We Study Billionaires - The Investor’s Podcast Network - TIP394: How to invest in ETFs w/ Cullen Roche

Starting point is 00:00:00 You're listening to TIP. For this week's episode, I invited back Mr. Colley-Rote, for you might remember for our popular inflation masterclass. Today's topic is ETF investing. We discuss inflation protection, expected interest rate changes, and we even discuss how to launch your own ETF. But first, we start up discussing how to find the right ETS strategy for us as individual investors.

Starting point is 00:00:23 So without further ado, here is my interview with Mr. Colin Roach. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Welcome to The Investors Podcast. I'm your host, Dick Broderson, and we're welcoming back Colin Roach here today, the CEO of Discipline funds. Colin, our audience just loves you. Your last appearance of episode 370 Masterclass in Inflation has been one of the absolute. absolutely most downloaded We Start Billioness episodes we ever had. So with all of that being said and put in maximum pressure on you here, Colin, thanks for making time yet again to come on the show. Hey, Stig.

Starting point is 00:01:20 Thanks for having me again. I'm not sure if it's, is it so much that inflation and my comments on it were popular or just super controversial and people were spreading them because they hated that. Who knows? Who knows? But like, whenever we check the numbers, it was just like, boom, hundreds of thousands of people then. It was, I don't know, people loved it and I loved it too. So let's just say it was all the good things. Jumping right into the outline of the show, Colin, we're going to talk about ETF investing today.

Starting point is 00:01:49 And we know that we should find an investment strategy that is right for us. And there are many great strategies, but we also want to pair out with our unique personalities. For example, here on the show, we have this rule of thumb that if you don't read a company's financial statements, typically you shouldn't invest in that specific company. And the reason is just that whenever things turn sour, which just happens to some part in time during the lifetime of you holding that stock, you really truly need to understand the specific company you invested in. This just gives you conviction. So there's just a way of pairing your personality with the investment strategy. So keeping that in mind, you know, we haven't covered ETF investing as much as individual stock picks.

Starting point is 00:02:29 And ETF investing is your field of expertise. So how do I know which ETF and which ETF strategy that is right for me. I always tell people, investing is so personal. I mean, we have all these little clicks and sort of groups that focus on different types of strategies and different narratives and whatnot and everyone's kind of combative about it to some degree. But everyone's so different. And all of this requires so much customization.

Starting point is 00:02:55 And so I start from a very general framework where when I'm typically working with somebody or trying to explain to them how they might allocate their assets, assets, I always tell people that you should really start from a first principles perspective. So I start from the idea that the term investing is actually somewhat misleading. From an economics perspective, the term investing means to spend for future production. And what we technically do when we buy stocks and bonds, we're not technically investing. A firm invests when they spend money for future production. So when Tesla's building their cars, they're spending for future production.

Starting point is 00:03:31 But when we buy Tesla stock, we are literally allocating our savings to an instrument that will derive its returns based on how well the firm invest. And so when you work from that methodology or that perspective, you kind of arrive at a different conclusion where investing is oftentimes viewed as this very sexy sort of get rich endeavor, whereas the idea of saving is much more prudent. And that's the foundation I typically try to get people to work from. The reason that I focus so much on on ETFs and index funds and just indexing in general is because when you're saving, you generally need to diversify across lots of different asset classes. And the goal, really, is to diversify your assets in such a way that you're meeting certain

Starting point is 00:04:20 liability needs over time. So, for instance, everybody needs to hold some cash. Holding cash, I always tell people, cash is the worst investment in the long run. But in the short term, in terms of principal needs and being able to meet your liabilities, cash is the best investment because it's the one that provides you with the liquidity and the ability to be able to meet those daily, weekly, or monthly cash flow needs. So to me, a lot of this is about matching your personal assets and liability needs across time. And so the reason that I like to focus so much on diversified, low-cost indexing is because

Starting point is 00:04:57 if you view your savings and a big bucket of your of your asset allocation as this portfolio that needs to meet these certain needs, well, diversifying across ETFs is just a very good way to be able to achieve a lot of diversification in a very low cost and diversified way. So a lot of this is about setting very clear goals up front, knowing, you know, are you someone who is trying to beat the market or are you someone who's trying to save for retirement and meet certain liquidity needs. And then kind of filtering through what I would say is more of an evidence-based approach to investing and working from the approach of really trying to more so control what you can control rather than a lot of people try to get control what Tesla is

Starting point is 00:05:45 going to earn next year. But you can control what the, for instance, the taxes and fees you might pay on that instrument are. So you can control things like taxes, fees, your asset allocation, and the biggie that I'm focused on is behavior. So those are the four big ones that you can really control. And so when you're picking ETFs and you're looking at what asset classes you want to own to diversify across those ETFs, you need to figure out really what your personal needs are and what goals you're trying to achieve so that then you can apply the right components. Because by this point, there are thousands and thousands of ETS available. There's going to be thousands and thousands more. It's one of the fastest growing segments in the financial services industry. Mutual funds are

Starting point is 00:06:29 going to continue to convert at a blistering rate in the coming 10 years because the ETFs are just superior products in so many ways. So there's a lot of different options out there. And I'm not giving a very customized answer because this is such a customized approach to the way we have to actually pick and choose these things. Colin, I can't help but ask this question because as much as this episode is about ETF investing, you know, I, as an individual stock picker and we have so many in the audience who do pick individual stocks, I always think about like, whenever, for instance, you see ETF investing, passive tracking really beyond beyond the rise, you know, this stat here, we have like the S&P 500 that's held in passive indexes in ETFs or mutual funds that's raised by 0.5

Starting point is 00:07:14 percentage points in 2021. So it's like now at 18.3% the highest it's ever been. So keep in mind that a local audience are individual stock pickers, should we see this as a good thing or a bad thing that more money is pouring into passive investing? This is a really hot debate in the last five to 10 years, especially as the market seems to be on this just sort of perpetual upward trend. And a lot of people say that that's due to trends like passive investing. The most of the most interesting aspects of going through all the regulatory process of actually building an ETF is that you get into the weeds on these debates and these definitions with SEC examiners and the people who are advising you on the legal and everything. And so one of the big definitions

