The Compound and Friends - The Gang Launches a Crypto Index

Episode Date: December 3, 2021

On this week's episode of The Compound & Friends, Michael Batnick, Jeremy Schwartz, and Downtown Josh Brown discuss: the all-new RWM WisdomTree Crypto Index, "All-in" on DeFi, Crypto Sprint, Chinese Stocks, Jack Dorsey stepping down from Twitter, the Powell Pivot, and more! For more on the RWM WisdomTree Crypto Index, visit: https://ritholtzwealth.com/digital. Thanks to our sponsor Cadre! Invest in a portfolio of professionally-curated commercial real estate in minutes, check out: http://go.cadre.com/compound Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/disclosures/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

Where's Batnick? Can you get him out of the metaverse and into the studio? Alright, are we rolling? Are we rolling sound? Yo, I'm here. I'm so excited. I wore my best, best black t-shirt for this special occasion. Best black t-shirt for this special occasion. No joke, this is Old Navy circa 2014.

I've got my spider jacket. Still holds up. Look at you. You got dressed up, Jeremy. Very fancy spider. I don't know that Wisdom Treat's got a branded jacket yet. Dude, we've all become slobs in the last 18 months because nobody has any expectations for what anyone else is wearing anymore. Dude, I've been all, we've all become slobs in the last 18 months because nobody has any expectations for what anyone else is wearing anymore.

Dude, I've been a slob since 2014. To your credit, you were early. Very, very ahead of the game. I've been a Lululemon pant. I know. Comfortable. Are you still doing yoga? I've been doing it four or five days a week. My wife got trained as a teacher and we've been going for like 15 years.

15 years? She got trained as a teacher and we've been going for like 15 years and I got years. She got trained as like a yoga instructor. Yes. Oh, wow. Um, the Zen den at the Jersey shore and it's sort of more intense. It's more intense than traditional yoga. Um, but we started sponsoring for our company. Like our, our head of HR and compliance does it every, every day.

I need to start doing yoga. Like all jokes aside, because my back hurts. I hurt my back sneezing. It is. And it still hurts. I started doing yogurt. So, frozen yogurt. What?

It's really in the shot. It's looking at the camera. I feel like I'm getting pinched over here. He just sidled up to you. Oh, that's the scene in Goodfellas of the Bell. Do you not know how to lower that? You push it forward. Hold on, hold on.

I got it. Little stiff. Brute force? A little stiff. Do you want me to get Ben here to do that for you? LOL. Oh, you know who he's coming next week? Yes.

He's going to be on the show. Yep. He was running when you called him just now? Yeah, he's always running He just spends his whole day working out this kid It's unbelievable Yeah What a life

Must be nice He runs I've got a back He runs And you blow your back out sneezing Alright Little color check Do you have a turquoise on there

To match Jeremy's We're close Close enough Pretty good all right got some emails i really feel like every week it's a new challenge with this microphone i just feel like i'm never comfortable can you hang it from the ceiling for me it's our thing it's like our thing is hanging from the ceiling too ambitious can we get that done i mean from a drop ceiling yeah what's a drop ceiling those are just sound tiles acoustic tiles you asked me before about the the last carbure enthusiasm speaking of drop ceilings oh my god i mean did you watch you watch a carbure enthusiasm this weekend no

i i think it's like the best one of the year. Like I really did. When he climbs up that ladder, the roofer, and they're just looking at him like, do we want to even stay in this house? And then he takes. He goes to Vince Vaughn's house. No, but he takes J.B. Smoove's phone charger up on the roof. How much is J.B. Smoove getting paid for this commercial that's on every sporting event for caesars you're another one of them how do you watch commercials where do you see commercials every nick game i see the jb smooth commercial 15 times i see a lot to espn all the time where he's like dressed as caesar for the caesar sports betting app you have not seen this

no how is that i'm thinking how is it possible? During commercials, I'm on my phone. He's wearing gold. He's all in gold. It's on every other set of commercials for every Knicks game. Very high production value. You've seen it, right? Yeah. Caesar spent the last money they have on it. Gotta work. Jeremy, look at this email I got

this morning from a listener of the podcast who has season tickets to the Barclays Center. Look at this picture he sent to me. Not bad season tickets. Look at that, guys. Wow. Is that sick?

Nice. They didn't get kicked out? For what? He's a Nets fan. But you have pretty good seats in the garden. Not like this. No. No, I have regular seats.

He's this courtside, right? Yeah. I mean, come on. That's absurd. Is this his knees? It's kind of amazing how little space there is. You know how guys catch a ball and they're out of balance in the corner three-point line? We could go to a heat game, Josh.

And it pisses you off? Really? My wife used to have season tickets like that. Look how narrow that is. The space between the three-point line and the out-of-bounds. You ever sit courtside at the garden no never been close the only time i sat courtside was with uh with um tony in milwaukee in milwaukee well milwaukee i feel like you could basically sit courtside if you get there early enough stop they sell out shout to milwaukee we love you tony we love you we're all champs

no i'm just kidding no but courtside m MSG is unlike courtside anywhere else on earth. Yes or no? Well, because you're sitting next to like Jon Stewart and like Ben Stiller. Spike Lee. It's hard to go back once you're sitting courtside. I know. Oh my God, Jeremy. The global CIO just laid it down for you.

All right, we're going to get on the way. Big Jon, click it up. Let's go. That's the first one. Don't worry about that one. That's the one you got to look out for. We're ready. All right.

Welcome to The Compound and Friends. All opinions expressed by me, Michael Batnick, and our castmates are solely our own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Cadre is a next generation real estate investment platform that provides accredited investors with access to fully vetted institutional quality commercial real estate assets. Cadre has closed more than $3.5 billion in real estate transactions

across more than 22 markets, and they report an impressive track record in the high teens on their website. They are leveling the playing field and democratizing access to quality commercial real estate by enabling individuals to invest alongside some of the world's most prestigious institutions. And they are backed by the likes of Andrews & Horowitz, Goldman Sachs, and the Harvard Management Company. And believe it or not, we actually had Ryan Williams, the founder and CEO of Cadre on Animal Spirits, just recently. Be sure to check that out. To learn more and for key disclaimers and risks, please visit go.cadre.com. That's c-a-d-r-e.com slash compound. That's go.cadre.com slash compound. Let's go. Let's go. The Compounding Friends.

Very special guest, second time on the show. Thanks for having me back, Josh. You did so good last time that we said let's get him back ASAP. Jeremy Schwartz is in the house. Indexing fans, Wisdom Tree fans, you guys know and love Jeremy. How long have you been there, by the way? Wharton fans. 17 years. Yeah, Wharton fans, podcast fans.

You do a lot. How many years? 17 years. How old werearton fans, podcast fans. You do a lot. How many years? 17 years. How old were you when you started there? 20. Do the math. 20, 24. Wait, you're 47? Wait, that's not

how it works. That's not how it goes. So you started there at 24, but you were working with Professor Siegel when you were in school. So starting with Siegel, now with 20-year anniversary we passed this year, Siegel joined as a senior strategy advisor, invested in the firm. I was basically the fourth hire, now the second longest at the firm after our CEO, John Steinberg. Dude, unbelievable. Siegel is a national treasure.

Can I say that? What a mentor. I mean, I couldn't have had a better person. You know, we talk weekly on our radio show. I mean, I've sticked with him for 20 years. We're working on another version of Stocks for Long Run right now. Yeah, I heard you basically wrote the first one anyway. Is that true?

Future for Investors was my project at Wharton. So I helped the 2005 that came out. And I took off two and a half years in my life to do that book basically right but that book all right so seagull has the last laugh because there was a moment in 07 08 09 where people were like mocking stocks for the long run yeah like lol you look like a genius but now that's all dead, and the 60-40 is dead, and the stocks are dead. That's right. People were laughing at him.

He should just be – And he's not like – People give him the permable – He should run around – They give him the permable reputation. He tries to call it like he sees it, and most of the time it stops for the long run. But right now he's been saying he was worried about worried about inflation he was worried about this powell pivot that actually happened this week and he's been calling for like a 10 correction and so he's not always

well i like that you could be a permable and still say i feel like the market could correct here for this reason i like like i like the fact that you could just bullish, but then there are periods of time where you say, okay, this is too much. And he famously did that in the year 2000 with an op-ed that is probably one of the most prescient pieces of reading you can do or prescient pieces of writing you can do as a person in this industry.

