The Compound and Friends - Netflix and Churn

Episode Date: April 22, 2022

On episode 43 of The Compound & Friends, Ben Carlson, Will Hershey, and Downtown Josh Brown discuss: trouble at Netflix, thematic investing, metaverse ETFs, the future of Twitter, and much more! This episode is sponsored by KraneShares. To learn more about KraneShares' suite of China-focused and climate themed ETFs, visit: kraneshares.com/?adsource=wealthcast Check out the latest in financial blogger fashion at: https://www.idontshop.com 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/disclosures/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

Josh was in the Caribbean for... Oh, where about? I was in Anguilla. Nice. Which is my favorite place in the world. That's number one. And I've only been there once. I went there in 04, and it's very different now.

It's like much more developed, the island. Yep. But it still feels like you're in the middle of nowhere. Sounds nice. Which is what I'm looking for. The resort was full for the week, but you could go like a long time without walking near anybody else. How was the weather?

Perfect. Like literally perfect. April, we're starting to get maybe too hot soon. Yeah. In their off season, they were telling me that the island's visitorship drops to 30% of what it is in the winter. Sounds about right. So they're like dying for more things to open. Is it a little one where you have to do like a puddle jumper to get there?

You fly to St. Martin. No, you fly private. Come on. No. You fly JetBlue to St. Martin and then – Is that what you named it, JetBlue? That's what I named my private jet. You might get sued on that one. Mine would be JetBrown.

You fly JetBlue and then you take like a 30 minute boat ride from the airport in St. Martin to north to the southern tip of the island. And then a 10 minute taxi. It's like it's easier than it sounds. The hard part was the medical shit. You have to do a COVID test within 48 hours of arriving in St. Martin. Then you have to do a COVID test to go back to St. Martin from Anguilla, your last day on your trip. And they schedule all this stuff for you,

but if you don't have it, you're not leaving. Yep. Hawaii was like that too. They had very specific places. Where'd you go to Hawaii? Big Island. Okay, when? Oh.

During the pandemic? Yeah, like maybe a year ago, something like that. I get it. Once you get to the island, nobody has a mask on. No. Well, we're done.

Aren't we over? Now we're over, but like. Like even Ubers, they're, well, I think they made me or tried to make me... But it was such a relief. You go through the medical thing. One of us, so they're like, when was your last booster?

When was your vaccine? My daughter's fully vaccinated, but I think like enough time went by where she didn't qualify. So they're like, they did the nose swab with her. As soon as that was over we like all our papers were in order they go okay congratulations masks off and we didn't touch or see a mask for six days i guess that works though right if you're that strict on people coming in coming out you even go as far as what happens if one of us tests positive on the way out of here that's the risk. The risk is.

What do you say? Like, see you later? See you in two weeks? I mean, my family can go back home. I would stay. That's the risk. The risk is you test positive. Maybe that's the strategy.

You want to so that you have to stay down there and then you can take a longer vacation. And I'll be broke. Believe me. I don't have more than five nights in me as far as what I want to spend to be there. It was great, though. I needed a vacation. And not to intimidate anyone here, but I am very tan. I mean, I don't know.

I don't know if we're going to capture that on the YouTube. We are. We are. We'll pick up on that. Okay. When you're tan in Manhattan this time of year, I feel like other people respect you more. They will give you a wider berth on the sidewalk because they're looking at me. I was on 57th Street.

I had to drop something off at a store. And people were just like, that guy, that guy's got it figured out. Look at the tan on that gentleman. And I want to preserve it for as long as I can until we get into summer when everyone's tan and it's not that special. Is that like having a mustache? It's like an unwritten respect thing? I don't know how much respect you get for a mustache. Where you see other people with a tan and you give them like a little head shake?

Especially an older gentleman like myself. It's almost like you're distinguished. You're not an older gentleman. That's what it wears off of two weeks later. Older than him, older than you. When your tan's gone in two weeks, that's when the depression sets in. And then you have no respect from anyone. They just step on your feet.

They'll just walk in front of you like, all right, we get it. You're like a guy. But I feel like at this current moment, I am living my best life. Are you excited for the show today? Oh, yeah. You guys will confess to me that he's a little bit nervous. I get nervous every time I do media. I don't want you making eye contact with him.

It means you care. Exactly. Exactly. No, I was asking Josh earlier. I was like, you know, I've done CNBC. I've done Bloomberg. I'm doing this. I've done all this stuff.

But I still get nervous every time. And it's like, when does that go away? It might just be a nervous, it might never go away. Oh, that's lovely. So there are famous performers that say they still get butterflies. The guy who was the quarterback in high school for our team would throw up for every single game. It was like his thing.

And he just, without fail, threw up in the bathroom. All right, let's go. This is a little bit of a humblebred. Ben was like an all, were you all state? Or what was your? Oh yeah, for a little bit of a humblebred. Ben was like an all-state. Were you all-state? What was your? Oh, yeah. It was a tiny school, though. So that's the.

No, but you were like a serious player. Yeah. Okay. They take football seriously in northern Michigan. That was the sport. Sounds legit to me. It's hard to tell from Ben's build, but he was in his day. I played football, too, so it's hard to tell from my build, so there you go.

What'd you play? Fullback. Okay. Did you throw up before every game? No, I did not. Did you throw up before this podcast? Yes. Okay. I'm glad you got out of that system. I did not. I'm glad you got out of that system. Alright, are we ready to rock and roll? I'm going to call you a picture of my tan for social media.

What do you need? Yeah, put it in there. It's like the chart of sap and equal weight all right why did something happen with netflix this week is that is that is that in the news you have this in any of your etfs we have it in our streaming etf which we which we recently closed. Very confident in my assertion. Very confident in my assertion. Welcome to The Compound and Friends. All opinions expressed by me, Michael Batnick, and our castmates are solely our 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 any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Duncan, are you reading ChinaLastNight.com?

No. Well, you should. Listen, if you want to get your information, that's where you go. Brendan Ahern, friend of the show, ChinaLastNight.com. So today's show is sponsored by CraneShares. We've mentioned their K-Web a million times. I don't know when they started that thing, but they were early. Was it 2014, 2015? They've been around for a while.

But they also have just, it's not just the internet. They have a suite of China ETFs. They have clean technology, electric vehicles, healthcare, 5G, and semiconductors. If you want to learn more and learn about their research, go to craneshares.com. That's with a K. Craneshares.com to learn more. All new to the Compound and Friends. Welcome back, everybody.

Today's going to be an awesome show. Welcome back, everybody. Today's going to be an awesome show. We have an extremely knowledgeable and yet nervous friend to introduce you guys to. First time ever on The Compound, Will Hershey. Will, welcome to the show. I shouldn't have told you that. That was between me and you, Josh.

Too bad. Too bad. We're actually very excited to have you. So I want to give people a little bit of background. And, oh, of course, don't let me forget, Ben Carlson's here. Ben, say hi to everyone. I'm really jealous of your DJ board over there. Yeah, I'm sorry. You can't have one.

I'm confident in my assertions. But I have you captured right there. Also, the intro music. I'm, like, hyped now. That shit is fire, right? Yes, it is. Put that back on for a minute. Man, the nerves are gone.

Put that back on. I feel like I need a drop of beat. hype now. That shit is fire, right? Yes, it is. Put that back on for a minute. Man, the nerves are gone. Put that back on. Ladies and gentlemen, Will Hershey, former analyst at Yorkville ETF Advisors and head trader at Yorkville Capital Management. Current co-founder and CEO of Roundhill Investments.

Will has invented a variety of popular thematic ETFs. All right, start fading. I don't want to compete, Duncan. Including NERD, which is eSports. Bets, B-E-T-Z, which is sports betting. Metaverse, M-E-T-V.

And Meme, Meme Stocks, M-E-M-E. And you just launched a new ETF. Are you legally allowed to say it or do I have to say it? What are the rules around that? You know, that's tricky. I think given that this is like technically not live, but live, I'm allowed to say it. We launched weed. We launched a cannabis ETF on 420.

Okay. Are your parents proud of you for that one? Very much so. Okay. Got it. Very much so. All right. We, how'd you get that ticker symbol?

That's crazy. That was available. Yeah, I mean, how did we get that symbol? Did you buy it from someone? I have to give a shout out to Phil Bach. If you know Phil Bach, he helped with that. But when we got our hands, you know, normally you're going to come up with an idea for an ETF and then back into the ticker. This was one where we're like, we have the best.

That's available? We have the best ticker. Who squats on all these? Who's squatting on all the good ticker. This was one where we're like, we have the best. That's available? We have the best ticker. Who squats on all these? Who's squatting on all the good ticker symbols? That's a whole thing. You can go to the exchange and see if a ticker's available and reserve it for two years.

How much do you have to pay to reserve something like that? Zero dollars. Zero dollars. So they're pretty short-sighted. They should be selling that. So it's this weird thing. It's like real estate in the metaverse. Well, I mean, they don't really, They're pretty short-sighted. They should be selling that. So it's this weird thing. It's like real estate in the metaverse.

Well, I mean, they don't really, the exchanges don't really own it. They're reserving it on behalf of their clients. So I don't know if that would be too kosher, but no, it's a whole thing. It's a whole thing trying to get the best ticker. So somehow you got the best possible ETF ticker for your new fund. And when did it go live? Yesterday. Yesterday.

Oh, my God. Still got that new weed smell. Oh, yeah. Okay. So why is that the right way to play? Let's just start right there. Why is the weed ETF – why is it constructed in such a way that you think it brings something new to the table for people that want to invest in cannabis or whatever the Winnie the Pooh with the monocle version is. Yeah.

Right? How we refer to- Marijuana would be like the narc version of that. Yeah. If you say marijuana, I instantly don't trust you. I think cannabis is the- Oh, cannabis. That mother is a scientist. You hear he's like, all right.

But so you're saying it as cannabis, right? Is that what- Cannabis is how you say it in your prospectus. You don't call it weed in the prospectus, if that's helpful in terms of understanding what the scientific rules of the road are. Oh, your prospectus doesn't say this is a way for investors to bet on grass? No, we don't say that. All right. All right. So it's the Weed ETF. And what's the official name of it? Roundhill Cannabis ETF.

OK. What are you allowed to say about how it works or what's in it? Yeah, yeah. I can share that. So it was actually a long process to launch this fund, much longer than typical for an ETF, because we had to find swap counterparties to be able to trade total return swaps. So underlying the ETF, it's not just straight equities because a lot of these names,

you can't even custody them at a traditional bank. They won't touch it because they're plant-touching names operating in the US. So it's still federally illegal, Canada, right? Isn't it a deal like you can't put the money from that into the bank still, like federally? Well, that's a whole other thing, too, is that that's why it's really hard for these guys to get access to capital.

The cost of capital for cannabis is still really high. But don't you feel like there's so much money for cannabis, like in general? Yeah. I mean, people want to invest in it. It's just the way the rules are written right now, it's difficult. But anyway, so the way we've constructed it, it's pretty much more or less market cap weighted. But we are investing in these names that people, quite frankly, can't access easily. And that was a big part of getting this thing launched in place. We had to sign an ISDA, right? We're in the big boy leagues now, trading total return swaps.