Starting point is 00:08:02 that you come across is this active versus passive. And it's interesting because I would argue that working from a really strict sort of technical definition, there is no such thing as passive investing. So to me, there is one truly passive portfolio in the world. And that portfolio is the portfolio of all the world's financial assets. And the truth is that nobody holds that portfolio. But if you were buying into a purely efficient market hypothesis perspective, that's the portfolio that you would buy. And you would never deviate from it. You would just let the market cap weighting drift as it would. Nobody can buy that portfolio. And so one of the main reasons is because literally that portfolio is not investable. I built a global stock allocation within the ETF. The interesting thing is

Starting point is 00:08:49 that when you look at global market cap, I went back and forth with various attorneys on the definitions of this. Global market cap weighting does not have a consistent definition. And everybody, literally everybody calculates it wrong. So even Futsi All World, which is what Vanguard Total World is based on, it literally buys like 70% of global equities. So it's missing 30% of the global slide. because so much of this is not investable. And so when people talk about passive, I think there's a little bit of salesmanship in the way that the industry has framed this. And the term passive implies that this is some sort of market cap weighted pure market portfolio, when the reality is that Vanguard has actively chosen to deviate from what the true global market cap weighting is.

Starting point is 00:09:38 If you buy something like a 6040 stock bond index, that's not truly passive index. The people that built that 6040 index, they constructed that index in a very active way in that they're deviating from usually to a domestic all stock, all bond allocation. And they're choosing, they're actively choosing not to hold literally tens of thousands of global instruments within that portfolio. and they're deviating from what the actual global market cap of stocks to bonds is in a relative sense. So right now it's about 4555. So 6040 is actually an active deviation in a much more aggressive way that I would argue is not that passive. So it's a weird thing to think about

Starting point is 00:10:23 because when you get into the really fine details of it, you sort of realize that everyone's active and everyone is choosing to be active for some specific reason. And there's nothing wrong with that necessarily. I mean, there's bad ways to be active. You know, like I would argue day trading is a bad way to be active. But if you're building a portfolio that is in line with your risk profile and is just really well balanced and diversified across the 6040 and you're rebalancing that thing once a year, I would argue you're technically being active.

Starting point is 00:10:56 But it's a pretty smart way to be active. And stock picking falls into the same sort of bucket. There's nothing inherently wrong with stock picking. In fact, indexers need stock pickers to be able to make the markets that they operate in. So they provide the liquidity that makes indexing possible. And that's a whole other aspect of this discussion where when we break this thing down into this binary argument, we're ignoring the fact that active needs passive to even be able to exist. So I look at it as sort of two sides of the same coin in that when I'm constructing a passive

Starting point is 00:11:30 index or what we call a passive index, underneath the surface, that passive index fund is incredibly active. I mean, you should see the Vanguard trading desk. This thing's humongous. These guys are sitting around trading stocks and bonds all day. And yet this firm is known as the passive indexing firm when they're one of the biggest market making and trading firms in the entire world. And so that's the underbelly of this discussion that I think a lot of the sort of salesmanship and the narratives ignore.

Starting point is 00:11:59 And so long story short, I don't think you can break this thing down into this sort of neat little argument where one is necessarily bad or is active good and passive evil. Because in a lot of ways, they're just two sides of the same coin and they're codependent on one another. Colin, one thing we can see here in the market is that ETF investing has just continuously been growing for decades, very much at the expense of mutual funds. Could you please take us through some of the technical things about ETF investing? I think that as investors, we see a lot of the front end, we don't really see what's really going on. We have the creation redemption process, there are different tax benefits to consider, and a lot of that is not well understood. Could you please go through that process with us.

Starting point is 00:12:47 One of the neat things about building these things and actually going through the whole process of working with everybody along the whole process of how this funds actually work is that you see the underbelly of everything. And so one of the most interesting things about ETFs is so for anyone who doesn't know, an ETF is just, it's basically a mutual fund that trades like a stock. So the neat thing and the big advantage of ETFs over mutual funds, is that they have this creation redemption process where a market maker and the ETF issuer can literally create new shares of the ETF from thin air.

Starting point is 00:13:26 So, for instance, with a new fund, there is no market for that fund when it's issued. There are no sellers of the ETF because nobody holds the ETF yet. So the way that these funds become liquid and the reason why a fund that is not even widely traded, or doesn't have a lot of volume on any given day, the reason that that thing can actually be incredibly liquid is because the market makers can create shares from nothing. And as long as they're incentivized to be able to arbitrage the underlying basket, well, they'll make a tight market for that thing.

Starting point is 00:14:00 If they know the underlying value. And so to kind of get into the nuts and bolts of how these things work, basically, is that the way to think of an ETF is that there is a basket of underlying assets. And that underlying set of instruments has, That's what's called a basically, they call it the INAV. It's essentially the intraday NAV. So it's the intraday net asset value of the underlying assets. And the way that a market maker calculates that is by looking at all of the underlying assets and then they're able to quantify in real time

Starting point is 00:14:31 exactly what the underlying basket is worth. And so they're looking at the true value of the underlying basket. And then what they're doing is with the ETF, they're trading the ETF and basically creating or redeeming it for people based on supply and demand. And so they're able to look at the value of the underlying assets. And then if they're incentivized to do so, let's say that you put in an order for $25 to buy SPY, for instance. The market maker will look at that and he'll look at what the S&P 500 is actually worth. And let's say it's worth $24.98. Well, he'll create shares of the ETF at $25 and make a market at $25. And what he's able to do is they're able to then go into the market.

Starting point is 00:15:17 They will create the issuer will create shares of the ETF. The market maker will essentially sell short the ETF to the buyer. That creates a market for the buyer. And then the market maker goes in and they buy the actual underlying at $24.98. They'll then close out the position. and because they've sold the ETF to you, they'll close out their underlying and they've booked a two-cent profit essentially. And so they're able to not only keep the spreads very tight on that instrument, but they're

Starting point is 00:15:51 able to make a market in something that literally does not exist because they're able to essentially instantly arbitrage what the value of those things are in a relative sense. So you're in a sense, you're sort of paying for the liquidity in a sense of these things, even though they don't technically trade that much or they might not even exist in this instance. But that creation and redemption process is really, it's the distinctive element of ETFs that makes them not only function very efficiently, but more importantly, this process makes them super tax efficient. And so when compared to a mutual fund, the problem with a mutual fund is that when you send

Starting point is 00:16:32 money to a mutual fund, you literally kick them cash. And the mutual fund manager has to go in and buy all of the underlying assets. I don't do that. Somebody invest money in an ETF. I don't go out and reallocate the fund. I don't actually distribute cash to anything. So there are no purchases underlying all of this that go on. Whereas with a mutual fund, the mutual fund has to actually go out, distribute cash, buy all of the underlying assets.

