The Derivative - Volatility's Heartbeat, the AI Boom, and MJ’s Bulls with Equity Armor’s Brian Stutland

Episode Date: November 6, 2025

Join Jeff Malec and Brian Stutland, Portfolio Manager at Equity Armor Investments, as they dive deep into the complex world of market volatility, AI's transformative potential, and strategic investing. Drawing from his extensive trading experience, Stutland offers unique insights into the VIX, option strategies, and navigating today's dynamic market landscape. From the dot-com era to the current AI revolution, they explore how volatility can be an asset class, discuss the potential economic impacts of technological innovation, and share strategies for protecting and growing investment portfolios. Whether you're a seasoned investor or curious about option strategies and market dynamics, this episode provides a fascinating look at the intersection of technology, finance, and strategic risk management. - SEND IT!00:00-00:49= Intro00:50-14:38= AI, Valuations, and Market Froth: Navigating the New Tech Boom14:39-25:35= Harvesting Volatility: Strategies for Trading VIX Futures and Protecting Portfolios25:36-33:28= Option Premium Selling: The Hidden Risks of Wall Street's Favorite Strategy33:29-49:03=The AI Revolution: Deflationary Disruption and the Future of Technology49:04-55:13= The Ripple Effect: How Market Volatility Spreads Beyond Bonds55:14-01:04:22= From Bull Markets to Bulls: Whack-a-mole VIX spikes & Brian Stutland's Sneaky Game 6From the Episode:⁠Blog post: LJM Autopsy⁠ Blog post: ⁠The '96 Bulls: A Masterclass in Portfolio Construction Follow along with Brian on LinkedIn and Twitter/X and check out more from Equity Armor Investments on LinkedIn and their website equityarmorinvestments.comDon'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

How long the bear market lasts is tough to sort of stomach for people, but ultimately it goes from the lower left to the upper right. So I'm going to keep owning stocks. And if I'm a long-term investor, I'll take some lumps. If I've, if I've harvested some volatility along the way, I'm ahead of the game. Welcome to the derivative by our Sam alternatives. Send it. Hi, this is Brian Stutland Portfolio. manager at Equity Armour Investments here to talk about volatility in the markets on the derivative. All right, Brian, how are you? Great. How you doing, Jeff? Good. I'm, I can't remember if the last one we did, I don't know if you had this background, so I'm going to start asking you some

personal questions about your book shelf here so STS was your floor badge that that's correct yeah people nickname me status on the floor or studs uh short for Stutland on my nickname but yeah that was that was my badge for for many years status stuts I like Stutz better uh then what else you got here like a little boys or girls basketball team or something I can't tell what's happening there uh i got from well on this side right there uh this spring mustang baseball boys i was coach of the team my co-coach got me the plaque we went undefeated and won the house championship it's nothing great but it's it's kind of a funny thing to put in the background um it was a it was a good time for all the boys playing um and then next to that also have the uh world

trade center um obviously um you know sadness around that event but um kind of started trading my own book the day before 9-11 actually on the trading floor at the options exchange so um kind of a weird weird crazy day as it was but especially for me to like try and start off as a new trader and then not know what the heck was going on and then the markets were closed so um kind of keep that in the back of my memory is uh as a beginning point things can always get crazy in it right yeah uh-huh i got to um hold on real quick you know as long as we're talking eighth grade boys right right this was the uh what was this 22 so what was my son i think they might have been eighth grade yeah eighth grade boys fall ball ball ball champs yeah it's always look it's it's as we saw with

the world series this last weekend it is so hard to win a championship like even when you have it right there for you sitting there um it's never easy to be the best so you know whether it's fall ball or musting house league or whatever it's it's still hard to win whatever you're whatever you're doing so be proud of it right the fun part of that one for us we had it was all like his uh buddies from the eighth grade and then they in chicago you usually leave your eighth grade school and go to a different high school and it was like the last hurrah of those guys together which was fun yeah go out on top yeah that's it the rest are just boring family lovely family pictures i'm sure you just got those out of the frame those aren't real that's not your real family

right exactly those were the people in the frame when you bought it yeah had to find some good looking people to put in there. Love it. So thanks for coming on. We were just hanging out down in Nashville at the talking hedge event, which was a good time. So I want to expand on some of that stuff. And we've done a few podcasts. We've done one with you before.

We did one with Joe. So we'll put those in the show notes for kind of background stuff. And you can touch on a little bit as we go, but we won't spend the whole time on background because we've already done that. So anyway, it was on a call with an advisor today. an interesting fortuitous thing as you were about to come on. So he was kind of saying I'll summarize was, hey, I don't really hear about the VIX anymore. Is the VIX dead? What's going on with the VIX? Why don't I hear about it anymore? It seems boring now. So my red flags

and alarms were screaming in my head, but I wanted to start there and ask you of like, hey, where's the VIX? Where's it been? What's going on? Yeah, I mean, there's times when the VIX is boring. I mean, really the natural movement of that kind of product, it's calculating what traders expect implied volatility to be for the next 30 days in the S&P. And it's like a heartbeat. Like sometimes you're in the resting heartbeat. There's nothing going on and it is boring. And then there's times where, you know, you exercise and the heart rate elevates.

It can't stay that way forever. And then it comes back down to the resting level. I think we're kind of in this resting level. But what's really interesting about it, I don't think it's dead. so to speak, because when you look at it, it's kind of trading at somewhat elevated levels, given the severity of the bull market, right, that we've seen in the last, call it, you know, two years since basically the boom of AI and basically we got past 2022. You would expect the VIX to kind of be like around a 12 or 11 or something like that,

given how well the markets behave. But in fact, it seems like the VIX doesn't want to go below 15 or 16. And when traders look at that, to me that says there's something. some sort of level of risk in the marketplace. To me, I think it's probably just because valuations have gotten stretched so far on the S&P that there's a little bit of worry. Can it keep going? How far can the market keep going? So I actually think it's a pretty good indicator of what's really going on. And it's very tradable. So I mean, you can forget about it, but I'd rather trade it as an asset class because there's really some key potential benefits

as we talked when we were down in Nashville at the Talking Hedge Conference. Yeah. And then rattle off, you did this down there, rattle off your quick metrics for a VIX of 10 equals blah, blah, blah. You were rattling those off at the conference. That's good stuff for people to know. Yeah, sure. So like a 16 VIX would represent the market expecting most of the time

