The Derivative - Bull Markets, Behavioral Biases, and Blogs with Baird’s Michael Antonelli

Episode Date: October 1, 2020

If men are from Mars and women from Venus, it often feels like stock/bond investors are from Earth and us Alternative Investment folks are from Vulcan.  We’re digging in with the Bull and Baird blog’s author and Baird market analyst Michael Antonelli to hear how the earthlings (aka wealth management clients) actually think about investments, direct from the guy who is serving up what a whole bunch of them read week in and week out. How is he explaining this crazy investment world to them? In this episode we’re talking about appetite for alts investments, fee-based advisors, institutional equity trading, Culver’s custard, Patagonia vests, Star Wars fan-boying, the world breaking, portfolio diversification, wealth management, Robinhood & FANG driving gamma, what the rest of 2020 looks like, Wisconsin badgers,  Baird in retail trading, “golden age” of options trading, gamifying retail trading, if bonds are a flight to safety, investor patterns, election volatility, pelotons, Milwaukee’s best brewery, & starting a blog & popular Twitter handle. Chapters: 00:00-1:41 = Intro 01:42-10:30 = Background, Blog & Baird 10:31-25:09 = Investments & the World Today 25:10-36:48 = Passive vs Active 36:49-49:48 = Fee Based Models & Talking Retail Traders of Robinhood 49:49-01:01:29 = The Rest of 2020, the Election & Moving into 2021 01:01:30-01:10:40 = Favorites Follow along with Michael on Twitter and LinkedIn, and subscribe to his blog Bull & Baird. & of course we said we’d provide Joe Biden’s ice cream/custard clip here. And last but not least, don't forget to subscribe to The Derivative, and follow us on Twitter, or LinkedIn, and Facebook, and sign-up for our blog digest. Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Thanks for listening to The Derivative. This podcast is provided for informational purposes only and should not be relied upon as legal, business, investment, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations nor reference past or potential profits, and listeners are reminded that managed futures,

commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. Welcome to The Derivative by RCM Alternatives, where we dive into what makes alternative investments go, analyze the strategies of unique hedge fund managers, and chat with interesting guests from across the investment world. You can get world-class education for free. Free! Listen to podcasts like these, read Morgan Housel's book, you can get all sorts of tremendous

education. But just don't log on to something and start trading thinking like oh it's easy because it's not you got it's not and we wrote on the blog i wrote on the blog that one of the hardest things for me to learn as a trader was why things move the way they did how many times have you have you seen a stock you own beat and raise earnings after i was like oh my god this is gonna be great i own a stock they and raised. You wake up the next day, it's down 15%. Yeah. I mean, I saw it all the time.

It's because of expectations. Hello, everyone. Hello everyone, happy Friday, for me at least, who knows what day you'll be listening, but happy whatever day that is to you. We're here today trying to analyze how the analytical mind of a market analyst works. We're usually talking to the hedge fund managers who are in the weeds and navigating the forest tree by tree and thought it'd be fun to get the forest view for a change, and especially the forest view from the mom and pop investors or wealth management clients, as they call them, with Michael Antonelli, who's the market strategist for Baird, and also the brain behind the popular blog and Twitter handle, Bowlin Baird.

See what you did there, Clemmer. Yeah. So welcome, Michael. Thanks so much, Jeff. I'm super excited to be here. It's Friday. It's kind of late summer. It's a great time to talk about what's going on in the world. I know. And we just figured out that I'm going to be heading up close to you. We could have maybe done it in person with masks or something six feet away. Yeah. Next time. So yeah, I want to cover a lot of ground today, but let's start first.

Just give us a little personal background. You're from San Diego originally? Yeah, so my father was a former Marine. I was born in Camp Pendleton, which is kind of north of San Diego. We bounced around a lot as a kid. We kind of moved all over. My dad worked for IBM, so we bounced around. I landed on the East Coast, so I pretty much grew up on the East Coast, but I went to school in the Midwest. And went to Purdue for an undergrad. Ended up in Chicago like most Big Ten grads end up kind of migrating to Chicago at some point. Met my wife there.

Went to school. Got my MBA at the University of Chicago. And then ended up moving to Milwaukee in 07 to join Baird as an institutional equity trader. And what did that entail, institutional equity trader? Yeah. Go ahead. Yeah, so my background when I came to Baird was I got this analytic finance MBA from Chicago and I wanted to kind of use that knowledge to move to an institutional equity world. And the world I was coming from, remarkably, was futures and options.

I mean, Chicago, futures and options. It's CME, CBOT. I worked for a firm called FEMAT, which is a futures clearing merchant owned by Sachin. I think they merged. Yeah. I think they killed the FEMAT name a couple of years ago. Yeah. So I came from a world of futures and options. I cut my teeth on trading Project A and Globex and all these things for clients. Then I moved to become an institutional equity trader, which means I started dealing with pension funds and hedge funds. You went to the dark side. Yeah. I kind of left the alternatives for just the plain vanilla. And I got to tell you, in 07, that was a time when structuring and CDOs and all these things were really taken off. And

people kind of wondered, why are you going to do vanilla equities in Milwaukee? I said, this firm's great. This firm is really is really really great I'm super excited about working there and in retrospect best decision I ever made all these CDOs and structuring people ended up kind of getting knocked out when the GFC hit yeah and then so Baird's one of the only firms allowed to still have the Patagonia vests yeah I mean I I'm a proud owner of a branded Baird Patagonia vest it's kind of my one on Twitter I will always stand for for Patagonia I'm a proud owner of a branded Baird Patagonia vest. It's kind of my, when on Twitter, I will always stand for Patagonia. I'm always out there saying that it's the most versatile thing you can own. All right, but they, right, they basically said they won't sell them to all the Wall Street firms anymore.

Maybe Baird's enough Midwest charm that they can still get them. Yeah, I mean, I think I bought this a couple years ago. And the funny thing is, this reporter at the Wall Street Journal, Akane Otani Otani reached out to me and she put me in an article in the Wall Street Journal with my vest on and it's hanging on my wall right now in my office so it's yeah I'm I'm still hanging on and my father-in-law was actually at Baird uh ran the Kenosha office and then was in Racine for about 40 years so I know the firm I know well I've been to the zoo party. Yeah. Yeah. It's, you know, it's, it's, so we're employee owned. It's small culture, tight knit culture. You know, we're, we're, we're still bringing all of our friends and family and coworkers to a zoo outside of Milwaukee for, for like a, for, for a firm event. And it's great.

It's, you run into the CEO, you run into your manager, you run into an advisor or a trader. It's got this really tight knit employee owned culture andowned culture and it's just a great place to work. And so you've been there for what you say 13 years and then you somewhere in there switched off the desk? Yeah, so I was there I was an institutional equity trader from 07 to about I guess it would be 18. I was my territory was Europe. My territory was international so I got to travel the world. I was, my territory was Europe. My territory was international. So I got to travel the world. I was in the Middle East, I was in Australia,

