The Compound and Friends - Small Caps Rip

Episode Date: July 19, 2024

On episode 150 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Todd Sohn, ETF and Technical Strategist at Strategas, to discuss: small cap stocks, the odds of tech stocks faltering, semiconductors, cash off the sidelines, thematic ETFs, Trump economics, and much more! This episode is sponsored by STF Management. Learn more about the STF Tactical Growth and Income (TUGN) ETF at: https://stfm.com/etf/tugn/ Sign up for The Compound Newsletter and never miss out! https://www.thecompoundnews.com/subscribe Instagram: https://instagram.com/thecompoundnews Twitter: https://twitter.com/thecompoundnews LinkedIn: https://www.linkedin.com/company/the-compound-media/ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Do you play croquet? Not often. OK. Not often. Should I start? I mean, I'm happy to get involved. That's the is it going to be the next pickleball? No, very antiquated. Nobody's nobody's playing that game.

You know what I'm seeing? I'm seeing more bocce, though. Places I go. You know what I'm saying? I just found out I'm going to Food Fighters tomorrow. They're at City Field. Oh, that's awesome. They just got rained out last night. I think they got rescheduled for tomorrow. Or is there another one tomorrow?

They're running the concert back tomorrow? I don't know, I just found out. I just got a text message. Who's opening? Don't know. I just got the text. So Adam was there last night and there were thunderstorms. It was bad.

It was really bad. There were rolling thunderstorm thunderstorms and they can't they like halfway through the show They called it which I've never heard before It's the lightning they're worried about I don't know how many songs they ended up playing but People people online seem pissed. Yeah can go. Oh yeah. Still tickets available, my friend just got. I gotta talk to the wife. Have you ever seen Foo Fighters Live? I saw them in 2003 maybe? Honestly, it's one of the best shows I've ever seen.

It was a Foo Fighters Weezer show. Amazing. Teenage me was. So I saw the Foo Fighters, the first show back to Madison Square Garden during the pandemic. Teenage me was... So I saw the Foo Fighters first... the first show back to Madison Square Garden during the pandemic. Oh, that must have been... Was that Chappelle came out for that?

Chappelle sung a cover song of Creep. Yeah. Did a radiohead cover. But that was cool because everyone had a vaccine card. And it was the first time they brought back a concert and there was not one person in a mask in the whole building because you had to get the must felt liberating it was so cool you had to get the new york state vaccine card to get access to the building right so uh so i went i took my son and i went with another guy and his kid and uh i'll never forget like just how weird it was till all of a sudden.

It was surrounded by people. I want to say this is like March of 21 maybe. Yeah. And I still have the commemorative cup that says the rock is back. And it's like Foo Fighters Madison Square Garden and the date on it. Is it unfortunately a collector's item? Yeah. Well, it's a collector's item.

I drink beer out of it. So what was your first live event post-COVID? Remember? Is it unfortunately a collector's item? Yeah, well, it's a collector's item. I took a few out of it. What was your first live event post-COVID? Do you remember? I think it was in the middle of the year. I don't know. That whole year and a half timeframe was like a blur to me. Yeah.

It's still weird as shit. It's very weird. When you think about it. You know now everything is five years ago, pretty much. Like anything pre-COVID is five years ago. The whole thing felt like a blur. And my first, my youngest, my older son was one and a half years old at the time,

so that was a shell shock. Having to work at home in an apartment with him, it was just coming into walking, yeah, light walking, potty, all that stuff. And that's right. So one of the weirdest things that I remembered the other day, they used to do this thing where, okay, the restaurant is open, you can go.

They put tables in the parking lot. They enclosed it in plastic. You could sit in there, that's fine. That's safer than sitting in the regular dining room. Yeah. Something to do with ventilation. Okay, sure. But then it was like, you had to wear a mask

to walk into the restaurant. And you check in with the hostess. Then you sit down at the table, everybody takes off their masks. Everyone at the table's next to you, their masks are off. Maybe the table's a little bit more spaced. And then the waiter comes over, the waiter is pulling down the mask

to tell you what the specials are. Hey, we've never had a COVID before. It was the first time. It was just... Next time we'll be much more better equipped. It was safety theater, basically. I don't want to do that again. No, it'll never happen again. Please, no.

They'll literally never do that again. All right, well, we still do it. The biggest safety theater bullshit is on airplanes, when the stewards have to read, like, in the event... If the plane's going down, we're all going to die. But they have to do it. Stewart. They have to do it. What are you traveling on the Titanic?

The Stewards. Flight attendants. Flight attendants? Oh I didn't say stewardess because I know that's not, you can't say that anymore. They'll put you in cancel jail. Flight attendant. I have books for you. Let's go.

What do you got? Okay. Because as a thank you for allowing me. Were you giving us gifts already? You're welcome. Alright. This one's for Nicole. I was told Nicole's a Rangers fan. I am! because as a thank you for allowing me. Were you giving us gifts already? You're welcome. All right. This one's for Nicole. I always told Nicole's a Rangers fan.

I am. So this is a Marc Messier. Oh, that is so sweet. I love it. Look at that. Wow, I can't wait to read this on the beach. What is it called? No One Wins Alone.

No One Wins Alone by Marc Messier. I hope it's not a snooze fest. By Marc Messier? Wow, looks good. Marc Messier. Hey, Nicole, you want me to sign it for you? Yeah. Okay, all right.

What else you got? I got a, you're welcome, thank you. This is, I was talking about you guys talking about the JPMorgan 5K. Yes. It's a running book. Oh, okay. Yeah, throw that right out.

Who is that for, me or Josh? Whoever wants, I don't know. That's more of a joke. This is actually a very good book. It's more of a joke. I don't know if you're familiar with this. This is a gentleman. I just read that.

I'll 100% read that. I love that. He worked at Raoul's and Le Cuckoo. Okay. There's some hilarious stuff in here. All right, this is called Your Table is Ready. Table is Ready. Tales of a New York City, maitre d'.

Yeah. All right, let's have it. This is good. Let's have it. Give this to Matt or something. No, this is for Michael's, Michael's already training for the next race. Let's have it. Give this to Matt or something. No, this is for my, Michael's, my majority training for the next race. For what I talk about when I talk about Ryan.

He's a, I've never read any of his books except for that one. He's a, some sort of writer, yeah, but. A brilliant meditation. You know what, I could, I really, maybe this will be my on-ramp to get back into books. I've really just been in a massive drawdown. I told you that was going to happen too. Remember I told you, wait till your kids turn like three or four.

Well, what you didn't tell me is wait till you do four podcasts a week. Well, yeah, that'll definitely do the trick. I would agree. I would agree. Todd, you were here on the show not long ago and said some things that turned out to be really right. So this is super exciting. We're going to celebrate all of your amazing calls.

How's the summer been so far? Summer's good. Still, Michael about his trip to Spain with my wife for a friend of ours' wedding. What do you think about destination weddings? Are they selfish? Well, I did one myself. Oh.

In Saratoga Springs though. Not in my Erica Springs. Saratoga Springs is not quite, I mean that's. Here's my thing with Destination Weddings. Shut the fuck up. Go to the wedding. Stop complaining. Spend the money, get on the plane, go do the thing,

and in five years, you're not going to remember how much it costs for you to be there. You're going to remember that you were there. I went to one. What if it sucks? What if it sucks is a great question. It was an amazing wedding. It's really hard for it to suck.

Where would a destination wedding have to be for it to suck? Saratoga Springs. Besides that, why did you get married at Saratoga Springs just to get everyone together? Because that in New York City was too expensive. Okay. All right. So we just came across to Saratoga. We liked the venue.

Did you come down the aisle on a fucking thoroughbred or something? Well, we did the rehearsal dinner at the horse racing hall of fame. Oh, okay. Which I know nothing about horse racing. Okay. But that was cool.

Yeah, dude, I think that stuff's cool. I didn't do one. But when I hear a lot of people like, oh, how dare they? So don't go. If you really don't want to go, then you probably don't belong there. Don't go.

Oh yeah, if he got invited to a destination wedding right now, he'd be coming and hogging. No, of course I wouldn't go. But I wouldn't be walking around crying about it. No, you just wouldn't go. What about, so my brother got married at Walt Disney World. Wow. I'd go to that. I'm into that shit. See, there's another thing people Disney World. Wow. I'm into that shit.

See, there's another thing people make fun of and I'm into that shit too. Why did they get married there? Was his bride a Disney adult? I know Nicole likes Disney too, is what I was told from my sources. She does, she does. We're a big Disney family.

Okay. So in family is very interesting. Yeah, I love Disney. I wish my kids were younger. I would go back right now. Let's go. It's funny you mentioned that. I think I'm going back next April.

I said that to Robin last weekend. Do you want to go back? How old was Logan the first time you went? One years old? No, we went in California a couple of months ago. But they're going to age out soon, so. They'll never age out. Yeah, they will.

Trust me. No, they will. How old are your kids? Five and two. Okay, trust me. They do not want to go with their parents to Disney World. I will age out too. Here, here, here.

My parents just celebrated their 50th anniversary. Yeah. It's great. We love them. They went to Disney World. Okay. All right. I love it. Dude, I'm all about Disney. I actually, I want to take my son back because he was five when I took him.

He's two. So like, he doesn't remember any of it. Got a whole Star Wars thing there. And now he's 15, so it's not going to be quite the same. But they did a lot of adjustments the last 10 years. They've done some. They've done some adjustments. A lot of money.

All right. I only will go on rides that, no, you know what? Let's not go there. All right. Let's get the show started. No, it's get this. Let's get the show started. What? No, it's going nowhere. Hey, John, what show is this?

This is the Comedy Boys episode 150. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Red Holes Wealth Management. Welcome to the compound and friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Red Holes Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Red Holes Wealth Management may maintain positions in the securities discussed

in this podcast. Ladies and gentlemen, today's show is brought to you by NASDAQ. Did you know over 600 ETFs are now listed on the NASDAQ exchange, including this new one from STF Management I'd like to tell you about today. Option overlay ETFs have exploded in popularity. People are using them as a source for alternative income, but most of them are based on a stock index. The STF Tactical Growth and Income Fund is very unique. First of all, the ticker symbol, TUGN, literally stands for tactical growth and income, but what they're doing is using a rules-based approach to toggle between stocks and bonds

when the market trend turns negative. Tug and Turn, two years old this summer, has paid 24 consecutive distributions of roughly 1% per month, currently has an 11.4% trailing 12-month yield. To learn more, visit stfm.com or just click the link in the show notes. 150. It's a milestone. What are so many people thinking? You'll find out. Don't distract me.

Todd, 150 episodes. Sounds like it's a lot, right? Yeah, I think quite frankly, quite frankly, we've gotten better as we've been doing the show. And honestly, the last few weeks, the last run that we've been on, I feel have been really solid shows. You're on a high streak. Yeah, no, we really hit our stride. It took a couple of years to figure out the formula.

