The Derivative - The 2025 market review draft, talking Bears, Crypto Cycles & AI Paradoxes with David Dziekanski & Zed Francis

Episode Date: January 15, 2026

Kick off the first episode of 2026 with a fun, draft-style market showdown as host Jeff Malec is joined by David Dziekanski and Zed Francis on The Derivative. Using funky categories and plenty of hot takes, the trio drafts everything from “wait, that’s still a thing” trades to market overreactions, false idols, and narratives that didn’t survive the year. Along the way, they break down crypto cycles, volatility, cash, and derivatives, mixing sharp insight with dry humor and real debate. It’s a loose, fast-paced way to start the year, packed with strong opinions, laughs, and a few bold predictions. SEND IT!Chapters:00:00-02:35= Intro02:36-12:50 = New year reflections, Market Trends and Predictions, Crypto Cycles and The Diminishing importance of Jobs12:51-20:55= Unsophisticated Investment Strategies, Market overactions and consequences & Correlations in the market20:56-35:52= Desensitized to Major Events, Future outlooks, Market Indicators, Volatility Trends & Dogs that didn’t Bark - Inflations/Tariffs35:53-43:28= Are We Sure this is Good? The Affordability Crisis and The A.I. Paradox43:29-48:03= Best Meals & Entertainment of 202548:04-59:41= Looking forward: Predictions for 2026From the episode:David on the Derivative: Stacking Assets: Bitcoin, Gold, and the Future of Portfolio Diversification with David Dziekanski of Quantify FundsZed on the Derivative: Protecting the Portfolio not with Long Vol, but with Long Gamma, with ConvexitasThe Polymath Pod: Jason Buck and Zed Francis talk rates, vol, and cheeseburgers?!WTF is LDI, and What’s working in Vol Trading with Zed Francis of ConvexitasFollow along on LinkedIn with David and Zed and be sure to check out their websites quantifyfunds.com and convexitas.com for more information!Don't forget to subscribe to⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Derivative⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, follow us on Twitter at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@rcmAlts⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and our host Jeff at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@AttainCap2⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, or⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ , and⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Facebook⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, and⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠sign-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, visit⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.rcmalternatives.com/disclaimer⁠⁠⁠⁠

Welcome to the derivative by RCS alternatives. Send it. All right. Happy New Year, everybody. Welcome back to the show. Welcome back to the derivative. I am wearing my Christmas present, Bears quarter zip. It's been lucky.

We've been having a fun ride with the Bears here in the city. Two more wins to get to the Super Bowl. Not sure if that will happen, but we're enjoying the ride. Welcome back to the podcast. We've got a great group of guest set up for you this year. We started it out with this one, a little bit of fun, with David Durenski from Quantify Funds. I have trouble always pronouncing his last name, so apologies already, and Zed Francis of Convexitas. We did a little draft kind of thing, where we were

hitting on 20-25 themes as a bit of a draft. So it was kind of fun, a little different, but I hope you guys enjoy it. It's not quite our nat. Bergotsie skit we opened the season with last year. That was fun, but a little off the wall. But I hope you enjoy it. I asked RCM to build me out a whole new home office background here. I got denied, but we switched to a new podcast platform. We're in HD here on YouTube, so I apologize to all of you have to see me in HD after many

years of being in the sun, sailing, skiing, all that good stuff. but it's all good. Lastly, we want to hear from you guys. Did you like an episode? Did you think they're terribly boring, terribly interesting? You want to hear more about volatility. You want to hear more about trend. Drop us a line at invest at rcm-am.com.

Invest at rcm-am.com. You don't have to invest if you don't want to, but that's where we'll get the emails. Get enough of them. We'll start to get the guests you guys want and maybe even have a mailbag and get into some of these questions and comments. So that's it. Enjoy the show.

We'll be back next week with Robert Mullen of Marathon Resource Advisors, talk about Venezuela. What was happening there is the oil even valuable? Does anyone want to even get it out of the ground? All that good stuff, plus what's happening with gold, uranium, all across the resource spectrum. So that was a fun one. Check it out next week.

Send it. Hello, everybody. Welcome to 2026. We've got two of my buddies here, Zed Francis, and David's not that good of a buddy because I still can't pronounce his last name, but David D. Can you pronounce it for us, David? My mother's still struggling, pronouncing it as well, so, so no stress. No stress. Happy New Year to you guys. Zad and I are both in our Bears, Bears quarters. Is that a Johnny O? This is Costco this past weekend for 20 bucks. Mine's Johnny O, so I'm double representing Chicago. Ah, there you go. That's the brother of who was Batman, Chris O'Donnell. His brother was a North Shore guy and started a Johnny O like golf attire.

So it's good to see them come out with the Bears one. David, you're somewhere fun, it looks like? Yeah, I tend to work remote out of Costa Rica at the beginning of the year solely because I'm a son-child. And it's just really hard to keep your motivation in 16 hours of darkness in New York City. So I spend most of my time here in a small. old box outside of the sun anyway, but it's nice to pop out in the morning and get a little bit of sunlight before I start my workday. I love it. You're on the Pacific side probably? Yes. Yeah, awesome. And we talked a little off air, a couple little mini surf sessions in, keep the brain

fresh. Yeah, it's baby surfing. It's like nice two to five foot waves in bathtub like water. So I think when a lot of people here I'm surfing, they're like, oh, you're chasing these massive big waves? Absolutely not. I'm a terrible surfer. I've surfed probably 50 times in my life and I thought I was going to be so much better than I actually am at this point. But I think I caught like four or five good waves this morning in about 50 minutes before I started my workday. Zad, you're here. It's warm in Chicago today. We're doing fine. Yeah, did my divvy bike ride in. It was comfortable. Really? Today. Yeah. Any fun? What'd you guys do over the New Year? Is anything fun? No, we were, we were local. Out to my folks, Western Burbs with brother and all the kids. But, you know, it's good for all those

kids, cousins to hang out with each other. So local, but, you know, fun enough. And David Webb at you, were you in New York? No, we hosted. No, certainly not. We actually, I was for one period that Zed joined us for, but I hosted two microconferences in mid-December and rolled that right into a bell ringing at NASDAQ that ZZ joined us for for our first CTFBT, which was about 75 people two days before Christmas. So very thankful for everyone who showed up in the dead of winter right before Christmas, but we also have three funds on deck launching soon. So I really haven't slept much since November. So I'm very excited for these things to get out to the marketplace. It'll be fun. So both these guys have been on the pod before. We'll put links to those in the show notes to go learn about what they're doing

and their products. So wanted to do something a little fun today. Thank you guys for being up for I'm a big Bill Simmons podcast listener. He does these little drafts and whatnot in the sports world, sometimes entertainment world. So thought we could do one in the markets world, interest rates, commodities, et cetera, crypto. So going to go through a couple little segments and we'll do a little bit of a snake draft. First one, maybe we'll let David go first.