a 1% daily move in the market over the next 30 days. It's like inside the bell curve basically. Right. yeah yeah so like yeah think of it like a bell curve or do you ever like um on the prices right the plinkgo chip yeah yeah so i mean think of it like drop the plinko down the middle and where is it kind of like kind of sort of land which is mostly like in the middle right so most of the time a 16 vix is that one percent daily move now the vix trades a little bit more elevated than expected moves uh due to some nuances of the skew and the s and p but but think of it that way so um the market

it's expecting 1% daily moves with the VIX is 16. Basically, if you double it to 32, that would be 2% moves and so on and so forth, right? So VIX 80 is, you know, call it 5% daily moves like we saw in March of 2020, like at the onset of COVID pandemic, right? And so you can kind of look at that and say, how are people expecting the S&P 500 to move over the next 30 days? And when it really can't get below 15 or 16, it's not like we're seeing 1% daily moves, right? We're not seeing those 1% daily moves, yet expectations are to see that move. So to me that says, hey, there's some level of risk. I'm willing to put a little risk premium on my option trade because valuations are stretched or whatnot.

And it's just not trading down. Like I said, I would like to see it probably like 11 or 12. That's probably more realistic of the actual realized volatility in the market. And do you think some of what's going on is we're seeing a little 99 internet boom stuff of spot up, VALA, like these things are going up so fast that VAL's reacting, right? People aren't used to that.

I'm like, how can VAL go up when the market's going up? But it happens. Yeah, I mean, yeah, we did. I mean, basically, I kind of liken it to like, 1994 was kind of like the emergence of Netscape. Then you had AOL. I traded in the pit in Netscape when I became a market maker. Nice.

You should have saved some of that paper. Have it up on the wall there. I know, right? Yeah, that's what I should have in the background. But basically what we saw from 94 and on is the VIX went up when the market went up. And the reason being is I think there's a very high correlation. Well, first of all, volatility in the marketplace. We have a newsletter called the ripple effect, and we call it the ripple effect because it's like you can't drop a bowling ball in a pool on one corner of the pool.

I'm not expect a wave to reach the entire pool at some point. You know, it might be smaller on the other end. But there is this ripple effect. And the ripple effect usually starts in the credit markets and valuations. And so in the 90s, we saw valuations continue to expand like we're seeing now. We saw a revolutionary type technology development in the Internet and email and everything else, like we're seeing now with AI. And so those two things coinciding together. I would expect Val to go up, VIX, and the market to go up maybe for the next four or five years until we reach some cuspic.

of a blow or five years it could be i mean look at like 94 i mean you know if 94 was let's call it 2023 when open i a i started right yeah we're kind of in year two maybe 95 96 that lasted all the way to 99 i mean if you look at what the nasdaq did from 94 to 2000 peak it was like a 700% return in a major major index um so uh but people were just jumping over themselves to let and get in more, more, more. Yeah, yeah. So, and then, you know, along the way, obviously, there were some, there were some shakeouts. And then 99, we had the Russian debt crisis.

So we sort of had like this emergency rate cut decision. We haven't, we have not seen that yet, which I expect to come at some point. We are seeing that the Fed cut rates. They started cutting rates in 2024, just like they started cutting rates in 1994. But rate cuts are right now, they're kind of systematic, right? They're like looking at the data. they're analyzing we haven't had an emergency rate cut situation um so that's probably coming and that will probably create some bubble-ish kind of event i disagree on that one i think they're done with

the like unannounced emergency stuff right like their lesson learned is like be transparent um telegraph what you're going to do way ahead of time don't spook people but right well i guess i should say i should say yeah the emergence of like the russian debt crisis kind of came on fairly quickly. You had long-term capital management go under. So it's like an emergency event kind of driven. You're right. Maybe not an emergency rate cut like we saw back then, where you had traders basically running back to the trading floor to get on when the Fed announced a surprise quarter point in the middle of their Fed meeting. I don't think we're going to see that. But we are going to probably see some sort of like major carpet shakeout event. Why were they, why weren't they on the

floor during the Fed meeting? They were expecting him to finish the meeting first? I think traders were just like coming back from lunch, you know? Like I was in the pit, Cisco and Oracle where the options trading in there was actually the number one rated pit on the Chicago Board Options Exchange at the time. In terms of volume you're saying? Yeah. Both volume and then there were like a rating system by the brokers that would rate the quality of pits and we would get rated number one. Who knew? The escalators were right behind us, right?

And you could just see guys like running back up the escalator to like dash onto the floor as like the markets roared. and came back and fun times, fun times. What do you see that's similar and different between that 99, like when you were there trading those options and today, like the same sort of froth or not as much? What do you think? Well, you are seeing the same level

of like elevated forward-looking P.E. and valuations on companies, right? And if you look at it too, I saw like a published report by J.P. Morgan that when you see P.E. is up here in like forward peas, not just like trailing, but forward-looking peas, which analysts are, you know, trying to determine how earnings are going to come in. And when they sit in like the low 20s to 25, like the 10-year historical return after that point is not very good.

It's rather flat. So you're seeing the same sort of like elevated PE levels that we saw in the 90s. I think the only difference here is that AI is like, you know, whether it's open AI, Gemini, whatever one of the LLMs are building out, they're building out like a central nervous system in the brain that could be used for robotics, better business, productivity, et cetera, et cetera, down the road. It's like, is there really a valuation to that or is that just like, what are people willing to pay

to have a central nervous system, right? And then let's plop it into robotics. Let's pop it into our business and AI agents and all that kind of stuff. And then is the secondary level really the next valuation that we have to really analyze? And the first one doesn't really matter. It's just a question of, you know, are they going to get too frothy in their debt and borrowing with each other to play out?

So that's maybe the one difference is that is, you know, we're still kind of in the early. I don't think we're in 99 yet, you know, put it that way. You just touched on that. So I'll ask you, any worries with this vendor financing that seems to be happening? Yeah, I hear a lot about it because it's like the circle of life, you know. one guy borrows money to build this one and this person then promises to buy whatever and I'll give you equity and you know there there is some concern that that wheel could stop

but like I said I think we're still in like the buildout phase where that cycle can kind of continue and continue the question will be really like we the second like the Palantiers of the world right that are actually building out practical uses of AI and applications, you know, right now it's basically like the new version of the CIA Palantir, but the Palantirs of the world, will they start to use this whole ecosystem so that all the borrowing and that circulation actually gets, you know, put to use? Right.