What do you think? Yeah, I think you're getting decent. I'm almost decent. Alright, hey, we have a special guest today Mr. Todd zone is back returning champion Todd is an ETF and technical strategist at strategist securities and strategist asset management and Institutional research and asset management platform. Welcome back Todd. Thank you very much All right. I have all this other stuff about prior to Stratigus but we're we don't need we don't need to do that

again. Oh thank you. Can I show you something I thought was funny? Of course. All right hey put this on screen. So this is a meme this week. Jerry asked Kramer what's going on in there and it's all the largest cap stocks blood red and Kramer answers the door he says they're rotating it's a the largest cap stocks, blood red, and Kramer answers the door. He says, they're rotating, it's a small caps, Jerry. This is a big meme week. It's a huge meme week. Okay, what's the most entertaining part

of what you're seeing happen on the screens? That small caps were being asked if they mattered anymore. Josh asked if they were investible. Are they even investible? I'm part of that crowd, too. Do they matter at this point when you have Nvidia and Microsoft? And then they just have this explosive move higher.

And it's not like they're down a ton, but some of these big cap names are finally mean reverting. But it doesn't mean they matter. It's just cool if you own small caps to see them go up a lot. That slice of your portfolio is actually doing something. Yeah, but not just doing something. It's drawing capital away from the mega cap trade,

like undeniably, right? I think, without definitively saying yes, I mean, there's clearly money going there. And whether that's real money or short covering money, it's something. It's demand. Right. But when we say money is coming out of large growth,

it's not large growth managers going into small caps. No. It's model portfolios, perhaps? It could be models. It could be short-term algos. It could be retail traders saying, all right, I'm trading out of large cap growth. I'm going to rotate your simple.

And you can do that with one or two clicks in an ETF, right? So it's not going to be these Goliath Titanic type managers who are moving this, because the mandates, it just doesn't work like that Did you see? Did you see what went on with like the regional banks this week for example? Yeah, um huge moves QABA It's a community bank ETF huge move. Yes, enormous. Yes Um, I want to talk about some of the things that you said the last time that you were on the air

Yeah, let me play this you have a chart showing that this is the fourth longest streak without a new high in the Russell 2000. What are bears gonna say if that makes it, when that makes it a little too high? Let's double click on this. I love this. So you talk about bear markets and how bad they've been, right? How desolate. And Russell's getting up there in terms of length, right? The bar is really low for small caps. What's the numbers? Is the fourth longest bear market for the Russell? One, two, three, yeah, fourth longest consecutive days

without a new all-time high for the Russell 2000. That's how bad it is. That's so bullish, though. Terrible it's been. Yeah, the bar is super low for small caps to work. Maybe they're not an outlet performer by a huge margin, but these numbers, we're getting to an extreme territory in terms of- Should I just blindly buy small caps right now for like my higher risk tolerance bucket?

I like it, yeah. But the 600 over the 2000. But are you PGing it? Ooh, the 600 over the 2000. What's the- because I'm asking you, what's the historic after it comes out of a period like this? How good are the results? Oh, you know what? Well, just eyeball it.

I mean, they look pretty good. I actually, I don't know how the exact numbers off the top of my head. I feel like it's gonna be really good. But it should be good. And all these bullshit regional banks that everyone's so worried about, they're just gonna shrink in,

they're just gonna shrink in proportion to the good small caps. There's this interesting evolution going on within large and small cap indices where the banks are shrinking in Russell 2000, the industrials are taking shares, some tech, some discretionary, health care. Yeah, the whole thing.

We play the whole episode. So do you want to take a bow? You want to do like a little karate? What do you want? Cobra Kai's out, by the way. I know. Wait, was your dad a karate instructor? Yes, yes.

He's still in. He's a sensei. And what belt do you? I never got that far. Okay. Is it true that you won the All Valley? I did. You beat Daniel Luisa?

I've read Ralph Macchio a couple of times. Okay. Did you? Just tie this together. He's a sensei who goes to Disney World, all right? I mean, it's a rare combo. Fair. So listen, that was a really prescient set of charts that you had on the topic, and I

think you were talking about the old days. I was in the old days. I was in the old days. I was in the old days. I was in the old days. I was in the old days. I was in the old days. Just tie this together. He's a sensei who goes to Disney World. Fair. So listen, that was a really prescient set of charts that you had on the topic. And this snapback, the question now is, is this for real? Can we now say that there is a new trend, or is this just counter trend, and we're all going to forget about it in a week?

The breadth statistics say this is new. This is a fresh move higher. You had 70% or 75, I want to say 75%. I might be skewing that number of Russell 2000 stocks straight to a one-month high this week. That is historic. The strongest in however many years. It's a breadth thrust.

A breadth thrust. No, but it is, though. This is a breadth thrust. You want to buy those. Yeah, breadth thrust coming off of major lows, which you could make the case the Russell is in the process of doing that, should be bought. Yes, they can be short-term climactic. I wouldn't be surprised if small caps then just declined

and had some volatility for the next month or so, especially because seasonals, elections, whatever you want to call it. But more often than not, the forward returns are very bullish. All right, wait, what's the first, did we skip to this? I skipped it because we talked about it. But more often than not, the forward returns are very bullish. All right. Wait, what's the first? Did we skip to this? I skipped it because we talked about it.

All right. So we're not going to do a long time coming for small caps? We can. That's one we've spoken about. Whatever you want. I want to put this one up really quickly. I want to ask you a question about it. This is a fresh update of that chart. So this is the chart that you originally showed us and you said, look, this streak has been going on for too long, basically.

And when it snaps back, it's going to snap back hard. And that's what happened. Yeah. So far. So what's the aftermath of these periods like? You get a huge run. Huge run higher. Of course, there's going to be some volatility.

There's going to be pullbacks there. But I'm inclined to think small caps are back. Now, here's the important part. So the absolute part of this is small caps are an element of participation. That's great for the overall market. Can they outperform large caps? That's a little trickier because that would.

For five days they did. For five days. I'm talking like six to 12 months if you're an asset allocator. Yeah, I would love to know if you think they can. Usually that's only the case coming out of recessions. Which is not the case right now. This is not the case, so it's a little uncommon.

So I don't know how I feel about tilting overweight small caps, but if I'm just analyzing the market participation, what's going on, this is great. You guys getting calls from institutions that want to take a fresh look at their small cap allocation? Oh, yes. Everyone this week. Everyone.

What do they want to know? Is this for real? Is it short covering? Of course, there's a low quality tilt to this, but that's what happens during these moves when you get these big volatility spikes higher. Of course, the highest shorted stocks will be the biggest gainers. Yeah. And when crap rallies off a low...

You should... Crap should rally off a low. Junk, that's how things happen. And then you skew up quality as the cycle ages. I think Abraham Lincoln said that. That's a big Abraham Lincoln quote. So, wait, so they're calling you and then they're like, well, what's the right way to play it? Is the right answer to play it?

Is the right answer as simple as Russell 2000 and shut up? I think S&P 600 is a better construction. Russell 2000 still has so much junk in it. Fine. I also like the active route. And even prior to this move, if you looked at some active managers out there, the ones who are really good at their job

and know small cap stocks, they've actually done pretty well because they were skewing towards industrials and not towards regional banks or the boom and bust biotech type name. So I think if you have a good active manager comfortable with for small caps or S&P 600, makes the most sense. Okay, and then there's a read through to the S&P 500

when small caps are doing really well, you almost don't mind being outperformed in large cap because large caps should be in a healthy environment. Large caps have had their due the last year and a half. Yeah, what else do you want? Been phenomenal. Right. And the other part of this though

is it's been large cap growth. There are so many corners of the market that haven't done anything for three years. So now you get small caps going, you get financials going, industrials have been there, health care, we'll see if that's actually sticky, depending on where you are in the cash scale. They look good though, health care looks good right now.

I think it looks good. And so if I'm taking the optimistic case here, I think this is very much an optimist market right now. There's a lot of room to run for anything that is not a top 10 stock, let's call it that. So we're going to get some of your charts, but I should point out as we're recording this Thursday afternoon, let's call it that. So we're going to get some of your charts, but I should point out as we're recording this, Thursday afternoon, Dow's down 500 points. I'm a big point queen.

Russell's down 2%. So you know I have to pay attention to that. I think it's to be expected, right? Yeah. Biggest two day loss for the Russell since. Huge. Sometime. I can't remember what the date it was.

This is a volatility period. That's when trend changes can happen. And this one seems to be from bear to bull for small caps. My theory on the Russell 2000 sell off today is like everyone woke up and was like, wait, what did I just buy? Yeah, it's a huge short term momentum trade. Let it breathe for a couple of days.

Maybe there'll be a little shakeout. People get nervous. Oh, it was a fake out. I actually wouldn't trust it if it ran up another 10% right now, like without taking a breath. Yeah, yeah. I'd be a seller. So bespoke tweeted the Ross 2000 gave up a 4% gain

and had from Monday's close through Wednesday at 10 a.m. So, all right. Small caps, it's volatile. It's to be expected, but I go back to that new high data, the advances, the decline ratios, all this stuff has the breath thrust written all over it. And you can get pullbacks from those in the very short term, but longer term, 6-12 months, it's really bullish. You know, one thing though, like, that I would love to know, was there any way to see this coming?

So we think that this happened as a consequence of the CPI print falling in line, and then obviously, clarity on the election happening like almost overnight. Neither of those two things are predictable per se. Even if you knew the reaction would be what it was, still couldn't have come up with both those two events happening. Huge game like this. I'd be hard pressed to say if you see it.

Even if you thought that there was going to be a cooler print, you probably piled more into large caps. Yeah. Yeah, buy more tax. Stick with what's working. I would have thought, yeah, I would buy the stuff that's working, the momentum stuff, not small caps because they've just been so frustrating.

So the Russell has underperformed big time off the lows relative not just to the S&P, but to its own history. So you have a chart showing the Russell 2000 performance one year off major lows. And it's well below the average. Yeah, so big move, that was what we were just talking about. And if you're saying, all right, this is too far too fast, hasn't performed its one year off major lows, and it's well below the average. Yeah, so big move, that was what we were just talking about,

and if you're saying, all right, this is too far too fast, well, you're way below average. Oh, wow. Other versus other major market lows, especially. Look at this compared to 2020. Yeah, I mean, 2020 was super rare, obviously. It's the best ever. So read me these numbers, not everything,

but like the average return for the Russell off of a one year major low, which is what we think we just witnessed, the average return, this is 200 days out, 250 days out? One year, yeah, one year out. Okay, so one year out, what is the average return? You're looking close to 50, 60%. And we're carrying on about what 20%? Yeah

Okay, nowhere near average nowhere. No average nowhere near the 2020 example What is that you were up? I want to say? It's a double. Yeah, okay. All right. That was really uncommon. No, of course, but this idea that it's too far too fast Well, yeah, it's pretty fast, but it's not that far. Too far too fast if you're a day trader. But if I'm a big allocator or I want to buy something for the next year, we're nowhere near too far too fast. Okay, one monkey mentioned that is Michael and I both believe that things are just faster now.