So if David takes your answers, Ed, you've got to move on to something else. You got it. And vice versa. I'll go last the first time just to, you know, set you guys up for success. So let's get into it. First one is the weight. That's still a thing, market? So let's talk, David, what's your first draft pick for weight?

That's still a thing. Trendor Asset class that kind of unexpectedly surfaced in 2025. I'll talk more about an investment philosophy, but my weight, that's still a thing is the four-year cycle in crypto. I actually do think that it caused a little bit of pullback. in the fourth quarter of crypto because a lot of people didn't see this continuous rally that they had hoped for and then got a little bit scared that we were in the tail end of this four-year cycle. But our philosophy really is if you look at the new allocators to crypto, they're not the ones that have 60, 70, 80, 120, 150 percent of their portfolio in crypto.

They're picking up single percentage points of their portfolio and crypto. So they're actually buyers on the way down. And also to relate it to the halving cycle, I think one of the things that caused the four-year cycle was when you had a halving in the supply of crypto and that having cut the supply significantly, that makes sense if supply cut significantly, that you're going to then have an uptick in prices and that might dwindle back down. But where the supply number is in crypto or Bitcoin right now at 86 basis points, you know, we went from 172 basis points down to 86 basis points.

So that actually really wasn't a massive cut in supply. So I actually don't think the last rally could be attributed to the having. Explain that real quick. What's the 172 and 86? So every four years, the amount of supply in Bitcoin cuts in half. And so we are now at a point where the supply is about 86 basis points a year. Prior to that, it was 172 basis points before that. So it means 0.86% of what's left is going to be released this year?

Well, 0.86 will have new supply in terms of reference to the entire amount of Bitcoin that's out right now. But I think in past cycles, when you were going from 15% supply to 7.5, that was a huge cut in supply. But going from 1.72% of supply down to 86 basis points in supply, it wasn't actually a massive supply cut. So I think the rally just happened to randomly align with that pullback, but it wasn't necessarily caused by that pullback. And so I think my long-witted answer as to wait that still thing is investing in Bitcoin on this four-year cycle because it's no longer a pop driven by this massive cut in supply. And there's an entirely new pool of allocators that are allocating to this. And they aren't overexposed. If anything, they are dipping their toes in the water and eager to add to their portfolios on.

any real pullback. And I'm going to work on my debate with you for when I see you in Miami or whatnot next, that the supply is really a thing because there's so many derivatives and infinite abilities to split it. So I'll work on that. If it's a good debate, we'll put it out on another podcast. Sounds good. Zed, wait, that's still a thing. Second pay. All right, I'll go with, like, leaning into the weight that's still a thing. I'll go with the jobs report. Like, does anybody care anymore? I can tell you right now, the options market, doesn't care about what's coming up this Friday. It's barely pricing as any event.

So I think it's as simple as sure, obviously we had a couple months where there was just no data, but ultimately the data has been such junk for the last handful of years that I think the importance of these releases has just diminished greatly. So we're at this weird time where there's a significant amount of involvement of both fiscal and monetary policy in the day-to-day lives of the market and frankly, individuals and in theory some data is supposed to be helping, we'll call it, make those decisions. But at the same time, I don't think anybody thinks the data is anything useful.

So I feel like that fits the number one seed of weight. That's still a thing. Do you think that's because people have gone beyond relying on the government for that data? Like huge hedge funds are doing their own channel checks and whatnot and kind of can generate their own metrics? Yeah, I think there's a blend of how they're currently, you know, sourcing the data is becoming, we'll call it, not very efficient or useful. So, yeah, so the government data just naturally is not, not as interesting because it doesn't provide much accuracy. And I think, yes, people are finding, we'll call it sources. But I think at the same time, like, just, I think everybody's confused on how the heck do categorize people that aren't essentially W-2 earners? and because that group of Uber driving.

Yeah, the cohort's accelerated so much that I think just it's messing with all of it. So I think everybody's just more just like, well, what does consumption look like? And like, yeah, if that's going well, that probably means people have jobs and they're able to buy things and move on with their life. So, you know, this,

whether unemployment's 3, 4, 5%, I don't think that's really telling a whole lot. And do you see it when you're trading in the option market? Like, it used to be a thing that the ball would move, everything would move, and now it's no longer. So you stopped trading off it, then the next guy, right? It's almost like a self-fulfilling prophecy.

Yeah, I mean like NFP morning always was a, you know, event that was priced in to markets. And when monetary policy is more involved, that tend to accelerate, you know, because it's like, oh, geez, because of this one number, they're either going to cut or hike or whatever, right? It's like, it has like very specific, you know, reasoning that causes the market to have significant movement. And the last basically six-ish, the market's not only not moved on any of the releases that actually took place, but like the market's not pricing in anything. That's a non-normal movement on Friday. S&P, you're saying. Right.

Volan bonds, volon S&P. The whole market's just like, yeah, there's this number, but I don't even know what to do with it. It sounds dumb when you say it out loud, like that the Fed was going to rely on this single number from a single, like, survey. But, all right, my weight, that's still a thing, will be cash. Right? Like four and what we average, four and a half percent, T bill rate. And a lot of wealthy investors I know are just happy to be in cash. And who cares if things are going up 25 percent in S&P and AI? I'm earning my 5 percent over there in the T bill market. And I'm happy to call it a day. I don't know. Cash seems pretty bad, Jeff. You know, there's this thing called taxes. And your wealthy friends are only getting two and a half after they pay all those. Well, some of my wealthy friends are in Puerto Rico. So they pay no tax. on the box trades in Puerto Rico.