I think that happens. Will people pay for it? Right. Love it. So this feeds into, and heard you say, before, right? There's actual individual stocks that play here. So you more than anyone I talked to, a lot of other managers are like, hey, forget all this stock and AI is risky. It could blow up at any minute. You need to hedge. You need to do this and this. But I've heard

you a few times be like, no, own that stuff. That's great. Own that over there. Do this over here. So kind of, I don't know if I set that up correctly, but tell us what you kind of how you think about that. Yeah, there's some great stuff to own out there. Own it. Yeah. I mean, look, like I kind of said at the beginning of the show here, right, that the NASDAQ went up 700% over like a five or six year period, right? So that stuff can really continue to go. And I think, you know, there's a place in the portfolio for it. Now, the question is, is how do you manage that so that it's not the end-all-be-all to your entire portfolio? And so, yeah, the Navidias of the world are going to be the leaders.

Can you just own Navidia? No, you have to look at AMD. And then I just heard that Cornell University, just a week ago, came out and validated GSIT, which builds like an APU that takes up a lot less energy, a heck of a lot less energy to do some calculations. So somebody's going to come along and build a better chip, right? Somebody's going to come along and build a better LLM platform. But do I have to own like this part of the world? Yeah, I think technology, this is a game changer that we're going to see forever.

When you get these like, you know, 25, 30 year, like revolutionary things that happen, I want to own it. I want to be in it. Now, the question is, is like, what kind of time frame are we in? And how can I continue to diversify my asset allocation? One way we do it, you know, as a portfolio manager is we buy volatility. So, you know, to the point, I know we've talked about the VIX up, stocks up, but, you know, that's where you want to own volatility as an asset class. You want to own some optionality in the market. you want to own some stocks and sort of put that together as a sort of good mix if that's the right

macro environment that we're in and I think we're in that macro environment. So expand on that, right? People have been trying to own VIX or talk first about how you can't actually own the VIX. So how do you solve for that? But then after that of like people have been trying to do this for years and years and years without much success because it's a massively declining asset. So tell us how you solve that puzzle. Yeah. I think, I mean, I think on the first part, when you look at owning the VIX, right, you can directly, well, kind of indirectly own it through VIX future contracts. So these are volatility futures contracts. They're traded at the CBO. You can use options or you can use the futures contract themselves. You can make a directional bet on where you think the VIX is going to be. Now that the nuance to it, unlike most commodity products out there, oil, you buy an oil futures contract. There's an

bedded storage and transportation costs and sort of like a supply and demand factor as well. VIX and volatility futures, it's just a bet. I'm just going to add time of expiration. We're going to settle our bet up and cash settle it. It's called a cash settle product. We're not delivering, you know, a barrel of oil or a bushel of corn or whatever, right? So zero start, zero transport, yeah. Right. So there's zero transport, there's zero carry. So what we're really doing is just where is the VIX going to be, let's say, 30 days on expiration from now, right? And that just becomes strictly supply and demand, right? So the VIX future can trade above the VIX for right now. It can trade below it. But on that 30 days, they'll meet each other. But in between, there can be movement above and below the VIX. And so because VIX is sort of mean reverting, it's an insurance product, people are, the demand is usually to overpay.

for that futures contract. And so there's a little bit of an extra cost, right? If you overpay for the futures contract, if nothing happens at settlement, the futures contract will go back down to VIX and you'll have paid like a little extra than you should have. And so sort of watching that structure on how that trades becomes more of a trader's game than it does. I'm just going to buy volatility futures contracts or VIX ETN or ETF, which I can own

to buy the VIX. the expected return of that is not positive over time, right? It mean reverts with levels of spikes and back down, like that heartbeat that I talked about. So you want to make sure you harvest that volatility to your point of how do you trade this? You have to harvest your volatility when those events happen. And then, but do you guys also harvest throughout, right? If there's a little bit where you can start to kind of make it more of a neutral carry along the way until those spikes? Right.

Yeah. So what we like to do is, you know, let's say you do get like a small mini spike. Then that's a time to sort of, you know, maybe take some profits on the volatility side, sell that out and buy stocks at a lower price and vice versa the other way. The other thing you can do is you can trade it like a long short. You can look at other pieces of the market that maybe have some time decay value to them. I know some traders out there will, they'll own a structured. note at one part of the portfolio, which is almost like an option-selling strategy technique while they own volatility in another with stocks, right? So you got your notes that are kicking out premium with some defined risk. You've got your stocks. You've got your long volatility position, right? For us, we actually trade S&P options. And like I said, we shift through the VIX futures contracts accordingly to look at that contango, like I call it, that premium of the volatility futures contract above the VIX itself and to determine what's the best one to kind of own to mitigate some of the buy and hold decay loss to which is the cheapest one essentially right so there's times

where like when you look at the VIX futures curve um for example February might be at a call $1 premium to the VIX index and November it could be at 75 cents which is expiring you know just in a couple weeks, right? So there's only really a quarter point difference between Feb and Nove, but 75 cents between Nove and the VIX now. So, you know, do you want to hold something that's going to lose 75 cents in the next two weeks, or do you want to hold something that's going to lose a buck over the next four months, right? So we kind of like look at that kind of decay, time decay value and make an analysis on how to hold VIX features. And it's always mostly always elevated above the spot vicks just because nobody knows what's going to happen over the next 30, 60, 90 days, whatever.

Well, that's the uncertainty premium. Yeah, yeah, yeah, that's a good way to put it. It's the uncertainty premium on the market. And so imagine a bull market that's kind of going and going, right? The level of uncertainty, I think, starts to rise. And so you typically see this premium in a bull market, a bull market, a bull market, a bull market. trending upward market where there's going to be some uncertainty that's going to happen, you know, somewhere down the road or upcoming very soon.

