart. You mentioned that you're kind of agnostic on the direction of the market because you have these funds that can take advantage either way.

I imagine as a fund provider for you, it's really hard to choose what is going to work ahead of time. You launch a fund, and a lot of times it depends on what the market's going to do, what the trend is like or what investors are feeling. And sometimes I imagine it's hard to predict for you what is actually going to to work and what's not? It's a great question. And the answer to that is yes. I mean, we'll have some funds that we'll say we feel are going to resonate in a given year. It does help that we have a bull or bear. So if there is some volatility with a lot of our stuff, we have pairs. So we could

have the wrong thesis on something. And maybe we think it's going to be a bull environment or at least a trader's environment on the long side. It ends up being on the short side. So it's good to have that balance of pairs. But I can't sit here and tell you what's going to resonate this. year because the markets will dictate that to some degree. And maybe it'll be a counter trend move where you have people putting in money for short-term trades to try and buy on the dips or buy on reversals. That'll happen as well. But this year, we've seen a decent amount of flows in both the bull and bear, but particularly like SPXS, S-O-XS to start the year off of that rally, people looking for that not to be sustainable on a short-term basis to trade.

But we are fortunate in that we have a lot of tools, both on the bull and bear side. A lot of people feel tech's going to come back this year. One of our competitors has a very popular triple leverage NASDAQ 100 bull and bear. But more people now want pure tech. So they're gravitating more towards our tech L and TechS, which is triple leverage bull and bear on pure tech on the S&P technology sector. As you both know, the NASDAQ 100, only about 50% tech, their other air. areas in there, but most investors sometimes confuse the cues or leverage cues with pure

tech. We're seeing some divergence there, some interest in short-term traders saying, hey, I want more of a pure tech clay than just the overall NASDAQ as well. And TechL and TechS is certainly seeing some flows as a result of that. Well, Ed, I appreciate that you guys at Direction are always pushing the envelope and exploring the frontiers of what's possible inside of an ETF wrapper. Before we let you go, is there anything else that you wanted to cover that we didn't got to today. No, just again, I appreciate you both having me on. More about education. Go to our website. We have a whole educational section. I can't stress that enough. Know what you're investing in. Know how these work. Understand the mechanism of daily reset of leverage, the compounding,

the timing matters with these investments, and you need to monitor these day to day before you even considering making an investment in our leverage and inverse lineup. So educate what? I appreciate it, Ed. Thanks so much for coming on today. Not a problem. Thanks again, guys. Thanks again to Ed for coming on. Remember, go to direction.com to learn more about the risks involved in these products, and send us an email inolespherespot.com. Thank you.