But yeah, all right, good point. Taxes are still a thing? Okay. Directly pulled from Bill Simmons, his nephew Kyle, who's kind of the unsophisticated guy. Apologies, Kyle. So what's your nephew Kyle thesis? I'll go first here.

The unsophisticated or dumb-sounding strategy that outperformed all other assets in 2025. I'll go with silver. Don't have the actual stats there, but silver's huge rally towards the end of the year the last two months, left gold a bit in the dust over those two months. Always kind of gold's red-headed stepchild,

little brother kind of thing. But more importantly, has way more practical uses than gold. Gold's the store value. Silver's actually used in solar panels and some other stuff. My nephew Kyle thesis would be silver. Zed will let you go first. than David gets last pick now.

With your next and David gets up. All right. I'll go with your just-by Korea. I think Korea is like this little corner that people don't really pay attention to, but ultimately Korea is a great, we'll call it risk barometer. They, as a class of investors,

really enjoy risk-taking. And so when you have a global experience of risk-on, they tend to lean into it even more. So even though the first, you know, four months of the year were a little choppy, ultimately this was a big risk on year. I mean, you can't find any asset class that basically was red. I mean, if you were invested, it worked, right?

You know, like, forgett a risk occasion. It's just all green. And when you have that kind of risk on mentality, like the Koreans tend to do a little bit more than the rest. You think that's like a high beta basically playing? Like, you, hey, invest in Korean, you get a, that's also playing into Europe and Asia finally outperform this year a little bit, right? Yeah, like international, you know, Right. I think the concept of like everybody's like, oh, man, international crush S&P 500.

You're like, S&P was still up, you know, high double digits here. Like, you know, 17 odd percent. It's a pretty darn good year. Yes. You know, or Koreans were, I think somewhere in the 70s. But I think, yeah, I think they're more of like almost like what maybe Bitcoin used to be or something like that. That's like, is money just flowing into markets? Like, that's probably a market that's going to do better. David. Yeah, my nephew, my nephew Kyle thesis is retail buying the dip. I think most of retail outperform the institutional world, buying the dip. I think a lot of the institutional world is trending towards the trend following space.

And I think 2025 was just a really difficult year for trend followers since most of markets moved on policy changes and not so much on just market mechanics. And I think the institutional world has been waiting for about a decade for, for, retail to get burned on just buying the dip, but again, we saw another year of just those emotionless retailers just like throwing money into the market on drawdowns and outperforming most institutions. So we'll see if that can continue. I do feel that we will continue to have market drivers caused from policy changes more so than market mechanics. So that would line up for the unabashed retail investor buying the dip to potentially continue to outperform. I was one of those punters in, yeah, in April, like selling puts on core weave and those kind of things.

Exercise and then it all worked out. Hey, that's a great one. Like, I'm trying to remember the exact numbers, but Citadel Securities produces like, we'll call it a weekly note. And because they see a lot of the flow, especially from the retail arena, they kind of just put together some of their summary stats. So it's only their universe, but they're, you know, 25% of the universe. Yeah, exactly. But it's something crazy. I think they said that this is specifically ETFs,

but retail was net sellers of ETFs only two days in all of 2025. And the week of the tantrum we had in April, it was like the largest inflows they've ever seen kind of thing. So the data backs up David's pick. Right. Which leads into my next segment is the overreaction bowl of who took the cake and we'll let David go first here of. What was the biggest overreaction in 2025?

I think we just mentioned two prime candidates. Yeah, I think so my statement for the overreaction bowl is be wary of a market that has run for three years in a row. I think you alluded to there's a lot of institutional investors that, quite frankly, have made a good amount of money and have been increasing their cash on the sidelines and looking at historical context of like a three-year bull market. But if you look at, for example, how U.S. equities, treasuries and the dollar, traded in April. The world is treating the U.S. economy much more like an emergic market economy, quite frankly, as they should with the massive deficits we're running. So I think people underestimate and underappreciate how big and long a rally can truly be when you're running these massive deficits, especially in the face of all-time highs and equities. So I think a lot of

the institutional world sitting in cash, and I think ZED can talk more to this. Overreacting to deficits and valuations, basically, you're saying? Yeah, exactly. You know, Everyone's been calling the U.S. overpriced for a long period of time. But if we're just pumping all this money into the system, that money has to end up somewhere. And we're looking more and more like a banana republic. So I like that take, right? Like, hey, we should price this accordingly. We're in emerging market.

Z, overreaction bowl, pick. This is not as good as David's. He's winning these things. I would say probably the concentration story because I feel like that's what somebody's, you know, everybody's talked about basically in every quarterly note for years. now and like it just keeps cranking along and ultimately i think the story is their their earnings concentration is growing at essentially the same pace um so there's a there's a reason for this concentration and a handful of names and i think yeah i just got to pay attention to when when the earnings no longer say that's the right story then it might actually be something to pay

attention to. You know, when you're, when you're a third of the earnings, I guess you're allowed to be 40% of the S&P 500. Doesn't it seem like the institutional investors feels like they're gaming that game, right? Like, hey, if we're going to rotate out, we're putting it back into one of the other mega cap, right? So it like net net, it kind of keeps that game going when maybe they lowered their exposure on one leg of it. I'll also some fancy dispersion trade explanation for that. Also, I think the largest companies in the U.S. today versus in past high levels of concentration are so much more diversified. They're almost economies within themselves. They have so many different lines of business and such a diversified revenue stream that it's no longer just like a single offering as a company that's floating to the top.

and their ability to access credit better than anyone else, better than some governments in this world, allow them to continue to climb up the percentage points of how much, for example, the S&P top 10 make up the S&P 500. I think you guys both missed on this pick, and the clear number one in this category is the Liberation Day, sell-off, right? Like talk about overreaction,

the mother of all overreactions. We were, everyone was, we were going to die. It was 180% tariffs. Out of that came the taco trade, which I love. Trump all was chickens out, which became a thing, which was back to you, David, buying the dip, right? Like the retail led the way there. Buy this dip.

