The Investor Utopia is Here with Eric Balchunas

Summary

The Compound and Friends – "The Investor Utopia is Here" with Eric Balchunas

Date: May 8, 2026
Guests: Downtown Josh Brown, Michael Batnick, Eric Balchunas
Main Theme:
Exploring the current “golden age” for investors through the prism of ETF innovation, index investing, market dynamics, and cultural investing shifts, with deep dives into the latest ETF trends, the democratization of access for retail investors, and hot topics like prediction markets, bitcoin, and major IPOs (SpaceX).

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Overview

In this episode, hosts Downtown Josh Brown and Michael Batnick welcome back Eric Balchunas (Senior ETF Analyst at Bloomberg Intelligence, author of "The Bogle Effect") for a candid, fast-paced conversation. The trio covers:

• The bizarre but advantageous state of equity markets and index investing in 2026
• ETF trends: the explosion of new launches, the bifurcation between “cheap beta” and “hot sauce” active funds
• How access and costs for retail investors have reached “investor utopia”
• The mechanics and investor psychology behind new ETF products, prediction market ETFs, and headline IPOs like SpaceX
• The evolving cultural landscape of investing, from punk-rock fee wars to the gamification of speculation

Tone: Energetic, irreverent, deeply knowledgeable, heavy on metaphors and practical wisdom.

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Key Discussion Points and Insights

1. Sports Banter & Opening Vibes (00:00–06:00)

• Lighthearted rivalry discussion about Knicks vs. Sixers, basketball fandom, and the joys of sports as an emotional parallel to investing psychology.

  “Isn't sports the best?” – Michael Batnick (04:22)

• Sets the warm, combative-but-friendly tone for the episode.

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2. Bitcoin, Gold, and "Both Sides of the Coin" (06:00–16:20)

• Josh’s upcoming book: “Both Sides of the Coin,” aims to give a fair, nuanced look at bitcoin—covering both its passionate evangelists and intense critics.
• Key points raised:
  • Bitcoiner psychology: The "spite coiner" mindset (buying because you hate being left behind); the agony and glory of holding through huge drawdowns.

    “I'm gonna go into Times Square, pour gasoline on myself, and light a match.” – Michael Batnick, quoted by Josh Brown (06:11) “Only true psychopaths could actually do that [hold through 80% drawdowns].” – referencing podcast guest American Hodl (11:40)

  • Bitcoin’s utility in regimes with failing currencies; the allure of an asset that can’t be debased and provides inflation/sovereignty protection.
  • ETFs and adoption: New ETFs created “silent IPOs” for bitcoin—OGs cashing out, institutions buying in.
  • Investment philosophy: Respect for assets that survive multiple 50%+ drawdowns (Bitcoin, Apple, Berkshire); skepticism toward all-in bitcoin allocation—preferring a “both” (diversification) approach.

    “I just don't know why both isn't an answer. A lot of people are one or the other.” – Josh Brown (13:09)

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3. Market Structure: Cap-Weighting, Concentration, and Indexes (20:31–26:50)

• Michael and Eric highlight the current market oddities:
  • Major indexes at all-time highs even while many stocks are tanking—"weird shit happening… all year." (20:32–22:29)
  • Cap-weighted vs. equal-weighted strategies; why indexing “just works” and how most stock market wealth accrues from a tiny select group of companies.

    “4% of stocks create all the wealth… That's why indexing rules.” – Eric Balchunas (22:34)

• Discussion on the Mega Cap 7 tech stocks, antitrust stagnation, and how market concentration is less dangerous than headlines suggest—“the Mag 7 is really 70 companies if you look at acquisitions.”
• AI fuels wild dispersion in returns:
  • Single names up or down 20-30% days after earnings.
  • It's not a classic "bubble" because current mega-cap prices are plausibly justified by earnings.

