The Compound and Friends - Have Some Fun in '21, Eddy Elfenbein's Buy List, Doug Boneparth on Survival in the New Year, Josh's Resolution

Episode Date: January 1, 2021

This week on The Compound Show - getting ready for 2021! Josh talks to Doug Boneparth of Bone Fide Wealth about surviving and thriving in the coming year. Financial advisor use of technology exploded this past year and now there's a significant increase in adoption, comfort and expectations on the part of their clients. Better get your tech right this year if you intend to compete. Plus - the regulators are pondering a big rule change for investment firm advertising, including the potential for customer testimonials - what does this mean? How gross will it get? Visit Doug's site here: https://bonefidewealth.com/ Next, Eddy Elfenbein drops in to talk about his 2021 Buy List. Eddy is the creator of the Crossing Wall Street blog and the manager of the AdvisorShares Focused Equity ETF. Eddy's got five new stocks on his Buy List for the coming year. Check out Eddy's blog here to see all his Buy List names: http://www.crossingwallstreet.com/archives/2020/12/cws-market-review-december-25-2020.html If you enjoyed the show be sure to rate and review! 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/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

I got a two-hour hole to fill in my life each day. Two hours. Because I'm removing something that I've decided is a complete and total waste of my time and attention. By the way, welcome to 2021. We're kicking off the new year right? With good habits. Focused on the important stuff that actually matters this year. Right? Good habits. Like what do I do every day? With good habits, focused on the important stuff that actually matters this year, right?

Good habits, like what do I do every day? What do I do every week? What progress am I trying to make? It's like my favorite Peloton instructor, Julie, always says, how did you get this phone number, Josh? Listen, for the last four years, because of the volume, the loudness of news coming from Washington, D.C., I've fallen into a habit of spending two hours a night with cable news on somewhere in my house, in my office, in the kitchen. I might not even be watching it, but it's just on. And I know way too much, right? Like every day learning

more and more newer and newer details. And it just, it's a waste. It's like a waste of the mindshare. If you think about how your brain works, like how many things do you have room to be up to speed on? Not that many things. You can't have everything on the front burner. But I have the news on, and it's Russia stuff, and then it's Ukraine stuff, and impeachment, and Supreme Court stuff, and Stormy Daniels, and all the bullshit. Giuliani, just nonstop bullshit every night. And for what? Turns out it was all a total waste of time. None of it mattered. Donald Trump, despite all of the corruption and incompetence being reported every night, finished his term and still managed to get 70 something million people to vote for him again.

So I don't really know what that's about. Like, I guess like it doesn't matter what you do. If you're on the right team and people are angry enough about something in their lives, you can like get them to channel that anger into whatever you're carrying on about. And I don't know. I still haven't quite wrapped my head around everything that's gone on. But just you think about the sheer volume of news every day, every night, around the clock, nothing but Trump scandals, people complaining about Trump, people who love Trump. We took money out from the bank this week. We got like $20 bills and somebody took a red Sharpie and wrote Trump along the bottom

of like seven $20 bills. I don't know what the is going on with you people. I don't quite understand it. But if you think about all of these scandals and complaints and all the incompetence and now hundreds of thousands of people dying of a disease where that's not happening in other countries to this degree, et cetera, all the news, all this, all the crimes, everything, none of it mattered.

It didn't influence anything. You could watch the news every night. It didn't matter. And now all these guys are being pardoned anyway. So you have like court cases that drag on in the news every night and people being sentenced for crimes, people pleading guilty to crimes. And then they just get pardoned anyway.

And they're like, no, I didn't really plead guilty. So having this stuff on, even if you're not focused on it, if it's just on in the background at night, after a full day of work is just not time well spent. And this spring and summer, obviously with coronavirus, like you kind of felt like you had to pay attention, even though they were just like repeating the same thing over and over again for hours. I feel like a lot of people fell into that same habit where like the news was just on. So in New York, we were like hanging on every word from Governor Cuomo.

And it just, it was endless. And then I think just people got into that rhythm. Like, oh, I finish eating dinner. I throw on cable news. And then from eight to 11, it's just Trump, Trump, Trump, Trump, Trump, Trump, Trump. We love him. We hate him. He's great.

He sucks. All right. So now we have a new administration coming in. And my sincere hope is that I never hear a word about it. Never. Like, I literally never never hear a word about it. Never. Like I literally never want to hear anything about it. So I don't know if you remember, but that's how it used to be. You always had people who cared about politics.

You always had people that watched CNN every night or watched Fox News every night. But then that was just like some people and the rest of us, normal people, just went on with our lives. We talked about sports. We talked about music. We went to the movies, talked about TV shows. Like there was other stuff going on in our lives

and it wasn't just constant what's going on with the president. That was a thing. And every once in a while, if there was a scandal, if Bill Clinton was grabbing someone's ass or Obama wore a tan suit or George W. Bush accidentally misspelled his own name in crayon, Maybe you saw a late night comic make a joke. Maybe you didn't. It didn't matter that much. Then there were some things that really did matter. 9-11, invading Iraq, you know, to invade or not to invade, et cetera. But like they were few and far between.

It wasn't 24 hours a day, seven days a week, a new explosive scandal every 48 hours. Like that's not, that's not how it's supposed to be. So the other thing is that you could have opinions and you could even have a party affiliation, but it wasn't like a tribal membership. You didn't have to obsess over it every minute of the day. So I hope Biden and Harris come in. I hope they hire competent people who aren't looking to become famous or go on dancing with the stars, but just competent people who want to put their heads down and just do the job. Let's not forget. It's a job. Do the job.

We're paying you. Don't tweet. Don't call into TV shows. Don't pick fights with athletes and actors all day. Just do the job. Our taxes are paying you to do and make it so I don't even know you're there. don't even know you're there. The only time I want to see or hear Joe Biden is once a year at the State of the Union and then maybe occasionally wearing a windbreaker directing hurricane relief. That's it. Shut up. Stop talking. Stop fighting with people. Stop raising money. Just govern the country. There's a consensus that Trump has permanently broken the presidency and that now this is what people are going to want going forward. They want world wrestling federation style entertainment and 24-7 culture wars. It's not true. Nobody normal wants more of that. Think about all the normal people you know in your lives. They don't want more of that. They might want more conservative politicians or they might want,

you know, very far left liberal politicians to take over. That's fine. But I don't think they want to live their life through the prism of a culture war. And I think that will turn out to not be true, that we don't need to have this succession of even Trumpier people coming behind this. I think people are going to be reminded of what it's like when they don't have to feel like they're at war all the time, where they don't have to hate half of their family to death. They're going to go days on end. You, you're going to go days on end without hearing a peep about the White House. And I think you're going to remember how much you like it.

Hey, I wonder why I haven't heard anything about Biden. Because who gives a shit? That's why you haven't. That's why you haven't. So this is how I'm going into 2021. No more primetime cable news. No more culture war. I don't care what you think.

I don't care if you care what I think, right? We all have our own stupid politics and biases and belief systems, and we don't have to fight over them all the time. So I'm setting the tone for myself. Football's on. The NBA is back, and it's awesome so far this season. We're going to get baseball back on time this spring. I think I'm going to games late this summer. time this spring. I think I'm going to games

late this summer. How about that? I think I want to be at Yankee Stadium. How about that? The whole economy in the meanwhile is transforming into a digital version of itself virtually overnight. I would say a more efficient, cleaner, faster version of itself. And it's happening overnight. It's an amazing time to be alive and be in this economy. It's scary. It's dangerous. It's profitable.