Starting point is 00:16:57 And if they are selling stuff along the way, they're incurring capital gains. And this is the big problem with mutual funds. that mutual funds are unfairly punitive with the way that they distribute their capital gains because you could buy a mutual fund at the end of the year. And if that fund has large capital gains, you can get kicked a tax bill even though you don't actually have a capital gain. And so this process of creation and redemption inside of a mutual fund is very inefficient because it's basically a cash-based reallocation process. Whereas in the ETF, underlying the market maker and the issuer, they're actually exchanging the underlying in what's called an in-kind

Starting point is 00:17:40 transaction. And so they're not actually making a cash sale of the underlying assets, which allows the ETF to operate in, frankly, a much fairer way because it gives the control of the tax liability to the shareholders. So rather than being forced into a capital gain in the way that a mutual fund often does, the ETF puts the power of the tax liability in the shareholder where I control the tax liability based on when I want to sell it rather than the actions of thousands of other people buying and selling the fund within itself. Let's continue talking about costs. ETSs are very often promoted for the low cost associated with it.

Starting point is 00:18:26 Pasts are typically lower than comparable mutual funds. Whenever I look at an ETF, you know, I very often look at the expense ratio. Like, to me, that sounds like that's the expense I'm going to have by holding this asset. Do you have other expenses if I buy an ETF? And let's just disregard any commission that my broker might, you know, impose on me. Commissions are obviously, they're kind of going away, as you mentioned. But ETF expense ratios can be a little bit confusing because you actually have a, you have a gross expense ratio and a net expense ratio.

Starting point is 00:18:56 The gross expense ratio is typically the total cost of running the ETF for the actual issuer. So typically they will discount that to some degree and that arrives at a net expense ratio. The net expense ratio is the fee that the shareholder actually will pay. Typically, this is waived for a period of like 12 to 24 months. I tend to find this way too confusing. I typically think they should be the same, but that's just sort of my philosophical belief. So those are two things to pay attention to is that the net. net expense ratio is the, that's the fee that you're going to pay. And you have to pay attention to

Starting point is 00:19:31 whether or not that fee is waived for 12 months or 24 months or maybe it's waived in perpetuity. Who knows? Every fund is different. But the other big one with ETFs is the bid ask spread. So like I was saying before, one of the reasons why ETFs operate so efficiently is because the market makers are incentivized to make markets in this thing. And the reason they're incentivized to make markets in this thing is because they're getting paid to make the market in that thing. And you, You're paying the spread, basically, on the way that fund works. So like I said with the previous example, when SPY is actually worth $24.990.98 and the market is selling it to you for $25.

Starting point is 00:20:10 Well, you have the benefit of being able to buy SPY at a very liquid and relatively close price to what it's underlying intraday NAV is actually at. But of course, you're paying the two cents to the market maker. So that's one of the underlying costs. You see very, very widespread on an ETF, you have to consider that that's actually part of the upfront. It's essentially a form of a commission is really the way to think of it, that the market maker is earning a commission basically for making that trade and making that market for you.

Starting point is 00:20:41 The other big cost is that ETFs can trade at a premium or a discount. And that's usually a function of how liquid the underlying are worth. So how tight can the market maker keep the current market price? of the actual instrument relative to its INAP. And that's not always easy to do. So, for instance, if you have very illiquid underlying instruments in the underlying, well, the market maker is probably going to keep much wider spreads on the ETF because he has to sort of cover his butt in the case that he discovers that the underlying

Starting point is 00:21:16 are not worth nearly what they're actually selling the ETF for. So you have to pay attention to the premium versus the discount. And this can be tricky for retail investors because retail investors really rarely know what the INAV actually is. So typically on a very, very liquid fund, the INAV will be very, very close to whatever the bid ask is. But on a less liquid fund, you could have a situation where an ETF is really worth, the underlying is worth $25, and the spread could be $25 to $2510. And because the underlying is very illiquid, you might think it's a good idea to buy that thing at 2510 and you might be paying a, you know, you're paying a 10 cent premium basically. And that's where the fund will trade.

Starting point is 00:22:00 But it's in the long run, it's an important element to be mindful of because like closed-end funds, ETFs, even though they tend to be much closer to the net asset value, they can trade at these premiums and discounts. Let's take a quick break and hear from today's sponsors. All right, I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year,

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Starting point is 00:26:13 slash WSB. Go to Shopify.com slash WSB. That's Shopify. dot com slash WSB. All right. Back to the show. One thing that's been popular for many years is to look at back testing.

Starting point is 00:26:31 And I'm very torn whenever it comes to back testing. It's definitely something we see a lot of in the ETF space here because you have ETFs out there that really show an impressive back testing record. It might be that they're buying companies that has lowest PEs or highest dividend yield, highest share repurchase yield, whatever it might be. And whenever you look at the track record for those back-tested results, it's like upperforming with three, five, whatever, right?

Starting point is 00:27:00 It looks really, really good. And so whenever I look at ETF investing, I feel, well, I feel really good about investing in something that has historically proven that it's a good strategy. But on the hand, I'm always constantly concerned, well, history repeats itself. It's a cyclical trend. Is it like secular trend, whatnot? How do you think about investors, well, thinking about back testing results whenever they're constructing their portfolios?