But exposure across the space predominantly focused on the U.S. players, which honestly, when I started to learn more about this space, I was shocked at how cheap they are. They trade at low double-digit EBITDA multiples with growth, right? It's not just like this is a value trap. Why do you think – so these are tiny market cap companies. Tiny. Even the biggest producers that are publicly traded in Canada. $4 billion, $5 billion. They're so small. Yep. Why? This is it. I mean, the second that they're-

Because it's so hard to put money into them as an investor? Even institutional investors can't trade these things easily because they're listed on the CSE. You probably don't even know what that exchange is, the NEO exchange, and they all trade only OTC. What the hell is the NIO exchange? Is that like Vegas downtown? Is that like Binion's horseshoe? I wish I knew. Canada's the Wild West, if you ever looked at the TSX Venture.

Yeah, those guys are crazy. It is crazy. Those guys are fearless. But I do think it's kind of this whole thing of just, they're illiquid names. They're super thin. The market caps, if and when they uplist, the nicer your NASDAQ. That's why, I mean, that's why Tilray trades at a huge premium to these US names. Because it's uplisted already.

Because people can trade it. There's liquidity. And that's still only a $2.6 billion company. So in the grand scheme of things, it's pretty tiny. That's the biggest one, right? No, it's not the biggest one. Is that the one that Constellation invested in? That was Canopy Growth, I want to say.

Canopy Growth, CGC. So all of those names, though, the ones that trade on NYSE or NASDAQ, they're operating in Canada. It's weird. And then the names that are operating in the US trade in Canada. Or trade in Canada. On the NEO. Come on.

The whole thing's a mess. Why are we still doing this? I don't know. I don't know. But when there's more regulatory clarity nationally let's say Biden decides he wants to get re-elected this seems like a really easy thing for him to be like I'm into this like he could hijack this whole thing and like get young people to actually remember that he exists he's like hey I had quarter of a gummy last night look at me yeah like it would actually explain him shaking hands with the air and forgetting where he is halfway through a sentence. If he's just like, honestly, guys, I was with Willie Nelson this morning.

I'm sorry. Like, I feel like that would be helpful for his image. I mean, it should be bipartisan too, right? I mean, the tax revenues. Everybody smokes. And the tax revenues are meaningful, right? Dude, it cuts across race, age, gender. Yes.

Everybody's high. Yes. Like everyone that I feel like most of the people I deal with, I don't smoke weed. Most of the people I deal with on a daily basis, they can't be that stupid. They have to be high. Well, the other fund you have, the sports betting, once a couple states did that, they all realized, oh, wait, we can make a ton of money off this in tax revenue. Why wouldn't we do this? Same thing, right? In a lot of ways, that, they all realized, oh, wait, we can make a ton of money off this in tax revenue. Why wouldn't we do this? Same thing, right?

In a lot of ways, it's a similar thesis. The difference there is sports betting since 2018, repeal of PASPA, is now legal at the federal level and now is rolling out state by state. Cannabis is kind of almost the reverse where it's rolling out state by state but still not federally legal. Right. But no, the thesis in a lot of ways is the same story. It's a shift from black and gray markets into regulated markets where you get tax dollars. States love it for that reason. Does there need to be a consolidation there?

Because all these stocks have gotten crushed. DraftKings is down almost 80%. Oh, it's crazy. Do they need to get together? Is that how it has to work? Yeah. His sports betting fund went from large cap to small cap. It's a small cap index. I shouldn't laugh at that.

I should not laugh at that. Your universe is now a micro cap index. I should not laugh at that. No, I think there will be consolidation. When you look at sports betting, I mean, the biggest cost for these guys is customer acquisition, marketing. I mean, if you watch the Super Bowl, how many of the ads were Caesars or DraftKings or FanDuel? And they give away a ton of free gimmies to people if they bet. Oh, did you do the Caesars one?

They matched $3,000 if you deposited it. And by the way, I was— Customer acquisition is so completely out of control in that space right now. I had never done it before until it came legal in Michigan. I'm like, I'm going to do it. It's so much fun. It is fun. It is fun.

Betting a little bit of money on a game. You know, I never put money into DraftKings or I never bought any of these stocks only because somebody from England was like, that shit's been legal here forever. It's true. It's not that great of a business. It's like OTB.

It's a decent business. I mean- What are the companies in Britain? Ladbrokes? Flutter. Flutter. They had Ladbrokes? Flutter. They have Ladbrokes. William Hill got bought by Caesars.

Entain, which is Ben MGM's partner. These companies are not like Google in the UK. It's very dingy locations. Well, the physical is not a sexy play. I mean, it's really the online. How hard would it be for a broker to get into the Zillow? Because Robinhood wanted to do sports betting. Could they legitimately do that? Oh, I mean, the licensing is like half the battle, right?

You have to work with state regulators. Tanner Fitzgerald was trying to do that a decade ago. They built a sports book in Vegas or something. I think they did. Anticipating that one day it would be national or I don't know whatever happened to that. I want to back up a little bit. So you and I, you were here when? 2019, you said? Yep. 2018? 2019. 2019. And what were you, 18 years old at

the time? Let me do some math. But you're like a kid and you're like, I'm going to start doing some of these thematic ETFs. We did one, seems to have been well-received. I think I can like really make a go of this. and then i think the pandemic was probably really helpful for some of your categories all right totally uh but you like you did this from scratch yes i mean i would say it was yourself as the owner no is that are you the main owner my co-founder and i yep your co-founder or two of you founded roundtail yes why is it called that uh resort in jamaica uh really nice that we've been to all the greek gods were taken Two of you founded Roundtail. Yes. Why is it called that? Resort in Jamaica. Really nice that we've been to.

All the Greek gods were taken. Can I tell you something? That's not such a bad story. The Carlyle guys named it for the hotel. I think they were sitting in the lobby. There you go. They said, we're a Carlyle group. It's only a $15 billion company, so not bad.

But yes, the pandemic definitely helped the categories i also think the pandemic wait let's back up okay okay aum is what now we hit 1.4 billion shut the up look at this look at you i think we're now down to one ish dude market's not helping okay a billion dollars though yeah three years uh, June 2019, we launched our first fund. Where does that put us? Almost three years? Dude, you did the thing. Yeah.

You did the thing. Yeah. What does an ETF company need to be like break even and like good? Like 500 million? No, no, much less than that. Much less. On a fund level, depends on your expense ratio, obviously, right? If you're charging five bips like Vanguard or iShares, different i don't recommend doing that i wouldn't i wouldn't try and compete compete

in that game okay um you know 40 50 million you kind of start to break even at a fund level and then you have you know opex just to run the business outside of that and now you've built this infrastructure so your job is like come up with enough funds to spread that infrastructure cost across so that it's like becomes more. So you don't necessarily spend a lot more money for the fourth or the fifth or the sixth fund. No. Is that right? In fact, like a lot of the costs, custody, admin, a lot of these are kind of commoditized. So it's really – it's not even that it's – there's not operating leverage in the sense you're talking about.

But yeah, I mean at this point, it's like you got an idea for an ETF. Like let's do it. That's very cool. Hey, congratulations. Thank you. Very proud of you. All right. Do you feel like thematic ETFs have historically gotten a bad rap from behavioral finance writers but the audience loves them and doesn't give a shit what the literature says.

Well, I feel like the whole thematic name is new. Isn't that like a pandemic? Wasn't that born out of a pandemic, basically? No, I mean, people have been talking about thematics for a while. I think Cathie Wood, ARK, people consider those thematics. And it was like, wow, the assets in this

kind of part of the ETF world is now like really significant. They're almost like sector ETFs now, right? In a way, like at least that part is. But they're micro. Like the way Will is slicing and dicing, like esports is a micro, micro sector. I guess you would call it a niche. How many ideas do you come across that you just can't fill it with enough stocks yet? Where you have a great idea and it sounds like a wonderful thing people are latching onto, but there's no market for it. Oh, let me solve that. You just throw't fill it with enough stocks yet where you have a great idea and it sounds like a wonderful thing people are latching on to. But there's just there's no market for it.

Oh, let me solve that. You just throw Google in it. Well, that's the thing. I mean, that's how a lot of these thematic funds end up. They all own the same stuff. I mean, think about the ESG funds. They own, you know, Exxon Mobil. And it's like part of like part of like well, it's just like part of launching, in my view, a successful ETF is like, does this shit make sense?

Is what's in the portfolio literally what I see on the tag? What I'm buying, am I buying what I'm intending to buy? Does the portfolio match the tag? Correct. To your point, if Google's in the top holding in XYZ fund, is that really what I want? No, this isn't core beta part of your portfolio. This is you put a little bit in because you believe in the theme. Does there have to be a certain number of stocks?

Do you have a threshold you have to get above? There are rules. There are some diversification rules. You're saying SEC rules or rules that you set up? 1940 Act rules, registered investment company rules. So you can't own eight stocks? You can't own eight stocks. That would be awesome. How come every regulation is 1930s or 1940s?

Where are all the new regulations? Every act goes back to the 30s or 40s. Joe Kennedy wrote them all before manipulating the election to put his kid in office. All these acts that are like 1932 act or – I wish I was exaggerating, by the way. I'm totally not. How can these still be relevant today? How can SEC – well, that's the whole thing with mutual funds or like the latest in 1940s fund technology.

Yeah. They don't refer to the ETF as the 1990 Act or whenever the first ETF came along because the ETF basically is abiding by exemptions from the 40 Act. That's interesting. That's a good point. That changed though. And that's why you've seen so many new ETFs come to market. So you used to have to get an exemption called exemptive relief from the 40 Act, basically to do things in a slightly different wrapper that wasn't contemplated in 1940. That's how it used to be.

It used to cost $2 million in legal bills to be able to do that. Now it's much more, you know, it's Rule 6011 passed. It's more streamlined. But that's why you're seeing more entrepreneurs launch ETFs. The barriers to entry have come down, which I think is great. Yeah, it's much more, you know, it's Rule 6011. It's more streamlined. But that's why you're seeing more entrepreneurs launch ETFs. The barriers to entry have come down, which I think is great. Yeah, it's awesome. Like think about how many people just from finance Twitter that we know that have done independent things and started their own based on their brand or whatever. We know a lot.

One of the pioneers there was Meb Faber. Yep. And shortly after, the Pennsylvania guys came along and started doing cool shit. And now we probably, I don't know, you and I probably know like 20 or 30 people that have their own ETF. Yeah, it's great. Can we say? Yeah, and like you said,

I think the bared entry is way lower than it used to be in terms of assets. We were getting pitched like seven, eight years ago, maybe longer. Barry was getting pitched hard. Like do Ritholtz ETF, dof do rid holds etf but like the two of us would sit there and like but anything we put out people are going to be like that's your track record now what strategy or category do we even think that it makes sense for us to have

our so there was never an idea that made sense for us to do it. And the other thing, though, there's a lot more regulatory scrutiny the way that you talk about an ETF because it's a product. For sure. So we just – it never made sense for us. Do you guys – in your portfolios, do you pick stocks or is it just more asset allocation? Depends on the portfolio. Yeah. Right. Because if there's some – if you're doing emerging markets where you're actually picking the stocks, that could have been something.

But here's the problem, though. Then can you put that in a client account? No. You can maybe waive the fees. That's a pain in the ass. That's a pain in the ass. Most ETF providers have no idea where their clients are. I have no idea.

