The Derivative - Unlocking the Equity Risk Premium with Dividend Futures

Episode Date: March 13, 2025

In this episode, Jeff Malec sits down with Rick Silva, the co-founder of Metaurus Advisors, a boutique asset manager. Rick walks us through Metaurus Advisors' innovative approach to understanding and trading the equity risk premium using dividend futures markets.Rick Silva provides insights into the firm's background in derivative markets and their goal of bringing fixed income securitization techniques to the equity space. He explains the concept of parallel tranche securitization applied to the S&P 500 using dividend futures, which offers visibility into how the market prices equity cash flows and the equity risk premium.Rick and Jeff discuss the strategies Metaurus has developed to harvest risk premiums in the front-end of the dividend curve across different markets, as well as the introduction of new futures contracts based on sequential tranche securitization of a 100-stock index. The episode also addresses the challenges and opportunities in the dividend futures market, including differences across regions, and for a little fun, we fall down a political rabbit hole - SEND IT!Chapters:00:00-01:02=Intro01:03-09:57= Bringing Fixed Income Securitization Techniques to the Equity Markets09:58-21:53= Harvesting Equity Risk Premiums through Dividend Futures Strategies21:54-35:36=Introducing Sequential Tranche Securitization in Equity Futures Contracts35:37-44:06=Dividend Futures Markets Across Regions and Regulatory Challenges44:07-54:07=Implied growth rate & data analysis54:08-59:22=Rabbit Holes: Political Impacts Metaurus Advisors 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

I can actually mathematically take the S&P 500 now and break it down over time using these instruments. So as opposed to buying a whole market, which is essentially one dividend strip in perpetuity, I can overweight just like you trade the yield curve. So if you have a methodology not just to price it, but to trade it and isolate it, then I think it opens it up. Welcome to the derivative by RCAIM Alternatives. Send it.

Hi, I'm Rick Silva of Mataris Advisors, and we believe there's a different way or alternative way to think about and look at the equity risk premium using the dividend futures market. And I'm here to talk about that on the derivative. Good afternoon. Thanks so much for having me. I'm Rick Silva. I'm with a firm called Mataris Advisors. We are a boutique asset manager. The Mataris Advisors is, it's an interesting place. So we're small, there's about 10 of us. And the principles at Mataris,

we actually first met in the very early 1990s at Merrill Lynch. And we were part of the team that built Merrill Lynch's equity derivative and structured note business. And then we left and we went and we did that again at Morgan Stanley. And then we did it again at Wachovia. And then we did it again at Wells Fargo. So we've been involved in derivative markets for the better part of the past 35 years. And so the idea behind the TARS is we wanted to kind of continue to look at the same spaces

and solve the same problems for investors, basically helping them understand what markets they can look at in order to identify and affect interesting trade-offs of risk and return so they can build better portfolios for the most part. So the first thing we did at Metars, which kind of leads us to where we are today, is we looked at a lot of the technologies that existed in fixed income, specifically in this area of securitization, where the marketplace is very comfortable taking an asset like a bond and breaking it up into its component cash flows.

And they're also very comfortable taking a portfolio of bonds and carving up different risk tranches off the back of that. And it's brought a lot of liquidity. I think it's added a lot of value to the fixed income markets. It's not been without risk, right? I mean, remember 2008, some of the CDO Squares and things like that. But a lot of those technologies have never really migrated over to the equity markets.

And so one of the things that we spend a lot of time at Matars thinking about, and this goes back, over our years together, and all these different firms is what are some interesting ways that we can take some of those technologies and bring them into the equity markets to help make those markets more liquid, more efficient, to carve up new and different ways to allow investors to express risk and return views and so the first one we did. Why do you call them technologies? What's that? Are there structures or technologies? Well, I'll give you an example. I'll give you an example. So the first thing we did at Ataris

was you're probably familiar with fixed income. You can take a bond and I can strip coupons from the zero coupon return principle principal. That's basically a parallel trough securitization where I take an asset and I create two different interests in it. So investor A owns the coupons, investor B owns everything else that's left over, the returner principal. So that concept we thought was really fascinating and could it be applied to equities? Practitioners have thought about doing that, of stripping an equity asset apart, stripping out the dividend cash flows or the cash flows over time and leaving the residual. That was the first thing

we did. We did a parallel tranche securitization on the S&P 500. We used the dividend futures market. That's the marketplace that had evolved from an over-the-counter market to an exchange trader market that allowed us to do that. But before we get into that market, at a concept level, we took the S&P and we created two effectively ownership interests or economic interests in it. One ETF was a 10-year dividend strip. The price that that traded at reflected the present value of the markets, the implied dividend expectations. Over time, it paid out the actual dividend. So you bought implied dividends, you received actual dividends, and you bought implied dividends at the

risk-free discount. So what that was, was actually a way to begin to kind of carve up the equity risk premium. The other piece was the market without the first 10 years of dividends. So the stripped market. And what's interesting when you do this, you know, number one, you're taking the S&P 500 and you're breaking it into different risk profiles now, right? Because the two together, if I bought one of the dividend strip and one of the market and I held them, it's kind of boring, but I will have just recreated the S&P 500. And so you break it apart, you don't just break apart the cash flow growth profile, but you're breaking apart the risk and return on profile. So that's where we started. Isn't it weird? Real quick, It's weird to think about the right.