People are making money. People are learning new ways to protect themselves. It's not ideal. It's not ideal that a pandemic came along and accelerated all this stuff, but it was already going to happen anyway. And we don't have a choice. We don't have a choice about the times that we live through. It's not always up to us. So we can lament. Okay. I think we did a lot of that in 2020. Or we can adapt and survive. When has it not been about survival? There is an endless amount of great reading material to understand all of the

changes our economy is currently going through. There are so many great podcasts now. I was listening to this Bio Eats the World. It's a biotech podcast put out by a 16 Z. They had the founder of Moderna on talking about literally how they wrote down what they thought the formula was to beat Corona virus, like on a napkin. Like it took them, it took them like a couple of hours to know that they knew how to beat this disease. And then of course it took them, you know, seven or eight months to develop the drug and, and test it. But like they knew how to beat this disease. And then of course it took them. You know seven or eight months to develop the drug. And test it. But like they knew immediately what to do.

And it worked. You got to listen to this. So there's so much material like that. I'm reading all these sub stack letters. This thing came out of nowhere. Totally captivated my attention. Some of the most knowledgeable people. Thinking and writing about markets and the economy.

I guess a lot of them were like former analysts working at buy side shops or sell side like Wall Street hedge funds. And they were just like, you know what? I think I can build an audience around my insights and I don't need any of the trappings of this firm I'm working at. And they're just going for it. And I'm getting smarter every day. So I just want to absorb everything. I'm working at and they just, they're just going for it. And I'm getting smarter every day. So I just want to absorb everything. I'm fired up. You should be fired up. The vaccine is on its way

to the town you live in, the city you live in. It's here. You might not, you might even know people that have gotten it. I don't, but you might, you will. Multiple vaccines. We're gonna get this AstraZeneca vaccine pretty soon too, I think. So I already have two trips planned for the first half of 2021. I'm getting out of here again. Trust me when I tell you,

booking a trip right now is the best mood elevator available. It's the best feeling you can get booking a trip. It's better than a Xanax with a red solo cup filled with gray goose. Not that I would know what that's like, but I imagine that's pretty good. Booking a trip is better. So do it. Try it today.

Put it on your calendar. It's an instant mood elevator. Now, two things. Double check with the hotel that it's refundable up until the week before or 48 hours before, obviously, because you never know what travel restrictions will be. Okay? So go into this optimistically, but use your head. The second thing is double check with the airline just in case you can't fly out on that flight that you book. Make sure that you can reuse that at a later date. Honestly, it's not the worst thing in the world to have an airline holding on to your money because it obligates you to travel at some point.

Like it's not ideal, but it's not the worst thing. So I'm telling you, do this for yourself. We booked a trip to save our marriage this week. All right. I'm kidding, but not really. Ever since we booked, we booked a vacation to take the kids away for February and maybe it's a little early. We'll find out. But just booking it felt so good. All of a sudden, everyone like everyone, like you could feel a weight lifted in the house and people were like looking forward to the future again um so i'm i'm in these dark days the dark days still left in winter i'm i'm highly recommending you think about doing that um you gotta have things to look forward to in life

if you just feel like every day is the same as the last and you're on a treadmill to nowhere you're not going to be the best version of yourself. You're going to end up drinking wine and eating garbage all night just to pass the time. Like a nihilism sets in and you just stop caring about yourself if you don't have things to look forward to. So, and at this time of year, especially when you're stuck indoors and it's freezing cold and, you cold and all the backyard barbecues of the summer have faded away. And it's just – it sucks. And there's no daylight.

And you can go a whole two, three days in a row without seeing the sun. So it's really, really important to keep yourself going and have something on the calendar. So if you don't already, do that. I'm going to Miami. I'm going to the Caribbean. And if I die there, well, at least I'll have a tan. You know what I'm saying? At least I'll be wearing white pants. It's enough already. We've got to start planning to get our lives back. And speaking of having something to look forward to, I have an amazing show on deck for you today. You're going to love it. I know I always say that, but I think it's always true.

Eddie Elfenbein is the founder of the blog Crossing Wall Street, where he's been running an annual buy list of stocks since 2005. He releases the list just before each new year begins. Every year, it's 25 names, equally weighted. There's an index based on the list now, as well as an active ETF that Eddie manages personally through the firm ActiveShares. So he's also one of the funniest people I've ever met. Just an absolute killer sense of humor. We're going to talk to Eddie about his 25 names for 2021, some interesting stock ideas for you. But before we go to Eddie, my pal Doug Bonaparte is dropping in. Doug is not funny at

all. I'm just kidding. He's a little bit funny. Doug is one of my favorite people in the advice business. He's got this great way of telling the truth and cutting through a lot of nonsense for investors, but in a very disarming and non-threatening way. So everybody loves Doug. He's not a firebrand. He's not controversial. But if you listen to what he says about the right way to do financial planning and the right way to invest the future, it's just pure, unvarnished truth. He says it like it is. He's got a big smile on his face while he's saying it. People don't get mad, but he is cutting through a lot of the nonsense out there, and I love him for it. So our industry needs more people like Doug. So we're going to talk about getting ready for 2021. We're going to talk about how advisor use

of technology has just absolutely exploded because of the environment we're in. There's a new SEC rule change that may allow for client testimonials at investment advisory firms. We're going to talk about what that might mean. I think it's going to be hilariously insane, but we'll see. So there's a lot to do. So we'll talk to Doug. We'll talk to Eddie. Duncan, let's rock and roll on the disclaimer and we'll go right in. Welcome to the Compound Show with downtown Josh Brown. Josh is the CEO of Ritholtz Wealth Management. All opinions expressed by Josh or any podcast guest are solely their own opinions and do

not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Hey, I'm here with Doug Bonaparte. Doug is a good friend of mine. He's a certified financial planner and the founder of Bonafide Wealth in New York City, although he's originally from South Florida. So Doug, you are already doing this backwards. You're supposed to start in New York and then finish in Florida.

What's wrong with you? Yeah, my parents are wondering the same thing here. I don't know, man. You can take the kid out of New York, but you can't take New York out of the kid, I guess. He says with his Floridian accent. Yeah, they showed me they showed me the skyline of new york city one time when i was a kid and that and that's that was it that was

yeah drove from manhattan and i was like i gotta be here we're happy to have you here so you bought one of me and porto's new book like you bought a copy of the book and you sent it to me and you filled the box with coffee beans you dick you got You got it. So thanks for that. They spill that, they spill that all over my, my little makeshift office here. Perfect. Exactly what was supposed to happen. So a lot of your friends are in that book. Would you like, what would you think of how everyone came across? They pretty much were very much themselves, right? Yeah. Yeah. Everyone. I mean, I know, I pretty much know everyone who wrote their chapters and for, for me, I could hear them, you know, like, right. You could hear them. We were saying it in their own voice. Yeah. You

can hear their inflections and you could hear the passion or if, you know, it got somber, you know, you saw it in there. At least I could visually see it in their face. So it was really cool. It was well done. Congrats to you guys. Well, well done. Thank you. Thank you. So I want to talk to you about 2020. So normally you're working out of like lower Manhattan. You're in the world financial sector, right? Yeah. World trade. All right. And then you move, you like me, you retreated to the suburbs, like not, not because you had any choice in the matter. That's just what we all had to do to get through the year, but you have a pretty big practice.

And I know it's yourself and one other person now. Yeah, one staff. Okay. But you've got a lot of clients. You work with young people, millennials, probably some people whose careers were never better as a result of the pandemic. And probably some people who were like, I really don't know what to do with myself. What's that been like for you this year? Yeah.

So, you know, we'll get to the end of all of this and look back and we'll see the survivors and those who really struggled here. But look, you know, if I'm being very honest, you had the Fed backstop the entire capital market. So just from an asset point of view and valuation clients dodged a bullet there, but it was crazy. March, April, May for my clients who have mostly, you know, a lot of young kids here that, you know, blowing up the logistics of their life was likely the toughest thing for them. Right. Yeah. Way, way, way tougher than anything going on in their portfolio.