Vice versa, if you have an event, like COVID pandemic, actually, we saw VIX futures trade at a nasty discount to the VIX itself. You know, you're talking five, six, ten bucks lower than VIX was. Why? Because the volatility event is happening. And now people's expectations in the future are for volatility to subside and come back down to normal. like it can't get any worse type of right right um but sometimes that makes for some really good

opportunity actually to own that um on those contracts at that moment even though they are probably going to come down and it's probably going to be a loser um sometimes you catch those at such a steep discount that those are good to sort of own against let's say a long beta position in the market and how do you protect or right if you're monetizing along the way to kind of offset that carry how do you protect against you got out of all your protection and the thing keeps going down. There's a second leg down or a second third week down or whatever and you've already monetized everything. Now you're on the wrong side.

Yeah, well, I mean, look, I mean, the VIX, I always tell people it's like a merry-go-round. Like, you really never know when it's going to stop sometimes. There are some indicators and trend followers that have some techniques. Like if they see the VIX making like a lower high and the market making lower lows, right? So stock market is still going down, but the VIX is not going up anymore. Right. People use that as like, oh, wait, there's got somebody selling puts in the market to keep the VIX suppressed because the VIX is calculated off of S&P options. So if option premiums are coming down, there's got to be somebody picking levels on the put side, like saying, hey, the market's going to reach a bottom somewhere.

I don't know where it is. It's going to reach a bottom somewhere. They sell put premium. That brings the VIX down. So that's sort of an indicator of like maybe the market's going to turn. do I take everything off strategy and volatility? No, because of that merry-go-round effect, right? I might lessen the position.

What other traders might do, which is, I think, a very interesting technique is so in our fund, we're long stocks and long volatility, right? It actually can, that sort of position can act as a really good rebalancer. You know, Jeff, we kind of talked about, like, do you still have to own Navidia? Well, if volatility is high, our fund maybe is not going to perform. as well because you're owning this volatility component that might be coming down even if the market's going down. We're going to

continue to own that volatile position. But that might give you a time when volatility tight trim positions in our trading strategy and buy those Navidia risky assets at that moment in time. And even if you get hit a little bit, hopefully over time, that equation kind of reverses

itself. Yeah, you get the rebalance effect. Yeah. So it can act as a really good just inherent rebalancer. And I kind of It's like history is shown if you stick with that rebalance, it does work. I mean, look, you look at the history of stocks. They go from the lower left on a chart to the upper right over a long period of time. There's just a lot of volatility in between.

And it's a question of how big and how long that shakeout is going to last. 99, 2000 was like a three-year bear market after that, right? 2008 was like a year-long bare market. How long the bare market lasts is tough to sort of stomach for people. So, but ultimately it goes from the lower left to the upper right. So I'm going to, you know, I'm going to keep owning stocks. And if I'm a long-term investor, I'll, you know, I'll take some lumps. If I've, if I've harvested some volatility along the way, I'm ahead of the game.

What are your thoughts? Do you have, right, you see way more covered call strategies and alternative income that's really just selling calls or selling premium. So all that stuff added up and I think that's the highest growth AUM mutual fund or ETF category right of like

alternative income options income so tons and tons of people selling options so I don't know if there's a question in there but just talk about that a little bit of like what does that do does that affect the markets is it pushing around the option prices that you guys are looking at does it push around the VIX

I mean I think it's definitely has an effect on the option prices, right? I mean, yeah, the level of growth of option premium selling has been absolutely enormous. Then you couple that with like zero DT options and that trading aspect of it. And so I like the premium that once was on all those trades that made it worth it to sell the option premium, I don't think is quite there on a risk-adjusted basis anymore. It's very easily to tell people, hey, we're going to give you, you know, a yield of 7 to 10% a year, or maybe more, by selling this option premium overlay, but what they don't tell you is by selling that call on the market, by selling the call, right? A call option is the

right to own the market no matter how high it goes. If you're selling that away, you're giving up the upside. And we've just seen like these V-shaped moves back up. I mean, it's, we're going on five, six years now of seeing these nasty volatile shakeouts to the downside. And the rip back up is just as nasty and violent and happened so quickly. You know, not to like, you know, I don't like bashing like anybody, so to speak, but just as a case and point example, J.P. Morgan Hed Equity Fund, you know, they're only up like 5% this year with the market's up 15, 16% or whatever because they've just been called away. A lot of these design options selling strategies pay for their insurance on the downside by

selling away the upside and that can be a very dangerous trading strategy and if you get too big you have to get you have to sell closer and closer and closer to get enough money or as the volatility goes down you have to sell closer and closer to the market yeah it's more of as volatility goes down you sell closer and closer to where the market is at and now you're at more and more risk of being called away to the upside and if we're in a 1990s like scenario that that's just you you're missing and and a possible like you know slightly inflationary environment like you don't want to be called away when there's also inflation right you got to at least make money on the stock equity side of things to pay for inflationary costs so it's it can be just a nasty

strategy where you're just giving up not enough to make enough money that's a good thought experiment right like we don't know where we are in that 94 to 2001 right so if you gave up a half year upside for eight years to protect against a 60% drawdown? Yeah. That's a loser probably, right? Yeah. Someone do the math for me, but that's probably definitely a loser. Yeah, yeah.

So that's where you guys are coming from and they're like, no, I want to participate as much as possible in that upside. Right. Have as small drain as possible and go from there. Yeah, exactly. It's like, I think when we talk to our conference, I like the word that you use is like we're kind of like your, first responders into a situation like we want to capture the emergency situation on the downside and protect that now there is a cost to it and we try and mitigate that but we also the emergency upside move too we want to participate in that to to a degree um so that we can you know

continue to feel the valuation move higher or whatever it is um and so it's kind of like playing like the wings the wings to the market that's a good i'm going to coin a new one like for the first responders was a guy at makita it's been borrowed by one river and now so i i've been borrowing it but interesting the thing you said they're like you're viewing it more as like i'm not necessarily the i am the first responder in the volatility side but what you really want me is i'm the first one like back in the party like the boat tipped over the sharks are in the water i'm the first one back in the boat right and let's go let's get this tour back back going yeah right yeah it is

You know, so I guess I'm kind of like your tour guide and you ever want to kayak a level five a river without knowing where like the rapids are going to catch you, right? So we kind of like get around that and avoid it and then, you know, then we'll catch the fast moving stream back to the upside. Maybe not, I mean, this year, this year our strategies have outperformed the market because the, the V shape off of April like tariff tantrum has been so sharp. But, you know, we won't necessarily always capture all. of the upside, but we'll still be

in the game. We'll still capture most of the upside. But structurally, you're not calling away your upside. Correct. So your drag, if any, is going to be from the protection, from like paying over and over again that vix and not being able to harvest enough to offset that. Correct. Correct.