I was in Europe kind of talking to our buy side accounts there, right? The buy side accounts that used us for institutional research. Then something called Mifid hit. Mifid is this kind of, you know, formalizing sales and trading, formalizing research and trading in Europe. And I saw a

chance to jump to private wealth, which is this really, really awesome division inside of Baird. And what's the breakdown look like? Because I think most people don't even know Baird kind of has that institutional side. They're mostly known for their client facing wealth management, right? Sure, sure. So we're a global firm. We have wealth management, we have asset management, which is a very, very fast growing part of our firm. Institutional equity, sales and trading, private banking, obviously that's the wealth management. We also have investment banking and private equity. So we kind of delve into all the things that an institutional financial services firm would do, but private wealth is, private wealth is one of the bigger kind of divisions within our firm. When they're ready to get into futures,

let me know. So then moved into this new role. So what are you doing in that role? Something to, and tell us about the blog. Sure. So when I was in this institutional role, I was, I was kind of writing an email to people that kind of explained what happened overnight. And you know how many of those exist on Wall Street? What, like a million, maybe 2 million? And then I wanted to make it stand out. So I started writing about pop culture and sports, and I would link Game of Thrones to what happened in the market, or I would link some sort of sporting event to crazy price action in stocks. Like a Bill Simmons of the market. It's exactly right. I really looked to a

guy like Bill Simmons for inspiration. I said, you know, this guy makes sports fun and interesting to, to, to, to write about and to read about. Why can't I do that for Wall Street stuff? Because I have this pet peeve that Wall Street in general, in general, not everybody, but in general, just makes things too complex. It's just a complex conversations and writing and charts and all these things. So I wanted to make something that people could read. And I kind of brought that to the private wealth world. I said, let me write this blog. And it was titled Bull and Baird, right? Kind of a play on our firm's name. And I brought that blog and this kind of 12 years of institutional expertise to the private wealth area, just so I could talk to a different set

of clients. And that's been since 18. and then they passed all around, or you've been pretty active on Twitter and whatnot. So it seems like it's outside of just the Baird clients these days. Sure. Yeah. I think that it's 2020, we've moved into a world of not only educating clients, but educating them in all sorts of venues, whether it's video, podcasts, social media, LinkedIn, Twitter, all of these things. We've kind of reached a point where if you're going to be an educator, if you're going to try to educate people, you got to do it in lots of different places. You can't just do it in email and you can't just do it with charts. You have to do audio, video, all these things. If you look at some of the most popular

people on Twitter, the, you know, the Ritholtz group or the Morgan Housels of the world, the Carl Richards, you know, they're trying to build this broad, broad multi-channel education process. And I think we at Baird also want to think about that when it comes to only like prospects and clients and, you know, attracting new advisors and educating and pushing our brand. You've got to have lots of different ways to do that. I think Taylor Pearson, I don't know if you've seen him on Twitter. He had an interesting thread the other day about like everyone's a media company these days. Yeah, I think that's right. You look at some of the most successful tech companies, Shopify. Shopify is an incredibly successful tech company.

Their CEO's on Twitter, and he's got some really amazing tweets, stuff that I put aside, and I'm like, you got to read this later. There's some really good stuff in here. So I think if used correctly, Twitter is a very valuable place to aggregate content and thought leaders. It can be toxic. I agree. It can be toxic. You have to kind of use it correctly. And Josh Brown was kind of pioneer there in terms of financial services. And now he, he doesn't use it anymore. I don't know what that whole story is, but yeah, Josh Brown on Instagram or something. He's been an inspiration for me, all of Ritholtz, those guys, they're an inspiration to me, the way they write and talk. I think it's, it's fresh and revolutionary, much like Bill Simmons.

I think Josh Brown was much the same for finance and I am a huge, huge fan of his. He's a little too New York for me. I don't like, I like the Midwest roots better. So let's dive in. Like we've done that throughout our career of, you know, educating, super important, make sure the clients, and I've always come to it from a view of, you know, educating, super important, make sure the clients, and I've always come to it from a view of, you know, helps them stick through the drawdown, helps them stay invested, helps them counter these behavioral biases. So, you know, besides looking at it more from like promotion and getting clients or more of keeping clients and keeping them doing the right thing? I think it's a little bit of both. I think when it comes to the way people think about managing their money or whether it's, you know, done in

a wealth management environment or a retail trading environment or an alternatives environment, people want to belong to a tribe in general. And what does that mean? Well, they want to belong to a place with people that think like them or think the right way. So I think if you're thinking about projecting a brand, you're wanting to say, here's how we think about the market. Here's how we think about investing, your success, what tools we use, what venues we use it in, and say, this is what we stand for. Come belong to our tribe. Come belong to how we think about the world. So behavioral finance, I think is an important part of the wealth management process. You know, we have the diversified portfolio strategy, we got tax planning, charitable planning, all these things. But you know, if you don't really

focus on how you act in the good times and the bad times, frankly, you might be prone to failure. So one of the things that I've focused on in my career is behavioral finance. We have really, really high quality technical content, but I think you have to marry that with stuff that the average person can digest and take away from one or two things when you speak. Yeah, I've yelled, would probably be too strong, but heavily debated with a client before who hammered us for weeks and weeks over, is this tax efficient? How do I structure this, that? And then a year or so later, he dumped the whole investment as soon as it was down like 8%. I'm like, why did you worry about so much about the taxes if you were going to like knee jerk reaction? Yeah. And there's lots of people that say that if the most important thing is having a plan, but a plan you can stick

to, that's really, really important. Because if you have the most complex thing is having a plan, but a plan you can stick to, that's really, really important. Because if you have the most complex plan in the world with PhD level analysis and guys who went to Oxford and Harvard running it, but the minute the market goes down 5%, you cash it all in, you really don't have a plan. Yeah. And or you see this with the pensions and their turnover and their investment committees, right?

The CalPERS guy dumped universal right before the crash here in March. Yeah, it's hard. You're just people are prone to panicking at things that happen all the time, frankly. You know, how many times have we seen the market fall 10%? It happens on average once a year. Speaking of that once a year, I wanted to get a little adversarial with you and say, you know, you said in that recent blog post I read, the world breaks all the time. Don't let that knock you off your

plan. Or, and you said again, if you fall asleep or forget you own stocks, you would have said, what's all the fuss about? So in the alts world, in my mind, it's like, wouldn't it be better to go find something that works in those periods? Where it seems like you're educating and saying, no, just stick through it, make your way through it. How do you square that? I think that number one, what people want to focus on is remembering that the world breaks all the time. And I bring that up, inspired by my friend Morgan Housel, because there will never be a really peaceful, calm moment where we're all just reaping these amazing returns. And we're just walking out the door saying, wow, this is awesome.

It's been a decade since anything happened I think what we want to remember is that the world's a crazy place that the crazy things happen all the time you have to kind of accept that to be an investor I personally want people to invest in diversified portfolios not diversified portfolios could include stocks and bonds which are kind of the fundamental building blocks of those. But alternatives and real estate and hard assets, these things can all belong in a diversified portfolio. I think it depends on the individual and how they view risk and how they view, you know, different sorts of investment choices. I'm not, I wouldn't go to a client or and say, you can only invest

in stocks. That's it. You can't invest in anything else, just stocks, because I don't, I don't think that's necessarily the right way to think about the world. We want to kind of diversify not only our investments, but we want to diversify our views. We want to diversify all these things. But remembering that just because we're diversified into all sorts of different asset classes, we need to be able to hold on to them when things really go crazy. And then so of a Twitter thread the other day of saying, is the goal to minimize losses or maximize wealth? So I guess that's to each client's own perspective and their own desires. But it seems you could argue that diversification

is kind of giving up and not trying to maximize wealth and just having that little bit of safety versus some other strategies might, right? If you just in a pure mathematical sense, look at like Kelly criterion or half Kelly or quarter Kelly or all those, and you can draw them on a curve. Like if you want the maximum wealth, use this. If you want maximum wealth, given a few little filters, use this. So it seems

like all the education's about just removing and keeping you steady instead of maximizing wealth. You know, I think one of the things that often doesn't get talked about, Jeff, is there's a difference between getting wealthy and staying wealthy. So said another way, there's a difference between getting wealthy and staying wealthy. So said another way there's a difference between the kind of mindset it takes to get rich and the kind of mindset it takes to stay rich. Yeah at some point your utility curve flattens out and you don't you don't want to maximize wealth you want to minimize loss of wealth. Yeah yeah so I think it you we want to you know a wealth manager can help some people