This isn't real. I was going to say, I don't know if I missed out or already used that answer. So. All right. True. I don't think you said Liberation Day. So I'm going to sneak it into my answer. All right.

The guess, next. I guess we're all pricing this in now. What's a consensus trade that became crowded and then failed to play out? I think we also just talked about that. So that's going to get tough. We're going to get tough on the bottom end of this here. But I'll go with, and probably going to steal one of your picks, but the aggressive Fed cuts, right? I think everyone was in that trade.

Bond markets could reflect that and didn't really come to pass. We had the cuts, but what were they calling it at the end? They're a hawkish cut, which doesn't make sense. But right, it was a cut with hawkish language of like, hey, we're not doing these, we're not going back to zero any time soon. That would be mine. And I think I've lost track, but I think who's next, is Ed? Sure. I'll stay same category, but I'll go with like long end rates, right?

I think there was a very crowded trade to be short the long end. And, you know, obviously the reasons are, you know, we're running deficits. We have all this debt, you know, like continue to be fiscally stimulative, all these things. and the tenure ultimately was boring the entire year. Fun Wiggle was the snap rally, snap sell off that first week of April and otherwise been incredibly rangebound and boring. So yeah, I think there was a very common trade to be short, long end, and ultimately they got, you know, didn't work.

And you're saying short rates, they're thinking long rates would go down. Long rates go up. Yeah, price down, yields up. Yeah, yeah, got it. My answer will be similar to the reason why we have this concentration bubble, but it's the never-ending wait for the rally in small caps. I think everyone has just been for the last 10 years waiting for this rally to come. But I think as we alluded to before, these larger companies are so much more advanced. They have so much better access to credit.

They actually do have earnings, like much of the Russell 2000 doesn't have earnings. And I think so many people have just been waiting for this bounce back in the Russell 2000 that just never seems to come. And, you know, there are definitely some phenomenal small cap companies. But there are also a whole lot of zombie companies that the fact that we keep pumping so much stimulus into the economy almost makes it hard for these companies that should be, should fail to fail and fall out of the Russell 2000. But they also traded more this year last year. I keep saying this year, 25. Any listeners, if I say this year, I mean last year. So 2025, but they were trading almost in lockstep with the tenure, it seemed.

Anytime there was a big rates went down, the Russell was rocking and vice versa. So it became more of just a rates trade based on what you're saying. They don't have access to as cheap a capital and it really hits their balance sheets and their profit. All right, where are we at? Somewhat related here. I'm going to pass on that one. That one's too good. Oh, this one's fun.

All right. This would have been front page news in 2019 story. What was a major event that barely registered because markets have become so desensitized? I've forgotten who's first. I'll let Zed go first. I'm going to start writing it down. I think this one's easy, so I'm glad I get to go first. The government shut down.

I mean, did anybody care at like any point during that entire saga? We're about to have another one, right? Right. I feel like even when you walk past the TV and they had some news channel on, they weren't even talking about it. Those people are desperate for daytime entertainment and they were even bored of it. Which is why? Who knows? I think, you know, everybody understands what happens with it.

Everybody eventually gets their paychecks. They don't really, really turn off that many services. Keep on, carry on. Yeah. My answer would be the perpetual calling for the end of the dollar dominance. I know the dollar was down probably 10, 11% versus a basket of international developed currencies. and it had run up a lot in the last couple of years, so we really just retraced that what we had earned back

or what we had gained in the last couple of years. And while we do believe all currencies are going to devalue against scarcity assets, there really is no better horse in the race on the currency front. Like whose currency do you feel more comfortable holding right now over the next three years than the US dollar? I'm not saying the US dollar is good. I think a lot of assets will outperform the US dollar.

I just don't necessarily know if the euro is going. and outperform the dollar, for example, over the next five years. Cleanest dirty shirt. Yep. Thesis. I was reading some conspiracy that this whole Venezuela thing is just a move to prop up the dollar. Like if they were getting oil into China that would sell in one terms, it would destabilize the dollar. But to your point, it seems like just another, let's unravel that conspiracy and the dollar's going to die.

Well, following on that conspiracy theory, I also have read that it's going to make us more likely to push or might. with the Middle East, right? Every time there was geopolitical conflicts with the Middle East, the price of oil spiked. So what did we do? We opened up a pipeline to oil elsewhere. So I actually think it could actually add to more geopolitical unrest because now any future conflicts with the Middle East shouldn't cause oil to spike as much. But that would make it less volatile now? That would.

Yeah. And who is it up to me? So this would have been news in 2019. I'm going to go with the... all the trillion-dollar companies. How many do we have now? I remember when it was like, oh, Apple might become the first trillion-dollar company,

and now we have Navidia went from nowhere into, I don't know what they're at $5 trillion. So that's to your dollar story, too. Maybe that doesn't mean as much because that isn't worth as much in today's terms, but that would have been a huge story back then, that America has one company that's larger than many of countries' GDP in the world. We're pretty close to potentially our first almost trillion-dollar IPO.

right? Who's that? SpaceX. They're talking about SpaceX's IPO in the $1.5 trillion range, which that has to be an all-time record. Yeah, better issue of little float. All right.

Next, the false idle report. The false idle chart, indicators that everyone watches that completely stopped working or gave misleading signals. I'm going to go with the gold versus S&P, NH Futures versus S&P, Anything versus S&P basically has so blown out.

Well, gold's the opposite example. But to me, everyone who is like, oh, this is over undervalued versus commodities. We're undervalued versus SEP we're going to buy commodities. Hasn't been working. Hasn't worked at all. Who's next? Zed. Go over it.

I don't know if there's necessarily false idol. I'll just go with volatility in the U.S. So volatility ultimately was just too high the entire year, frankly. It was way too high starting in kind of early February all the way through the end of March. Yes. We're talking implied or realized? Implied in volatility. Then of course, yes, we had a chaotic, you know, we'll call it 10 trading days.