Oh, for sure. I mean, that got scary too. And, you know, for me personally, it's like, okay, how do I tell a hundred plus households to buy that? You know, don't, don't panic when you have every right to panic. Really? There's a global pandemic. This isn't the credit, no credit crisis. And then, you know, how do you tell them? All right. If you can do this, how do you buy that dip? How do you take advantage? How you, and who wants to talk about opportunities when you're working out daycare, when you're working out, am I going to have a job, you know, next week? That's a really good point. I think most people who are financial advisors in the industry, like they're primarily working with people whose kids are grown up already and have left the nest. But so you've got this focus in

your practice and we've got some of these clients too, people who are in their thirties and forties and first building that life for themselves and their kids are like in first grade. And it's both spouses working in many cases because these are people that are really striving to be high net worth households. The logistics factor of this is something that we've never had to deal with in any recession. It's like literally who wakes up at such and such time to set their kid up on Zoom preschool. It's like out of control what we had to figure out this year. We got a 22-month-old and a five-year-old.

So you got preschool Zoom, which is just a dumpster fire. A joke, right. And then you got a toddler figuring out how to walk and constantly trying to off itself at every corner of your house. And you're right. My wife and I both work. And this was emblematic of pretty much like 70% of my practice. So on one hand, like no one was calling me, which kind of worried me because they were busy doing preschool Zoom. Exactly.

You got to prop the kid up in front of a screen like it's a stuffed animal. Exactly. Look, and, you know, for me, my whole first New York experience was 08, 09. It was like three, four years into the industry for me. was 08, 09. It was like three, four years into the industry for me. And my recollection of like, like I was training myself for the last 10 plus years to handle the next thing. Right. Like, what are we going to do differently? Like I was learning almost risk-free. So what if, you know, the senior advisor lost his practice? My, my downstroke was going back home to Boca, you know, to chill by a pole and figure my life out while the world burned. That, that is not. And I knew if I survived that 10 years plot, hopefully never

again, but it would happen. I needed to be ready to do almost everything. So now you're the senior, right now you're the senior advisor and it's all on you and it's hundreds. Is it hundreds of families at this point? A hundred plus. I keep it lean. I keep it lean. A hundred plus, 80 million in assets. So you don't just take on anybody that calls you. You're looking for someone whose life you can genuinely impact and you can really help. Got to be in segment, got to want it. And money's ahead. Money is all ahead. What does that mean? It's not distribution phase. It's all accumulation phase. Yeah. Peak earning years are still ahead of them and they're making great money. Like we're just now starting to accumulate. And I, and that's why AUM is probably a horrible, horrible measure for my practice. Although, you know, it's nice, but

it's really about, um, getting the right clients. And this year was nuts, right? If like 30 households perfectly in segment for who you want to grow with is a gangbusters year. You can't even do that three times over before you have someone. And now you've got accumulators as clients. Did they do their job? Did they up their accumulation? Like, were you able to successfully convince a lot of them? Hey, this is that moment that your parents had. you never had yet, now you're having it? Did you get that across?

So I think I executed fairly well on the game plan of how to take advantage. If you made it very clear you need to be in the right headspace, right position, got to feel comfortable about your job, and that was tough as it was given what was going on. I think I was underwhelmed with the amount of people who said, yeah, let's go. Let's do this. Let's take advantage of this. And there's no one to blame there. It's just that I've been preparing for a decade to do this. I think if your blog posts and your content were a little bit stronger, you would have had more people like, let's do this. So I would give you a B in that regard. No, dude, how are you going to tell people in a pandemic they have to own more stock? I mean, you could say it, but you can't hold yourself responsible for their reaction.

No, no. Again, wishful thinking that more more than 20%, you know, would have, would have asked. So I'll, I'll take the 20%. I'm more happy about the 99% that did not sell. Yes. That's your job. That's your job. I won there. You know, the buying the dip was icing on the cake for anyone who did it. That's right. You did what you had to do. That's all. We talk about this internally all the time, like selecting for the right clients upfront so that there's a reasonable chance that you can actually do what you say you're going to do. And then when that moment comes, did you select the right people? And did you impart the

right information so that they stayed put? And like, that's like the main, if you're a financial advisor, that's really what you, if you're a financial advisor, that's really what you should be judging yourself on. No one else is judging you on that. I think it'd be interesting if advisors publish their churn rates, like how many clients did they lose within the first year, which means you did a really bad job communicating what you do up front, like stuff like that would be interesting to see, but you did your job. If people weren't selling and jumping off the roof and they stayed put, you can't get them to be greedy in a pandemic. They're not Warren Buffett. No one, no one gets to their goal and says like, man, I wish I did that sooner. Or I wish I took more risk to get there sooner.

Like ask anyone who's retired successfully and has a high degree of confidence. They won't run out of money. They don't care if they missed out on Zoom or whatever stock that way. They'll joke about it. They'll be like, I almost bought Apple at 20. I almost put half a million dollars into it. You know, the fact that they're retired and have confidence is their victory lap. Yeah. It's good enough. It's good enough. That was the plan. You executed on the plan. You won.

What are we talking about? I agree. The other thing is it's not like anyone's doing an ESPN 30 for 30 on these people's investing and going back to that moment where somebody could have invested more and didn't. Like nobody – no one is paying attention. It's your own life. I think that might be good in a way for our profession if you got like the recaps of the Smiths' 10 years leading up to retirement. With like that orchestral music in the background. Yeah.

And then the deep voice voiceover. But the pandemic had yeah other plans i don't think we're going to see that on tv anytime soon all right so we all used a lot of technology i think to like get through this year and i sent you this link from investment news we're talking about adapt and survive 2020 forces advisor embrace of digital tools. So from my firm's perspective, we were already doing all this because we started in 2013 and we started making hires outside of New York in 2015. So look, we were already a national firm before we were a big local firm. So we were getting by with a lot of Zoom. There wasn't Zoom then. It was like Skype, Hangouts, whatever, FaceTime.

But we were doing this already. But all right. So they did this survey and they said, what tech tools are advisors using more of in 2020? And obviously, 62% said video conferencing software. That's not ever going away now. So I was just talking to Duncan before. I can't wait to go to a Yankee game. I can't wait to go to a Yankee game. I can't wait to go to a Foo Fighters show.

There's a lot of things I can't wait to do again. I don't give like, I don't think anyone out there is like, I can't wait to go sit in my advisors waiting room, you know, and then, and then stare at his bookshelf while he talks to me in person.

I don't think there's anyone dying for that opportunity. Do you? This was a blessing for advisors, particularly with older clientele who now can transition out of this notion that you have to go see your advisor. Even for the folks that want that face-to-face, in-person, they've basically now have been rewired. They had no choice but to do the video conference. I think they see it as the same thing. Well, now they're comfortable with it, right? That's right.

That's all it takes. That's all it took. They had to smash through that wall and they're now past it and they can join the, you know, for me and just like you described, I've got clients everywhere in the country. I have clients I've never seen face-to-face. They don't care. This is face-to-face. We haven't met more than two-thirds of our clients.

Yeah. And that was normal prior to the pandemic. It's probably even accelerated now. And even anecdotally, I've asked my advisors, we do this really intense process up front before, not intense, but thorough process up front before somebody can become a client. It's like a lot of steps to this. We're not just like, oh, yeah, here's a portfolio. Thanks for calling. Like, we really like we go deep into financial planning and really walking them through our process and expectations so they understand what they're getting.

