Greed is Good

Summary

Podcast Summary: The Compound and Friends - Episode: "Greed is Good"

Release Date: March 28, 2025
Hosts: Downtown Josh Brown, Michael Batnick
Guests: Andrew Beer (Managing Member at DBI), Sam Rowe (Founder and Author of Ticker)

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1. Introduction to Guests and Today's Theme

In the 184th episode of The Compound and Friends, Josh Brown and Michael Batnick welcome their regular guests, Andrew Beer and Sam Rowe. Andrew Beer brings his expertise from DBI, a pioneer in hedge fund replication, while Sam Rowe introduces himself as a bourbon enthusiast and the founder of the award-winning newsletter, Ticker. The episode centers around the provocative theme, "Greed is Good," exploring its origins, implications, and current relevance in corporate America.

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2. Greed is Good: Origins and Evolution [10:48 - 16:22]

Andrew Beer delves into the historical context of the "Greed is Good" mantra, tracing its roots back to the late 1980s. He references the release of Oliver Stone's Wall Street in 1987, where Michael Douglas's iconic speech advocating for profit maximization ignited debates on corporate ethics. Beer emphasizes how this philosophy shifted corporate America from a focus on community and diffuse incentives to one centered on shareholder value and profit-driven management. He notes, "Greed is good was so shocking at the time." [13:35]

Sam Rowe and Michael Batnick add to the discussion by highlighting how this shift influenced the alignment of management incentives through stock options, fostering a culture where financial success became paramount. They compare the corporate ethos of Japan and Germany, which prioritized employee welfare and long-term stability, contrasting it with the aggressive, profit-focused American model.

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3. Unfettered Capitalism vs. Cronyism in Trump's Administration [16:22 - 23:02]

The conversation transitions to the contemporary economic landscape under President Donald Trump's administration. Andrew Beer characterizes Trump's approach as "unfettered, unapologetic capitalism," suggesting that it seeks to minimize regulatory constraints to foster innovation and efficiency, akin to Elon Musk's ventures with SpaceX. He asserts, "Without opining on whether they're going to be successful or doing it or not." [16:22]

Josh Brown counters by redefining Trump's policies as cronyism, arguing that the administration's actions resemble patronage networks similar to historical examples like Tammany Hall or the Clinton Global Initiative. He states, "It's the same picking winners and losers that the other party does." [19:22] The hosts discuss how Trump's policies favor certain businesses and political allies, potentially undermining the principles of free-market capitalism.

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4. Market Resilience and Analyst Outlook [23:02 - 35:06]

The discussion shifts to the impact of Trump's tariffs and trade policies on the market. Michael Batnick presents data indicating that S&P 500 buy ratings have reached their highest levels in years, despite economic uncertainties. However, Sam Rowe and Josh Brown express skepticism, noting that declining earnings estimates from 12% to 7% suggest growing caution among analysts. Brown interprets this as a clear explanation for recent market pullbacks.

Andrew Beer highlights the complexity of Trump's trade policies, emphasizing that their unpredictable nature makes it challenging for businesses to plan long-term. He explains, "We don't know what the combination. We don't know the motivation of the first order effects, we don't know how the second and third order effects will play out." [35:06] The hosts debate whether the market is overreacting to tariffs or if the policies will have more substantial, long-term negative effects.

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5. Private Credit ETFs: Innovation or Risk? [55:42 - 87:05]

Andrew Beer introduces the concept of liquid alternatives (liquid alts) and critiques their performance and structure. He defines liquid alts as strategies typically employed by hedge funds—such as long/short equity and managed futures—packaged into mutual funds or ETFs for retail investors. Beer is critical of these products, citing poor performance and high fees. He states, "Since they launched, they've done about 2% per annum during one of the great bull markets ever." [56:53]

The conversation then turns to the emergence of private credit ETFs, which aim to democratize access to private credit markets traditionally reserved for institutional and high-net-worth investors. Beer explains the challenges these ETFs face, including liquidity issues and accurate pricing of illiquid assets. He warns of potential pitfalls, such as selling illiquid assets at discounts during market downturns. Josh Brown and Michael Batnick express concerns about the transparency and valuation of these products, questioning their long-term viability and impact on investors.

Notable Quote:
Andrew Beer: "The issue is in an ETF, because there's $10 trillion of money that's sitting in ETFs, they're trying to jam illiquid assets." [76:43]

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6. Conclusion and Personal Anecdotes [87:05 - 97:16]

As the episode winds down, the hosts shift to lighter topics, sharing personal stories and upcoming plans. Sam Rowe mentions his upcoming vacation to Aruba, while Andrew Beer talks about enjoying time with his family and his child's interest in Legos. The hosts reflect on the balance between professional insights and personal joys, wrapping up the episode with a sense of camaraderie and anticipation for future discussions.

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Key Takeaways

• Corporate Culture Shift: The "Greed is Good" philosophy fundamentally transformed corporate America, emphasizing profit maximization and shareholder value over community and employee welfare.

• Trade Policies Impact: Trump's approach to capitalism, characterized by cronyism and aggressive trade policies, introduces uncertainty into the market, challenging traditional free-market principles.

• Market Resilience: Despite economic uncertainties, the market shows resilience, but declining earnings estimates indicate growing caution among analysts and investors.

• Private Credit ETFs: While innovative, private credit ETFs present significant risks related to liquidity and valuation, potentially disadvantaging retail investors compared to institutional counterparts.

• Financial Innovation vs. Investor Protection: The episode underscores the tension between financial product innovation and the need for transparency and protection for retail investors.

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Notable Quotes

• Andrew Beer: "Greed is good was so shocking at the time." [13:35]

• Josh Brown: "It's cronyism." [19:23]

• Andrew Beer: "The issue is in an ETF, because there's $10 trillion of money that's sitting in ETFs, they're trying to jam illiquid assets." [76:43]

• Sam Rowe: "I'm a lot of things, but like the main thing I'm not is I'm a lot of things, but I'm mostly bourbon, but also tequila." [04:07]

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Final Thoughts

In this episode of The Compound and Friends, the hosts and their guests navigate the intricate landscape of corporate ethics, government policies, and financial innovations. They critically analyze the enduring legacy of the "Greed is Good" mantra and its resurgence in modern economic policies, while also offering a cautionary perspective on the latest trends in financial products like private credit ETFs. The discussion provides valuable insights for investors seeking to understand the interplay between corporate culture, government intervention, and market dynamics.

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Follow the Hosts and Guests:

• Josh Brown: Truth Social
• Michael Batnick: Twitter
• Sam Rowe: Ticker.co
• Andrew Beer: DBI Website

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Disclaimer: The views and opinions expressed in this summary are solely those of the podcast hosts and guests and do not necessarily reflect the views of Ritholtz Wealth Management.

Transcript

[Josh Brown]

There's a tequila crisis going on.

[Michael Batnick]

Oh, shit.

[Josh Brown]

Do you know about this?

[Sam Rowe]

No.

[Josh Brown]

Yeah.

[Michael Batnick]

Wait, so how much did Jimmy pay for our bottles?

[Josh Brown]

No, it's not a price crisis. It's a. It's a supply crisis.

[Michael Batnick]

What's the difference?

[Josh Brown]

The reaction to this, to the supply crisis, is the problem. Problematic part. So tequila became like the. The thing, and that happens. Like vodka was a thing in the 90s, I think. Single malt scotch in the 2000s. Like, there's always a thing. So they can't. The good brands can't make it at quantities sufficient to supply it all over the world from this one little province in Mexico. So some of them are cheating. They are adding more sugar to speed up the fermentation process so they can get more out the door. So I guess technically you could say that it's being aged the same length of time, but it's really not.

[Sam Rowe]

And does that affect, like, the labeling of the tequila bottles? Cause, like, every different country has like a pretty tight sort of standards process that affects labeling.

[Josh Brown]

I don't know if they're faking. I don't know how they're getting away with it or what they're doing, but it's noticeable. Like my favorite brand's tequila, they taste at this point, it's like maple syrup. And I asked somebody who sells like high end tequilas on Long island, like a guy with multiple liquor stores who's like, plugged in with all the top suppliers. He's like, this ain't the shit you were drinking three years ago. I'll tell you right now. Like, this is sweetened. So why would they screw up the taste? Because they're trying to make more and more and more. And so the more sugar you add, the faster they can make it or something like that.

[Michael Batnick]

So this is why we need to buy Greenland as fast as possible.

[Josh Brown]

I have been saying this. Most, most great tequilas come from Greenland.

[Andrew Beer]

As you are well aware, with Canada.

[Josh Brown]

As you are well. And DOSA Arts is the biggest basket case. My favorite brand tequila, they can't make. They can't ship anything. Like the one that's in a ceramic bottle. It's kind of square, like a rectangular ceramic bottle.

[Michael Batnick]

Never heard of that.

[Josh Brown]

Yeah, you have.

[Andrew Beer]

You've.

[Josh Brown]

You've had it before, I think at my house maybe. Okay. They. They can't ship anything. They're like, sold out of the anejo everywhere. So it's, it's. It's problematic times, guys.

[Sam Rowe]

I remember, was it the Avion tequila guys from Entourage? The Entourage guys yeah, Cuban. Yeah, I forgot. They like sold the jets or they sold a private jet company that never.

[Michael Batnick]

Really took off Avigne.

[Sam Rowe]

I don't think it got as big as it as they wanted, of course, but they are still in bars.

[Michael Batnick]

I wonder. I wonder.

[Josh Brown]

Here's what happened to Avon. It had a moment in like 07 the last season.

[Michael Batnick]

It was too early. It was like the pets dot com. It was like too early.

[Josh Brown]

Right. But then what. What happened was Randy Gerber, who owned the Whiskey Blue like the big bar in Manhattan, teamed up with George Clooney and they did Casamigos. Casamigos just totally stole their thunder.

[Sam Rowe]

Right, right.

[Josh Brown]

And that became like the mass market premium tequila brand for a while. And now there are, I don't know, 100 of them. So.

[Sam Rowe]

Yeah.

[Josh Brown]

Bring this up.

[Michael Batnick]

The more you know.

[Josh Brown]

We were delivered two bottles of Class Azul today as a gift.

[Sam Rowe]

Are those still good?

[Josh Brown]

Yeah, quite good. Quite good.

[Michael Batnick]

Tasty. Not quite. $86 a glass. Good.

[Josh Brown]

And not. And not an. The white. The white and blue bottle that you see everywhere is actually rep. Yeah. And the reposado is better than the Anejo in Class Azul. It's cheaper and better.

[Sam Rowe]

I usually prefer Reposado.

[Michael Batnick]

Me too. It's like the 15 year old Scotch is too much for me.

[Andrew Beer]

Sure.

[Michael Batnick]

Especially the 18. No thanks. Not for me.

[Josh Brown]

Yeah, you're not easy.

[Michael Batnick]

So what else is going on?

[Josh Brown]

You a tequila guy? What are you trying?

[Sam Rowe]

I'm a lot of things, but like the main thing I'm not is I'm.

[Josh Brown]

A lot of things.

[Sam Rowe]

I'm a lot of things, but I'm mostly bourbon, but also tequila. It's like if I'm sipping, it's bourbon or tequila and then mixed drinks as well.

[Josh Brown]

What's your bourbon?

[Sam Rowe]

I like Eagle Rare. But lately I've been drinking. This is just totally random. Lately I've been drinking Benchmark, which is basically well whiskey, but it's the cheapest. It's basically the cheapest, shittiest whiskey that the Buffalo Trace distillery makes. And Buffalo Trace is the one that produces Pappy Van Winkle and Blanton's and all these like really hot.

[Josh Brown]

Yeah, they all come out of the. That's right. They all come out of the same thing.

[Michael Batnick]

Is Knob Creek in that family?

[Sam Rowe]

Knob Creek is separate, is a different family. By the way, Knob Creek has an amazing firing range. If you're ever into. If you're ever in Kentucky and you're looking to shoot.

[Josh Brown]

I could see how those two things would go together. Like bourbon and guns. I totally get that. Kentucky Breckenridge. Underrated bourbon. I think it's originally a whiskey distillery in Colorado. Breckenridge is off the chain. Four Roses.

[Sam Rowe]

Yep. Four Roses.

[Josh Brown]

Yeah.

[Sam Rowe]

Four Rose.

[Josh Brown]

Good.

[Sam Rowe]

Yeah. Yeah.

[Josh Brown]

Okay. Is Blanton's like, a top for you or.

[Sam Rowe]

I like Blanton's, but, like, you know, it just shows up in too many. So many movies that it's, like, impossible to get for, like, you know, the manufacturer's price. It's like, I don't know, you're supposed to be able to buy it for, like, 30 or 40 bucks, but anytime you go to a liquor store, they're selling it for, like, 180 Pappy. I've never had Pappy.

[Josh Brown]

Okay.

[Sam Rowe]

But I would imagine it's kind of like this thing where, like, the more it's aged and the more it's refined, I'm just not gonna be able to pick up on, you know, what I'm supposed to be picking up.

[Michael Batnick]

Budweiser.

[Josh Brown]

Budweiser.

[Sam Rowe]

Love Budweiser.

[Michael Batnick]

Andrew gives the thumbs up to Bud. There we go.