And it happened when I was at Wharton. I mean, so that talk about lucky timing of me getting to Wharton, he becoming pretty famous for that op-ed March 14th of 2000. That would put him on, like, really, really put him on the map. Stocks for Longer came out in 94. And that op-ed came, big cap tech stocks, sucker's bet, March 14th of 2000. And oh, my God, the Nasdaq subsequently fell 90%. Yep.

He could not have made a bigger call. And so he took, and he was saying the rest of the market was OK, more reasonable price. That's what got him on his journey to value investing, which was what the future for investors is about. How do I protect from bubbles and rebalancing? What does he think about current valuations and like the makeup of the market? Should we just throw you out and get him here? Like what do you think? I'm curious because he's been around for a long time

and a lot of these metrics like just are different. The thing with the metrics, so his stocks for long run was stocks did six and a half, six, seven over his 200 year period. Bonds did like three and a half. So he had like this 300 basis point equity premium over bonds. Today, bonds, the 10 year tips yield, which is what he would say is your forward-looking

after inflation, that 6.5% is an after inflation number. So you compare stocks as real assets, earnings grow with dividends and inflation over time. So you've got to compare them to tips yields. That tips yield is negative one. Wait, compare them to tips yield versus what? Earnings yield. So earnings yields being the inverse of the P ratio. If you go back, why did stocks return 6.5 to 7? It's because the P ratio was 15 over 140 years. So 1 over 15 is 6.5. It's not an accident that the earnings yield was the predictor of the real return. Do you have to add in dividends and buyback yield?

The dividends and buybacks come from the earnings yield. So you just look at the inverse of the P ratio. If you look at the total market, like obviously subsets of the market can grow earnings faster than the total market. So the tips yield is negative 1%? Yeah, even less. Right. So you're losing money in inflation. You're giving the government $100, and 10 years from now, you get $90 after inflation.

Okay. So by that metric, though, can't you basically justify paying anything for stocks? Stocks are real cheap versus that. And that's the thing is the equity premium, even though stocks may only return five after inflation. Still better than negative. Better than negative one. Yeah. Jeremy, the other day, Josh and I were talking about this chart from Yardeni, this dividend chart.

Yeah. And I said, like, just a knee-jerk reaction. If I had to show investors why they should think long-term This might be the one All-time high Yeah This dividend chart Very stable It almost never declines

More than 5% In 2009 It declined in 20 To be clear Because podcasting Is an audio medium It's a chart Of the dividend payout

Of the S&P It's not a chart Of dividend stock prices Correct It's billions It's the billions of dollars That have been paid out from S&P 500 stocks going back to 1999. And basically, absent the GFC, it's up only.

And even to go back 60 years, it's only really declined 5% a few times, five, six times. And only 20% in 2009. And it was all financials. And last year? Very small. It was modest. But you still had a drop. It's not even 5%. It last year? Very small. It was modest. But you still had a drop. It was not even 5%. It was not even. It was a blip. Well, the government paid

those dividends, so it worked out well. Somebody had to pay them. The last thing on the single part. So he's been a proponent of unbundling the CAPE ratio and looking at a lot of the accounting rules changes. What does he think about the CAPE ratio today? You should also take a bow for that, by the way.

Yes. I feel like he's the only one that did that work. Because I think it's universally acknowledged now that that number in the absence of qualification is completely useless. Yeah. There's a lot of issues. However you square U.S. stocks, they're not cheap. But I'm curious what he would think about that. Yeah.

I mean, he likes the methodology. It's hard to predict real returns. And he says valuations do matter. He's not saying we're going to get the same 6.7 after inflation that we did 200 years ago. He's more like 5% after inflation from where you are at the 20p ratios today. So he's more of a forward-looking p-ratio than a historical p-ratio. Well, listen, I mean what I i said i think he is a national treasure i think anybody that starts as an investor by reading his stuff is probably way

better off oh yeah than starting off reading market timing stuff because i think he gives you that perspective that you need to like have that you need to like understand that what this is really all about. And I think he gets it to you in a very easy to digest way. There's a chapter in technical analysis in Stocks for the Long Run where we talk about sort of moving averages. And Meb in some of his tactical allocation has highlights. Even Siegel talks about strategies that can cut drawdowns and things like that. But yeah, he is a Stocks for the Long Run. Well, if you're going to have a bias

towards something in this business, it might as well be toward the thing that we know works, right? Like just at that starting point. All right, we're wildly off course. We actually have some very big news today. And one of the reasons we're so excited to have you live here on the show

is because Wisdom Tree and Ritholtz Wealth are making a major announcement today. Major. Big time. You say this qualifies as major? It does. It really does, right? Yeah, it does.

Much more for you than for me. Very proud of what we've done here. You did like 99% of the firm's work on this. That's a little high, but... I'm almost full-time crypto. It's sort of crypto for it. I know, I know. All right, listen.

Introducing, and we're not pitching product here today, but I think this is like a very important discussion. If you're involved in crypto or wealth management or financial planning or long-term investing, I think this is going to be very, very good for you to experience because of how much we've learned building this. but I'm here to introduce the RWM Wisdom Tree Crypto Index. That's what it's called. That's exactly what it's called. And a separately managed account or SMA strategy that we've built to work based on the index. Am I saying all these things right?

Powered by OnRamp. Well, we're going to get into the partners that we have on this because that's really important part of why this works. Sitting on Gemini. So the RWM Wisdom Tree Crypto Index SMA strategy is powered by OnRamp. You guys have heard Tyrone Ross here on the show, CEO of OnRamp, and they have done an amazing job building the trading tools that are necessary and the visualization tools. What's the best way to describe their role before we get into Gemini? OnRamp. So OnRamp is, that's a good question. All right. So I would start with Gemini first. Okay. So Gemini is custodian. Here it is. Here it is. Gemini is a custodian. And in this case, the exchange as well.

Gemini is custodying the assets the same way that Fidelity does, that Schwab does, that TD Meritrade does. OnRamp sits on top of that platform and executes the trades, opens the account, does all the KYC checks very similarly, but not exactly, to maybe how we work with Canvas, which is the Oshana CIS management platform. It's basically a technology solution that sits on top of a custodian. So it's like in the crypto world, is OnRamp like the layer two? That's a good way to talk about it. They are a connecting protocol. Are they chain link?

Well, wait, but it's also the user interface. It's also how advisors see their clients' accounts and how clients can view their own assets and their own portfolio. It's all going through OnRamp. It's a platform that's connecting all the dots. So it's connecting to Gemini, connecting to the strategy,

the advisors go through. Integration platform as a service is a phrase Tyrone uses a lot. Okay, that's perfect. I pass. Okay, so this is the first, to our knowledge, this is the first index-driven SMA strategy for crypto. So this is basically financial advisors who want to help their clients get exposure to digital assets in a evidence-based approach, which we're going to talk about the index and its construction in a minute. This is now a Ritholtz Wealth clients only for right now. And then that will open up to all financial advisors, family offices, wealth managers, and their clients,

we think, sometime early Q1. Do I have that right? We're hoping. All right. I don't want to overpromise. Well, how about this? If you are- It's open now for our clients.

If you are an individual investor who wants exposure to this, if you are a financial advisor who wants to allocate clients to this, we have a landing page. It is, what is the landing page? Good question. Ritholtzwealth.com slash digital. So give us your email address. And when this is live, we will let you know. Yeah. So, all right, let's get away from the salesy side of this. Cause I don't want to turn this into a pitch. We can't pitch this because nobody can buy it unless they're already clients of ours. Talk about what went into the creation of the index and why this is so different

from everything else that's out there. Well, yeah, let's start there. Yeah. Why did we try and do this? What were we trying to solve for? Well, first, it's still incredibly difficult to access crypto. I mean, the regulators in the US have a very different approach than the regulators in Europe. In Europe, you can launch ETPs, ETFs, baskets of single and index baskets. We're doing that. In the US, they're not even getting to a physical Bitcoin. There's no spot Bitcoin ETF as of this tape. And so when will they come up with a diversified index? It's going to be a long time before your traditional access vehicle. So you need to open an account at Gemini Coinbase somewhere and do it yourself.