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4. ETF Utopia: Fees, Product Proliferation, and "Hot Sauce" (45:05–60:00)

• Fee wars and investor empowerment:
  • "We have just arrived at the greatest time to ever be investor. You can get everything for under five bips. It's done."
    — Josh Brown (46:05)
  • Access to global assets is now nearly frictionless, democratizing investing for everyone.
• Boredom to “hot sauce”:
  • The fee war "punk rock" ethos segues to the explosion in higher-fee "degen" (speculative, active) ETFs.
  • Launches of 1,100–1,200 ETFs per year; most are “hot sauce” (speculative, leveraged, or thematically active); very few will become hits, but those that do are enormously profitable.

    “It's the hot sauce arms race—fire up the spaghetti cannon!” – Josh Brown (52:13)

• Metaphor:
  • “Just charge me for the chips, not the air.” – on value-for-fee in active ETFs. (61:22)
  • “People have married VOO and BND… but they want some speculative fun on the top—the Ashley Madison of ETF issuers.” – on “core + explore” portfolios (56:53)

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5. SpaceX, Index Inclusion, and IPO Dynamics (36:36–44:54)

• SpaceX IPO mechanics:
  • Debate over rapid index inclusion rules for SpaceX; rationale: enables liquidity for early investors seeking exit, meets public demand for access to iconic growth names.
  • Thematic: Major index funds now act as onramps for public liquidity events previously limited to private and institutional investors.

  “If you’re coming in that big and good, you could argue… the rules were made for a different era.” – Josh Brown (39:11)

• Hot take:
  • “It's so obvious that [the SpaceX IPO] should be the market top—so it probably won't be. It's poetic.” – Eric Balchunas (37:31)

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6. Prediction Markets and “ETF-ification” of Everything (68:20–75:17)

• Prediction market ETFs:
  • New ETFs in the works to let investors directly wager on macro and political outcomes (e.g., 2028 Presidential winner), integrating prediction markets with traditional brokerage plumbing.
  • Potential applications: macrohedging, betting on economic releases, and sports (pending regulations).

  “The wisdom of the crowd. Surveys are totally broken… I think we can have some better clarity into what's actually happening in the economy.” – Michael Batnick (72:19)

• Broader theme: ETFs as the standardizer and access channel for nearly every asset or wager—"they equitize everything." (75:17)

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7. Lightning Round: Commodities, International Flows, and More (75:29–83:10)

• Commodities:
  • GLD (gold ETF) remains a staple; USO (oil) is a trading vehicle fraught with complexity (roll costs).
• International ETFs:
  • US investors still overwhelmingly favor domestic funds (VU, VTI); marginal but not major flow increase to international.
• Direct/custom indexing:
  • Remains niche, more hype than threat to ETF dominance (“the Segway of investing”)—simple, cheap products overwhelmingly win as the investing landscape matures.

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Notable Quotes & Memorable Moments

• On the shift in investing accessibility:

  “I used to say you can just roll out of bed and grab your phone… Now you can grab your phone in bed, type in this, and own anything in the world for under five bips, commission free.”
  — Josh Brown (46:23–46:37)

• On ETF proliferation:

  “There's more active ETFs than passive ones now… But only 10% asset share.”
  — Josh Brown (57:59–58:06)

• On surviving bear markets:

  “To survive those drawdowns, they earned it. When that's your whole asset, by the way…”
  — Josh Brown (10:08)

• On behavioral defense of simple indexing:

  “Half the battle here is just not messing with it. The art of doing nothing, which is the last chapter on the Bogle Effect book.”
  — Josh Brown (26:44)

• On the futility of prediction by “macro experts”:

  “There should be a service—when they go on TV, it says, ‘batting .07, has called 20 tops and been wrong 19 times.’ The opportunity cost of listening to somebody like that is astronomical.” – Josh Brown (31:31)

• On cultural investing shifts:

  “Most people stopped dating five-star managers and have gotten married to VOO and BND… but they still want to have a fling.”
  — Josh Brown (56:23–56:46)

• Closing on bitcoin and asset management:

  “If you’re going to launch an active ETF, be very active. And then you don’t have to explain why it’s priced where it’s priced.”
  — Eric Balchunas (61:29–61:40)