If you read anyone who's pitching you on owning stocks, it's like you want to you are getting the future earnings growth. I guess that's reflected in the price. My thought was going to like if you're just owning the dividend growth, that's sort of equivalent to the earnings growth or no? No, it's another dynamic because you're, you're, you're, the earnings growth or no? No, it's another dynamic because the earnings growth is implicit and then you have how much of that earnings are going to be those earnings are going to be returned via dividend. But the whole thing, when you price a bond, it's nothing more than it's a discount cash

flow analysis. So 10 year 4% coupon bond is just a promise to pay $140 over the next 10 years. Value of the bond just the market what the market's debating is what's the right discount rate to use to discount each of those cash flows, right? Well, that's ignoring credit risk and everything. And everything. And so if you if you move out on the credit curve, that's right. It's not just a risk-free rate. You have a credit spread, and that credit spread is the credit risk premium. And it's identifiable and it exists over time. Right? There's one-year credit spread, a two-year credit spread, a three-year credit spread. And you've had instruments now that have developed where you can trade that credit spread in isolation. I can trade it in the investment grade bucket. I can go trade CDS, things of that nature.

But for fixed income investors, the idea of time and duration is fundamental to the portfolio construction process. It never was in equities. And part of the reason for that is, you know, companies don't, companies borrow debt at every conceivable maturity, but they don't, you know, JP Morgan doesn't have a five-year class of shares and a 10-year class of shares. They just have JP Morgan stock. So even though just like a bond, the stock is a financial asset, it's a claim on the

future earnings of the company and dividends are how companies return those earnings to investors. The price of the stock at any moment in time reflects the risk discount to present value of all of its future expected cash flows. And so what you're talking about, which is the implied growth, that is really, fundamentally, that's the equity risk premium. And I laugh because there's a ton of academic work, and we've had the very good fortune of working with one of the leading practitioners, a gentleman named Professor Dan Binsburg, and who's down at Wharton.

But he tells this story where he says, when he teaches finance, he spent the first two weeks doing discount cash flow analysis and how to price bonds and stuff. He said, then we turn the page and we move to equities and we do the dividend discount model where I basically have a dividend, I have a growth expectation, and then I price it like a perpetual annuity. And he says, I can always tell the smart students because they'll raise their hands and say, wait a second, we just spent two weeks understanding for a series of known cash flows that there's a different discount rate, different credit spread at every point that you use the discount. And now you're talking about a variable cash flow asset and there's only one growth rate

and one discount rate. So he wanted to dig into that. And that's the basis for his work. But that's the crux of the whole problem, right? The bond has a fixed term. That's right. And so is it just, hey, this was too complex in the beginning to figure out for most people? So we came up with a different model, right?

Fixed term versus infinite term. So it does, but I mean, I guess you have to ask the question, is there a spot in the equity markets where you actually price term equity cash flows? And the answer is there is, and it's in the equity derivative marketplace. And if you think about all the options and futures and structured notes and things like that that are traded out there. A, they're all linked to the price return of whatever the underlying equity is, and they all have defined terms. And so if you're pricing a call option on Microsoft, right, you know what the payout is. But if you're buying the call option from me,

Oh, guys, you're putting timeframes on that infinite time frame via futures, via options, via got it. Exactly right. Exactly right. that infinite time frame via futures via options via got it on it exactly right exactly right if you were to buy the call option on microsoft and i'm selling it to you right yeah implicitly my hedge is to go along some amount of microsoft stock so i'm going to receive that dividend so i need to think now where am i going to price that dividend. So I need to think now, where am I going to price that dividend? And so that happens in structured notes, options, futures, the implied dividend is embedded in all of that. And so that market became very, very, very large. It was the over-the-counter dividend swap market. And then after the financial crisis, it moved to a clear format. They started listing essentially these dividend swaps on the exchange.

And before that groups would be market making, selling options or whatever needing that dividend exposure. So they would go to the swap market and be like, hey, can you give me a swap on Microsoft dividend growing more than X? Exactly, or go the other way where you know, if I was given a structured note three years and I had to figure out, okay, how much credit am I going to give for the three years of S&P dividends? I will price it, then I'd say, I don't want that, right? I'm an options guy. I want to get paid my premium in cash. I don't want to get paid in future dividends. So then I would turn around and find a place where I could offload it. And so I would try and sell that risk to insurance companies, pensions, hedge funds, you know, institutional investors who get paid to take that.

And the market makers do both. So they're owning that Microsoft stock and hedging the dividend out? Or neither, right? It depends on who they are. But yeah. Yeah, no, that's absolutely correct. But so that market, which started, you know, grew up off the back of the equity derivative marketplace, it became very, very large. But it was actually, what it allowed was visibility into how the market at a consensus level, prices equity cash flows. How does the market think about the term structure of equity returns?

And it was talking about Professor Van Binsburg and he went in and he looked at this historically using over the counter, he had some proprietary data that he was able to get, OTC dividend swap books, the marks on that. And then in 2009, the first Eurex listed dividend strips on Euro stocks, Japan did it in 2012 and the CME listed in 2015 on the S&P 500. But you now have this whole marketplace of dividend strips. And so

if you go back and you think, okay, a bond is nothing more than a claim on a future series of cash flows, a fixed rate, fixed term annuity. I know easily how to price that. And as you pointed out, the complexity in equities was that it's variable rate, right? Dividends aren't guaranteed. They're linked to earnings. You could have earnings to go down and dividends won't change. You could have earnings rally huge and dividends might not change. And they're perpetuating. And so how do you price it? Until they're not. That's the other piece. They're perpetual until they say we're suspending dividends or whatever. Yeah, suspend their dividends. And then what that does though is that is really a reflection of an extension in duration

in the marketplace, right? Because now I can take the S&P 500 and I can price it just like a bond. I can take that dividend strip market, which by the way, they're already risk discounted prices, right? Like if we were doing, you know, it wasn't sophisticated, but 25, 30 years ago, if we were trading something on the S&P 500, and the expected yield was 275, I'd have to figure out where am I willing to take that risk? Where do I think I can sell it? What kind of discount? That's the same thing as a credit spread, right? That's how I discount JP Morgan versus Jet Blue. Where do I discount S&P versus a single name? Right? So to summarize, you have now you have two fixed

calculations on the bonds. Easy. This is the present value of that future cash stream with a in with a defined endpoint equities. I've got this strip of dividends, which I'll put a defined endpoint on it, even though it's not defined. Those are two easy calculations. Now on the bond side, the trick is credit risk. On the equity side, the trick is dividend risk for lack of a better term. What do you call that?