Yeah. I like this kayak on the rapids. So some of the guys are getting into the rapids and they just pull their kayaks over to the side and walk the rest of the river. Right. Right. Some know exactly where the rapids are and they can navigate the rapids and then boom they're in flat water and now you're gliding down the river you're going to get there 10 times faster than the people

walking correct because they they stepped aside they you know got shooking out by by everything that happened and then the the river's moving you know nice and steady but fast down down the road and they're and they're walking so yeah I mean that's and you know you're you're actually kind of in some way taking the other side of the trade of all this option premium selling that's going on. And it's such a big market. I think there's opportunity to take the other side and advantage of that.

I mean, that's what I did as an option trader as a market makers. I was taking the opposite side of a trade. And then granted, as a market maker, I was trying to make my nickel or dime and lay off that risk very quickly, you know, in seconds, minutes, or whatever. But this is, you know,

this is someone for taking the opposite side of all that order flow and paper that's gone into option premium selling that's out there. And what do you think that's a huge like blow up risk for the market and economy overall, all that option selling? Or is it just going to be like a people get disenchanted with it because they're only made 5% this year instead of 20%. I think it's more of like disenchanted with it. You know, there will be, I mean, we've seen groups blow up from taking like unmitigated, unprotected option selling risk to the market, whether to the upside or downside. Like we'll put the LJM autopsy.

in the show notes. Yeah, right. The famous one. Yeah. Among the, I mean, there's a handful of others over the years, right? But most of these are covered calls from my understanding. So you can't really blow up on that. Correct.

That's why I'm saying. So, like, they're not uncovered. They are covered. They're not, you know, taking endless risk on the market. So that's why I think it's going to be disenfranchised move. You know, like, hey, look, you know, I mean, I think this year, advisors, especially, like, you know, if you were in an investment advisor and you were in like some sort of defined risk strategy, it's only up five or six percent this year. And the market's up

15. People are going to be like, what's going on? Why am I missing all this? So let's talk about your equity piece. You're in that fast moving smoother water. Two programs, right? One is doing more S&P focus. One, NASDAQ. focus. So which one you want to start with? Explain how the equity piece works. Yeah. So normally as portfolio manager, you know, volatility, it moves so fast. Like the harvesting the crop happens so fast that you only need to own a little bit of it. You know, call it like 10%. The other part is mixed with that 90% of equities. So obviously we know the VIX. Let's just start with the S&P portfolio management. The VIX is calculated off of 30-day options on the S&P 500, right?

So it has a very high tied correlation to the S&P 500 itself. So our stock picking wants to correlate to the S&P 500. Now, the beauty of using some stocks and why you don't necessarily need 500 companies or an index is because there can be some tax loss harvesting that you can do along the way, you know, where two stocks behave very similar and they go down together. You can sell out of one, take the tax credit by the other and still ride, you know, back to the upside. the same way.

That's number one. Number two is search for areas that are going to provide tailwinds to the economy. Not all 500 names like right now, you know, Procter and Gamble, I don't know what that is doing for you right now, right? Yeah, right. Yeah. Yeah. But it's not, it's not, you know, there's no tailwind from the economy going on from

Procter and Gamble right now. So you can then choose those like, you know, 40 or 50 names like we do. um and sort of structure like we're like a little bit overweight obviously i've talked a lot about i'm a believer in it so we're a little bit overweight information technology relative to the s&p we're a little bit overweight utilities because i think there's going to be a huge energy build out that occurs along this way with data centers and everything that's we're already seeing happen yeah let me check my nuclear stocks hold on yeah yeah right it's my number one train yeah right they're getting hammered today actually um but hold hold on we we lost the

So there's one program as S&P focus, one's NASDAQ focus. So on the S&P side, it's 9010? 90s, correct. And the 90s doing active individual stocks plus index? Mostly just active individual stocks, right? Got it. Okay. So, yeah, so that's going to give a high correlation to the S&P.

But then when you add the volatility component with it, now you kind of like create a portfolio that's more like a large cap value, low volatility, fund right where you know we've kind of proven we've never had a month over month down more than 6% since we started in 2019 we've we typically have like half the draw down to the market so it's kind of like this 50 beta protection so it kind of makes like I said this low volatility strategy when you take S&P with with our VIX volatility over now versus the NASDAQ side of it when we take the NASDAQ side of it when we take the NASDAQ stocks and we're just going to trade NASDAQ 100 that's we want to own that's the growth in the

market when you put like an all growth stock picking behind with the volatility component now you've actually kind of like almost replicated the S&P almost replicated downside risk like the S&P but upside of like a NASDAQ kind of thing you're not going to get all of the NASDAQ to the upside but you're going to get a lot of it so when we sit that we sit that around 85 or 90 percent you know, it's like almost adding like a higher beta equity position into the mix for somebody that, you know, we tell advisors with S&P stock picking with volatility is like a low vol. You almost could use that to replace your low volatility for your moderate conservative. We actually get benchmarked by Morningstar's moderate conservative index.

Which is the weirdest thing I've heard. I thought you were trying to get like a voter block or something, moderate conservatives. that's a that's an actual index what's in there um it's just like your balanced fund blended thing like a like a proctor and gamble well no it's it's it's no it's balanced fund managers fixed income you know like a full balanced fund approach right like mix of fixed income equities whatever blend that like your moderate conservative investor would want to be in moderate conservative yeah and then NASDAQ with our hedge is going to be more for somebody that wants to take some risk in the market, right? Like you're more growthy kind of individual, but kind of feels like, hey, the market's a little frothy.

I don't know if I want to keep going with this thing. I want to add some protection to it. Then NASDAQ with volatility is a good one to own. And that makes it look more like the S&P you're saying. Correct, correct. But just in terms of volatility, the downside should be much less, right? it can but because you have that higher beta sometimes the vault component's not going to hedge out as much as like you know the other fund right so in 20 in 2022 like you know we were down I think 18 19% on the year but 2023 you know when the markets were back up we were up like 36% so it's going to behave more like an S&P kind of thing and and put a hedge now the thing that was interesting about 2022 is that the second half of the year, actually the market went down and VIX went down, right?