Literally no idea. That's the difference. I'm pretty sure that your client is not my dad in the weed ETF. Like I'm 90% certain. You sure? 99% certain. Maybe he's in the metaverse one. He might be in the metaverse ETF. I'm 90% certain. You sure? 99% certain. Maybe he's in the metaverse one. That's more his...

Your dad is at Woodstock? You know you skew young. Yes. You should skew young. Most of what you're doing is futuristic stuff. Yep. Theoretically, that should be the types of stocks that require a long runway to

work out. I also think like so you talked about the ETFs in the 90s. That's like a breakpoint. 70s is index funds. I think we're going to look back at 2020 and think this changed the way people think about investing and how they invest like young people. In what way? There's just so many more things to invest in. People are just more into it now. That's more of a community aspect. I think that the investing world for young people now is so much different than it was. And I think 2020 sped it up a lot. Totally agree.

And kind of what you touched on is part of our whole thesis from the beginning. Actually, when Tim and I started the business, it was after the crypto run. What was that? 2017, 2018. We started to see signs of that. It was like people were talking about-

Tim Cook? Sorry, my co-founder, my co-founder. Oh, okay. Who is that see signs of that. It was like people were talking about- Sorry, Tim Cook? Sorry, my co-founder, my co-founder. Oh, okay. Who is that, Tim? Tim Maloney. Okay. When we started to see people on Reddit, on Discord, you know, forming these communities, and it was like widespread how passionate they were. We said, look, the world's changing in the way that young people are thinking about investing. They're becoming more active, again, I think, than kind of passive in a way. You know, let's build a business where we do

zero outbound sales, which we still do to this day. No emails, no calling. Let's focus on content, research, reaching as many people as possible. And reaching young people is a large part of that strategy, just given the themes we focus on. But that's how we've done it. But you did it. Yeah, we did. That was the thesis we focus on. But that's how we've done it. But you did it. Yeah, we did. That was the thesis and it worked. And I'm jealous of young people because when I was coming up, I had none of this stuff.

No. You had to read old Warren Buffett books. Like now, young people, they are so much more knowledgeable because the knowledge is there for them if they want to find it. 100%. Well, it's a double-edged sword because they're also coming across a lot of things that look like information but aren't. Yeah.

And it's really hard to discern. Yeah, you need that filter for sure. What does that mean? Most of the influencers on Instagram or TikTok literally don't know anything. Oh, okay. And it's not that bad that they don't know anything, but actually it's worse. It's dangerous because the things that they think they know are completely wrong. And there's a lot of blind leading the blind going on amongst young people.

But I don't think that that's any different than any other generation. It's just more obvious now because there's social media. It's easier to reach people. Yeah, so you could mislead people in a message board in 1999, but you probably couldn't amass a million followers on TikTok and be held up as an example

of somebody that's like, now the one saving grace to that is most of the content is like motivational speaker content. Like, you know, oh, I empower women, young women to invest. It doesn't matter that that person literally knows nothing. What matters is that they're addressing a category of investors, for example, 20 something year old girls who were not being engaged by their traditional investing community for a long time. addressing a category of investors, for example, 20-something-year-old girls who were not being engaged by their traditional investing community for a long time. So maybe the encouragement is like enough to overlook

how horrendous the information is. And it's just like, all right, cool, there's encouragement. Maybe that's what people need when they're young. And if it's somebody that looks like them and appeals to them, you could overlook some of the misinformation that's being shared. I'm trying not to be too pessimistic about online influencers. I'm trying my best to be diplomatic, I guess. You can see how hard I'm working at this. All right, let's get down to brass tacks.

Netflix blew up this week. I think it's down 36% or 40%. Listen to this. From November 2021. This is just in November. Netflix was at $307 billion market cap. $700 a share. Now it's down to less than $100 billion. Like that.

Yeah. So the stock's at 2018 prices, but they have doubled the amount of subscribers as they had in 2018. $209 billion in lost market cap. 68.5% drawdown from the November high. Is this one of the biggest blowups you've ever seen? I mean, there have been so many over the past year, right?

I mean, like, where do you even start? Shopify is down 70% as well. PayPal. Roku. I mean, where does all this market cap go? Does it just go right into Apple? It seems like it's going to Apple and Tesla. I was telling Will before we started.

John put this chart up at the end here for equal weight. Look at this, Josh. Equal weighted S&P versus the S&P. Equal weight is down 4% from the highs. Okay. That's crazy. It's crazy to me even that the S&P is only down 8%. The pain under the surface is crazy.

X tech stocks, this is not that bad of a correction at all. It is basically all tech stocks. It's all speculation. I don't know, if you would have told me 15 months ago, hey, all this tech stuff is going to fall 50% to 70%, the market's down 8%, I would not have

believed you. It's not just IPos and spax it's like facebook or what meta and um netflix and paypal these were some of the biggest market cap companies in the world totally down and they're in half but i mean or worse part of it makes sense all right right like look at look at netflix they're going what negative to no growth? What multiple do you put on a company that's negative to no growth? Yeah, so let's set this up. They were supposed to add – they were supposed to have added two and a half million subs in the last quarter, which is slow, right? Like they had already guided in January that things were getting slow. So that was like a low ball of a low ball.

And then I think they lost 700,000 subs by exiting Russia. And then they still would have missed anyway even without the Russian thing. They ended up negative 200,000 subs, which is the first time ever I think in a quarter that they've lost net subs. It's interesting that within that same whatever four-month period, facebook had their first decline in users and so did netflix first of all i think a lot of these companies have fake sub numbers anyway especially facebook i think half the activity that happens on facebook netflix is low because of that that number's got to be too high they said 100 million people share passwords so their their subscriber count is lower than it should be probably so i don't even know what that means when they say it they're saying a hundred million people don't actually pay that they just steal

their mom's password that's what i do that's what we do or a hundred million people are sharing meaning some of them are paying and some of them aren't right oh i don't even know what that number means no that's a good point i asked like three people that really know about this stuff and they're not sure what that – I think they're getting – Because the implication is if you could get like a fifth of those people, 20 percent, to say, okay, well, I don't want to get completely cut off. I'll give you $10 a month. Isn't that 20 million new customers out of 100? So they talked on their earnings call the other day that they would think about doing an ad-supported version now, which they said they would never do.

So I can't tell if that's a way to get those people or if that's just really desperate. I mean, they should have done that two years ago before all the competition came into the space. But I think that's smart. You give consumers more choices, right? When Netflix was really kind of crushing it, they were the only game in town. Now there's a zillion streaming services they have to compete with. But I think that's a smart move. Why not give people choices? So Netflix is 220 million subs, which dwarfs Disney, which is their closest competitor. Disney is talking about getting to that level, but not until 2025. And it's not guaranteed that they will. HBO is not even close. So Netflix really

has something that's not, even though they have a lot of competition, you still can't replicate that in terms of audience. They still have a bigger audience across which to spread all the content costs. So that's one. Two, the ad-supported tier, let's say it comes out at the end of this year. It's better than getting zero from all these people sharing, right? So maybe that would be the answer. I don't know how popular it's going to be or what that does to margins or blah, blah, blah.

But what I would say, this thing is now being valued like a TV network. And this comes from the information. Netflix basically is trading at the same multiple as Disney, multiple of this year's expected revenue as Disney. So all things being equal, Netflix now 100 billion market cap, 30 billion revenue, 5 billion in earnings last year, 220 million subscribers. Could it get cut in half again? I feel like it's been substantially de-washed i bought some full disclosure i'm down immediately i bought it on

the open yesterday uh from a boat oh shit but um not a lot but like i i can't imagine this thing being as risky as it was in january you just described a a perfect commercial for robin hood yeah i did not buy it on Robinhood. I bought it on Fidelity. I just bought Netflix on a boat. Pretty bad. But I look back, they've had four separate 60% plus drawdowns in their history. The worst one was like 80% in 2012. Remember they were going to

separate the DVDs and that business or whatever. Yeah. They've gotten crushed in the past. They got crushed when they said we're going to go international and we're going to spend all this money. And Wall Street was like like that's going to be a money pit ended up being the smartest thing they ever did a lot of those international hits became u.s hits and vice versa they got crushed um when when they said they're going to double how much money they're spending on production like there have been these these episodes that the stock has recovered from

people feel like this time is different much like the sports betting apps doesn't need to be There have been these episodes that the stock has recovered from. People feel like this time is different, though. Much like the sports betting apps, doesn't there need to be consolidation eventually in some of these streaming services? There's so many. Well, it's different, right? Because sports betting apps are relatively commoditized, right? They're all offering betting on the same games. The content is different, right? If you're Netflix and producing your own content, you can differentiate just by having the best content.

And I think that's – honestly, they've kind of failed on that. Like I'm not watching Netflix myself. I don't know if you guys are. I'm enjoying more – Only when the new Narcos season drops. There you go. Then I have my undivided attention. And then what else they maybe need to do is go to a weekly release, right?

Yeah, I think they need to do that too. There's a story at the Journal with their head of TV being interviewed and basically they're going to be much more hands-on than they used to be. The whole rap in Hollywood with Netflix was like they trust the creator, they'll just give you the money, no suits, no

bullshit, make the best show you can. That's over. Now they're like they have plot points. That's over. Now they're like, they have plot points. They have like notes. If they did Ozark, the final seven episodes over a seven week period instead of doing it all at once, they would have podcasts and the ringer would be doing everything for them.

They'd get so much more publicity doing it that way than just doing it all at once. But the problem is that they got the audience accustomed to binging and people liked the binge experience. So maybe the answer is somewhere in between. Maybe drop three that's what apple pause drop another three that could work i like i mean the other thing interesting they're doing they've only just started is lagging into gaming a little bit i don't know if you've seen this they bought it like a couple tiny

gaming companies that's now on their platform i mean that could be an area for them to you know what do you think they would do in gaming that anyone else couldn't or isn't doing? Well, I think they can buy someone. I look at like Ubisoft trades at like $5 billion enterprise value. They're assassins. I mean imagine – So it's like buying content but instead of shows and movies, it's a game. Well, even better, adapt it into movies and shows too.

They did that with – what was it? The Witcher is a game. The Witcher was a game, right? Yeah, that's a game. By the way, as someone who's not a gamer, that show was unwatchable for me. I did not know

what the hell was going on. I hated it at first and now I'm into it. The first episode was fun. What was it about? I have no idea. It's not really about anything. It's about,

no, it's a guy. Someone said, no, you have to play the game for five years first and then you'll get it. No, it built its own audience eventually. I think they got picked up for season three.

It's like a guy who fights monsters, basically. It's a binge. That sounds like a show for my five-year-old. Yeah, yeah, yeah. Or me. Or your 45-year-old friend. All right, options volumes went crazy on this Netflix. I should say stock and options volume.

100 million shares traded yesterday, which is the first time since 2015. Calls and puts topped all the most active lists. This is while the stock is having its biggest one-day-ever percentage drop going back to 04. $54 billion in lost market cap. Put options were going crazy. The 200s, the 190s. Traders shelled out $2 billion for Netflix options as of afternoon trading.

So they're taking all the premiums of all the options traded to come up with that. There was more money traded in Netflix options premium than Amazon or even the SPY ETF. Is that surprising that so many people wanted to express a view on that stock on that date yesterday? Or is that just like catnip for retail traders?