[Sam Rowe]

Full on Bud heavy.

[Andrew Beer]

There we go.

[Sam Rowe]

None of this Bud Light crap.

[Josh Brown]

We did a show. We did an episode of the Compound of Friends with MEB Faber, and he's a huge craft beer guy. So I brought, like, 12 different craft beers in, and we, like, drank them head to head. Like this one versus that one. I was stumbling out of the. I was stumbling out of the room.

[Michael Batnick]

I think Mev went to see a Broadway show with his family after.

[Josh Brown]

Yeah. And Mev's wife showed up to pick him up from here, and the table was just strewn with beer cans.

[Michael Batnick]

It's not what it looks like.

[Andrew Beer]

Dan Ariely, the behavioral economist, did a great study at mit. He took Budweiser, and he took then Budweiser next to it and added a little bit of vinegar to it, and they called it MIT Craft beer. And they did taste tests, and people loved it. And they were like, oh, my God, it's so great. It's small batches, et cetera, et cetera. And then he told them about it. This is one of the great behavioral studies. And then what happened was actually, people were so anchored to liking it and they were so insistent on consistency that the bartender at the MIT bar had to have a thing of vinegar behind it, because people would say, no, no, I want MIT craft brew. Which meant buying a Bud mixer.

[Josh Brown]

And then. But what if it's actually good?

[Andrew Beer]

It might be, yeah.

[Sam Rowe]

I mean, you think about, like, you know, martinis with brine and all that crap. And people taste.

[Josh Brown]

Yeah, people like that. People like that taste.

[Michael Batnick]

You know, I did a taste test myself for wine, not like a big wine guy. And I bought a $40 bottle and a $10 bottle. The problem was there were two different types of wine.

[Sam Rowe]

One was white and one was red.

[Michael Batnick]

Exactly.

[Josh Brown]

Oh, you wanted to see if you could between the good one and the bad one.

[Michael Batnick]

And one was like a Pinot and one was a cabernet or something.

[Sam Rowe]

One was champagne, the other one. Champagne of beers.

[Michael Batnick]

Exactly.

[Sam Rowe]

Coming in with three.

[Michael Batnick]

Zero percent chance. Zero percent chance. Zero percent chance.

[Josh Brown]

Oh, my God.

[Michael Batnick]

Whoa, whoa, whoa. Stop the clock. Here's a word from our sponsor. Today's show is brought to you by our sponsors at Betterment Advisor Solutions. Imagining a better future is the first step. Investing in that future with Betterment Advisor Solutions is the next. Whether you're launching your own practice, looking to streamline client onboarding, or just searching for efficient ways to scale your firm, Betterment is here to help. They automate to make tax optimization simpler. They provide support to make administrative tasks easier. At Betterment, they're building innovative technology. All for anyone who's ever said, I think I can do better. So grow your RIA your way with Betterment Advisor Solutions. Learn [e-mail] advisors. Investing involves risk performance not guaranteed.

[Andrew Beer]

Welcome to the compound and friends. All opinions expressed by Josh Brown, Michael Batnick and their castmates are solely their own opinions and do not reflect the opinion of Redholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.

[Josh Brown]

Ladies and gentlemen, welcome to literally the best investing podcast in America. Dare I say the world. Right?

[Michael Batnick]

There we go.

[Josh Brown]

I don't know. Do you think there are other good investing podcasts in Europe that I don't know about?

[Sam Rowe]

I'm sure not this good. Not this good.

[Josh Brown]

How many of them? Say more, bro.

[Sam Rowe]

Not even this close.

[Josh Brown]

All right, come on. Ladies and gentlemen, the Compound and Friends episode. What is it?

[Michael Batnick]

184.

[Josh Brown]

184. You guys, we're in for a treat. We have a returning champion and a first time guest. And I can't tell you how excited I am given all that's going on in the markets. To tell you who's with me today and get into the show, first things first, please welcome Andrew Beer. Andrew is a managing member at DBI, a pioneer in hedge fund replication. Prior to DBI, Andrew started in the hedge fund industry in 1994 when he joined the Baupost Group as one of six generalist portfolio managers working for Seth Klarman. That's a big name. Big name. If I ask him if he knows you, will he say yes?

[Andrew Beer]

Absolutely not.

[Josh Brown]

During 1999-2004, he was the founding partner of three hedge fund firms in areas ranging from derivatives arbitrage to fundamental commodity investing to cross border trading in Asia.

[Michael Batnick]

That's what Josh Al Jubir Cross border trading in Asia.

[Josh Brown]

We have a very similar background. Also with us today, Sam Rowe. Sam is a bourbon drinker. He's the founder and author of Ticker, an award winning newsletter covering news, data and insights informing long term themes for investors and the economy. And as I mentioned, he is also a fan favorite here at the Compounded Friends. Thank you for joining us.

[Sam Rowe]

Thanks for having me.

[Josh Brown]

All right, good to see you guys. All right, so anything going on these days or. Not really.

[Andrew Beer]

Quiet.

[Josh Brown]

It's pretty quiet out there.

[Sam Rowe]

Ups and downs.

[Josh Brown]

We're gonna start with this America's greed is good moment. Where did this idea come from? Who's. Whose idea is this?

[Michael Batnick]

Oliver Stone.

[Josh Brown]

Okay, it's your idea. So I want to, I went through this and I wanted to, I wanted to agree with like 90% of your notes and I'll tell you where the 10% is. Okay, but tell us what's happening right now.

[Andrew Beer]

Well, so I think I call this America's greatest good moment. Because in 1987 when the movie Wall street came out and Michael Douglas gave that great speech about the job of the company is to make money. Yeah, it was very controversial. Right. Remember in the 1970s, America, corporate America had gotten very fat and lazy. You had Japanese cars coming in the 1980s. You had sleepy corporate boards. People would build factories just because they like to build factories. You had conglomerates that specialized in mediocrity. I mean, it was a. And around that time though, the LBO business was starting and the M and A business was starting. And what was happening is people were looking at these companies and saying, we can do better. But they were vilified for it. Like the idea of providing stock options to management teams who'd not started a company was very, very controversial. It was going to exacerbate inequality, which it did. But what it also did was it actually aligned the incentives of the management, which was basically, it's much easier to run a business if your one goal is to make money. You can focus on it. And it got people thinking about things like restructuring and all sorts of other things. So what it. You know, and remember at the time, the cognoscenti were arguing that the problem with the US business community was we should be more like Japan and Germany.

[Josh Brown]

Literally. What were they focused on if not making money?

[Michael Batnick]

Craft beer.

[Andrew Beer]

Craft beer. You know, what do our customers think? What are we doing for our community? It was a much more, how do we think about our employees? It was much more just diffuse.

[Josh Brown]

I think Japan was like lifetime employment. The shame of getting a demotion or being laid off. The prestige of being elevated within the company. The company was your life.

[Andrew Beer]

The company was your life. It wasn't about economic success, it wasn't about economic reward. And so to me, just the point was that greed is good was so shocking at the time. And there was a great speech. There was an LBO guy named Sir James Murdoch who was giving a talk that I saw around 1988 or 1989 and everyone was talking about the role of the company. And he said, look, your job is to make money. Let your shareholders give it away. Make more money, hire more better people. Let everybody make money. They can give it away, they can decide what to do with it.

[Josh Brown]

Is that who the British guy in Wall street was based on?

[Andrew Beer]

Oh, yeah, okay. Yeah.

[Josh Brown]

His name's Sir Larry Sir Lawrence Wildman.

[Andrew Beer]

Something like that.

[Josh Brown]

Something like that.

[Andrew Beer]

I can buy you 10 times over.

[Josh Brown]

Yeah, yeah. Okay.

[Andrew Beer]

And so just the point is that, you know, LBO started out as the barbarians of the gate, but they've evolved into private equity. Yeah. You know, private credit was asset based lending. It was hard money loans. It's become private again. They've stepped in to fill the role the banks haven't provided. So just my point is that things that are very, very controversial at the time actually ended up that, I believe ended up driving a lot of the American exceptionalism that we've seen in corporate America over the past however many years. For instance, I don't think you could get the people that you get into the tech industry if you didn't have stock options. If you basically said, look, come here and be like what IBM was, you're going to get what IBM was.

[Josh Brown]

These are the smartest people in the country. You're not going to put them in a room and have them work 20 hours a day if they're not earning equity.

[Andrew Beer]

Right. And back then, the whole point back then was, and the whole kind of undertone of Wall street was you're taking this best and the brightest and they're doing this unproductive thing on Wall street and they're buying Beamers and they're turning up the collars in their shirts. And so. But it was really profound.

[Josh Brown]

What happened to your point. Not only was it shocking, it was unintentional. Oliver Stone's a communist completely. He did not mean greed is good to take flight within the hearts and minds of 20 million young men who would then eventually go on to found companies or come to Wall Street. He didn't mean it as a rallying cry.

[Michael Batnick]

The Irish poker was the same thing. It turned out that way.

[Sam Rowe]

Both Oliver cautionary tales. They thought. They thought it was supposed to be like, this big indictment in this community, but then it actually drew people in.

[Michael Batnick]

Liars Poker. Like, that's why everyone.

[Sam Rowe]

Wolf of Wall street did the same.

[Michael Batnick]

Same thing.

[Andrew Beer]

Yeah.

[Michael Batnick]

That's why Josh got into it.

[Josh Brown]

You know, it's very. It's very funny because in the movie boiler room in 1999, there's a scene where the brokers are reenacting not the greatest good speech, but another Michael Douglas scene from that movie. And Gekko is the archetype that they are striving to be in in 1999. If they're all 25, that means in 1987, they're 13 years old. And that's a formative moment for them, is seeing Gordon Gekko on screen.

[Michael Batnick]

That was I'll eat your lunch.

[Josh Brown]

And I've written about this. I felt that the Wolf of Wall Street, I don't think Scorsese meant it to, like, glamorize ripping people off in the stock market, but I have to tell you, that movie, I think, gives birth to the types of traders who first came into the market in 2020 and 2021. And I think that that's their cultural touchstone that they grew up with. I can't wait to grow up and be just like Leo.

[Andrew Beer]

That's so. Yeah, I never saw that. But you can definitely see the parallels.

[Josh Brown]

Absolutely. Okay, so go on.

[Andrew Beer]

Well, so my point is today, right? I mean, we have a. I mean, there's been a very, very strange transformation. Whatever you think of Trump either way and whatever you think of.

[Josh Brown]

I'm a maga, like, through and through.

[Andrew Beer]

Okay, I'll le. You know, outside. But what Trump and the administration represent is unfettered, unapologetic capitalism.

[Josh Brown]

Yeah, we're going to disagree on this unfettered part, but keep going.

[Andrew Beer]

Okay. So basically that, in a sense, if you free capitalism from regulatory constraints and all sorts of other things, that you can do what Elon Musk did with SpaceX, you can take a government that needs 3 million people today, or 5 million people, whatever the number is today, and you can do it with 1/7 of that. I think a lot of it is unrealistic at the end of the day in terms of what's actually achievable. It's not achievable, but it's a philosophical thing that feels very shocking today. That's where I draw the analogy. Without opining on whether they're going to be successful or doing it or not. It's just there is a sense of even almost a sense of like, well, it's now if we're gonna. You know, the old model of serving in the government was I work on Wall Street, I work my way up through Goldman Sachs or something. I become Secretary of the treasury and I'm gonna bring my experience, but it's gonna be. It's all incremental.

[Josh Brown]

The Robert Rubin. The Robert Rubin Method.

[Andrew Beer]

Exactly right. And that's. And there's a long history and it's almost noblesse oblige. Right. And these guys don't care. Right. There is no.

[Michael Batnick]

They definitely don't care.

[Andrew Beer]

There is no Sir Elon Musk in the future. Right. There's no. They don't. They're to public criticism. They are willing to have open failure. They're willing to have things break. It's a huge philosophical change relative to anything we've ever seen. And so my point is just that what it's doing is it's stretching out the range of possibilities right now.

[Josh Brown]

Right.

[Andrew Beer]

Three months ago it was, this is animal spirits. It's gonna be great for the economy. It's gonna lift all boats. It's wonderful. Now people are like, oh my God, things actually might break or kind of going back and forth.

[Josh Brown]

Yeah. The Overton window has been kicked completely out of the frame. We're no longer shattered. Sh. No longer talking about opening the aperture wider. Now the realm of possibilities of how far these policies can go, what the second order effects may be like. Everything and anything's on the table.

[Andrew Beer]

Everything's on the table.

[Josh Brown]

I think that's a really good take. I agree with that.

[Michael Batnick]

What point that entry made.

[Josh Brown]

Do you disagree with the unfettered capital? This is not unfettered capitalism. This is literally the President saying, write a check for my inauguration and I'll let you do your next merger. Make your platform more amenable to my most hardcore supporters in the, let's call it alternative media and I will find ways to include you in the next government contract. That's not Unfettered capitalism. I understand that people want.

[Sam Rowe]

It's cronyism.

[Josh Brown]

It's cronyism.

[Andrew Beer]

It's venal. Right. It's venal inflation.

