Animal Spirits Podcast - Talk Your Book: Animal Spirits Live

Episode Date: November 25, 2024

On today's show, we are live from Chicago with Alex Morris, Chief Investment Officer of F/m Investments to discuss why investors are still crowded on the short end of the curve, thoughts on why rates went up following a Fed cut, why credit spreads have remained so tight, not taking advice from hedge fund managers, and much more! Find complete show notes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Past performance is not indicative of future results. The material discussed has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed.   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. 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. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. 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. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

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. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Riddholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Riddholt's wealth management may maintain positions in the securities discussed in this podcast. Let's get excited. Come on, Chicago.

There we go. Didn't open the bar early enough, apparently. Folks, to reiterate, Dave said, thanks for showing up. I know a lot of folks, I have a lot of other things going on so to get part of your evening is really special for us.

I know Michael and Ben need very little introduction, but by way of how we met, I think it was really when our sales guys saw you at a conference, assaulted you, which is probably what the police would have called it. But after a few conversations, we thought, well, maybe they're not as crazy as those guys were. And we've done this a few times together. I know we've got an interesting set of topics for tonight, some of which you'll guess, maybe some new stuff you won't. We'll make some mistakes along

the way. Most of them will be mine. You'll notice those. You won't notice there as they're very smooth at this. But I appreciate you coming along. Afterwards, with anything we can answer, happy to do it. But with that, Michael and Ben, I'll turn it. it over to you. Alex, thank you for the introduction. We have an editor, so we might be a little bit less smooth in person. All right, so before we get into some of the meaty topics of the day through the lens of the financial markets, Alex, for new, for people that are new to FM investments, what's your story? How did we get here today? Yeah, it's been a weird road. Dave and I started this business about five and a half years ago now. Dave will check me on that

or compliance, who's in the room, will check me on that. But the simple idea that there are really great alpha generators out there who often can't find their way into your portfolios. And the problem isn't that they're bad at generating alphets, that there's a whole business layer that needs to happen between those good ideas and ending up in everyone's portfolio. So we built the business to remove all of those roadblocks. And along the way, we've met some really great people,

come up some pretty interesting ideas, some somewhat off-the-wall ones, like the benchmark series, which is what really brought us together here. And have helped, you know, serve now $17 billion of your and your client's assets that we appreciate and look after every day. How many different managers and strategies are we talking here? So right now it's about 60 different strategies. You know, there's probably some flavors of that. So a few of my pms are in the room today.

We'll say, no, it's more or it's less. But about 60 strategies, about 85 of us who do this every day. And it spans the full gamut of asset allocation, asset style. primarily, though, in between institutional fixed income and equity, you're going to hear a lot about bonds today. So we did lock the doors. You can't actually leave until we're done. But it turns out bonds have been interesting for a while. So it's been a good place to be.

All right. One of the most interesting areas or one of the most exciting areas of the ETF market from the perspective of where dollars are going are option overlay strategy. So when are you going to start selling calls against your fixed income? Come on yield. Let's go. You say that, but there's a few things in the work, so give it some time. I was joking. That's a terrible idea. You're really going to do that? You know, we've seen some by-ride strategies. You know, if you hear, if you stop by and, you know,

prayed at the altar of Our Lady of Margin called to see me downstairs, you know, there's a lot of people who would happily take that trade. We were talking earlier about your benchmark series and the fortuitous timing of it. So you said five and a half years ago, so you guys launched the firm pre-pendemic, basically, right before the pandemic. rates went to zero effectively in the pandemic, and you launched this series of bond ETFs 2022, 2023? Yep.

Okay, which was great timing because at that point, rates finally went back up. Because if you launch when rates are all sub 1%, what is the reception going to be? 0.0, right? We stuck the landing on timing, for sure, but it was a need in the marketplace, right? We built it not because we thought, hey, this is a great time for rates. let's do a single bomb product. It was, we wanted to be the first consumer of the product. We had portfolios who needed exactly what the U.S. Benchmark series, T-Bill, U2, U10, were, and it didn't exist.