And then every once in a while, somebody would get to the end of that process and be like, I love you guys. I love the portfolio. Like, I love all the content and how you guys are really what you say you are. But I just feel like I want to have somebody locally in town. And we're like, all right, well, we can't do anything about that because we're not moving into your town. Call us if you change your mind. You know, no problem. It's disappointing. But anecdotally, I've i've asked my advisors like is that still a thing and over the years and like it's less and less anyway so this just accelerated that to like almost zero almost zero at this point i think what do you think yeah like few like younger new new next gen clients coming in would probably never bring this up to you like when it comes out

face to face again you know saving grace for practices and advisors who weren't as comfortable with it now now they are now their clients are what a huge leap that is for you yeah it's huge because if once you get caught behind we're talking about tech here like once you get so far behind that wave you're in a you're in for a lot of trouble you know and i'm again you're not to pick on older advisors here but if you're in your like late 60s early 70s and haven't adapted and like you want your practice to continue on for another 20, 30 years. Like you have to pay attention to this. And it's just going to get harder and harder and harder to do that.

And now every advisor can be a national firm if they could attract clients nationally, which most can't. But like the advisors that have built a presence online and have built content and have built some awareness of what they do and of their brand now with impunity can just take clients from local advisors everywhere. And they are and we are. And that is now, I think, an explosive moment for our profession. moment for our profession. In 2021, you're just going to have, I think, thousands of advisors working with clients that are hundreds of miles away from them without even anyone thinking twice. And it's never been, it's other than for a handful of firms, it's never really been possible. And now it's going to be practical. What I think was just cast in stone this year was anyone who for the last two, three, four plus years has been putting themselves out there by creating content, marketing online, and just doing it consistently didn't need to be the best. It just needed to be out there. This is the year where you reaped the rewards of doing it.

Right. If you were decent. If you were decent if you were decent absolutely in the top half yeah like you you just had presence yeah and when people this is the year people were like i need to get it like i'm scared i'm worried google boom you pop up you're getting an email and you're getting a crack at bat you're getting a client right it's unbelievable best year probably the best year on record for any advisor in that category up, you're getting an email and you're getting a crack at bat. You're getting a client. Right. It's unbelievable. Best year, probably the best year on record for any advisor in that category. Now you think about like the way the wire houses built themselves, where it was super important to have a local presence in all these wealthy areas in the country. So like they're all in Scottsdale. They're all in, you know, South Florida Florida. They're all in midtown Manhattan. That's a lot of real

estate and a lot of expense and a lot of people making a ton of money doing a job that can be done remotely from somewhere else for less. That whole business model to me seems like it's – it always felt archaic. But now it's almost comically archaic like our wealth management branch office with the marble floors and the art gallery and all that shit. I just think that is the opportunity that now all of these RIAs are just going to tear into. to. And if you're like a 65 year old and you have like an account at Wells Fargo, like Wells Fargo Wealth Management, not to pick on them, but it's like, why do you have your account there? Well, I used to go there to the bank also. And it's two miles from my house. And I played golf with the guy twice a year. Really? That's who's managing your family's future? I think that's over. I mean, I just think there's two almost completely different worlds of wealth management at this point. Yeah, yeah.

And one is on an implosion course, and the other one is thriving. Right. So now your job, though, as the advisor in this new virtual world is putting in place a lot of cybersecurity stuff. Like the more stuff you want to move from the physical world to online, the more stuff you have to protect. And it's not about like a locked file cabinet anymore. Now it's cloud storage of documents. It's how do you have signed pieces of paperwork?

How do you have those things flying back and forth over email or whatever? That's the next big challenge for our industry if everyone is going to try to do it this way. What do you think about all that? I think broker-dealers who can pivot into providing those types of services and help their advisors transition from reps into RIAs or We're becoming IARs of the corporate RIA, are in an amazing position. Who's your brokerage custodian right now? You're Commonwealth? Yeah, I broke away from Commonwealth as a rep,

but they're doing 80 to 90% of all my tech stack for providing me, it's on my own RIA, but they're providing me all these services that by the way, were the same services I had before, right? And yeah, that was great for transition, but also good for the heavy lift. Like you talked about security. I can lean heavily on a really, really reputable BD

and their tech stack as my tech stack. And then I add on the things that I want, like my online files. I was going to say, I wish, so we're Schwab and Fidelity. We were a big TD shop, which is now Schwab. I wish they were doing more of the tech spend on things like cyber and endpoint security and network security. I mean, they're obviously doing like what they're supposed to be doing, but then we have this whole added responsibility because they're not interacting with our clients at the rate that we are. Like we're setting up the account.

So we – a lot of the onus is on us. See, I'm going to be there. So what I'm running now – so I spent the last year building out the firm's own investment management platform to run alongside of kind of the white labeling investment management platform that we had at Commonweal. That's to be able to write alternate – because now i'm my own compliance officer right i can go outside of the you know the rap account that exists over at commonwealth and i'm learning a lot of the things that you're talking about right you could add what what you need yeah it's a yeah now it's a multi-custodian platform of to your point nfs fidelity and schwab i want to be able to plug in the direct

indexing, the alts, you know, investments that are on those platforms that might be valuable. Like if my clients are, if their money is ahead of them, like I described, like I don't need to worry about it now, but if I don't build it out now, you know, and I'm double the size today, I'm going to get crushed just in the time that I'm spending. It's not easy to know the cadence of when to add what piece as you get bigger. So I think we've made mostly good decisions, but we didn't do in-house compliance until this year. We actually, we offered the job to an amazing professional with an incredible background. We offered the job to her in, I think, February.

background we offered the job uh to her in i think february and she had been to the office for the interview and then hasn't been there since but we committed to her and thank god we did this was the year that we really needed so she's compliance but she's also cyber yeah and this was the year that we really needed the cybersecurity oversight in-house like more than ever given what this turned into. It's like 34 people using their own devices, some of them in their houses. Like it's – It's like never been more important. So we got lucky that we found this person right before coronavirus. this person right before coronavirus. And that makes complete sense. You know, and I was going to make a comment how like, I guess I'm fortunate that because I'm so lean, it's just me and one

other. Like I have a pretty tight grip around the operations, right? Like it's Murray and I messaging each other. It doesn't go further than that. Like I can, I can do that. But even knowing that I understand compliance very well and I can handle, you know, the apparatus right now, boy, boy, would I like, you know, to have someone to be able to do all that. Certainly who's that's their skill set. Right. So now I can do, you know, at least the consulting firms can come in. You know, you hire one lawyer to come in and you pick and choose what you need. Well, that works really well for us. When we were smaller, we didn't have it in our budget when we started the firm to have a full-time in-house compliance. So we worked with ARC, Advanced Regulatory Compliance, and we still retain them

because they did the stress test for us, what's called the mock audit. They come in once a year and act like examiners. I'm doing that right now. So that's good. It's good enough to have an outside person at the stage that you are, but it's hard to know when to make that leap. I think it has more to do with how many employees than it does have to do with how much in assets under management, because the more people you have, the more there are gaps for things to fall through cracks in a lot of ways.

So I think that's how we kind of thought about that. All right. What are the most important tools for retaining clients? 40% of advisors said client-facing portal. So we use Orion for that. Clients like it, and it's getting a really big upgrade because they acquired Advisor, which is like – it's like MoneyGuide Pro, but it's like they own it. So it'll be – performance reporting will be totally integrated with financial plan. So clients will see that all on one screen.

I think the portal is underrated. I think a lot of advisors, like they have clients logging in all different ways, and they almost don't care that much. I always viewed it as being important because it's the user experience. So you don't want half your clients logging into the BD, the custodian, and then half logging into the financial plan. How do you think about like user interface and portals? Yeah, I don't want to constantly give the same answer I'm giving for like all these questions. But again, it's the tech stack that I had through Commonwealth. Like it's still through their, you know, portal, you know, this is

where I think the big opportunity is for BDs that are looking to stay alive over the next 40 years. Like you got to get these parts, right? So yeah, we're money guide pro plugs into it's called investor 360 and they log in there. They see everything. They can add their accounts, everything you want it to be. You just want all of your clients to interface with you the same way. It's almost not even like who's the best provider because that's debatable. As long as there's consistency. I'm a big tech nerd. Like I take this stuff very, very seriously.