[Josh Brown]

And by the way, the Clintons did it, too. So what I'm saying is not coming from a partisan standpoint. The Clintons had this bullshit called the Clinton Global Initiative, which was effectively a patronage network, not unlike what we've seen in New York city in the 1800s with Tammany Hall. Okay? Everybody does this. They do it in Chicago, the Democrats, Trump's doing it in D.C. and all over the world. But let's not call it unfettered capitalism. Let's. It's the same picking winners and losers that the other party does, only this time, the people that are being picked and favored are in many cases the enemy of the media. So the media is much more angry about this than they ever got about whatever the hell Hillary Clinton was up to.

[Andrew Beer]

I think in terms of how it actually, for the venality in plain sight is something new.

[Josh Brown]

Well, they're not hiding.

[Michael Batnick]

It's more brazen.

[Josh Brown]

They're not hiding it.

[Andrew Beer]

Right, right. And that's why. And I think there are people who are going to the administration who think, hey, I'm worth a billion dollars.

[Josh Brown]

Yeah.

[Andrew Beer]

I'm willing to drop my day job, come in and save the government. And I think in their mindset, which is exactly the greed is good mindset, you know, hey, if I can privatize Yellowstone National Park, I deserve a cut.

[Josh Brown]

Yeah, right.

[Andrew Beer]

Like, I mean, it's.

[Michael Batnick]

Well, Lutnick was talking about this with, with Friedberg and Schmath. Talking about, like the strategic reserve.

[Andrew Beer]

Exactly.

[Michael Batnick]

Not Bitcoin, whatever. The wealth creation thing that we're going to do that if we're going to do a deal with Pfizer, we should have warrants. He said that out loud.

[Andrew Beer]

And that's what I mean about the stock options. Right. But a lot of people, stock options were viewed in the same way in 1987, in 1988, it was what? They didn't earn that. What do you mean? If the stock price goes up, I'm not taking position either way. But I just. It's having been there because I'm probably the oldest guy in the room. And having seen it, it was. You know, there was a guy named Mike Jensen at Harvard Business School.

[Josh Brown]

I don't know. He was telling me about the courtship of Eddie's father the other day. I don't know. I don't know if you're the oldest guy in the Room. Hey, can I ask you a question? You agree with this? I want to hear what you think. Also, there are 40 million Americans who would answer back and say, I assume they're all stealing. Both parties, every level of government at all times. I really don't care as long as they get the Venezuelan gangs outta here. And I get to say the R word. Like people, honestly, most people really don't care about these things. The media is up in arms. Maybe there are some really highly principled people on Wall street that are somewhat offended by it, but honestly, people just want their stocks to go up, their house to be liquid, the price of groceries to go down, and you guys go steal whatever you have to.

[Andrew Beer]

Look, we have the senior administration communicating on signal.

[Josh Brown]

Yeah, no, it's totally normal. I love it.

[Andrew Beer]

That's totally shocking to like beyond shocking. And the same people who were on signal were demanding people get thrown in jail for communicating, for not being. I mean it's. But there's a, there's maybe. I mean it's the unapologetic part of it that I find fascinating that the standards are very different than the way they were in terms of what you're saying. Look, I think most people are concerned about their day to day existence. Yeah, that's what I, I don't, I think that the, and I think what you have on the media side is, you know, the 11,000th moment of shock again and again where, you know, oh my God, there's, you know, somebody is saying something that is dishonest. I don't think that's shocking to those 40 million people anymore.

[Josh Brown]

That ship has sailed.

[Michael Batnick]

The sovereign wealth fund, I think people would love that idea. Like, wait again, going back to Pfizer, if we're going to buy all their vaccines. Yeah, we should get upside on that. I think that the average American would say, like, isn't that how it should work?

[Josh Brown]

Okay, but that's not unfettered capitalism.

[Sam Rowe]

I think there's this greater theme of regardless of the state of the economy or the stock market or whatever, you know, you have record high stock prices, you have, you know, unemployment at 60 year lows and all this kind of stuff, for better or for worse, I think the American people, or consumer, whatever you want to call it, are just never satisfied with the state of things. They always want things to be better. They always see everything going wrong in their life, even though there's a lot of things going right. And so I think it kind of ties into this whole sort of greed is good messaging in that because you're never satisfied with how good things are. You'd rather just destroy the state of things because you think that something might be better on the other side of it. It's sort of like a collective grass is greener moment.

[Andrew Beer]

But people also take it for granted, right? Oh, for sure. We have generations of people who've grown up without going to war. Right. Without being confronted with it. I mean, look, that's why during the first Trump administration, I was less concerned about a breakdown of democracy than most people I know, because I believe in the robustness. Again, as you mentioned, second and third order effects. Something happens. Two years ago, Trump was sitting in a dusty courtroom a couple of miles from here. Right? That's not autocracy. The way that we think about it, autocracy is your political opponents get arrested in the middle of the night or thrown out windows.

[Josh Brown]

Right?

[Andrew Beer]

People do revolutions when they don't have food, when their lives are at risk. I mean, my partner's in Paris and we do a lot of business in. Well, political fighting here is still child's play relative to Europe. So I'm less concerned about the left fat tail being somehow the collapse of democracy, because I think a lot of the people that Trump has surrounded himself with, which is, in a sense, I think a huge head fake on his original constituents who got behind him, are, I think they're great optimists. I mean, if you do an exercise two years ago, if you'd said, you know what, there's a candidate where Elon Musk, arguably the greatest single businessman of the past hundred years, was willing to drop things, arguably was willing to go spend a meaningful amount of his time to try to save trillions of dollars. And the outcome of that was he was going to make another $100 billion that he otherwise had. Again, I think Most of those 40 million people were like, I don't care.

[Josh Brown]

Yeah, I agree with that. And that's why it's gone on as long as it has. But I wanted to ask you guys, one of the things that's creeping in and it's still at the edges, and I don't think the average person is waking up and thinking about it. We tell ourselves this story where the reason for the hegemony of just global capitalism, the reason why it's centered around these Anglo countries like England and the United States, is because of the strong rule of law. It creates an environment where you can do business. You know what the rules are. You don't have, like, some bureaucracy that can step in and cancel deals. You Also don't have people getting away with things. And I wouldn't argue that that's totally broken down, but the threat of it breaking down. There's a consequence to the multiples that we're willing to pay for stocks. There's a consequence to who we're willing to buy bonds from. Again, I don't think that's a front burner issue right now. But what I would say to your point is Trump has surrounded himself with people who have the most to lose. If there were to be a loss of trust in our markets and in the business rule of law, like they are the wealthiest people with the most assets, there's no way they're rooting for that.

[Sam Rowe]

Breakdown about this because I think early on there was sort of like this discussion about stock market vigilantes.

[Andrew Beer]

Right.

[Sam Rowe]

Like if the market reacts negatively enough or the fact that he is surrounded by people who have so much exposure to. I mean, it's literally the CEOs of the mag seven, you know, are in the front row of the inauguration.

[Josh Brown]

Yeah. Zuckerberg was there, Bezos, they were all there.

[Sam Rowe]

Yeah. And so it's so confusing to see, like, all these announcements about tariffs that are almost universally agreed on as a negative to, you know, especially publicly traded companies that do a lot of global commerce. Yeah. Or maybe it's the case that they're all in the same game. But yeah, it's, it's, there's a lot of conflict there because I would have assumed that, you know, you wouldn't have this kind of rhetoric that's so unfriendly to the market that that's, that breaks down the confidence that's behind the market. Right. Like the idea that, you know, rule of law and contracts held and that, you know, you don't have to worry about your American trading partners or whatever. But, you know, that's where we are right now.

[Michael Batnick]

I think the market, the market is looking past us for now. And it is confusing for the average person who's either even if you're in the middle or you're somewhat moderate. I don't know if that exists anymore. You have people that are like, freaking out, like, how is the market holding up? It's going to collapse. He's going to break something. And then you have other people saying, well, yeah, maybe like it'll be rocking and things are going to be so much better than the other side. We've got AI and productivity. But if you look at like just the analysts and these are non, these are not partisan people. You have this Chart three, John, please. There's a chart from fact set s and P500 buy ratings. It's at the highest level it's been in a couple of years, which is pretty remarkable. We've got consensus expected earnings estimates still at all time highs. Next chart. John, like this. You sure? We had a mini Vic spike and the market wobbled, but. But wobbled. We were up 20% back to back years and had a 10% drawdown. That's it.

[Josh Brown]

One of the.

[Sam Rowe]

Well, one thing. Well, the first slide, you know, let's not forget that, you know, all these analysts giving these ratings have a lot of career risk and, and all kinds of different interests in mind. Like, you know, as you can, as you can see, there's always, most stocks are always, you know, have a buy rating or most analysts, you know, give a buy rating. So, you know, it tends to pick up when prices are going down. Right.

[Josh Brown]

Which is exactly how it's playing out now.

[Sam Rowe]

Yeah. Because the market's falling for better or for worse. They're going to be anchored into whatever their fundamental analysis is saying in terms of price targets. So when the price comes down, the buy ratings are going to go up. I mean, that's exactly what happened in 2022. Right. I guess the buy ratings actually came down.

[Michael Batnick]

John, chart five. But even still, you've got bottom up EPS actuals and of course estimates. They're not incentivized to do this but like they're still ratcheting it up.

[Josh Brown]

Estimates have just come down for full year 25 from 12, correct me if I'm wrong, from 12% to 7 and falling fast.

[Michael Batnick]

Strategists are getting bearish.

[Josh Brown]

Yeah, well, no, no, no, no, no, no. These are bottoms up earnings estimates. 12 to 5 is a lot. 12 to 7 is a lot. You agree?

[Sam Rowe]

Yes, that's very rapid and I think that would certainly explain, you know, the pullback in the stock market.

[Josh Brown]

I think it perfectly explains it.

[Sam Rowe]

Yeah. So you have sort of two competing narratives. Right. So the expectations are definitely getting a little bit more cautious. But like what this is telling you is it's not outright disastrous in terms of the expectations. All they're saying is that we went from pretty bullish to a little bit less bullish because we're still expecting earnings growth in 2020.

[Michael Batnick]

So that's my point.

[Andrew Beer]

But look, I would say, I mean all the talk about tariffs is scaring the daylights out of people. Right. I mean, I mean like the, in that I don't think there's anybody else we cannot separate the signal from the noise on it, right? I mean, I'm going to tell you a very, very funny story about my one encounter with New York real estate, which is where I think. But it describes this. So I looked at doing a deal about 20 years ago. It was a complicated deal. I didn't know anything about real estate. And I got introduced by a top New York real estate lawyer to one of the developers in New York. And I went in and presented the deal. And the guy. They trashed me for 20 minutes to the point where I got up and walked out. I'm like, this is crazy. I called the lawyer back and I trashed you. And why, what are you, some little Harvard Business School guy? What are you gonna pull out your HP12C and tell us how to. I mean, it was like. It was personally insulting. It was professionally insulting. And I walked out, I called the lawyer, and I said, larry, excuse my French, but what the F was that? And he said, well, tell me what happened? And I told him. He said, wait, those three guys were in the room for 20 minutes. They're dying to do the deal. And I said, larry, look, it was an idea. I'm not gonna do it. I said, just tell them thank you. I wanna be polite. Tell them thank you, Walk away. I got a call back from three days later. They loved your response. He's like, he's our kind of guy. Now we know he's serious, all right? And I'm like, literally, no, I'm not negotiating here. I'm not gonna do the deal with him. Two weeks later, this went back and forth. Two weeks later, I got a shark in my office. They were calling me the shark. Cause they thought my simply not wanting to. They couldn't imagine that I was walking away from the deal. Everything was a negotia. And then he started telling me stories about, like, people in New York real estate who will invite somebody to lunch and then put their lieutenant two tables away and not show up and see how long the guy stays there. It's the amount of head games that goes into that world in particular. So the lens through which I look at Trump is. It is truly impossible to signal, to try to figure out what's the policy signal underneath it versus what is. I mean, the answer could be you'll include the Melania coin in your strategic. In your sovereign wealth fund.

[Josh Brown]

It could be anything.

[Andrew Beer]

Is the answer to solving the fentanyl crisis. I mean, it's like they're all unrelated.

[Josh Brown]

You'll book someone's wedding at the hotel or at the golf course.

[Sam Rowe]

I think this also speaks to a lot of the analyst estimates too. One of the more popular phrases from the Q4 earnings calls and earnings announcements that wrapped up a couple of weeks ago was we have not factored tariffs into our earnings guidance.

[Josh Brown]

Oh, well, good luck.

[Sam Rowe]

So, I mean, yeah, so what do you, I mean, what do you do about it? Right, so like, you know, the current guidance is basically assuming some sort of status quo because, you know, you're supposed to take him, you know, seriously, not literally, but if stuff actually gets enacted and it starts to affect business, or even if it doesn't get enacted and it starts to affect business, then you're going to start to see it come up in earnings guidance.

[Josh Brown]

Here's a note from renmac to that point. Neil and Steve consider the tariff threat as more of a dial than an on, off switch. We expect Trump and the administration to fiddle with that dial well beyond April 2nd. So basically it's like an ongoing negotiation that never ends and this week it's 25% and hey, we had a great phone call, now it's 10. If you're a sell side analyst trying to come up with estimates for Stellantis, I don't know how you do that.