And frankly, it took us a while to actually get up the gumption to do it because we thought, clearly, someone had to try this. This had to have been thought of before, and we just couldn't find it. And after a few months of trying, we finally realized it just needed to be done, and maybe we were the right people to try. And so far, so good. There is $7 trillion, give or take dollars in money market funds. And the money is not slowing down, despite the fact that the Fed has lowered rates twice. Are you surprised that money is still pouring into money market funds? And then a corollary to that is one of your most popular strategies, T-Bill, great ticker, has almost $4.5 billion, and it seems like that has not really slowed materially.

Like, are you surprised that investors aren't extending their duration? Or what? Well, we see some investors doing that. We keep talking about it, and we see flows coming into the middle and longer into the curve in our products. But when you're still getting 4% on a nominal rate, if we did that on a tips basis for you, you're getting 6.5%. The question is, is that enough to coax savers into risk assets? And so far, the answer is no. You see that with the two-handle, maybe things change.

But right now, you're used to a decade of zero, and all of a sudden you get four and a half percent. for buying a government bond and just sitting there, not having to think about it, there aren't that many more attractive opportunities for folks who wanted the security of cash. A few weeks ago on our show, I talked to Michael about the fact that the markets have been just rocking of late, right? If you look at the past 12 months in the U.S. stock market, the small caps, a large cap, we're up, I don't know, 40% or so. And I was saying, you know, this has been a lovely bull market with a little pause there for 2022, which wasn't a lot of fun for people.

What's about the lovely? Who describes a bold market as lovely? I do. Someone who's invested in it. And so I'm just trying to figure out the juxtaposition of, okay, things changed in the election. It seems like, okay, now there may be there is some euphoria because markets took off, even though we had already been up a lot, they took off even more. But how do you square that with the fact that money still is pouring into T bills and money is still pouring into money markets? Is there just money everywhere that it can just be spread out and sprayed or what's going on here?

I think there is money coming in from all sorts of sources, right? And what it's not doing is finding its way to just one part of the market, which is good, right? That's what we used to see. A lot of that money that we're seeing today used to go to private funds or things that we couldn't readily track, right? We just didn't see it as much in the statistics. They were locked up in outside enterprise. So I think we're seeing a lot of that.

We're seeing a lot of those funds that people invested in five, ten years ago that had lockups, that now have cash available, and they're not re-uping. They're putting it into the public markets. They're holding on to the cash, waiting. to see what happens. But to your point, a week and a half ago, we really got animal spirits back in the market. Things were pretty good, but then we just got a shot in the arm. And that sort of sudden sense of euphoria, of loveliness, if Michael will allow us, is, I think, going to keep happening. I mean, folks want to see these things continue to rise, and there's a lot of powerful forces

behind that. It's only been a week since the election and the inflection point in the markets. are you noticing a different tone from the advisor, clients that you serve? Well, I mean, I think we'd ask folks who are here that and get a better answer, but somewhat, I mean, I think there's a sense of, okay, this wasn't a fiasco. And regardless of who voted for whom or what you were hoping would happen, the big fear for markets was this wouldn't be decided today, that we would be sitting here talking about lawsuits or all sorts of other crazy things. And none of that happened.

The market was really happy about that. I think investors should be really happy that the market reacted exactly as we'd wanted to. Took it in stride, went back to worrying about inflation, jobs, and fundamentals, which is what we're trained to actually work with. There don't seem to be a lot of fears right now. I know certain investors are always scared of something, but it kind of seems like everyone in the pool, not scared of much. Do you think investors should be afraid that rates are moving up again?

Because there's always a narrative attached to this, and Michael and I always talk about this. when rates go up, it kind of is choose your own adventure, right? Well, rates are going up because the economy is stronger. Or no, no, no, rates are going on because people worried about the economy and inflation is going to come back. Or no, actually, it's bond vigilantes. So when parsing through this stuff, do you think there is a line in the sand where, oh, actually, we should start worrying if rates get back to 5% or something in that range? Who are these bond vigilantes? Alex, have you ever met one out of the wild? Maybe it's us? Maybe we didn't know.