And individual retails are doing it. They're doing it on their phones. About a trillion or $2 trillion worth. It's just not in the advisor world. And so it's hard. So OnRamp does solve a lot of key issues of making all those connectivity points happen. They do the integration with the Geminis and allow the trading and the custody in a very seamless way. So Michael was showing me how it works for your clients. And it's amazingly simple.

I'm going to become a client, it seems like, in two days. It's a very easy process. That's if we let you. So you can open an account on OnRamp in minutes, which is really incredible. The technology that Tyrone and them have built. So what's in the index and why is it set up the way it's set up? So let's start with this. What we didn't want was a straight up market cap weighted index. Why? Because if you do that, you're at 60% Bitcoin and Ethereum. Is that about right?

That seems about right. Yeah. But that back test looks f***ing awesome. I mean, a back test of any crypto exposure looks awesome. I can't get the back test. I have to only get the forward returns. So Bitcoin probably won't go up 36,000% again, the way it already has. It would be very unlikely for that to occur again. We don't want to, we don't have the ability, nor do you need the ability, in my opinion, to pick the winners. I think what you want is if you believe in cryptocurrency, just generally, that the space will be bigger in the future than it is today, then you want beta. You want broad

exposure. You don't want to bet on which King, King Kong, Godzilla, which is going to be the winner. We will, We will institute the index, and then we will set it free. How many coins are in the index? We've got 13. 13 today. Where did those come from? Why those 13? So we try to get diversified exposure to a broad cross-sections of themes. So yes, we have overweights from the other 11 coins to Bitcoin and Ether. They deserve the bigger spots. from the other 11 coins to Bitcoin Ether. They deserve the bigger spots.

But we are capping it. It's today 56% between 36 Bitcoin, 20% Ether. And then it's essentially 4% allocated to the other 11 assets. So because one of those other 4% weightings two years from now could be a 20% weighting. Or zero. Or zero, fall out of the index.

And we don't want to try to guess. We just want to make sure we're there. Yes. Okay. And so we are trying to get broad diversification of themes. We hear DeFi. DeFi is one of the biggest applications of crypto. So hot right now.

Well, this is a bit, seriously, if we can't even get a spot Bitcoin ETF, when are we getting DeFi exposure for investors? And it solves a lot of challenges. You hear about the interest rates and the lending and the borrowing rates that you could get through DeFi. And there's a lot of interesting yields that you can get there. So when interest rates are zero, yes, they're going to go higher next year. That's part of our worldview.

But it's still going to be like 1%, 2% on the Fed funds. You could get meaningful yields on some of these lending arrangements. You could get meaningful yields on some of these lending arrangements. And a lot of these assets, whether it's Aave or Sushi or you're in finance, they all have interesting elements of adding in lending, borrowing. And these companies are literally minting money, right? And I don't mean that – I guess I said literally. I mean figuratively. They are making so much money through these protocols.

So it's hard to do a fundamental analysis. Not that people shouldn't try. It's hard to do fundamental analysis the way that you would with a stock to come up with these 13 holdings that we have. But you guys did build the criteria and I saw how much work went into it and I was blown away. You guys did build a criteria for which coins and why. And then this idea of letting it float. Yes. So that, hypothetically, is Solana in the index? Not yet. All right.

Because it's not a Gemini. But if Ethereum flips Bitcoin. That's right. We will flip Ethereum higher than Bitcoin. We're going to let it go higher. That's right. So there are going to be some coins that drop out because total value lock declines. The community stops using it. Market cap, you know, vanishes. But then there will be some coins that 10x. And we don't know which. That's why when I say evidence based, the only evidence we have is

that crazy shit can and will happen. And it'll be very hard to predict in advance. So that's the idea of letting it float and accepting the returns of the beta. But we're starting with that modified market cap. And we do have two thirds of the market. So in our 13 coins, they represented approximately a little bit over 64% of the total market. That doesn't include,

you're taking away the stable coins, right? Yes. Okay. This is of what we call the market dominance. Why aren't we using stable coins? Because they're supposed to act like dollars. There's no reason in this index. This is trying to get you the long-term growth capital. And so the stable coins would just be, it's like just a cash allocation. And so this is trying to get the growth of the crypto assets ecosystem. Okay. So the biggest holding by far, as we already mentioned was, was Bitcoin and Ethereum. We've got some other layer one networks.

So that's like two-thirds of the index. We've got Polygon as a layer two. We've got DeFi. We've got Metaverse. We've got Oracle in there. I don't mean Oracle, the publicly traded company. I mean it's a basically bringing the off-chain and on-chain things together and helping connect the actual real world with the crypto world. So let's explain what that means. together and helping connect the actual real world with the crypto world. So let's explain what that means.

So let's say there's a distributed app where people are trying to make bets on the weather. Well, how do you know who to pay? Well, the way you'll know is that the Oracle token will come to the table with that information and say, yes, it was above 70 degrees 10 days in a row. The person betting on that gets that money. Or this particular coin is supposed to do this on a contract basis if something in the real world happens.

You need oracles to connect things going on in the real world with data to, I guess, the tokens that are going up or down based on that information. Is that a good way to phrase it? I think so. I mean, the asset we have is called Chainlink. Link is the acronym there.

That's a pretty popular one. Yeah, it's in the top 20 in the market rank when we were looking at it. The use case we talked about was a insurance platform that uses their data to determine if the payout conditions are met. But so that's where it's using the offline with the connecting the online to it.

When you say we, can we just talk a little bit about the digital asset team and what you guys are doing at WisdomTree? This is not just you and me picking names. Yes, we have a big team. We've been making investments in digital assets. I mentioned we have products actually in Europe that launched this week. So we launched three different basket products in Europe. So we've been hiring against this effort. There's a research team focused on it. There's a broader than research team focused on digital assets and how it's

changing finance. We could talk a lot more about that. But the committee is between capital markets. There's people who are involved in the trading side. There's people, the research team is five people today focused on crypto assets. And so you're used to dealing with stock nerds at WisdomTree, right? And I feel like you can kind of like you're the alpha, right? How insufferable are these crypto people that you've had to hire? I mean, it's amazing, actually. I love them. It's remote.

You don't have to deal with them. They are. Where are they, Russia? We have a few people in London. One of my people is in New York here who's working on it. So we've got all over the world. All right. I kid, of course.

We love crypto people. I want to talk about John Steinberg's message to Wisdom Tree investors, which I guess this came out. By the way, Jono, that's like his nickname. Is he like Bono from U2? Always done by Jono. It's like his nickname. Is he like Bono from U2? Always been by Jono. It's fun. All right. Jono told analysts on a conference call at the end of October

when Wisdom Tree released its results, somebody asked a question from Goldman or something, and his response was so powerful that you guys ended up turning into a blog post. Do I have that right? That's right. Okay. I'm going to quote from Jono. I would say that I am now,

when I do that with my voice, that's me becoming, right? It's just the craft, okay? All right, I would say that I am now personally all in on DeFi. I say that because I believe it's going to meaningfully change the user experience for the positive,

and from a business standpoint, transform the economics of financial services. I believe that over the next five years, we will be recognized as a DeFi business that has an ETF business. That's big. That's pretty, I mean. It's a big save-in. So you guys are a DeFi company now. Well.

This isn't marketing. He really believes this. No, this is the future um and we're and as we mentioned digital assets we're hiring um there's probably there's over 10 people focused just on digital assets a lot of people are wearing two hats but they're now focused on digital Mike's been knows Ryan LeVar who's our head of legal who's working on all of our applications with the SEC but now focused full-time on digital assets. Will Peck was made head of digital assets in the US. Nobody knows who these people are, but this is top-down. So the focus is, it's hard to see it today because you see the ETFs.

We've talked publicly about having a Wisdom Tree wallet. We are going to tokenize a lot of different assets. We've had a filing for a tokenized treasury, which is essentially helping bring cash to the crypto ecosystem. And you can say, well, people have treasury funds today. Why? Are you going to mimic the yield of a treasury in token form? It's going to own, yeah, it's going to own treasuries, physical treasuries on the blockchain. Pass along the yield of those treasuries to the token holders? Think about money market funds and all the fees they charge. And think about putting it on the blockchain,

how costs can come out of the ecosystem and people who are in the crypto ecosystem who look at some of the cash products today where you don't know the assets behind it. Do you want to say Tether? You could just say it. Tether and others. Like, are they transparent with their assets?