do the former, help some people do the latter, help some people do both. But one of the things I like to say, especially to like a next gen event, or when I go out and speak to some younger investors is remember, if I just take Jeff Bezos, for an example, he was all in on Amazon. He wasn't, you know, he wasn't in a diversified portfolio of healthcare stocks and, and, and bonds and real estate. He was all in on Amazon. That was his life. Oh yeah. A lot of those, if you go through the billionaires list, they're mostly concentrated bets, right? Yeah. So the, so I think I want people to remember, there's a difference between those two things. Like when you're younger,

when you're older requires a different mindset, it requires a different style of investing. I don't think an 18-year-old invests the same as a 75-year-old. I think it has to be well thought out. And I'm glad that people are listening to a podcast like this. So in hearing somebody say that, because you could fall into that trap, like you're saying, I'm just going to try to minimize my risk and that's the key to success. Well, I guess it depends. Yeah. And I always worry about the kind of the standard Wall Street or investment advisor research and education is kind of focused on this is noise, hang in there, yada, yada. And from an alternative view, we're like, hey, you know, Taleb's turkey kind of thing. Like just because they were 99 99 of the last uh down moves resulted in

up market doesn't mean the hundredth one is going to snap back the hundredth one could go down 90 percent so it's just like yeah and the down 90 percent too speaks to to you know the notion of behavioral finance you know if if you were invested in amazon since the ipo you had to live through multiple 90 percent drawdowns, multiple, multiple, multiple. And could you have done that more than likely? No. I mean, you were down 50%. You're probably like, I'm out now 90. You were probably like, well, I lost all my money. You know, it's, it's easy to look at things in hindsight.

I don't want anybody to think that this is easy, you know? And there's lots of different ways that an investor should, should use financial instruments. One of the things they should remember is that living through those tumultuous moments is not easy at all. And do you, so in the blog, is outlining the strategy for the whole firm?

No, or it's just one voice? Yeah, so we have kind of multiple different viewpoints, which is, I think the way that people should be thinking about engaging with their wealth management firm. We have Strategas, which is part of the Baird family. Strategas is this really technical investment strategy firm. It's great. Absolutely great. It's part of the Baird family. We have me who kind of focuses on behavioral finance, talking about the markets. We have another team that does investment strategy

who uses kind of a weight of the evidence model. So I think the way we think about it is there's, you can have lots of different voices and you can kind of pick and choose and you can use the ones that really make sense. You can use the ones to fit into a certain framework. And I think that you see that a lot. I think you see that a lot. You see it in RIAs. I think you see it in even firms like Goldman Sachs and Morgan Stanley. They have investment strategists and market strategists and private wealth strategists and institutional strategists. I think the more voices, the more chances to look at things from a different angle, the more that you will have a real clear picture of what's going on. And so the client, hey, choose your horse, so to speak what, which of these fits with your worldview and go with that? Not only that, but like, we want to challenge people's worldviews too. If Mike Antonelli thinks that, you know, this is going to happen. And another guy says, well, here's what I think is going to happen.

You can, you'd like to get competing viewpoints. I don't think you'd ever want to always have one viewpoint. You might be worried about some sort of group think there. I think it'd be okay for, for people to generally have the same framework, but be saying, this is how I think, this is how I think, and let people kind of play that off each other. So, and what I call them high net worth, what do you call the clients, wealth management clients? Yeah, I think, I mean, I generally just say wealth management clients,

Baird's wealth management clients. It's, you know, there's lots of different terms for it. Retail, wealth management, institutional, like there's lots of different terms for it. Retail, wealth management, institutional, like there's lots of different kinds of names for clients. I just, when I look at, think about private wealth management, I just think about the kind of wealth management clients that have, that have hired us to help them with their, you know, with their financial goals, with their financial life. And so tell us what the general portfolio looks like for those clients, which is hard across tens of thousands of clients, but what's the general mix that they're looking at? There's the great thing about Baird. We have over 1,100 advisors, and they're all kind of running their own businesses. They run their own portfolios. They invest in portfolios that Baird runs. They invest in external managers. There's lots of different ways that these advisors are engaging with their clients. There's no one framework. And I think that's great. I think the advisors get to run their own practices. They get to choose how their clients invest, what the asset allocation is, what the style is. I think in general, most wealth

management clients just have diversified portfolios, bonds, stocks, real estate. Some might have hard assets like art or wine. Some might use managed futures accounts. You know, they're kind of all over. There's no one kind of common portfolio that they all use, which again, is the right way. You want to be tailoring these plans, these specific investments to an individual. You don't want to say, here's my model portfolio. I think it these specific investments to an individual. You don't want to say, here's my model portfolio. I think it works for a thousand of you. I don't think that's the right way to view it. Each one of these plans is kind of highly customized. But the flip side of that argument is, does the guy in Wausau really know, is he really the top

guy in the world to be handling your investments? So you get that flip side, which I tell people, not just Baird, but any advisors, that guy in the middle of Mississippi or wherever, really the smartest guy that could be controlling your investments. A lot of times that answer is probably no, but then again, you could go with the smartest guy in the world that you find in some hedge fund or other thing, and he might lose money. He might be Bill Miller. He's never had a losing year. Then he has three in a row. Yeah, wealth management is certainly about relationships. It's right. It's about the person that you're engaged with. It's about that relationship and then finding the right investments for them for sure.

So, but it seems to me the whole advisory industry is going more relationship and less about that guy who has the relationship actually picking the investments, right? So whether that's the far side of that is robo-advisor model of investments, right? So whether that's the far side of that is robo-advisor model of like, I don't want any relationship. I just want something that picks the investments for me. So actually, I actually wrote a piece called Modern Day Wealth Management. It's on bairdwealth.com, which is our kind of private wealth website. And in it, I kind of wrote about what I think wealth management's going as opposed to where it came from. And one of the

points I made is that, you know, investment management, right, managing the investments of a client is just one arrow in a quiver. It's just one, right? There's also tax planning, there's charitable planning, there's, you know, estate planning, there's all these different other things in the quiver. And when you think about the value proposition of a manager, back in the day, it was, you know, it was, it was born out of a transactional model. It was born, you know, wealth management was born in this, you know, a guy was a stockbroker and then he executed trades and that was the wealth management. And it moved more towards a model where it's holistic. It's top to bottom, more than just investment management. It's all these other

things too. So I think I view it as investment management is a part of the value proposition, but it's not all of it. Yeah. My neighbor's a wealth advisor. He was saying in March, I was a therapist. Yeah. Absolutely. Think about it. State planning, tax planning, all that. He's like, all I did was answer calls and talk people down for an hour a day. And I think that imagine your advisor saved you from selling in March. Imagine that you wanted to sell. And I wrote a piece called Grading My Actions where I also said that as a market strategist, I was close to wanting to sell in March.