Are they going to grow, suspend, decline? What is the dividend rate? That's right. We call that the dividend risk premium, but really what it is, is it is the equity risk premium. And so you could take that dividend strip, that 10 years of dividends on the S&P, and they're already risk discounted, right? Because that's the market traded prices. That's if you asked an analyst, like historically dividends over the past 75 years in the S&P, they grow at about 6%, I'd call it, right? And up years at 7%. It's been six negative years, the average negative year, but for 2009 was negative 1.6,

right? So it's a fairly stable asset. But if you looked at where that growth was trading in the market today or recently, it's pretty close to zero. So that's the discount. So they're not forecasting a lot of growth and dividends in the marketplace, because that's where they're willing to buy and sell that risk. Right. Is it sort of like they're just punting on

it? Like, I don't know what that is. So I'm just going to price it at zero growth and see what happens. Well, I analogize it to credit spreads, right? I mean, are they punting when JP Morgan credit spread is 40? Should it be 40 or 50 or 60? I don't know. Right. If the risk environment changes, credit spreads wide and if treasuries go from zero rates to 6%, high yield spreads aren't going to be 200 basis points, they're going to be 500 basis points. So it's a risk market exactly in the same way that that is. But if you took the first 10 years of dividends and you discounted them using the treasury rate, just the present value of what they were. And you came up with that number, you added them all up. And you compare

that to the value of the S&P 500, that dividend strip, the value of it represents the first 11 years or 10 years of the S&P 500. So if $100 of S&P, if the present value of the first 10 years dividends was 12, then 12% of the total market value is attributable to dividends to cash flows in the next 10 years. The difference is the residual that's attributable to earnings and dividends in years 11 and beyond. So that was I did an exit that that was taking the market and breaking it up over time.

So what's interesting, there's a bunch of stuff that comes off of this. We can talk a little bit about. Yeah. And this is all, I guess, this is all known math, this is out there. This isn't anything proprietary. This is just, this is how dividends work

and how it's all priced in the swaps and now in the futures. Yes, that's right. That's right. But what's new, it is no, I mean, it's visible, right? And the markets move around. And if you looked at like the growth rate in the U.S. right now is slightly positive.

If you went and you looked at the UK or Europe, it's significantly negative. Like the dividend strip looks like, you know, it falls off a cliff. Japan is pretty normally sloped. So these different markets trade and discount those equity cash flows based upon the perceived risk in those markets. One of the senior guys in the group said, hey, Rick, go figure out what the equity risk premium was for the past three years. And so I was like, okay, great. And I was like, no idea what the hell that equity risk premium is. I looked at somebody else in the group, a smarter guy than me. I said, what's an equity risk premium? It's easy to figure out. Let's go figure out what the total return of the S&P was each year for the past three years, and then compare that to what

the yield was on a one-year treasury in each of those years. And then that excess represents the risk premium. The risk premium is just how much excess return do I require or do I expect to earn in order to take risk beyond the riskless asset. A credit spread is a pure isolated risk premium. It is the credit risk premium. JP Morgan is trading at 50 basis points over treasuries. It's 50 basis point credit risk premium. So I did that exercise and I got an atta boy and things were good and went all with my life. And then 30 years later, we're looking at these dividend markets and we're reading the academic research.

And if you think about it, if you're talking about the credit risk premium, if I asked you where is the five-year credit risk premium for JP Morgan, would you take a five-year JP Morgan bond and compare it to a three-month T-bill? No. Yeah. Different duration assets. I compare the five-year JP to the five-year treasury. I compare the one-year JP to the one-year treasury. And so you actually have a term structure of credit spreads, right? People used to think of the equity risk premium as one number. Yeah, just above cash. Just above cash or through my T-bills or one year. The reality is now, if you want to try

and understand what the one-year risk premium is, I have a one-year dividend strip, and I can compare that to a one-year treasury and I can see how did that perform. And if the market is the present value of all of its future cash flows, then the total equity risk premium is the aggregation of all the individual risk premiums. So when you go and you start thinking about what is the equity risk premium, it forces the question, what is the fixed income counterfactual that you're trying to compare it to? Right? Or, or what's your timeframe? Like, great, there's no just one number, what is it over x? What is it over y? Exactly. And if you're trying to do the whole market, the

exercise is what's the duration of the market, because that's the treasury that I need to compare it to. Right? Now, we don't have 50 year duration bonds in the US, but if you went back, so what Van Binsbergen and his partner, Ralph Koichin was at Chicago, what they did is they went into the equity marketplace and this dividend strips market to understand historically how has the market discounted equity cash flows? What is that risk environment? What has it been? And so they created, just like you would in fixed income, a one-year constant maturity of two-year,

three-year, or four-year, all the way up the curve, right? So they did a one-year constant maturity dividend strip at two-year, three-year, and they did this across a ton of markets, right? Japan, Europe, UK, US. And they looked at the risk return profile of it. And then when you aggregate it all up, it forces you to look at the market risk premium. You have to compare it to a very, very long duration fixed income asset.