You will see the treasuries in the fund every day. You can't be transparent if you're paying an 8% yield. Like, let's be honest with each other. You can't say what's in there. You either want the yield or you want the transparency. You can't have both. Yeah, well, this is going to be traditional cash, right? Or treasuries.

Right, so you're not paying a high yield on a treasury token. Yes, no, this is just a treasury. This is U.S. treasuries. What's the advantage of having treasuries in the token? Why hasn't the government tokenized the treasury yet well there's all sorts of studying of they they eventually will i mean you see china talking about the central bank digital currency there is a process studying central bank that's the dollar but i'm talking about the treasury like why wouldn't they have done that yet it seems easy the government don't, they don't know that there's a demand for it. Governments are slow.

I mean, that's why private enterprise will do it first. I think we will be first with treasuries on the blockchain. And let's, let's talk about being first. I think in your space,

in ETF land, in asset management land, there is a huge premium for first in so many examples, not always. So, all right, this is back to Jono. Set a different way,

WisdomTree is in the business of transparent exposures, whether we're doing it in regulated tokens or through ETFs. I think they'll prove quite complimentary. We are 30 years into ETFs and yet the mutual fund industry is still very, very strong. I remain bullish on ETFs. But when I think about where WisdomTree stacks in the competitive set, we were early in ETFs, But when I think about where Wisdom Tree stacks in the competitive

set, we were early in ETFs, but we were 13 years after State Street and seven years after iShares. Here we have a chance to be first. Why is that so important here? That point, the first mover gets, it's hard once you get awareness and these people start trading a certain instrument, it's hard to get off that. Why is the SPY – You become the conservative option, right? It develops its own liquidity ecosystem that's sort of like a moat. That once you know you're trading a certain ETF ticker, even though other things become the same thing but cheaper, it's hard to get people to trade the new ETF.

Jeremy, you're the global CIO. Congratulations, by the way, on that. Thank you. When did they name you that? Just in the last few months. So you obviously talked to a lot of what were you wait what were you before i was global head of research for the last uh okay well well so did seagull get demoted what what is he was always a senior investment strategy advisor so he's always been a consultant okay that's great congratulations so you're in the room with people that control a lot of money.

When you're talking about this whole strange new world to people, do they laugh? What's their reaction? Do they look at you like you have 10 heads? Not anymore. So it depends what world you're in. So Tyrone and I were at an event in Austin with 20 different banking executives. That was like the Illuminati type stuff, right? It was a really closed circle table of a lot of senior banking executives. And for that world, it is like you're talking another world.

Was Jamie Dimon laughing at you? They're not there. But it's – Who's there? Like what level at the banks are there? Head of Wealth Management at a bunch of these banks. OK. Got it.

And what are you – so you and Tyrone are jointly presenting? Talking crypto. We were both there. So it was educate us on digital assets and where the future is going. These banks don't have internal people doing that for them yet? Is it that early? It's far. It's not unbelievable that they don't have their own internal?

Here's why, in my opinion. It's not that they're asleep at the wheel necessarily, but their crown jewel is like trillions of dollars, and regulation is just not there yet for them to make a move. I agree with that. I think that's one of the main reasons why when you go into that room – They'll get there, right? They will obviously get there. They're going to be late, but whatever. They'll get there.

Yes. Is every question they ask about regulation? It's when will the custodians be at a level that they are looking for? I mean, that's frankly some of the regulator questions on even the ETFs is over the custodians and are they following the same protocols that they want from a 40-act perspective? Right. And we think it's getting there. I mean, we think Gemini is there. As long as they keep asking those as the questions, it's still early. Like, I don't see how this could top while the main players in the industry are still preoccupied with, like, only the potential negatives.

So this is why I'm bullish. It doesn't forget about, not forget about, but just hold aside the whatever libertarian bent, inflation hedge, all that sort of zealotry type stuff for Bitcoin. Hold all that to the side. It's just, in my opinion, a very simple matter of demand. The demand is coming in a big way. And so it is possible the demand is coming in a big way. And so it is possible that prices have mostly pulled that forward. That would be unusual for prices to top before all the demand comes in. I think there's a trillion. I think next year, another trillion dollars comes into crypto from wealth management. A trillion dollars? And institutional asset management. Yeah,

I do. I think mutual fund money, hedge fund money, wealth management money, about a trillion bucks. All right. Let's just say that Josh is off by three X. What is it now? It's two and a half. So let's say he's up by three X. Let's say 300 billion comes in. Is it possible for all that money to come in and the price to go down? No. The only way prices go down is if you invent 50 more coins and it dilutes. But here's the thing with getting back to Bitcoin is that even if you think that Bitcoin is not the king in 10 years, maybe it is, maybe it isn't, that's where the money is going. Today, right?

When new money comes into the space, they're buying Bitcoin. They're not buying Aave or Uni or whatever. They're buying Bitcoin. That's it. Who knows what that's going to be in five years from now. Do you agree with that? Well, if the easiest one to start – I mean so there's retail who does all sorts of things, right? I'm saying an investor's first dollar into the space, where is that going?

What kind of investor, though? Professional investor? It doesn't matter. Yeah, institutional investor. Okay. What do you think? It tends to be that path. It starts, I mean, my personal path would start with Bitcoin.

Then you go to Ether. That's all of us. And then you do other things. It's Bitcoin to Ethereum to whatever's list. Now, but here's another thing that's important to mention. All right, what else you got? All right, I'll take a little bit of that. Well, that's where the diversified index is.

And then all these dollar coins are like the pack of gum at the register. Give me one of those. You got a flat screen TV in your arms you bring to the register, and then there's like, oh, look, cool. I could just buy this $5 thing also because it but as amidst our bullish sentiment i think we also have to uh say that i'm not positive on anything in life but uh and i'm not positive what i'm about to say i'm i'm confident i'm fairly confident that the cryptocurrency space will be bigger in the future than it is today however i'm much more confident that it will crash between now and then like if i had to say where like if i had to place like varying leaves of confidence i'm much more confident that it will crash between now and then. Like if I had to say where, like if I had to place like varying leads of confidence, I'm much more confident that it will get

cut in half from today's levels. Crashes every 18 months. Then the fact that it will be higher in 18 months. I mean, it just crashed 50% and it's already come back. When did that happen? This spring? It crashed with the meme stocks. It went from 60 to 30.

Yes. But my point is, my point is. Oh, because of China or some shit? Elon. Elon started, then China. But my point is, people, I don't think you should necessarily invest as if it's going to zero. That was cute. People used to say that because it's not going to zero.

However, you should invest as if it's going to get down 50, maybe 70%. Yes. Now, my personal opinion, that's just a good way to set a realistic position size so you don't go crazy. I personally think that the floor is higher given all of the demand that's coming online. So I think a 70% crash is unlikely. But wait a minute, but wait a minute, does that demand stay strong if there is a 50% crash. The reason why I think it does is because these gigantic ships in the ocean have already turned. It's too late to go back. Who is that?

JP Morgan? Just all of the institutional money. Once they have committed, they have months and potentially years of board meetings to make a decision. Once they decide, they're not going to get scared away, I don't think, by a 30% correction. Do you know about the crypto sprint? We get into this? Hold on. Just Jeremy, do you agree?

If prices fall 30%, do you think everybody's going to be like, forget it, forget it, forget it? They know. They know it's crashes. I hope it does. All this stuff can be anecdotal, like what you hear, what your friends are doing. I mean, my brother got into Bitcoin before I got into Bitcoin. And he's younger.

He's not a stocks for long run guy. He holds Bitcoin. He's part of that new generation. He's not a stocks for long run guy. He holds Bitcoin. He's part of that new generation. He's a Bitcoin for the long run guy. He is. And you talk to him. And I'll ask him, so do you think the demand can ever peak? Don't you think there's, at some point, all the buyers are it.

And then there's, who are the additional buyers? This is your brother talking, or are you? I'm asking the question. Got it, got it. I'm saying, so is there a point? What does he do there a point? He's been a tech guy. So he's been, he was early in internet marketing and now he's doing-

Retired. A platform in real estate, but he likes crypto. Okay, so how does he answer that question? He thinks it's going to be just long-term bullish. Like there's no wavering of any falls. He's long-term bullish. So a lot of, I mean mean you saw who did this paper. Was it Bitwise?