I just had never seen anything like it. I was overcome with kind of fear. And my advisor kept me out of that. And think about what, by the time August hit, think about all that that advisor had saved me from. Think about out of that and think about what by the time you know august hit think about all that that advisor had saved me from think about all yeah all of that but it's it's odd for a systematic guy for like a in in 2020 with algorithms and everything it's like why do i need to like get word call somebody they talk me down off the ledge and then everything's all right like shouldn't that all be automated and automatic and like my fear gets removed by some automated process there's actually a tweet by carl richards today human process algorithm versus real life and the algorithm is just a

straight line and the real life is this like big squiggly line yeah you know like real life isn't an algorithm and even if you had the great algorithm and it maybe it works great in march yeah it's here in sept September it's not working good now what you still have to call someone and say like how's that algorithm doing yeah I want to get into more of these uh what the wealth management clients are doing so are they you've seen all this stuff on fin twit of all the retail buying all the fang calls and clients are doing? So are they, you've seen all this stuff on FinTwit of all the retail buying, all the FANG calls and whatnot. Are they, do you guys see that as a firm or what's your general thoughts on that in your mind? Is that happening? Yeah. So I think that a lot of wealth management

teams, a lot of advisors as part of their process, pick individual stocks. A lot of them use funds. A lot of them use actively managed funds, passively managed funds. Some pick stocks stocks. A lot of them use funds. A lot of them use actively managed funds, passively managed funds. Some pick stocks. It's kind of, like I said before, kind of a broad mix. There's no blanket, you know, kind of portfolio or strategy that people are choosing. There are some people that love to pick stocks. There's some people that love to pick funds. So it's, again, it's kind of all over the place. When I think about, when I engage with them, it's the macro stuff that generally tends to be number one on their mind. The macro stuff, like I'm worried about the election. I'm worried about the pandemic. Why is the stock market doing what it's doing based on the economy? Those are the kinds of questions that I think are

universally asked. Yeah. Whether it's a virtual event, whether it's a live event, whether it's a phone call, you know, I don't, I don't usually sit in a lot of conversations where they're like, what stock should I buy? What stock should I sell? That's, um, I try to stay out of that, that I'm a market strategist. I try to leave that to the advisors and, um, we do have an institutional arm that does, you know, does that. I came out of that, came out of that. I want you to say like that in the management meeting, it's like a thousand clients a day are calling their advisors saying, buy Apple calls, buy Apple calls. Yeah, I generally don't operate on that playing field per se. The advisors are also good at that. I'm glad to help them and talk them through that kind of stuff because I have always come from an institutional world of dealing with clients. But again, I try to

answer the bigger questions, like the ones that are constantly coming up. Yeah, the well, I'll give you one of the bigger question is all that. So if that's happening, maybe it's not happening in wealth management, it's more Robinhood or retailers buying driving the fang higher, which in terms causes the dealers to have to buy gamma, which in turn drives it. Yeah, you know what the funny thing is about gamma, like, I always said I used to write this in I used to write this in my blog. I said, if you throw gamma down in a blog, you lost all your readers instantly. It's so hard to understand what gamma, I mean, I went to the university of Chicago, right? I, I studied with, uh, you know, Cochran. I mean, I literally like, I was at the feet of these guys that created this stuff and I'm even lost with gamma.

It's the rate of change of Delta. Okay. Well, how can I explain that to a person? Yeah. I feel like until you've lost money or with gamma in your option, you don't really understand it. Yeah. Imagine saying that to me. Why is the market?

Well, dealers had to hedge a lot of gamma. What? Yeah. But, but I, you know, I. Because a bunch of people with $500 accounts are buying Tesla. Yeah. They're causing dealers to be shorter and shorter by the minute. And all of a sudden dealers are having to hedge more and more. So, you know, it's, it's, this really goes to the heart of why I write my blog because these things, I love to talk about these things. I really do. I,

I can sit with an institution and talk about all these things nonstop. But if you can find a way to explain what gamma is to a wealth management or a retail audience, you have found a secret sauce. You have found a way to communicate a complex topic in an easy to understand way. And it's hard. It's hard. But if you can manage to do it, it's a secret sauce. It's the, yeah, I'll work on that. Yeah. My mind immediately went to like the cartoon lady in the West tied to the railroad track, right? And she's screaming a little bit. And then as the train gets closer,

she's screaming a lot and a lot and a lot. Yeah, exactly. That's gamma. You're gonna scream more the closer that train gets. And that's the thing, you're trying to use a story or an example to to make a point and all the best writers do that all the best authors do that they they convey their point in a story because frankly that's how human beings learn but but so to that point you're like nobody understands gamma but if that's the major driving force right now like don't you have to explain don't you have to wade into those waters and try

and explain it to the clients you do you do You do have to mention market structure every now and then. You know, market structure, how it trades. It's something that kind of a lot of people don't think about, especially kind of your average wealth management client. I promise you they're not spending a lot of time thinking about market structure. They probably shouldn't be. They should be enjoying their life and their family and all that things. But let's kind of transition to an example. What is another example of that? We have to explain gamma because that's how the market's reacting in this highly charged retail trading world. What about market structure? What about the FAANG stocks? What about the fact that in September of this year, the stock market was up about 11%,

the S&P 500, sorry, the S&P 500. Five stocks accounted for basically all of that. Five stocks. And if those five stocks weren't up what they were, the market would have been flat. So a client says, why is the market doing what it's doing? Well, we have to talk to them about market structure. The fangs are 21% of the weight of the S&P 500. Whatever your view is of the market, you have to have a view on those five names. They're such a big part of the market. So I actually had that down here to talk about. So agreed, you got to have a view on those names. Do you feel like that's a bad thing, a good thing, or you're indifferent? So I've looked at the history of the market. I used NDR's research

to look at the history of the market to try to think, is this an unusual moment? Is this the first time it's ever happened? It's not. If you, if you look back to the early eighties, there have been moments where the top five stocks in the S&P are 20 plus percent of the index. They just weren't these names. They were other names. Which names were there? Just to come up, talk about like ExxonMobil, IBM. There were some points where some of the older more established companies were

larger back in the early 80s. And even in the like robber baron days, it might have been some of those. Yeah, it might have been more. It might have been the Standard Oils back in the day. But when I think about today, it doesn't concern me, number one, because these are real companies, real earnings, real profits. They're a part of all of our lives almost every single day uh so when i think about them as as businesses they're they're not these kind of uh this is only working because of the fed this is only working because of valuations that's not true these are real companies with real um with real business but in in theory it'll drive more volatility right if you have fewer names just mathematically the the fewer names you have fewer names, just mathematically,

the fewer names you have, any movement in those stocks is going to have a bigger effect on the index. That's right. And one of the things I think investors are probably going to have to come to grips with is I think we're entering a world where volatility will be increased. And I think we'll see more of these short, sharp, ugly corrections than less of them. I just think by the nature of the market, by the nature of the kind of investing world we live in, where information is just everywhere and the ability to transact is everywhere.

I think the last podcast, I was like, are we in the golden age of options? Like if you have an internet connection, you can trade options basically. you could be on you could be on a phone at disney world and be like hold on hold on i gotta get long some tesla here yeah it's so so i think we're going to come into a more i gotta drive some gamma here yeah hold on i gotta have some gamma what does that mean i'll give the mickey pretzel then we'll come back to that um the gamma conversation works the other way too that's the scary part of if all the dealers have to sell into it, it pushes it down. Yeah. I think that when it comes to those five names, market structure, you're right. It probably does increase volatility. I think that sophisticated

investors will probably use volatility much, much more so as an asset class. It's not something that's easy for people to get their hands around. Most wealth management clients aren't probably using volatility as an investment strategy. It's complicated. It's really difficult to kind of get your arms around.

But I think we're going to see more of it. Tell them to listen to all our guests because they're some of the best in the world trying to explain it. No, I agree. And then if you can take all that into the passive thesis too, which is another popular fin twit concept

of more and more people just want to own the index. The index in turn is comprised of fewer and fewer companies, right? Is that adding fragility to the whole system? And eventually that whole game can just have massive dislocation and blow up risks versus in a perfect world, to the whole system and eventually that whole game can just have massive dislocation and and blow up risk versus in a perfect world all 500 stocks in the S&P 500 would be equal and people

would be able to trade those in and out and there wouldn't be this you know it's the the uh eternal bid for all this passive and what happens then what are your thoughts on that I I think we just got a prime example of whether that is true or not. What we went through in March, you know, volatility levels akin to the Great Depression, I think was a real stress test on this notion that, you know, ETFs and indices will blow up in some sort of market event. I don't necessarily think that played out. I really don't. You know, when it comes to passive or exactive, here's how I think of it.