But then through the out that, the rest of the year really, really elevated volatility in comparison to what was actually happening day to day and markets. And I do think a lot of that was, we'll call it, you know, institutional style investors got a little. little risk reduction in April and kind of never got back in. And so they were constantly in this seat of being light risk relative to benchmark. And nobody likes to, you know, sell when it's down and then buy when it's up because then they could get the double whipsaw. So I think they were using options a lot the rest of the year for what's called directional positioning, which is kept volatility very elevated in comparison what it should have been. Do you think if They're buying, they're going long via options was depressing realized, basically.

I don't think it was necessarily affecting realized, but it was definitely elevated and implied in comparison what it should have been. Right. They're bidding it up to get it versus spending all that on getting for real back. Yeah, just buy. Just buying stocks. Yeah. And I think that's why like out of the first two days, a lot of the, we'll call it, really out, the strong outperforming names and sectors rallied like crazy the first. one, two, three days of this year because, again, if you're lightweight and they did really well,

it means you're light or weight, and you're using options essentially to stave off that experience before buying until you've got to reset the track record. And sure enough, like, holy cow, like those names moved. So, right, coming in 26, let's get back to, so does that mean, does that mean in your book, like maybe we see a more normalized ball environment in 26? Yes, I think so. And you're already seen it implies. They've collapsed in the last, you know, basically two weeks relative to that excess spread that they were carrying for much of 2025. David, got a false idol? Yeah, false idol is total investors investing on, for example, PE ratios, the Schiller PE ratio.

I think we saw a run in value when interest rates first spiked in 2022 and so 10 years of growth outperforming everyone said, yes, value is finally back. But that has since fallen by the wayside again. And I think we talked about it earlier, like money has to find a way. And so if we keep pumping so much money into the system, people are choosing to invest in companies that are actually growing, albeit are expensive, more so that companies that don't have a lot of growth, even though they have maybe significantly more attractive, like price to equity ratios. You know, I'm surprised Hussman still has any of his hair left. I don't know why I thought you were going to answer ETH there. Is there like the Bitcoin Eith relationship?

Did that break down last year? So one of the best Wall Street trades for about a two-year period was going long Bitcoin and short ETH. And that's reverted a little bit last year during the Genius Act and JP Morgan issuing its stable coin. So I don't expect that to continue going forward. I think there's real validity in some of these other cryptocurrencies. You know, you related Bitcoin to gold. I look at Bitcoin to gold similar as ETH to Bitcoin. Bitcoin and gold are pure store of values.

Silver might have some store of value tendencies. It's also a technology play, just like ETH is a technology layer for things to be built upon. So while that did do really well last year, if you're trying to find a pure store value play, in our opinion, it's still Bitcoin and Gold that are the purest forms of store values, whereas Eith, silver, are more driven by GDP growth because they are actually part of the growing economy. And was it Tom Lee or someone famous, using air quotes, famous like that, came out with their like, Eiff is the answer. And I think it went down like 30% the day, starting the day after that.

Tom Lee had a hell of the year in 2025, though, launched a multi-billion dollar ETF firm and, you know, chairman of BNMR. I don't know if you would do the BNMR again if you could ask him behind closed doors. But, you know, definitely good news for Tommy. What was that? The BNMR? What is that? Is the ticker?

BNR is the publicly traded company that is essentially a DAT, a digital asset treasury company that holds Ethereum. And the thesis was at least you can earn some yield on Ethereum. So it could have been considered a better digital asset treasury company than just pure Bitcoin. We all know at some point there's the C level. It was like a micro strategy copycat kind of plan. Exactly. Yeah.

Which is just, what are they now? Strategy? Just strategy? Just strategy. Yeah. Next year there'll be strat. All right. Next is the dog that didn't bark.

So a widely predicted crisis or blowup that was inevitable, felt inevitable, but never happened. I'll go first here. The inflation, inflation's rampant. We've got to get under control. Can the Fed do the perfect landing looks so far, like sort of they did? Could argue grocery prices, health care, things are still a little bit out of control. But overall, inflation, especially right, grains were moving lower throughout. Metals finished strong, but were mixed throughout. So at least in the commodity markets, from my view, inflation wasn't really present. I'll let David go second here. Yeah, I'll go next. I think the response to Liberation Day, obviously we talked a little bit about how the markets responded, but I think many people expected almost a boycott of the U.S. economy in response to tariffs. And I think

that was never really truly seen or felt. If you saw businesses expecting massive drops in tourism in the U.S. And while there was a little bit of that in the very short run, that seems to have gone by the wayside. Oftentimes, in my opinion, in many cases, because however rash he might have gone, approached it in getting it done, you know, we were responding to tariffs on the other side. So I think a lot of people walked back the statement that there is going to be a complete boycott on traveling in the U.S. and doing business with U.S.-based companies. Zat do not do, like, similar thing. But like specifically the tariffs causing, you know, a recession or problems, like whether it was inflation or things along those lines. I think the like, we'll call it like the silly math behind it of why it was less of an aggressive problem than what people are originally thinking out of the gate is like, you know, I'm sure everybody here has seen Shark Tank at some point in their life. And most of that is consumer products that are likely actually built over in China who obviously had the, you know, worst wrath of all these terrorists.

You know, the panel always asks like, what, what do you sell it for? And they're like, you know, we sell it for 100 retail, $80 online. And they're like, how much does it cost you get here? And they're like, it's $20 landed. And you're like, okay, so ultimately, when you go to, you know, this shop, you're paying $100. But it costs them $20 landed, which also contains the transportation cost. So maybe that $100 thing, the actual cost to make it is, you know, 10%, 15% of the whole thing. So when there's a 50% tariff and only 10% of it, you're like, well, the price that you know,

goes up five. And I'm pretty sure everybody along that chain probably ate a little bit, right? So it's like there, there's more space in there for a lot of the products in the like, we're called heavy tariff arena space versus the headline what you're paying, what actually was getting tariffed. So to paraphrase you, like this $100 helmet cam to go skiing is not really going to be $200 because of tariff. Only $10 to $15 of that is the tariffed. portion. Easier to digest. I did just get a new helmet cam, by the way.

It was only $100. I'm impressed. No, it might have been a little more. All right. Almost there. Are we sure this is good? Are we sure this is good, right? This is Bill Simmons is like, are we sure the bears are good?