Somebody did. Compared it to the internet, the early years of the internet. I can't remember. Maybe it was – I can't remember. It doesn't matter. And they think that like this is the new financial system is being built right now. Well, it is very similar to the early days of the internet. The difference is you could not invest in HTTP or SMTP, the mail protocol, or Java. If you wanted to invest in Java as a programming language, you had to buy

some microsystems. If you wanted to invest in HTTP, you had to buy Netscape. There were corporations on top of these protocols, and now the protocols are naked and open source. The bet that you're making is that more people are going to use this protocol, which will lead to more total value locked, which will lead to higher market cap. Yeah. That's not an unreasonable bet, but you have to get your mind around, Hey, these coins don't have CEOs. They have what, here's what they have. They have a network or a community of people that believe in them. They have developers working with them, but in the end, it's a little bit like investing directly in a, in a, in a protocol. Like literally, well, literally. So a lot. So

yeah, decentralization is not, is not the answer for everything. And not every coin is the same. So Bitcoin is different than Ethereum. So Bitcoin is more of this alternative to gold, the fixed supply. I think of it as the millennials' inflation hedge and the digital gold. I'm sorry. Here's what I say. It's not just institutional demand for the coins and the tokens that's coming in a big way. It's the venture capital money that is absolutely flooding into the space.

I think it's- To build things based on it. To build things. So forget about what we say. And not that you should take anybody's word for gospel, but Marc Andreessen has a pretty good track record for being ahead of the curve with this sort of stuff. He wrote about Bitcoin in 2014 in the New York Times. I laughed when I read it. I'm an idiot. But all of these people that are committing serious dollars, and when you hear the people,

like I was listening to a Bankless podcast today, and one of the co-founders of Polygon was on. This dude is from whoever knows where he's from, somewhere in Eastern Europe. I couldn't understand a word he was saying, not because of his accent. That's so bullish, by the way, when that happens. Because he was talking in computer language,

and that's not my language. But you follow, Chris Dixon said, by the way, when that happens. Because he was talking in computer language, and that's not my language. But you follow – Chris Dixon said follow the engineers. And all of the smartest people are going to the space. And that is what has me more excited. Forget about the price. But that alone should tell you something. Where do you get your information from on tokens, crypto, et cetera?

Like what are your news sources? I mean, it's hard to go away from Twitter as a starting point. Yeah, that's going to be one of my topics. So Paki. I hear you. Paki. Mario Gabriel, A16Z, Bankless. That's what I listen to and read.

So a lot of it I've been starting. It starts just- Wait, are you on chain? Like what are you doing? What am I doing? I don't know. Like, where do you get your news from? I'm still on Twitter.

I'm still a Twitter guy. Okay. Well, Jeremy's got a digital assets team. That's true. My team is on Twitter. That's true. Fair enough. You have a decentralized team, though.

So in many ways, you're ahead of him. Not to brag. Right. You have a DAO, and he doesn't. All right. You know about this crypto sprint thing so the regulators are trying to come together i mean yes you see the even with etf filings um it got rejected but there was some a commissioner who wanted to re-review those kind of things and so the regulars are trying to come together um this is last Tuesday. U.S.

financial regulators on Tuesday released an interagency policy agenda for regulating cryptocurrencies as discussions unfold about how to provide oversight for the booming market. The so-called crypto sprint, as officials call it, sketches out a to-do list for 2022 that will offer crypto players more clarity on the rules of the road. Who's in it? Federal Reserve, FDIC, Office of the Control of the Currency or OCC, and probably several other agencies. But they are – they're going to start making rules next year. This shit is not going away.

They understand that and they now i feel like they're going to stop suing people and maybe start like deciding where the potential for harm is to consumers or whatever and focusing on that versus closing their eyes and hoping it disappears is that the way you guys see it well it'd be it'd be nice if they approved the ETF of physical Bitcoin. No, we don't want that now. We have an SMA strategy. We're fine now. Well, that's – I mean I think it's going to be a long time before these 13 assets are approved in any traditional form.

Sure. So it's for sure not. But you want to see them come around. I mean you don't – I think that they approved a futures product, which has more – I think, more issues in many ways than the physical product. Yeah. We're not fans. It's different issues, but in my view, more issues.

Like, I think it's worse issues. But, you know, obviously they have their concerns about the custodians and all sorts of things. You guys don't do futures-based ETPs, or you do? We have a commodity. In fact, we actually were, before the 100% futures were launched, we had a commodity fund, GCC, where we added a 3% position to Bitcoin. We were the first to do that, but not by a lot. So we were like a few days.

Did that take off? Did a lot of people buy that? The fund has done better. I won't say it's taken off, but commodities have been good this year. So the fund has done well this year. But it's nice that we were the first to have the Bitcoin futures. And we're looking to add it to other futures-based products. How close are the futures tracking the spot?

The correlations will be extremely high. It's got the long term where the compounding of the contango is the killer. And so the cost of that futures curve, whatever that future curve cost is, is what will drag away slowly over time. But what if the slope of the curve changes to investors' benefit? What would have to happen for that to happen?

That people become bearish about the future and that there's no leverage. Out of contango into backwardation? Is that what you're saying? Yes. Okay. Does that typically last? Does backwardation in a market last? It can happen.

People used to talk about commodities as being naturally backwardated. And right now, oil, because there's so much demand for the physical and less demand for the out, the storage thing. There's always a scenario where it could happen. So if everybody all of a sudden needs to use Bitcoin, like actually use it for something,

there might be more demand for it now than there would be for demand for it now than there would be for futures that are six months or a year. The other thing is financialization always messes with commodity prices. And if we're calling Bitcoin a commodity, whatever, you can argue about it. But like there's always funky stuff that happens. Fidelity announces spot Bitcoin ETF in Canada. This is now the largest asset managed $11 trillion company, now the largest asset manager

to have a crypto fund. Fidelity's ETF is called the Fidelity Advantage Bitcoin ETF, F or FBTC is the ticker. It will directly obtain physical Bitcoin, meaning the fund will buy actual Bitcoin rather than acquire it through a derivative instrument. When you saw this news, were you like, that's a big deal? Or there's already Canadian Bitcoin ETFs?

A lot of stuff in Canada. I mean, we have baskets in Europe that now have things like Solana in it. Like we launched that this week. Okay. So the European- But that's just, is that a big signal that when somebody, when Fidelity does something, that's got to be like meaningful to people at Wisdom Tree look at that and say, OK, something big just happened or no. You like those guys.

No, it's standard that a lot of people are going to come into the space. And now it's really the regulators today. That's the things that you want to see movement on. So there was like a deluge of filings of crypto ETFs recently in the last like two months or so. And some of them are being pulled. So the SEC commented on a recent application. They rejected it. We have the next application under review.

So this month, we have an application under review. I'm sure it's going to work. Go on. For what, Spot? For Spot Bitcoin. And we have... I hope you didn't spend a lot of time on that. They spent a lot of time on that. What comes first, futures ETH or spot Bitcoin?

Wait, wait, wait. Why is your spot Bitcoin ETF application different than the ones that have been rejected already? There's all sorts of nuances. It comes down – He doesn't know. rejected already? There's all sorts of nuances. It comes down and the team is working and even more, there's gonna be more changes to improve them for in the short future. Um, but the question is what are, can you, can you get to the SECs and Gensler's concerns and some of its custodians, some of its other things. Um, and so we're working to be the first. Eddie Elfenbein taught me a

valuable lesson. If there's a question that you can't answer, here's working to be the first. Eddie Elfenbein taught me a valuable lesson. If there's a question that you can't answer, here's the answer. It's very technical. You probably wouldn't understand. Does that work? Of course not. It doesn't work in my house. I'll tell you that. Hold on. No ETF issuer can answer the issue that Gensler has because the underlying is the problem. He's worried about manipulation in the, in the Bitcoin market. It's hard to pinpoint. Opacity,

concentration, manipulation, everything that a regulator should worry about. Well, a regulated exchange. So the question is the futures are under CFTC. And who is their regulated exchange that trades the crypto? So that's,

that may be forever, right? So that's be forever, right? So that's where these things may be a long time before they're approved. Stocks like GameStop, AMC, there's never manipulation. What are the exchange – wait a minute. Okay. So what are the exchanges that are most likely to be deemed by the regulators as acceptable in the way that the CME is? Coinbase and Gemini.

Can they get there? But so they're brokerages and exchanges. So that tells me that that might be tougher, even though they're big and they're very good at what they do. Yes. So that might be part of the issue. Are there any pure exchanges that like might be deemed as, like FTX is a broker and an exchange.