If you invest in the S&P 500, which is the 500 largest companies in the United States weighted by market cap, some people might say, well, you've made a passive investment. That's not true. The S&P 500 is an actively managed fund. They just added some names to it.

Tesla wasn't one of them. Yeah, and not Tesla. Tesla wasn't one of them. That was, by the way, if your one of them. By the way, if your thesis for buying a stock is whether it gets added or removed from the index, that's not a great investment thesis. But anyway, that's an active management fund. For that day, it might be. Not only that, you've chosen an asset class. You've chosen large cap. You've chosen a large cap fund. I think most of the debate is about fees. It's about what somebody pays for, for an actively managed fund versus a passively managed fund. I guess that of the debate is about fees. It's about what somebody pays for, for an actively

managed fund versus a passively managed. I guess that's really more of the debate. Yeah. I think the passive, even though they've made that active decision to go into the, and I'd agree with you, the index is just a trading model, right? We're going to select and reselect these. I think the concept is once and all the setup now is automatic inflows, automatic month after month and the rebalancing and all the setup now is automatic inflows, automatic month after month. And the rebalancing and the market weighting creates a scenario where you have more flow than the liquidity of each name will allow for. So one of the things that somebody wrote, I'm not sure who it was, it might have been Josh Brown. He said, if a bunch of people say to the world, I just want the market return, I'm not trying to beat it.

I'm happy to just settle for the market return. Does that sound like a bubble to me? Like that doesn't sound like, I just want the market return. I'm not out here trying to beat it. Just give me the market return. Let me go about my daily life. That doesn't sound like a bubble to me. A bubble sounds like I need to beat the market by a thousand basis points. Right. It sounds like the reverse. It sounds like it would depress returns really, right? Like everyone's just settling for average. You're going to get average or below. I just want to settle for average.

And I want to go out and take my grandchildren out for a walk and enjoy my life. I, so I, you know, I, I want the debate to be framed the right way. I think it's, I don't think it's about the S and P 500 being a passive vehicle. I think you're making active decisions, period, full stop. You make an asset allocation, you're making an active decision. I think the active passive debate is much, much more about what fees am I willing to pay for the investment that I'm investing in. Yeah, I'll get you and Mike Green on to debate the finer points. He knows

more about it in the market structure. But I see where you're coming from. So another Twitter favorite, Corey Hofstein had a thread a little while ago. I mentioned thread like 17 times today. Yeah. Listen listen twitter's a great place for content yeah and great place for conversation but uh he was kind of asking what are fee-based advisors which i assume baird's mostly now all fee-based yeah we're certainly i mean there's still some legacy kind of transition to happen you know the the majority of the industry is moving towards kind of that fee-based model they're also working on some subscription models like there's so there's lots of different models that are kind of up and coming in the space. We'll talk about that in a second. But for that fee-based model, what's the average fee?

75 base points, 100? It's probably lower. I don't think it's much near 100. I don't have that date off the top of my head. All right. Well, let's call it 75 for the sake of argument. So if the advisor is charging 75 bps on all your assets, and he's recommending some portion of those assets go into 10 bps or 20 bps yielding bonds, like, how does that work? I think was the concept of that thread. And it's an interesting conversation of what do you do with that bond bucket, just overall, when it's so low, and in particular, when you have to pay a fee that's greater than what it's providing yeah i think one of the biggest challenges going forward certainly from this moment in history will be what what is the bond portion of a portfolio look like if if you looked at the history of investing the 60 40 portfolio is kind of the gold standard 60 socks 40 bonds that's kind of been the gold standard of diversification for a long time. But, you know, bonds have been in a 40-year bull market. You know, yields have been falling since the 80s, essentially, 70s, 80s. So how are we supposed to view a world where bonds yield 50, 40, 30 basis

points? One of the ways I like to frame it is that, you know, the bond portion of your portfolio can act as the stabilizer in volatile times. And when you think about treasuries, people were flooding into treasuries in the crash. I have a great chart that I created on YCharts that shows stocks versus bonds and how they acted in March. And eventually bonds just become the sideways line because they act, they kind of provide the stability, the anti-equity volatility stabilizer so i think about bonds as the more you add the more stability you add to your portfolio you know as for kind of the fees and everything i think that's a whole nother argument which goes

into all the different ways that an advisor provides value where i wouldn't solo it to just oh my bonds yield this and my fees this i don't think that's the right way to look at the right way to look at is what value are we exchanging? What value are we exchanging between each other? I think that's what's more important. That's fair. Yeah. If his only job was to advise you on bonds, yeah, then there's an issue. So yeah, say you're a bond portfolio manager and you own all treasuries and they yield 60 basis points. I think that's a different question than what's the value proposition of a full service advisory. And I'm not necessarily questioning the value proposition, but just that, you know,

before in time as, you know, it comes into starker relief when the actual asset that most of them are recommending still. It's tough. It's a tough question. One thing that I would tell people is not to reach for yield. I don't think you're going to want to say, oh, high yield is yielding this and I need the income. I should reach. I don't think that's the right way to look at it. What about, I look at that,

like I agree bonds, even if they're negatively yielding, they'll still likely provide a flight to safety return. Yeah, that's what I think. Yeah, I think that the treasury portion, the bond portion should be viewed as the stable, as a stabilizer in your portfolio. But what I think what might happen is people might have to look at portion, the bond portion should be viewed as the stable as a stabilizer in your portfolio. But

what I think what might happen is people might have to look at other kinds of investments for income, whether it's harder assets, whether it's farmland, I mean, I don't know, it depends on the individual and their risk tolerance. But it's a tough question. What do you do with 50 basis point bonds? Yeah. Or to me, like if I'm in in the past i'd like bonds to be that flight to safety because i got paid to own them now if i'm not getting paid or they cost me 50 basis points a year maybe i want to pay three percent for some more direct structured tail risk hedge right that's a more guaranteed uh structural like buying puts for example you know that structurally i can get that flight to safety and that pop in a downturn since I'm not going to earn money from the bonds anyway.

Speaking of just bonds back in the day, like a lot of people are saying, you know, does this feel like 99? Does this feel like 2000 with these market moves? You know what? Treasury's yielded back in 99, like 5%. Yeah. But you could have left your stocks and got 5% in a treasury bond. If you're leaving stocks today, you're getting basis points i'm i'm not necessarily saying it's all tina going on right now um but it was a different environment back then yeah tina being there is no alternative yeah correct yeah that's not your girlfriend's name yeah yeah no no certainly not no tina yeah, Tina has to be qualified here as an investment notion. And so you wrote another blog post we were reading on the retail trader, and we spoke a little of blog posts together and we said, let's write something about kind of this rise of retail. What's our take? How do we view it?

You know, Baird doesn't have like a stock trading platform. We're not, you know, we're not engaged in, you know, just generating retail stock trades. We're a wealth management, institutional trading type firm. So the people that come to us are getting wealth management. And they can certainly trade, right? They can certainly trade stocks in the market, but it's more of a wealth management style, right? Yeah, but our take was, we're not against the rise of retail trading per se. I don't think there's anything wrong with the democratization of access. You can't say that more people having the ability to trade and to access capital markets and to access stocks and bonds and those things is bad. It's not. It's not.