I mean, we've certainly seen a lot of folks who are happy to buy bonds no matter what happens in the market. So, you know, there's a lot of opportunity there. To answer your question more broadly, I mean, if the short end were moving because the Fed had to start a hiking cycle, you know, that would be a warning sign. But, you know, the market is pretty diverse. There's a lot of things happening out there of 10 years sitting at almost four and a half today after pretty nice yield rally today. You know, so prices are dropping. But I don't think that's anything inherently to worry about. is trying to figure out policy that is yet to exist for things that have not yet happened or

even been promised. So there's a lot of guessing. Well, the two years gone from, I don't know, 3.5% to 4.3, I think. Is that signaling maybe not as many cuts as we thought? I think the theory that we were going to zero is coming out of the market, right? We never described to the theory that we were getting back to 0.1%. I think there's also a lot of fear that there'll be some inflationary policy coming down the pipe. And the market is getting a little bit ahead of itself. I mean, that was a pretty strong yield rally for what happened. But that said, I don't know that it's any immediate cause to worry. The underlying fundamentals of the economy, both real and financial, are super

strong. Things are just kind of working themselves out. One of our favorite theories for why rates rose is attributable to Warren Pison. He basically said that the rise in yields is not people that are not trusting our ability to pay us back and the demanding higher rates. It's that people were off sides, positioning for a weaker economy, perhaps a recession, lowering rates. Obviously, that didn't come to fruition. And they're just getting back on sides. And it's more about positioning than fears. So there's actually a good thing. Yeah, I think that's right. In coming into November, a lot of economists were still saying there was a 15, 20 percent chance of recession, which last year, they said there was a hundred

percent chance of recession this year, and they've all been wrong. So I think there's been a lot of prepositioning and lack of faith in the economy. I know someone who we talk about from time to time, Jared Dillian over at Dilley Dirtnap, says debt is a great expression of optimism. And there's a lot of optimism. It's a lot of things to be optimistic about, whether that's, you know, the bond market, the equity market, or folks belief in themselves and the ability for the economy to weather all storms. And I think we should bet on that because everyone else is. Is the Fed making a policy mistake by continuing to lower rates without incorporating the fact that, yes, inflation is coming down. There's no need for Fed funds rates to be 200 basis points

over inflation, whatever it is. But maybe they're missing the farce for the trees. Like, if growth picks up, if asset prices keep doing what they're doing, are they fanning the flames of the fire? So in two years, we might be able to say, yes, they should have done it. I mean, everything in hindsight is usually a little bit clearer. But this was a sort of preemptory cut. You know, I was calling for 25 last time. We got 50.

I'll give myself half credit, you know, two times ago when not just because 25 is half a 50. But the Fed was basically saying, we should have done 25, you know, spread out in a nice, even way. We had some bad data. We couldn't get there. Yeah, that was an admission. They were wrong. Yeah, they basically, we were wrong. Like, it was a, oops.

Now, how do we go from here? And it's weird to hear the Fed share say that, but they did, and they moved on. I think we're going to see this cut cycle continue on for a while in this rate because that's what they said they're going to do. They want to keep doing it. They want to be seen as apolitical. They seem to be okay with making a preemptory cut. They're not going to be okay with a preemptory hike.

Even if all of the news says it should go there, that's a pretty bold statement from Do you think that we get another hike in this cycle? Well, I think that would mean there's a new cycle, sort of by definition, right? But I don't think we're going to see one for a while. You could see a prolonged pause in 2025 if CPI ticks back up, if GDP remains as strong as it is. If it turns out there are policies that are obviously and immediately inflationary, then they'll pause. To start hiking again would send one of those true fear signals to the market. I was looking at your website today at Benchmark Series, and you have, based on your ETFs, at the different maturity levels,

you have a yield curve built, right? And the short-term yields are still higher than the long-term yields. So don't we want to see short-term yields continue to come down to make the yield curve more normal? I think there's a obvious desire for historical reasons to see the yield curve

in a totally normalized environment. But we've been dealing with the yield curve in some pretty funky shapes for the last two, three years now, and things seem to be fine, kind of testing the theory that maybe doesn't have to look exactly that way. Now, it is kind of odd