That's the one area of risk where volatility is not occurring, realized volatility is not occurring. It's just kind of like a slow grind down. Where you want a second responder. Right, right. But like, you know, the tariff tantrum in April or whatever, then NASDAQ with volatility is very good because volatility spiked very hard very quickly, and it did cut drawdowns, right? So that would be the goal. It's like if we get a very nasty downside shakeout, hopefully NASDAQ with VIX gives you less drawdown than the S&P.

And there's some basis risk there? Like the VIX isn't completely covering the NASDAQ? Do you guys measure that? What's that what's that look like? What's that basis? No, I mean, it's a very good point, right? Because like I said, the VIX is calculated off of S&P options and S&P options are calculated and anticipated off of the S&P index. So there could be this like disjoint thing that happened.

where the NASDAQ is moving not correlated to the S&P or not having some sort of beta to it. Typically, we see about a 1.2 to 1.3 beta of NASDAQ to the S&P. But like you said, there could be that basis point risk where it doesn't line up like 2022. The NASDAQ was down, I think, like 33% with the S&P down 18. So it was a lot worse than 1.2 beta. And that's some of the risk in sort of putting NASDAQ with volatility in VIC. some of the risk to do that. But we...

There's no such thing as the NASDAQ VIX? You know what? There was an attempt to create VIX futures trading. There was VALQ index, which was calculated off of like, at the money, NASDAQ options. And then they listed volatility futures contracts on Volkue. And they really didn't find the right liquidity. People didn't really love the way of the calculation

of it. And so it really never took off. So there's not a good long volatility match for the NASDAQ. And so like our design here is like, let's get the next. Maybe we should roll it back out, right? It seems like a needed product with everyone long all these tech stocks. Well, it might be coming soon to a theater near you. I'm not going to.

Oh, breaking news. Yeah. Yeah. Tell us more. I can't talk too much because we're working on a few things here to figure something out. But that, you're right. That, you know, probably a better proxy kind of contract with the NASAC given, you know, what, 60% of the market cap now is like NASAC stocks in the S&P, I believe. Well, that's going to be my next way. Like, it seems like that

basis risk is becoming less and less and less because of that fact of like the SEPs littered, maybe it's the wrong word, or bejeweled with tech stocks. Yeah. versus 5, 10, 15, 20 years ago, not the case. Yeah. I mean, still, like, I think information technology sits at like 30%, 35% in the S&P. So it's not like it's not even a majority still yet. But, you know, obviously these market cap companies are having an effect. And I mean, just look at the earnings last week, right?

From the Mag 7, we saw we saw Amazon. We saw Microsoft come out. We saw Google come out. Like meta, all these things were moving the volatility last week. you know on these like seven names right yeah what's your thoughts my take is that all this a i is massively deflationary and right you're going to have these uh people coming out of college making 100 to 300 grand at google or whatever um those jobs go away and then what does that do downstream to the economy so i think you're like this AI boom is putting itself out of business eventually

right like you're so what are your thoughts on that Who knows? I mean, I could probably have another hour-long podcast discussion on this, but I mean, yes, I think the risk to it that I don't think is in the market right now, to be honest with you, is this, you're right, this massive deflationary effect that this can all have because ultimately if AI is taking jobs or just kind of shifting things and making things more efficient, then there's less money that. to go around to people, right? And then that just kind of brings things down. I mean, to buy the products that the companies are using the AI to sell. Right.

So it's like circular weirdness. And everyone would be like, well, the buggy companies, like everything pivots in the economy. But I'm like, this feels different. Maybe I'm just old and thinking that, but feels different this time,

which are dangerous. I don't think so. I mean, I tell people like, I think the day is coming, not tomorrow, but the day is coming where we're just, you know,

sheep hurting around the field. and you know you want to go eat some grass somewhere go do that but there's nothing really else going on besides doing that um what do you mean by that like that the a i's just taken over and we don't have anything to do yeah yeah i mean in a good way though it's like it's like star track like there's no money everything's fixed and taken care of i don't know if you're a star track fan but yeah yeah no i am and i mean that's you know that's the uh sci-fi world of it like you just live in this bubble and you're protective and taking care of, but there's really nothing for, I mean, look, if you want to go play a game of baseball, we can recreate a fall ball ball league of our own

and not have to worry about it, right? Exactly, yeah. So, yeah, it's, look, the rise of the machines is the point is to make businesses more efficient. We are still in the very early innings of that. I mean, I think you look at an Apple iPhone that actually put a reasonable device in your hand to communicate with others, like going back to 94 to 2007, right? The iPhone, that took 13. iPhone came out in 07?

Yeah. Yeah. So that took 13 years to happen. I think there's probably that same, you know, 10 to 15 year window from 20, 23 on where you have something really usable and marketable and happening all the time. And then that thing is going to grow for the next 10 years after that. So, you know, we're still, you know, call it 10 to 20 years away from like this major massive deflationary effect, but there is going to be more and more of it.

I mean, look, when I went to the trading floor, right, I started in 98, the floor was open outcry, you had a quote reporter taking your orders, you wrote things on paper, you shouted buy and sell, and, you know, by 2003, there were a lot of jobs not there anymore, right? A lot of people out of work and had to go find something else to do. And by now, none of those jobs. I mean, still in the options, but in the futures, no. Yeah. And the financial markets are the leading insight on what's going to happen.

It usually happens first. I mean, I had a touchscreen in 2001 when I started right before 9-11. I had a touchscreen. Where people like, what is that? Yeah. Like, it was very common on the floor, so it seemed normal there. But if I told somebody else about it, they'd be like, oh, that's the future, whatever. I mean, we didn't see the iPad for years after that.

So it does give a little insight of what could happen. If the trading floor is any indicator of like rise of the machines and what happens, then there's going to be a lot of people out of jobs. It worries me. And then my other medium hot take is why I'm seeing all these chat GPTs running ads. I'm like, if you're already starting to run ads on like how to make pasta for your girlfriend, that doesn't seem like a good sign to me. It seems like we're topping to me based on my,

unscientific ad indicator. Is that going to be the new, the Malik ad indicator? Yeah, the Malik ad indicator. But like, right, if you're just making money, hand over fist and there's more demand you can handle, why are you already running ads? It's probably because it's like there's going to be a winner take all maybe and everyone's trying to get the most users to be that winner. Yeah.