So in the US, you would compare it maybe to a 20 year bond or a 30. It would be about as close as you could get. But what they understood or what kind of emerged from the research was the distribution of that risk premium was not what they were expecting. In fact, shorter duration equity cash flows offered higher risk premiums, generally speaking, than longer duration equity cash flows. So there were more heavily discounted versus expectations and versus outcomes. So now you have what used to be thought of. If you talk to a bond guy or a credit guy, right, they talk over it. It's about the continuum

of time. Like, you know, where's the best place to be on the yield curve? Where's the best place to trade credits? You cannot do that in equities. And so this is, you know, off the back of that original IOPO, this is some of the stuff that has been opened up now. And so these are these are some of the markets that that we've been looking at. It's interesting, like the word risk premium gets thrown around an awful lot, right? So a lot of people just be like, there's a risk premium in equities because they can go down. Yep. Right. They're just saying that's why it goes up, there's a risk premium in equities because they can go down. Yep. Right? They're just saying that's why it goes up and use the word risk premium without any

stats. As you said, it just could be the simple, it's over cash. But you're saying no, it needs to be considered in each time frame like a bond, like a strip of two years, five years, 10s. Interesting. All right. I'm going to noodle on that for a second. So back up real quick. We shot through your bio there quick. So you were at, rattle those off again, Merrill, Wachovia.

I started at Merrill and then I did a short stint on the buy side then I spent a bunch of years at Morgan Stanley Then went over to Watkovi and Wells Fargo. That was my sell side Substantial sell side background before reconnecting with but that was sort of the same adventure We were just talking through of like learning the bond structure term structure and then moving into the equity term structure Yeah, working across asset classes working working across geographies, understanding basically derivatives, derivative risk, financial pricing, how do you price financial assets? What are the techniques used to estimate future cash flows,

forward cash flows? How do they trade? How does the risk market look at them? And what would you say? Sure, I've had plenty of hedge fund guys on here who would be like, discounted cash flow model is BS, right? Or if like trying to even price these securities is BS, like they either go up or down, there would be animal spirits, systematic, intraday trading, whatever the thing is, they don't

care about what the discounted cash flow is. Like, how do you square that with with actually trying to get a price? Well, the price is the price. And if you're talking about bonds, it's there, right? You can see it. Exactly the different components that you can trade. And so can it go up? Can it go down? Yes. Why do credit spreads widen? I'm not smart enough to figure that out. Only in hindsight can we figure that out, right? Why do equity markets move around? Lots of different factors factor into it. But what I believe and what I think is true is the price of an equity at any moment in time reflects a market consensus. I'm not saying whether it's rich or cheap, it can go up, it can go down, but it's a market consensus of the risk discounted present value of all the future cash flows. That's it. And now

that we have this dividend market, what I can say is I can trade it. So it doesn't matter what people think. And I still can't explain why it goes up and why it goes down, but I can actually mathematically take the S&P 500 now and break it down over time using these instruments. So as opposed to buying a whole market, which is essentially one dividend strip in perpetuity, I can overweight just like you trade the yield curve, right? Just like you build a fixed income portfolio. Doesn't mean you're going to get it right. Doesn't mean you were targeting a three duration. It should have been a seven because that's what the environment turned out to be but I think these cash flow

I mean that's all a financial asset is so if you have a methodology not just to price it but to trade it and isolate it then I think it it it opens it up yeah I think their argument my fictitious bogeyman here would be like that it doesn't matter what you think the price is which is essentially what you're saying to the price is the price but you can get into a lot of trouble with your model saying no this is the correct price and it's right infinitely higher infinitely lower and you're trying to sell into that or buy into that and and get into a lot of trouble that's I guess my point of and that's fair and I would

analogize it like this. Like I would say, if you were talking about volatility markets, right? I don't know where the heck the fix is. Let's say it's like a 21 or whatever. That's the price of the fix. That's the cost of insurance. Is that the right price? I don't know. But I know that's the price. And so with the dividend strips, my comments on discount cash flow analysis are less about is the risk premium accurate or inaccurate, but I can now identify it. And if I have a basis for reasonable forward expectations, whether that's through forecasting models, bottoms up analysis, and I can see where these things are trading on the screen.

Like I did say, why people buy, you want to buy HIO, you want to buy investment rate. I don't know. Where do you think you get the better risk return opportunity? Right? So it's a subjective assessment of the risk and as close to an objective assessment of the return as it possibly can be. And in equities, you never really had a very objective assessment of return. And now I'm saying you do more and more with this marketplace.

And that allows you to do things like sell the front month by the back months. I'll use air quotes for the listeners, but basically, if you can separate those into timeframes with the dividend strips. Yeah. Same way you would build a credit portfolio, like a duration neutral credit portfolio over time. We do that, we do a couple of things. So we have a public ETF that we do in partnership with a wonderful company called Pacer Financial. They're the cash cows guys, if you've ever come across those guys. They're awesome. You'll see them. Sean O'Hara, you'll see them on CNBC and the box business and stuff like that. But with Pacer, what we do is we essentially isolate

a three-year dividend strip from the S&P 500, and then we overallocate to it and underallocate to the S&P 500. So if you go back to the IDIV, XDIV, the 10-year dividend strip in the market without the 10 years, if you put them together, you just recreated the S&P 500. But if you put them back together in different ratios,

you've now changed the cash model growth profile of the S&P and modified its risk return profile. So that ETF, we actually pay out the actual dividends as they're earned. And so that makes quarterly distributions at a rate of four times the actual S&P dividend yield. And it has a market beta of about 90. And it has a volatility profile between 80 and 85% of the S&P. So it's a very growthy, very risk efficient growth and income strategy. That's one thing we do, right? And that's mostly geared for investors who are looking for market data, but who want to tailor their, you know, kind of growth and income and risk return profile. What's the symbol? Are you allowed to say? What's

that? What's the symbol? QDPL, quadruple for four times the dividend. Got it. And we rolled it out on NASDAQ. But you're 4Xing the dividends or no? You're only, what did you say, 120 to? 4Xing the dividends. So you're owning 4X the dividend strips and how much of the S&P? About 85%, 85 to 90%. You're all in beta. So what we're doing is we're taking that annuity profile and we're pulling it forward for you a little bit.