that if you go back to theory, you're saying the government's more likely to go out of business in 90 days than in 10 years. I mean, that's just sort of bizarre. But somehow or another, that's what the market seems to want. And the bill auctions are, they're fine. I mean, the other, you know, systematic way to assess the health of the market is to say, are people showing up to the Treasury auctions? And is the government having a hard time issuing debt? They're not. So there's plenty of investors. Michael said the recession unwinded. that we're betting on bonds as more of a trade than an investment. It's funny, our podcast producer, Duncan,

he said he bought TLT when the Fed announced we're going to make cuts. Yeah, why don't you throw him Duncan to the bus? Sorry, Duncan. But from the day the Fed first cut rates, the eight trading days after that, TLT was down eight days in a row. Yeah. And he couldn't figure it out.

And why is this happening? A lot of people were, I think, implicitly making that bet. But as an advisor, you don't. I didn't want to see rates go right back down. I wanted to see rates stay in the four to five percent range because that's better to just clip that coupon as an investor, right? That's, we should, we should want this as fixed income investors, correct? Yeah, no, the higher rates in that sense are good for bond collectors. And if you look at, say, the IG market, you're going to see now most of the return is actually coupon. That's certainly true in the high yield market, where if you're not

at least equal weight to benchmark, you're losing out on the carry there. And a lot of folks who were buying bonds for total return, hoping that there was some convexity sitting there that would give them this really sweet return when rates went exactly the way they hoped, they've been a little disappointed. But if you were buying it more for income, why we call it fixed income, you've been pretty happy with what you've got. And as long as you are in the more liquid side of the market, things are still healthy. So spreads are tight because the economy is good, defaults are low.

They should be tight. It would be weird if they weren't. one of the other reasons why they're tight is because I think investors are happy with the absolute level of returns or yields from their investment green bonds. I remember, I think it was during the pandemic, Microsoft issued bonds at like literally like 2.3%. Yep. It was like, who the F is buying these? Like, why? Literally why?

And so if you're only getting 100 basis points to spread or whatever it is, the number is, but the measuring stick is 4%. it's still a pretty juicy return. Yeah. No, I mean, look, there's a lot of opportunities in all aspects of the market today. I think there's fewer of those bonds floating out there now, and a lot of them have made their way to portfolios that are going to hold them to maturity. So as a new investor to the market, and you have to ask what's actually available, what's out there.

The new issue market, though, remains strong. Yields are good. Coupon rates are reasonable. So you get a nice return. Like, if you look at the 80 basis point spread of two-year new issue debt versus two-year Treasury, that's a nice space. And if you look at the default rate in the IG space, it is very low and it will probably stay pretty low for the foreseeable future. And that probably is true of the high yield market and certainly the muni market. We were talking about tips out there over

a medello, which is a great thing to do with drinking beers. NER alert. So I was looking today, the break-evens. I think the five-year break-even is 2.4% or something. I mean, the break-evens were negative in the pandemic, I think. I know that there was some investors who got burned by tips. Michael and I heard from a ton of people that emailed it and said, what's going on here? I thought inflation was coming following the pandemic. I put my money to tips, and then they got killed when rates went up. And they acted more like bonds than they did in inflation protection. But if you have a higher yield now and a high real yield, aren't tips just a wonderful opportunity at the moment? We think so. We have to ask also, why did folks

so much despise tips last year, two years ago? It wasn't that they didn't like tips. They actually got the inflation protection, they thought. They are really bonds underneath it. It's that they bought bonds that were three, five, six years duration. So your inflation protection worked. Just your duration hurts you far more than you saw the immediate impact of that inflation protection. Hold on to that bond for another three or four years.