That's just like, I mean, I bet Facebook when they had their blow up day was the same thing. It's hilarious how that happens. It just became like you have to be a bull or a bear on that. Myself included. I was right there. Hit the button. Well, whenever there's a day in the news cycle

where in the financial media where everyone's talking about one name, retail is going to participate in that too. You're going to trade it. But so are institutions, right? They can't help that same urge to kind of take a view on something that's- It's an S&P stock.

So they have to have – they're either overweight or equal weight or underweight. How much did Ackman end up losing because he got out, he said? Did he lose a lot of money or was it just like – So I thought this was interesting. He like owned this loss immediately. There were press reports that he could be down as much as $400 million. And he put out his own press release. And I guess, like, this is a good lesson. Maybe never own so much of a stock that to sell it,

it requires a press release. But he's basically like, here, here's the Persian square letter. We require a high degree of predictability in the businesses in which we invest. Okay, good luck with that. Due to the highly concentrated nature of our portfolio. While Netflix's business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company's future prospects with a sufficient degree of certainty. As soon as I read this, I thought of you. Can you tell me a business that you can,

quote, have confidence in your ability to predict the company's future prospects with a sufficient degree of certainty? What would that be like, a utility and Hershey's? Well, it is funny how quickly this psychological shift has happened because before it was everyone 15 months ago or 18 months ago was saying, how big could these companies possibly get? And we're anchoring to these huge, well, if Apple can go over a trillion in five years, other companies can do it. And that we're going to pull everyone up. And now it's like Netflix at 300 versus 100 billion. It's like, which one is right?

I don't know. Well, now it's 20 times 12-month earnings. It sounds more right now than 40. Yeah, but that's the thing. That's how the psychological shift for these growth stocks is like those multiples are still pretty high, though, if their growth is going to slow down. 20 might be too high if they don't add any subs net for the whole year. 20 feels high when a stock is crashing and low when it's going up. Right.

When it's going up, 20 is a discount to the S&P. Like, wait, why could I buy Netflix at a lower multiple than the S&P? Now it feels like 20 times. But the thing, my biggest takeaway here is that for the last three years, the growing course of people have been saying, why would I not, why would I want anything besides tech stocks? Tech stocks are all there is to own. And like, finally, for the last year and a half, diversification has shown like, oh yeah, that's right. What if this is an inflation story? Let me hit you with this.

This is New York Times. Another concern some analysts say is so-called churn rate. Consumers are growing warrier of rising prices for streaming services. They upped their subscription cost in January. And becoming more likely to cancel a service when a favorite show comes to an end. According to Deloitte, 25% of US customers have canceled the streaming service only to resubscribe to it within a year. I would not have guessed that one in four people have time for that shit to like turn off Netflix until their favorite show comes back. But apparently I'm wrong.

And that is way more prevalent. Mr. I'm never going to cut the cord ever. Me. Yeah. What'd you cancel? Nothing. I own cable. I own the cable bundle and I'm looking awesome now because I don't have to deal with jumping

in and out of these streaming services. Cable TV for the win. But which of these streaming services are you paying for? All of them. Right. In addition to the cable bundle. I'll do the same thing. But TV for the win. But which of these streaming services are you paying for? All of them. Right, in addition to the cable bundle. I'll do the same thing. But here's the problem. If you wanted to-

You doing that too? No, no, no. But I was joking recently that we're in a much worse place now that we're just paying like a million different companies. But either way, you have to pay for at least internet. So if you're paying for internet, if you just pay for internet and not cable, they jack up the internet bill for you.

But if you bundle it, then it ends up being just about the same. So you might as well get the cable too and have a million channels. Are we going to go back to cable? Dude, I called them three years ago. I said, if you don't give me Red Zone right now, I'm canceling forever. Fios. They go, okay.

I'm like, that's it? Because I'm from New York. I would have gone eight rounds with you. I'm going to count to five. I'd pay for just Red Zone alone. I'd stream just, I'd put that as a streaming site. So I love it.

I love it. And obviously like I would pay for it because it's not that much money, but it would never occur to me that I have to have it. My kid has to have it. Fantasy. Yeah.

He will sit and watch 12 hours of Red Zone. Like if he would watch repeats of Red Zone that night, if it didn't end at 6.30 or whatever time it ends. Before you move on, can I ask a quick Netflix question? Sure. What does it tell you? I saw that Reed Hastings bought like 50,000 shares back in late January. What does that tell you? What?

That nobody knows nothing? Like 387, I think. He's got too much money. I don't know. He did an open market insider buy in January? Yeah, if I'm looking at this right. He should average down. You know what's funny about that?

His average cost is like zero. That's true, right? So if you see him doing that, it's not actually to make money. It's the signal. Anyway, 25% of customers have cut a streaming service and then resubscribed to it. I feel like you need a lot of time on your hands for that to be worth it.

Save like $18 for two months or whatever. Right. But apparently – Maybe right now people are thinking that it's worth their time though. Yeah, because the cost of everything in their life has gone up. Gas prices, right? Right. So maybe Netflix has finally run into the price point at which they get pushback because they've been able to raise the price every 18 months, let's say.

And now I think they ran into a wall. It can't be coincidental that they put through a price increase in January and almost simultaneously had to guide lower on net. Can I get a get off my lawn take, please? Please. When I was growing up, we'd go to the mall and buy a DVD for $19.99 for one movie. Yeah. Now people are complaining about paying $14.99 for Netflix. That's so true.

There's thousands and thousands of options. Because you have to pay for six of them, though. That's such a good point. You don't have to. Well, you kind of do. I'm just saying, though, if you look through the movies on there, 12-year-old me would be just blown away by the selection. Yes. And now people are like are like, it's terrible.

That's true. We're spoiled. You have access to a thousand movies you can watch on your phone. You can continue watching when you get home. It's still a pretty darn good deal, even if they don't put out that great of entertainment anymore. Well, kids these days, they don't know how good they have it.

I want to go back into thematic investing. I asked Sean, our researcher, to run some numbers. Maybe these are accurate. I think he's got the right numbers up to date. Thematic ETFs are only 1.6% of the whole US ETF industry's $6.9 trillion total assets. Wait, do I have that right? What was the number? $110 billion in thematic ETFs. He's using $6.9 trillion total because he's probably including bond funds too.

There are now 240 thematic ETFs. And you have what, five of them, four of them? Seven. Seven of them. Okay. Who's the biggest player other than Cathy in thematic ETFs and you have what five of them four of them seven seven of them okay who's the biggest player other than Kathy in thematic ETFs uh besides Kathy is only biggest on on AUM right she only has what she probably has similar number of funds another another Kathy hater maybe uh no I'm just kidding get out of here get out of here I'm a fan I'm a fan I'm a fan no no we're

all we're all we're all fans of hers I would say GlobalX is probably the biggest. They kind of pioneered it in a lot of ways. What was their first big one? Oh, man, I'm trying to remember. They did some country ones that were pretty big. They've been around like 15 years. They've been around for a minute. They were around before the financial – maybe right around then they started.

I know you said you don't really know who your customers are, but how many advisors do you think are getting in here where you could say, hey, put 5% of this versus just being completely retail if you had to guess? Honestly, it's so crazy. That is the holy grail to try and understand what works, what doesn't, and who we're reaching. do we get reached out to by advisors or institutions that say they really want to do a deep dive on fund XYZ to really understand it before they allocate. So even those types of players. They can do that without talking to you. Well, yeah. I mean, that's the thing with ETFs.

It's like the holdings are public. Everything you would need is on the website of the issuer. If you want to talk to, go into the nitty-gritty of the index and how it's maybe, but that's what's beautiful about them too. That kind of comes back to the other thing. Right. You're publishing the index rules too. Yeah. So it's all out there. It's all out there.

Okay. Which requires a less heavy-handed sales approach, which I think everyone appreciates. Yeah. Right? No one wants to be taken out. Yeah. No one wants to go out for, well, maybe some people want to go out for a steak to buy my fund because it's, you know, one bit lower than the other guys. Right. You don't have to, you don't have to golf with people.

No, I don't do any of that stuff. Right. On a year over year basis, thematic ETF assets under management decreased 21% from 139 billion at the end of February 2021. So that's all market effects. I don't think that's the public's changing taste. It's just thematic ETFs tend to be tech heavy and tech has been routed.

I think that's fair. A lot of that's probably price. I mean, just anecdotally from our side of things, our drawdown in AUM is almost all price. We've seen a few kind of trickle out, but really people hold onto these things for the long term. And yeah, it's definitely tech heavy. It's definitely even beyond tech, longer duration equities that people say-

Themes, stories. Stories don't play out overnight and people understand that. And they say, I'm buying this for my kids' retirement, whatever. Not your kids' retirement. You know what I'm trying to say. And then it drops 30% in their life. You know what I'm trying to say. And then it drops 30%. You know what I'm trying to say. No, I'm just kidding.

529, by the way. I'm just kidding. No, it happens. Thematic ETFs is such better marketing than Smart Beta. That's such a better name. I know that's two different things, but I'm saying if you had to compare. Yeah. Who doesn't like thematic?

I still don't even know what Smart Beta means, if I'm being totally honest. And I'm in this space, and I don't really know exactly where that starts and stops. It's quantitative, but people have trouble spelling quantitative. Physical environment-related themes saw an increase in AUM of $350 million. On the other hand,

disruptive technology-related themes saw the largest AUM decline of $1.6 billion, followed by those related to people and demographics, minus 420 million. At a theme level, cybersecurity and cleantech led the gains, while emerging markets,

internet saw the largest decrease in AUM. So a lot of this is just backward looking, like what did the stocks in the category do? I could probably tell you which thematic ETF took in money or gave up money. And that's never going to change. It doesn't matter if it's an index or it's a manager. People like whatever just worked most recently. What is physical environment related?

Is that just like clean tech? I think that's, no, I think that's like, well, maybe part of that. Maybe that's like, you know, infrastructure. Some of that stuff doesn't fall nicely into gig sectors. So it gets classified as thematics, right? People and demographics. So that's like. That's like a millennial ETF or something like that.

I was going to say, I was going to, right. I was going to say like, they made one for like Trumpy people. And then they had the MAGA ETF. Right, okay. All that stuff's crazy to me. They also have like Catholic values ETFs and all that stuff. Hold on, you wouldn't go there like hook up with a celebrity who's got like a very specific niche audience

and build an ETF around that kind of personality cult? That would never be worth it to you? I mean, it could be. Let me give you an example. By the way, I don't know if that's allowed. That's the trickier thing. Allowed?

Do you see what goes on these days? Portnoy was, okay, so Portnoy found out. He did that. There was a loophole though, right? Yeah, what was the loophole? Well, technically he, I think, took an equity stake in the index provider for that ETF. Not the ETF. Not the ETF.

And I think when he put his video out, by the way, that fund has gone from half a billion to I think I last looked, it was under 100 million. Just amazing. A hundred million. Oh, it's buzz. Did you say billion? A hundred million.

A hundred million. Okay, yeah, yeah. That's how big it was at the peak? 500 million? 500 and I think it's below 100. The next social sentiment ETF. And was the peak the first month it launched? I think it was the third day it launched or something like that.