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Key Timestamps

| Segment | Timestamp | |-----------------------------------------|------------------| | Sports/banter opening | 00:00–06:00 | | Bitcoin deep dive, book talk | 06:00–16:20 | | Market/Index weirdness | 20:31–26:50 | | ETF fee wars, investor utopia | 45:05–60:00 | | SpaceX IPO and index inclusion | 36:36–44:54 | | ETF proliferation/hot sauce | 52:01–60:00 | | Prediction market ETFs | 68:20–75:17 | | Lightning round/commodities/international| 75:29–83:10 |

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Conclusion

The episode spotlights how a relentless pursuit of lower costs, greater access, and product innovation has genuinely transformed investing for the better. The guests blend practical frameworks ("core and explore", “chips not air”), historical context, and self-aware humor while giving listeners an inside look at everything from ETF launches to the psychology behind speculative products. With deep dives into current “investor utopia”, ETF design, and the future of tokenized and prediction-based investing, this episode is packed with both actionable insights and cultural commentary.

Recommended for:
Investors of all experience levels; those curious about the evolution of retail investing, ETFs, and the current state of markets.

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[Episode ends with basketball predictions, playful sports ribbing, and shout-outs.]

Transcript

[Michael Batnik]

Dude, don't even get me started. Don't get me started. I saw what you posted the other day and deleted.

[Josh Brown]

Which one?

[Michael Batnik]

I saw the tweet about Knicks fans harassing Sixers fans. As if.

[Josh Brown]

I know. I didn't delete that.

[Michael Batnik]

Oh, you didn't?

[Josh Brown]

No, no, I left that one up.

[Eric Balchunas]

Hold on.

[Michael Batnik]

As if you are not the most aggressive fan base in the entire United States.

[Josh Brown]

Well, that's why you should.

[Michael Batnik]

Literally. Literally.

[Josh Brown]

I know. I.

[Michael Batnik]

But it's different. Sports basketball fans are not as psychotic.

[Josh Brown]

They're not as psychotic and they're not as drunk. No. Probably can get away with it.

[Michael Batnik]

And then Bede asked for it. If he shut his mouth and didn't say anything.

[Josh Brown]

Oh, man. I get it, everybody. I went to a Knicks game with my kid three months ago, and, like, everybody boos and be constantly. He's hated.

[Michael Batnik]

No, he loves it.

[Josh Brown]

Oh, he likes it.

[Michael Batnik]

He loves it. He's a great villain.

[Josh Brown]

But I'm saying he's hated here. Yeah.

[Michael Batnik]

Oh, yeah, he loves it. He loves being hated.

[Eric Balchunas]

It's also the longstanding thing with Kat that's like seven years old already.

[Michael Batnik]

But he said New Yorkers don't come. Affiliates. Like, dude, literally. You're holding up a great idea. Say, please come. Anyway. Josh and I are going. Josh is taking Nugget. Tickets are plummeting like a stone. Are they cracking hard?

[Josh Brown]

Yeah. I might go lower.

[Michael Batnik]

Bowl is now below 400.

[Josh Brown]

Really?

[Michael Batnik]

And you can get in for below 200.

[Eric Balchunas]

This might be the worst. This might be the worst Sixers home loss in postseason history. What's about to happen?

[Josh Brown]

Well, I will say there is.

[Michael Batnik]

I don't love you saying that.

[Josh Brown]

Yeah.

[Eric Balchunas]

I said might be. Not will be pride coming. Might fall.

[Josh Brown]

Be careful.

[Michael Batnik]

Seriously.

[Eric Balchunas]

Might be.

[Josh Brown]

And you know the news.

[Eric Balchunas]

What are they going to do? They can't run.

[Michael Batnik]

It's not about us. It's about you.

[Josh Brown]

I know. At the end of the day, dude,

[Michael Batnik]

don't enter the day.

[Eric Balchunas]

Eric, they can't. You.

[Michael Batnik]

You have no bench.

[Eric Balchunas]

Listen, Eric, they can't play maxi. But 45 minutes to the point where by the third quarter, he's settling for. For pull up threes because he can't even make it.