And because of that, I'm very cynical about all the technology that I see. Like nothing's perfect. Nothing blows me away. And I think it's really just the fault of like the financial services space has just been building on top of old tech for so long. Like you still see like a domino server show up from like Lotus 1, 2, 3.

Like, come on. Like, you know, you pile exchange on top of that. You just know you're not going to get a pure, fresh, like amazing user experience that's built out from scratch. And I know there's many people trying to get us there, but the industry is huge, man. You're trying to write chips that IPOs from some of the financial services companies that have done the best job with user interface. I think Robinhood will go public. I think Betterment will go public.

And I think SoFi will go public. I hope they do. Right. So they don't all do the same thing for investors. But if you look at like one commonality between them is their shit looks awesome. But if you look at like one commonality between them is their shit looks awesome. Like when you use those apps, when you open an account, when you transfer money into or out of one of those things, the shit looks and feels awesome and it's fast and it works. And like I feel like that's going to be table stakes for RIAs. Like you're going to have to have something that is as easy to open an account as those companies have.

And it's coming. The demand is coming for it too because of the services that you just mentioned, your betterments of the world that have built from scratch this very sleek-looking interface. I had one client in tech ask me, like, why does your portal look a certain way? And literally compared it to some of the, you know, I think they compared it to either Betterment or Wealthfront. Why isn't it looking like that? Just looking like that, right? Not even working like it. Right. They don't even care about that. That's the crazy part. Like nice, large, smooth, round button edges and the color schemes are right. But dude, that's what's coming. So we, you know, we built our automated advisor on Betterment platform. It's called Liftoff. It's liftoffinvest.com. But we have clients open an account there. It takes 30 seconds. They're like funded. The account's open. They're like funded

immediately. And we're not really doing much there. It's like an automated thing. And then we like do this like incredibly high-end, white glove, high net worth investor service and the custodian is like now Schwab and Fidelity and that process is nowhere near as convenient. And so it's weird to me that we can't get those two to converge a little bit faster, but maybe that'll happen this year. It's exactly what I'm talking about here. And I try and put myself in the shoes of the financial department in these big companies and think about the kind of numbers they're asking for to revamp.

You're a 10,000-person firm with a trillion dollars in assets, and you're trying to figure out how you rip the, you know, five band-aids layered on top of each other. And they're like, yeah, we need $4 billion. Go tell the shareholders they're not getting 30 cents a share this quarter. I want to pivot and do a couple of minutes on this SEC testimonial thing because I think it's fascinating. Let me just tell people what's going on. This is the first revision, major revision of an advertising rule that's been in place since 1961. And it's to better reflect technological advances like social

media marketing, et cetera. But basically, if you have Doug, if you have a client who's happy with you and they go on LinkedIn and they're like, Doug is doing a great job for me as an advisor. Like you're in trouble and you, and you have like nothing to do with it, but that's literally what the rule says right now. It's, it's, it's nuts. It's happened. It's happened. I had a client sent out a tweet. He's like, I get a picture with you. So that tweet, this is my guy. He was, you know, as a real estate guy, he knows all about, you know, hyping up people who are in this, you know, kind of business. And I remember getting an offer on compliance, like, can you call your client and ask them to take it down? Call your client who's

doing you a favor and have them take it down. Awkward conversation, no matter who you are. All right. So it's totally stupid. So Jay Clayton on his way out, this is like kind of the last thing that he wanted to do. He said, quote, this comprehensive framework for regulating advisors, marketing communications, recognizing the increasing use of electronic media and mobile communications, and will serve to improve the quality of information available to investors. The new rule provides for, I can't even read it. All I can picture is like, hi, I'm Derek Jeter. Creative planning has done a fantastic job for me but like that's obviously where this is going isn't it oh it's cringeworthy in a way if not all the way like you have to so you have to disclose that this is a testimonial and like oh my god like even if you

get your client to do it and then you who's gonna say are they gonna say it you're gonna throw the fine print there i i wanna i wanna like give a hot take on this we're gonna retweet or like clients tweeting thank god i'm working thank god i'm working with doug and then doug retweets it it's gonna be so gross listen here's the hot take if if you need to rely on testimonials to generate to drum up the business to grow. Yeah, you suck. Right. Yeah, you're not doing it right. Paid. Paid testimonials. Like Tom Selleck selling reverse mortgages.

Oh, my God. So I will make a commitment right now. I will say I will never ask a client to come out publicly and endorse my firm. Our client relationships are private. No one will ever know that someone's my firm's client, let alone be asked to listen to a testimonial. So I will commit to that right now. Will you commit to that right now?

No, I'm going to dress up as an actor and I'm going to do my own testimonial, but dressed with a whole mustache thing. Oh, you're going to be your own cliential, but dressed, you know, with like a whole mustache thing, you know? Oh, you're going to be your own client. Yeah. Like Billy McFund. Eye patch. Yeah.

Yeah. All the way. All the way. Oh, it'd be so great. No, you're like a rich old man, like come out in a Monopoly man suit. Doug has made me millions. My steel conglomerate tycoon hasn't done better. Something like that.

That's what I'll do. But I'll commit to never, ever, ever, ever asking a client to do a testimonial for my firm. No. You're going to want to take a shower when you see what certain people start doing. You're just going to be so grossed out. I don't want that. I don't want this. No.

Not a great idea, but whatever. We'll see. We'll see what maybe somebody will use this creatively and it's not gross. I can only picture being gross. I guess that's the best thing I could say about it. All right. I want to do, uh, before I let you go, I want to do some, uh, some resolutions. I asked you to think about this stuff before coming on. Um, do you have one? What do you want to do? Yeah, no, there's, there's plenty. I want to do differently. I want to get the level of energy that I had going into 2020 back. Like I can be super excited and pumped, but I lost writing every week. it though you're like you could have done a better job doing the thing i was like i know you were but i lost 80 weeks in a row of a weekly blog poof gone and getting that back going is like you know pulling teeth um all the content that i was so excited to do really turned into child care

keeping the business alive being good to my spouse we did a fun show this summer you and i though uh we did summer school for cnbc yeah i relied heavily show this summer, you and I, though. We did summer school for CNBC. I relied heavily on my friends and you and the connections in the media to, you know, do the things that I love to do. But the first party content, like it evaporated in 2020. And that's life. Like, thank God I had the other stuff because first party content just went poof. And I need to get back. I must. I have ideas. Well, your clients, like if you have a client that came in because they were reading what you're saying or listening to what you were saying,

and then you like stop, they're like, you okay? How come you're not doing the podcast anymore, Doug? The one thing, so I actually did do a podcast with my wife and we've been rolling out the first season. We did a mini podcast of just her and I to see if we could get enough attention. It's called We Should Be – Marriage Counseling. Yeah.