[Michael Batnick]

But don't you think the market or don't you think that Trump blinked as a react as a result of the market's reaction last week? He said tariffs, we'll see.

[Josh Brown]

I think that's part of the reality show though, is the twists. I think it's part of the show.

[Michael Batnick]

So there is so much uncertainty, like literally nobody knows.

[Andrew Beer]

Well, and this is where you get into business planning, right? Who's going to hire, who's going to do anything now, who's going to make long term investments now when you literally can, I mean it's, I described it to a friend as, it's like, you know, you get on a plane coming out of a storm and everyone's like rattled kind of stumbling off the train because you've been bouncing, I mean plane, because you've been bouncing up and down. It's like, it's nerve wracking to try to think about anything beyond an incredibly near term horizon because three months ago we could not be talking to tariffs at all, as you say it. And so I think right now the market is assuming that this is noise and that you really do.

[Josh Brown]

Like we're in a 10% correction right now.

[Michael Batnick]

Nothing.

[Josh Brown]

The market, the market thinks it's noise.

[Sam Rowe]

It could be. It's also, it's not just noise but there's also the possibility that any terrorists that get enacted are very short lived. Right.

[Josh Brown]

Like, well, that's, that's been my base case this whole time is that if.

[Michael Batnick]

You zoom out, if you zoom out, say, is the market super concerned about Trump's policies? And you zoomed out, you'd say, no, it's a blip. I'm not saying that it can get there, but right now it's looking past it.

[Andrew Beer]

Well, that's. So it's the bond market and back to the second third order effects. Right? So, okay, so we throw tariffs on everybody. They're going to throw tariffs back on us.

[Josh Brown]

Well, that's.

[Andrew Beer]

And he's going to triple them. And they're going to triple them. It's an insane downward spiral that nobody's thinking back to your point. Nobody's saying, well, that's likely.

[Josh Brown]

So here's how stupid this is. We do tariffs against Europe. What we sell in Europe is software and services and financial shit. And it's like a 50% profit margin. The stuff Europe sells to US is a 5% profit margin. They sell us Volkswagens, they're breaking even. They sell us Porsches, they're not making any money on any of this. A lot of people along the way are making money. That's not the same as selling software at a 50% margin. Why on earth would we want to upset an Apple cart where the stuff we sell around the world services are so profitable and the stuff being sold here is razor thin profit margins? It just doesn't seem like even if we got the outcome Trump seems to want, it doesn't seem like we win. Oh great, we get to manufacture more things that have a 7% profit margin and the rest of the world stops buying our software. Who wins in that? It doesn't seem like the, it doesn't seem like we win anything.

[Andrew Beer]

That's what I'm saying. I don't think any of the people around him, I think this is one of those issues that has some sort of political driver behind it. I mean, he has surrounded himself with some people who, from what I understand are, are believers in tariffs. But I don't think the Elon Musk's of the world, the.

[Michael Batnick]

You think best sense of believer in tariffs.

[Josh Brown]

I think he has to twist his mind into a pretzel to become a believer.

[Andrew Beer]

I think he and Lutnick. And Lutnick, I'm not sure about it, but I think, I think they all like, I think what the Trump administration is doing now, which they didn't do the first time is they've unified messaging.

[Josh Brown]

Yeah, they're really good at it, right?

[Andrew Beer]

I mean, it's normal to use signal. No, it's not. Right, but it's the adoption of Trump's Roy Cohn approach to everything, which is you don't concede anything and you punch back as hard as you can.

[Josh Brown]

This is Ricardo Houseman writing at Project Syndicate. He's an international trade expert at Harvard. US based companies like Apple, Google, Microsoft, Facebook, Nvidia, Johnson and Johnson and Tesla leverage their innovation based market power to extract rents from consumers and businesses around the world. If these firms were hit with the equivalent of a tariff, they would not be able to pass the cost on to their customers abroad. After all, they could have raised prices without losing profits. They already would have done. So. If we multiply American companies foreign earnings by 26, which is the average PE ratio of the s and P500, the value of US investments abroad can be estimated at 16.4 trillion. By contrast, foreign companies operating in the US earned just 347 billion in 2024. So we've built this value on foreign earnings of. If you use a PE ratio like 16 trillion, Europe is making a few hundred billion. How are we losing in the status quo? It seems like we're not.

[Andrew Beer]

But I think the market is saying the base case scenario is not. Nothing's going to happen. Right. There's going to be, it's, it's, there's going to be noise, it's going to always be on the front, on the front page of the news. But ultimately, you know, you're, because of what we've seen about, you're not going to see a Mark Zuckerberg or somebody else stand up and say, I think this is insane, stop it. It's going to have to be in a way where they, you know, they shift the narrative, they talk about something else and they claim victory.

[Josh Brown]

Yeah, right.

[Andrew Beer]

There's no, there's no. And I think that's the problem with the media and the way they approach this is that it's, it's like a 1980s high school flick where the bully at the end of the day is like, I'm sorry, I shouldn't have been mean to you. It's not gonna happen. Right. There is no concession. There's no moment of concession, there's no acknowledgement.

[Josh Brown]

Okay, if the media stops talking about tariffs, though, Wall street analysts won't. So it's more than just immediate. I get what you're saying. You're saying if everyone just calms down over it. He'll get bored of it.

[Andrew Beer]

No, no, no. I don't think he's going to go on his normal path and he's going to look and we don't. The second order effects may be good for all we know at this point. Like I said, I'm not. I mean, it's like what's happened with Europe with defense spending. It's hard to argue that's a bad thing that's happening. I think it's great economically, et cetera, et cetera. So we just don't know what the combination. We don't know the motivation of the first order effects, we don't know how the second and third order effects will play out and we don't know how it'll be resolved. And I think this is one of those things where there's the known unknowns and the unknown unknowns. I think the market is saying it seems so destructive to take this to its logical conclusion. That's not going to happen.

[Josh Brown]

I agree. So I'm going to just say I think the typical person who is not a Wall street finance person trading shares of GM is perfectly fine with what's happening unless it's directly affecting them, which is not a huge number yet that have really felt the effects of this. And in the meanwhile, the number one thing that you have to admit about Trump, whether you love him or hate him, he's doing exactly what he said he would do. Today they arrested the number three guy in MS.13. They ripped him out of the house in Virginia. They put it on TV immediately. They're getting rid of a lot of the regulations that annoyed people. It started with plastic straws and we all laughed. But in the meantime, every day there's more news about different departments in government where they're cutting regulation. I know everyone doesn't love that, but I think the people that voted for Trump, they love it and they're getting it. He's really doing it.

[Andrew Beer]

And I think, look, I think from the Democrats perspective. Right.

[Josh Brown]

Are there any left?

[Andrew Beer]

Well, I mean, like, for the Democrats perspective, like, you know, pick your battles, right? I mean, I mean, your battle is not. The government was functioning perfectly the way it was before. No one thinks that. But on the other hand, focus on the essential things that we want to preserve to make sure there's not a bad impact on people's lives. Focus on the fact that this vilification of every government worker because they made a choice to go work for the government is very, very damaging to the social fabric of this country. There are people dealing with the government, the whole career. There are people who are wonderful, who work for the government. It's just the career path that they chose. And there are people who are very, very difficult. But in a sense it's the same way that the arrogance of the kind of sort of Washington geopolitical establishment about free trade and ignored the consequences that it would have to the families, the multi generational families in an industrial city.

[Josh Brown]

That's the part that Trump is right about. It never was free trade. We called it free trade. In reality, US goods were being tariffed everywhere. So I think he's probably right. That's the part that he's right about. And I think, you know, again, to bring it back to investing though, like, I think the chaos might be part of the point, cause of all the attention it gets.

[Michael Batnick]

But the market is looking past it.

[Josh Brown]

I don't know, I think each week we're losing a little bit more ground. And one week it's gonna be a really big move.

[Michael Batnick]

Yeah, you move, you might be right. But in times of like height and uncertainty, I defer to the market. I think the market knows more than any of us collect. I mean, obviously it doesn't mean it's always right and this could age very poorly. But for now the market is looking past it. So Morgan Stanley's Andrew Sheets was quoted in the FT this week and he said, we're mindful of the temptation for equity investors to take comfort from the credit market's resilience. Yet remember, two of the big issues that have faced stocks were not really credit stories. So then later in the article they, they quote Greg Obenshine from Verdi Capital. And Josh has been talking about this, that maybe it's not showing up in credit spreads because really we should be looking to the private credit markets. But even then they say while the private credit markets has experienced rapid growth in the past 10 years, the high yield market is the same size as it was in 2014. Pretty interesting. Furthermore, of the same period, the share of double Bs, which are the highest rated portion of the index, has climbed from 41% to 51% of the high yield index, giving credence to what Josh has been saying. It's like if you're looking there, it's more highly weighted than it used to be otherwise. However, even the junkiest of junk, so forget about the double Bs, even the junkies of junk, we're looking at triple C and lower, remains sanguine over recession risk. So there was a little Bit of a spike. But to call it a spike is a hyperbole because it's still below where it was for Almost all of 23 and all of 24. So unless this starts to pick up, I have a hard time being too worried.

[Josh Brown]

Sam, this doesn't look like starts to pick up. That's exactly what it looks like.

[Sam Rowe]

Yeah, I mean, it's like, you know, on one hand, but it was on the floor on one hand. You have the whole like, you know, slowly and then it happens suddenly kind of thing too. But don't forget, we also spent the last couple of years talking about how much credit quality has improved. A lot of these companies we're talking about.

[Michael Batnick]

Right. So all of a sudden that's different because of threat of tariffs.

[Sam Rowe]

Yeah, no, I mean, I think the threat of tariffs or higher costs or lower revenue and all this stuff might be a problem when it comes to earnings growth. Going from earnings growth to slower growth. Or maybe you have some earnings declines. But I'm not sure anyone's like saying, well, we're in a situation right now where we're having actual financial distress.

[Josh Brown]

No, but nobody yet.

[Sam Rowe]

Nobody. Yeah, nobody. Because again, you know, credit quality, cash balances, all this stuff is very high. Profit margins are nearby.

[Josh Brown]

Did credit quality get better or.

[Michael Batnick]

Yes.

[Josh Brown]

Or was there just so much money available that nobody could actually default?

[Sam Rowe]

I mean, what's the, what's the difference?

[Josh Brown]

The companies themselves probably aren't better, but. But the treasury and Fed printed $4 trillion and rained it down on everyone.

[Michael Batnick]

Margins are at all time highs across the board of almost every company. Not every company, but across.

[Josh Brown]

Even when you look at issuers in the junk indices, I don't know about that.

[Michael Batnick]

Those are never highly profitable companies. But my point is, I'm not dismissing risk. I'm just saying that for now the market seems to be not super duper concerned. And again, maybe it's wrong.

[Sam Rowe]

Yeah, I mean, if this stuff persists, then yeah, it could probably turn into a problem because I mean, that's another thing that's sort of like, you know, you b. Is this a good or bad thing that so many of these companies have shifted toward long term fixed debt as opposed to a lot of short term floating rate debt. So it's like this might not affect companies for the next couple of years, but if rates stay where they are or they creep up more, then maybe you do have a problem. Especially if growth sideways.

[Josh Brown]

Do you worry about the wall of maturities or the amount of private credit expansion and how much more important those types of lenders have become relative to the traditional banking sector. Is that on your radar, is something to worry about or not yet.

[Andrew Beer]

I would say with respect, first of all, I think in any area where you throw tons and tons of money people and you give them an incentive to put the money to work, you're going to have. People are going to take more risk at lower yields. A great case study would be to talk to a typical buyer. What was your experience doing a loan today versus five years ago and ten years ago? And I. So on the other hand, there's not the contagion risk, right? I mean private credit funds can lose money, but they're not leveraged, nobody's calling. I mean, yes, maybe some of them have a little bit of leverage built into them, but you don't have that. I mean, in a sense you've actually decentralized a lot of the.

[Josh Brown]

They're not tied to deposits like at.

[Andrew Beer]

A bank, short term deposits, their money runs. There's no Silicon Valley issue issue here. So I really don't know the answer to that.

[Josh Brown]

I agree. I'd rather them, I'd rather Apollo take the risk than bank of America.

[Andrew Beer]

And those guys, guys are again Apollo, Blackstone, Aries, 6th Street. Right. These are some of the greatest investors, allocators like businessmen and the top six.

[Michael Batnick]

The top six issuers are responsible for 75% of all loans in private markets. So there's. You're already seeing the payment of kind stuff pick up. But you're right, like Blackstone can probably take these companies through. There is almost infinite money. Now I know this figure, when it turns, it gets dry very quickly. But for now I would rather it be in their hands than syndicated all over the place.

[Andrew Beer]

Well, because see, I would have said before in the 2010s when you were looking at normal issued bonds, my argument about it was okay, so you're going to negotiate those bonds and you find out that Apollo owns your bonds. I mean that's the worst day of your career.

[Josh Brown]

Why?

[Andrew Beer]

Because they are so tough. Okay, Like Apollo, Ares or whatever it used to be. If you're negotiating with a bank that banks have ongoing business they're worried about, whatever. I mean these are such hardball negotiators. They always leave the room more than anybody else.

[Josh Brown]

So this is that creditor on creditor violence we hear so much about, right?