[Michael Batnik]

What was. I don't know.

[Josh Brown]

I don't know, because we only have seven guys.

[Michael Batnik]

He gave him away.

[Josh Brown]

Eight with Embiid.

[Michael Batnik]

You gave him away. By the way, yesterday, I said to my friends, I'm happy. I mean, I'm sorry. I want Embiid to play. I wasn't happy that he would miss a game. You're clearly better without him. The offense is not stagnant. He's a corpse on defense. You guys are better without him. It's not.

[Josh Brown]

Yeah.

[Michael Batnik]

I'm not kidding.

[Josh Brown]

Let me just say one thing.

[Michael Batnik]

Go ahead.

[Josh Brown]

I'm okay if we lose. You know why? Because we beat the Celtics. F them. The Celtics have owned us for 10 years.

[Eric Balchunas]

Yeah.

[Josh Brown]

This was like defeating the Dragon.

[Michael Batnik]

It was a great win.

[Josh Brown]

This is like.

[Michael Batnik]

And game seven in their. In their backyard.

[Josh Brown]

Oh. We beat them three times in td and it was glorious. And it felt good. I was like, we're going to win this game. I don't have that feeling of the Knicks. I'm like, I think they're going to win.

[Eric Balchunas]

I am actually happy that you guys beat the Celtics.

[Michael Batnik]

Me too.

[Josh Brown]

But if you were playing the Celtics, I would become a Knicks fan like you would. You have no idea. I hate the Celtics. Knicks are my second favorite team.

[Michael Batnik]

Really?

[Josh Brown]

But F you for now.

[Eric Balchunas]

He's been in New York long enough.

[Josh Brown]

Yeah, No, I was here in the late 90s for Larry Johnson's four point play. I was on a rooftop in Brooklyn at a party. No kidding. In my early 20s. And Alan Houston hitting the dropper against Miami.

[Michael Batnik]

You guys. You guys.

[Josh Brown]

So I was there for that Latrell Sprewell run where they lost the Sands. But that was so fun.

[Michael Batnik]

The Sixers are very likable, except Embiid, like Edgecomb and Maxi are very likable and Maxi's incredible.

[Eric Balchunas]

And you know what you got. You're going to have them for, like, that's your. That's your core now. For years, hopefully. I mean, for years to come. And those are. Those are great players.

[Josh Brown]

I agree. Edge combination, his energy. He's really good at guarding. Brunson's gonna score anyway. But I thought Edgecombe did a good job. He gets over screens and he gets back on Brunson.

[Michael Batnik]

He did great. He did great.

[Josh Brown]

He's good. But like, go to the game. One of your dumbass bench players messed with Edgecomb at the end of the game. Did you see that?

[Michael Batnik]

Yeah, I saw the chirping.

[Josh Brown]

This is. Remember Pritchard said he wasn't worried about him being.

[Michael Batnik]

I saw him tripping.

[Josh Brown]

I don't know who. Sometimes this stuff can actually change the complexion of a series.

[Michael Batnik]

You have five players. Barely. And Ubre is not a player.

[Josh Brown]

I love it. Like, the more prideful you are. Like, I'm telling you, New York, you

[Michael Batnik]

don't have the ponies. Eric. No.

[Eric Balchunas]

Oubre is annoying too.

[Josh Brown]

You.

[Eric Balchunas]

Oh, man. Is that an Unlikable player. I mean, he's good.

[Josh Brown]

You know who I don't like? Josh Hart. He's always.

[Eric Balchunas]

Yeah.

[Josh Brown]

Every play he's got that. It's like I want to punch him out so bad.

[Eric Balchunas]

Yeah.

[Josh Brown]

And I like Villanova. My dad went there. I grew up a Villanova fan.

[Eric Balchunas]

But I. Josh Hart was on your team.

[Josh Brown]

I like McKilbridge.

[Eric Balchunas]

If Josh Hart was on your team, you would wait outside the building for autographs.

[Josh Brown]

Probably.

[Eric Balchunas]

Okay. Come on. Yeah.

[Josh Brown]

No.