What needs to happen, though, is a rise in education. Yeah, I was going to say, I can't argue it's a bad thing if you've got kids killing themselves because they lost money and things like that. It has to go hand in hand. My son's almost 16 and he's almost about ready to drive a car. I'm not going to hand him the keys to the car and say, go right. Here's the, the car's available to you. Now you're 16. I'm going to spend some time educating him. So it's such that he uses the car in the proper way. And, and that's what we want. And, and partner with somebody, partner with some, RCM does good content. We do good content. There's lots of great content everywhere. Get educated. If you're going to open a Robinhood account, if you're going to open a trading account, if you're going to open a managed futures account, whatever you're going to do, spend a whole host of time getting educated on how things work, how things trade.

Yeah, and you could argue there's never been a better time in the history of mankind to get that education which is what you can get you can get i mean honestly go on twitter curate your curate your follower following you can get world-class education for free yeah free listen to podcasts like these read morgan house's book you can get all sorts of tremendous education but just don't log on to something and start trading thinking like oh it's easy because it's not you got it's not and we wrote on the blog I wrote on the blog that one of the hardest things for me to learn as a trader was why things move the way they did how many times have you have you seen a stock you own beat and

raise earnings after I was like oh my god this is going to be great i own a stock they beat and raised you wake up the next day it's down 15 yeah i mean that's not all the time it's because of expectations and i think these option traders especially right they're buying the same thing they're buying these calls the stock goes up but the call loses money because it was already priced in they already charged you what they expected the stock to go up i remember i remember taking a volatile an options trading class at the cME when I was kind of, again, trying to learn how things work. And the teacher was talking about the fact that, hey, you expect something to go up. You expect that corn or S&P or lean hogs, whatever, you expect to go up, you're buying call options. And it goes up and you lose money.

Well, guess what? You just bought the 99th percentile of volatility congratulations you bought a volatility level that's been unseen and now your option your option loses money so people need to learn why things move the way they do yeah i called i've said trading options is like uh 3d chess on the water with sharks with laser beams on there it's just it's it's it's not easy. I know that, you know, alongside this rise in Robin Hood, there's a rise in Reddit. You know, there's Reddit subreddits called like WallStreetBets.

Yeah. You know, where people can go on and it's just, I don't want somebody's first education in this to be on Reddit. I want it to be much more structured. I want it to be on reddit i want it to be uh much more structured i want it to be much more um informative you feel like the regulators have like lost control of that whole thing like in in the old days like you maybe they would have come after you but you know you couldn't just say whatever you wanted about these stocks and do yeah it's hard to know you know it's it's so hard to know

with the amount of access to to information and venues it's hard for them to be everywhere at once right but the genie back in the bottom right it's just one person's opinion of what they're doing yeah yeah so the blog post and go read it again it's on bairdwealth.com we we just want to talk about education we want to talk about if you don't have that it's it's very easy to fail and if you fail right away you might say this whole thing is rigged i I'm never going back to it. And that's problematic. Part of me thinks, right, like there's, and this is a huge industry now, too, of gambling

and online betting and everything. Like, if a lot of these people have no expectations, or they know that there's a huge chance of them losing, but they know there's a small chance of them winning, like, they don't care about the education. They're just like, no, I'm gambling. I'm betting that I'm going to get a huge win, knowing there's a possibility of losses. Yeah, it's the gambling portion is not lost on me at all. And especially in a world where, when we were all stuck in our homes, and there was no sports, and commissions are free, and you can log on, and you can take your stimulus check, or you can take

1000 bucks. And just, you know, it's,'s again not against the democratization of access i think that's a good thing uh you just want to do it the right for the right reasons why are you doing this are you doing this because hey i want to turn a grand into two grand that's not a great reason investing should be for a goal what's my goal i want to pay for my kids education i want to retire i want to i want to buy a house one day most investing the best kind of investing has a goal attached to it yeah well but something they want to get a buy a ferrari they want to right it looks like their goals are very short short term and big return yeah and you you think like the robin hoods they have a duty to do more education like not to give a legal opinion like could they have helped those

people who you know that poor kid and everything like if they did more education if they didn't gamify it so much it's a good question i certainly i would think that would be attractive to their business model you could kind of get somebody to be a lifelong customer if you said hey we had a whole host of video lessons i know they have uh a robin hood snacks i think which is like a newsletter and and i actually don't know if they try and educate or not but yeah they have a Robinhood snacks, I think, which is like a newsletter. And I actually don't know if they try and educate or not, but. Yeah, Robinhood snacks, I think is the name of their newsletter that they have. So when I think about their firm,

it came at the right time. It embraced mobile. It embraced commission free trading. It embraced all these kinds of trends that were coming together before the pandemic. The pandemic hits and accelerates because all of a sudden everybody's stuck in their home looking for something to do. Robinhood, it's a place that if they have this big, huge education program, they could build customers for life. But one of the things that we would want,

if somebody would come to us and say, I want to start trading, I see all this stuff in the news, I want to start trading, we would sit down and say, what's your goal? Let's do this the right way. Let's focus our efforts correctly. Let's start a relationship together so it can be long lasting. I think it's also helpful to experts and more advisory type people like yourselves. Hey, I tried this on my own. Didn't work. Help, help me out a little. Yeah. You know what? Honestly, like I think somebody, I don't know who said this, but you know, when you're a kid and you touch a flame or you touch the stove or something, you get your hand burned. You, you've learned a lesson right away. You walk away. You're like, I'm never touching the stove again. I was eight. I burned my hand. It's awful. You start trading.

You lose, you lose some money right away. You probably learned a lot about yourself as a speculator in that very moment. You lost money. That's bad. That might really sting. You've certainly learned a lesson and hopefully you take that lesson. Maybe it's better to learn that lesson early as an investor. I've learned that reckless speculation is bad. I need to do this the right way. Maybe that's a good lesson to learn. You probably have the outlines of a future post, but what's your views on the rest of 2020, the election, and moving into 2021? Well, one of the things that we're starting to get asked is about the election. It's kind of the number one question. It used to

be the pandemic, the economy. It's shifted gears into we have this election. It's less than 40 days away. I want to make a decision. I'm worried about a certain candidate winning. My friend Ross Mayfield, who's another strategist in the firm, he wrote a piece called Investing in an Election Year. We put that on our website. It's on Bull and Baird. It's on, you know, Are they mostly worried about Biden winning? No, I think most people bring their biases and their nervousness about both candidates. I don't think it's skewed to any one particular candidate. I think most people see an election and biases start to take over, emotions start to take over.

They say, should I do something? And we want to remind them that the history of the stock market says that the market's not partisan, that it doesn't root for a particular candidate. If you look at the history of the market, there's all sorts of presidents, you know, blue, red, all sorts. And the long run is what we want to focus on, not the short run. We don't want to make emotional based decisions. The rest of the year year too, I think that the election will dominate the next, you know, 30 to 50 days. As we get closer to year end,

we'll start to hear more about, will there be another stimulus package? Whoever wins, we'll get a little bit more view of kind of what their first hundred days will look like. But I think that when you think about that low in March, that was panicky. That was really, really panicky. That was a tough moment. I mean, it was real world panicky too, right? It was crazy. Right? 08 was kind of financial people panicking and the real world was kind of ho-hum, but this was, everyone was panicking. Real world. No, in 08, when I left my desk, I could at least go to the bar or go to a restaurant and meet my wife. I was in my home. I couldn't leave.

I couldn't leave. So I think that every step we take. Which is hard to imagine. We only went down 35%. Yeah. It should have been 70 or something. I'm also of the view that every step we take towards reopening is down a one-way street. I think we learn more about the virus, how to treat it.