[Andrew Beer]

And that's when they're inflicting it on each other. Imagine if you're a normal corporation or a normal corporate board. I mean it's just sort. Anyway Look, I think they're responsible stewards of capital and I think they're aware of the historical precedents of taking on too much leverage and stuff. And I don't see it. I'm not an expert in the overall industry landscape, but I doubt that's going to be, I guess.

[Josh Brown]

But the question is if there's really so much. Michael might be right when he says that the markets are looking through a tariff driven recession. Cuz if there really were as much concern as people say they think there is, why is copper making a record high right now?

[Michael Batnick]

Why is the tenure at 4? Why is the tenure at 4 3?

[Josh Brown]

Why is the tenure at 4 three? Why, why do we not see spreads blowing out really anywhere? Because there isn't any distress yet. So it might just be it hasn't gone on for long enough. Might be the right answer to that.

[Sam Rowe]

Question or we haven't been surprised by, you know, second, third or effects the unintended consequences and all that kind of stuff. Everything. Because like you were saying that a lot of the stuff that's happening is stuff that Trump has been promising for a really long time. And so as much as there's volatility in the markets, a lot of companies will tell you that they've already been setting aside a plan B for all these different things that could possibly happen, but none of that stuff will ever capture. Well, let's say Europe decides that they just hate America now and all the consumers there decide that they're not going to buy American branded products anymore. Like, okay, then maybe you have bigger problems. Not that I'm not saying that's going to happen, but you know, it's really disturbing when you watch like a Canadian hockey game and like people are booing national anthem.

[Michael Batnick]

It's not great.

[Andrew Beer]

But also go to Montreal next week. See you later.

[Michael Batnick]

The hardgate is not softening yet. I mean it's not as strong as it was last year, but. But initial jobless cancer. People have been waiting for that to spike. Maybe it will. It hasn't yet.

[Andrew Beer]

I mean, Trump has an extraordinary nose for power, right? And he recognizes that the US is still and however you think about it, the most powerful nation in the world. You don't want to counterpunch on a trade war. You want to concede what you can concede and slither out of the room as fast as you can to avoid getting into a major escalation.

[Michael Batnick]

But you said this. He's gonna declare victory before anything happens.

[Josh Brown]

He already won the trade matter. Right? But Apple and Nvidia are two pressure points that the Chinese, if they wanted to, could really push on. Apple is hugely reliant on China, both as a place to sell phones, but also as a place to manufacture. And you know, you can, you could see it. It hasn't happened yet and it may not happen. I hope it doesn't happen because it's the second largest market cap in United States of America. But the Chinese are very well aware if the iPhone disappeared tomorrow, there are plenty of Chinese phone makers who would fill that void. And if they really wanted to put the screws to our stock market, pushing on that Apple pressure point is pretty easy thing to do. You don't even have to do it, you could just talk about it. That's one, two. Now they're going, now they're sort of waffling on the Nvidia relationship with China. They're saying that all of this AI stuff happening with Nvidia's chips, it's not great for the environment. These are hints that they're dropping. Nvidia and Apple are massive pressure points for the entire global economy. And very acutely, the United States stock market. And that hasn't really been tested yet. Do we wanna know what the NASDAQ does in that scenario? Do we wanna guess at what the S and P looks like if that becomes the new theater of the trade war?

[Andrew Beer]

And I think that's why the market's ignoring it or largely looking past it, because they see this. I mean, usually when the market freaks out, it's either something big happens overnight that nobody was expecting, deep seek, or it's three things that converge at once. So last July, it was the bizarre political stuff happening here because again, it was like everyone thought Trump was going to win and he was going to face Biden. Then overnight, Kamala Harris was put in, which everyone thought would be worse than Biden. All of a sudden she's doing really well in the polls. So all of a sudden the stock.

[Josh Brown]

Market didn't love that.

[Andrew Beer]

Animal spirits Stock market didn't love that. At the same time that Powell comes out and talks about weakness and you get a number of data points on weakness in the economy. At the same time, the bank of Japan comes in and decides to blow up the macro world. And so it's usually convergence of things like that.

[Josh Brown]

It's either a shock or it's an in threes thing where the market sits up and says, wait a minute, all of this sounds bad, right?

[Andrew Beer]

And it kind of builds on it, right? And so to me it would be, it's less likely that there's going to be a visible escalation on the terror front that results in kind of mutually assured destruction. On the economic side, it's more likely that while that's going on, there's a bond market tantrum in the UK that causes something bad to happen there. And that same week some bank that nobody's heard about goes under at the same time or like it's going to be it's usually. And then there's a new virus. I mean like there's going to be, it's always something weird where you're, where people don't know how to price it initially.

[Josh Brown]

How about a $40 billion IPO that nobody wants to buy?

[Andrew Beer]

Just.

[Michael Batnick]

That would do it.

[Josh Brown]

Yeah, that would do it. Would that do the trick?

[Michael Batnick]

That would do it.

[Josh Brown]

Because that's what I think happens tomorrow.

[Andrew Beer]

I don't know.

[Josh Brown]

By the time people are listening to this, I will look like an idiot or I will look like, or I will look like George Soros.

[Michael Batnick]

So for right now, it's still a political story story, right? Like it's more of a political story than a market story. If you look on who's on the, the talk shows, the political shows, it's not Marcus people yet. That's when you know we're in some when Jim Cramer's on, but Jim Cramer's on Bill Maher, then it's a market story. For now, it's a political story.

[Josh Brown]

They're not calling me yet from like cnn. And that is, that is there were.

[Sam Rowe]

There were a couple of days close to whatever the bottom was when we entered that 10 correction that there was a couple of folks.

[Michael Batnick]

Yeah, we might get there. Josh might get the call.

[Josh Brown]

Yeah, yeah, I might get the worry.

[Michael Batnick]

Well, stand by, stand back.

[Josh Brown]

And what I always say is, well.

[Sam Rowe]

That'S another thing too. Right. It's like as much as we're going to say that it doesn't look like the market's taking this very seriously. Well, these corrections can happen for over a very long time.

[Michael Batnick]

Totally.

[Sam Rowe]

Right, totally.

[Josh Brown]

But, but what I always say is about that you never do the first markets in turmoil. So I'll usually when when there's going to be a markets in turmoil special. So this is at 7:00 at night on CNBC when they would normally run like Shark Tank if the dow is down 1300 points or something, they'll call for a markets in turmoil and with good reason. That's when people actually are paying attention. You gotta have something there for them. But you never Want to do the first one? You always tell the producer, I'm not free tonight if you need me tomorrow night. Because that first day of markets and turmoil could be reversed so fast. And then it's like I just spent an hour last night like doom scrolling with people. And so you always want to wait till the second or third edition.

[Andrew Beer]

If you need a crash tomorrow, I'd be more than happy to put a Twitter post up saying I'm not worried about crash.

[Josh Brown]

No, we don't need that. Yeah, we're good.

[Sam Rowe]

I just went all in.

[Andrew Beer]

Bye, bye. Bye.

[Josh Brown]

We're good. All right, where are we going next?

[Michael Batnick]

Andrew, you've got some opinions on the ETF market specifically? Let's talk liquid alts. Go ahead, the mic is yours.

[Andrew Beer]

Well, thank you.

[Josh Brown]

Can you define liquid alt for the audience that's not sure what that term means?

[Andrew Beer]

Sure. So liquid alts was a term. It's a terrible term that came into existence in the early 2010s after the GFC. And basically the idea was there are alternatives, which means generally it meant things that hedge funds do. So you don't just buy stocks, you also short stocks, you make macro calls, you might go long and short different fixed income instruments. So kind of the bread and butter of what hedge funds do inside hedge funds. And hedge funds are vehicles that a typical investor cannot get access to unless you meet certain net worth accreditation requirements. And they're kind of a pain in the ass and tax inefficient, all sorts of things. So generally it's the realm of institutions, high net worth investors. So people came up with this idea after the GFC where a number of these hedge funds did well and they said, well these would be great, let's take them out to the retail world, to the everyman investor and we'll take the same kinds of strategies.

[Josh Brown]

They had great three year numbers because a 6040 portfolio in 08 looked horrible. And so if you were doing something that deviated from that, you looked better in comparison. And on Wall street, the number one rule is you sell what people want to buy.

[Andrew Beer]

Yeah. And you look at a thousand funds and you find the 50 that have done the best.

[Josh Brown]

And then that's your benchmark. That's your benchmark, that's your track record.

[Andrew Beer]

And so so they package them in mutual funds to make them more accessible to people. It's generally been a catastrophe for investors. So since they launched, they've done about 2% per annum during one of the great bull markets ever. And that's after about 200 basis points in fees. So I'm in a kind of a sort of unusual position. I think that there are some things that hedge funds do that can be very valuable for the typical investor. But I am a hugely critical of the vast majority of stuff that's been created where I don't think there's any real value that they've offered to investors, but they have made a lot of other people rich.

[Josh Brown]

Is the problem the mutual fund wrapper itself, or is the problem that once a strategy is done really well, whether it's a liquid alt or a hedge fund, the strategy is going to become so crowded that the alpha is not going to be enough to go around? Which is the bigger issue with liquid alts?

[Andrew Beer]

Well, I would say one. I would say, honestly, it's both. The mutual fund wrapper has been a very big problem. And in 2013, I wrote a paper with a professor at Columbia basically saying people are radically underestimating how hard it is to take what hedge funds do and make it work with daily liquidity, all sorts of other constraints. You can kind of go on this list of things you have to do to make it work. And I described it as taking a great mixed martial artist and asking him only to use his feet. Basically, it's just not going to work as well. And we were right. It didn't stop the business from growing to hundreds of billions of dollars, because the typical firm in this space has what Ben Johnson at Morningstar calls a spaghetti cannon. They shoot a bunch of crap at the wall and they hope some of it sticks. And whatever sticks, whatever's doing well, they'll.

[Josh Brown]

Make 10 of them.

[Andrew Beer]

They'll unleash their army on you. And that's the only one you'll hear about. You won't hear about the ones that did badly. And so it's very much of a. It has historically been an area where products are sold. Because again, going back to your boiler room analogy, you got a 200 basis point product, you can pay your salespeople a lot more than going out and selling at 25 basis points.

[Josh Brown]

Not only are you paying the brokers more who are selling this to middle America, but also it's giving the brokers an aura of sophistication, just being able to talk about it versus having the conversation like, well, what do you do that's different than Vanguard? What do I do? How about private credit? Mother, can I show you? And then, of course, they'll pull out whatever the best track record is and they'll sell, you know, and they'll Sell that.

[Andrew Beer]

I mean, I mean, you know, the average advisor has, I think, two major strategic issues at this time. One is you're competing with Vanguard, right?

[Josh Brown]

Yeah.

[Andrew Beer]

It's absolutely bizarre that one of the two largest firms in this industry is a nonprofit.

[Josh Brown]

Right.

[Andrew Beer]

I mean, imagine if Steve Jobs set up Apple as a nonprofit, what that would have done to the tech industry. And how weird your iPhones would be $7. The other is that 60, 40 stopped working. A lot of the asset management business was built on a peculiar statistical relationship between stocks and bonds in the 2000s and 2010s. That has not been working.

[Michael Batnick]

What do you mean it hasn't been working? I mean, it didn't work for one year.

[Josh Brown]

It didn't work in 2022.

[Andrew Beer]

Didn't work in 2022, 2023 and 2024.

[Josh Brown]

How didn't it work?

[Andrew Beer]

Okay, so the.

[Michael Batnick]

When you say worked, what do you mean exactly?

[Andrew Beer]

Providing meaningful diversification benefits relative to equities. So I start from the assumption that if you want to.

[Josh Brown]

Those are bull market years. It shouldn't work. Meaning, like bonds are a drag on stocks in 23 and 24, and rightfully so, because stocks did 20% plus in both years.

[Andrew Beer]

Well, okay, I would frame it the other way. I would say in the 2000s, 2010s, you literally didn't need anything other than bonds.

[Josh Brown]

That's true.

[Andrew Beer]

Bonds did 350 basis points more than cash. Sharpe ratio, 0.9, volatility of 3. It was a straight line to the upper right. Negative correlation to equities never went down more than 4%.

[Josh Brown]

Yeah, great decade. Great decade for bonds.

[Andrew Beer]

If that was a hedge fund and whatever. All you should have done is in 2000, you should have leveraged up bonds and forgot about everything else.

[Josh Brown]

Which is why I did that.

[Sam Rowe]

Okay.

[Andrew Beer]

And that's why you own this building.

[Josh Brown]

That's right.

[Andrew Beer]

Now, since then, vols have doubled, the max drawdown has quintupled, and on a.

[Michael Batnick]

Real basis, forget about it.

[Andrew Beer]

Right. And it's underperforming cash, negative Sharpe ratio. And it now has a correlation to equities.

[Josh Brown]

So you're looking specifically at the fixed income piece, whereas Michael and I are always biased toward the equity piece.

[Andrew Beer]

Right.

[Josh Brown]

Because that's the way we think.

[Andrew Beer]

You start with 100% equities, and then you say, how much do I want to peel off?

[Josh Brown]

That's right.

[Andrew Beer]

To sleep at night.

[Josh Brown]

10, 20, 30.