Which I could argue hearing anything. I hear that sentiment. So a rally, an asset class, anything you want to think of, are we sure this is good? I'll start because I doubt either of you will say this and just which I've been saying for years, but private equity, right? Are we sure this is good? I'll give an honorable mention of private credit. Are we sure this is good thing? It's worked out great for a lot of people, but when does the music stop? Without any data or science there, I'm just going to throw that one out as a draft pick. Yeah, I'll add on to, we'll let David go next. These can be rhetorical. You don't need to back it up with any data.

I'll add on to that if you, what was a blue owl that came out with the closing fun, their private credit, it traded down about 40% on day one. So I think that the markets tend to agree. It's rebounded a bit since. But, you know, I think the name of the game has been, if you were a private equity firm in the last couple years, is great. Now we've got to create a private equity sleeve to fund our private equity firms that we can't, that we can't sell. And you saw private equity took EA sports, private? So I think you'll say more of that, like, we've run out of private companies to buy. So we're going to start buying public company. Like, do you have to change your name then?

So my, are we sure this is good? We'll be the end at the end to one of Z's earlier comments of the worry of long-term treasury rates not really blowing out last year. I think this could be there. You could actually see yields a spike just because, again, our deficits and debts are at such massive levels. And you're seeing central banks ownership of U.S.-based treasuries drop significantly. Sometimes people are right on the trade in just early. I think that people have kind of looked past the fears of yield spikes on the Treasury markets, but it is something that you could actually see occur in the future just because we have a mismatch

of supply and demand. There's just a massive amount of supply and a shrinking demand for those assets. And real quick, before you go, Zed, what's the outcome of that, right? If it's basically you're saying the market versus the Fed, if the Fed's like, hey, we're trying to cut and spur things, but the bond vigilantes are like, no, you need to pay more. This is way too risky. Like, that's causing bond market volatility that's causing equity market volatility. We put that off so much. He left. Any one-liner, what that will do

to the market, if that happens, could do? It would be very bad. I think, you know, if 10-year rates get to 5% or higher, a lot of bad things happen, I think we avoided real issues from the markets from rates being so high because they weren't that high for that long. They came back

down a little bit. But I think, you know, there's only so many people who can put all cash offer on their house margining their equity accounts. At some point, you do have to rely on people actually getting 30-year mortgages on assets that are cheaper than the actual value of that house in the rental market. And so if you see rates spike too much further from here, that mismatch between the cost of ownership or the cost of renting just continues to erode.

That's why they're going to do the 50-year mortgage. Or yield control, right? Or yield-serve control. Save a couple hundred dollars a month should work. Got fine, those extra 20 years. Sorry, Zed, we took all the good stuff there for you. No, as I say, this is not too familiar, but I just wrote my year-on note on it, so I'm still going to lean in. But on your page, you're calling it fiscal addiction.

But ultimately, in my opinion, like, can we continue to finance growth? And to me, you know, your big three cohorts are government, brits, and consumers. Government is obvious. You're like, we're not raising taxes. So, like, this is all borrowed to finance growth. And they just put out a 50% increase in defense spending. Yeah. And right now, forget anything going to the future, we went from pre-2020 for like 30 years,

government spending being around 20-ish percent of GDP. Over the last five years, it's almost 25. So it's, you know, it's become a more meaningful portion of GDP. Like, forget, you know, what the right number is. We just know that the government is more important in terms of growth and that they're borrowing to achieve it. You're saying that's only one leg. That's only one leg.

Corporates, you know, are going to enter a refinance cycle and a debt finance growth cycle here. It's been pretty boring since 21 in terms of corporate issuance. But that's about the change in 26. So it's like your high-y-old guys normally can issue kind of like three to seven your paper. Like they have to refy all of that low coupon stuff from 2021. coming up here. But on top of that, like the big beautiful bill is definitely trying to get folks to invest in infrastructure and R&D. And that's coming from borrowing ultimately. So we all know

the AI stories. That's going to be a big version of it. But there's going to be a lot of corporates, essentially borrowing to build something to go ahead and fully depreciate it, year one. So that's me where a lot of growth is coming from corporate is borrowing. And that ultimately, the consumer, everybody knows that the, you know, elderly, really wealthy folks ultimately are spending money based on asset appreciation. So, you know, they're financing growth from the market going up. But the lower kind of half of well-to-do folks are also financing expenditures via market appreciation, which is very different prior to 2020 versus post-2020. So ultimately, like, all the components of GDP are like, the market better stay open or else consumption can collapse from all of these various folks.

You're saying the credit markets better. Yeah, you better be able to keep on issuing debt or else you're going to run into problems. And ultimately, it should mean it's all like, it's all tied to the same thing, right? So everything should likely be more correlated. We should have all these like events where nothing, nothing, nothing happens. Like, oh, shoot, like something seemingly with small happened, but get large movement out of of it because it's so interconnected from the same source, can we continue to finance growth? Sure.

It's a good thing to have all three legs of the stool be based on credit. It's probably not lovely. The consumer, too. Do you see those stats? It was, I'm going to make it up, but it was something like 40 to 60 percent were using the, like, pay later, you know, affirm, all those things that are directly on the website now. Like, oh, I'm sure. Like, I don't need to buy this. And you gave an interesting nugget there to me.

like the, a lot of the, maybe it was, I'm just like stock loan and borrowing against portfolios. A lot of those tools maybe weren't available when the boomers were in their 30, 40s, right? They were like actually spending actual cash versus, so what does that do to portfolios moving forward? Or maybe they're like, either they're levered and they have to get out quickly or they don't have as much compound growth and they're not as wealthy. Yeah. A variable prepay forward used to be for, you know, 100 million plus. Now you can just go into Schwab and like put on a collar and take out a loan at, you know, Sofer plus 50 basis points if you have, you know, half million bucks in the account.

Anybody can use these tools. But you know what I'm saying? What does that do for future compounded growth? Like we'll have way less multi-deca millionaires in the future because they've been paying Schwab instead of paying themselves. All right. We'll finish up with the, all right, two more. One, the conversation nobody wants to have.