Starting point is 00:27:28 Like you, I think you have to be really skeptical of back tests because it's very easy to sort of backpedal into a back test that looks really good. I mean, everybody, if you're constructing a fund and trying to pick out, you know, what would be potentially the, you know, the best performing future assets, of course you're going to, you know, typically you're going to look at what worked the best in the past. And the assumption is that, you know, this is sort of an extrapolative expectations process where people are extrapolating from the past and expecting everything to be the same in the future. And obviously, you know, it just doesn't work out that way. And so you have to be really skeptical of back testing. get into all of these finer discussions about like the necessity of forecasting and making predictions about the future. And I just sort of think that people need to embrace that. I typically fall into a more of a market cap weighted approach to indexing and allocating assets just because to me, I don't pretend to know where in the stock market we typically should be at any given time. And so to me, it's almost generally, at least as,

Starting point is 00:28:38 a big portion of your portfolio. To me, it's better to just own it all rather than trying to pick and choose which components. Obviously, there's lots of ways to skin the cat here, but for me, when you're thinking about your savings portfolio and the core of your asset allocation and the piece that is just going to be sort of your more of your like your sleep well portfolio, to me, it's really about building in diversification and owning lots and lots of things, knowing that, well, there's going to be a lot of times when certain parts of that portfolio are going to do really badly and other parts are going to do really well. And that's, in essence, that's why diversification works is because you have these uncorrelated

Starting point is 00:29:22 assets that they aren't always doing the same stuff. And so you almost want some portion of your portfolio to be underperforming at times in a weird way. And back testing, oftentimes what ends up happening is people will put together back tests and discover that, well, they found a whole bunch of assets that all perform really well in the past. And then you find out that, well, in the future, when things go badly, well, all those assets perform really badly. And you don't have a lot of diversification in that portfolio. So to me, again, going back to sort of first principles, I like thinking of things sort of for what they are rather

Starting point is 00:29:57 than trying to back test and then extrapolate what they might be. And so, you know, looking at, You could go back and, for instance, look at like a 30-year treasury bond and say, holy cow, this thing, I'm going to start a treasury bond ETF because treasury bonds have performed so well in the past. And you have to look at what that thing is today for what it is. And that instrument today is nothing like it was 30 years ago. That instrument 30 years ago was a 10% yielding 30-year instrument that had government backing. And today, that instrument is a 2% yielding instrument that has the same credit quality. instruments, but going forward in almost any reasonable expectation of the future, that instrument is a significantly worse risk-adjusted position than it was, for instance, back in 1980 or 1990. So you have to be, that's a really simple example, but you have to be really skeptical of back testing because the future is always different. The environment, and I think after COVID, I think we all kind of know, nobody knows what the future holds for all this stuff.

Starting point is 00:30:59 but you can formulate reasonable guesstimates about what these instruments will do. And to me, that's a much more sound way to look at the future rather than, yeah, the past is a nice guide, but it shouldn't be your only guide by any measure. One of the reasons why I'm so excited to speak with you here today, Colin, is that we have a love of listeners who really wants to manage money. And you've done that for a long time. But here very recently, as of last month, you've, started your very own ETF. Could you please walk us through step by step? If possible, you have this

Starting point is 00:31:35 idea of, hey, I want to start an ETF, and then until the day it launches. I know it's a very big question. There are probably many steps, but could you break that down for us? It's basically hundreds of phone calls and emails with lawyers back and forth. Is it really what the majority of the process is. But no, I mean, in essence, they've made this a fairly smooth process today relative to what it used to be. So 10 years ago, starting an ETF was a monstrously difficult process because you needed what was basically called SEC exemptive relief to even be able to form the trust that's able to hold the assets that actually is really the underbelly of the ETF that you want to start. But today, it's become much easier to do this with the new SEC or the new ETF Act.

Starting point is 00:32:22 And really, there's a number of ETF white label issuers now. So in my case, I worked with West Gray and Alpha Architect. A lot of your listeners, I'm sure know who they are because you've interviewed them in the past. But they offer a white label process where they're able to basically utilize the Alpha Architect ETF Trust to help people like me who, I mean, I have a big asset management business. And so I have clients that are already using my strategy. And the ETF is basically a really clean, distilled version of the strategy that I, I'm already operating. The kicker with an ETF is that because you're able to put all of these, so I run a fund of funds and I'm able to basically put my client portfolios into one

Starting point is 00:33:07 ETF, which creates a huge amount of not just systematic efficiency, but also tax efficiency like we referred to earlier. But the process of starting this basically involves, well, first of all, this is a hugely competitive area. So a lot of people were laughing because I started a fund of funds that basically is a global stock bond allocation. And it's very, very similar to, although I'm technically referred to as an active fund, for all practical purposes, it's pretty passive. It's a fund of index funds. And so I hold basically a bunch of Vanguard funds inside of the ETF. So it's a weird thing because I'm referred to as active when technically it's relatively passive in nature in the way that the fund actually operates. But from in terms

Starting point is 00:33:52 of the way that the actual structure works when starting is, well, you know, you. need to have a good idea and you need to have an idea that is going to be viable because it's expensive to start an ETF. And so the kicker is that you need a relationship with a white label issuer and you need to convince this white label issuer that you're going to be able to make it worthwhile to them to be able to actually go through the process of, I mean, we'd spent nine to 12 months actually going through all the regulatory hurdles. and getting all the legal details and regulatory stuff ironed out. And then, you know, so there's all these upfront costs.

Starting point is 00:34:36 And the really, really strange thing about an ETF is that the way that the SEC views an ETF is that the way to think of it is that it's technically a rolling IPO. So like I mentioned earlier, when a market maker will go to the issuer, the issuer will be able to create new shares, well, each one of those instances, in essence, in essence, it's an initial public offering. So the SEC views this stuff as sort of a rolling IPO. And so with new securities, they're very strict about the marketing. That's the thing that makes ETF somewhat difficult. If you're a new entrant into the field, for instance, it's very easy for Vanguard to go out and market a new ETF because they have this big base of existing customers.

Starting point is 00:35:19 Whereas if you're someone who's trying to start an ETF, well, you're stepping into this arena with a bunch of established, you know, competitors, and you can't talk about this thing until the day it's issued. So you're in a blackout period until the day this thing is issued. So I'm, you know, I was not even allowed to talk to friends and family technically about the ETF until September 21st on the day that it actually went live and it became a publicly available instrument. And so, and then going forward, the regulatory agencies are, they're relatively strict about communications with the public because this. is technically a rolling IPO is the way to think of it. So getting the word out and getting people

Starting point is 00:36:00 to even know that you have this thing available, it might be the best ETF in the world, and you might not be able to get it out to the public because it's just very difficult to educate people and get the word out. So that's the probably biggest hurdle along the way, is just getting people to even know that this thing exists in the first place. One thing that's definitely known to a lot of people, if you can continue on that, is whenever you have a stock that's IPOing and you hear the news that, oh, like this pop 10% or 30%, and one an amazing entry into New York Stock Exchange or whatnot. So there's a lot of buzz around that specific stock.