You know, like I said, I think right now, like the initial buildout, Open AI and everything else it's a central nervous system to i think ultimately robotics which is going to happen later on down the road like very sophisticated robotics like acting like a human being kind of robotics whether that's a chip that goes in our brain or it's an actual robot doing the work um i'm ready for the chip i got to wear this whoop band all the time like just put something in my arm that i but then how do i charge it that's the problem your own body's uh uh energy right yeah yeah um But I cut you off. Sorry.

I remember you. No. So, you know, when it comes to like this efficiency and what's going to happen, you know, it's going to take time to develop. And I think like I said, like Open AI is building out the central nervous system. What that is worth, I think, is many times more multiples than what the market's willing to give it. Yes. And you think there's multiple central nervous system? or can that work or does it need to be a winner take on?

I mean, if you're into like the world of Zen, there can be multiple, right? It's multiple upon multiple building it. Now, there will probably be a handful of just winners outright, but there can be more than one winner to it, especially, I mean, that's capitalism, right? Even if we have this massive deflationary like you're saying, and if that were to happen, there would still be capitalism taking place. be one huge winner, yeah. With, like, the, great, the 10,000 shareholders of that huge winner are richer than their

wildest dreams, and the rest of us are in depression. But to your point, that's why you got to own that stuff. Let's finish you got to. I think you mentioned this down on your panel down there. Hot take or, like, what you see in the volatility. space like I think you said no one's ever seen or what could be bad as if it stays elevated for some weird period of time was that you yeah I think um you know what could be what could be interesting well two dynamics I think you know on a hot take number one if you look at the move

index which is the volatility index on bonds it's trading at yearly multi-year lows right now so there's very little movement and price movement in the bond market and I talked about the ripple effect. After being somewhat crazy in like 22 and right coming off of COVID wasn't right move was pretty crazy. Yeah and now it's come all the way back down so there's little volatility going on with bond markets right there's you know the fed saying maybe there might be one more rate cut but don't put all your bets on it. So if we're sort of like in this known static interest rate environment you know how is there volatility somewhere else well there can be volatility somewhere else because when you have like this liquidity in the bond market, people can flush

money into the system, raise valuations to a degree where it's like, well, this is maybe two, I'm not going to get return on my investment. And then you have this like, you know, higher runaway volatility effect in the equity market. And then all of a sudden the credit markets crumble after that. Like normally it's the credit markets that crumble first. This could be the opposite where the equity market volatility gets so expansive that that pushes the ripple effect. You know, maybe you drop the bowling ball. The bowling ball is going to drop in the deep end of the pool instead of the shallow end of this time.

So I would just be cognizant of that because, like I said, that's where you can get runaway upside move on the market and then a nasty flush out. Is that, I think of that like a whack-a-mole, right? Like, oh, the bond volatility is low. It's like getting artificially suppressed somehow. So where something else is going to pop up, right? Right. Yeah.

while you're trying to hold, oh, well, cover that, cover that. Nope. Something's going to pop, which it seems like gold was the thing that has popped of the last two years. Yeah, well, I mean, gold has made a tremendous massive run. I think a lot of it, you know, there was obviously a big shift of governments buying gold versus like the US dollar, you know, in the last few years. But, you know, some of that is rightfully justified given the level of government debt that we're taking on. I mean, we didn't even talk about, which could be a whole other pack of us, is the government shutdown.

I mean, it's like the government shut down. Nobody even cares. I don't hear anybody talking about it. And our debt is just. That line killed at the conference. You were like, hey, oh, by the way, the government shut down. Is anyone in here even care? Yeah.

Nobody raised their hand. Nobody said a thing. You're like, it's so weird. This isn't even a thing. I know, right? But the government debt is an issue. And I think that has a lot of tie to gold and that, you know, moving significantly higher in the last couple years. And so maybe as you push this like bond volatility down like the whack and

what's going to pop up. Is it, you know, government debt? Is it is it valuations in the stock market? It's going to move. It's going to move to somewhere. So, you know, watch where that is. And that's why I like owning volatility with stocks right now because that could be that could be the next vol movement. And then what's a weird ball scenario that could unfold, right? Like 22 is kind of our last weird vol period yeah mark it down vol me so like what what would be a weird ball thing that you could foresee that is trouble for some people maybe not necessarily you but for some yeah um well i mean it's like we kind of just said it's like you know mark it up ball up like normally like 75% of the time i think that's the stat really is that the vix moves opposite

of the smp um historically the percent the vix goes up four percent um but vice versa the other way because vix can't go to zero otherwise nothing would be trading right there'd be no volatility so at some point the vix levels off so on a 1% up move in the market in the s&p fix historically goes down like two or two and a half percent because eventually stops going down um and in fact when that kind of correlation is this is what i'm talking about is vix has been down you know sitting here in the teens we could see market move up and vicks actually go up um opposite of what happened in 20 the back half of 2022 so that's That's a scenario to sort of look that could be weird, weird that plays out. And what are your thoughts? It seems every Vick spike has become shorter and shorter and shorter. Does that keep going? Do we just get like hour long Vick spikes? Or is that somehow it need to end eventually?

I think kind of, I don't really see it getting shorter, let's say, in the last year. I see your point, like, you know, from, I think what happens is you have this big voluble. event like we saw in 2020 in 2020 where that elevated volatility lasted for quite a number of months right obviously the pandemic drove that following that what typically happens is a period of like these shorter spikes you know like just microburst spikes that people freak out um then back to like you know vix is mean reverting like we will have this longer expansive volatility spike um we're kind of like slowly turning the table on that if you look at at the level of put buying the skew in the s&P like that what people are paying for a put premium versus a call premium of like the

same moniness um we're not seeing like we're seeing a little bit more elevation in the put buying right now so um then you saw a year ago versus when you see a rally and ball comes off so maybe maybe that prolonged vol expansion thing is going to is is getting ready to happen but sometimes that takes a little bit for to work out we had a major, major volatility event in 2020. And sometimes, like, now we're getting tighter volatility events. I expect a bigger, longer, drawn-out volatility event to happen. You know, maybe that happens a year or two from now.