[Andrew Beer]

Buffett would say, give me 95% equities, give me 95%s and P500. I've got 500 people going back to this options discussion who are going to go to the office every day, try to make me more money, but I'll keep 5% in cash so I can.

[Josh Brown]

Buy more equity somewhere so I can buy more.

[Andrew Beer]

But the industry was built around a particular mathematical relationship where they said, well, and look in model portfolios are a phenomenal social good for the average investor because they combat two of our worst weaknesses, which is one is we tend to panic and sell at the bottom and we focus obsessively on insignificantly small line items and how they did last month. So getting people to look at their overall portfolio and map out what the horizon is going to look like in 10 or 20 years is hugely beneficial to tens of millions of individual investors. But underpinning it is also is a belief that you can't time the markets. You want to remain invested through good times and bad. And since you can't accurately pick whether stocks and bonds are going to do better this year, just keep it at 60, 40. And my point is that 6040 was the right answer for 20 years. It has not been the right answer for this decade. It would be a lot more equities because in a sense, if you think about that 40%, the 10 year treasury was yielding 50 basis points in the middle of 20, 20, 70 basis points by the end of that year. So you were basically going to your clients at a what no one argued was not the world's craziest bubble over the past 20 years. You're going to your clients and saying we're going to put 40% of your assets into something that is sort of the equivalent of March 2000 with equities.

[Josh Brown]

Treasury bubble in 2020 I was saying.

[Andrew Beer]

Actually the dot com bubble in 2000.

[Josh Brown]

But you're equating like allocating to bonds at 50 basis points in yield. Now a lot of advisors shortened up their duration and their fixed income allocation is not always the same as a fixed income allocation. So I think a lot of people said I'm getting paid the same for cash. Then I'll just, I'll go to cash, I'll go to money markets.

[Andrew Beer]

And that was a great move for getting rid of duration was a great trade. Going to private credit was a great trade. Cliffwater Steve Nesbit BILLIONAIRES Basically he's become a billionaire under the argument that the public bond market is not giving you what it should be giving you. Anyway, my point is when you look at the statistics, if you were to build a portfolio today, it wouldn't be 60, 40 and so the problem is that going back to this connects to the disaster and liquid alts. And that's what's driving private credit ETFs and everything else that people are saying. We've got $10 trillion of ETF assets of which the entire legitimate hedge fund ETF category is probably 10, 15 billion.

[Michael Batnick]

If that.

[Josh Brown]

If that what, like a liquid off that trades in an ETF wrapper? Yeah, I can't even think of more than three of them.

[Michael Batnick]

Wait, is yours. Would you consider managed futures in that category? Yeah, right.

[Andrew Beer]

Yeah. So managed futures is one of the categories. Equity long short is another category. They've gotten certain long short factor stuff like quant trading and other things, but it's not going to be the only solution. But the gold rush that you're seeing is. Wait a second, that could be a. If even 3%.

[Josh Brown]

Right. They always do that.

[Andrew Beer]

And that's the way I look. So we manage an ETF that's about a billion two, which you can look at it statistically and measure its benefits relative to a 6040 portfolio. It's not a hard statistical argument to make, but we as an ETF are one basis point of the ETF world.

[Josh Brown]

It's crazy. It's a rounding error.

[Andrew Beer]

Exactly. The argument is not get rid of equities, get rid of bonds, et cetera. It's just 40% is not the right number.

[Josh Brown]

40% for fixed income.

[Andrew Beer]

40% in something that looks like the Bloomberg garbage.

[Josh Brown]

Well, listen, everyone seems to agree on this. So the only. Other than on the Boglehead forum, everyone in our industry seems to agree it's not 60, 40, it's 60 25, 555 or it's 60, 20, 10, 10. And then the argument is, well, what are those extra pieces going to be? And is that tactical in a certain interest rate regime, do you say it's this and then you. I mean gold is over 3,000. So you started to hear a lot of people back to the gold sleeve.

[Andrew Beer]

Gold, Bitcoin, commodities, things like tactical, things like mandatory, which we do certain other kinds of hedge fund people will. Private credit, MLPs.

[Josh Brown]

They use MLPs.

[Andrew Beer]

Right. So people will feel, I mean, I think 60, 20, 20 is probably where most people are going to end up.

[Michael Batnick]

What's the other 20?

[Josh Brown]

Private credit, private equity, all of your.

[Andrew Beer]

Smorgasbord of things that you would consider to be not stocks and bonds.

[Michael Batnick]

The active ETF industry just hit over a trillion dollars. I saw Belchunas's Tweety. So people like you and Simplify and Corey and people are allocating dollars to you guys.

[Josh Brown]

Yeah, you guys have broken through.

[Andrew Beer]

Okay, so the active ETF story is an interesting one because active ETFs were a failure at first. Ironically, Cathie Wood was part of the catalyst of putting active ETFs back on the map. But because stock pickers didn't want to do active ETFs because they didn't want to disclose their positions. LOL. So they went down this non transparent ETF route which nobody bought.

[Josh Brown]

She loved disclosing her positions.

[Andrew Beer]

Loves disclosing her positions. I mean that's.

[Josh Brown]

But you're. And realized, oh all right, yeah, here's my positions. Who cares.

[Andrew Beer]

But the vast. There's a trillion dollars. Balchunas just noted that there's now a trillion dollars of what are called active ETFs. A lot of those would have been called passive 10 years ago.

[Josh Brown]

It's deactive in name only. They're really quant. They're really quant formulas.

[Andrew Beer]

Yeah, it's a DFA value versus something screening mechanism.

[Josh Brown]

We call those passive. But I could understand why they would be sold as active.

[Andrew Beer]

Well, because when they were sold as passive, passive people would say then why are you more expensive than Vanguard?

[Josh Brown]

Yeah.

[Andrew Beer]

And so now what Happened is active ETFs has become a thing and it allows them to price the active ETFs at 40 basis points and not get pushback. And now what's happening is across the industry, most of the ETF models originally were passive models because a wealth management platform that had mutual fund models, they Never really liked ETFs because can't make any money on them. So they kind of relegate them and say, well, we can give you, wait, I guess we have to give you an ETF model. But it's going to be passive or it's going to be, I think BlackRock's models are mostly like 12 basis points or something. So like the dirt cheap, super passive, super simple stuff to preserve the moat around the higher margin active stuff. But now you're seeing a convergence. Right. So people are going to the same guys with the models and saying you need to mix it up a little bit.

[Josh Brown]

Can we do this liquid alts train wreck chart? Walk us through what's going on here.

[Andrew Beer]

So this is data from February 2002 to December 2024. And what you see on the lower right, real estate event driven long short equity macro trading multi strategy. Those are the Morningstar category returns.

[Michael Batnick]

Yikes.

[Josh Brown]

Almost fully correlated to the S&P 500.

[Andrew Beer]

So the horizontal line is correlation to The S&P 500 and they cluster around 0.8.

[Michael Batnick]

Not good.

[Josh Brown]

So what's the point?

[Andrew Beer]

And then the vertical alpha. The vertical is alpha, negative alpha. Right.

[Josh Brown]

Horrible.

[Andrew Beer]

Don't buy them.

[Josh Brown]

How long? Sam, write this down. Wait for how long?

[Andrew Beer]

22 years. Wait.

[Michael Batnick]

Not to defend them, but in a bull market, these things are going to suck.

[Andrew Beer]

Okay.

[Sam Rowe]

Since 2002, it might work exactly as you want, but nobody wants.

[Andrew Beer]

Would you pay 200 basis points for that? It's not just. They're expensive, they're complicated, they're hard to explain to cost.

[Josh Brown]

Anyway, I would pay 200 basis points for that if they take me golfing at Winged Foot.

[Andrew Beer]

And they do.

[Josh Brown]

Right. So then.

[Andrew Beer]

Yes, Right. But that's a different part of this.

[Josh Brown]

I know, I know, I know.

[Andrew Beer]

I mean, you maybe should be so reformed.

[Josh Brown]

So CTA replication and CTA hedge funds, okay. Very distant from those at the other end. Why?

[Andrew Beer]

So CTA's.

[Josh Brown]

So CTA is a strategy where commodity trading advisors.

[Andrew Beer]

Commodity trading advisors. It's a regulatory. What it basically means is people build these models that are effectively next generation charting. They're looking for breakouts. They're looking for the things that fundamental investors generally consider to be lowbrow. They just work well. And they've worked for 50 years. Now what they do though, is that sometimes they're long, sometimes they're short. So over a market cycle, if you look at that, they have no correlation. It's one of the few asset classes you can plug in and say this really has no correlation to stocks. And by the way, it has no correlation to bonds either. And the horizontal axis is the amount of alpha it generates. So there's a $340 billion business of CTA hedge funds that do this, that are staples. How much? 340 billion.

[Josh Brown]

Did you know it was that big? That's a lot more than I thought it was.

[Andrew Beer]

Yeah. So the mutual fund side is only 20 billion.

[Josh Brown]

Okay.

[Andrew Beer]

In part because these guys walk in and they try to convince you to put your clients and they basically are describing a leveraged long short order based black box. And they think your client's going to be happy with it. But. But the point is that even after high hedge fund fees, what that dot shows you, it's one of the few categories you can point to. It generates a lot of alpha. Alpha. Look, alpha matters when you're putting together a portfolio. No one is going to give a crap about the alpha generation of a particular investment in a typical retail portfolio. But it is a way of looking at it, saying whether it should be. So when I look at CTA replication the dot above it, what I basically said is, well, if they can do that after all these hedge fund fees, after all these crazy. What if we could find a way to copy that, cheaply preserve that's where we are in that vertical axis and just bump it up. And if I can do that in a simple way, I can put it into an ETF and then I can be the anti liquid alts by actually giving you diversification benefits in a client friendly router.

[Josh Brown]

And what's reception to that idea? When you sit with wealth management firms.

[Andrew Beer]

If they want to add things to their portfolios that will bring diversification benefits, if they're in that mode, then it's very good. I mean this is a breakthrough ETF.

[Josh Brown]

So you don't position that against the S&P 500. You say, look, I already know you're not. I already know you're doing that. You're positioning that against the shitty liquid alts that they've been trying and failing with for 20 years.

[Andrew Beer]

I'm saying that 20% bucket that you need to fill.

[Josh Brown]

Got it.

[Andrew Beer]

Look, I'm going to. This is. I hope I don't get excoriated for this, but it wasn't my quote. He said, he said, you are by far the tallest midget in that room.

[Josh Brown]

Yeah, we would excoriate you, but we don't know what that means. Would you like to be. All right. No, I love that concept. Let's put this demand for diversifiers chart up. I think this is good too.

[Andrew Beer]

Oh, so by the way, that's the growth. So we got into the miniature. This was a non existent space basically before we got into it in 2019.

[Josh Brown]

And again, manage futures ETFs.

[Andrew Beer]

Manage futures ETFs.

[Michael Batnick]

Yeah, and you're the biggest by far.

[Andrew Beer]

Not to brag, so I think I'm not supposed to talk about specific tickers, but whatever.

[Josh Brown]

You might get excoriated, bro.

[Andrew Beer]

But so what I wanted to basically do is I wanted to take this, which is valuable to advisors, and figure out how to translate it to advisors. Like the value proposition here is not some shiny object. You can go to your clients and tell you about how cool this is. It's rather how does this incrementally help your portfolio? Does it complement what you're already doing? And so the space has gone from 0 to 3 billion now what's happened now is that people are realizing that out of that 20%, this is likely to be 3% of that 20%.

[Josh Brown]

3% of the 20%. That's not bonds and stocks.

[Andrew Beer]

That's not bonds and stocks. Maybe up to 5%.

[Josh Brown]

So what's that, Tam? Is that $500 billion?

[Andrew Beer]

I think this could be $100 billion. $100 billion.

[Josh Brown]

$100 billion space. Okay.

[Andrew Beer]

Now what's happened is since on the basis of our proving that this could expand beyond its original areas, it's about 3 billion right now. So 3 basis points of the ETF world. BlackRock just launched one, Invesco just launched one, and Fidelity has one in registration. And what they're going to have to go out and do is now every time you fire up Aladdin and do your asset allocation, guess what, guess what's going to pop up. And it's not going to be blackrock's track record in it. It's going to be the dot that you just saw. But the overall space and its diversification benefits.

[Josh Brown]

Got it.

[Andrew Beer]

In the same way that after they did ibit, all of a sudden, oh, maybe we should have Bitcoin as an asset allocation thing. So the point is that my goal is not to compete with that $340 billion of hedge funds. It's rather to try to find a way to make this useful and valuable to advisors who are trying to find a way to help their clients grow their assets and sleep at night, basically. But message it in a way because like I described this as the kale of asset allocation. You know what's good for you. Right. And it could save you at some later date if you were going to have some nasty cancer come along. It's just not that pleasant at the time. You know, it's not, it's.

[Josh Brown]

Yeah, you're not going to. Right. That's good. That strategy in 2024 is not going to be the thing that your clients are thrilled that they own.

[Sam Rowe]

Low correlation, low fees are great. When the S and P is in a 10% correction or even flat and.

[Michael Batnick]

A 15 year bull market, it's tough.

[Josh Brown]

Yeah.

[Andrew Beer]

I mean the overall space is up 20% in 2022.