Starting point is 00:36:42 But I also think it's important for retail investors to understand what this process is all about. So, for example, you have an underwriter of an IPO. It could be Morgan Stanley, could be JPM Morgan. They would typically get around 7% of the money raised. And they're typically freshly minted shares. That's how it goes. So the current shareholders would get their stake diluted a bit.

Starting point is 00:37:04 It might be something along the lines of 10%. That's getting issued there. And so this would, your everything else, equal incentivize the investment bank to charge a somewhat high stock price. However, the investment bank that is promoting the stock, That's truly what is. It is a promotion. They had to sell that to institutional clients and they don't do that to retail investors. So that's also why you have this hop in the stock price. And if we just look over the past decade, it's averaging 21% of the very first day. Snowflake, that was a lot of buzz about it. There was at 112%. So this is a premium that we as retail investors are paying. Let's talk about ETFs. So a really retail investors at a similar structural disadvantage compared to institutional investors whenever ETFs are being launched?

Starting point is 00:37:57 It was funny. When I was going through this process, so we had to pick which exchange we were going to work with. And I talked to NASDAQ and CBOE and NYSE, and it was interesting because, like, the NYAC came back and one of their big marketing pitches to us was the bell ring. Everybody knows about the bell ringing at the New York Stock Exchange. And so I was thinking to myself, I'm going to get to ring the bell at the New York Stock Exchange. And the NYC came back and they were like, you shouldn't care about ringing the bell for an

Starting point is 00:38:25 ETF. And I was like, why? This is awesome. I'm going to, you know, I'm IPOing a fund on the New York Stock Exchange. That's amazing, isn't it? And they were like, well, to put this in perspective, this is totally different from a corporate IPO because thinking of a corporation, a corporation, you know, they raise funds and they build this company for a decade before more, before anybody even knows what it is when they

Starting point is 00:38:50 IPO in the New York Stock Exchange. And in a lot of ways, when that thing issues on the New York Stock Exchange, in a lot of ways, the original investors are, they're getting out or they're diversifying, they're selling their shares to the public and allowing the public to, you know, sort of reap the benefits going forward of whatever that stock is going to do. And an ETF is just totally different because an ETF is issued, but again, it has this underlying net asset value where you know what the underlying net assets are actually worth, whereas with a stock, nobody necessarily knows what the net asset value of Tesla is today. So in a lot of ways, people are doing some guesswork about what the actual underlying assets

Starting point is 00:39:36 are worth. And that's what the IPO process is part of is it's allowing the public to value this thing hopefully in a manner that is more efficient than the way that the private market was valuing this thing. Whereas with an ETF, you issue an ETF and the underlying assets have that net asset value. And the supply and demand for the fund, it can create a premium or a discount for the way that the instrument trades. But the market makers know, they know exactly what that INAV is.

Starting point is 00:40:10 So they know exactly what those underlying assets are worth. So if I hold a fund that is 50% SPY and 50% TLT long-term treasuries, well, the market makers know exactly what those things are worth in their underlying value. And so if I issue a new fund that holds those two ETS and the market maker goes out and starts making a market for those things, and let's say again that it IPOs at $25. And let's say that some knucklehead goes in and puts in a market order for $26. Well, the market makers know they have an instant $1 arbitrage there. So what they're going to do is they're going to make a market for you at $26 because that's the price you want to buy it.

Starting point is 00:40:54 And they're going to instantly, they're going to sell those. They're going to buy the underlying. They're going to sell the underlying and they're going to sell you the ETF for $26. They will book their $1 per share profit on that instrument. and the price of the ETF will then collapse back down to 25 because in the long run, there aren't a lot of people who are willing to buy at a four or five percent premium to NAV. And so that's one of the reasons why an ETFs work as efficiently as they do is because

Starting point is 00:41:26 they're totally different in terms of the way they're structured because we actually know what the underlying NAV is, whereas with an individual stock, nobody really knows in real time what those things are actually worth. Perhaps someone out there are thinking, well, it seems like it's a lot more approachable now to run NTF. You know, you can wide-label stuff. And it seems like it's a lot easier today than perhaps it's been in the past. So perhaps someone is thinking, well, call it, how much does it cost?

Starting point is 00:41:56 Like, if someone's like, I want to do this, I have a great idea for an ETF. Like, could you talk to us about the different costs you would have associated with running in ETF? So there's fixed underlying costs of just being able to partner with, for instance, the white label. You're basically paying for a very streamlined compliance and legal structure in doing so. So rather than I didn't want to have to pay for the trust on my own and hire attorneys to work with and new compliance firms. So a firm like Alpha Architect makes it very clean to be able to just go in and essentially outsource all of that. You're going to end up paying, I mean, it depends on the complexity of your fund.

Starting point is 00:42:38 And I mean, my fund was very simple, very clean. And this thing, I would estimate that the base cost of most ETS is probably you should expect to pay at least $200,000 a year for just the fixed fees that you're going to incur along the way. But the more complex you get, I mean, you could build an ETF that is futures based or options-based. It's a lot more complex to run or a Bitcoin ETF or something like that. And you can get really, really infinitely more complex than I did, in which case your costs are going to be a lot higher. And that doesn't even get to the biggest cost, which is in the long run, the biggest cost

Starting point is 00:43:18 of running an ETF is going to be all your marketing. Because again, it's difficult to get the word out. If you're a small shop or you don't have the Vanguard like marketing megaphone. that a lot of these big firms have. And so in the long run, it depends on how much money you're willing to spend on advertising. That's the big challenge with an ETF is that you spend all this time and money up front building the ETF and getting it ready to come to market and you're not even allowed to talk about it. So nobody knows about this thing.