You're going to get your money back plus all the inflation that you thought. And it'll be a pretty healthy real return. We think folks just need to reassess what were you getting. I think most folks thought they were buying tips. They were getting T-bill plus inflation. protection, and they weren't. And that's the next, next, as it were. Alex, this may be a non-sequit of the conversation. You could punt if it is. But one of the biggest themes in wealth management has been the rise of private markets, specifically

private credit. Yep. So loans being made to companies that can't tap public markets. Any thoughts on those markets, what they're doing to issuers or anything that investors should know about? I think you'll see a lot of debt issued there. Some buy issuers who can top public markets, but have found it's easier to do this, right? Or they have other debt stacks that they can more readily refinance without a traditional underwriting process. You're going to see a lot of ETFs and other products that take these Wall Street products and try to bring them to Main Street. And that's going to be a real experiment because the thing about it being private is it doesn't have all the conventional rules.

and there's generally one or two people who get to decide what is and is not allowed in that individual. So are they really going to try to do private credit and an ETF structure? Well, they absolutely are. They should have doing it. Yeah. But also, aren't there rules that you could only have 15% of the fund in things that aren't liquid? So what is that even? Well, yes, and I think 85% of the fund is going to be mostly liquid stuff, some less liquid versions of it.

But even though that 15%, even if you found a way to create a swap or something else where you were, you know, impersonating elements of that private credit, who's setting the market? Those things aren't redeemed and created every day. So there needs to be a liquidity provider in the middle. That liquidity provider is going to set the price. And when things are good, that's probably a fair price. When things are not, you know, we haven't yet tested what that looks like. Set it all once again. The number that we read was private credit makes up maybe five to six percent of the IG market. And so it's still a pretty small amount. But does it ever get to a point where that money somehow impacts spreads in investment grade credit? Or is that just so big that

it doesn't really matter? I'm going to guess it's so big. It doesn't matter for the foreseeable future, right? Certainly private credit gets an awful lot of attention, despite being 5% of the market. In our inbox it does. It's, yeah, 5% of the market, but 95% of advisor inboxes these days. And I always say that it's the easiest sale you could ever make. Yield is an easy sale. So if you tell an advisor, I'm going to get your clients 10%, 12%, 14%, multi-distributions? Yeah. Noval. That sounds amazing. My question is that asset for your client is a liability for someone else. How do these companies taking on these loans keep running when they're paying 12, 14% on their debt? Loans to pay the loans. More loans. And I think this is.

The cynical view is this is a great opportunity for folks who've issued that debt to find a whole new set of investors to allow them to refinance it off their books and try again so they can refinance this. Because so much money's pouring it. It sounds like musical chairs. The fear is that it becomes that and that's what the regulators will need to determine if that is going to happen, how do they stop it? And, you know, the unknown there, if one, it will be approved in that state.

And unknown, if it is approved in that state, if that's what's actually going to happen. but it seems like that's a good bet. But do you think that these big players, the big private Apollos and KKRs and Blackstones and Black Rocks of the world, if they just say, listen, we're putting five or 10% of our client model portfolios into private credit, there is enough of a wave to keep this stuff going for a lot longer than people would assume? Yeah, no, they could move enough of their own asset base to create, you know, a microcosm here.

Sure. But at some point, if the returns don't actually materialize, right, you wait your five or your seven years and your IRA is six, not 14, all of a sudden, I think those assets start to go somewhere else. And that's more likely than, because a lot of people are saying this is going to be a calamity in the next recession. This is going to be a huge come-to-Jesus moment. But I would think that just lower returns than you expect are probably, is probably more likely. Yeah, and once you're afraid you're not going to get any of your money back, you're happy to get most of it back. So if you went from thinking you're getting 14, afraid you're going to get zero, and you get eight, you're all of a sudden pretty happy.

And that may be the outcome. There may be enough fresh money for a while that some of the funds don't have that risk or don't have that reality. But eventually that something has to give. And you can't keep running 14% return, no vol forever. There just isn't enough in those private companies. Alex, one of the questions that we got in our inbox probably every week, and I don't know that we're equipped to answer this, maybe you are.

is the deficit, keeps going up, the pace at which it's going up is accelerating. What are your thoughts? Should investors be worried that the U.S. government is going to run out of money or there's going to be a crisis in the bond market? What are your thoughts on the deficit and what it means to investors? That's an easy one to answer. Probably a good opening line at Thanksgiving, too. No one will get mad at that.