Okay. But he basically, in his video, they bleeped over the word ETF, and so it was technically him talking about the index. Now, I don't know what calls they're getting. Was that VanEck? That was VanEck. That was VanEck. All right, but so let me give an example.

The Kardashians come to you. Beauty ETF. I love it. And they just say. It's went from 500 to 94 million like that. Because it's hard to understand where it fits in a portfolio if it's not going up. Yeah. That's it.

You know what I mean? That's a lot of stuff. Isn't that a lot of stuff? It's almost everything. I believe in tons of stocks where as they go down, they make less and less sense. Yes. The good news is the others, the rest of the portfolio going up shrinks them in importance. So you could just kind of like

forget that you bought them. I have a few of those. That's funny how that works. The Kardashians come to you and they say, we want to do an ETF, like our 50 favorite brands and people want to invest in the Kardashian lifestyle, you would fucking build that. I totally do. I mean, I think for them, why not do health and beauty ETF? That's actually one I've looked at. That's a good industry.

Tom Brady says, I want to do like a men's wellness index ETF. Build it for me. If the regulators allowed me to do it, I would totally be all over that. Why wouldn't they allow it? Honestly, I mean, coming back to the whole earlier discussion, right? These rules were written before Twitter existed. They didn't want Frank Sinatra to launch anything. Right, exactly.

No, you're going to laugh, though. The other day, I won't call out the firm, but compliance folks we work with were referring to Joe Montana ad from the 90s with Franklin Templeton as a reason why we couldn't do something. Because as you can imagine, for the WEED ETF, we launched on 420. We may or may not have tried to do something similar to this. Seth Rogen? Bigger. Bigger. Ooh, okay.

But we were— Snoop D-O-double-G? Maybe. Maybe, maybe. So that's where we are, right? It's like, no, the rules are so gray and weird, and people do different things. By the way, you could have got him. That guy is on every commercial that there is these days.

It's a race between him and Kevin Hart. Do you want to do a commercial? Yes. What is it? I don't care. Do it. So very wildly off topic, one of my favorite podcasts is Drink Champs. And Drink Champs is like a former rapper, Nori, and he just has other famous rappers on,

and they get drunk. And he'll do shit like, he'll make you sit there and choose like, Nas or Biggie. And if you're Snoop, you're like, can't pick one, so you have to do a shot. Okay. So they're sitting there drinking Ciroc for like,

it's like a three hour show. You gotta do that with socks, here. Yeah. Pick a sock. We'll do that to shortly that's that's what the bottle of champagne is for anyway snoop is talking about his business ventures it's a really great podcast highly recommend it and it's just about being a 50 year old and recognizing that like you have so much value when you become that famous to your community in terms of like you can completely shift everyone's focus from gangbanging to like let's make 10 000 entrepreneurs come out of this neighborhood like you can do that at snoop's level yep so he he gets into that stuff but anyway i think he

definitely would do the the etf launch with you if that were if you could find the right loophole uh you know you never know um and he's a fintech guy. Fidelity launched a Metaverse ETF. So did you sue them yet? That just happened today. You haven't given me time. I've been here. All right.

Here's your first chance to publicly respond. No, I think Fidelity is smart to be getting into thematics because this is what the audience wants. this is what the audience wants. It may not be what the Financial Times or like Jason Zweig or like all the behavioral guys that we respect so much. They don't like thematics because to them it looks like trend chasing or hype investing. And to a large extent, that's true. But so what? investing. And to a large extent, that's true. But so what? Like, thematics are like one of the most popular things among young people to talk about when they talk about investing. They're

going to do it anyway. If you're Fidelity, you should probably be there, right? Like, offer them a version that you can stand behind. So that's looks like that's what's going on. You had a metaverse fund from when? When did you launch yours? June 30 last year. How'd you get that done so quickly? Did you know it was coming? Well, we were working on it like six months before that.

So we were thinking- Before Zuckerberg went all in. Oh yeah, before. That all happened after. Is that the largest holding in your fund? Depending. I don't know. Performance has been so volatile for all the names.

I don't know where it is. Yeah, I think it might be top three top five it's a meaningful wait it has to be so how long how soon did you realize

they want your ticker do you have an NDA here I don't know this story you sold meta to them so this is like you last saw about this not Clay

so this is like LeBron James gets traded to another team and he wants the number 23 and he's got to pay the guy for the jersey number or something right will sign will sign something you can't talk about it so i'm gonna actually make up what happened and don't nod don't even blink so zuckerberg invited him to a meeting in the metaverse now zuck's in an astronaut helmet riding a surfboard, and Will steps into the room, and he's dressed in a digital tuxedo, and they sit down and they have mock cocktails, and Zuckerberg offers him $50 million for the ticker. So I got to be meta.

And you said – no? All right. I tried. I tried. All right. But you still have a good ticker. You have METV. Yeah. Okay. Good enough, right?

Yeah. Less confusing too. People want it, they know how to find it. Less confusing too, right? Agreed. All right. So what made you know that this is where the puck was going and that you had to have a product here? Yeah. I mean, it is kind of crazy to look back and say, we launched this before anyone was really kind of talking. It's actually incredible.

Anyone was really kind of talking. It's actually incredible. That's the holy grail if you're going to launch one of these things. You want to time it where you're already out into market. For me, it was reading Matthew Ball's work on the metaverse. I don't know if you guys have taken a look at what he's written on it, but kind of his vision for... Say more. I have no idea.

He's got a book coming out, too, right? He's got a book coming out. Who is this person? Does he exist or is he fictional? He, well, maybe both sometimes. He used to work at Amazon, right? He's a venture investor. He's a venture investor. He's the index provider for our ETF.

So we worked with him to actually put the basket together. He's been talking about this for a few years. He's been talking about this for years. Exactly. Okay. And he kind of defined this whole concept of what the metaverse will look like. We still really don't know. It's from like sci-fi novels in the early 80s. Yeah, Snow Crash. If you've ever read Snow Crash, that was kind of defined this whole concept of what the metaverse will look. We still really don't know. It's from like sci-fi novels in the early 80s.

Yeah, Snow Crash. If you've ever read Snow Crash, that was kind of what point. And Ready Player One. Yes, exactly. All right. Less dystopian, but sure, that's kind of where the genesis comes from. For now. We'll see what happens.

And kind of, yeah. Well, I have views on that. But, you know, I think when we saw Roblox come to market with their direct listing, we were like, you know, I think this is really really going to be one of the themes for the next decade. Roblox is a metaverse. It's a self-contained metaverse with its own currency. It's a self-contained virtual world. Sure.

Yes. Well, it's a group of virtual worlds though. Yes, yes, yes. That's what it means to be a metaverse. It's not here's a video game. Oh, this is also the metaverse. It's here are 50 games and you can make your own 50 using these building blocks and will connect all of them in the case of Roblox with a common currency and developer base. But like just that interconnected nature is what makes it a verse.

Well, I think there'll be one. And kind of the way that I like to define the metaverse is it will be a three-dimensional, living, breathing, real-time rendered, high-fidelity version of the internet. So instead of going on your browser on Google and it being a two-dimensional text-based, that's where you start your experience on the web. This will be avatar in a world. I don't know what will be the search engine version of the metaverse. We'll see. But that's kind of the way to think about it. And a lot of people try and associate with AR and VR, virtual reality, augmented reality. To me, that'll be one of the technologies you access this with. But the concept of three-dimensional, living, breathing internet, that's what this is going to become. Yeah. And Roblox is a closed ecosystem, right? So by definition, they can't be fully But the concept of three-dimensional living, breathing internet, that's what this is going to be.

Yeah, and Roblox is a closed ecosystem, right? So by definition, they can't be fully a metaverse. They exhibit a lot of the characteristics of it to your point, Josh. I actually think that the whole pandemic use case for that is people working from everywhere. That seems to me like the biggest broad use case for people. You're sitting in a boardroom with everyone in the metaverse, right? Because people are working all around the world or all around the country or wherever.

That to me seems like the thing that if Microsoft turned that on or something, then the use just explodes. Yeah, I mean, they have that, right? Microsoft- But do people want to attend? Yeah, that's why I don't know if they're ready for that. So if you need the goggles to do it or the headset, that's a non-starter.

So let's say we get past that. The technology advances. You could just be sitting here like the three of us. By the way, if we start having meetings in the metaverse, I'm going to severance myself. So I don't have to sit through those. I mean, you saw Captain America where like all the people like on the security. Robert Redford is in person. I don't think he did.

And he has like a virtual meeting with 10 people from around the world you know the scene i'm talking about yeah yeah okay so everyone's a hologram but they're all technically in the same room i think they did that on star war uh the star wars prequels 20 years ago like this has existed in movies for a long time so if and when it happens it's not going to be that exciting for people. It's like, oh, virtually, I could appear to be sitting next to you on a sofa. Yeah, like, woo.

So that part's not exciting to me. What seems exciting to me, and maybe you guys capture that in the fund, is being able to transport rewards or tools or whatever that you acquire in one game into another environment or game. Well, that's where NFTs, like that's to me, that's where I get excited. So that's the role that NFTs are going to play in the metaverse? Can you explain that a little bit? Yeah.

I mean, I think, you know, I don't know how much you guys have kind of watched or learned about Roblox or Fortnite or Minecraft or if your kids play any of them. All of them. Yeah. But there are these entire fully functioning digital economies, you know, in case of Roblox or Fortnite or Minecraft or if your kids play any of them. All of them, yeah. But there are these entire fully functioning digital economies, in the case of Roblox, based on Robux, where they are acquiring a new outfit. Or in the Fortnite, maybe it's a dance. The skin or dance.

But the problem, or if you want to call it a problem, is I'm now beholden to Epic Games or Roblox or Activision Blizzard for using that digital item. And in the case of NFTs, you know, you can theoretically allow for ownership not to be the IP owner or, you know, the IP can be transferred actually to the individual user. And think about the idea if I put, you know, 100 hours into Roblox, earned a really cool outfit. I put 100 hours into Roblox, earned a really cool outfit, and then I can take that into maybe a meet, coming back to your example, maybe a meeting in whatever Microsoft's version of it. I'm going to buy an invisibility cloak.

That's going to be the first thing I buy with all my crypto. I was going to say, I don't think Ben Carlson is that excited to be able to walk into a meeting with us still dressed in his frigging Robin Hood costume from whatever game he was playing. Oh, look, Ben's here. Ben's here for the investment committee. And look, he brought his bow and arrow.

It's so great that that was interoperable and you could bring that into this environment. I think it's a generational thing. A lot of this will be lost on us. I think it's a generational thing in large part, right? I mean, you look at kids today and they are not, they're not just playing games on these platforms. They're hanging out. Games are so,

video games are such a big business. And for me that, I mean, I got into it a little when I was younger, but it's so much bigger and better now, I think. I'm glad you said that. My kid made it,

my son made it through the pandemic because of Fortnite. And most of the time they were not even playing the game. It was group chat. Totally. There'd be six of them or four of them or whatever because of Fortnite. And most of the time, they were not even playing the game. It was group chat. Totally. There'd be six of them or four of them or whatever

just talking about like virtual school that day or whatever, literally talking through the game like with the controller on the floor. And I think that there's a lot to that. Just kids interacting with each other in their skins from these games,

in their avatars. As ridiculous as that seems to us, it's second nature to people under the age of 20. And we all have to accept that. A hundred percent. I like to make the analogy, you know, when I was growing up hanging out with friends after school, it was AOL Instant Messenger, right?