[Josh Brown]

All right, guys, are private credit ETFs a bad idea. What do we think PR IV got out somehow. Somehow. Did it get out or it's a.

[Sam Rowe]

It's out, it's dropping.

[Josh Brown]

It's in the world.

[Andrew Beer]

Yeah.

[Josh Brown]

All right, I get the idea. Why should only rich people have access to private credit? Blah, blah, blah. They say it's about everything. There's truth to that. I think regular people want to have the Opportunity to invest in something that. I don't know, what is it? Compounding at 12% CAGR for the last five, 10 years.

[Andrew Beer]

It's been a great investment.

[Josh Brown]

It's been a great investment. So why. Okay, so I like the concept behind it. The execution is you have companies that are willing to stand and buy any, any and all redemptions. So if somebody wants to sell the etf, they can. Even though the assets are illiquid, there is a buyer who is under contract to take that asset to provide that liquidity. Is that how that works?

[Andrew Beer]

I don't think that's. I don't think so.

[Josh Brown]

How does it work?

[Andrew Beer]

So there. So a couple things. One is you can get access to private credit. You can get access through a mutual fund that's, that's, you know, 100 basis point mutual fund that Cliffwater has. It's 25 billion thing is a straight line.

[Josh Brown]

Straight line meaning it's gone up and up and up, up and up.

[Andrew Beer]

It never goes down.

[Josh Brown]

Yeah, probably because they get to say what it's worth, but. Okay.

[Andrew Beer]

No, no, it's. No, I mean one of the great appeals of private credit is the returns are fake.

[Josh Brown]

Right, right.

[Andrew Beer]

It's like your house. I love it. So it's like private equity. It's like. And, and, and it's. People aren't pulling the wool over people's eyes. I mean it's like, you know, if you don't really mark something to market. But so there are ways to get the question. The issue is in an ETF. So why in an ETF? In an ETF, because there's $10 trillion of money that's sitting in ETFs that.

[Josh Brown]

Will only buy in ETF, will only buy ETFs.

[Andrew Beer]

And that's going to go to 20 billion or something. Or 20 trillion or something. So what they're trying to do is jam illiquid assets. Now, PRIV is controversial not just because the SEC kind of said don't do it, but it's also controversial because it's State street plus Apollo. Except Apollo's not the pm. Apollo's job is to source private loans basically and sell them to State street. Who's the PM of this etf. Okay, why is that bad?

[Josh Brown]

Well, because somebody has to do it.

[Andrew Beer]

Usually if your name is on the fund, you have a fiduciary duty to the investors. Again, the way I read it.

[Josh Brown]

Oh, Apollo can sell its bags to State Street ETF buyers.

[Andrew Beer]

That's the way I read it. Again, I am not.

[Josh Brown]

Okay, that's the controversy.

[Andrew Beer]

But, but it's also. But, but in order to get their strict limitations on how many illiquid assets.

[Josh Brown]

Hang on. This show brought to you by Apollo. I meant to do that earlier.

[Andrew Beer]

Okay, so, so the. So in order to. In order to bump the amount that they can have in private assets, it's only up to 35% of this. Right.

[Josh Brown]

The whole fund is not actually in a liquid asset.

[Andrew Beer]

Right. And originally I think they were going to call it the private. And then the SEC said you had to put public in there. But what Apollo has said is, look, we'll make markets in these loans that we originated.

[Josh Brown]

That's what I was trying to tell you, the price.

[Andrew Beer]

And in theory, that's fine on a normal Tuesday, if you had to sell it and they were going to make a market for it. The problem is not that it's March 20, 2020.

[Josh Brown]

Everybody wants out.

[Andrew Beer]

Everybody wants out. And there's one firm that knows how to price all these things, and they are the greatest distressed investors in the history of mankind. And so I've used the analogy. It's like, it's so weird, some of the structural decisions they made. It's like basically saying, don't worry, don't worry. I know all our money is tied up in this house, but our local vulture investors promised to buy it in the middle of a hurricane. It's so weird.

[Josh Brown]

But also, if I sell the Triple Qs in a panic, right? Picture this market's panicking. Sam's my client, Sam Cole says, get me, get me out of there. Triple Q's, whatever. If I sell them, I roughly know what I'm selling and at what price. Like, I could look at Apple, Nvidia, Microsoft. Like, I know the stocks that are big in there. I know the price I'm selling it at.

[Andrew Beer]

All right?

[Josh Brown]

We all agree with this. Get me out of pr. Iv. A, you don't know what you're selling. B, you definitely don't have a way to look up what the price should be. And that's the. I guess that's the part of the asset class.

[Andrew Beer]

You'll sell it at a discount to nav. That's not even a horrible thing to do.

[Josh Brown]

If you want liquidity, that's the price.

[Andrew Beer]

You have closed end funds. Actually, a mutual fund is at greater risk of having this illiquidity unwind because you go to the mutual fund and say, I need cash. Tomorrow with an etf, you're selling it into the market. So the great example on this is people have always looked at ETFs with private assets. Assuming that the ETF has to sell the asset assets to meet redemptions. It's not the way they work. They just trade in the market. The case study on it was the Greek ETFs in 2011. The Greek market actually shut down in the middle of the euro crisis.

[Josh Brown]

Remember this?

[Sam Rowe]

It was my first year at businesses.

[Josh Brown]

I remember you writing about the European debt crisis.

[Sam Rowe]

There was nothing else to write about.

[Josh Brown]

That's all we did.

[Sam Rowe]

Yeah.

[Josh Brown]

Okay, so what happened?

[Andrew Beer]

The ETF kept trading. It just traded discount to the stale grev grek.

[Josh Brown]

It was. You remember it?

[Michael Batnick]

Yep.

[Josh Brown]

How old were you?

[Michael Batnick]

16.

[Andrew Beer]

But yeah, it's not disastrous. You'll sell it at below nav. It just. It's the weird ways in which they've tried to jerry rig this in a way that State street has tried to jerry rig. To me, they look like the patsy.

[Michael Batnick]

So people like you that get Mark to market every day hate private credit.

[Josh Brown]

Hate.

[Andrew Beer]

Yes.

[Michael Batnick]

You just said the returns are fake. Let me play devil's advocate. If you are making a loan to a company that is private and you're going to loan them money, they're going to pay you interest, they're going to pay you back. Why does that need to be marked every day?

[Andrew Beer]

It doesn't. No, no, I'm saying I should say, I should clarify. The volatility is fake.

[Josh Brown]

The lack of volatility is the point.

[Michael Batnick]

Okay, but that's what investors are paying for.

[Andrew Beer]

It's exactly. But now you have an ETF that trades every day where the nav doesn't move, but your price moves every day.

[Michael Batnick]

Oh, I get why Cliff is pissed off. I totally get it. I'm just saying from the investor's point of view, good. Lie to me. I don't care. I don't want to see the market.

[Andrew Beer]

I used to get called by journalists about in 2022, private equity firms didn't mark down their portfolios very much relative to what happens in the markets because generally they're leveraged long equity. So equity markets go down 20, 25, they should be down 30 or 40, something like that. But they mark it down 10. And journalists were up in arms and they called me and they're like, they're deceiving their investors. So I called some guys who run PE firms and I said, guys, how do you feel about this? And they said, honestly, we don't really care. It doesn't really matter to us whether we're marketing down 10 or not. He said, but nobody's pulling the wool over our client's eyes. If we mark it down, if we're co invested with Apollo, with kkr, with somebody else and we mark it down more than they do and our clients invest with us and not with them, they'll call us and yell at us. And if we don't, if we don't mark it up in the same way they do, they'll call us and yell at us.

[Michael Batnick]

We're all in on it.

[Andrew Beer]

We're all in on it. I said the only people who care about this are journalists.

[Michael Batnick]

Right, right. By the way, and in 23 and 24, the PE funds did not like have banner years. So yes, they may be under marked down in 22. It's not like they were up 20. They didn't match the S&P in 23 and 24.

[Sam Rowe]

And all these journalists, by the way, got their starts during the financial crisis where everything.

[Michael Batnick]

The FT hate all.

[Sam Rowe]

All the, All, Yeah, all the controversy. All the controversy, yeah. Cds. And you know, Mark, I mean, it's literally. Mark to market was a huge issue back then and accounting standards, you know, were constantly changing. And it turns out that like, you know, arguably changes to accounting standards helped stabilize the market back then.

[Michael Batnick]

But Andrew, you're 100% right. Investors don't want to see the marks. That's why they're in the asset class.

[Sam Rowe]

Yeah, but only if the marks are going up.

[Josh Brown]

But if you're a. But if you're. All right, so. But if you run a mutual fund company, you're in the asset gathering business. The thing that makes it easy to gather assets is when you look good relative to either your peers or the market or both. The thing that makes it hard to gather assets is when you look much worse. So there you are going about your business. Market has a great quarter, you look really good. Market has a terrible quarter, maybe you look a little bit better or a little bit worse. And that's the life that you have signed on for in that business. And then you see these other guys in 2022, NASDAQ falls 30%. S&P falls 20. Treasuries down 16, 17. These guys are down 5%.

[Michael Batnick]

Yeah, it feels unfair.

[Josh Brown]

They're gonna raise a lot of money now. A quarter later on a lag, they may mark that down, but it doesn't matter. Money's already been raised. And so I think they look at it. Cliff Astness calls it volatility laundering. I call it regulatory arbitrage, which is what I think it actually is. But either way, it's Got to piss you off.

[Michael Batnick]

It feels unfair. It feels like it's bullshit. It's not fair. I get marked every day and they're lying. I get it. I'd be pissed too, right.

[Josh Brown]

I have a ticker. Yeah. And they don't.

[Michael Batnick]

Yeah, it's not fair.

[Andrew Beer]

So it's, it's not fair. No, no, I'm not saying, I don't.

[Josh Brown]

Say they're not lying about the marks. It's just a different business.

[Andrew Beer]

That's Cliff Water Fund that I told you, it's done 13% a year for the past since it launched or something. That's real money.

[Josh Brown]

Everybody's happy.

[Andrew Beer]

Everybody's happy.

[Josh Brown]

That's right.

[Michael Batnick]

Except for Cliff.

[Andrew Beer]

Except for Cliff. But I think that again, I think there's a difference between. I think what's weird about this ETF in particular is the ways in which they've bent over backwards to kind of position them in a segment of the market that's clearly very, very hot. But just as an investor looking at it, it seems weird.

[Michael Batnick]

It's weird.

[Josh Brown]

It's a built in conflict is the easiest way.

[Andrew Beer]

Yeah, I called it like a, you know, like a moral hazard with a tied up with a bow. Like it's just, it's, it's.

[Josh Brown]

How much money has this thing taken in so far?

[Michael Batnick]

55 million.

[Andrew Beer]

It just launched.

[Josh Brown]

All right, is it going to have.

[Michael Batnick]

Bad returns or is there blow up risk? Like what do you see as the potential downside?

[Andrew Beer]

I mean. Well, first of all, mostly it's mostly going to be normal bonds. I think that, I think just the question is, do people, I'm sure they'll do well like State street as an organization. Asset wise, they're going to throw a lot of weight behind it. I'm sure they control model portfolios. The first look, give them credit for being first.

[Michael Batnick]

Wait, will it get to a billion in a year? I don't think so.

[Andrew Beer]

I don't know. I don't know. Again, that's a bold call, Andrew. Well, look, the ETF space, like I've come out and said and called certain things out there niche products and people view it as an insult. Jeppy from Morgan Stanley, from JP Morgan is a niche product at 40 billion. JEP Q is a niche product with another 17 billion.

[Josh Brown]

If you talk to somebody working in JP Morgan Asset Management, they will tell you Jeppi is a huge home run.

[Michael Batnick]

It's the largest asset, It's a home ETF in the world.

[Andrew Beer]

It's 35 basis points. Right. So, so, so chew on that for A second. Right. They started with this thing being 35 basis points. But I'm saying it's not going to supplant the s and P500. It's actually people are viewing it as it's maybe looks. Feels a little more like that bond portfolio, the traditional bond portfolio that hasn't working in the same way. I mean it's. I am all in favor of financial innovation. Right. I am all in favor of bringing. And there's a lot going out there, particularly ETF world stuff, which is like wild west stuff that we're going to look back on in five years and think why the hell did people do that stuff? The ex leveraged ETFs and single stock ETFs and stuff like that.

[Josh Brown]

Well, we know why they did it. That's the spaghetti cannon. You don't know which of those are here to stay.

[Michael Batnick]

Those are not going away.

[Andrew Beer]

But people buy them. Right. It's meeting some strange investor need out there.

[Michael Batnick]

Gambler need. Gambler need.

[Andrew Beer]

Fine. But that's a need. Right? I mean putting the sugar in the tequila.

[Josh Brown]

You know what? Those products have no marketing budget budget because Schwab and Vanguard don't make them. The sells itself. There are people using it and they have their own reasons and it's none of our business.

[Andrew Beer]

It's bottled lightning.

[Sam Rowe]

Right.

[Andrew Beer]

And you got five of them.

[Josh Brown]

Yeah.