And moves are sped up, up and down. So it is possible that, like like we've seen the lion's share of the gains, but I mean, possible. Well, another big monkey wrench is that, like usually when you get a major bear market low, it happens in the context of a recession, which we did not get this time. No recession.

And so there's something, there's a weird dynamic happening that happened in the market last week that usually occurs at bear market bottoms. So we're looking at the S&P 500 versus the New York Stock Exchange Composite Index and we're looking at a rolling five-day average of the net advances and what just happened this week as you could see on the chart happens at major bear market bottoms and obviously we're not even close to what I did bear market we're at all the behind we're not at a bear market, we're at all time highs. So this is a very odd move that we just saw.

Strange tides. Very strange. But plain devil's advocate, it is kind of a bear market for most stocks that are not in the S&P 100. Yeah, so that goes back to the point here. I mean, look at the NYC composite on that chart. Outside of the last, I mean, if you had to zoom in, outside of the last few months, it's been a lot of nothing.

Yeah, yeah. A whole lot of nothing. If you're not in the right stocks, it's basically been like a bear market. Right, and that's why you've had this weight influence over the last year and a half or so of these stocks that just became colossal heavyweights in the index, because everything else was doing nothing.

What are flows like in terms of small caps? Are investors interested at all? So over the last six months, there has been what I felt kind of agnostic flows. Of course, you're going to get your drip into standard Vanguard type products and whatnot, but the fast money wasn't there. I don't believe so.

So what's the red line in the top pane? So that is just the S&P 600 relative to the S&P 500. OK, so that's the ratio. So underperformance, yeah. OK. We also have the S&P 600 by itself. And on the bottom panel is all small cap ETFs. There's a couple hundred of them.

And the flow is over a rolling six month time frame. And I'll put little standard deviation bands on it to make it statistically significant. And over the last couple of weeks, there's been outflows. Yeah. There's no interest there. So they're still, on a of weeks, there's been outflows. There's no interest there. On a net basis, it's still outflows. Yeah, it is tactically.

Yeah, I don't think that'll, when do you get the new data, next week? We get it every day. So there's been money into the IWM, that's Russell 2000, pretty substantially these last few days. I think probably short covering to some extent, and then fast money. But bigger picture, I don't believe

there is a lot of aggressive positioning in small caps. So that leaves a lot of room to run, kind of similar to the last two elections in a way, 2016, 2020. The election gets cleared no matter who wins. And all of a sudden, this big rush of money to small cap value all that stuff. I feel like early 2017, everything rallied. And a lot of small caps participated in the quote,

unquote, Trump trade. There was like a, no,ied, and a lot of small caps participated in the quote unquote Trump trade. There was like a, no, but there was a run. It was a huge, it was one of the, that was the lowest volatility year, I think of what, all time maybe? 2017 was an amazing year. Yeah, absolutely. Let's do this commonality chart.

So you're looking at multi-year bear markets. What's the story that you're telling in this chart? That, be optimistic outside of tech that there's a lot of stuff that has been in a bear market for almost three years. OK, so the top pain is the equal weight S&P 600 index has not eclipsed its 2021 high yet. Middle pain is equal weight financials.

Same story, although better. Bottom pain, equal weight health care, basically consolidation for the last three years has done nothing. Yeah. OK. I think this is really getting overlooked. This along with the-

Not by me, I'm all over it. Say more. For our clients, viewers, whoever, this idea along with the idea, which this is in hindsight now, is that when you make an index of the mag 7, it went down 50% in 2022. That's a generational decline for those stocks. So now they've rebounded.

And so I like the idea that you're going to get major broadening out, and these sectors could go on big multi-year runs after this huge, huge technology. You think about how many retail investors have to, like, first for the first time, like, look up Merck. Yeah. Merck, Pfizer.

And Chevron. And they don't know these names. They don't know what makes them tech. So if I'm just looking at participation, which is how bull markets work, that's the durability of it. I am very optimistic with this. Can you envision a scenario where the large cap Nasdaq tech names have made their highs for the year

and then for the next six months, it's everything but. Like, could that continue through the end of the year? I think that's fair. It's hard to imagine. It's hard to imagine just the way things work. Yeah. Maybe they, with the lag relatively speaking, if everything's going up, it's hard for me not to think like,

OK, those will also go up just the way the world works now. We're going to get Netflix earnings today. Large cap tech starts, I think, next week. And then maybe that'll be like, just the reactions to those reports might be decisive. Yeah. I mean, that was the case 24 years ago, the tech bubble, where you had big tech go down.

Everything else was sideways to high. Highest. I mean, you were there for that. So I don't think that's a good comp, but that did happen then. I guess the point is that it's possible. It's just, that's not a likely outcome. I just feel like market structure is so different now

without being an expert on market structure. All right, so to sum up though, basically it's not too far too fast. Yes. This probably has legs given the breadth that you're seeing. Exactly. These things are under owned. They're under appreciated.

Very under owned. I think expectations are pretty low too, just in general. And historically, this thing follows through. It should. If this is a head fake, it's going to be a painful head fake. Because then if the big names can't meet their expectations, those collapse and everything goes with it. If this doesn't follow through, I'll never buy a small cap again as long as I live.

Oh, yeah. I'm just kidding. I don't think the stakes are that high for people, but yeah, it'll be a nasty head fake. In terms of people being under-invested, you have a table showing all the ETFs, not all of them, a lot of them that have yet to exceed their November 2021 high in terms of assets under management, right? of them, a lot of them that have yet to exceed their November 2021

high in terms of assets under management, right? And it's a lot of Russell 1000, Vanguard Extended Markets, MidCap, 2000 Values. Everything. This is an extension of what we were just looking at with those three charts. I just wanted to say. Everything is not tech.

Everything is not tech. Investors are not interested in. If it's small cap or if it's an equal weight sector, or even some international stuff too, has been in a bear market for two and a half years. So all right, so to be clear, this is not the indexes. These are the actual ETF AUM that you're listing. Yeah.

All right, so here's an example of the things that are still below the November 2021 high price in order of AUM, so how big they are for investors. IWM, which is the Russell 2000, okay, we talked about that. MSCI, IFA, that's below its 2021 high price still. The entire world developed markets. Vanguard Extended Market, same story. Russell MidCap, Russell 2000 Value, 2000 Growth,

Biotech, which I find really interesting, MSCI Europe, Regional Banking, the JETCTF, which is the airlines, Equal Weight Healthcare, it's just this huge list of stocks that if you feel like you missed the last nine months in the market, which many people have, hey, there's still a lot of asset class up for grabs. Assets, stocks, whatever you want to call it.

We're talking about thousands of companies. Look at the holdings. Vanguard Extended Market has 3,668 holdings in it. That's a huge number of stocks. It's a huge number of stocks that are not extended and haven't done anything. Of course, there'll be ebb and flow. There'll be corrections here and there,

but I'm looking at this from the optimistic scenario of the next 12, 24 months, however long you want to go. Todd, on the other end of the spectrum, you've got obviously the tech trade. You have a double levered Nvidia single stock ETF that has more AUM than 92% of all ETFs. This is one of the- Playing it like Buffett. NVDL, unbelievable.

Wait, this is 2X NVIDIA? 2X NVIDIA. It's an oxymoron because it's a single stock ETF. Yeah. Doesn't make sense. I still don't understand the purpose of this either. These are a new kid on the block for ETFs. OK.

They serve a purpose, obviously, if you feel high conviction for an Nvidia, Tesla, whatever it is. But the Nvidia performance has been so good that this funds, AUM has just rocketed. And it was $5 billion right before this decline, which would have put in the top decile of all ETFs, 3,000 ETFs here in the US. It's ridiculous.

That's crazy. I mean, that's really ridiculous. It's great for the issuer of granite shares. Yeah. You know, they get the fee on that. It was $200 million to start the year, a rent of five billion. Yeah. Todd, you have this hall of fame table

that you put together showing the S&P 500 sector weight change over the last five years. Let's do this. And this is just unbelievable. You say that every sector, except tech, has lost market share within the S&P 500 over the last five years. It's unbelievable.

Two tech. Two tech. So I have a lot of weight stuff in here and maybe I overdo it or not. The reason I like this is because it shows how investing is evolving and that the indices that ETFs invest in, the way that we are all investing in, that's the ingredients that make up our investing diet Right you go to the grocery store. You're looking at what am I getting in this food? It's the same thing with with with indices. That's why I like all these weight charts

But you see on the slide you wrote humans are not the only one using weight loss drugs Lol, so let's let's illustrate this point for people Three years over the last three years, tech has been 5.5% That's how much it's gained. Has gained 5.5% of all the market cap. So it's gone from 28% to 33%. And over the last 10 years, it's gained 14.2%. And over the last five years, it's gained OK.

But over the last five years, everything has lost. Market share to tech. That's incredible. Everything has lost. Not one sector is bigger in the S&P than it was five years ago except for tech. Yeah, all in on tech. Healthcare has lost the most.

You say the most amazing stat on this table, the five year column, every sector. But the bottom of that, health care is negative 2.8% of its value, basically. Tough time for health care. I don't know if it's lost all of that directly to tech, but indirectly it has. Yeah, so the net of those. The net has health care. I don't know if it's lost all of that directly to tech, but indirectly it has. Yeah, so the net, yeah, the net of those.

The net has to equal, right. So I'm not going to go through and see if any of these other ones have grown. I'm sure there's been some change there. But in the end, like, that's a lot of market cap going to one segment of the economy. The pushback you could also get is that Meta and Google aren't even in tech, right?

They went to communications, which helped that way. Yes. Put them back in tech, and it's even in tech. They went to communications, which helped that way. Put them back in tech, and it's even bigger. It's even more pronounced, if you did the traditional what we used to think of as tech companies. The S&P is taking a GLP-1, basically. S&P tech. So does this revert at any point,

or is this just now permanently the largest sector of the economy, given how important it is? I like the largest part of the economy. Do I think there'll be a rough patch at some point? Yes, but man, to say it's going to go all the way back to the teens or 20% that's a tough time. It would be catastrophic for the market at this point. You're reliving the technical lens.

There is a precedent, though. There's a precedent. Energy stocks, I think, were at their peak in the mid 2000s, by the way, in the mid 2000s we traded energy stocks the way that we currently trade tech stocks. So if you sat down, but I'm telling you the truth, if you sat down with a room full of traders they were in Chesapeake Energy the way that people now are in Nvidia. Come on. Okay, but ask people that were there.

All right, dude. I'm telling you the truth. I'm telling you the truth. And energy was 12% of the market. No, it literally was. And now it's three and a half. 1%. Yeah.