That was where you'd go to hang out. Today, like that equivalent is in one of these worlds. And that whole concept gets lost on a lot of people. So why wouldn't you just buy AMD and NVIDIA? If you think the future is everyone spending three to five hours of their day in a virtual environment, why wouldn't you just buy the companies that make the graphical processing units

that are going to render all of these images and graphics and make that realistic? Yeah, I mean, look, NVIDIA is a large holding in the ETF. I think that's kind of more of a picks and shovels way to play it, if that's kind of more... Well, you can't make any of this without it. No. You cannot make a virtual environment today without GPUs.

No, the computing... And there's two companies making all the GPUs. The computing power that's going to be needed to have this kind of come to light in the way that we think it might is going to be incredible. Beyond anything we can currently contemplate. High fidelity real-time rendering takes a ton of computing power.

And then you have companies too, like Unity is an example. I don't know if you're familiar with Unity. Unreal Engine from Epic Games does something similar. Those are the engines that power these things too. So they're kind of another picks and shovels type. Doesn't that also unlock a use case for crypto where you're just going to be paying for everything in there with crypto, whether it's NFTs

or some sort of token, I guess? Certainly. I think that crypto is going to play a huge role in this whole ecosystem. Speak for yourself. I'm in the Euro metaverse. I only use Euros. What's the most interesting company in your metaverse ETF

that most people have never heard of? And what, not like a stock pick, but like what's a company that we should all be aware of? I'll throw out Matterport. I own that. Okay. I'm only caught in half of the stock.

It's very exciting. I know RJ though. I talked to the CEO. They seem to be very integral to a layer of the metaverse that doesn't yet exist where we start rendering real environments that exist in the world and having you be able to visit those places virtually. I feel like Matterport is going to be very involved. I say they need to change the name to Metaport. Metaport would be good too. They should.

They should. Why should. They should. Why not? I'll run it by them. What else besides Metaport? What else would I throw out there? It's interesting that no one's heard of. A lot of it does end up being larger cap in the metaverse theme because these are the companies that are, well, I mean, there's Meta, Facebook is a large holding.

Snap doing a lot of interesting things in AR. Snaps in the metaverse. Why is coin in here? Is that because of the NFTs? Because of the NFTs. Okay. Which they just launched, what, yesterday? Or they launched the beta for it.

What, their marketplace? Yeah, it looked kind of like Instagram meets OpenSea. I was going to bring this up. John, pull the Coinbase Bitcoin chart up here from later in the deck. So I looked at this the other day. Coinbase, this is since they went public. They're now underperforming the Bitcoin price by a wide margin. It's like a gold miner and gold.

Is that because they have so much? I would have thought that because of the volatility, more people trading, that they would hold up better than the actual price of the cryptos. Well, I mean, earlier you just brought up, I think, how retail trading, at least that was for equities, has come down a lot. I wouldn't be shocked if that's the case for crypto as well. We're going to do this today. Maybe that's not true. I don't know. We're going to do this today, actually. Maybe we'll jump there now. Schwab, the retail frenzy, this is my personal opinion, but I want to get your take on this because I think you're more plugged into that world. I think we've seen the peak of retail trading for the cycle.

Not that all the traders are going to pack it up and go home. Yeah. But I think we're lapping that February, March, April period from 21 and all the numbers are way lower. So Schwab just reported earnings. They were supposed to earn 84 cents. They came in at 77 cents. Customers placed 6.58 million daily average trades in the first quarter, which is a decline of 22 percent from the same quarter last year. That's a pretty big fall off now that we've lapped the meme stock moment.

Net revenue is OK, 4.7 versus 4.8 billion. But that's because they make money from a lot of other things besides traders. Bloomberg is saying that 17 percent of U.S. equity trading volume came from retail investors by early March, which was down from a peak of 24 percent in the first quarter of 2021. You know what else is impacting this? So Robinhood has increased their margin rate like three times already. Margin rates are higher because interest rates are going up. Which means less shares traded. Yes. And probably less interest, quite frankly. If you can't turn $5,000 into $15,000 as easily, then it's probably less interesting for you.

Is that really impacting Robinhood traders, though? Are they looking at the margin rates, you think? Yes. Robinhood traders buy options on March. We'll leave you there. Anyway, I think March 21 is going to be like 1999 and 2000 was for my generation, for like the millennial Gen Z. Unless there's an even crazier meme moment at some point, which I suppose could happen, it's hard to imagine how Robinhood, Coinbase, Schwab, Fidelity can replicate the level of excitement for trading that we saw toward the tail end of the pandemic, especially given how much the markets had gone up into that moment. What's your take on that?

No, I mean, look, I haven't been doing it as long as you guys, but that was unlike anything I've literally ever seen. Every person you knew was talking about trading. Yes, yes. All the time. Yes. Yeah. And even smart people were like,

I'm just going to buy GameStop because this is fun. I can't remember that ever being the case. But no, I mean, look, that was the craziest period ever. It probably will be. And it was crazy because it didn't just impact those names that people were getting squeezed on the short side. You started to see cracks in the market then that are maybe now kind of coming to light.

But no, I think we're not going to get back to that level of activity. That's why the comps that you just mentioned are what they are. It's not because people aren't involved in the markets, because last year was insane. And the stocks that are now doing well, energy stocks and financials, no young people

want to own those. That's a great point. Remember all those headlines about how every hedge fund is now going to have a Reddit strategy and they're going to hire somebody just to watch the boards and Twitter? Do you think all those people have been fired yet? That were hired to be the chief meme officer at a hedge fund? I don't know if those people are still employed.

I think the quants that do that kind of stuff can do some pretty cool stuff, and they're probably doing that on Twitter and every other platform and Discord and you name it. They're probably doing that scraping and getting two bips of alpha on a trade just because they can. Speaking of, I just read about this guy that runs Melvin Capital, the restructuring that they're going to do. Yeah, are you kidding me? So he's going to go from 30% carry to 20% and eliminate the high watermark. Steal.

That's a steal. If you're paying those fees again, you deserve to pay them at this point. He's down 50% in 18 months. What's the point of the high watermark in the first place then? He's down in half from first place then? He's down in half from first quarter 21.

He's down in half? 50%. So now he's going to shrink the fund. He's going to shrink the fund. It didn't shrink itself? It shrank itself. He's going to go from like $7 to $5 billion

and lower the carry and eliminate the high watermark. People are willing to give anyone second, third, fourth chances now. Like Belfort is selling these huge like $40,000 crypto conferences or something. That's Gary's novel. He was talking – Lake Success. Gary Steingart.

That was the hedge fund one? I read that. Yeah. The joke – one of the best jokes in the book, the last chapter, it's this hedge fund manager who literally blows his whole life up, like loses his wife, loses his fund, SEC investigation, like ends up riding around the country on a dirty Greyhound bus trying to like figure out his life. The joke is he gets another comeback in the last chapter and he makes a ton of money and then loses more.

And then he gets another comeback. And like people just keep giving him money because he has a famous name. It's almost like you can't fall so far out of favor once you get to a certain level. It's like the joke of it. Yeah, I mean, Plotkin's super respected, or at least had been until GameStop is one of the best short sellers on the street, right?

I think he made money for a lot of people for a lot of years. And you know how the name of the game works. If you can get in and say you got your clients into someone who has a big name, people like to see that. So I'm not shocked. Although getting rid of the high watermark is – Name brands are super important in hedge funds and it almost doesn't matter what the track record is at a certain point. It's just like, oh, it's a name.

Yeah, exactly. And that's hilarious to me. Okay, good for him. Congratulations to Melvin Capital. It's a like, oh, it's a name. Yeah, exactly. And that's hilarious to me. Okay, good for him. Congratulations to Melvin Capital. It's a great situation. We're going to do something quickly on crypto. You guys have a payments fund, but you're not really big in the crypto arena, or you are?

So we didn't launch the payments fund. We have it filed out there. You filed. We haven't launched it. But crypto will be part of it, right? No, when we were actually looking at it, it was more, you know, Adyen, PayPal. Thank goodness We haven't launched it. But crypto will be part of it, right? No, when we were actually looking at it, it was more, you know, Adyen, PayPal. Thank goodness we didn't launch it.

It probably would have gotten crushed. Very out of favor. Very, very out of favor. Yeah. So nothing in crypto. We're trying to do something in crypto. But as you know, the SEC won't allow you to do anything ETF related. I mean, all we've got is Bitcoin futures.

We've thought about doing Ethereum futures, but they won't even touch that right now. Can I tell you something? You've been really forward thinking and grabbing these niches before anyone else. That's almost like trying to launch an S&P 500 fund at this point. You know it's going to be done 10 times

by people much bigger than you. If I'm being totally honest and transparent on the strategy there, if you're not first, if you can't somehow become first there, you don't bother. We're first three even. I don't even think. Look at the volumes on the Bitcoin futures ETFs.

It's like 99% in the pro share. You already know like sun and shine is going to beat you because this is like he wakes up every day. For the spot. For the spot. For the spot. Yeah, probably. Well, you're not going to construct it differently. No, no. For the spot. For the spot. Yeah, probably. Well, you're not going to construct it differently.

No, no. It's Bitcoin. It's not. Yeah, no. I don't know what we want to do there. You should just use green energy Bitcoins in your fund. That's one of the funniest things I've ever heard, by the way. Here's my hot take.

Crypto is super boring. Bitcoin, every day I wake up so excited to see, is it going to be $39,000 or $41,000? Those seem to be the only two prices that Bitcoin's allowed to be now isn't that good i don't know it's boring as shit i either want to go to 100 000 or zero and i really have no patience for anything in between but have i been spoiled yeah it needs to have something like this happen i think to remind people that it's just not going to be this easy all the time yeah why isn't it making new billionaires every week? Isn't that what we grew accustomed to with this whole thing? Well, I don't know.

You can't have it both ways, right? I feel like when it was insanely volatile over the past few years, people said, you can't touch this asset. It's just so risky. You can't put it in a portfolio. It doesn't fit the mold. It's not a store value. It's not a medium of exchange.

Right, right. Maybe now it's starting to tick some of the boxes that people were kind of memeing that it never had in the first place now. If Bitcoin is not minting new billionaires, air quotes, minting new billionaires, what is the point? No, it's fair. Nobody's getting rich right now. That's fair. Really bothering me. Also, gold had some nice revenge. Over the last year, gold's up like 9% or 10%. Bitcoin's down 20-something percent. Ben, you just don't understand the metaverse. Should Twitter be a private company? So this was Ben Thompson.

You and Michael are talking about this a lot. Well, Ben Thompson at Tritechery, yeah, he had a piece on this. Some of these numbers are crazy. He said that Twitter has over 19 different funding rounds, including pre-IPO, IPO, post-IPO. They've raised like $4.4 billion. The company in total has lost a cumulative $861 million in its lifetime as a public company.

So that's pre-IPO. One of the worst tech stocks of the last 10 years, easily. They've had 33 earnings calls. The company's reported a profit in 14 of them. Right. His whole point was that you're just not going to get a long enough leash. Whoever the management is, whether it's Musk or someone else, it has to be a private company to try some new things out

and try some different models. I don't know. What's your Twitter take? Are you a big Twitter guy? Are you a user? Oh, yeah. You love it, right? I love it.