So you can harvest more of the earnings and dividends in the early years. You'll get less of it in the later years. So the portfolio for $100 of quadruple, I literally hold $85 in the S&P 500. And that gets me 85% of the dividend. And then for 15 bucks, that's how much it cost me to go into the strip market and fully pay for another 315% exposure to earnings and dividends in years one, two, and three.

Put it together, I get four times in years one, two, and three, 85% in years four and beyond. So as opposed to tilting sectors or selling calls and things of that nature, we're just time waiting the S&P. We're shortening the duration of the market. Got it. So that's one thing we do. We also have a strategy that you guys are familiar with where when Van Binsburg and Koichin went in and they started looking at the individual strip markets to say, how does the market systematically over time or do they systematically or persistently, how do they discount cash flows?

Because it's a big market. So whether they're intending to or not, things will emerge from it. And what they found is that shorter term equity cash flows offered higher risk premiums than longer term equity cash flows. So if you think of the market as one equity risk premium, you wanted to break it up over time, more of it would sit in the front end and less of it would sit in the back end. Just simply because of future uncertainty? Honestly, there's a bunch of reasons.

There's some market structure reasons, because most of the derivative flow is in the short end. So there are more natural sellers in the front than there are in the back. But it's still a risk asset. So you still should have a risk premium. The other reasons are there's a left tail. If I'm long one year dividend and it gets cut,

right? I'm going to realize a loss. You don't have time to make it up. I don't have, there's no recovery. So there's a left tail there. You're getting compensated for the left tail. But they looked at this. It also has a much lower cap and data. And I'm thinking of that reverse. So front end has a higher risk premium, meaning it's cheap, more cheaply priced. Yes. Right. In bond terms, it has a higher yield. Yes. Yeah. Then the back end. That's right. That's right.

Okay. And that's because of that factor. The back end has longer to make up for any short-term hiccups. Exactly. Exactly right. Markets, individuals, you get into the behavior side of it where investors are much more risk averse in the short run than they are in the long run. Everybody's worried that next year, this year the market's going to be down. If I said 10 years from now, what do you think? No, no, no, we'll be fine in 10 years. If you're borrowing money, you know, I need to borrow money for one year. Then you say, let's make it two years. You're

going to get a very different interest rate. If I say, ah, borrow money for 29 years, you know what, let's make it 30. But the dynamic they uncovered, and by the way, it's not what they were expecting. The higher risk premiums in the short end, lower cap end betas, which means if you take the S&P 500, again, which is all the dividend strips, and you allocate to the piece of it that with a higher risk premium and a lower cap on beta, and you under allocate to here, it actually has a higher sharp ratio. And so we run a strategy where we harvest the risk premium in the front end of the dividend curves in US, Europe, UK, and Japan. And there's a lot of curves in US, Europe, UK, and Japan. And there's a lot of stuff we incorporate that informs what maturities we're picking, how we're allocating across the geographies, and things of that nature. But we go along the front end and we hedge out the beta and the residual data there by going short

the back end. And the hedge ratio is like 20 to 30, somewhere in that range, generally speaking. And so we've created a beta neutral access to an equity risk premium, just like you would in a credit portfolio, right? You're trading bank loans or you're trading CDS. And that strategy's not going to have done very, very well. But back to them, Vinsburg, when they discovered this, that's not what they were expecting, right? They thought, well, the longer the term, the more uncertainty, the higher the risk premium. And among the things that kind of helped them, could help convince them that this is actually a very viable conclusion. And it actually is probably for persistent

or really two things. Number one, that profile held across markets. So it's not like it was only the US or only Japan. So, right, it was consistent across equity markets. And the second thing is they went back and they started thinking about, and they're like, wait a second, there's lots of other assets that have this same profile,

right? Housing, corporate credit, volatility. And so it started to comport with a bigger picture of other assets and had similar behavior. And so, and then sure enough, like we've been looking at it, the data, the research goes back 25, 30 years. We've been active in it since 2018. And that's when we launched IDA the Next. And then we've been very active in it, post-COVID.

So and then you mentioned volatility in my brain when you said harvested, right? I think of selling option premium. So does it have a bit of a negative skew, short gamma profile, right? Of like a COVID type, something bad in the front months is going to hurt you? It does. It has a left tail for sure. It's very safe as measured by cap M beta. So like in 2022, you know, okay, fine, markets sell off because rates are going higher and

there's inflation fears. Didn't impact anyone's expectation on 2022 earnings and dividends, 23, fine. Markets sell off because rates are going higher and there's inflation fears. It didn't impact anyone's expectation on 2022 earnings and dividends, 23, 24. But what you saw in that scenario is people say, well, geez, the recession, they come in 25, 26. So the back end of the curve sold off. If you go into 2020, what happened is- That was actually a good thing for you, right? It was a great thing for us. Yeah, yeah. That was actually a good thing for you, right? It was a great thing for us. So the risk in the strategy is the systemic risk. It's the COVID risk, right? Where all of a sudden the rate...