Kraken is a broker and an exchange. Kraken is a broker and an exchange. How long could they fight this for? Long time. Good. What if they said it's bullish for the RWM wisdom tree crypto? That's fine. We are very bullish on that index. It would be nice if we could be the only game in town for a little while.

All right. I want to get away from all this crypto stuff. Is there anything left to say on this? Are we very excited to be working together? More importantly, more excited. I think this is going to be dude. It's very excited to be working together? I can't be more excited. Dude, it's us. It's Wisdom Tree. It's Tyrone. It's Gemini. I don't know if they like

us that much. They will. But we don't know them that well. But it's fun to build something I think with people that you respect from other parts of the industry. And we contributed our wealth management knowledge. You guys did an amazing job with the index stuff and the research. And Tyrone's team crushed it on the engineering.

I'm so, so, so excited. And I just want to say just before we leave this topic, I'm still buying all stocks all the time every two weeks in my 401k. Shots of stocks. We're not like pivoting to crypto. So we are. Still love my stocks. We are stock and bond investors who are adding. Is that the right way to put it?

Yeah, we're tradified people. We're not like bond investors who are adding. Is that the right way to put it? Yeah, we're triad fight people. We're not like Jeremy, who's going to tokenize his whole life. We're going to tokenize treasuries and gold and other things in our life, actually. This guy's tokenizing up a storm. All right, I want to pivot. Is 2021 going to be looked at as the year that China became uninvestable? No. No.

I think yes. Go ahead. I understand the argument. Yeah. And think yes. Go ahead. I understand the argument. Yeah. And John or Sia would agree with you. You guys don't have China exposure or you have to? We have some big China exposure.

Our second largest fund of the firm is XSOE, and we have a China version of that. So XSOE is 30% plus in China. Because you have to. You're trying to track that market. MSA emerging markets without the state-owned. What is Wisdom Tree buying Perth's fund? I'm a big fan of Perth. You could have had that fund for much less than you're going to pay now.

I'm a big fan of Perth and that concept. And she's maybe the only other person focused on the ex-state-owned concept. And so shout out to her. What is ex-state-owned? You built indexes that remove the companies that you believe are government-controlled. LOL, they all are. We found out this year.

But the idea is we don't want to own the state-owned bank. We don't want to own the state-owned utility. We want to own enterprises. Well, we created this seven years ago. And we were traditionally, going back to my Siegel roots. Shit, we're getting old. That was seven years ago? Yes. Value investors traditionally going back to my seagull roots and we're getting old that was seven years ago yes value investors right so high dividends had and i remember sitting in a meeting with a large pension in texas and the pension texas said

eight of your top 10 holdings are gazprom petrobras china construction bank all these state banks and energy companies i said what is the impact of the state on that and i said that's a great question and they said who are the state because besides? And I said, that's a great question. And they said, who are the state companies? Besides looking at the top 10, you know, eight of the 10 are state companies. Who are the rest? Yeah. You own Putin's gas station. You own President Xi's bank. Like what else is? Right. Okay. So I went back. Nobody had done the work. There was no index. There was no bass. You couldn't even find a data provider. So my team went through like the 800 companies in the broad index and made a classification. Are they state-owned or not? And so we were the first to do that and then created the index.

And at the time, it was when Alibaba wasn't even an MSCI index. And so we were going to be the first – and that's one of the reasons why we've added good value over the broad MSCI was we were the first to own China tech in a major way. If you're underweight, the state-owned enterprises, then by definition you will be overweight Chinese tech. Essentially. So no banks, energy. And that was a great thing to be overweight. Yes. Okay.

Not anymore this year. So what's – like, look, we talked to Brendan Ahern at Crane Shares and, like, we get all the perspectives. Yeah. What does Jono see about China that it sounds like I also see that makes me feel like something may have permanently changed? Solve the Chinese issue if you would in the next three minutes. No, but like what is he saying? We have somebody on my team, Li Chenren, who I met through West Gray.

Jewish? She grew up in China, has 20 family members there. So she is real on the ground. I think she's done the single best commentary on what's Jewish. She grew up in China, has 20 family members there. So she is real on the ground. I think she's done the single best commentary on what's happening, the narrative versus what she sees happening on the ground reality. Okay. And so she's – I mean now she's from China, so she probably has a slant there. But she thinks it's overblown what's happening in the China text names. Now there's this other question of the investability and the uncertainty, right? So

the growth rates are high. These companies are going to continue growing. So the valuations are- If they play by the new rules, they'll keep growing. Yes. Here's why I'm asking you this question. It's a huge part of MSCI now. Over 30%. Right. And that a huge part of MSCI now. Over 30%. Right. And that just happened in the last three years. I mean, I was looking at it earlier this year. Even after it was down 50, it was still basically ahead of the S&P.

There's not many markets that have been able to keep up with the S&P. That ex-state-owned enterprise for China had beaten for a long time. And even after it fell, it was still ahead. I feel like could something be permanently uninvestable? I guess it could be. I mean, when Siegel hears that, Siegel says that's why he's buying now. Yeah, right? When people say it's uninvestable, that was energy last year.

Russian stocks in 2014. But there are certain markets that have always been uninvestable. It doesn't mean they can't be a good trade. But it's two different things. So to your point, Russian stocks. I'm looking right now. Yeah, they rallied. And then what?

Did you stay with them? So I'm not saying nobody should have China exposure, but I'm saying like, you probably want to get that from an ETF and not be an individual shareholder in a Chinese. Wow. Wow. Wow.

Remember Russian stocks? Yeah. Look, I mean, massive, massive, massive run since they were uninvestable, massive run.

Right. Okay. So I heard somebody say triple, like a triple. So I heard somebody massive, massive, massive run since they were uninvestable. Massive run. Right. Okay. So I heard somebody say- Like triple, like a triple. So I heard somebody say good things have a habit of happening to cheap stocks or whatever. Yeah. Okay. So that's my point.

At some price, everything has value. The ramifications, though, of having a market this big now going through this reform, which I get why they want to do this. They don't want to have what we have here. They don't want Jeff Bezos, right? Like, let's just say what it is. They don't want Elon Musk. They don't want people who could become more powerful than the government, right? For obvious reasons. So now what do you do if you're invested in China tech? You know that these companies are now going to be limited at how big they could get, how successful they could be. How big of a problem is that? Well, the growth rates I think are still going to be above the rest of the broad emerging markets.

They still have a huge consumer base. If you say who can compete with US tech, I couldn't put another country who compete with US tech the way China tech is competing and where AI is going. What drives AI is data. So they have more data and sharing more data amongst all these companies than anybody. And so there is a thesis of why China tech can compete with US tech and be the only place that can compete with US tech. And so I don't think they're trying to make these companies, they know that these companies are sort of very important for China's long-term development. We don't think they're trying to make them all go out of business.

There was real issues with Alibaba and Ant, where Ant was really, it was getting FinTech valuations, but it was a bank. And so it's like they had to be regulated like a bank. And so the IPO timelines. It was systemically important too. A lot of stuff happening where there wasn't lending and there wasn't the consumer credit card market here like we have here.

And what they were doing through Alipay and all the other lendings, there was some real stuff going on there. They needed to get under control. Let's talk about something. Let's talk about investable tech. Let's talk about something. Let's talk about investable tech. Let's talk about Twitter. Josh's favorite company. So Josh, yesterday you and I were talking about Twitter

and why they don't know anything about you. I like the company. I hate the stock. Why they don't know. Is that fair? You like the platform? Yeah, he loves it. Why they don't know anything about you.

Our friend Brian Portner tweeted, no Twitter algorithm. I do not want to follow Bank of America. That really is – I mean we're not going to really get into this whole thing again, but like that really is a bigger problem than whoever the CEO is. Let's run it back. Well, no. I'm just saying I don't – I feel like it sucks that they have to be compared to Facebook and Google and some of these companies because then it's never going to be that. And maybe it's healthier for the investor class

to just get over that. The advertising algorithm is so broken. Just based on, even if you're just a lurker, right? And you don't tweet whatever, but you follow certain accounts, maybe you like a few tweets, like just based on that alone, they should know something about you

and they seem to not know anything. I mean, we've spent money on Google and we've tried on other things. And Twitter had some issues for some time. But I think it's getting better is what I've heard. Well, you're a good user of the platform. You don't seem to be in fights with people. You seem to derive a lot of great information from it. It's because he's not a billionaire yet.