With the bonapartes. Yeah, our marriage is alive. Yours can stay alive too. And now we've been bringing on guests, and this will be our third week dropping a guest episode. So that at least has been there. Hold on. Stop. I don't even know about this. I haven't been on Twitter. You and your wife and you're bringing on a guest. Yeah. And

then the two of you like interrogate the guest. Oh, yeah. We want to know why they're so successful. What is your wife? What does your wife do for a living? Tell everybody. Tell everybody the background of why this would make sense for a podcast. Yeah. So she is a general counsel for a Fortune 500 company. Right. You know, her and I are just like constantly can't stop doing stuff like it's just nonstop. So we said, you know, what should we be? What are you doing instead of sleeping? We wanted to find people who kind of function in the same way. I can't turn off, have to be doing something, have to be creating. And that's really their own definition of success. And that's what we love about our generation. How come I haven't been

invited on this yet? How old are you? 43. Just missed the cutoff. Oh, it's for people under 40? Got to be a millennial. When you want ratings, you want Gen X or older. You want people who have been through something. How about my wife and I will come on to the podcast with your wife and you, except it's not a podcast. It's like Chinese food and we eat in a restaurant somewhere. And I will do that. I will do that tomorrow. All right. Listen, you're the best. I've been looking forward to talking to you all week. And you I don't know if you realize it, but you made a couple of very well-placed phone calls to me during some really rough times I was having over the summer and in the fall. And it was just nice to hear

from people that are going through the same thing I'm going through, trying to run a business, trying to keep everybody calm. So it was nice talking to you. And I'm happy to have you on the podcast. We'll have you come back. I'd love to. Thanks for everything you guys do. You're awesome. Happy 2021, my man. I'm here with my friend, Eddie Elfenbein. You have probably come across Eddie's excellent blog, Crossing Wall Street, over the years. Eddie, how long have you been blogging now? Let me see. I guess have you been blogging now uh let me see i guess it's been 15 years now you're one of the original financial bloggers right like by far yeah who

else was around in 05 besides ridholtz and taught us i have no more two names that that jump out i'm trying to think uh joe weisenthal we were actually featured in barons's together in 2005. This guy, how old was he? 12? Yeah, he was 12. He was the stalwart back then. Yeah. I remember. Okay. I probably met Joe in like, Oh eight. And he was already like, he was already doing it. He looked like he was in the strokes. Like he didn't look like somebody that writes about finance, but he was kind of doing, he was, he was already doing his things. That's a good point. Now, Eddie, you originally became famous for having called the crash of 29. Do you still get like letters from fans and thank yous for that? I do actually. Well, it's not that they send it by telegraph. So the guy will show up at my house with a hat and everything. But yeah, I'm proud of

it. All right. So I want to get into your buy list. So a lot of people who are fans of yours, one of the things they like that you do best is every end of December, you put out your list of 25 stocks that you want to own in the coming year. And it's subsequently become an index. And now it's an actively managed ETF. And I think it's your four years now running this? Yeah. We just had our fourth birthday. Okay. So we have compliance restrictions around how much we could talk about the ETF, but we'll talk about the strategy, the index and what goes into it. All right. So these are 25

stocks that you're a fundamental guy. These aren't like stocks breaking out or these are 25 stocks that you're a fundamental guy. These aren't like stocks breaking out. These are – I think you find companies that have a good outlook and that have – that are currently quality companies. So you're not like skimming from the cream, the momentum names. But you're also not in the bottom of the barrel looking for the cheapest, filthiest setups. You're basically like, look, these are good companies. You should be an investor in them. And then the year ends and you will make some changes, but I think you're trying to have a lot of continuity too.

So talk a little bit about the origin of the buy list, and then we'll get into some of the names that you have on it for this year. Sure. I guess one of the things when I started blogging, you know, I wanted to help investors. And one of the things I wanted to show people is it's not that hard to get good returns. And so I said, well, we'll start this buy list. And I kind of had the, it's sort of when you fight somebody with one hand tied behind your back, I said, look, I'm not going to make any changes throughout the year. These stocks are set and forget for the entire year. And then each year, I only swap in five, five come in and five go out. So it's 20% turnover. And I wanted to show people, you don't have to do that much as long as you have quality companies, you have some discipline

to what you're buying, and time. That's the best factor. So, you know, we had a lot, you know, a lot of people liked the buy list and we had some success with it. So then I got asked again and again, do you have any way I can invest in it? And always the answer was no. And so a couple of years. Right. So people are like reading your blog. They're a fan of your commentary. Right. They see that you're putting out these lists of stocks each year. And they're like, all right, I love this approach.

I just don't want to do it myself. Right. I don't want to buy the stocks. Can you just do it for me? Exactly. And I calculate, I think to buy all 25, it's something like $4,000, $5,000 to get one share of each. And so each year we rebalance the portfolio. And the great thing about the ETF structure is that can all be done right inside the ETF.

Right. And so you have that turnover taking place, but the end investor doesn't feel it in terms of tax consequences. It's all invisible to them. Okay. Would you ever make a change to your buy list in the middle of the year? Have you done that before? I never have. The only thing is when stocks are bought out, but again, I keep this rule. I do not change it. So you don't replace it. Right. So you could have an acquisition and finish the year with 24 names. Exactly. Yeah. And what So you could have an acquisition and finish the year with 24 names. Exactly, yeah.

And what do you do with the cash? I've had it once where we got cash and I just redistributed it, you know, 21, 24th into all the others. Okay. But usually when they're bought out, for example, that's an effect is this year, one of the stocks we're selling is,

it was a buyout. So it wasn't the stock that we bought. What are you selling? Becton Dickinson, where we bought CR Bard, wonderful company, bought out. It happened. We held on for Becton for a while and we're jettisoning it. Becton bought CR Bard. That's right. That's right. Yeah. And they bought it for stock. So you got shares of Becton Dickinson.

Exactly. Exactly. Yeah. Okay. And you're happy for the buyout, but then you're like, wait, I don't know about these guys. So Beckton's a good company, but it just had some issues this year. Are you governing this portfolio top down in terms of sector exposure? The exact opposite. So you're going bottoms up? It is the ultimate in stock picking bottoms up. People always want to know what's my macro view, Or for example, I don't have any energy companies because I couldn't find any energy companies. I'm looking for the best stocks.

It's basically, this is for people who like stock picking or into stock picking and just love finding that great stock out. Hold on. So you don't have any energy stocks because you couldn't find one based on your criteria. Yeah. So that's interesting where sometimes a bottoms up way of picking stocks keeps you out of areas where there is macro trouble just because the fundamentals are deteriorating for that industry. Right. And that's one of the problems about screeners, that people, a lot of newer investors get this over-reliance to screeners, and that can lead you astray if you're just going by a PE or a price book

or something like that. You got to look at more variables than that. And that's something that it's taken me a long time to learn. Okay. So let's get into some of your names. Let's start with what were your biggest winners in 20 that you're carrying into 21 that you still feel really confident about? I guess our biggest winner was Trex, the decking company. That makes perfect sense. Everything with the housing, with mortgage rates, and it's just a

really well-run company. I think it's up something like 90% this year and another, I think recently another new high. Wait, so you have a lot of conviction then to hold a stock that doubled this year, keep it on the buy list, and you can only have 25 names. Each one of these slots is at a premium. It's not like you own 700 stocks and who cares? That's right. So you have a lot of conviction then to keep a stock that's doubled and commit to holding it for yet another year. Yeah. So do you see a continuation of the company's success because of those macro factors that you just cited?

Absolutely not. I hold on because I like the company. Now, remember, so it's 25 stocks where the turnover is five each year. So when I add a company, my thought is, am I going to be comfortable owning this for an average of five years? And it can go even longer. So people think that I think that's a benefit. People think it's a it's a handicap. So it's not.

So you're not making a 2021 bet with a new stock you're adding. You're making a 2026 bet. Exactly. That's exactly right. And people want to know, oh, it's the mortgage rates. I couldn't have predicted that with Trex. It's a good company and they took advantage of it and they're in great shape. All right.

Who else you got? Well, a good example, like Disney. Josh, if we went into a basement and we had created a company in a lab that could be more adversely impacted by the coronavirus and the lockdown. We got the test tubes and everything. You couldn't have done worse. Like weird science. Like we built it. We could not have done a better job than what Disney is.

It's sports. Oh, my God. It's movies. On top of that. Theme parks. It's a cruise line. It's a cruise line on top of that theme parks. It's a cruise line. It's a cruise line on top of that. And I mean,

they've had just absolutely tremendous success and it's all about, you know, their streaming business and you know, they're where they would be three, four years from now. That just got accelerated today. The only thing they were missing is an airline. The only way it could have been worse.

I'm sure Mickey Air was in the plan somewhere. Oh, my God. Mickey Air would have been completely fucked. Yeah. So did I predict what Disney did? Good God, no. But, you know, it's – Well, hold on.