We get closer to a vaccine, more therapeutics. I think every step we take towards reopening the economy uh in in in some way it's a one-way street i don't i don't foresee the political will or or frankly the need to go back to this like wholesale uh this wholesale shutdown that we went through in march yeah well iowa or no what's the one next to us there indiana sorry just reopen like fully. Florida too. I think Florida just did phase three this morning where they're talking about opening bars and restaurants

and more Disney World and all those things. And that's good. The optimist in me thinks that, no, we don't have a vaccine yet, but yes, we're getting closer every day. Yeah, but also Florida's biased, right? Like they need to open it for their economy. And certainly a tourist-based economy, yeah.

I wanted to go back to the election real quick because we've had some guests on here saying what's priced into the VIX curve, it's elevated for November, but it's also elevated kind of into the back months, is a contested election. Any views on that? Are you guys doing any strategy around that?

You know, one of the things that I'm starting to land on is that a contested election has become almost consensus, unless I'm reading the tea leaves wrong. Yeah, it's priced in. I feel like when I go on to Twitter, or when I go on to blogs, or when I go on to websites, I feel like all I read about is this notion that we won't know on election day, and then it will be contested. And what are the worst case scenarios? And I understand that stuff sells. I really do.

I get that's why people are writing these things. Nobody's going to read a blog post that says, what if the election just ends up normal and we know the winner on election night? You know? So I'm trying to keep this in historical perspective. There's been a lot of crazy elections in our history. In the late 1800s, we had an election where they had to come up with a compromise to hand electoral votes to the winner. I think it was in the late, it might've been the 1870s, 1880s.

We've had crazy elections before this. The United States hasn't gone through 244 years of just seamless elections. Yeah, I think that's- Everybody's got recency bias going right now. All this is gonna be the craziest one. That's the narrative. No, it's always decided by 10.30 p.m. on the election night.

So is it possible we don't know the winner on the election day? Sure. Is it necessarily going to be a contested election? That seems to be consensus. If that's consensus, I don't necessarily want to make my bets with consensus on that. Yeah, maybe here this sellout this month is pricing that in, and then you'll get a bump. Yeah, I think if you had a smart option strategist, or if you had a smart person on your side, you could say, what kind of bets should I make for contested election?

What kind of bets should I make against the contested election? I think there's probably lots of ways to express that. But for us, you know, I did an election video, I've done election strategy pieces for our clients. It's about, it's all about, is this a chance to make a mistake with your investments? Is an election, a chance to make a mistake? I think it is. Yeah. It's a chance to make a mistake. Do you want to do this? Imagine everyone who was like, Trump is a lunatic and like I'm selling out of all my stocks.

It happened at the end of it. Honestly, at the end of 2016, before the election, there's multiple examples we could pull up of people that said that it's the end of the world if President Trump wins. Well, you know,

I hate those kind of statements because history does not, does not, you know, confirm that. It just doesn't. And for me, it kind of, belittles might be the wrong word, but it kind of like the whole,

no matter what party you are, there's a whole other party like fighting to keep everything going and keep the country strong. So it's like any one party, yeah, they could do a lot of damage, they could do things, but there's the whole rest of America trying to keep things going. Yeah, I put a chart of Capital Group on Twitter, a chart by Capital Group, American Funds, just a great asset manager. They had a chart showing a hypothetical investment in the S&P from 1933 to 2018. Hypothetical, $1,000 becomes $10 million. Right?

Hypothetical. Not bad. No guarantee of future results. But then all the presidents along the way, red, blue, red, blue, red, blue, red, blue. Yeah. And $1,000 became $10 million. Long term. I want people to focus on long term i will

always say that i might not succeed i might not succeed in convincing your listeners or our clients i might not and i'll i'll be bummed that i didn't succeed but i wanted this decision to be grounded in data not in well our listeners hopefully we're saying like hey don't just panic and tell everything have a plan have alternative. Have something that could do well if things go terribly. Yeah, that's certainly something to think about. What, hey, I want to make a decision. Well, can you make it evidence-based? If this happens, then I'll do this. Yeah, or even better, put something on beforehand that's asymmetric that'll pay off if your worst-case scenario happens and doesn't cost you a lot if it doesn't happen. Yeah, there's certainly ways to express that, the uh so are there any things on your radar ignoring the

pandemic ignoring the election like it seems to suck up all the air in the room right um it does it really does and and like i said it was it was all pandemic then it was all what's up with the economy now it's all election but here's the thing it will be something else yeah that we're not identify right now something will fill the void i promise everybody listening to this something will fill the void of things to worry about it has always been that way so one of the one of the things i wrote in a vlog piece called stock market lessons from 2020 i wanted to kind of write down what i thought was the most important things for me to learn in this moment, right? Not to say it's over, but what did I learn from this moment? And that is, even if you knew what was going to happen, you would still have problem making money off of it. If I were to tell you in January,

exactly what was going to happen, you'd still have trouble making money off it. Why? Because you don't know what everybody else's view of those same events will be you don't know what the expectations are you don't know how they will view that event if i would have said that a company that makes two thousand dollar home stationary bikes with an ipad attached to it that most people thought would struggle in a recession right yeah bike with a camera one of the top success stories you'd go like no no i don't believe that no no you got one there you were motioning to your right we actually we actually just got one we i've owned it for like four days and i will say it's it's a great product we're talking peloton of course yeah yeah it's a great product i get it like it's i thought what's what's the big deal and i think it's more of like

like everything if you belong to a network you belong to the social community i think that's the real um that's the real strength of it you know you you challenge a friend you ride with a friend all these things yeah i was a seller i was i thought it was more like gopro like yeah on a stick right there's no way on january 1st if i said on a bike we'd see all this we'd see a crash we would see a pandemic we'd see social unrest we'd see a recession a bear market you'd have been like anything that isn't really just absolutely critical to an american is going to get thrown out um and so you have no guesses on what that might be 2021 throw throw something wild out there what what if 2021 was the start of the roaring 20s version 2 yeah in 1918 we had they had a pandemic killed three percent of the world's

population uh the spanish flu right after that was the roaring 20s all that pent up demand launched into the economy and not the same yes this is a different time period nothing's ever the same what if what if we get to the other side of this we get a vaccine and all this pent up kind of economic activity

gets unleashed yeah we'll see there's no way that's consensus. There's no way. Oh, definitely not. Cool. Any other thoughts before we go into your favorites? Yeah, no. When I think about all the things that have happened this year, there's lots of lessons that I think you and I can learn, Jeff, and listeners and our clients and everybody. One of them that I really, really want people to focus on is that when things go haywire, you need to find somebody to talk to. You've got to find somebody

to pour that into. In March, I'm in my basement, right? I'm into work from home. Our firm kind of transitioned to work from home. I'm in my basement. My family's doing their thing. I'm busy looking at markets crashing. The bond market seems to be coming apart. The pandemic headlines, the death headlines. Unless you can find somebody to talk to, that will eat away at you. And the crazy part is even you who write all this stuff and tell people not to panic and are more expert in behavioral finance than most, we're panicking. I mean, I had to lean on my advisor. I leaned on some friends on Twitter.

I leaned on some people. You weren't drinking your own Kool-Aid. Yeah, I'm like, exactly. I sit here, I'm like, I went to the University of Chicago. I've studied this stuff. I know the long-term numbers. And all I'm thinking about is selling because I've never been this scared in my life. It was real to me. So you've got to find somebody to lean on. Advisors are great. You just, you can call them up and say,

hey, put all this stuff aside. I don't want to talk about investments. Just talk to me like a person. Get me through this. I need some help right now. And that's got an infinite value attached to it. Right. That's got a value no matter what bonds are used to bring it full circle. Right. Yeah. I appreciate that. Yeah. My,

I personally have my own model that rotates in and out based on the monthly close. So my issue there was, I don't need anyone to talk to, but man, I hope it doesn't close at the lows on the month because my monthly model did it, but it worked out. Okay. Yeah. So we'll go through rapid fire. Here's some of your favorites. Yeah.