You're good. Yeah. Stay tuned. I'm surprised that I haven't been attacked more on Twitter for some reason. I guess maybe this will get called. Stick around. Stay tuned. I'm surprised that I haven't been attacked more on Twitter for some reason. I guess maybe this will get called. Stick around. Keep talking. No, but I feel like from what I remember, you seem to be using it right.

You're not in people's faces all day. You have like a real job and a real life. When you're on there, it's about the thing that you're interested in, which is markets. And yoga. I do some yoga, yeah. Fine, but that's that you're interested in, which is markets. And yoga. I do some yoga, yeah. Fine, but that's what you're interested in. In other words, you're not on there trying to instigate fights to build your following. That's not what you're doing.

So you use it very well. I probably am on it too much. I do share a lot of teams. We use teams for our communication. I'm sharing Twitter links with our legal people updates. I find a lot of information. A lot of ETF people are really good on Twitter. Mike and Ben are still very involved with Twitter,

and a lot of the information I get is from them sharing links. And it's fine with me. I honestly couldn't do the podcast without Twitter. It's a good filter for me, like seeing stuff on our Slack channels that people are talking about on Twitter. I was shocked to learn that the product that was born on Twitter is up to almost a billion dollars.

That's crazy. Yep. We, I mean, it's sort of infamous now. Talk about that. So the product is tickers NTSX. This is an ETF that you guys launched.

9060. The original name had 96, the name structure is it, we called it, we rebranded it us efficientS. Efficient Core because the 90-60 was- Throwing people off. The 90-60 balance fund, it just was not as strong of a name. Okay.

But the original conversation was Corey Hofstein was in Barron's talking about the innovation in ETS. Shots of Corey. The capital efficiency, that there needed to be more things that made your money work harder essentially. And then a few – and people have been doing this in active form, mutual fund form using active bonds. Hemcron has done this forever. Yes, and DoubleLine also has done it with Shiller's index. So there's been people who have done this kind of stuff, but nobody did it for beta. So nobody did it for the S&p plus a bond a bond

ladder and so basically a few people on twitter uh anonymous gentleman jake as well as uh love jake non-related sense nrs and they were talking and and basically said somebody launched this and i was on there watching and seeing the conversation and I kept bringing it back. So that's one of those tweets you send to your team internally. This is an amazing idea. So what do you do then? You DM Corey and Jake and non-related scents and you're like, this idea, I'm going to steal it

and I'm going to make it. Well, we started working on it. I brought it back to my team. Did you ask them to help? I had their feedback. Did you tokenize a royalty for them? The information was on Twitter. We had conversations.

How does Jake not work for Wisdom Tree? That's a great question. I've tried to make that call at some points in time. I would like him to work at Wisdom Tree. He's so bright. And clever. So the idea behind it. Right time, right place.

Maybe it happened in the future. The idea behind 90-60 is you invest a dollar and you get for that 90 cents worth of S&P and 50 cents worth of bonds such that you can put 66 cents of every dollar that you invest into this and you've got 34 cents left to play with. Yes. Corey's now got a paper called Return Stacking that he and I did a podcast on. He's all over on the Return Stacking paper. And I like that phrase also where it's another way of describing leverage, right? But you're getting this, your money's working harder. And the idea is you reduce stocks, you reduce bonds, and then you can do other things.

So that's the part that bothers me. I love the idea in theory. It's the other 34 cents that scares me. What are you going to do with it? Let's say you put it in cash. If you just put it in cash, you now have cash you can spend. Fair. Fair. But you could do a lot of silly things if you feel like you've got some free 34% to play with. But I get it. I get it. In theory, it's a great idea. You had the alternatives allocator's edge last week with Phil. Those kind of strategies are, I think, what it's meant for. It's like these diversifiers that give you uncorrelated streams. If that can be responsibly implemented, you could do really clever things with it.

What environment does Efficient Core not do well in, if you had to guess? If bonds go down and direct stocks down with them. If you're using it appropriately, it's all about what else did you do with the money? Because if you're using it. OK, I assume I bought NFTs. Well, I've been with NFTs too. It better be non-correlated. I'll tell you right now.

I mean, you could do it versus 100% equities. But that's not what I would do. You could swap an S&P 500 and use this. But now you're just adding bond futures. You're just lever bond futures, right? You're just levering up bonds. You're lowering your equity risk. Instead of $100, you have $90 of equities and you're adding the $60 of bond futures.

So it's just a bet on bonds if you're selling the S&P and buying- Okay, but so correlated bond in stock markets is not great for this. Yes, but if you're ever a 64 investor- It's not great for you either. So it's no different. It's just what else are you doing with the freed up capital?

But $900 million, do you know where that money is coming from? That's a lot of money. It's amazing. It's only three years out. And so this year it's grown $400 million this year. What are you benchmarking it against? 60-40? The S&P.

I know, but what should you really benchmark it against? Is that appropriate? It's beta for S&P 90% know, but what should you really benchmark it against? Is that appropriate? It is beta for S&P 90% and 60% bond futures. It is that. It's going to give you that return. By the way, how does that all happen inside of an ETF? We take in $100.

It's technical. You wouldn't understand. No, it's easy. You really are a funny guy. It's very simple. It's five bond futures. They're almost equally weighted. So it's like 12% in five different bond futures. And essentially S&P 500-like. It's not the S&P, but it's 500 largest stocks by market cap.

It's our own universe. And for every 100, we get $90 of that. Okay. I could hear the listeners committing suicide. All right. But we're talking about Twitter. So, okay. I agree. There's really smart people on there. Just most people on there aren't. And there are a lot of people that are on there who are not trying to help you build your next billion dollar ETF. So that to me is, is look, that's endemic to every social network.

It's not just Twitter issue. But a lot of smart people. All right. So could you think of a worse CEO job? Oh, my God. Square just changed its name to Block. Why? Who has the time for this? Because Jack Dorsey.

Swear to God. I'm calling it Square. The Block. All of a sudden, I just got bullish on Block. Okay. I can see why. Can you think of a worse job than being the CEO of Twitter? Like, I can't blame him for being like, you know what?

I don't want to fight with the next president. I don't want to do any of this shit. I don't want to deal with terrorism. I literally just want to do Bitcoin. That's basically what happened here, right? Much better dynamic. Okay. Cathie Wood just bought a whole bunch of Twitter.

You guys talk to her? You ever meet her before? I have. All right. I'm very impressed by her. What do you think? She's assembled an amazing track record. She's using Twitter the same way you are.

She's pulling a ton of information out of there. She's hiring out of there. I would like to do more of that for sure. Okay. All right. So we're going to move off of Twitter. What are we doing next? I got lost in the doc.

Oh, the last thing. I think we don't have to spend a ton of time on this. Does Wisdom Tree have a take on the taper, whether or not it's something that investors really have to focus that much on? Because that seems to have been the biggest story of this week. And I'm sure Jeremy did a whole bunch of media on it. I didn't see him. Yeah, we started there a little bit that we've been saying that we've been saying there's

going to be this Powell pivot that and Siegel's been saying could be a 10% correction because it wasn't priced in. I'm curious when we talk on Friday, if he's going to say now it's out there and that was the pricing in. You are still seeing- You have stocks that are down 50%. You don't have a 10% stock market correction, but you have huge corrections.

Those mega growth stocks have really sold off. Oh, yeah. So where the far out cash flows matter, there's been this huge rotation. And that's what you expect. You expect the sort of shorter duration stocks of the higher dividends where the cash flow today be less impacted by rising rates.

But it has been a dramatic. So has there been enough pain then if they hit the growth stocks that they should have hit? If, if there's going to be, forget about a faster taper, taper period. If they hit,

is it enough? There's really become more aggressive on pricing in the rising rates. So the, the bond market, the futures market is doing a lot of that. Right. I think they're gonna be wrong. I think they'd be disappointed. I think they're gonna be disappointed. I don't think Powell is doing a lot of that. Right. I think they're going to be wrong. I think they're going to be disappointed.

I don't think Powell's in a rush to taper. I don't know. Jeremy, let me ask you about this. Speaking of Twitter, Balchun has tweeted this today. I don't know who this person is. Ryan Kristopowicz. Ryan, do you know Ryan?