So that stock is now up on the year. Yeah. Has no business being up on the year. No. business being up on the year no it's up on the year it's on it's unbelievable jesse livermore said don't argue with the market you're not gonna win yeah we live by that creed where i come from um okay let's you're about to talk about moody's what is the bull case for a bond ratings agency do they are they working on a vaccine like what yeah why do you want to be in moody's right now the only thing better to own than a monopoly is a near monopoly and that's basically what what moody's is and and it's all

about the move to data data has just taken over uh wall street And the Moody's Analytics is, you know, that's the AWS of Moody's. It actually hasn't had that strong a year this year. So it hasn't been one of our biggest winners. But what wonderful company. I always think tied in with that is Intercontinental Exchange, another great stock, ICE. A lot of these like Wall Street data plays have been red hot stocks. Market Access, I think, is the best S&P 500 stock over the last decade. Nobody even knows what this thing is. MSCI has been a massive winner, which is basically index data. So there is a gold mine here.

And I know there were some acquisitions this year, too, in that space. You know, it comes down to, you know, the moat argument. I mean, these are companies that basically you have to deal with if you're going to be in this space. There's not much in the way of options. You want to look at switching costs. That's for investors. for investors. Think about what you use each day and what company, if they came along and they raised the price by 15%, you'd be upset, but you wouldn't go away. That's sort of the ultimate kind of company you want to have. So you have Sherwin-Williams, which I imagine worked for

the same reason trucks worked. It's people repainting their houses and remodeling, which is a mega trend. You have Church and Dwight, which is baking soda and Trojans. Is that? You cannot go wrong with condoms and baking soda. Okay. Is that Arm and Hammer? Is that them? Yeah, yeah.

Okay. So they had a good year because anything household related, people just stopped up. Classic defensive play. The boring staples always have been historically very good when people get nervous they go to that people don't cut back on their uh uh baking soda purchases i know i don't yeah so you always want to have baking like baking like a wild animal i'm gonna i'm gonna try popovers this weekend no baking soda needed but that is the ultimate expression of of uh

of where i am personally is when i start buying muffin tins i have no i don't know i don't know what's going on with me all right hershey probably had a good year for the same reason that a church in dwightwood uh one of the best managed companies in the world yeah actually it's kind of weak this year not it was up a little bit. But I mean, put it like this. There is no town in America called gluten-free America, but there is a town called Hershey. And that really tells you all the other notes. Anything that is a sugar delivery system is going to be a good business. You know what's funny about Hershey? like are all excited about esg and governance and companies that care about their the community they're in and their employees hershey's been doing that shit for a century yeah like i went to the hershey museum so they have a

park yeah the theme park but then they have a museum nearby with just like old photos of the original grounds yeah but they he they were sponsoring little league teams and civic societies and we and women's women's suffrage stuff they were doing that shit a hundred years ago um before it became fashionable so i guess they're like a prototype for what we want most companies towns wanted people taken care of they wanted people to be uh safe and comfortable in those towns and And for a lot of the times, it was a good middle-class living for a lot of Americans. Okay. So let's get into the five new stocks that you're adding.

So we'll run them down in order. Abbott Labs, I think a lot of people are familiar with the name, but maybe don't know what it is that you find attractive about Abbott right now. Well, I mean, first of all, this is one of the classic names. I think it's 49 years of consecutive dividend increases. And in fact, a lot of times when these companies keep their streaks alive, they're raising it by like one or two cents. They just had a 25% dividend increase. Oh, my God. They just had a 25% dividend increase.

Oh, my God. Abbott is a really, you know, what I like about it is the pure medical devices. I love the devices. Again, it's one of these companies you sort of have to deal with within the healthcare industry. It's not a COVID play, although they did have their quick, I think it was the five-minute positive and the 13-minute negative COVID test early on. And so I might have that backward, but hugely important in that space. It's a little pricier, but as you may notice, I'm not a pure value play, but I still think it's a decent valuation. I think it's about 23 or 24 times next year's earnings, higher than I'd like. But again, I want to hold it for a number of years.

So it's- Hey, you might notice valuation is irrelevant and the higher the price, the better the stock. The better it is. Get with the times. All right. Zoetis, I know this name. It was a spinoff a few years back from Pfizer. That's right. It's animal health. They sell supplies to both agriculture and veterinary businesses. And is there anything like unique going on there that we should be aware of? Are they working on bat stuff right now? I mean, basically, someone used a phrase that, you know, 50 years ago, the dog was outside the house and the dog went inside the house. Now the dog is inside the bed. And that really, you know, it creates this tremendous need for animal products. Also, they're doing very good business outside of the United States as well. So people tend to think of it as only pills for your dog, but they do a lot

of livestock and they do a lot of stuff overseas as well. Very strong company. Okay. Miller Industries is like tow trucks. I never heard of this thing. Very few people have. Since 2000, this stock is up 8,000 fold. No analyst follow it. Come on. One single analyst follow. What's the market cap? About 450 million around there. Come on. Yeah. It's a great company. Again, classic niche play. This is where I become the green eye shade guy with the bow tie stock. No, but doesn't this sound like something that Berkshire Hathaway would have bought 40 years ago? Exactly is. It started by a guy named Bill Miller, not the value trust guy. And it was a highly segmented industry. Again, you don't think of tow trucks and wrecking stuff. You know, somebody has got to do it. It's an important business. And there's only a few names

you can go to. So he quickly bought a bunch of names. He standardized so all the tools can be used on any of the different brand names. Got about a 40% market share. Very well-run company. Also, and just like as you would expect, it got slammed earlier this year. One of the quarters was especially bad. But, I mean, again, it's- Why? Because they're involved on construction sites.

Yeah. I mean, all that got shut down during Q2. And so they had a horrible quarter. But again, you got to sort of dismiss that. As far as the valuation is pretty decent. And again, if the reopening goes well, it's going to be there. By the way, if you remember, I think we talked about this. I wrote about the companies that are not followed on Wall Street that have tremendous- I remember that. So this is one of them. Exactly. Why won't anyone follow this company? Because they're not issuing stock or doing bond offerings. And they're not getting debt. And so they're not doing any dumb acquisitions.

And also all across the street, they've cut back on the research departments. So all these marginal names, they don't need the banking business. They don't need the bonds. They don't need the M&A. I have a great idea though. Hear me out. Okay. What is it called? Miller Industries? Yeah. What if they were just like Miller Cloud? Miller Blockchain. Miller Blockchain. Do it. Do it. miller industries yeah what if they were just like miller cloud miller blockchain miller blockchain do it do it hey i'm gonna talk to you about that stuff in a second let's let's get to uh let's get to the last last two names thermo fisher scientific i guess this is a good replacement for cr bard it's

like um diagnostic equipment and and it's everything you need to develop drugs and everything you need to i guess run a lab or whatever right like is that the story here yeah exactly and i mean this is one of these you you look at the eps i mean every year it goes up like 15 17 percent and it's it's not just health care but also just broadly scientific for people who've been investors longer you may remember it was Thermo Electron and Fisher Scientific. So the name was Thermo Electron Scientific. Science is going to make a comeback in 2021. I feel like we're going to be into science again. Science might've just saved the world.

It's a great business model. It's sort of like the razor razor blade model where you buy the equipment, but all the upgrades and all the assisting you need. So really a very strong business model. Okay. And then I never heard of this one either. Heiko. I think you mentioned that this has been in your buy list before and now it's making a comeback.

And again, stupidly, I admit- H-E-I. What's the ticker symbol? H-E-I. And it's H-E-I-C-O. Yeah. What does that stand for? I think it's somebody's name.