But I'm making the point that there were stocks that were the AI stocks of the day, and they were coal. It was a stock, James River Coal, that traded its market cap 10x a day. It was one of the hottest stocks in the market. So it's possible that tech fades a great degree. I don't think it's happening, but I'm just saying there's a universe where a 12% sector of the market

goes to 1%. We can find examples. I mean, industrial's way back in the 70s. Yeah. And they were a big way, and they are down to 7%, 8% now. Do you know how big tobacco stocks used to be? Well, would it go to the overall market? GE, right?

Telecom, AT&T. So it's hard to bet against it, but there is precedent. Todd, how is this doesn't seem right to me. The semiconductors are now the largest industry group in the S&P 500. Oh, yeah. This is index evolution. I mean, it's Nvidia, Broadcom, Qualcomm, AMD.

These are big stocks. But within all the other tech giants, what industry groups are they in? So there's software, which is Microsoft and Salesforce, Oracle, Adobe, and then Apple's in hardware, along with like Hewlett Packard and Dell. Tiny, tiny, tiny companies. It's just Apple.

Yeah. OK. But so semis, 10 years ago, semiconductors were 2% of the S&P 500. What are they now? 2%, 13, 12. So it's the largest industry group. Yeah.

That seems a little crazy. So the level below sectors, if you want to get more granular. I actually would bet that that could mean revert more than overall tech. Semis are super cyclical. You could see that the semi, what is it? What'd you say, 13%? Yeah.

You could see that easily coming down to eight. Like, why not? Oh, totally. Especially if Nvidia goes through a hard period. Or if some other sector. So you need two things to happen. You also need some other sector to rise up and take the place of the... Yeah. What is it?

Again, we've seen Chevron and Exxon outweigh everything else in the market. We've seen financials. I was about to say financials. Look, how about this? Over the next year, financials will flip semis. Ooh. Interesting bet. Wait a minute. It's hard to say, but... Where is the peak Oh look

Do you see where Exxon and Chevron are in 2008? Like I'm telling you that those were the stocks that I believe I just don't think that Chesapeake Energy was traded by Common folk the way that they trade out you have no idea. I'm telling you that this You I would disagree to disagree you think people were trading Chesapeake like it's Facebook? No, I was there, we did. Okay, who else? You can't disagree unless you take a time machine that are actually, actually.

I'm not saying that they weren't trading Chesapeake. I shouldn't say that. I'm just saying, it's not like Nvidia today, it's just not, I don't care what you say. It sort of was. I don't care how there you were. It sort of was. No, it wasn't.

No, it sort of was, and also. There was no 2X Chev Chevron How old are you? 37 we there for this no I was in college Rob So where's well dorm dorm Christ you're the only person here you're the only person here older than me It's true And that's not what I said energy was just saying that people are traded Chesapeake like it's meta Yeah, they were they really were no truly They really were not just that once I shouldn't just like harp on that one example

But I have to tell you we had shipping stocks that people were talking about. Oh, it's a blue chip shipping stock It was just a different time and it's not that we didn't Did you ever get an 80 year old to ask you? Oh hell yeah Okay, yeah, Aubrey McClendon was the CEO of Chesapeake Energy and he was on Mad Money, he had a weekly spot. Todd Williams. With Jim Cramer. This is great, you wrapped it right to where

I wanted to go with this. He then took the Sonics to Oklahoma City. Yeah, and but it's, And then, No, no, no. Aubrey McClendon was Jensen Wang in 2006. I promise you. I know he was a big deal.

I promise you, but there were like more than just that one stock. I shouldn't give you that impression. My point is right now and for the last 10 years, the only stocks that people are really excited about trading happen to be involved in cloud computing and tech. And this has gone on for a really long time and those stocks are now a huge portion of the market. Not to belabor the point, but just to say that, just because those energy stocks came down,

like that has nothing to do with Apple. And I'm not saying that Apple can't come down, I just don't like the comparison. I don't think, yeah, I don't think that's a good comparison to Apple. But Exxon is. Exxon, I mean, Exxon in its day was Apple. So I want your guys' opinions on this.

Todd and I were talking before. Eric Beltranes tweeted, VOO, which is the Vanguard S&P 500 index ETF, is a mere $2 billion away from breaking an all time annual flow record. And it's the middle of July. One more data point from Beltranes. ETF, this is from today,

ETFs took in $15 billion yesterday, bumping up the five day rolling total to $60 billion, or $12 billion a day, unheard of. And the rolling one month to $141 billion, which if it were a calendar month, would be an all time record. It's the 18th of the month, by the way. This is because you have traders, SPY, IWM, TLT,

and retail, which are the Vanguard and iShare's funds, both piling like crazy. So my question, Josh, Todd and I were talking about this before, where is this money coming from? You're not going to like the answer. You're not going to like my answer. Energy stocks. Money market funds.

No, no, no, no, that's the wrong answer. It's too fast. Too soon, okay. I'll tell you what I think it is. I think it's literal cash and brokerage accounts. Yeah, okay. Not money market funds, but like just cash. There are cash ETS basically, right? The BIL, that's a T-bill. No Todd, I money market funds, but like just cash. There are cash ETFs basically, right?

The BIL, that's a T-Bill fund. No, Todd, I'm saying literal uninvested cash. Because it just happens so fast. That's wild though, that we're seeing an inflow record to that extent, right? When the markets get going like this, FOMO comes out and everyone just piles in. VOO just takes in money.

It's a vacuum. But like where? So we've seen data from custodians that I think 20% on average in cash is not crazy. So let's say like given how high interest rates were, let's just stipulate that it's 10%. That's still a ton of cash that could be deployed into the market.

Yeah. Yeah, yeah. I mean, once you start seeing other sector ETFs atop the top 20 leaderboard on the day to day basis. Are there any right now? I don't have the data in front of me from today, but yeah, there's been some money into, say, XLF, right? A decent chunk of dollars.

I want to say $500 million. So this is on a monthly basis sorted and ordered. It was SPY, IVV, IWM. That's the typical stuff. The Qs, TLT, VOL, RSP. Oh, RSP. That's not typical. So RSP, thatWM. That's the typical stuff. The Qs, TLT, VOL, RSP. Oh, RSP. That's not typical. So RSP, that's different.

That's not typical. What else is in here? Who's doing that trade? Oh, who's doing RSP? Yeah. I think it's just the catch up trade. Catch totally a catch up trade. Some people want to equal weight.

Is that XLF, I see. So rather than buy small caps, a hedge fund will use RSP, which is equal weight. And that way, they're getting more weighting toward the smaller stocks in the S&P 500. Anything but tech. Anything but tech. RSP works for that.

Yeah. Even look at the liquids number 11 on there, the Dow Diamonds. Do you ever see that? Takes in money, but I don't know about being a top 15 name. How big is VOO right now? 500-something billion. 500 billion. I think it just crossed 500. So here we go.

Oh, yeah, here it is. It's the same size as IVV. Yeah, those are the three big guys, SPY, IVV. SPY, IVV. And they effectively all do the same thing. 1.5 trillion across three products. They're literally the same thing. They attract the S&P.

OK, so that money is not coming out of other stocks. I agree with Michael. That's just money that's uninvested. SPY would be the only one, because that's a little bit more of the quick money, right? If I got a hedge or I got a quick exposure. VU's staying there. IVV's staying there.

All right, but could we just isolate VOL for a second? Because that's a little bit of a different beast. But again, Eric said, it's $2 billion away from breaking the all-time record for a year, and we're at July. That's crazy. What's the story? I don't know if that's just paychecks, Vanguard people.

And the amazing thing is, we're still seeing money market funds hit record highs. $2 and 1 half trillion in retail, AUM. I like to separate institutions and retail because they have different purposes. $2 and 1 half trillion trillion money markets from retail. Retail accounts. OK.

That is major. So we had a relatively new client who is sitting in money market funds. And the conversation is like, well, when do you get out of some? OK, I agree with you. Rate's going to come down. And Cali took a look at some of the historical precedent

of how fast things move once rates start actually getting cut and you kind of you kind of have to anticipate it with a large dollar. You got it you gotta get out. What did Callie find like 13 it's just a 13 months? I don't have it in front of me but yeah what I do you have that chart I was put that was eye-opening to me I did it so we did a show recently get out of cash We had Alicia Levine on. She's great. She's great.

She made some really important points about this. But if you're planning to get out of cash, stop planning and get out of cash. What are you waiting for? If it's really meant to be cash, then leave it alone. If you're buying a house or something, yeah. Right. But as an investment, the money market trade

is long in the tooth. Oh, totally. It was what everyone talked about, any conversation at all, but these 5% yields are great, aren't they? Yeah, are people going to be as excited at 3.75%? No, once you get cuts, and this number goes down to 3-ish, after tax it makes no sense. You might as well buy another longer duration bond

ETF or any other stuff out there, actively managed bond ETF that you can get the yield then. John, charge forward to while we're on this topic. So Callie said, money market data since 1950 shows that people tend to hold on to cash until an average of 13 months into a rate cut cycle. Wow. So they're way late on making that adjustment.

Because you know what? If it goes from 5 and 1.5, 5 and 1.25 down to 4.7, ah, it's still good. Yeah, you're still getting there. Still not bad. So what are you doing work on this time? What are you saying? So in the mid 90s, the rates go from, you know, all the way from 10 down to three. Money market AUM at that 3% level finally stalled out, right? The flow is flatlined. So Fed funds rate was 10% and it was taking down the% now. That's a cutting cycle. That's a big yeah

You had the recession in 90 91, but you're saying money stayed in there Well, you didn't have outflows. It just the inflows just kind of dried up, but that's wild it didn't run out Well, then well, so then the interesting part though is Once the hiking cycle came back we went back to 6% money market AOM grew with the SMP throughout the rest of the 90s. So maybe some of that money's going to stocks, some's going to money market funds for whatever reason. So I don't know if money market AUM flows ever dry up

unless we get a major cutting cycle. That's really the key part. You gotta get it below 3% for these flows to dry up. So you say we think it likely takes cuts back to 3% or so before money market inflows meaningfully slow. Whoa. So you think that they're not only not going to go out, but they're going to keep coming in?

They're going to keep coming in barring major cuts. People love this. And it's a habit. People keep doing what they've been doing. Yeah. If I have $100, maybe I put $90 in stocks, 10% in that cash. Right. Just think about how some people think out there. If I have $100, maybe I put $90 in stocks, 10% in that cash. Just think about how some people think out there.

Are bond funds ultimately the primary recipient of money market outflows if and when we get to 3% Fed funds, right? Yes. I think so. Before it goes to stocks, it makes a stop in the bond market. It's a demographic thing, too. I think so, too. I think so too.