We'll let you keep going. There's that. All right. I'll go with affordability crisis. because the solutions to it are generally not great, right? It's ultimately, you know, you need to ask the prices to go down to make things for affordable for the most part. But I'll tell a like a story, you know, even even the youths, like real youths understand this.

So we were running errands this weekend and my six-year-old Isla is sitting in the back of the car and she just out of out of the blue goes, how much is a house? And my wife, Neve goes, Isla, it's expensive. It's like a million dollars. And she pauses for a second. and then a very, you know, serious, calm voice just goes, you've got to be fucking kidding me. And really, that was on the low end.

It's like $3 million. So I think, you know, that even sounds crazy to a six-year-old. Is she allowed to throw the F-bomb around like that? She's not allowed, but she knows how to use it. That's like a once a quarter thing when it's like she's truly stunned. All right. Love it. David, what's nobody talking about that they maybe should be talking about?

My response to that will be that the Fed still has the tools in place to handle the extremes of the business and market cycles. Big believer that, you know, the Fed has tools to handle and curb corporate and banking green, but they're just ill-equipped when that overspending is coming from the government level. They're kind of just pushing against the string because at the end of the day, they're always going to respond, in my opinion, first and foremost, to unemployment. So it's really hard to curb euphoria from the Fed when the government is the entity that's adding so much liquidity to the markets. Mine is the AI paradox that I can't believe

more people aren't talking about that drives me crazy. I like wake up in the middle of the night. It's because I got a deck to invest in some AI anthropic thing. And the slide on there was like, this valuation's based on saving U.S. companies 5 trillion in labor costs. It's $5 trillion, right, which is, I think the whole labor market's like $18 trillion or something. So I'm like, wait, who thinks taking $5 trillion out of the U.S. labor market is a good thing?

So to me, there's a paradox. These things are right now priced as if they're going to save all these companies $5 trillion. So if they succeed in that, the economy loses $5 trillion to spending power. If that's all baloney and we don't get those productivity gains, those things are way overpriced. So either you're going to have the market fall 50, 60, 70 percent based on them being overpriced. or fall 50, 60, 70% because you took all this money out of the economy. But if I take the other side of that table, I would say, well, it's not good for participants in the economy. We're seeing such a high percentage of spending come from the top 10% that if it continues to cause asset prices to inflate,

they will continue to have funds to spend while 90% of the economy might have little to no disposable income and will have serious wage pressure because of AI and face potential unemployment because of AI. In theory, asset prices could still float up because of it and therefore spending from the top 10% could continue to boost overall spending in our economy, even though it's really imbalanced from a socioeconomic perspective. But like what are they buying at that? They're going to buy an aircraft carrier? Just at some point it's like how many Aspen, Monaco, how many houses can you? have. Have you met them? I don't know. There's no answer to that question. No limit. There's no limit.

And I think adding out of that, I think the sad answer, to be honest, is AI is probably best at replacing, we'll call it, 20 to 35-year-old college grads, right? Yeah. And so those in theory were the lighter wage earners at that point in their career path. So even though they're, you know, we'll call it quote-unquote white-collar job. Like the wages lost is less substantial than you would think, right? It's like your, it's not your average lawyer making 300 grand a year. This is the paralegal, that kind of thing. So it could take a lot longer before you see the problems of that. I don't know, ma'am. But I appreciate the points.

Okay, we'll finish up with two things. One, best place you ate this year. Best restaurant, hot dog at a game, taco stand in Costa Rica, whatever you got said. You probably got one teed up here, so I'll let you go first. I think my favorite meal last year

was Volhalla off of division. I'm usually not like the tasting menu guy. Yeah, but it was... You sent it to me, yeah. It's very like, it's actually like different and like good tasty menu, more just like, yeah, it's a coarse meal rather than like, you know,

a little bite of a bunch of things. But I thought it was really strong. fairly priced, nice people. That was probably my nice one. Yeah, it was a fun experience. David, you got one or you want me to go next? No, I'll go first. I can't recall the name because there was a small shack

on the side of the road in Costa Rica, but man, the fresh fish and saviche you can find down here. You sit down and they're like, oh, this was caught two and a half hours ago. You just, that doesn't exist in the U.S. You get that kind of fresh fish on your plate. So not as fancy as Zeds, but I think just as good. Does the saviche, does the citrus ass

said I have time to cook the fish in the two hours. So far, so good. I haven't got a sick yet. Mine will be half humble brag because we were in the Dolomites over after Christmas to New Year's there. What was it called? Refugio Birds, B-U-R-Z, I think. But up at the top of a gondola, sitting outside on these tables, the Alps in the background, and like the best pasta pizza you've ever had right there on the mountain. So Refugio Burrs, I believe, and I'm probably butchering the name. One more fun one, the best movie or show that you watched this year, last year. Eventually, by the end of this pot, I'll get the last year this year, correct. I'll go first with the I'm going to go Stranger Things finale, season five.

I was expecting, I was a little worried about it, but it came out, it hit. Yeah, who wants that grenade, anyone? I'll give you a two-part answer because I don't actually watch a lot of movies these days. I just don't have a lot of time, but in the realm of sports, I grew up in New York City. I've been a die-hard Knicks fan since I was a kid, have won nothing. The Knicks just won the, what, an intro season cup. So that's the closest thing, the Emirates Cup. That's the closest thing I felt as a winner, as a Knicks fan, since the Larry Johnson four-point

play back in my childhood. And then honestly, I would say some unbelievable battles on Twitter. I think they're much better than Netflix or some series. Watching Cliff Asnes and Michael Green go back and fourth once every six months on Twitter is better than Netflix. So, yeah. You weren't at it. Like the Knicks made a hell of a playoff run too. That was exciting. Still failed, but.

Yeah. But what do you got said? Yeah, it was funny. I was with or had a sales will last night. And we spent like 45 minutes talking about how terrible movies have been. By more I like the other side that I feel like I haven't like caught anything good. So I'll just say the one that I probably was forced to see the most this year. which is K-pop demon hunters because by girls,

I think had that on a hundred times in the last two months. God, thank God my kids are older and I didn't have to endure that. Okay. All right. And then last, I'll just wildcard. Anything you guys want to wrap up with? 25. What you're looking forward to in 26, which I know you both have something you're looking forward to together.