[Michael Batnik]

Isn't sports the best?

[Josh Brown]

It is. It is.

[Eric Balchunas]

And you still have the Eagles and we still have the Giants, so I feel like it's only fair.

[Josh Brown]

It all balances out.

[Eric Balchunas]

Yeah.

[Josh Brown]

In the end. Except for jets fans.

[Eric Balchunas]

All right. No Sixers. No Sixers hate. On today's podcast, no Sixers hate.

[Josh Brown]

Oh, no.

[Michael Batnik]

Plenty of Sixers hate.

[Eric Balchunas]

I don't hate this. I hate. I hate Miami. I don't hate.

[Josh Brown]

If you were our first round matchup, I'd be more touchy. But we beat the Celtics.

[Michael Batnik]

Yeah. No, it's great. It's has.

[Josh Brown]

We sent Jalen Brown home and then he went on the next day on the live stream and was just so. What's the word? Petty.

[Michael Batnik]

So petty. He said, my favorite season ever is the One. Is the one where my teammate. Best friend, not best friend, tore his Achilles and didn't play.

[Josh Brown]

I know.

[Michael Batnik]

He's unbelievable.

[Josh Brown]

I don't like he's gone. Yeah. I was so good. Anyway. But this is. If we beat you, you're not beating us. What if.

[Eric Balchunas]

What happens?

[Josh Brown]

We were 7.5 and more underdogs against the Celtics every game. One game. We were 12.

[Eric Balchunas]

How about this?

[Josh Brown]

They were up 3:1.

[Eric Balchunas]

I don't even think. I don't even think Anunoby's going to get back in the series and we're still going to win.

[Josh Brown]

Okay.

[Eric Balchunas]

It's our best player. I don't even think he's going to play.

[Michael Batnik]

When's your book coming out?

[Josh Brown]

November 1st.

[Michael Batnik]

Okay. Why is it just.

[Josh Brown]

Your quotes are so good, by the way.

[Michael Batnik]

Are they?

[Josh Brown]

I, I, I. He has. Everybody who reads it is going to identify with you.

[Michael Batnik]

Okay.

[Josh Brown]

And there's one section where I refer to you as a spike coiner.

[Michael Batnik]

Yeah.

[Josh Brown]

I love that.

[Michael Batnik]

Totally.

[Josh Brown]

Because there are other. There are other spike coiners and it's a fine place to be.

[Michael Batnik]

That's a great way to.

[Eric Balchunas]

I'm a spike corner.

[Josh Brown]

Yeah.

[Eric Balchunas]

He's more. He's more.

[Michael Batnik]

I hated it so much that I needed to own it.

[Josh Brown]

I know.

[Michael Batnik]

Just in case.

[Josh Brown]

I know, I know.

[Michael Batnik]

And it worked. Thank you.

[Josh Brown]

You're not alone.

[Eric Balchunas]

Yeah, Michael. But was early.

[Michael Batnik]

I'm very petty.

[Eric Balchunas]

He said, if this thing goes to $100,000 and I'm not in it, I'm gonna be pitch black.

[Josh Brown]

Well, no, the quote was, I'm gonna go into Times Square, pour gasoline on myself, and light a match.

[Michael Batnik]

I said that? Okay.

[Eric Balchunas]

Yes.

[Michael Batnik]

That was a lot.

[Josh Brown]

That's in the book.

[Michael Batnik]

I stand by it.

[Josh Brown]

Oh, you have another one that's in there, which is like, the Goodfellas. It's so good because he's like. He's comparing bitcoiners to, like, Henry Hill. He's like, look at all those people going to their nine to five.

[Eric Balchunas]

Yeah.

[Josh Brown]

Yeah, I want to get 60% a year. So he's like, so I get it. Like, who doesn't? Who wants to get 10% a year when you get 60 a year?

[Michael Batnik]

Those jobs are for suckers.

[Josh Brown]

Yeah, those jobs are for suckers.