Starting point is 00:43:53 Then when it IPOs, that's the first day anybody even knows about this thing. And so it's not like you got to do a road show and go and, pitch this to the to the whole world and let everybody know about it, you kind of just have to, you know, vomit this out to the world on day one. And then that's when the real work starts. So unlike a corporate IPO, in a lot of ways, starting to do ETF is the IPO day or the initial IPO day is really, it's takeoff. It's the very beginning of the journey in a lot of ways. And so it depends on, you know, how much you're willing to spend, not just upfront, but how much, really how much marketing you can be willing to spend and how well you can get this

Starting point is 00:44:34 idea out to the public so that even if it's an incredibly great idea, you still need to be able to tell people and sell them on the idea that, hey, this is something that I think can be helpful for you. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC 2 or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, VANTA gives you continuous automation across

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Starting point is 00:48:12 that was the very core in how we got found in the first place. And World Buffett placed this famous $1 million bet, where he bet on a passive S&P 500 index to outperform a fund of funds in heads funds. And at the time, whenever he made that bet, and I should say all the proceeds were going to charity, but it was a very publicized bet. At the time, he warned about the two layers of expenses whenever you have fund of funds. So I can't help but ask, what are your general thoughts on fund of funds, ETFs? It's interesting because there's actually a great quote from Buffett that says, we don't have to be

Starting point is 00:48:51 smarter than the rest. We have to be more disciplined than the rest. And I would argue that one of the big successes of Warren Buffett over time is not only is he smarter than most of other investors, but he is much more disciplined to his actual methodology than most other people have the ability to be. And so I literally name the fund company discipline funds because the whole ethosophobic those for me is that the older I get and the more experience I have, the more I come to the belief that investors' biggest problem is usually themselves. And it's their ability not just to find a strategy, but to remain disciplined to a strategy. And so there was this study that came out in dieting circles about five years ago where these academics, they studied all these different

Starting point is 00:49:39 fad diets. And, you know, Atkins diet and keto and all these popular diets, that everybody loves and claims work so great. And what they found was that the diet that worked the best was the one that you stuck with. It didn't even matter which diet you actually picked. It was the diet that worked for people was the one that people could remain disciplined to. And to me, investing is so similar in that we spend so much time trying to pick and choose

Starting point is 00:50:07 the absolute best strategies that are out there. And we look at back tests and we look at, you know, manager performance and things like that when for the most part, I think a lot of people should spend more time picking a strategy that is aligned with their financial goals and then making sure that it's something that you can stick with because that's one of the biggest hurdles that people have to overcome is this constant lure of the grass is always greener somewhere else. And you're going to, you're going to always see strategies that look better than yours and you're going to constantly question, well, I'm underperforming now. I could be doing better. Why don't I just switch

Starting point is 00:50:44 everything into, you know, Kathy Woods Fund or whatever it is, whatever the hot shot fund is of the day. And what we often find is that the money-weighted returns of these strategies over time, you know, there's an old academic research going back ages and ages showing that money tends to chase returns. And it's because we're undisciplined about the way that we approach all of this. And so to me, I don't have any problem with people trying to generate actual alpha, or picking stocks or doing anything that's really customized to them and what they prefer. But to me, it has to be aligned with the goal of being able to generate what I call behavioral alpha, which is the ability to perform better than you otherwise would because you remain disciplined

Starting point is 00:51:30 through essentially the most traumatic time. So can you implement a strategy that not only does well from 2015 to 2020, but also during March of 2020, when it's scaring the daylights out of you, can you stick with that strategy and reap the benefits of the big upturn? And that's the kicker is that a lot of people, they aren't able to actually stick with a strategy when the going gets tough. And that behavioral bias, that behavioral risk creates a huge amount of financial risk. And so to me, it's not that generating excess return or generating alpha is a bad goal. It's that you have to be, I think, somewhat careful of whether or not when you're

Starting point is 00:52:17 reaching for return and reaching for alpha, are you potentially creating behavioral risks where you create essentially a conflict of interest? That, to me, if you can kind of meld the two where you're implementing a strategy that is to some degree achieving, you know, some degree of excess return relative to a counterfactual, but more importantly, helping you, remain comfortable and sleep all night. Well, that's the best of all world. And I also should say here that Warren Buffett won that bad. That was why I was curious. It's not to demonize everyone who is like doing fund of funds. I think it's important to understand what fund and funds are really doing and why people are doing it. Let's specifically talk about your new

Starting point is 00:53:01 ETF. In your ETF column, you have six ETFs. Right now, you have a 45% weight in stocks and 55% in bonds. And here on the show, we often talk and wondered why investors who are not required by regulation to buy, say, long-term bonds would invest in them. And this is due to the no yield and inflation prospects. I'm putting you on the hot seat here. You can probably tell here, Colin. So in your ETF, you have a 13.75% exposure to Vanguard's long-term bond fund. Why do you have that? Again, going back to sort of, I'll give people the framework for how I structured the fund in essence, in essence, I'm starting from what is essentially a global market cap weighting. So at present, the global market cap weighting of stocks versus bonds is about 4555 stocks versus

Starting point is 00:53:53 bonds. And so our allocation, technically, we have about a 50-50 benchmark is the goal that we structured. And so the current 45-55 waiting for us is a little bit below our benchmark. And the fund itself, actually, the goal of it is, again, to create something that is really well diversified that is helping people keep sort of a bucket of their savings that they can remain disciplined with to a large degree. And so one of the problems that I have with index funds and your typical, for instance, It's just cherry picking like a 6040 index fund is that the problem that I've run into with people is that that 60% weighting is it exposes you to a lot more risk than people realize.

Starting point is 00:54:38 And so you think you're building this nice little savings bucket here where you've got like your retirement in this 6040. And the reality is that that neat little savings instrument can be a lot riskier than a lot of people realize. And so for instance, in 2008, 6040 falls 35%. in large part because something that people don't realize is that even though we call, like Vanguard calls their 6040 a balanced index fund, that fund is not balanced at all in terms of where risk actually comes from. That fund actually derives about 85% of its volatility from the 60%

Starting point is 00:55:13 stocks like. So the stocks are so much more volatile inside of that aggregate portfolio that what happens over time is that there's certain periods where the principal risk, the negative volatility of that portfolio is extremely exacerbated. And so I would argue that the way that most index funds rebalance is not necessarily aligned with the way that people actually perceive risk. So, for instance, 6040, it grows into 70, 30. And Vanguard just systematically says, well, we're going to rebalance back to 6040 because I don't know, because that's the waiting that they like for whatever quantitative reason or subjective reason that they decided that 60 was the right number. actually go in and I look at the equity piece relative to the bond piece and I say, and I actually

Starting point is 00:55:59 constructed an algorithm that tries to essentially quantify, well, how risky is that stock piece relative to the bond piece at certain times? And so typically what this thing is doing is it's trying to quantify essentially where we are in a market cycle and whether or not we're riskier in the stock sleeve than we are on average. And so right now with the weighting being slightly underweight stocks, I would argue that the algorithm is basically consistent with an environment where the stock market is being quantified as relatively above risk in terms of its historical weight. And so rather than just rebalancing back to this fixed weight, we actually rebalance somewhat more dynamically. So this thing actually, right now it's 4555, but it can move within a

Starting point is 00:56:44 band of 70-30 to 30-70. It never gets all in or all out. It's designed to help people stay the course through thick and thin. So you're always invested in stocks and bonds through thick and thin, but you're dynamically rebalancing across time. And again, doing so pretty passively, but in a way that I hope is creating a more stable, a little smoother ride for people so that they can remain essentially more disciplined to the strategy over time. And a big kicker with that is that one of the hedges, one of the most important hedges during negative periods is long-term bonds. And so typically what will happen is that as you actually see the equity slice shrink inside of our portfolio, you see that a long-term bond allocation will actually grow.