9-11 COVID, some sharp and acute. Exactly. Something that causes a reset of short-term expectations. Yeah. But would you say less than being outright short, right? Less than that same trade in the VIX if I'm short front month VIX, long back month VIX? Well, yeah, VIX, I would imagine would have a lot more gearing in it. And we use actually that relationship in VIX to help inform the sizing of the strategy. And when you start to see distortions in the credit markets and in the volatility markets,

those historically have been precursors to forthcoming events. The market has been pretty good setting up ahead of things. And so we use that to inform, you know, maybe we should dial down the strategy a little bit in terms of notional exposure or leverage. notional exposure or leverage. We also have a commodity trend following strategy, which is a little bit different. But the other thing that we just launched, which it's actually not launched yet, but we entered into a partnership with the Chicago Board Options Exchange to roll out a series of futures contracts based on some

technology. So in the very beginning, we talked about IDA the Nextiv as a parallel tranche securitization. Remember, the idea is what are things that the market is doing in fixed income that might make sense to kind of explore in the application class. So IOs and POs are parallel trunk securitization. The next thing we wanted to tackle was sequential charge securitization, which would be CDOs, CLOs, things of that nature, where I take a pool of assets and I basically carve it up into performance tranches. And if you really think about what is a CDO, right? It's a series of better, other than worse outcomes. And the senior, when you capitalize a pool of assets, the senior lenders get the best performing bonds, right? Said differently, the equity tranche gets the worst performing bonds. The first default

eats into the equity. And as long as you don't have enough bad performers to eat into the collateral that's really sitting behind the senior tranche, then the senior tranche is fine. So we wanted to think about how do we do that? Is that after the fact in CDOs and to is or before the fact like they pick out which they think are going to be the best or it's by rule after the fact the worst go into this bucket, the best. So in a CDO, you start off you pick what the assets are that you're going to benchmark to, but the outcome is ex post. So it's basically after you get to the end, right? It's only after you have a default that you have an outcome in strategy.

So we applied that same approach to equities. So we have, we build an index without getting into all the technical stuff. It's basically, it's a hundred stock index. Each stock is equally weighted. It's the sector weightings are interesting. So the index itself actually has very, very, it's very highly correlated to the S&P 500. So it's only a hundred names,

but if you were to just buy that index, it would look and feel a lot like the S&P 500. But we basically created an equal weight S&P out of 100 names. I think you could have just bought five names or seven names and looked awful lot like the S&P 500. For the past five years, for sure. So we have this, that's the master index. And then we have off the back of that,

there are two sub-indices. One index is called the lead index, and the other one is called the lag index. So if you think about it, the master two tranches, two tranches, the best performers and the worst performers. And so the master index, the total return index, where all the corporate actions are captured at the constituent level, so not reinvested across the index, and it's a horse race. And we run it for a quarter. And whatever the 50 best performing names are, I don't know what they're going to be until I get to the end of the quarter. Those things will sit in the lead tranche. Everything else, the 50 worst names

will sit in the lag tranche. And so what is as an index and then there'll be futures on that index. Well we're gonna list futures on the lead tranche and the lag tranche. So you go to any investor and you say okay three months from now would you rather on the best performers or the worst performers? Most people would just instinctively say well I'll take the best performers. Okay question is how much you willing to pay for that right?? Right. So if that price gets bit up and it's no longer risk reward. Well, you would expect that the lead tranche futures, the futures linked to the lead index would trade at a premium to NAV. So on day one, the NAV of the index is 100 and the two

tranches are 1550. I don't know what names are in it, but each stock's worth a dollar. As they move around over time, the NAV of each of the tranches has to equal the NAV of the index. The futures contracts, if the lead tranche is trading at a 5% premium to NAV, then in an arbitrage free model, that means the lag tranche has to be trading at a 5% discount. Discount. Because those two have to also add up to the index. So that's realized dispersion. It's realized return dispersion. But not dispersion as we talk about on this podcast a lot of volatility dispersion, of dividend dispersion.

How do you define that? I mean, or maybe they're one and the same because that dividend action causes the volatility disparity. Yeah, it's kind of the next level down. So, most of the correlation indices and things like that that look at implied vol between the index and the constituent stocks, those are all implied to implied, but none of them have a realized outcome. And we actually have a realized outcome here. So, you'll have a return. There's a beta in it or a delta in it.

The pricing of those, the futures contracts will have to capture the implied vol in the market and the implied correlation in the market because it's basically a better run than a worse option if you want to think of it like that. Over time, they're going to converge But what's unique is it actually allows you to express a directional view as well It they need to launch a tell them next time you meet with them, right? All these RAs are selling these best of products but like S&P Russell Nasdaq Yeah, like you get the worst of or the best of on the upside Those would be interesting futures to to allow them to hedge

Well, these futures will will be the natural other side of it because the lead trunch, you know or the best of on the upside. Those would be interesting futures too, to allow them to hedge. Well, these futures will be the natural other side of it because the lead tranche, we'll have an embedded correlation exposure. The lag tranche will have the opposite side correlation exposure. So you can use this to lay off some of that risk. Now, how do you think about in all this

that you're doing with the dividends, the NASDAQ companies that don't pay dividends, how does that work into the math? If at all or what, right? How do you price those? Go ahead, whatever your comments are. That seems like a thorn in your side. No, well, it's, you know, it, with the NASDAQ, it will remain to be seen, right? Because Nasdaq dividends are, that's kind of, has a lot of call option features. Like with S&P dividends, you have upside surprises, but most often it's a downside surprise, right? Where companies or sectors get whacked

or financials cut their dividends or you have that kind of stuff. With Nasdaq, just to give you a metric. So last year, I forget what the index itself was up. The dividend growth last year in the NASDAQ outperformed the index itself. So really, all those guys to claim to Salesforce, Meta, Google, right? And there's only, I think it's about, I think like, I mean, these numbers may be off a little bit,

but I think it's about 80 plus percent of the S&P 500 names pay dividends. With an ASDAC, it's closer to 50%. So the play there is really- Which is that up from like 10% 20 years ago? Is it always been? No, I mean, I could cheat and pull up my graph. I have it. But yes, it is. Yeah, off the top of your head, but it's been steadily growing.

Steadily growing. And, you know, if you read the fundamental stuff out there, and, you know, you look at the environment, there's a lot of pressure for companies to start to return capital. And as these tech companies get larger and larger, right? I mean, a lot of them are growing through M&A activity, their revenue base, their sales are stabilizing, they have positive earnings. You know, what do they want to do? Yeah, basically you're looking more like a S&P company. You need to start acting like it.