Yeah, no, not at all. It's don't have to tread carefully. We're not going to run out of money. We have a printing press, and they know how to use it. So I think they'll avoid that. The incoming administration historically has tried to talk down the strength of dollar, so that gives us some room to make more dollars to pay some of the debt. But we will eventually get to a spot where we now owe enough money on our current money

that we have to issue more money and pay more money to do that, that we get to the spiral similar to the private credit cycle, where now there will be something we'll have to give until there's a major change in the amount of debt we need to function every day. How much help will be, so I think I read the other day, it's 13 or 14% of the budget in 24 was interest expense, which is effectively the same as the defense budget. But isn't the Fed cutting rates going to make that a little better, depending on the maturity spectrum, I guess, there? It should make it somewhat better, but that's assuming that everything was issued on the short end,

won't all be, and that those auctions will continue to be believed in as much they are today. And that faith could wane at some point. And it probably will wane in the bond market before the broader market. But is the whole day of reckoning. This is a lot of what the hedge fund and billionaires say. Like, there's going to be a day of reckoning that comes and people are going to stop buying government debt. First of all, I don't know where else they would go. I don't know what's the next best option. But couldn't the Fed just say, okay, we're going to issue a bunch of short-term T-bills. You're not going to buy T-bills? Isn't that like, for the day of reckoning scenario, isn't there a ton of stuff the Fed could do before?

there's an actual crisis that people are predicting. Certainly, and there are a lot of commentators who, I think, as you pointed out, right, the number one rule investing is don't take advice from hedge fund managers, where it turns to be true, there's like this odd fetish of figuring out how the end of financial economy is going to happen, and they're always wrong. So there's the good news is don't worry too much about it. They've always been wrong. They will be. The government couldn't keep financing itself only on 90-day bills, right? We have longer-term goals on that. employees want to know that they're going to get paid. So we will always need that and money will go there, if only because there are a lot of laws that say certain institutions have to buy that debt.

So they can kind of insulate themselves against some of that. Yeah, well, that's the other thing is people don't realize, again, the other side of their liability is an asset. And pension funds and insurance companies and they baby boomers in the years ahead are going to want and need that. I was telling you earlier, the baby boomers have just got it, they're the luckiest generation, aren't they? Because they, they rode the wave of a 40-year bond bull market. Yeah, bonds struggle there. But now we're getting into the teeth of retirement. We're talking four or five percent yields on bonds. It's a pretty good scenario. Yeah, counterpoint. They had three channels, four channels, whatever it was.

But they saw the rise of cable television. They saw the rise of ESPN. I mean, that's good to be there for. But I think the answer is yes. On a real return basis, you know, you'll see six percent. And that's why you'll see us dip out into the tips market in the coming weeks and months as we start to offer some new products to help folks deal with a longer period of inflation, where that's going to be a real thing and where your real return is going to continue to be material for the foreseeable future. So, Alex, you mentioned at the start that the animal spirits have kicked into the markets this week. You're seeing crypto go nuts, spats, not spas. Klarna just announced an IPO. The IPO window should open wide in 2025, large cap stocks,

small, I mean, everything is really having a good time. Are you seeing flows slow down at all in terms of what you're seeing in your fixed income products? You know, not really. We see, you know, fluctuations we'd expect for time of year, for tax harvest, for other reasons. But assets are still coming in, as you pointed out, still $7 trillion in money markets that can make their way over and are. And there are a lot of folks who I think are still looking at that absolute level of return you're getting, of yield, and they're still really happy with it. And although it looks nice to say the S&P's up 30%, you didn't know that was going to be the case. And if you believe the economist exactly one year ago, you would have been short the S&P 500 this year because

constant doom was coming. And it missed. So it's a great place to hang out and still make three, four percent with no real risk to your portfolio. We've heard from a few asset managers who are just salivating at that $7 trillion in money markets. Yeah, Blackrock mentions that every Yeah, they talk about it a lot. Do you think that that money is more likely to make its way into fixed income than stocks? I don't know. I mean, for the benchmark series' sake, I hope it does. But I think you're going to see it go a lot of places that you hadn't expected. And that's just because investors are going to be forced to rebalance in ways they didn't know. The baby boomer generation is passing that wealth on. And those new investors are not necessarily using the exact same playbook their parents did. And we don't know exactly what that's going to look like. We do know it's not going to be the exact same. And some of that asset may leave the public markets might go back to private things. Some of it's going to go to real estate. It's pretty expensive to buy out your parents' house, right? Or buy out your siblings so you can live in the house you grew up in.