[Eric Balchunas]

And do you know how many of these people there are? Like, in Dubai alone, there could be thousands of people who just. They're in bitcoin big enough that they never have to work again, and they're filming themselves, like, sitting by the pool in Dubai for the rest of their lives until they die of a drug overdose. But there are so many of those rough, like. Yeah, a lot of people.

[Josh Brown]

Yeah, there's. There's. I think the. I want to say 50 million people worldwide own at least some bitcoin.

[Michael Batnik]

That's crazy.

[Josh Brown]

And I think in the US 30 million is in that number. It might be. Actually might be 51, 50, maybe 50 million in the U.S. something like that. Don't quote me, but it's. It's in the tens of millions. It's more individuals than I thought that own bitcoin in some form in the US and in globally. What was interesting to me in the research was the per capita ownership of bitcoin is the highest in these countries, where the dictators have, like, driven the currency into the ground. It's all censored. And the human rights people I talk to love it. So there are some of these interesting counterpoints to the. Some reputation that some people have for it that I try to expose a little bit in the book. But there's also the lack of cash flows, and I think you have to acknowledge that. And then the gold thing. Gold's been around for 5,000 years. It's not going away. So we. The book is called Both Sides of the Coin. Like, we want to give people both sides because all the books are either written by hardcore evangelists or people who hate it or the journalists making fun of said evangelists.

[Michael Batnik]

Do you own bitcoin? Are you allowed to.

[Josh Brown]

We are allowed to buy it. Yeah. But it through. We have to put it like a form in and stuff.

[Michael Batnik]

Do you own it?

[Josh Brown]

A little bit, but not much. I'm like the kind of person who would be like using it as hot sauce. Most people, 1 to 2%.

[Eric Balchunas]

If you think about the rabidly anti bitcoin, which I think is very small.

[Josh Brown]

Yeah.

[Eric Balchunas]

Okay. It's like Elizabeth Warren and five other people.

[Josh Brown]

It got bigger with Trump. I think some people see the Trump family getting involved and they're like, okay, now, now I don't like it. It's like. Because I. But let's. Do you want to include them or not? We're talking haters before that.

[Eric Balchunas]

Yeah, just. Yeah, because that'll come and that'll come and go.

[Josh Brown]

That'll come and go.

[Eric Balchunas]

Because if Democrats decide they're going to court the crypto vote, then that'll, that'll, that'll change. Go away.

[Josh Brown]

But just from the Paul Krugman's of

[Eric Balchunas]

the world, I would just say from like a professional investor standpoint, the hardcore haters. Right?

[Josh Brown]

Yeah.

[Michael Batnik]

I like the OC kid.

[Eric Balchunas]

The three reasons that guy.

[Josh Brown]

Yeah, he just hates it like so I.

[Eric Balchunas]

Hold on. The three reasons, whether they admit it or not, working backwards from the least severe to the most. So number three would be I missed it.

[Michael Batnik]

Yes.

[Josh Brown]

Okay. Yeah.

[Eric Balchunas]

So we all acknowledge it's like human nature. Number two would be it seems like it's a lottery ticket and it seems like a lot of people made a lot of money and.

[Michael Batnik]

No, no, no, it's a Ponzi lottery.

[Eric Balchunas]

Fine. But like they didn't do anything to deserve it. There's a lot of that.

[Josh Brown]

Right.

[Eric Balchunas]

And then number one is like, I don't understand why do we need this? Yeah, everything. And that first category of people that I'm talking about, they've never lived overseas. They've never lived in a country where the currency went to zero. They've never had to flee somewhere in the middle of the night. So they really don't understand that aspect of it. But you gotta give it to them. On the other two points, it is lottery esque. Some people were just faster to buy lottery tickets.

[Josh Brown]

Yeah. Well, the only thing I'd say to that is those people who hold it survived, you know, like multiple 70% drawdowns.

[Eric Balchunas]

So they earned what they did on returns.