Pretty much, pretty much. So, yeah, so that's NASDAQ, and we're looking at potentially doing it on some other international indices, but that could be a whole suite. We call it the dividend multiplier strategy. So with Pacer, we do this in partnership with our good friends at Pacer. We have a suite of ETFs where investors can build their global portfolios or advisors, RIAs, whomever. And if they're looking for growth and income, or if they want to dial

down the risk a little bit or change the income profile of their portfolio, they'll have the opportunity to use this suite of ETFs to do that across markets. Do you listen to the podcast Smart List with Jason Bateman and those guys? They're always saying for my sister Tracy, but I say for my friend, George. So explain for my friend, George, exactly how the dividend futures work. Like what are they quoted at? They're quoted as the growth percent or the dividend percent?

So they're actually quoted in dividend index points. So they list contracts. So they're traded on the CMA. They have quarterly maturities, but we deal with the annual, with the quarterly maturity, sometimes the company's dividend moves from one quarter to the next year. Yeah. Yeah.

But typically over a time period, it's much more stable. So they list the current year and the next 10. So you always have 11 years of contracts. They mature in December of their contract year, okay? And they're quoted in dollars, but it's index points. And then there's a dollar multiplier that brings it to a certain notional exposure. But the way they work, they're linked to something called a dividend points index. And so for the S&P 500, S&P publishes the dividend points index. And the way that index works is it begins the year at zero. So for instance, the current year, on the third Friday of 2024 December, third

Friday of December of 2024, the final value of that dividend points index determined the final cash settlement value of the futures contract. That next Monday, the index resets to zero. And then every day for the next 12 months that a company in the S&P pays a dividend, S&P takes the dollar value of it and based upon the company's weighting in the index, converts it to a number of index points. And it just pounds it during the course of the year. And so when you get to the end of the year, that futures contract, and today it's trading about 78, but the, is trading at about 78 bucks. Whatever the total dividends paid over from December 24 to December 25 will determine

the final cash settlement price of that contract. So it's whatever, 78 divided by 6,000 or whatever? You got it. But you're buying the implied yield. So people don't think about this, but if you looked on the screen, you say, okay, what buying the implied yield, people don't think about this, but if you looked on the screen, you say, okay, what's the implied yield? Where are these things trading? It's trading at like one and a quarter, roughly, give or take.

The actual dividend yield on the S&P has been coming out between 170 and 185. And they couldn't quote it in, right? They had to make it difficult. So normal people couldn't understand it. They could have quoted it in the percent yield. We paid extra for that. So it's already 1.3% through, I guess, the first quarter. What is the yield? That's the price that you pay for it. So what happens is during the quarter as that dividend

points index accumulates, when we get to the end of the quarter, I know exactly how many dividends have been earned on the S&P 500. So it's going to be 58 is the how much has been received and 20 is the 20 to go. So if we bought it for 80, and we get to the end of Q1, and it's at 20, that means $20 of risk has been taken out of the contract, and it's been earned. And basically basically your remaining risk for the next nine months is now 60. And what you'll see is those contracts will start at like 75, right?

And then as the dividend points come in and affirm where the actual growth rate is going to be, the contract will migrate up and they will converge that maturity. And that's the dividend risk premium. And so the 11 year out ones trading at like a 10th of that, that's my quick math at like five, six, seven, something like that. No, no. So, I mean, I pulled up on the screen. So it'll just get 10 times more valuable over the. Well, no, no, no, no, that's the thing.

The implied growth rate in those dividend futures contracts is like 1% per annum. So the 2000, it's about 77.85 right now, the 25. Okay. The 2032 is at 82.50. So what does that mean? Again, getting back to- Yeah, that's weird. It should be- Yeah. Well, what can I do with this information? If the S&P goes to the moon and that curve doesn't move, would you rather buy the S&P and pay essentially a massive multiple for earnings 10, 15 years out? Or would you rather buy exposure to earnings in years one to 10? You might get better value. What did people so people use options to do this on individual names right like Nvidia comes to mind like I don't want to own it so priced up there's animal spirits in there like can I just

own the return the dividend stream instead I don't know if they even pay dividends probably they don't pay dividend it would be tough to isolate it but if there was a company and you'd rather exposure you could isolate and strip the dividend out but what's interesting is you know the US is a is a funny place sometimes. So you have the competing regulators, right? You have the SEC and the CFTC who constantly trip over each other in the space of derivatives, right? Is that a commodity or is that an equity? Who regulates it? So they can't figure out who's going to be in charge of the single stock dividend futures. So the Eurex lists them. So you can go into Europe right now. I think there are 29 US names where

you could trade dividend strips. They list them for five years typically. And in Europe they list them on sectors. So if you just want to take a view on the financial sector, maybe you want to sell it because that's like buying and put, right? And talk through me globally what everyone's main index looks like. S&P versus, so, Euro stocks or whatever versus Japan, like what are those dividends running at right now? Yeah, so it's funny.

So great question by the way, in the US, as we said, it's basically flat in the early years and then very modestly upward sloping. You get about 1%, 1.5% growth per annum. Japan looks a little bit like the US. Now, Japan isn't as liquid. They only last five years, and you really get most liquidity sits in years one to three. But that's normally sloped, and it's actually just sold off today pretty significantly. But it's positively sloped a little bit, right? So normally sloped. And it's actually just sold off today pretty significantly, but it's positively sloped a little bit. Right. So it looks normal.

If you ask somebody to draw what you thought the curve would look like, that it would look like what they would draw. If you go into Europe, it is upside down. It is massively inverted. No, it's inverted. It's a W. Oh, it's inverted. Not even a W. It's just a downward check. It's like an upside down check mark.