He's the head of our, well, he does a lot of the client solutions for model portfolios with us. Okay. So he just tweeted, this shocked me. He tweeted total model portfolio assets have hit record levels this year at $4.9 trillion, up from 3.8 trillion during the same period in 2020. $4.9 trillion in model portfolios. That's like, that's like truly a shocking. Model portfolios where? That advisors use. I mean, that's portfolios. That's like truly a shocking number. Model portfolios where? That advisors use.

I mean, that's your world. Does that sound like a gigantic number to you? For us, we've been investing in the model portfolios for a while. I was telling you before that we hired the dynasty CIO, Scott Welsh, to be our CIO. We've done things like Siegel-branded model portfolios that are now on platforms like Merrill and Morgan Stanley. Can you just explain this to the listener that doesn't know how this works? Forever, people would come to us and say, you have 60 ETFs. How do I put them together into a portfolio?

And so we started, call it 2013. You guys had the products, but how do I construct a portfolio out of these pieces? Yes. So it's like we put basically an asset allocation grid. Here's the US foreign, US developed EM. Where in the bond market would you be positioned? And we're not just using WisdomTree ETS. It's an open architecture platform where it is.

And it's very open architecture. Some models are as low as 30%. Some are higher depending on the model. Income models were more. We're pretty good at dividends. Now, the compliance departments at Merrill Lynch, for example, love this because you are giving the financial advisors the structure to not destroy a client. And we have a Siegel longevity model there. It's like he's got his new 60-40.

It's a 75-25. And we built it with him. And he and I, we worked on the asset allocation and figured out what she needs. And then he probably does like ongoing commentary for the advisors. And client events. And so for example, like you'll say that you could be 30% of a portfolio. You'll have where,

where wisdom tree shines, you'll have your products, but for something as simple as like plain vanilla, large cap, US beta, maybe you'll use the cheapest out there. Fidelity, Vanguard,

whatever. Yeah. We'll use, even use Vanguard high dividend funds when they're appropriate. So we have a few. So are you guys one of the, so are you guys one of the bigger players in model portfolios? We're definitely growing fast.

Is it BlackRock? Yeah, as always. Sure. I mean, we've done well on the TD Model Center. I think it'd be surprising. I mean, we're one of the bigger ones in that platform. And I think we've just been added to Merrill and Morgan in the last 12 to 24 months.

So it's pretty new. Historically, they have not been big on ETFs. So this is what has me most excited about our core business. Is that you? What's that process like of getting on those platforms? Well, this one is a, I mean, when you're going to a platform, it's from Jono, Siegel, myself, the models team. You guys have a lot of firepower. It's a big, I mean, that you're going to a platform, it's from Jono, Siegel, myself, the models. You guys have a lot of like firepower. It's a big, I mean, that's an important platform.

Like a Merrill and Morgan big platform. Trillions of dollars. So those platforms, you are bringing everybody. And a check. Stop that. So, no. So I was talking to my friend Joe Terranova, and he was saying, I'm not on the Wirehouse platforms, but like my fan base are the Wirehouse guys.

They love me. I love them. I meet with them all the time. I fly around the country. He's like, eventually, I will get on those Wirehouse platforms. And I think he just got a big one. But it took, you know, he launched his ETF a year ago. It took him a year, and they said you might have to wait three years.

Active funds are harder than index funds. And each platform is different. They each have different 50 million, 100 million, different trading requirements. And some of the things you think are like, why is that a requirement? That's not – the whole point of ETFs solves some of the requirements. But it's gatekeepers, standard gatekeepers. And that's why I love the RA community is you all do your diligence diligence and you can figure out is it the right fund for your clients. So when does Twitter change their name to Chain?

Ooh, I like that. I was going to say Stream. Stream seems like underused. Where are we going? No, we're done. We're going to do favorites and we're going to – It's 5-12. It's been an hour.

We're going to get out of here. All right. So I have a problem. We know. I'm like a Beatle maniac. I watched 12 hours of – I watched the whole thing, the Get Back documentary. Did you watch it? I feel like this is something that you would watch.

You look like John Lennon. It's totally right up my alley, but I haven't watched it yet. I saw half of the first episode. It's unbelievable. Are you like I can't take anymore or are you going to finish it? No, no, no. I'm going to finish it half of the first episode. It's unbelievable. Are you like, I can't take anymore? Or are you going to finish it? No, no, no. I'm going to finish it.

It's, it's, it's, it's, it's nuts. Who's, who's your favorite Beatle? I'm just curious. I would, I would probably, after watching the documentary, I probably would have said George Harrison my whole life, but now I'm Paul. Really? Okay.

Because he's a leader and I get what he's trying to do. And as the documentary goes on, you're going to start to feel bad for him because it's spoilers. No, it's not a spoiler. It's history. But like when Brian Epstein died,

who basically was running the group, like discovered them, put them on, got all their deals done. There was this power vacuum and Lennon was out to lunch with, with Yoko and couldn't be bothered. So Paul basically had to be, be the asshole.

But if he wasn't like the last three albums, arguably three of the top 10 albums would never have come out. So that's your excuse. Paul was an asshole. No, he had to be somebody has, somebody has to say, guys,

stop smoking dope. We got to record three more songs this week. Like somebody has to do that. It's weird. It's weird watching them make music. Did you watch any of this? You a music guy or not crazy? A little bit, but I can't say it on pop culture.

Okay. I'm not your best commentator. Yoko looked very like uninterested or disinterested. The whole thing is nuts. She can't be separated from john for a second and i think john wanted it that way so she's sitting next to him they're writing like the greatest songs ever written literally they they have the footage of them trying to figure out the next chord and she's sitting there rolling a joint she's reading a newspaper

a lot of this thing is surreal but it's all true did you watch did you watch the dmx documentary not yet you don't like that what the the ringer one yeah not yet i haven't watched any of those okay the alanis was very good this is very good um they made this before he so they made this before he died what the dmx one like they got him out of jail yeah and they were making it and obviously we know he passed but like uh i'm 100 i'm 100 you're gonna love it it was very heavy in a good way what do you got for us what should we be reading or listening to or watching fact sheets what's your favorite fact what's the hottest fact sheet on your desk i didn't put something on there i i i um what do you do what do you do when you're not reading about uh equities and bonds and jeremy texted

me at 4 12 this morning are you really up at 4 12 you texted me i wish i was not to be honest but i all the work we've been jamming on um it's been i i don't know maybe that's what's keeping me up the last few weeks but i've not been sleeping as well as i used to tell us about florida and and uh and we'll make that your favorite how excited are you to get out of here i was down there for a week over thanksgiving we'll be there for two weeks um we go down there my all of our families are my brothers you like seeing your family or the beach so i my my plan in florida was when i was there every morning around seven would walk down to the beach take an hour walk sit on the

couches by the beach how old are your your kids? Six and nine. You could do that. Okay. It's been great. What's going on? What did I miss? Nothing. Duncan and I were just having ice. Having a moment.

All right. Duncan, I think we're going to wrap up. How did we do? Should we do the whole thing one more time, or do you feel like we got it? Yeah. You can never be too safe. Yeah.

All right. So what's in the index? So we'll wrap up, and we'll do it. Tell us about the index. Listen, if you want to learn more about this thing that Jeremy and Tyrone and Michael and the team and the whole team and a ton of work has gone into this. If you want to learn more, go to Ritholtz wealth dot com slash digital. You guys will put up a page, I'm sure. At some point, you know what the URL is or not yet. All right. Well, we'll link to it when

we have it. Thank you so much for coming in today the URL is or not yet. All right. We'll, we'll link to it when we have it. Thank you so much for coming in today, Jeff on my pleasure. Thank you. What is it like working with Michael Batnick? Should we spend another 30 minutes on that or okay. All right. Listen, everybody did a great job on today's show. John, great job.

Duncan, great job. Very proud of you. You know, I am for the latest in financial blogger fashion Don't forget idontshop.com For your favorite trader This holiday season Or investor Oh we need a Paige Vicks sweatshirt I need a hoodie I don't know if we're going to do that

There's a hoodie shortage We already can't get enough hoodies for the other thing So it's I know Thanks Powell Thanks Biden Yeah That's just how it's going to be

What was the last thing? Oh, don't forget. New Animal Spirits every Monday, every Wednesday. And we will talk to you guys again next week. All right. Pretty good. Pretty good, right? All right.

That was good.