Cops or Culver's. A hundred percent Culver's. it's got the absolute best burger if if you're in the midwest or you have access to a culvers honestly right behind shake shack maybe the number two burger in america not what about for custard cops or culvers probably i will tell you why cops cops has a uh cops has a custard called birthday cake which tastes just like that sheet birthday cake you would get at a grocery store it is tremendous and they only do it twice a year they do it like at the fourth of july and another day i want do you ever see the clip of uh biden goes into that one and no i haven't no it's from like eight years ago maybe maybe obama's second term and he was dumping around and he

comes into the one on uh what's that 164 near that best buy and stuff yeah so he goes into that one he's like who's ready for some ice cream oh no and the manager actually comes over he's like sir this is custard and he's like i mean for all you non-wisconsin listeners or all you like you know custard ice cream those are two different things. Believe me. Get to Wisconsin. I'll take you to the good ones. I don't think I technically know the difference.

I think one is with heavy cream. Probably custard, right? Yeah. Favorite Milwaukee brewery? That's a great question. You know, Third Space is a pretty popular new brewery in our town. Makes some great, great brews. They're on the kind of the south side of Milwaukee by the Iron Horse Hotel, by the Harley Museum. It's called Third Space. Yeah. I would say either

them or Good City. Milwaukee has been blessed recently with some really good breweries, really, really good breweries. In fact, that one of milwaukee's uh motto should be we should be the beer capital of the world just have people come by and bring a passport and stuff they were the beer cap i know but we got kind of you know we got off track there we need to get back to that yeah well but you were kind of the anti micro but you're right you were the macro brew yeah we were the yeah the miller light and honestly miller light it's great beer it's great But Third Space, Good City, those are probably my two favorites right now. Probably Third Space would be my favorite. I just saw that the Miller Field's no longer Miller Field.

I think, yeah, and I think American Family might have taken over, which is, I mean, look. The Sears Tower is called the Willis Tower. Is anybody calling it the Willis Tower? No. Yeah, we all call it. All right, maybe that was their move of like, hey, yeah, let's let it go. Everyone's just going to keep calling it Miller Field. Yeah, I mean, I guess I'm calling it Miller Park. It's tough to change those names. I saw this brilliant thing, marketing, the

Burger King sponsored this, like, second tier, last place team in Premier League in London, England. England. Just because of the the video games and then they had a whole campaign if you post a clip of a goal or whatever with the guy wearing the burger king shirt you got these points they could go for a burger or something so it's the number one team in career mode on all these things and there's all these pictures of like the best players in the world because in career mode you can trade for messy and get out yeah yeah yeah there's messy right with the burger king on his shirt where burger king would have to pay like 200 million dollars to get him to sponsor that weird how they got their kits have those just giant sponsorships across the chest and you're like imagine that

you know the red socks don't have that they have sitco across their chest or they have i know that's coming well you see the nba guys have the little uh actually the harley davidson one on the bucks jersey is pretty cool i won't lie i agree bucks need some help though that was a early exit oh uh marquette or badgers i get that question should have been eagles or badgers but yeah probably badgers i uh you know i i went to purdue as an undergrad but i've lived here long enough that i think i'm allowed i've paid enough taxes i think i'm allowed to root for the Badgers. Madison's such a great town. We have a, we have a great branch in Madison. We have a couple of different branches of Madison. It's such a great town.

I was on that campus. Yeah. It always gets to like top city in America. Honestly, I think if you were thinking about underrated cities to live in America, Madison would have to top the list or it would be top five. Yeah. If you could describe the weather, obviously the weather's challenging, but i would be badgers the badgers are just i i'm praying that one or both of my children go there for for a number of reasons number one being uh the tuition but number two being this it's such a good college what's in states probably still insane these days

though you know i think it's you know relatively speaking it's probably incredibly attractive yeah but you know the cost of college is is a whole podcast really i know that i've had that debate before like we're worried about inflation like inflation as a government measures it isn't my inflation mine's private school tuition yeah college and health care um and i honestly don't think the price of oil is i don't know what the price of oil is. I don't know. Like if you have, imagine you have three or four kids, like it's just, when I think about all the savings you have to do to,

to get to that point, it's daunting. It's daunting. Yeah. Buddy works investment banker in New York, four kids, private school. And it's like 260 grand a year.

Oh, like that's a big nut to cover. That's a lot. Yeah. We got such a so closing favorite star wars character all right this is right up my alley i don't know if anybody but i am um you know i'm a big pop culture fan i use pop culture as much as i can in my content i think it's a great way for people to uh to relate and star wars i'm a huge disney guy so star wars is a big big part of my uh big big part of my childhood i was born in the 70s so star wars i was right there as a kid you know i i'm not gonna go og i'm not gonna go og here i think that okay

the the you know i think they're the kind of vanilla answers the han solos or the yeah we're gonna do an infographic uh yeah after a year of podcasts with everyone's answers yeah i i'm gonna go ray i'm gonna go ray who uh was i think one of the most compelling uh characters from the from the sequel trilogy i will openly admit that the end of her story was a little uh a little dicey not i didn't like it yeah i'm not super super glad with where they ended on that but i think her arc and who arc and what she stood for and everything was really compelling. And to show a really strong female character in the Star Wars universe is important. And I think I was inspired by it.

My daughter's inspired by it. My family's inspired by it. And I think that absent her being Palpatine, which is just terrible. That whole last movie, it should have, it should have stuck with the, from the one prior, right? I think that she's one of the best creations in the history of the franchise. Nice.

I thought you were going to go with some random Mandalorian character for a second. I almost did, but I had to keep it more mainstream here. Q, what was that guy's name? Did you see the new Mandalorian 2 trailer? I did. So, you know, when I think of the things that are good in the pandemic, and there's not very many, William, there's not very many.

That was early on saved a lot of people. So the Jordan documentary. I think, well, I will look back and say the Jordan documentary was something that really kept me going. The fact that we have now a fresh season of the mandalorian which frankly is the best star wars that's come out and since i don't know maybe the return of the jedi the fact that we get another full season of that they wrapped it for the pandemic began i'm so excited disney plus great great product i think disney plus is a is a home

run for that company yeah i just had an argument with my whole family because we paid the like 39 for mulan or whatever like we have disney plus yeah we're paying the 10 a month for this like wait six weeks and you get to see it for free yeah i think it's certainly we haven't done it yet i think it's in december but why didn't they bring black widow like they push black widow to may of next year like why can't they why can't they bring this stuff to disney plus i don't understand yeah and especially if i'm paying for it like give it to me now but i gotta pay they gotta pay the stars yeah that's true i gotta pay to do all that cool uh video in mandalorian that's what's cool about it it's movie quality like it's so good it's and honestly like i hope my twitter followers don't hate me because when it's on i'm probably going to be tweeting about it so yeah no way i'll be

following it all right michael is it mich or Mike? Maybe I should ask that in the beginning. No, Michael. Michael's fine. All right, Michael. This was fun. Thanks. And when the everything opens back up, we'll hang out in Milwaukee someday. Yeah, but a lot of good Chicago FinTwit meetups too. So Milwaukee, Chicago, let's do it, Jeff. I'm in. Let's do it. Thank you. thank you so much you've been listening to the derivative links from this episode will be in the episode description of this channel follow us on twitter at rcm alt and visit our website to read our blog or subscribe to our newsletter at rcmalts.com. If you liked our show, introduce a friend and show them how to subscribe.

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