And the UK looks exactly the same. What's the logic there? It's all going to be invaded by Russia. There will be no dividends ever. I just it's just a risk market. I think they're just looking and saying, you know, yeah, like, I don't know what the prospects are going to be eight years out. And so if you want me to take the dividend risk eight years out,

the regulatory environment, the geopolitical environment, all the stuff that's going on there, I need to get compensated to take that risk. So this is in euro. So the euro stocks, I don't even know where that euro stocks is today. It's about 5,200, 5,300. The 2025 contract in euro stocks is trading at 165, 166, somewhere in there. The 2030 contract is trading at 142. But they generally pay a higher dividend in Europe? They have a higher payout ratio in general, yes. And the U.S. is higher, so the relative value of the dividend versus the index is higher

over there. And what do those payout ratios generally look like? S&P versus Europe versus Japan. So historically, S&P is like, view all the way back. It's like 50%. Right now, it's like 25 to 30%. So we've had a huge period of earnings growth and the dividend growth has stayed at 7, 8, 9%, but it hasn't matched what earnings had done.

Right. But I'm saying just the actual dividend on the SP last year was what? Three and a half? I don't know what the number is. No, no, no. The actual in the S&P was about like 180 last year. 180. Got it. Versus Europe's maybe what? Double that? Yeah. Like it's over two, two, two and a half maybe. Japan's about, Japan's over two. But the key is the payout ratio, right? It's how much of the earnings are they returning in the form of dividends?

And then the yield is a reflection of the valuation of the market relative to that payout ratio. Is that partly, I guess there's plenty of smart and well-heeled people around the world, by the way, that partly of anyone playing this game is just playing in it out of the US versus globally. So you don't get as much interest? No, no, no. So what Metaris is doing I think is a little bit unique because we're looking at these markets to build portfolios and to create systematic strategies that-

Yeah, not purely hedging or whatever. Yeah, I think in other markets there's a lot of hedging here. They look, you look, you can trade options on these things too. And like I know, a lot of the big the Canadian pensions, the Scandi pensions, they'll look at this opportunistically. And so when you get a COVID event, some code what happens that the market sold off, the short term dividends didn't really move because people, you know, but then they sent sent people home from work and then out in Europe, they started jaw-boating about, hey, banks should suspend dividends this year. And then you saw a complete

collapse in the front end of the curve. In the US, the big sovereign funds came in and actually bought that. So they'll wait for the left tail and they'll come in and provide that liquidity. On the flip side of that, I know some long ball funds that actually will sell them as a long ball play. Finding it cheaper to hold than buying putts or holding the VIX or whatever they're doing. That is exactly right. There's no lost premium. There's a dividend risk premium that will erode over time. But you can simply look at how much option premium am I going to spend to buy out of the money puts or to get exposure to VIX versus the dividend strips. So all these things should have relationship to each other. We're going to finish up. What intriguing rabbit hole have you found yourself diving into lately, personal or professional? Well, I'll tell you my rabbit hole, but I don't want to talk about it because I've been

obsessed with this Doge stuff. All right, let's do it. Yeah. Wait, yeah. And where you're in Connecticut. I'm in Connecticut. So what's the mood there like everyone what the heck is happening? What's going on or cheering it or panning it? You

know, Connecticut's a weird place you get it's funny because you get the outrage like, you know, well, how are they doing this? We need to, you know, help the rest of the world and we can't be cutting all this stuff. And then you actually point out the stuff that money is being spent on. They're like, you know, that's stupid. We shouldn't do that. And so, you know, I mean, I give Trump credit because he finds the 80-20 issue and he puts himself on the 80% side of it, even though the 20% side would be very loud. And even the 80% side might not realize that they're on the 80% side until they actually are forced to look at it. So I've been, and I don't know, there's this young woman who is a data scientist. She's deaf and has some physical challenges, but she's freaking brilliant and must just

hire her to the team. But she's been doing a ton of just data mining now that a lot of this data is becoming public. And so there's just so much, I mean, it's so discouraging in so many ways, but you know, it's like, you know, whatever, just the gore of it. Yeah. Right. I feel like it was missed. They could have promoted a little better. Like we're going after the pork projects, the bacon like all that stuff that is to me the fix is put it all every single line item has to be voted on that's the problem right they stuff all this stuff into one big bill half the people don't probably even know

what's in it as they're voting on it yeah no I agree half of Congress I'm saying that much less the Americans. Yeah. So by the time it gets to us, we're like, what are we doing? But someone promoted that, someone wanted that in there for their own interest. Their own interest, and you know, remains to be seen how nefarious those interests are. I'm sure more will be uncovered over time. But like one of the most controversial political things over the years has been the line item veto, right? Where you can send a bill to the president's desk and you can say, okay, I'm going to sign this, but I'm going to veto

that, I'm going to veto that, I'm going to veto that. So nobody, they want to jam it all on the big bills, for exactly the reason you pointed out. Tying it back, what does that do to your, what is this administration, DOGE, right? There's been some ups and downs. What's that done to dividend markets that moved? It's moved them. Yeah, I think the market is trying to sit through, you know, as the equity market has sold off, you've seen the back end of the dividend curve sell off, right?

Because remember all of them together equal the market. So if the market goes down, some of them have to go down. The front end has held up pretty well, but you're starting to see some risk evident in, if you look at credit spreads, if you look at the time structure of VIX and some things like that are starting to indicate that that left tail risk is starting to kind of heighten a little bit. So you're starting to see some of the front ends sell off a little bit. We haven't seen anything material, but it definitely has us, you know, very focused on that. My rabbit hole is my son is reading Great Gatsby for English class and he was asking me about it and I started to pick it up right back through it and getting

into all the the green light and looking up now these days you don't just have to think about it and talk with your right back there's YouTube clips and whole blog posts on what all this means so I was diving down into all that symbolism and was it really intended or was it not? Yeah. Which was somewhat. The rabbit holes that the kids throw you down are awesome sometimes. Oh yeah. You've been listening to The Derivative.

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