If I'm too nervous to take what I had in cash and however long it was sitting there, I'm not going to go and put it in stocks. You still have 70 million boomers, and they're not looking at money markets and saying, should I buy some stocks with this? This is a huge, I really want to delve into this more data, a huge topic for the fund industry

because there's so much wealth there. Where is it going to go? This is why these buffered funds are getting so big. Here's my guess. And then funds, right? I would guess, and there probably is data on this. I don't know why I'm guessing. But I would guess that 40% to 50% of the money that

went into money market funds is in a brokerage account, meaning you're taking money out of bonds, and you're just parking in money market funds there. I would say a lot of another part of it could be money coming from somebody's savings account getting zero going into money market funds. So part of it, I think more of it is actual cash cash versus I'm going to fix my duration.

That makes sense, too. And a lot of that escalated after the bank failures last year. That's when this really took off. That's when the cash sorting really happened. So in other words, there's no reason to expect us not to go back into cash or sit there as opposed to getting back into the market or the bond market. You know what's a really great product idea?

I would do this if I were on the other side of this business. I was building products. What's that? I would do like money market funds with a wink. So you got a money market fund, right? But rates are now like 3%. People aren't that excited. I'll sprinkle a little mystery stock in it every month.

Every month I take like 2% of the cash in the money market fund and I randomly just buy a tech stock with it. And I don't even tell you what I'm going to buy. And then one day you like just- You can't miss. You hit the website. It's like, yeah, you're 98% money market, 2% Microsoft. And you secretly, you're like, thank you.

I didn't want to do that for myself. Thank you for doing that for me. This is like the kinder egg of... It's literally, it's the prize in the Cracker Jack box. It's like, yeah, it's a money market fund with some sex in there. We're putting some sex in the money market fund. And then people don't have to take the money out themselves and buy stocks. You just do it for them. Cracker Jack funds. Yeah, now you have to sign something. out themselves and buy stocks. You just like do it for them.

Crackerjack funds. Yeah, now you have to sign something. NVDL, NVDL. Throw some NVDL in that mother f***er. What do you think about that? Here's your money market fund. How do you like me now? This is like kind of like credit card roulette in a way.

You want to build this with me? Yeah, let's partner up. All right, Todd and I have to go guys. Have a good rest of the show. No, I think though, but people need other people to do that for them. If you sit in a money market fund for three years, and the stock market's up 30%.

It's an education issue. What do you mean? People get scared of the market. Well, sure. They look at what happened in COVID. Oh, stocks went down 34% in a month. Yeah. Yeah, but then they rocketed right back.

It's also just inertia. Inertia, whatever you want to call it. Yeah. And then they went down 24 in 2022. Right. Todd, you do some of the best work on Fumatic ETFs. And Mike and I were talking about this topic the other day. Morningstar came out with a report

that the average fee paid across all ETFs has probably hit rock bottom and is now in some areas starting to climb. So in other words the index funds will just be free. They'll just be index funds. Okay forget about that. The fund industry is getting better at marketing products that actually have a fee and as a result I think the average fee paid we said was 36, 35, 36 basis points. So that's probably as low as it's going to get. Doesn't mean it's going back to 50.

But thematic ETFs are going to be part of their way that mainstream asset management companies climb out of this fee abyss into increased profitability. Thematic plus exotic derivative type plays that the common investor can't create. I have a problem with thematic funds though. It's too money? It's a supply and demand issue. Guys, get your shit off. What do you got?

There's a major supply and demand issue for thematic ETFs. What's the issue? You supply them, I demand it. There are too many products chasing too few AUM. There's almost 200 thematic ETFs with less than $50 million in assets. So what? It's not profitable.

Okay, let them live. Well it's great for the investor, you have all these choices. Yeah, but they kill these things off. There's going to be a lot more, I think, that need to be killed off. So we used to do blog posts about this topic. In 2011, 2012 was the first big wave

of just new ETF launches on almost a daily basis and it was comical. Some of the things that were launched in that era. It's still going. I know it's still going, but it was like, oh, do you want to be invested in corn? Here's five new ETFs that invest in corn. That's AI right now. So I remember there was like silver, there was leveraged silver, there was like Plutonium. Yeah, there was ESG silver. I mean it was just so we used to make fun of this

And we used to like scream like oh there's too many ETFs. The truth is they're not bothering anyone Oh yeah, they don't bother. It's survival of the fittest and these fun companies eventually they kill them quietly Well, I mean there's one ETF company that since 2018, they've launched 22 ETFs and they liquidated 11 of them. Guess what? Defiance. The ones that get liquidated. Oh, you knew who that was, right?

The ones that get, I didn't want to say names. The ones that get liquidated are not the ones that get. The show is brought to you by Defiance ETFs. They're not the ones that are performing well. We love Sylvia. Sylvia's great. So, but what is that indicative of? Just like a fun company throwing too much spaghetti

at the wall and- Yeah, you're trying to chase the too hot of a theme as opposed to going from this more durable. Okay. So here's an interesting one. But how do you know what's going to be durable? Oh, you don't. I might say it's malicious,

but it's tails to the wind, heads investors lose. Yeah, that too. But how do you, so how do you know which ones are really going to be the best ones? It's not easy. No, it's definitely not easy. I mean, cannabis was a big thing off the idea that everything would be legalized

and we know how those stocks have been. Well, that's a trash point. It's hard. These fund companies are not launching products that they think are going to fail. Obviously. Of course not. Nobody would do that. When I see iShares today launched a manufacturing fund. Yeah, good timing. I think that they see what's going on with reshoring,

whatever. I think when they launch a new thematic fund, then I pay attention because they've probably done their due diligence. And there's a couple other reshoring funds out there that have been pretty successful. So that's more interesting. That sounds like a durable theme as opposed to chasing some

of the other things that happen. I never worked directly in the fund industry, but my take has always been there's like three reasons to launch a new ETF. Reason one is it doesn't exist yet, and we think there's a reasonable belief that people want it. That's perhaps the purest motivation to do that.

Reason two is this is a gimmick, and whatever, we'll ride it as long as we could ride it. Maybe there's a famous person who will slap... That's like the inverse Kramer nonsense. ...will slap their name on it. Yeah. Like that's a joke. It's an in-joke, it's a meme, it's something.

There's like a gimmick, there's like a catchy thing about it. There's a certain crowd for it. Yes. Now, I don't know anyone like adults who are investing in these things. Oh, the DGen stuff. Remember like the, there was a few of those, the Portnoy one. Buzz. Oh, from VanX. Like social media, there's a few of those. Yeah. But so from VanX perspective, it's like, look, this is a thing.

People are trading these meme stocks. Let's bundle them. Rowdell had meme. Yep. Yeah. Literally meme was a ticker. Let's, okay. And now if they don't work, okay. But you bundle them. Round Hill had meme. Yep. Literally, meme was a ticker. OK, and now if they don't work, OK. You close them. You close them, but the thing is they don't throw an event to announce the closing of an ETF.

It's not a party. It's a random press release. They take it out back and strangle it. That's OK. I'm OK with that. Get whatever money's left back. For those investments, like I think, people know that those are gimmicks, right?

And so people that are investing for the most part, it's not their core, right? They'll throw a few bucks into it and it's sort of fun. But just backing up, so those are my first two reasons you launched an ETF. What was the third? The third reason is every bit as legitimate as the first, which is you have somebody asking you to make it.

You have somebody come to you. That's back to this manufacturing case today. Right, so they didn't wake up one day and say, oh, you know, it'd be cool. Let's do an iShares manufacturing. They obviously have people trying to get exposure to this reshoring theme or supply chain theme or whatever. And enough people ask them about it where it's like,

all right, fine, we'll build it. So, and I have no problem with that. The one, the good example here is innovation and disruption. Yeah. Those exploded 2020, 2021 after ARK success. And that to me was like me too. Rick Edelman went to BlackRock and said, my clients don't need more exposure to the fang stocks.

They want innovation, They want exponential tech. So Rick Edelman as an RIA is not going to build the ETF because then he can't allocate to it because then he's double dipping. So he says to BlackRock, if you guys build it, I'll seed it and I don't want to get paid on it. I just want it to exist because I want exponential tech as a sleeve in my portfolio. So I like that because it's grassroots, it's organic, it's not some contrived thing where someone's trying to use a gimmick.

Yeah, catch the gimmick, yeah. That makes more sense to me in terms of sustainability. I don't like when you have all these copycat funds because that's what's created this supply and demand issue. What else don't you like? Yeah, what else really grinds you gears, Todd? In life? No, ETF market.

No, the thematic ETFs. Oh, the, uh, obscure countries. Obscure countries. Like there's no reason, no, anybody needs like- Egypt, remember J.C. used to love Egypt. Mongolia. J.C.'s a big Egypt guy. Yeah, he's not.

Still? He's like, bro, I'm telling you, Egypt. I have to see him in a little bit, by the way. Oh, you're going to Happy Hour on Stone? See you at Happy Hour. Okay, I got invited, but I can't make it. Come one, come all. The thematic explosion happened. I don't do away Happy Hours, so.

Stone Street might as well be another planet. I turn into a werewolf if I go south of 42nd Street on the 5. I can't do it. Todd, what was the hot thematic, John Chardon, please, Stone Street might as well be another planet. I'd turn into a werewolf if I go south of 42nd Street. Todd, what was the hot thematic, John Charlan, please, what were the hot thematic ETFs in 2017-20? I don't remember. 2017 wasn't much. You had inflows.

There was some inflows to ARK very early, and then PAVE, infrastructure. I don't remember that one. What are you laughing at? Get thicker. PAVE, Global X Infrastructure ETF. Oh, wow. I didn't remember that one. Yeah, that's a good one. What are you laughing at? It's a good ticker. So, P-A-B-E. GlobalX Infrastructure ETF. Oh, wow.

I didn't even know. It's actually the largest thematic ETF now because ARK's had its challenges. Wow. Wow. It's done well? It's got caterpillar, deer. Yeah.

It's basically reshoring, but it worked differently. That trade worked. I like it. Cybersecurity, I think, was probably in there. Hack. I don't remember when the Sony hack was. CIBR is... But CIBR hack was. CIBR is. But CIBR hack.

Is CIBR bigger than hack now? I want to say yes, but I'm not sure. Okay, go on. 100%. So cybersecurity infrastructure and then a pinch of ARK stuff, I think. Doesn't this look, but you're looking, so 2020, 2021 is a massive boom in thematic flows.

And we know Cathy. It was all ARK. Cathy is a huge. All right, it is. But all five of them, right? They all had lots of flows. And we know Cathy is a huge... It was all R. All right, it is. But all five of them, right? They all had nother flows. It was the whole suite. We'll see another one of these though.

Yeah, I don't know what it'll be. But something will cause it. Something... Is Bitcoin not in here? No. That might be that last candle, dude. That would be much better. No crypto.