[Josh Brown]

That's like getting tortured for like a Year. Yeah, it's, it's. So that's why when the ETFs came out, there's a thing called the silent IPO. A lot of individuals sold and ETFs and corporations bought in the past year. That's sort of what caused the drawdown. And some people call that a silent IPO. So some of these OGs that had like a lot of money, probably they're like 35 now, and they put. Maybe they have a partner, maybe they're getting a mortgage, like, so they're like cashing out a little bit. I have no problem with that. That's just like getting early in Facebook or something. Like you earned it because to survive those drawdowns, they earned it. When that's your whole asset, by the way, a lot of them aren't anything else. They earned it and they survived that.

[Michael Batnik]

Yeah.

[Eric Balchunas]

Now one, one other aspect of this, a lot of them were saying things like, I was a visionary. It's like, well, you risked $1,000 and turned it into $10 million. Were you really a visionary or you just risked $1,000?

[Josh Brown]

It's a good question. Again, when something's going down like 70, and I think it went down 80% at one point, you immediately get your psych, your psyche gets weird. You think it's bad and it's awful and it's. It's going away. So to not think that it is a little bit visionary because you have to see through that darkness, that's not easy.

[Eric Balchunas]

I agree with that.

[Josh Brown]

I mean, even in 2008, stocks went down 37%. Most people thought it's over.

[Michael Batnik]

But let me ask you this.

[Josh Brown]

It's also 37% if you turn a

[Michael Batnik]

thousand into 10 million. Yeah, but the thousand was 4 million and then down to $400,000 and then you voted up to 10 million.

[Eric Balchunas]

That's not easy.

[Michael Batnik]

You deserve a lot of part credit, a lot of credit. But also, do you get credit for just being insane? No offense, because that's insane.

[Josh Brown]

Well, there is this guy, but respectfully insane.

[Eric Balchunas]

Like insane to watch 4 million turn into 400,000 and not do anything the whole way down? Yeah, yeah, yeah.

[Josh Brown]

There was a podcast, this guy, I don't even know him, but it was a good podcast called the Bitcoin Matrix. This guy, American Hodl, was on it. And he was, he said he thought that surviving those drawdowns, only true psychopaths could actually do that. And it was like preparing them for something greater in the future when Bitcoin becomes like a huge currency. Well, I know there's some interesting tastes, but. Hold on one second on this. Back to the book opens with. I didn't really care about bitcoin. It was like off in the distance for other people, like pickleball. But I did like, it pissed off the right people. I thought the high priest types were all like, angry about it. Like, they weren't. They didn't just ignore it. They were like, angry.

[Michael Batnik]

And I was like, whose quote was that?

[Josh Brown]

That's my quote.

[Michael Batnik]

Your quote.

[Josh Brown]

I'm saying that like it just.

[Eric Balchunas]

Jamie Dimon, Charlie Munger.

[Michael Batnik]

You're anti establishment.

[Josh Brown]

I'm anti high priest.

[Michael Batnik]

Yeah.

[Josh Brown]

I don't mind the establishment. I don't like these people who are like, I know, I don't like holier than that. And bitcoin has a special ability to piss off both sides. Holier than thou people on both sides. The other thing is it survived again, about 8, 50% drawdowns. And if you look at the things that have survived multiple 50% drawdowns, it's like Apple, Amazon, Berkshire, Florida real estate. I mean, all the best shit has come back from multiple beatdowns. Tulip bulbs went down and never came back. Beanie babies down once. They can't even handle one punch, let alone five. So those two things made me respect it, and they still do. However, it would be tough for me to say, like, I'm gonna put all my money in bitcoin. That just doesn't make sense to me. I'm a big believer. I also say that cash flows. I like stocks. I just don't know why. Both isn't an answer. A lot of people are one or the other.

[Michael Batnik]

I'm a both guy.

[Josh Brown]

Yeah.

[Eric Balchunas]

Not everything survived. Like, NFTs did not survive. NFTs wanted to and a lot of cryptos didn't.

[Michael Batnik]

Apes and punks.

[Josh Brown]

I'm just talking about bitcoin. Yeah, right. But the other cryptos are billions of

[Eric Balchunas]

NFTs, and most of them are worth nothing.