But I've also used it as an advertiser for our business. Of course. And it sucks. Yeah. It's not like that. Thompson's point was it should not be an advertising business. It should be subscription. Oh, that makes sense.

You bought promoted tweets. Yeah, and they don't do anything. Because you know who's seeing those tweets? Bots. Yeah, exactly. Actual people on there. I totally believe it. And in that sense, yeah, maybe they should be a private company

and not have to deal with quarterly earnings. The problem is private company under whose sway, right? I mean, okay. I can't believe. So he sounds like he cobbled together the funding. I can't believe. It sounds like he's actually going to make a push for it. I thought this was just an ego thing.

He wasn't going to do it. Do you think everyone's saying? I was right about this and Michael was wrong. How about this? Nick was wrong too. There's so many. Do you think he's reading Matt Levine going, he's not serious. He's not going to do this.

And he goes, yes, I am. I'm going to do it. Yeah. No, I think he's being goaded into doing it by everyone saying he's not. I think we egged him on. Yes. I 100% agree. But part of the news today was that $21 billion is his own equity that he's putting up.

So like it's not – he's not like free riding somebody else investing in this. He's like willing to put up half the money himself. It's not bullshit. There's not an easy path to make Twitter super profitable though. It's not an easy company to fix. No. His point is it can't be fixed with public shareholders and I actually think he's right because if they really wanted to fix it, fire all the board members who are a joke and none of them even tweet. Take board members from the most active users of the service.

Like put Gary Vee on the board immediately. But do you remember the Simpsons episode? Josh, I think we get you back on Twitter and we'll hit 70 a share. Do you remember the Simpsons episode? We'll hit 70 a share. Where Homer's brother is a car manufacturer and Homer makes a car and it's the worst car in the world. Danny DeVito's in that. Okay, so that's the one where if Twitter was up to like the users,

like if Elon just said every poll is going to be what's happened next, it would make it worse because the, not a committee though. One user. Yeah. I agree. Take, take,

take 10 super prominent Twitter users who have some basis of like financial or business acumen, right? Get more Cuban, get people that actually tweet and that have built and sold businesses in their lives. Put them in a room, incentivize them with not just your Twitter following, but here's stock. Figure out a business model that's better than advertising.

And if you have to get rid of half of whatever you're claiming are monthly average users, whatever the metric they use now is, we all know it's all fake anyway. Close those accounts down. Make the user experience amazing. Make it an amazing user experience. And I promise you people will pay a subscription to keep using it. That's the business. You can't do that when you're a public company.

That's the business. You can't do that when you're a public company. You can't say no more ads, no more bots, no more totaling up fake users. Like we're literally going to make Twitter an amazing experience and we're going to ask $3 a month. Oh, man. They'd lose so many people if they did that. The people they would lose suck. The same people that are canceling their Netflix, they're going to cancel their Twitter. If you won't pay $36 to be there, then you're not contributing anything there.

Yeah, that's a fair point. Charge the power users. This is no offense. It's not classist. I feel like if you're a power user of Twitter, right, there could be a spectator tier. But if you're somebody that's using it every day to tweet and you don't have three dollars a month for that that's fair then how good could your tweets be you're probably just a fucking noisemaker at three dollars a month though are they even doing that well with no ad revenue like i need to look at

the numbers i'm glad you asked i thought about this they claim 200 something million users or close to 300 million users there's no way that's true. 50 million highly engaged, highly motivated users who are paying into the system. No ads, no bots. Twitter would be sick. It would be like 08, 09 Twitter. And I was there. And we built that thing.

We built finance Twitter. I was like finance tweeter number four or five literally who else was there lindsen heidi moore kelly evans when she worked at the journal uh it's a very short list i didn't even know twitter and then it was a whole lot of fake traders who were running schools like you know like i'm a consistently profitable day trader blah blah blah pay me and i'll teach you how to trade bullshit but like there were uh ph were – Phil Perlman was there, right? It was like a very, very small nucleus of us. I remember getting Barry on like the worst thing I ever did, setting up his Twitter account for him. Now I want to go in there and change his password.

But like it was good. And the people who were there were motivated to keep it good because it was like it was like meaningful to have those conversations well think about it if you charged like for the R subset of finance Twitter whatever that means

if you charged people to be on that that is a group of people who would definitely pay for that to follow the markets and analysis and charts and all the stuff that people do if that had its own little subgroup

that's what Thompson is saying like we need your own little subgroup to have them create their own rules but that could be a discord now that That could be a Slack channel now. Twitter doesn't have a monopoly on the ability to build that. That's one. Two, the hardest thing in the world is to sell a subscription to your own Twitter because every day you wake up like, I don't think I'm giving these people enough. What if I'm not giving people enough to justify what they're paying me and you

feel guilty no the subscription would not be to you it would be to twitter that's right twitter should allow you to create a community and then sell a subscription to that community right not not sell the subscription to follow you right it's too much pressure on a creator yes shit i haven't tweeted in two hours people are paying me the is running. That pressure needs to come off. It really should be about interests. And then if you're screening people out because you have people that are paying, you're probably going to lose a lot of misanthropic, nasty, angry people who are there for the wrong reasons. So anyway, I'm available if anybody wants me to consult. The last thing we're going to do is fixed income.

Ben, let us know what you're thinking here. All right. I put this out earlier this week. I looked at all the big bond ETFs. So 20 plus year treasury, seven to 10 year. Do we have this? Corporate bonds. On screen. There it is. Three to seven junk bonds. And I looked at the drawdowns compared to the S&P. This is as of a couple of days ago, but a couple of surprising things here. Every single bond there has a worse drawdown than the S&P right now. This is like drawdown from all-time highs. Junk bonds have the shallowest drawdown,

which is- Hold on, let's go through this. TLT is 20-year treasuries. Yeah. So its duration really killed you this year. Down nearly 30%. Down 30%. Actually, the peak for that is from March 2020, I believe. So this is a duration really killed you this year. Down nearly 30 percent. Down 30 percent.

Actually, the peak for that is from March 2020, I believe. So this is all time highs. So it's been falling for a while because the rates got so low. But the fact that have we ever had a period like this where every bond is getting crushed more than the stock market and the stock market's down? This seems like a very bizarre market environment to me. And I don't know if that means something's going to break or we're just going to see a really weird reallocation from bond investors going, holy shit, I didn't know I could lose money. You build a 60-40 portfolio and the 40 part is more risky optically than the 60 part. Even though yields have come up and bonds should be more attractive than they were a couple years ago. But now people don't look at that. They look at their losses and go get me out of here i don't want to be in this anymore dude you can buy you could buy five-year treasury uh

yielding two and three quarters percent right now it was basically yielding almost zero not that long ago exactly that's a very big that's a very big difference I think in – But to move this quick because before when yields rose from like the 60s to the 80s, it was a slow stair-step approach. This has all happened basically in a couple of months. So I'm just surprised we haven't seen some sort of, I don't know, credit hedge fund blow up yet or something go really wrong. I thought that we would see massive damage in risk parity strategies and I have not heard any of, like people that are leveraging bonds apparently

what? They're all appropriately hedged? Like why aren't we hearing about any blowups there? Any theories? I'm not smart enough to come up with a theory for that. So the risk parity ETF is it's RPAR. What is it? RPAR So the RIFT parity ETF is it's R-P-A-R.

What is it? R-PAR. R-PAR. Risk parity ETF. What does it do? It mimics a traditional risk parity strategy? It looks like a piece of shit. It's down 13%. So that's not great. It's not the end of the world. Not the end of the world. Not enough leverage

there, clearly. I'm just saying, like, do these bond losses potentially make people say, I need to just own more stocks? I think it has. Right? Is that what's kept the market afloat? Yeah. I was joking with Batnick about this a few weeks

ago, but I honestly believe people that lost 8% January and February in a treasury fund bought Apple instead. I think there's something to that. I mean, Apple trades like that's the case. Yeah. Or maybe they're putting it to energy and materials.

But that's not, I mean, those aren't sexy areas, right? But maybe even retail is doing that too. They are this year. Yeah, that's true. Matt Phillips did this thing at Axios. Matt Phillips did this thing at Axios the yield on the 10 year inflation adjusted treasury note is about to flip positive

for the first time in a very long time so real 10 year treasury yields are about to go actually positive which offers meaningful competition to other things that you can invest in not that that's such a great return but it's not negative.

And it was very negative up until very recently. What do you think about his premise? Let me read this to you. When real rates on treasuries are negative, savers, including investors and business leaders who buy government bonds, basically lose a bit of money on the deal. That makes saving unattractive compared to spending.

So people tend to spend and the economy tends to strengthen. When real rates go positive, it means savers can actually make a bit of money via the interest on their savings. They have a reason to save more and spend less, which can take some of the wind out of the economy's sails. Anything to that? I mean, the fact that it's still barely positive?

Not far enough to... don't my big worry is how isn't there a ceiling on rates that i don't know if it's three percent or four percent where the government has to say like we can't allow these to go any higher because of the interest we're gonna be paying in this debt yeah they can't fund the the government at a certain point i know they could they could just borrow short term and the feds rates are still low and have a ways to go but it seems to me there has to be a ceiling on this at some point. My assumption is 3% on the 10-year brings out a lot of buying. When do we cut rates again?

That's what I'm – That's what they're doing. They're raising rates to cut them, right? I mean, if you look at the long-term trend for rates, I mean, it's like, yeah, we've moved up a lot. But, I mean – We're back to 18 levels. Yeah, exactly. Right. And we were all scared then too lot, but I mean. We're back to 18 levels. Yeah, exactly. Right.

And we were all scared then too, right? I mean. It's not a general, it's the speed, I think has caught people off guard. Well, it's because we were at literally zero this time, right? Like that's part of it too. Let me know when the Fed has like taken down,

let's say 30% of its balance sheet reduction that they said they were expecting to do. Let me know where things stand at that point. I think it'll be a very different situation. Is any of that stuff going to happen though? I mean, things get political at a certain point too, right? You may not get that far. Yeah, I don't know.

Maybe people, you know, maybe the Fed's not looking at QPQ though. The market has already done so much for the Fed. I don't think the Fed ever even gets 2%. They don't need to, the market went there. That's what I'm saying. The market has done all the work for them Fed. I don't think the Fed ever even gets 2%. They don't need to. The market went there. That's what I'm saying. The market has done all the work for them. I think they can take their time, and if something does break or roll over,

the Fed will be like, all right, we changed our mind. Good thing we didn't do all those rate hikes you guys predicted. That would be a nice way to go. Let's do favorites, and then we'll get out of here. Did you have fun today, Will? Oh, yeah. This was great. So there's no reason to be nervous, right?

No. I think this went well. And there was no drink champs around. We didn't force you to choose between any two things. No, that'll be next time. All right, that'll be next time. I'll go first. I'm reading a book that's very uncharacteristic of me.

It's called The Codebreaker. You probably read this. Walter Isaacson, did you read it yet? His books are long, right? It's not as long as it looks. It's a big, fat book though. He's a good author. He's really good.