And let's finish. We were talking the double three-peat Jordan Bulls down there. So equating it to portfolio theory, we did a blog post. about it we'll put in the show notes but who's who's the volatility protector piece on that bull's team i didn't prep you for that sorry but yeah um well you know what's interesting is you know you almost can say uh uh Harper was right like he was kind of like you didn't need him to score a lot he played the point guard he was a big tall point guard he could defend I mean people don't i mean obviously pipin you know great defensive player rodman great defensive player

jordan great defensive all around obviously defensive player but harper really like his length and size to sort of lock down the small guard and his ability to do that was like very key and instrumental to like sort of um you know stopping like the the you know the sort of streaks on the scoring side of things so slowing down the other team's offense right if the if another team going on a run is the equivalent of the market selling off, right? He was the, hey, put that on that guy and stop this in its tracks. Yeah, yeah.

Or at least slow down the initial part of the other team's offense. A guy bringing the ball up. Let's slow it down. Let's make it difficult for him to make a pass. Let's make it difficult for him to hit a three when the ball's like rotating around. And so he kind of helped give stability to the whole team. And so, you know, that's what the VIXian volatility is.

By owning that as an asset class, you're giving stability to the portfolio. love it and i actually in the blog post i our friend mike philbrick was equating the this to these new old portfolios and was saying cur like he was leaving ron harper out of it ron harper started cur came off the bench actually yeah right i think cur came off the bench and cooge came off the bench harper was the guy um yeah and you can almost say like that that six man like it's like the overlay right the extra guy like to help protect you know so you know there could be some cases for that too and then um tell your story about seeing jordan's winning shot oh yeah i mean this this was super fun so i used to be i used to be a seat vendor uh for the cubs

of white so really you joined local 236 i think a seed bender seat seat seat i thought he said seed like you were what yeah no um so selling beer and hot dogs to people um so you would join a union and they would automatically then get you employed to each local stadium, right? So you could technically, you could work at the Wrigley Field, you could, you know, work with the White Sox played. Oh, that's why I sometimes recognize the same guys. I'm like, hey, I remember you from the Bulls? Yeah, because they're part of the union.

Yeah, it's all the same union, right? Chicago. Yeah, and we know how unions in Chicago work, right? You're not slinging one dog until you sign up for this union. Yeah, right? I even got to do like the World Cup in 94 when it was in Chicago I had Soldier Field because the union employed you at Soldier Field and I would do like the Bears like first couple of preseason games

before going back to college for the semester. What was your call? What's that? What was your call? Beer here, dog here. Hey, beer here. Hey, I thought. So anyways, so you kind of, before the game would start,

like you'd arrive about an. hour and hour and a half before any event and because you're a part of a union of course it's all seniority on you know who gets to sell what right back then obviously budweiser was like the best like beer sale thing right so yeah you had to be 21 to sell beer and then that was the hottest thing so the guys that had the most seniority got to sell budwiser um anyway so you'd line up outside the stadium at some point you'd get your assignment on what product you're going to sell and what part of the stadium you're going to sell it to so like the kid selling the claw that cubs game the like foam bear cub claw he's last on the seniority list yeah right or uh you know cotton

candy was probably kind of down the low yeah that only catered to like you know a specific person in the crowd um so you'd line up outside the door you'd get your assignment you'd go into the stadium through that door there would be security there check make sure you had your badge on and everything and then you'd go in so um me and my buddy we obviously working through all the stadiums we talked to their vendors we knew where in the bowl stadium what door all the vendors would kind of like line up to get their assignment and go in and we're like this was uh game six the first time the bulls beat the jazz and we're like you know what let's let's go put our vending like uniform on even though it was like you know the apron or whatever that you had to wear we brought our union card even though it was

a slightly different uniform for the bulls um and we're like we're going to walk up pretend like we're working and vending that game and then we're going to go watch the game instead um and this is of the finals versus car malone in utah game seven game six i think it was they went in six yeah they won in six i think that first year right on the last second well almost last second shot by cur so um i tell my buddy and this is before obviously cell phones i'm like all right you go in first at this door there's like a staircase that went up i'm like take the staircase up to the top whatever you get to the top level open the door and go in there and I will meet you there. You know, before cell phone is just like, okay, he goes in, I don't know if I'm going to find him

or not or whatever. I just got to hope he's there. And then you were going to go in five minutes later or whatever? Yeah. Like let him take all the risk first, right? So he goes in, three to five minutes passed by. I'm like, he hasn't come up. So he's either arrested or he's in.

So I'm like, all right, I'm going in. I go in, I look confident. and I walk past like the security guys of, you know, showing my union card, I go up the stairwell, I take it all the way to the top, open the door. Cliff, there you are! What's going on? We're in!

You know, turns out that game. You know, Kerr hits the game winning shot. They win it. Who was it? Pippiner, Koo Coach makes a steal on the inbounds. Bulls win the championship. We got in. I mean, we were, you know,

college kids just wanted to see a game, right? Awesome. you know i would do that now but but silly college kids uh doing that although i'll say the number of full grown adults with high paying jobs that i know that like basically snuck into world series game back in 16 yeah the cubs was unbelievable they were just like oh if you go and near this gate and they have the like metal detectors that are you know those new style metal detectors where he just kind of yeah passed through them and then people are mulling around and there's no longer a turn style, right?

They're like scanning your ticket. Right, yeah, yeah. Basically it was bedlam and they just kind of mull around in there until they could the person turn their head and they'd do like a back. Quick dash through. Boom, yeah. But like literally like five to seven people I know did that.

That's like what? That's awesome. I guess that's, you know, well, I think nine years to the day when they had the parade for the Cubs and almost an identical world series this weekend to what the Cubs were, except the Blue Jays couldn't come back and the extra innings um to pull it off after blowing the lead uh you know it's uh yeah i guess if

that that one maybe is worth worth going that might be our new metaphor your your programs are otani right you can hit home runs and then you get out there and play defense and and shut the other team down when you need it there you go all in one player yeah that's right love it all right great talking to you. We'll see you soon. Okay, Jeff, thanks for having me on here. I look forward to you talking soon. All right.

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