What is great business, it's airplane replacement parts, something nobody ever thinks of. So it costs a lot of money to keep these planes up. And if something breaks, you can't go to the original maker of the plane. So you go to a company like Heiko that makes it a specialty for your plane. Also, there's a lot of very specific FAA regulations. So it is kind of a high barrier to entry. Not everybody can do this. And in many ways, it's similar

to the generic drug business, just airplane parts. But why doesn't like Boeing and, um, and Airbus just make their own replacement parts? What am I missing? Uh, because I think Heiko can sort of do it for everybody. I just don't think it's worth their while. So you have that in the auto industry. So it makes sense to have that in the airplane industry also. Exactly. All right. So these are your new names and I hope none of them are unruly or disappointing to you this year, but you're going to stick with them for better or for worse, at least through 2021. That's right. Okay. Listen, I like rules-based, I like discipline. And I think sometimes people like try to focus so much on optimizing, like what's an optimal holding period. Statistically, it's 10 months, not 12

months, blah, blah, blah. But at the end of the day, like everyone has to draw the line somewhere. And so I think having that kind of defined buy list, and this is what we want to own this year, and then we'll revisit it a year from now, like at a minimum to me, if you're really an investor, I think every investment needs a year, right? I could be wrong, but I feel that's, I think you have to have a dividing line between investing and trading and maybe that's where it is. I want to talk to you about active ETFs in general. I feel like this year was a coming out party for active ETFs, but mainly because of one person, Kathy Wood, and what she's been able to do at ARK. But now her investing strategy is miles away from yours. So I'm curious what your thoughts are.

I think she's the active manager of the year, ETF or otherwise. Okay. I don't think anyone would disagree with that. So I guess my question to you is, as somebody who runs an active ETF, watching her go to like $50 billion in assets in one year, that must be somewhat inspiring. Like, okay, this is a category now that could raise serious money for all different strategies. And she's just the first to have really blown it up to large numbers. Do you feel that way? Absolutely. And, you know, still even today, people always, they associate ETS with indexes and with passive investing. And they're still in the public's mind.

I don't think that has been fully connected. So I'm glad to see the success of ARK just to bring, fully connected. So I'm glad to see the success of our, just to bring, I mean, it's a, it's a great structure for investing. It's much more user-friendly for investors. If you remember, you know, like say our parents' generation, you bought say, you know, Fidelity Mangellan, you didn't know what was in it. You had no idea. You had to wait for, you know, quarterly reports. You knew three months later. And those are just the top holdings. And you were happy with it. Right.

So she's giving you literally daily NAV updates and what's in the portfolio, which is what an ETF is supposed to do. I know we have some active ETFs that got a waiver where they can wait to reveal their holdings. Right, right. But not most of them. Most of them look more like you or more like Kathy.

Yeah, people are always shocked. They say, you give away the names? Aren't you worried about that, that you open it up? I'm not worried about it at all. I think it's- In her case, it's actually beneficial because she puts on a name and then people say, ARK is buying blank XYZ Genomics.

And they take the stock up even more because they know she's going to get more inflows and end up having to buy more of it. So that's become something interesting. I use the analogy, and people think this is funny. But if you remember years ago, everybody was worried about bootleg takes of your favorite bands. And there was one group that had no problem with it. And that was the Grateful Dead. They actually had a space up front where people could record it. And they're thinking, how does this hurt us?

It's just people listening to our music. So they're going to come to the concert. They're going to be part of the experience. They're going to buy our albums. And so I don't see how having the names public. I don't see how it's, I'm not running some black box portfolio. I'm trying to say, this is easy. You can do this. Well, I think for certain investors who they think they have an edge on the information,

they think they know something about a company, not inside info, but they think they have a perspective on a company that other people don't have and they need time to accumulate their position before it runs away from them. I think from that respect, you can understand it. But given the nature of how you're investing, that's not necessary. And then given the nature of something like ARK, where just their presence in a stock now becomes a self-fulfilling prophecy, it won't last forever. By the way, she's 65. Yeah, so she's 10 years younger than you. Anyway, I just, I feel like what's happened this year though, is the active ETF structure

has gotten really exciting for people. So I think that's going to help a lot of, a lot of the funds that are out there doing what you do, what they do, et cetera. So I thought it was pretty cool. I want to go to a couple of your tweets because, and I said this in my intro about you, but you're one of the funniest people I know. And I'm not really active in the social media community these days, but like, I just looked at like the last couple of things that you put out and I just, I can't help but crack up. Are you as active on social media as you were a couple of years ago or about the same? I've actually listened to you and when I've pulled back with some of the engagement I have, I just, I don't argue with people and anything. If you're involved in managing people say, oh, your ETF is terrible or something. There's always something.

And there are just people who they aren't happy unless they're angry. And I steer clear of that. So I'm more of a one-sided Twitter user these days. You're broadcasting. Yeah, I don't need any friends. Like, I have a lot. I'm good. All right.

So 2020 is the Florida of years. It's like six words, but you absolutely nailed it. I love that. I'm probably going to end up moving there at some point. But I'll own that. All right. This is good. December 22nd. I put on some big shorts this morning. This is not a market tweet. So how many things did that occur to you during the course of the day? I don't know. Were you like, I'm not going to tweet this? The thing is also – and then I'll get like a retweet by – somebody important will retweet. Somebody – you're like – I don't know. What do you mean somebody important? Michael Batnick?

Exactly. And then I realized, oh, I guess they saw all the stupid tweets I did as well. And by the way, I say the stable you have under the Ritholtz banner, these are the best tweeters and bloggers out there. So congratulations on getting there. It's a great crew. All right. This is you.

In the last 20 years, the Dow has gained 20,000 points. 60% of that has come in the last nine months. Yeah. You said that on December 17th. Is that real? Yeah. Well, that's just looking at the point gain, not the percentage. I get the trick, but still, the point gain does matter.

It is dollars. Oh, yeah. You get torn up about that. Any math, slight difference. But I still think it's notable despite the fact that it's points. It is amazing, right? So did you ever expect to see Dow 30? When you started in the industry, you started probably in the nineties, like I did, right?

Yeah. Early nineties though, for you late nineties for me. But the Dow was six or 7,000. Yeah. Is it, do I have that right? Okay.

Yeah. I guess around there. Did you expect to see 30,000 and this is just like completely normal to you or. I don't know what I expected. I wouldn't say I expected a specific number, but I do believe in sort of the long term. I mean, you know, to be an investor is to be an optimist.

I think Jason Zweig said that. And so I do sort of assume that is the long term growth of corporate profits. These are companies that make things that solve problems for every day. So I'm really not surprised by the success of our capital markets. It is remarkable. I just look, compared to when we started, none of these things were, I think the internet was just becoming known to people in the office space. There's nothing like Facebook or Google or anything like that. Right. It's a totally different ballgame, but I guess it always will be. Eddie, we're going to send people over to crossingwallst that. Right. It's a totally different ballgame, but I guess it always

will be. Eddie, we're going to send people over to crossingwallstreet.com. That's the blog. That's the blog. You see the buy list tag under it. Okay. Where people find more information so they can do some research on the ETF. The ticker is CWS. The ticker is CWS for Crossing Wall Street. I never had to sit down and choose a ticker symbol before, but I did that. So the advisor shares are partners that run the fund. I mean, if you just put in CWS and ETF, it's the first one that comes up, but it's at the advisor shares website. And so you get all the, you know, NAV and all the stats and some audio commentary from me, everything about that. We also have a great team. There's the 1-800 number. They can answer any questions about the

fund. You can go to Crossing Wall Street and find all Eddie's stuff there. Eddie is the best, just an all-around great guy, smart investor, great writer, legendary wit. Eddie, I miss you, my friend. Hope to see you in 21. Maybe we'll throw a conference just to get everyone back together. That would be awesome. All right, man. Stay safe. Happy New Year. We'll talk to you soon. Thanks for listening. Check us out at thecompoundnews.com for daily investing and market insights. You can watch all of our videos at youtube.com slash the compound RWM. Talk to you next week.