No spot crypto, I should say. There's probably stock-based crypto. So your conclusion is there's a future for thematic ETFs somewhere in the industry, but so far overall flows have only had one real major run during the easy monetary stimulus environment. All right, it's a lot of dumb money, young money, people that aren't worried about risk,

people that just want to get in the game. It created a black hole for issuers because they said, oh, people want these, and then everything flatlined. How many? Oh, so how many? Well, because there was a million Cathie Wood copycats. That's what I mean.

So this sucked in. It was a black hole for ETF issuers. It was like, oh, we've got to launch an innovation and disruption. We've got to launch cybersecurity, cannabis, whatever. And now you suck. They were like SPACs, basically. SPACs were part of it, too.

They were the SPACs of the fund industry. Yeah. Oh, the cannabis ones. Oof. There were SPACACs of the fund industry. Yeah. All the cannabis ones, oof. There are SPAC ETFs too. Is cannabis the most uninvestable, up until now, thematic suite of ETFs that have ever come out? I've had one, TOKE was one.

There's a few others. It's got to be. I mean, these are just universally, are they down 90%-ish? They had a run when that headline came out was like a month or two ago about the... They have a run, like a 10% run. And they gave it all back right after that.

They were in the biggest drawdown they've ever been still. They have not been kind. That's not the ETF issuer's fault. No, how would they know? Right, there's a universe in which some of those stocks ended up working out, they just didn't. I mean, Meb is there.

Yeah. He's a smart guy. Yeah, Toke is a ticker. I respect the heck out of him with what his funds are doing. But this is there. Yeah. He's a smart guy. Yeah, totally. I respect the heck out of him what his funds are doing. But this is a great example. When he launched that, when they all launched it to Josh Fund, how would they have known? Yeah, of course you would.

Well, I want to ask you another question though. There used to be bigger barriers to entry to launch a fund and those barriers have come down. There are companies that all they do is white label ETFs and they can get you a publicly traded product. It's your problem to raise assets for it, but they can get a product launched with a hundred grand. It's ETF in a box.

How much is that? Yeah, a hundred, 250 grand. So if I want to do my sick money market fund. All right. But so that's a lower cost than it was 15 years ago. Oh, absolutely. There was rules in 2019, ETF rules 6C11. The exemptor relief?

Yeah, that's why all these active funds have absolutely exploded, the regular funds, income funds, just total explosion of the industry. It made it far easier for barriers for entry for the common manager, as opposed to, say, BlackRock to get into the space. Let's look at this thematic ETFs have a supply and demand problem.

We just did that. So here's the data, though. 186 products, 0 to 50 million AUM. If you get a bear market, let's just say the S&P could decline 20% for whatever reason. It's all going back to VOO. These all go to VOO. And a lot of these funds get wiped out.

They have to close. We'd argue the primary issue for the thematic space is too many products. There are over 300 with only 120 billion of AUM. 76% of products have less than 200 million. Is 200 million the minimum viable long-term AUM for an active product? I think that's fair. I mean, to be profitable, you probably need like 50 to 60, I guess, depending on the fee.

Passion question. Some of this is a marketing challenge. Oh, it's totally marketing. Who is it totally marketing? I think marketing distribution. Do you have the sales force, the boots on the ground? Which is hard. Hard.

Performance matters, too. Performance, it's expensive to have distribution. Performance matters later. I mean, on the initial launch, there is no performance. So all you have is the sizzle. It's all marketing. You first launch a product, you might have a back test and index result, but those were a no-no.

No, yeah, they never worked. So all you have is the story. It's market. I mean, look, the spot crypto funds are a great example. There's nine, 10 that are all the same exact thing. iShares has their distribution, they'll do their thing, but then you have Bitwise, who has all these funny commercials. So they're doing their marketing part and they're gathering flows.

John, table back on, but you looked at the one-year flows of all of these buckets, and they're almost all negative, except for the ones that are $1.6 billion and above. It's all negative, and guess what? In a bull market. I was about to say, Josh is exactly right. They're all getting the shit kicked out of it by the Qs. Yeah, the Qs are the goat.

In a different market environment, this would look a lot different. In 2020, it did. Every bucket here was getting inflows. But that was a really rare free money student environment. One other thing is I can't think of any theme that perennially is going to do well, because it just doesn't work that way.

Permanently, right. So let's say you launch a sports betting ETF, which I'm sure there are 20 of them. They're going to have an amazing run while those stocks are in favor, and then those stocks will go out of favor. The ETF is going to suffer, and that's when the outflows start.

It is hard enough to pick a theme, and then you got to buy it at the right time and sell it at the right time. But nobody's allocating to a theme that's out of favor is the other thing. Oh yeah, no. It's just, no way. You can buy stocks and be contrarian, the bulk index, of course.

Yeah, Josh is absolutely right. Who's buying cannabis right now? Nobody. So when solar is out of favor. Who's buying solar right now? Tan. Is that the? Tan, ICLN, QCLN.

So Tan is one of the first thematics to actually raise money. Okay. Solar is cyclical. It ebbs, it flows. There's bad news out of China. There's good news out of component prices. The price of oil goes up. It falls.

In a downturn, no one's like, I'm going to start loading up on tan for the turn. Too much risk. They only buy these things at highs, and they puke them up at lows. Thematics are basically momentum plays. Totally. It's the same thing with these.

There's a lot of EV funds. They own the same companies, Rivian, Tesla. And nobody's buying those right now. All right, are we doing this Patat tweet? No, we did that. We'll gloss over that. OK, I want to talk about rates, spreads, volatility, the things that drive markets.

Peter Brookfarr put this out this morning. He called the current environment giddy, which maybe we cured that by the close today. Measured before yesterday's sell off, the level of bullishness continues to get even more extreme. In the Investors Intelligence survey, the bull bear spread rose to 46.9 the most since 2021. Bulls at 63.6 versus 62.7 last week. Bears slipped to 16 from 17. In today's AAII survey, Bulls rose another 3.5 points to 52.7, the most since December,

and just 0.3 points from a level last seen in April 2021. Feels good, eh? Okay. A little bit. Bottom line, combine the above with the continued rise in euphoria as measured by the city index. And we are ripe for more than just a one day correction in order to shake out this giddiness. Maybe even a two day.

It could be perfect timing too with big tech earnings over the next few weeks. So that's, we're going into tech earnings at massive euphoria based on sentiment. There is, regardless of what the survey says, there is always some form of a correction before an election. It just happens. We can go through the years, 2020, 2016, 2012, 2008, all the way back to the 50s.

There's always some sort of correction, whether it's earnings based, whether it's nausea about the election because people get anxious about it. This one is nuts too. This one is, we don't even know who's running. This is, right, this is a new kind of, this is a new kind of, this one's been different.

Do we put the, John, do we put this chart up? Just eyeball this though. Just eyeball these peaks. Yeah, so the sentiment gets hot and it sets yourself up for a little bit of disappointment. I like the idea of a summer speed bump, right? The largest correction this year is 5.5%. We've had plenty of years where that's been the max correction,

but the average year is 14%. We put these charts out a week and a half ago, summer storms, Cali and Chart Kid Matt did some stuff on this. Can I give a shout to Cali? Please. As many as you want. So we had a mini spike in the VIX from up to 16. I mean it was down at like 11, not quite 11, it was down to 12.

This is a wild chart. So Ben and I were talking about how impossible it's been to be an active manager. You had a record number of stocks underperforming. The index over the past 30 days, like two weeks ago, was just every stock was losing. And then you had this wild, vicious snapback where everything was outperforming. Usually a good time to buy equal weight then.

Yeah. It feels terrible, but it's actually a good time to buy equal weight. Did you see like giddy sentiment among active investors, fund managers like on Twitter? So a lot of people that professionally manage money despise the Mag7 leadership. They're sick of it.

It's like hurting their careers. They can't overweight those stocks. So this week, like there must have been people that were like really pumped about this. People that have small cap tilt, they have a value tilt, they have something. Anything but Apple, Microsoft. They must have been pretty excited.

It's so hard to own 7% of each of those names if you're an active manager. So nobody does. I mean, I'm sure two out of three maybe, out of those names they're overweight, but everything in bulk, that's extremely difficult. Can't overweight those seven names and waste the index.

Yeah, I mean, if you're an investor, why am I paying for that then? This is where all the memes come from. There's a giddiness about like, oh my God, everything I owned was underperforming and now half of it's outperforming. And it happened overnight, it's like Christmas. By the way, that is not breath to me,

if that's a thing that goes on. Percentage stocks underperforming, outperforming, that's not breath, that's just what's working. Do this Russell 3000 thing. 19% of stocks in the Russell 3,152 e-cali, that's pretty, is that breath? That's working. Do this Russell 3000 thing. 19% of stocks in the Russell 3000 hit a 52-week high. That's pretty. Is that breath? That's excellent.

That's pretty. This is participation. That's pretty good. Breath and momentum. Expanding new high list is needed for the durability of a bull market. That's a lot of units. 19% hit 52-week highs.

I'm proud of all those units. You can get corrections from this, overheating in the very short term. But it's great for the next six to 12 months when you back test this, back 30, 40, 50 years, however long you want to go back. Let's go next. This is a trend that we were looking at earlier,

just looking at the rolling five day average of net advances. And yeah, the rally has broadened out. Broadened out. This is what you need. That's what's necessary. That's what gets you out of trouble for all these non-tech corners.

Not to pat ourselves on the back, Josh and I, but all year we've been talking about narrow leadership. Usually it resolves to the upside. It's usually the rest of the market catches up. We said this so many times, like everyone thinks this divergence is automatically negative and the leaders are going to succumb. Yeah, just wait till they fall. It's a pessimistic attitude. Well, here they fell and the leaders are going to succumb. Yeah, just wait till they fall. It's a pessimistic attitude.

Well here, they fell and the rest of your portfolio went up. This is the bench coming into play. The starters coming off the floor for a little bit. That's right. Nice run. That's right. We're bringing out Josh Hart.

Yeah. Happy Independence Day. Here's a fireworks. Precious Chua time. Precious Chua. Congrats on your new deal. I don't know if you actually got a deal. There's a wild one.

Bespoke tweeted, strange day yesterday. And this is, I guess, Wednesday we're looking at. Yesterday was the first time since April 2000 that the S&P 500 was down 1%, but breadth was positive. What could be more bullish? I mean, it's great under the hood. So the indices lie. They mask everything now, especially when you have 10 stocks

at almost 40% of the index. And this is when you got to be a little bit of a detective and look on what's going on. It's a great statistic. So how many stocks were up with the, so the market's down more than half a percent, and more stocks were up than down? Like a few hundred stocks were up?

The S&P 500 is down 1%, but more stocks were up than down. Yeah. Pretty wild. That's pretty cool. You could make the case. It's just rotation, right? Buying the stuff that hasn't worked. The S&P 500 is down 1% but more stocks were up and down. Yeah. Pretty wild. You could make the case. It's just rotation, right? Buying the stuff that hasn't worked.