Starting point is 00:57:32 So for instance, I mean, two years ago, we didn't even own a long-term bond position inside of the portfolios. And so, you know, even though I've been running this strategy for 10 years outside of client portfolios, even though we just issued the ETF. But I didn't know any long-term bonds in this thing two years ago. Whereas as the equity strength and the equity market is perceived as riskier, it actually grows a little longer duration in the bond piece because the kicker is that we know that during periods of really traumatic market downturn, long-term treasury bonds tend to be the instrument that is always the safe haven. So you see it in In March of 2020, you see it during the Great Financial Crisis. These periods of really traumatic

Starting point is 00:58:18 financial market downturns, people tend to run to the safe haven that is long-term treasury bonds. And so it's a little bit counterintuitive to own something like long-term treasury bonds in an environment where, you know, I just went on a rant saying that long-term treasury bonds are totally different animals than they were 30 years ago. And while that's true, it's also true, that they could be the most important sleepwell aspect of your portfolio at the time when you most need them to be. And that's the kicker is that in a weird way right now, cash and treasury bills, they can't provide you with an uncorrelated return that long-term treasury bonds will. And so, well, it might be a little bit uncomfortable to own these things during periods where

Starting point is 00:59:05 the risk reward doesn't look great. It could turn out that during the periods when the stock market it is scaring you, that this is the component of the portfolio that's actually providing you with the most important hedge, and them helping you stay the course and remain more disciplined because that component is helping reduce the underlying instability of the equity positions. It's an interesting approach, and it also makes me think of Redalia's old weather portfolio where he always wants to have long-term bonds, even though it doesn't seem like it's appealing. But like that portfolio was constructed with the mindset of, we just don't No, this might look appealing or this looks to happen, but we don't know.

Starting point is 00:59:44 That's why it's constructed the way that it is. And I guess that's also a nice segue to talk a bit about the Fed, you know, sell an episode here on We Study Billioness without talking about the Fed. And one of the latest signals that we have from Fed here, Jerome Powell, is that it looks like we'll most likely be facing interest rate hikes, perhaps in 22 already. And so, you know, on one hand, the value of our current bonds goes down. but it also implies that bonds purchased in the future will have a more attractive yield. And so, and I'm saying this because bond ETFs are typically replacing bonds that have matured

Starting point is 01:00:20 with newly issued bonds continuously. It's being ignorant of what's happening right now. How should we as investors in the bond ETF look whenever, Jerome Powell, saying, oh, we're going to hike rates? Yeah, so this is as great as ETFs are, this is one of the difficulties with. ETFs that in some ways, ETFs create behavioral risks that wouldn't otherwise exist. So, for instance, I used to sell bonds at Merrill Lynch back in the early 2000s. And one of the nice things about selling literal paper bonds to people is that they just have a piece of paper that says, you know, XYZ certificate is worth $100. And you, you receive a coupon in the mail every, you know,

Starting point is 01:01:06 month or quarter or whatever. And you don't actually see that the value of that piece of paper changes because you just have a piece of paper that says, you know, $100 or whatever. And one of the behavioral problems with Bond ETS is that you can literally log in to your Vanguard account or your Schwab account or whatever. And you can see that the value of that thing changes every day. It can be harder for people to actually behave well with Bond ETS because they're able to see what the actual price changes are. And that creates behavioral risk. that it just didn't exist because people literally just didn't know what the value of their underlying bonds were before. So you were more likely to hold things to maturity inside of just holding a paper

Starting point is 01:01:46 bond because in large part, you knew that that thing was going to mature at par. And you didn't care whether or not the current value of it was $90 because you knew it was going to be worth $100 in the long run. So ETFs are different. And they create that behavioral risk. But I think it's really important to sort of compartmentalize. I love this. When you're looking at things from this sort of savings portfolio perspective that I was referring to earlier, I really like bucketing things across specific time horizons. And so if you're going to own a bond ETF or a short term key bill like instrument or anything like that, it's very useful, I think, to be able to match these things to certain time horizons across your portfolio. So for instance, if you need

Starting point is 01:02:33 cash in the next three years, you wouldn't want to go out and buy a 10-year treasury bond ETF for that money because that fund will expose you to principal volatility that it could persist through most of that 10-year period. Yeah, on average in a bond ETF, the likelihood of that thing losing principal value is low because the underlying bonds are consistently maturing at par. But in the short term, that bond fund could be incredibly volatile and could expose you to periods where inside of a three-year period, you actually have a principal loss. And so it would be much more sensible to look at something like a three-year CD or maybe even a five-year treasury bond at most, where you're better aligning the time

Starting point is 01:03:16 horizons with the specific instruments. So regarding Fed policy and Fed interest rate heights specifically, again, this is one of those things that you have to make a prediction about the future, but it's also virtually impossible to predict what future interest rates are going to be. I mean, Greenspan spent five years raising interest rates before the housing boom, trying to, you know, grapple with what was perceived as a potential housing bust or a housing boom and housing bubble. And he couldn't make long-term rates go up. You know, Greenspan called this the great conundrum back in the 2000s. And so it's one of those things where I don't know what's going to happen.

Starting point is 01:03:54 My guess is that has been that interest rates will be lower for longer and that the likelihood of returning to a 1970-style outcome is that. not very high because I just think there's so many different demographic trends and technological trends and globalization trends that the likelihood of moving back into a very high interest rate environment is low. So at the same time, we're diversifying across bonds in large part because we don't know. So again, it's kind of following this philosophy of own everything and manage it to your behavior, but own everything because we don't really know what's going to happen. And we don't know if the yield curve could completely flatten from here and invert.