[Andrew Beer]

And I mean it's sort of a funny story. Like I had, I had. I took Matt Tuttle to lunch about a year ago and it was before he hit the inflection point. And I was like, you know, let me pay whatever. You know, I'll pay for lunch. Be Magnum magnanimous. Whatever. Three months later I was like, he has 4 billion. Look, he's an aggressive entrepreneur who has a great nose for sensing out the demands of a particular segment of the market. And he's going to build stuff for that. I don't think there's anything inherently wrong in that. Would I buy the products myself? No. Do I look at a lot of products out there that when you kind of get underneath the hood, do I think they're economically irrational? Yes, but I can make those decisions. But again, going back to the private credit thing, again, I don't think it's pulling the wool over people's eyes. It's what people want to see. The weirdness is going to be that the first private. I would be more comfortable. There's actually the FT had an article this morning about a 33 act fund that's going to try to have 80% of it in private assets from bond box. And they basically say up front, and by the way, we may stop redemptions. Right. You know, or you may not be able to get your money out because we. But again, that's like a private reit. That's like all these other things. So in a sense, you're taking these things and just making them tradable in a different way. So anyway, yeah, try it, try it.

[Sam Rowe]

You know, I'm just not looking forward to the moment where my friend from college is going to text me and say, hey, this private credit thing that I've been reading about in the journal, I heard I can buy it now.

[Josh Brown]

Should I. Yeah, yeah.

[Sam Rowe]

Should I think, like, second this episode? Yeah, I mean, exactly.

[Josh Brown]

That's what I. You must be torn. I wanted to ask you this. You must be somewhat torn, though, because some of the best market research is now coming from private equity and private credit firms. I know you're a big Torsten Slot guy. He's writing at Apollo. Have you noticed a lot of the other strategists that you frequently read, quote, they're all going to private equity now?

[Sam Rowe]

Yeah, I mean, you know, so I used to work at Yahoo Finance, which is Apollo owned or operated.

[Josh Brown]

That's right.

[Sam Rowe]

And so every day a newsletter somewhat somebody's newsletter or something goes out where there's an ad for Apollo on it. Someone sends me a screen grab and says, hey, look at this. They're ad.

[Josh Brown]

I mean, they're. They're doing it. They're doing it.

[Michael Batnick]

It is not slowing down.

[Sam Rowe]

Yeah, I mean, you know, I think Torsten Slok's really good. He's got really interesting charts and stuff. And then every once in a while, he'll put out the private, you know, credit.

[Josh Brown]

Right.

[Sam Rowe]

You're like, wait, hold on a second. What's going on?

[Josh Brown]

Well, that's kind of. That's kind of the job.

[Sam Rowe]

Yeah. Oh, yeah.

[Josh Brown]

No matter where you work.

[Sam Rowe]

Exactly. That's. That's all of our jobs.

[Josh Brown]

All right, guys, do you have fun on the Today?

[Andrew Beer]

The best.

[Josh Brown]

Yes.

[Andrew Beer]

Thank you.

[Josh Brown]

I could do this for hours. I don't know if our listeners can, though, so we're gonna leave it there. We always end the show these days by asking people what they are most looking forward to. And you could tell me professionally, personally, sexually. I almost don't even care at this point.

[Andrew Beer]

I'll let Sam go first on that one.

[Josh Brown]

Sam, what are you most looking forward to?

[Sam Rowe]

I'm going on vacation tomorrow.

[Josh Brown]

I knew you were gonna pick option three.

[Sam Rowe]

Yeah, I'm flying out to Aruba.

[Josh Brown]

Aruba's sick.

[Sam Rowe]

Yeah, meeting up with some old college friends. That's great.

[Josh Brown]

That's great. How many, how many nights you going away for?

[Sam Rowe]

Four nights, dude.

[Josh Brown]

You could do your thing mostly from there too. Yeah, technically, if you needed to.

[Sam Rowe]

Yeah.

[Josh Brown]

Yeah.

[Sam Rowe]

I've already sort of pre written my, my stuff. That's Sunday. But yeah, no, I'm actually looking forward to uncovering.

[Josh Brown]

Good feeling, man. Happy for you. What do you got for us? What are you looking forward to?

[Andrew Beer]

It's embarrassing. Legos.

[Josh Brown]

Okay. No, I want to hear it. Say more.

[Andrew Beer]

I got a three and a half year old in my second marriage. Two daughters, they're one sibling.

[Josh Brown]

Wait, are you my age?

[Andrew Beer]

I'm 58 or 57.

[Josh Brown]

Holy shit. You're ten years older than me. Wait a minute. And you have a three year old?

[Andrew Beer]

I have a three and a half year old.

[Josh Brown]

So what's it like when you're like in the dugout at T Ball and the other dad coaches are hanging around?

[Andrew Beer]

They're like, I haven't gone there yet. I've been a boy. Yeah, it's, you know, that's going to be fun. It's an everyday reminder of the joys and wonder and amaze life. And it's also a render. I'm older, you know, but anyway, he loves Legos and when I'm in the city, I get to raid the LEGO store.

[Josh Brown]

Did you go to the lego store in 30 Rock? Where is it?

[Andrew Beer]

Yeah, it's right over there. It's right on fifth Avenue.

[Josh Brown]

That store is magnificent.

[Andrew Beer]

It's magnificent.

[Josh Brown]

Okay. Does he have a specific genre of thing he likes to build or. He's too young.

[Andrew Beer]

Entirely. Automotive and preferably construction.

[Josh Brown]

Automotive and construction. That's so cool. Congratulations, dude.

[Andrew Beer]

Legos are cool. When I was young, I love, I love. When I was doing, I mean, when I was young I did Legos, but they're all just blocks, right? And they're. And you, you, you know, you'd make stuff with it. There's. The sets are so cool today and the instructions are really, you know what.

[Michael Batnick]

Also one of the only things that you do without a screen. Yeah, like there's no screen.

[Josh Brown]

I like the zoning out part. I love also where like you have a mission, it's on paper, it's great. It's like a folded thing and like two hours could go by for me, four hours because I'm not good at it. But like, I love that, that like, like turning your brain off and just completing a side quest. I think that's, like, mentally healthy.

[Sam Rowe]

You can see the progress. You can stop. You can.

[Andrew Beer]

We're raising this boy in the 19th century, so there you go. This is about as exciting as his life gets.

[Josh Brown]

Dude, that's amazing. Congratulations. Thank you, Michael. What are you looking forward to? We're celebrating your birthday for a fourth or fifth time tonight.

[Andrew Beer]

That's pretty cool.

[Michael Batnick]

I'm excited to go to dinner. All right, so we're going to Emmy Squared. There's a new one in Hell's Kitchen, apparently.

[Sam Rowe]

We love that place.

[Michael Batnick]

And burgers. We're big fans.

[Josh Brown]

So I have a nutritionist now, and I gotta give her the heads up when I'm gonna go do something like that.

[Michael Batnick]

So Josh has been talking about his nutritionist. Hang on. For the last, like, two months. Apparently, it's a real person. I thought he was around.

[Andrew Beer]

No.

[Michael Batnick]

Yeah.

[Josh Brown]

What do you think, I make things up?

[Michael Batnick]

I did. I thought you made it up. This person exists.

[Josh Brown]

So I start showing her the Instagram for Emmy Squared, and she's like, oh, my God, now I wanna go. So it's Detroit style pizza, and I'm a New York style pizza partisan. So goddamn good. So we're going to Glengarry Glen Ross tonight.

[Sam Rowe]

Oh, nice.

[Josh Brown]

And right across the street from the theater on Broadway is Emmy Squared. Hell's Kitchen. So I was like, yeah, we have to do that.

[Michael Batnick]

Do you watch Daredevil?

[Sam Rowe]

No. Should I?

[Michael Batnick]

I thought you would. I like it.

[Sam Rowe]

Good show. I watch a lot of shows.

[Michael Batnick]

It's fun.

[Sam Rowe]

Not that long.

[Andrew Beer]

Is there a new. Is there a new Daredevil show?

[Michael Batnick]

One again? It's very good. Okay, so the last one is.

[Sam Rowe]

Oh, yeah, the last ones that you cannot forget.

[Josh Brown]

They brought everybody back. Back from the Netflix series.

[Michael Batnick]

Wait, you watch it?

[Josh Brown]

Yeah.

[Michael Batnick]

Dude, it's you. It's awesome. It's not as good as the first one, but it's eight years old.

[Andrew Beer]

The movie? The movie.

[Michael Batnick]

No, the first one was better.

[Josh Brown]

I like the first one.

[Michael Batnick]

That was 2017. That's a long time ago.

[Josh Brown]

Yeah.

[Andrew Beer]

I had daredevil 100. I daredevil one through 186. Okay.

[Josh Brown]

I have a lot of those, but I don't have the whole.

[Andrew Beer]

And look, I was like, I was born in New York. I had glasses and I had red hair. So it's like, I had to like Matt Murdock.

[Josh Brown]

What was your story? You go to Midtown?

[Andrew Beer]

I went to the one on. Was it 51st? All the way on the east side on Lexington? No, there's one. It was almost like between first and second place. Something I forget. It was far over there, but. And then the first movie came out with Ben Affleck. I was like, you ruined the value of my collection. It destroyed I've ever seen.

[Josh Brown]

It's not bad. They took the Netflix actors and moved them over with only slight changes.

[Michael Batnick]

Josh is fine. It's not as good, but it's awesome for me. I have a good time.

[Josh Brown]

Yeah, no, I think it's fine. And actually, if the first version never existed, you would love this.

[Michael Batnick]

True.

[Sam Rowe]

There are some MCU threads that I'm a big fan of and some that I just can't keep up with. But I remember, I don't know if you saw Hawkeye.

[Josh Brown]

Yeah, it was like a Christmas special.

[Sam Rowe]

It was a Christmas thing. And then at the very end, like the epilogue, after the credits had Kingpin walking in the background.

[Josh Brown]

So I like when stuff like that happens. But then they didn't do anything with it.

[Sam Rowe]

Yeah, maybe. Is this it?

[Josh Brown]

Oh, dude. How about this? They had John Bernthal playing the Punisher and somehow didn't make a movie out of it.

[Sam Rowe]

But John Bernthal's in the account. An accountant, too, by the way. So that's why you have to catch.

[Michael Batnick]

Up on that big Bernthal guy.

[Josh Brown]

All right, guys, this has been amazing. I want to say thanks to the crew. Duncan, John, Nicole, Rob, Graham, Keith, Travis, Daniel. How did I do? Sean, Char, kid, Matt.

[Michael Batnick]

Pretty good.

[Josh Brown]

Crazy. You guys killed it this week. Views are through the roof until this episode. We'll see. No, I'm just kidding. All right, guys, we love you so much. I want to tell people how they could follow you, how they could find your stuff. Sam, let's tell everybody how they could find the ticker.

[Sam Rowe]

Yeah.

[Josh Brown]

And they should be subscribed immediately, in my opinion.

[Sam Rowe]

Yeah, it's ticker co. Tker co.

[Josh Brown]

Very easy to find.

[Sam Rowe]

Very easy to find. Sign up for a free subscription and shoot me a note. Say, you listen to the compound. I'll send you some free.

[Josh Brown]

How many notes? How many notes are you publishing each week?

[Sam Rowe]

Yeah. Somewhere between 2 and 4. Every Sunday, a free one goes up.

[Michael Batnick]

Josh is Maga Josh on Truth Social.

[Josh Brown]

Yeah. Find me on Truth Social.

[Sam Rowe]

The real, real Maga Josh.

[Andrew Beer]

Josh the Terrorfin.

[Josh Brown]

That's right, Mr. Beer. Tell us where we can learn more and follow your thoughts.

[Andrew Beer]

Well, our company website, if you're. And what we do is. Is www. Dbi.co take care of DBMF.

[Michael Batnick]

I could say it. You can't.

[Andrew Beer]

I cannot say it.

[Josh Brown]

DBI Co just like him.

[Andrew Beer]

Yep.

[Josh Brown]

Okay.

[Andrew Beer]

If you. The commentary. They do. I am on a sabbatical from Twitter. Good sanity. So. But I am on, you know, it'll.

[Josh Brown]

Be five years for me in May.

[Andrew Beer]

Okay. God bless you.

[Josh Brown]

Yeah, I deleted the app from my phone five years ago.

[Andrew Beer]

Did they give you little medallion?

[Josh Brown]

I sent. Sent four tweets this year.

[Andrew Beer]

I. Yeah, I couldn't take it anymore. So I'm. Anyway, I'm on. I'm on LinkedIn. If you look me up, please reach out. I respond to everybody and anybody reached out to me, I respond.

[Josh Brown]

So, yeah, LinkedIn is where non sociopaths spend their time and it has its own problems.

[Andrew Beer]

You know what? You know what happened with me on Twitter was that. I know for some reason on my feed I started to see industrial accidents.

[Josh Brown]

Yeah.

[Andrew Beer]

And it was just. It was just the paba and I just like. I was like. It was nauseating.

[Josh Brown]

They keep showing it to you, cuz you keep watching it. All right, guys, that's it. We're going to wrap up. Special thanks to our listeners and viewers. We love you. See you next time.

[Andrew Beer]

Thank you.

[Michael Batnick]

You're a huge.

[Josh Brown]

Guys. Was that. Was that fun?

[Sam Rowe]

Yeah, man.