So we got Netflix after the bell. Two out of the three stocks that I owned have bombed this week. Domino's and Schwab. So I think Netflix is going to be a third disaster of mine. You do. I'm due for a win? I think so. I hope so.

I hope so. I'm not feeling too confident. Is that statistics? That's statistics. We You gotta order more pizza. We have to talk about Trump's economic ideas. So Bloomberg sent three reporters to Mar-a-Lago at the end of June. This is before the events of this weekend.

But the gist of the story that they came out with was about how he thinks about the economy. And I put a take on Instagram Instagram like a f***ing idiot about just about like from the article, not my own take, like literally his. So let me just read this to you. The comments are out of control. But so this from the article, Trump says he reminded the assembled executives that in 2017, he slashed

the corporate tax rate from 39 to 21. Actually it was 35 to 21. The reporter fact checked him and vowed to push it lower still to 20%. They loved it. They were happy. He adds that he wants to cut the rate even lower. I would like to get it to 15%. But Trump is also aware that whatever love

the CEOs might have expressed was ultimately driven by self-interest. They can read the election polls like everyone else. Quote, this is Trump, whoever's leading gets all the support they want. I could have the personality of a shrimp and everybody would come. So I commented this sounds like a wizened, more experienced version of himself. He gets that self-aggrandizement or having CEOs pat him on the back on TV is not the thing. Now he's like, yeah, they'll support me if I'm winning. He gets that this is a transaction.

There's a story in the article about how Tim Cook got around the China tariffs and Visited Mar-a-Lago or visit the White House and like showed Trump respect and got what he wanted out of the deal and Trump knows That that's what's going on and everybody's happy with it So I just said something like not Trump supportive but just like oh this guy seems like he figured it out Like he seems like a little bit more Normal people were so angry. They're like, but what about kids in cages? So this is the comments on your Instagram?

Yeah. I have a funny story when we're ready for this. No, tell the story. I feel like I'm sidetracking the show. All right, so TSMC fell the most on this article. OK? Yeah, yeah. Fell 5%.

Mean reversion. Because Trump's like, why aren't they paying us for protection? Which I don't think he's supposed to say that out loud. Anyway, they whacked the semiconductor stocks for obvious reasons because it looks like he wants to double down on tariffs and he's not so sure about the whole Taiwan thing.

Okay. But markets were back in this moment of the Trump trade stuff. So 77%, according to Bank of America Fund Manager Survey think that we're going to sweep. So Trump and the White House, both Houses of Congress would lead to higher bond yields. 52% think a sweep would lead to a higher US dollar. 48% think a sweep would be positive for US stocks or slightly less than half.

Anyway, this is where we are now. He's back. We're going to do all the same old games. What industry is in favor? What CEO is he mad at? I don't know. What are your thoughts? The setup feels awfully familiar to 2016,

where you have this kind of anxiety and boiling, where you had financials have been sideways, right? And they look like they want to explode, the positioning flows aren't there. Same thing with healthcare. Oil rally today. Energy. I just am weary that we may be setting ourselves up

for disappointment. Why? And then tech will come right back. Cause that's what, you know, all those industries had to run post 2016. There was a huge surge of money to value. Value funds took in a massive amount of money post 2016. And then it petered out and we went right back to tech.

Yeah, it lasted a year. Yeah, which I guess is great for the more intermediate term folks out there. But I still kind of defer back to tech eventually taking the crown again. What was your big takeaway out there. Yeah. But I still kind of defer back to tech eventually taking the crown again. What was your big takeaway from what Trump had to say about his economic policy?

Last week, Neil Dutta was on here and I gave the analogy that the president of the United States, with regards to the economy, is sort of like a baseball manager. They could do things, they could blow the game, they could do things, but generally speaking, it's the players on the field that have the biggest impact. Yeah, and I actually might want to walk that back a little bit because Trump is his what he does is so volatile just

What he did the other day. He actually can have a real big impact on certain industries Because most most presidents are like status quo presidents, right? They're not really going to turn things upside down and shake him. He has the ability, for better or worse, to really shake shit up. Yeah. The policy, Dan Clifton's our policy analyst. He's the best at this. He tells us this is an industry thing, not an index. Oh, yeah.

I agree with that. I totally agree. Elections are about industry. I totally agree with that. He wants to fight inflation by lowering interest rates, I totally, I totally agree with that. He wants to fight inflation by lowering interest rates, cutting taxes and adding tariffs. So crazy. It just might work. These are the three things that are the most inflationary.

I don't even know. I don't know at this point. Yeah. Well, they said like, what do you believe? I believe in, well, I'm going to fight inflation. Well, how I'm going to drill a lot. Okay. The payoff from you start drilling today, we'll get some more oil in two years. But more importantly, he thinks that lowering tax rates

further, putting tariffs on all goods, not just Chinese, but all over the world, he wants to renegotiate with Europe, and lowering interest rates, those are the three keys to fighting inflation. Well, but also, what he says, but does it even matter what he's saying? No, because it changes his to fighting. Well, but also what he says, does it even matter what he's saying? No, because it'll change his mind tomorrow. It'll change his mind.

So my fear would be the last time we had the trade war, I think that was like 2018, right? Yeah. That was a bear market for a lot of industries. It was very bullish for bears. He almost put the entire farming sector out of business. He had to do direct payments to farmers because of what China retaliated with on soybeans.

It was a mess. It was a mess for the oil company. It was a huge corruption. The financial decline. It ultimately ended with that puke in December 2018. I still think, though, that he's gotten smarter from the last time. He was fighting tooth and nail with Jamie Dimon four years ago.

Now he's talking about he wants to appoint him as a SecTrage. The other thing that was interesting is TikTok. So, well, in the last year of his first term, he was dead set on we're eliminating TikTok. We're banning it unless they write me a letter. Mr. TikTok has to write me a letter. No, so, but now he's like, wait, actually maybe TikTok's good. I wonder why that is. Maybe because he's one of the most followed accounts on TikTok and it's helping the campaign.

And it's the only counterbalance we have against Metta. Like we have. The only counterbalance that exists against Zuckerberg, who he also doesn't love, who banned him for life, by the way I don't know if you know that so I didn't know he was wasn't unbanned yet. I don't think so So anyway, the point is he throws grenades, you know Metaphorically

But if we react to them then we're the clowns because not everything that he says he wants to do He'll still want to do tomorrow. I think that's like the- We still have three and a half months of this, by the way. No offense, we have four years of this, and then you get Don Jr. in there. This could be the rest of your life. All right, anything else left to say on this?

Did we lose about half our audience? Okay. At least. All right, just a good half. Can I tell you my comment story really quick? Yeah, I want to hear it. Okay. Wait, what story? Well, he mentioned the comments on his Instagram. Yeah, I want to hear it. Okay. Wait, what story? Well, he mentioned the comments on his Instagram.

Yeah. I have to share this. Were you in them? No. Okay. But last time I was here, I dug into the comments real quick on YouTube. Yeah.

Here were three of my favorites. Oh, comments about you? Yeah. Okay. Which I don't normally do. Duncan, we didn't delete those in time? I caught them. Okay.

We try to edit those. These are great. Close your eyes and tell me this is not the stock market Seth Rogen. Okay. I... A reply. A reply.

Now that you said it, I can't unhear it. A reply. A reply. That's a good one, right? Skinny Seth Rogen. Oh, Skinny Seth Rogen's good. And then a third comment. I had no idea that Seth Rogen's good. And then a third comment. I had no idea that Seth Rogen worked at Strategus.

You got a lot of Seth. Wait. I hear it. Hold on. I like Seth Rogen. He's good. Will you do some Seth Rogen dialogue for us? Can we really?

How do I do that? Can we really test this out? Are you high right now? No, I don't smoke or anything like that. You kickbox. I like This is the End though. It's my favorite Seth Rogen movie. What's the best Seth Rogen line in anything? Can anyone think of? I want to get Todd to read it. They're definitely not kosher whatever it is. Yeah. What's the best Seth Rogen movie? This is the End. No, not for me. Superbad? What's the one with the pregnant girlfriend? Knocked Out is good too.

Because that's really his movie. That's his movie. Right? Pineapple Express is my favorite. That was good. Pineapple Express. That's a good one. Who is he in that with?

He's good at 40 Old Virgin. Is that Jim Twango? 40 Old Virgin. 40 Old Virgin. And The Interview. The Interview sucked. You don't like that one? No.

We done with market stuff? I'm done. I'm good. Are we all set? Anything else? Oh wait, I like this cycle defining chart. Let's do this one really quickly. Money markets. Back to money markets, but sort of.

What's the takeaway here? Every anecdotal observation I had was about 5% yields for the last year and a half. The data reflects that too, about flows to money market funds are greater than everything. 1.1 trillion. This is through April. 1.1 trillion in money market funds since the than everything, right? 1.1 trillion, this is through April, 1.1 trillion of money market funds

since the Fed started lifting rates back two plus years ago. This is from March of 2022. Fed lift off. Until April of this year? Yeah. So I gotta refresh the day, I'm a little bit behind there, but everything has been about money market funds. Equity flows have been good,

but this is all, I find that the attention towards 5% yields have reflected a lot of equity market apathy, and that resulted in this massive run we had too, along with obviously plenty of other variables. I just felt that the sentiment towards money markets was crazy relative to how stocks were bottoming and then having this major bull run.

But I like that because I think that's how people think. We didn't really see a crazy amount of demand for money markets until 4% rates. Because everyone's like, oh my god, they're almost 5%. I think everybody loves it. Because people that have money in money market funds, assuming you're not all in, which would be foolish. But if you have, let's say, 10%, 50% of your portfolio

money market funds, are you mad that you missed a 20% value in the, who cares, it's great. It's wonderful. I think it's great as part of our portfolio. It's great. The massive amount of money going to them though is startling. Well dude, it's been 15 years.

It's been a lot, yeah, you haven't had candy in 10 years, now you have a bowl of candy. Yeah, give me some diabetes. Sugar high. Speaking of candy, so did you know that happy hour is back? Like power hour? Do you work, oh, I wanted to ask you this question. I think the answer for me is no.

Do you work on Wall Street? Like physically? No, I know you don't. You're such a liar. If somebody says you work on Wall Street, you say yes. No, I normally do. And then I read this article and I said, I don't think I'm part of this.

I don't think I work on Wall Street. So like if I go to a friend's house and someone's there who I haven't met, do I say, do I work on Wall Street? You like if I go to a friend's house and someone's there who I haven't met, do I say, do I work on Wall Street? You work in asset management. I work in research, yeah. I work in financial management research. No, if you work on Wall Street,

asset management. That means you work for Goldman or one of the investment banks. All right, so I agree with that. So, but people are like, oh, he works on Wall Street. Does he though? I don't get invited to this shit. All right, listen to this.