So take it from there. Yeah. Very excited to kick off partnership with Convexitas on an income status. lineup that we have launching on January 20th, taking the concept of return stacking and applying it to the derivative income option space. That's something we've been in the works on for about eight months. So very excited about that. And if you want one random market prediction, I'd say I'm still so confused that Gen Z is enamored with home ownership. I think anyone who owns a home Yeah, without a 30-year mortgage before 2022

is probably pulling their hair out. I don't have any hair to pull out, but I can pluck eyebrows, you know? So I think 2026 is the year that hopefully, I think Gen Z will stop being enamored with home ownership. Well, I'm with just like, I have a great rate, like from whatever, 16 or something, right? But it's like, shit breaks, right? Like, crap.

This house is getting old. Things break. I got to replace it. I got to do this. Who do you call? Like, that's the A. I play, like become a plumber, become an electrician. You can't even get those guys anymore, right?

You can't AI your way out of a plumbing problem. So anyway, I'm with you on that one. Zed, how about you? Well, I'd say I'm just very hopeful for Saturday night that it's at least an entertaining game. My optimism is low. I just don't want it to be a blowout. So hopefully the cardiac bears at least make it very entertaining. Come on, man.

Like, your optimism can't be low. I'm high. That was one of the most fun times I had in all of 25 was my brother and my son and my daughter came a little late and we were in a bar over here on Southport. I don't know why they were just letting kids in the bar, but they did for that Packers overtime win

with like the entire place was bedlump. Just random people hugging, jumping up and down. Good time. So we're confident. Most fun football game probably ever for Bears fans. It was good. I'm going to follow up on the derivative. income because are we sure that's a good idea, right? Like a lot of people have gone against that of like, well, you're just calling it income, but it's option selling. So assuaged my fears there of like,

are we sure that's a good thing, which is probably another pod, but in two sentences. Yeah. Now, like the two sentences are, you know, definitely got to think of it as derivative income, not yield, not income. Like it is its own category. Like you're, yeah, it's more like credit spread risk. Like you're taking risk to hopefully earn, you know, basically a volatility risk premium, like some mispricing in the market off of that. But then like the second sentence is what matters the most is total return, right? You know, like so always focused on anything in that category. Well, forget the distributions.

What was the total return that category? And was that total return appropriate for the amount of risk that the, you know, strategy was taking. But that, I think that second part's the part most retail doesn't understand. Like what risk are they? taking on. And some of those products are like mislabeled, I think, or mismarketed of like, it's marketed as a yield and a bond when it has much more risk than that. Yeah. And I think just having distribution rates that, as that alluded to, far surpass the ability of the fund to actually generate

in total returns. So I think a lot of the assets that have gotten the flows have given a little bit of a bad name to the whole category. But I think there's a lot of good managers out there. We aspire to be one of those up-and-coming good managers. You know, back to the affordability. crisis and looking at private equity and the real estate market, like what else are you supposed to do besides for just own stocks or just own the S&P 500? Let's say you're 55 year old, 65 year old approaching retirement. Are you just going to sit in ag? Are you going to just sit in TLT? Are you going to take your assets to try to buy a business or a rental property and compete with the institutional world on the rates they get? So I think if done and constructed well,

it gives a level playing field from institutions to an individual allocating $5 on cost of financing and structure. Now, as you allude to, there's probably been more bad than good. But there's definitely good ways to do this that give you, at the very least, a passive managed distribution stream. I won't call it a return stream or an income stream. But some sort of somewhat assured payment that hits your bank account on a weekly or monthly or quarterly basis. All right. We've got to do another pot on that because I don't understand the nuances of that of those distributions. versus the total return versus

it sounds like some people are gaming the system on that. And if on that comment of gaming, and I think the gamification has been, retail had no other way to project what they would return on this other than to take the distribution, multiply it by 12 and say 80%, I'm going to make 80%. No, no, no, no, no.

You're going to get distribution rates at an 80% rate on a declining NAV assets. At the end of the day, you might end up with just 15, 20, 20, percent total returns. So I think just the inability to differentiate expected total returns versus expected distributions was the problem because what they were missing was what is the expected total return of that strategy, the underlying asset class, and the added premium generated

from the option side of it. And I think that would have totally changed their math. And many fewer people would have mortgaged their house to go all in on like a single stock derivative income strategy. Yeah. I think I wrote a blog post called for an MLPs once called, but the yield. The price was down like 90%, but they're getting a 11% yield. They're like, yeah, but the yield. I'm like, yeah, but the price. What's wrong with you? Look at the price. All right, guys, it's been fun. Good luck to your Knicks. Good luck to our bears. Zed's not competent. I'm going to give you a fully confident at home. Caleb's going to deliver. It's going to be like a first nail in the coffin of the Packers for the next 10. 10 years. They'll probably fire their coach after this. What's your score prediction then?

I'm going to go 7. Wow. Mail buyer. Batched. Yeah, they're going to have some botched extra point or miss field goal or something. Yeah, 28, 27. All right. I'll say 2419 bears.

That'll be my random one. Come on. David, what do you think as a mixed fan? I can't even give a prediction on this. I would say I'm ill-equipped to do it. So I'll let you guys do it and we'll see what happens. All right. And last bit. How long are you in Costa Rica? Do I have time to get down there and do a quick surf session? You do, absolutely. I probably will travel back to New York once every 14 days for a couple days to take in any in-person meetings I need. But I'll be here probably until future proof in early March. So.

Love it. All right. That's it for the pod. Thanks to Jeff Berger for producing. Thanks to Zed and David for coming on and being willing to have a little fun. We'll see. See you next week with Robert Mullen of Marathon Resource Advisors. Have a great week. Go bears. Peace. 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 RCMaltz and visit our website to read our blog or subscribe to our newsletter at RCMaltz.com. If you liked our show, introduce a friend and show them how to subscribe. And be sure to leave comments. We'd love to hear from you. This podcast is provided for informational purposes only and should not be really. 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 paths or potential profits, and listeners are reminded that manage 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.