So you're going to see it move in different ways and take a little while longer to trickle back out to the risk asset market. Alex, you guys are entrepreneurs, your innovators at FM Investments. What's the last, I'm putting you on the spot? You don't have to answer this. Is there an ETF that you saw launch that you're like, gah? I wish I thought of that. Oh, we see them every day. The ones that get me aren't the ones that wish we thought of.

It's ones that we thought of, and we didn't do. We see those happen. Every few weeks, we're like, oh, man, we should have done that one. I mean, obviously, the easiest one is, why didn't we do a Bitcoin one, too? That seemed like you could throw your hat in the ring there were a lot of good ideas. That wasn't historically anything we looked at. But I think we've been pretty happy with the success that we have had, that we don't spend a lot of time looking back on the things that we didn't get a chance to do. Anything that you could tease, or is that not kosher?

Well, as we've talked about, we're going to do some stuff inflation, so you'll see some tips funds from us come out. You know, we really think with the benchmark series, it's a great opportunity to really own the rate space. So you'll see some other. And what are the maturities there in the tips yield curve? So right now, they'll go out to about 10 years. They're not issued as regularly, and they don't have as many spots on the curve. So you'll see fewer of them. We'll probably focus on something more active on the short end.

So think of something like a real cash version of T-bill. So T-bill is your nominal rate. Tips fund will go after the real rate of cash. So if you had a T-bill tips fund, essentially you're getting all of the, inflation protection, right? Because the duration piece is taken out of it. Exactly. So we think that's what folks really thought they were buying. So we want to give that to them. And we'll do some other parts on the curve because we get a lot of requests. You know, our inbox gets filled up with, hey, I think the curve is going to do this. How should I play it? Well, here's two or three ways to do

it. We're going to start to wrap those trades up for folks who want to play that. And then you'll see us start to dip our toe out into the equity space. We launched a thematic equity ETF in the life sciences space for small caps. It was a great time to be there. And we'll We'll start doing some more of that as we start to figure out what investors really want in 2025. The advisor space is the bell of the ball these days. Michael and I talk about the private asset managers are coming for the RA channel because the institutional bucket, they're tapped out, right? So they see growth there.

Funds see growth. FinTech sees growth there. When you think about the advisor channel, when you make your products, are you thinking more about advisors than retail investors? Or are you just saying, no, it's a whole wider swath of people? Everything we build, we want to be accessible to everybody. But most of the things that we're good at doing, most of the clients we work with, folks who are here with us today, manage money for some other asset owner. So we want generally to build products that fit into that portfolio,

that asset allocation you have, that solve an actual problem you have today for investors. Nothing we built should be unusable by the retail market, but we appreciate not everything will have the same sex appeal as T-Bill or you too. Some of them are going to be used more by professionals to solve professional problems for large groups of clients or to solve operational or other concerns that you have as an advisor. All right. We've been talking for 30 minutes, oh, 32 minutes, and I'm about out of questions. Does anybody in the audience have any questions? Any men who are baldy that need some advice? If it's time to shave it, I'm happy to answer those questions too. No? Full heads of

hair. Every time we get on a Zoom call and there's another ball on the call, that's Michael's icebreaker is, oh, nice haircut, and it works every time. I'm not a talker. I like how you just offered that a bald is a thing, but you just inserted that into the language. Alex, you have anything else in your mind? I know. I appreciate everyone showing up.

Thanks to you guys. This is, what, our third or fourth, fifth? I'm losing track now. Go around. But good stuff. Let us know what's in your inbox so we can start solving those problems, too. All right. Anybody have any questions for real?

No? Cool. Drinks? Food? All right. Thank you, everybody. Ron, thank you. Big round of applause for Michael Ben and Alex.