Famed chef, Sean George Vanga-Richton's new Park Avenue restaurant has become the epicenter of a new post pandemic phenomenon for Wall Street's movers and shakers. The power hour. As soon as the closing bell rings, you'll go there right now. Was that a beer every shot of beer? No, no, no, no. Traders, investors and C-suite executives flocked to 425, which opened last December at 425 Park Avenue, the Norman Foster Design Skyscraper that counts Citadel as its main tenant. They come for the $25 cocktails and bar food that includes $68 egg toast with caviar.

I hate these people. But also for the all-important FaceTime. All right, so here's the gist of this. This is like three blocks away from Grand Central. It's a nice building. So all these people, if they don't live in Manhattan, they live in Westchester, Connecticut. So this is like, you can make your train. The other place they mention is La Pave, they call it La Pave, but it's La Pave-

Oh, and one Vanderbilt. And one Vanderbilt. Dude, we don't work on Wall Street. I don't know any of these places. I don't walk in, I don't work on f***. I don't know any of these places. I don't know these people. I don't work in f***ing Egg Toast for $68. What's Egg Toast? I'm more of an avocado toast guy.

What's Egg Toast? I don't know. It's caviar. I would like to eat there, but I don't consider myself working on Wall Street necessarily. Hold on. Similar power hours have popped up at Chef Daniel Balloud's La Pavilion at one Vanderbilt by Grand Central. The Monkey Bar uptown, okay, that place I go to. And the bar room at the Beekman Hotel downtown in FieDi.

So if you work in one of these areas, like that's your Wall Street bar, where you could see more people like yourself. I am going to the Beekman next week. Maybe I am one of these people. Anyway, this is the New York Post, and it's like a new trend. But why are they calling it power hour?

Because people are not running out of the city anymore. They're sticking around for this after the bell and it's like where they're networking. I will say, my train this morning, I was on an earlier train than I normally am, it was back, like fully back. Yeah, it's good. People were standing.

Yeah. In the summer too. Yeah. So that's, I guess that's a good sign that all good. It's good. It's good. It's good. It's good. It's good. It's good. It's good. It's good.

It's good. It's good. It's good. It's good. It's good. It's good. It's good. It's good.

It's good. It's good. It's good. It's good. It's good. It's good. It's good. It's good.

It's good. It's good. It's good. It's good. It's good. It's good., it was a low brow version. What's there now? Nothing. I don't know. Le Cirque used to be a thing. People used to go to Le Cirque.

It's a Chinese restaurant now. Yeah, but that used to be a thing. And then Stone Street, which we were just talking about. I have to trek down. There are no traders on Stone Street. You're going right now? Other than the people that are going to be. Not right now.

Only J.C. Perez is there. Anyway, I'm not a part of any of that scene. I don't think I'm like a Wall Street person. I was telling Chris, I went out for dinner on Monday with people that work on Wall Street, and I was not speaking their language. Not even close. I was like an alien.

Were you intimidated? They were very intelligent. These were like dorky Wall Street kids, but they were like brainiacs. Were they like quant side of Wall Street, or like bankers? Like yeah, yeah, yeah. Which, both? I don't want to say too much.

They were very smart. What did you eat? Egg toast. The f***ing piggy ate. All right. All right, listen, we're going to wrap it right there by concluding that I don't in fact work on Wall Street. We always end the show with favorites, Todd.

We'd like to hear from you. What do you got for us this week? What do I have? Okay, I took my kids to see Despicable Me. Four. Four. Was good? A plus stupidity. I had so many questions from three.

I hope they get answered in this. They don't. Okay, great. But I saw it in the IMAX. That was the power move. Was that cool? I felt really, I was impressing my children about how big the screen was.

Did they know the difference? The one up there? They had no idea. They had no idea it was there. I just had to do it, selfishly. This is Lincoln Square on the Upper West Side. Huge, original IMAX. Yeah, it's where I go to all my IMAX movies. I wanted to go tonight to see Twisters,

but I have to go home, so I'm gonna see Twisters tonight. In IMAX? Not in IMAX. What's Walt's Apprentice? So Walt's Apprentice is a book by a guy named Dick Nunes. He worked with Walt Disney up until his death and then spent the next 35 years. Basically, he's the guy who created the operational

efficiency of the Disney parks. Okay. Be our guest, as you have the book there. He's part of that. Okay. This is a book? It's a book. How many books do you read a year?

20? How old is your oldest kid? Five. Oh, you're done in like two years. Ask Michael. I'm getting to the point where I sit down and read and I fall asleep five minutes later. Yeah, that's where things are headed.

I try. Yeah, yeah. I try to get through. But don't worry, 20 years will go by and you'll start reading again. I started reading again this summer because my kids no longer have any attention span for me. It's like, it's nice.

It's like back in my life now. I got a stack of books and I'm plowing through them. This is a good one if you like the Disney parks. All right, so it's called Walt's Apprentice. You're watching this Acolyte thing. It's the worst thing I've ever seen in my life. I watched the Acolyte. It's the season finale.

It was last night. I'm a big Star Wars fan. This get better? Okay. So am I, but I couldn't make it through three. I watched 20 minutes. It was bad. The second season has potential.

Time out. It's twins. It's like a Freaky Friday thing. Did they switch bodies? What's going on? How do I say this without spoiling this? How is it so bad? What are they doing? There are no Star Wars fans that like this.

Mike Lantell, he hates it. He's a big Star Wars fan. There are no Star Wars fans that are enjoying this. The lightsaber does are good. The story was a little slow, choppy, so I'm hoping the second season will be better. Are they intentionally at this point doing this? Is there some sort of tax benefit to having these shows fail?

I'm trying to figure it out, because this is the fifth bomb in a row. I like some of the other stuff. I'm a Star Wars nerd. They have so many losses, they won't ever pay capital gains again. I think that's what this is about. I like some of the other stuff. I'm just, I'm a Star Wars nerd. They have so many losses, they won't ever pay capital gains again. I think that's what this is about. Michael, you have a favorite for us?

Well, I haven't seen it yet, but Twisters, I can't wait. So your favorite is a movie that you haven't seen yet. My favorite is, no, here's my favorite. Duncan, can we make a list of his favorite? He just doesn't understand favorites. No, I do, I do, I do, I do. Movies are bad. I've been going to the theater more than.

Hold on, the theater product is terrible. What do you mean? 30 minutes of previews. Why can't I buy a water bottle out of a vending machine? No, if you go to the IMAX, there's a lot of previews. You're such a rookie. First of all, you walk in with a water bottle in your pocket. I bring a water bottle, but just in case.

Well done, sir. But you need a backup water bottle? Why is there not, yeah, I get thirsty. Why is there not a vending machine for the soda and the water bottle at this point? Because they don't. Because they want you bottle at this point? Because they don't. Because they want you to buy popcorn too. Because they don't want you to buy one item.

You haven't figured that out? The food's terrible. Of course it is. So like, give me a protein bar or something. There's only one movie theater I'll go to on Long Island. I don't want to say the name of it into this microphone because it's empty every time I go. I don't know how it's in business, honestly.

It's the only one I will go to. And when you go there, you look around and you're like, how is this still here? Year after year, it's still there. But why is there 30 minutes of previews? There's only at IMAX. At my local theater, it's 10 minutes. I like the previews.

And if you go to IMAX, you have an assigned seat. What do you care? Well, I love the assigned seat, yeah. Because I used to be the guy who would go at the midnight showing. Wait there for four hours. All right. So movies are back and you're going to see a movie that might be a favorite of yours

next week. No, it's going to be good. You think so? It's going to be good. Well, when was the first one? 97. Okay. Helen Hunt.

Bill Paxton, Rest In Peace. Philip Seymour Hoffman. So what's this movie about? Their grandkids are now chasing hurricanes? I'm just there fan of that one. Yeah. Philip Seymour Hoffman. So what's this movie about? Their grandkids are now chasing hurricanes? I'm just there for the tornadoes. Dude, I'm with you. I wanted to give a shout out to the city of Newport, Rhode Island.

I spent about, I would say 28 hours there, which is a really long time for me. Maybe slightly less. We stayed over. What a beautiful place. Have you ever been there? Newport, my sister got married there. Okay, so you have.

Yes. Destination wedding? Another destination wedding. What's up with these zones? I don't know, it's just pressure. You guys don't have any catering halls nearby? Pressure from the parents. So Newport is beautiful.

It's nice. There's like Thames Street, which is all the shops and ice cream parlors and everything. And then there's the mansion walk. Yeah, it's fancy. The cliff walk's the mansion walk, the cliff walk. That's pretty cool. Very fancy. So you look at these houses and it's just unimaginable.

They're never building anything that looks like that right now. And they were all owned by old industrialists, like from the early 1900s. They filmed True Lies in one of those. Oh, is that right? In the Rose Cliff? Yeah, the Rose Cliff. Did you listen to the rewatchables? No. True Lies this one of those. Oh, is that right? In Rose Cliff? Yeah, the Rose Cliff. Did you listen to the rewatchables?

No. True Lies this week? Oh my God. Oh, great movie. Yeah, the Rose Cliff is there. There's something called Marble Hall or something. The Marble House. What is it?

The Marble House? All right. Who owned that? Is that Rockefeller? I'm not sure. Okay. There's like 15 or 20 of these. They're beautiful.

Insane, but they're all on the cliff overlooking the Atlantic Ocean. So that's a really cool thing to do. And then the restaurants are all great in Newport. Like every meal we had was banging. Watch the roll. We ended at this place called the Inn at Castle Hill, which like overlooks the water

and there's just sailboats going by and they have like these giant field filled with Adirondack chairs and you could just sit there sipping a drink watching boats go by. It's pretty great. So, shout out to Newport. Shout out to all the RedHolts Wealth people up in Newport. We appreciate you. Hey everybody.

Thanks so much for listening this week. Thanks for all the support for this show. Big thanks to Todd Sohn. Todd, I want people to follow you on LinkedIn. Your LinkedIn page is called the RedHoltsWealth. And you can find me on LinkedIn.com. And you can find me on LinkedIn.com. And you can find me on LinkedIn.com. And you can find me on LinkedIn.com. And you can find me on LinkedIn.com. And you can find me on LinkedIn.com. And you can find me on LinkedIn.com. Hey everybody, thanks so much for listening this week. Thanks for all the support for this show big thanks to Todd sewn

Todd I want people to follow you on LinkedIn your LinkedIn comm slash Todd sewn so Hn you're on Twitter Todd Underscore sewn and the website is strategus asset Comm to learn more about what strategic us doesis does. We cover all the bases? Excellent. You're the best. Thank you so much for coming Seth Rogen. Great to have you too.

Great job this week. John, Duncan, thank you guys so much for everything. Daniel, great job. Nicole, Graham, Rob, special guest today in studio. Connor Passarella. What a visit for you. You got to see Todd Song. Alright, hey guys, thank you so much for listening. Thanks for the ratings and reviews. We'll see you next time. Alright, this is crazy.