I haven't read a lot of his stuff, but this one caught my eye because it's about something I'm trying to learn more about. Do you know anything about this? No. Okay. This is a good idea for you for your next thematic ETFs. Pay attention. This is the story of all of the gene editing companies that now exist. The whole thing started as like seven or eight researchers all over the world, different universities, independently coming to the same conclusion, which is that they could harness this like ancient technology embedded within cells so that the cells could actually be programmed to edit out the types of things that are harmful to the organism. So like literally being able to edit out diseases from your DNA, things that you would have hereditarily passed on. So these people all figured out how to do it right around the same time in 2012.

It's 10 years later. There were three publicly traded companies that were formed from all of these geniuses. And they all now hate each other it appears. They've all sued each other into the Stone Age. Editas, Intelia, and CRISPR-AG. So all three of these got killed in the last year with all the biotech and growth stocks. But this is like the kind of thing

where it could have internet-esque ramifications for humanity. It's a perfect thematic ETF. I think there are life sciences ETFs that are popular. I know Kathy has one. I don't think anyone has specifically done gene editing but highly recommend the book um and i'm not recommending the stocks yet i don't own any of them but by the time i finish reading it i might end up investing in at least one of

them so it's a really cool story about how it all happened and i don't think most people have even heard of any of this shit so uh any plans to do any biotech stuff for you or biotech's interesting i mean like small cap mid-cap biotech trades like below net cash in a lot of cases i'm not the problem with that is first of all a lot of people don't understand it myself included yeah i don't know anything right so like that that's a problem number one um but yeah no i you know biotech's interesting gene editing sounds interesting you should you should look at that before somebody else grabs it we need more than three stocks i'll remember we need we need there are more than three but these are the most prominent three because the people who founded them are like the real

scientists who discovered and were had published paper Apparently, getting published first is really important, just like launching the first ETF. And it's like really, really important because then anyone else that publishes after has to cite your work. And then you're in a university, then you're like out there fighting for patents because you're going to start a company

based on what you discovered. You have to have been first for the patent to be able to hold up. So there's like a real battle that took place with gene editing, and you could understand why. Forget about treating diseases. What if we can start engineering babies to not be born with the ability to get a disease? And the Chinese claim to have done it. Chinese claim there's a pair of twin girls

who were born genetically altered to withstand something I forget what it was can we turn off the gene where your four year old throws up all over their bed

spread at night like happened to my daughter last night I'm not sure about that the metaverse fixes this the metaverse would definitely she wouldn't do that in the metaverse

she wouldn't dare it was I literally had to throw away the blanket that happened last night yeah and then you had a flight this morning yeah thanks to my wife The metaverse would definitely, she wouldn't do that in the metaverse. She wouldn't dare. I literally had to throw away the blanket. That happened last night? Yeah. And then you had a flight this morning?

Yeah. Thanks to my wife for holding out the fort. What do you got for favorites? All right. I've been reading this, The Tao of Bill Murray. It's by Gavin Edwards. It's a couple years old, but someone mentioned it. It's just all stories of Bill Murray.

Love him. And a lot of it is like pre-cell phone camera. So it's like Bill Murray, there's talking, Harold ramus was his old collaborator on groundhog day so they maybe this is like back in snl days so way before people could tape you on the street guy walks up and is like bill murray oh my gosh and bill murray grabs the guy tackles him to the ground and bites his nose and calls him an mfr no and he gets up and he goes no one's ever going to believe you that happened and walks away there was all these stories. Like someone would be smoking at a bar. Bill Murray grabs a cigarette, takes a puck, gives it back to him.

It's like no one will ever believe you. It's all – In other words, now everyone would have a camera on you. But he shows up on the set late and they're always like – he never practiced this big routine, but he would nail it. It just showed about how he is this like mad genius but also like just so his character in real life is almost crazier

than his characters in the movies what's your favorite Bill Murray movie I mean it's gotta be Groundhog Day right Groundhog Day I mean

that's me like after 18 pre-18 it'd have to be Ghostbusters right yeah Caddyshack

so I don't like it but I know he's great in it he's great in everything uh He's great in everything. What he did, he did something recently. He was in a cameo. He was in the Zombieland movies. I do like Lost in Translation too. Lost in Translation was great.

Oh, that was good. That was really good actually. Yeah. That was his. That's my favorite. So they said for that movie, so the way you get a hold of Bill Murray is he has a 1-800 number. So if you're like a director or a producer and producer, it doesn't matter how big your name is.

You call a 1-800 number, leave a message, and he might get back to you. So Sofia Coppola wrote and directed Lost in Translation and had Bill Murray sign on the day before they were about to start shooting. No one's heard from Bill Murray. So he said yes? He said yes. No one's heard of him. They filmed as much as they could with all the other actors. And they're like, we need him here today. And they're trying to call his people. No one's heard of him they like filmed as much as they could with all the other actors and they're like we need him here today and they're trying to call his people

no one's answering we don't know where Bill is shows up on set the day of and is like oh I'm here. It's one of the best performances like of any actor ever I feel like because you could tell that he's lived that life. Yes. Who was that Scarlett Johansson? Yes that was her like

big break too. She was pretty young. So did anyone ever figure out what he whispers to her at the end? I would love to hear that. No. That's like still a big mystery.

Yeah. Their entire forum's dedicated to that. Sofia Coppola has never said No but I'm aware of. like what he whispers to her at the end. You know the scene

I'm talking about? No I don't remember it that well. But rewatch it. I mean yeah I would say that's probably my favorite. I remember the whiskey I'm talking about? No, I don't remember it that well. But re-watch it. I mean, yeah, I would say that's probably my favorite. I remember the whiskey, Centauri Times, right?

Hilarious. That I remember, I don't know. Yeah, for super relaxing times or whatever. Yeah, exactly. What do you got? What do you got on Sofia Coppola?

Anything? Oh, no, I mean, Lost in Translation's my favorite Bill Murray is what I was saying. I was going to say, I would assume.

I mean, Wes Anderson has him in every film. That's fun too. He's great in Rushmore which I recently watched. Oh Rushmore that's another good one yeah. He's great in Rushmore.

I feel like he probably has like four or five great movies left in him if he wants to if he feels like showing up. I heard he sometimes shows up at his son's bar in Brooklyn

and bartends but I haven't actually Actually St. Vincent with Melissa McCarthy is a newish one that is pretty underrated. I don't think I saw that one. A couple years ago.

Wow. What do you got for favorites? What should we be watching or reading? Am I allowed to do a TV show? Yeah, please. It's not on Netflix, though, even though I know you bought some Netflix. No, that's fine. I'm really liking the WeWork show.

WeWorked. I didn't watch it yet. I actually think it's fantastic. It's Jared Leto. Yeah, yeah. And he does the accent for Adam Neumann. And it's pretty incredible. And what's his wife's name?

Rebecca Neumann, the way she's portrayed. It's Anne Hathaway, right? Yeah, it's Anne Hathaway. It's top-notch. It's top-notch actors. I tell you what, we love our sociopaths, don't we? Because there's so many TV shows about them right now. Well, it's crazy, right?

Like, is this just like a function of, you know, quantitative vision? One of them is a hit, so they make seven more until we get sick of it. But so far, so good. That's probably the best one. From what I've heard, that's probably the best one. I actually think it's very, very well done. What do you think about how they did Jamie Dimon in that? Oh, yeah.

So I think they might have missed on Jamie Dimon. That was really bad. They made him look really bad. He plays Jamie Dimon. Well, some nobody. But yeah, the way he's portrayed is pretty brutal. I'm sure he's thrilled. He made me look really bad. He plays Jamie Dimons. Well, some nobody. But yeah, the way he's portrayed is pretty brutal. He's like, well, it's like it's Jamie and Adam in Jamie's office. And he's like, we'll give you whatever you want.

Like, here's a $100 million line of personal credit. Morgan Stanley almost took that thing public for $50 billion. No, it's crazy. It's crazy. Like literally a week before. What I don't is if if you guys haven't watched it but but like the amount of partying and crazy shit they show going on within that company is like insane like i don't know if i don't know i watched the documentary oh yeah that was good and it sounds like the party thing was real like they would be doing shots in the office and like they're they really and they'd go to

these big huge concerts and it sounds like that was no it is real because why wouldn't it be real think about think about it you're a young handsome israeli canadian son of a bitch just crushing life you have people throwing billions of dollars at you yeah you have private jets you give like shareholder updates and like you're not even talking about like earnings or – you're talking about like – Elevate the world's consciousness. Elevating the world's consciousness and they eat it up. They're like standing ovation for this nonsense. Are we going to look back at all of this and be like we were so fucking crazy that we were like close to –

Honestly, I'm rooting for – But like a lot of the SPAC type companies and all this – Like – oh, I think we're done. Like we talked about it. Like March of last year was like peak, peak, peak. We're on the downside of a lot of nonsense. And like the quality is being separated from the nonsense, which is what markets are supposed to do. Yes.

Like Airbnb is going to keep its market cap. It's a real business that real everyday people find a lot of use from. It's not elevate the world's consciousness. It's like, oh, you want to go stay here for two weeks. This is maybe a better option for you than a hotel room. Great. I don't have to go in the yellow pages or on Craigslist to find it. It's all in one place.

That's a business. Yes. That should separate itself from WeWork. By the way, you know WeWork went public, right? It's a SPAC, right? WeWork kind of makes sense as a business now more than it ever did, doesn't it? It's a smarter business in a pandemic without all the hype. Well, even after a pandemic, right?

People are like, I want to go into an office two days a week. Give me a WeWork. 100%. We're paying WeWork in multiple cities. There you go. So we're, right? I'm paying WeWork. Chicago.

Maybe New Orleans. I don't know. It's great. I don't want to have a lease in these places. Where is that, on Apple? Apple. Okay. All right.

We'll check that out. Hey, what do we want to wrap with? Are we still doing reviews or are we done? No, we're done for now. We're done with that? Yeah. Okay, that got a little- But still leave us one.

That got a little much. Well, no, we got a lot of great ones, but yeah, we got to keep it special. So we'll bring it back to're done for now. We're done with that? Yeah. But still leave us one. That got a little much. We got a lot of great ones, but yeah, we got to keep it special, so we'll bring it back to something. All right. Very good.

All right, Will, thank you so much for coming through. You can give everybody your socials, how they could follow you, how they could learn more about Roundhill.

Where do you want to send people? What's your Twitter? Go to the company's Twitter, at Roundhill. Mine, if you want to check it out, I'll throw it in there.

At Roundhill, to follow Roundhill. Roundhill Asset Management to check it out, I'll throw it in there. At Roundhill, to follow Roundhill. Roundhill Asset Management? Investments. Investments? Investments. All right. And what's your Twitter, just for the hell of it?

Maybe Bullish. Maybe Bullish. I like it. All right. You did great. You learned some new things today. We learned from you. Oh, yeah.

Yes? Yes. Okay, so come back? Sure. Okay. Let's do it. All right. Awesome. How'd you do today?

Fun show? You miss Michael a little? Just a little. You get a little upset when you see Michael's vacation pictures with his real wife? Does that piss you off a little bit? I'm going to that same place next month. Where is it? Marco Island? Yeah. Very nice. Very cool. Alright. Nicole, good job today.

John, good job today. Duncan, good job. Take us out of here. Alright. We're going to turn the mics on. Good job. Take us out of here.