Starting point is 01:04:34 The Fed could raise rates a bunch and get scared of inflation and cause the whole economy to drive into a recession, which would be deflationary, which would cause long-term bonds to outperform. And so there's all these scenarios where, yes, maybe long-term interest rates go up, but there's also plausible scenarios where maybe the Fed raises rates a lot, drives the economy into a recession. And actually, in a weird way, causes a repeat of. this conundrum and interest rates end up going lower and you start seeing deflation across the whole

Starting point is 01:05:05 economy. And then we're looking at another period where long-term treasury bonds are, again, the best performing asset class across time. And I've heard that narrative my whole career. Literally since the day I stepped foot on Wall Street, people have been telling me you cannot own long-term bonds because interest rates are low and the risks are too high. And so I've sort of just arrived at this conclusion that everyone's been wrong about this for 20 to 30 years or more. And Bogle said, nobody knows nothing. We can make good guesses and you need to construct a portfolio that is behaviorally consistent and well diversified. But I don't pretend to know where interest rates are going to go. So we want to be diversified knowing that if the equity piece falls apart,

Starting point is 01:05:51 then we're diversified in a way that is really going to protect us in that scenario. So that's why we own some long-term bonds. And it's why I think most people should construct a diversified portfolio that applies this sort of asset liability matching perspective where they're really not just controlling for their short-term liquidity needs, but also maintaining a fairly long time horizon where they have assets that can potentially reap the benefits of incurring the structural underlying components of what these instruments are designed to do over the long term. I think that's a good segue way into talking about that no one knows. Like you mentioned, you know, you were quoting Bogle there. Like no one really knows. We have a lot of indicators

Starting point is 01:06:35 suggesting one thing or the other, but no one knows for sure where different markets are heading. And so whenever I think about the last time you were here on the show back on episode 370 or your masterclass on inflation, first of all, it was absolutely amazing. Everyone should go back and listen to that. I can't help but think now that we're talking about ETF investing, you talked about. your own ETF also, and how should we as ETF investors think about inflation and protect us against that? Because one thing that I did notice in your ETF, and I can't help but calling you out, traditional vehicles to protect against inflation, that's very often gold and commodities.

Starting point is 01:07:13 That's what we learn from Red Value and his old weather portfolio. Whenever I look at your ETF stocks and bonds, so how should we think about it and not just specifically related to your ETF, just in general for us investors? I love Ray Dalio's all weather approach, risk parity. I mean, I am essentially trying to build a very simple version of risk parity. I'm trying to literally keep parity between the risk exposures of the stock and bond components in the portfolio and the way that we rebalance countercyclically. Harry Brown's a permanent portfolio, I think is a fantastic portfolio, one of the working from a first principles perspective. It's a very sound approach to asset allocation. What I did with this ETF was

Starting point is 01:07:55 this thing is just a very simple, very diversified allocation that it keeps things simple and no more complex than I really think they should be. And so my only problem with owning commodities and gold inside of your financial asset portfolio is that they can be expensive ways to get exposure to these instruments. So in my opinion, investors can protect themselves from inflation in less expensive ways or ways that they don't have the taxes and fees necessarily that a lot of these publicly available instruments expose you to. So the inside of the discipline fund, to me, the stock market is a very good inflation hedge in the long run. Because you're basically buying what is a stream of future corporate profits, you have in essence a certain sense

Starting point is 01:08:52 of embedded purchasing power protection inside of that portfolio. So I like using the stock markets specifically as a growth and purchasing power protection component of your portfolio. And the bond component in there is specifically a principal hedge. It's not designed to generate real returns. In fact, you should expect it to lose to inflation in the long run. And that's fine. They're serving totally different needs. If you really wanted to own other asset classes, I have no problem with people owning gold or commodities or other types of inflation hedges. In fact, I've been a proponent of that pretty vocally for the last, especially since COVID hit because I said that the fiscal stimulus would be at least somewhat inflationary. But I think that most people, the average American

Starting point is 01:09:38 at least, I mean, has one of the best inflation hedges in owning a home, for instance. So owning real assets is a very, very sensible way to obtain an inflation hedge. And to me, your financial assets, sure, owning gold inside of your financial assets or owning commodities can be a fine way to get inflation protection. In my opinion, most people already have a lot of inflation protection outside of their financial asset portfolio. So the way that I generally just default to building a financial asset portfolio is to simplify, simplify, simplify. And that's really my methodology. And so to keep cost low and to keep things very diversified, we only use stocks and bonds because I think that a commodity component and a gold component, it unnecessarily

Starting point is 01:10:26 complicates things in a way that my fund is just not necessarily trying to protect you from. Colin, what can I say? This has been absolutely amazing once again to have you on our show. I'm always looking forward to having these discussions and hopefully we can already say that we're going to invite you back next quarter. But in the meantime, where can the audience learn more about you, problematic capitalism and your new fund, discipline. funds. I write the blog, pragmatic capitalism. I'm on Twitter at Cullen Roach, just one word. Discipline funds is discipline funds.com. The ETF is the discipline fund. The ticker is DSCF. It's on the New York Stock Exchange Monday through Friday. Yeah, so that's where you can

Starting point is 01:11:08 find me. And like I always say, I love to try to spread the knowledge and help people as best I can. and if you're you're looking for help to try to sort of navigate all of this, what seems to be an increasingly complex and confusing financial world. You know, obviously, like I said, a lot of times, I don't know everything, but I've spent more time than was healthy, obsessing over all of this and thinking about it and trying to build a nice, clean, simple approach to navigating it all. So I love answering questions, though, so feel free to email me, Cullen Roach at Gmail. or Cullen Roach at Discipline Funds, you know, I can field questions or help people in any way that I can.

Starting point is 01:11:51 Absolutely. Amazing. And thank you for spending so much time on it. So you can come here on a show on the educator audience, Colin. Really, really appreciate it. Whereas we are letting you go here, I just want to say to the audience, make sure to follow the investors' podcast on your favorite podcast app. If you're watching this on YouTube, make sure to like and subscribe to get more content like this. Colin, I hope we can see you soon again.

Starting point is 01:12:14 I'm sure we will. Thanks, Dig. Take care, everybody. Thank you for listening to TIP. Make sure to subscribe to millennial investing by the Investors Podcast Network and learn how to achieve financial independence. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision consult a professional, this show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.

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