[Josh Brown]

Yes. I think bitcoin, it's special compared to the other ones. I think the other ones are more like little businesses trying to solve, like, financial rails and become better tech for infrastructure. I think bitcoin's more like a. You know how rich people like to have hard assets to hedge against inflation. Like art and like real estate.

[Eric Balchunas]

Yeah.

[Josh Brown]

To me, bitcoin is in a way, a very convenient way democratized version of that. It's something you can own easily, that the government cannot debase. So that, that is sort of, I think, the value it has. But there is a lot of belief in it. You know, there is some faith involved in all this. But I will say, when you dig into how the whole network was made up, and I mean, there was a lot of people that came before that the influences were in it. Just like the etf. The ETF was built off a lot of influences. But the idea of making something that is like completely decentralized, like the computer, the nodes don't even know each other or like each other, like it doesn't matter. And it just goes on and on without a leader for 17 years. That. That's not easy. So the incentive system in the actual decentralization is pretty incredible, let alone. So it's, it's. I think it's more interesting when you dig into it.

[Michael Batnik]

So that part, that part lands like, oh, bitcoin has no purpose. Well, first off, aside, like the debasement stuff, but it works. It just does what it does. It survives.

[Josh Brown]

It's just kind of cool to have something that is worth value, that is outside of the government's. Because one of the chapters we have is on inflation and monetary policy. And we don't go like full tinfoil hat, but we do say, look, if you're a politician, I don't think any of them are ever going to run on like taking back entitlements. You can't tax that much. It's hard to balance the budget. I don't think it'll ever happen. I mean, Doge couldn't do it, right? So they're gonna keep increasing the money supply in order to tax people in a way that they can't see, which is inflation. It's an easy way to tax people. This gives you some degree of a protection from that. Not that it's also used as a

[Michael Batnik]

currency to some degree, is doing a lot of work here.

[Josh Brown]

Well, this is also what Gold's case is. So gold and bitcoin have a similar case in terms of having something that is finite or scarce that can't be debased. But I think the reason that the third group you mentioned, if you're a boomer and you've made a ton of money in stocks and they've done great for you, a little bit of inflation doesn't bother you. In fact, stocks are an inflation hedge. So you're like, I don't see the purpose in it. I think for younger people who do feel like there's something out there that's just like stealing from them, they can't quite put their finger on it. This is, I think part of why a socialist was in New York City.

[Michael Batnik]

Prices go up. Let's start. This is the longest cold open in the history of the show.

[Josh Brown]

All right.

[Michael Batnik]

Well done.

[Josh Brown]

Yeah. Sorry.

[Michael Batnik]

All right.

[Eric Balchunas]

Cold open though.

[Michael Batnik]

Very cold and very hot, ladies and gentlemen.

[Josh Brown]

Well, did you have. Yeah.

[Michael Batnik]

Whoa, whoa, whoa. Stop the clock. Here's a word from our sponsor. Today's show is brought to you by Invesco. Is it time to take your equity portfolio off autopilot? Relying solely on traditional market benchmarks may not give your portfolio all of the lift it needs. Invesco can help you take control with strategies that offer a different approach. Whether you're looking for an equal weight approach or mid cap exposure that can balance growth and stability, Invesco offers funds designed to help you break your concentration. Want to fine tune your approach? Explore our strategies targeting momentum, low volatility quality and more. Visit Invesco.com to learn more. Invesco let's rethink possibility before investing. Consider the fund's investment objectives, risks, charges and expenses. Visit Invesco.com for a prospectus containing this information. Read it carefully before investing. Invesco Distributors Inc.

[Eric Balchunas]

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[Josh Brown]

Welcome to the Compound and friends. All opinions expressed by Josh Brown, Michael Batnik and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz 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.

[Eric Balchunas]

You still want to do more bitcoin?

[Josh Brown]

No, no. Whatever you want.

[Eric Balchunas]

Vance whips a lot of the Knicks, a little more the Knicks. Don't you wish you listen rooted for the Knicks? All right, ladies and gentlemen, welcome to the compound and friends Repeat guest, fan favorite. Returning champion Eric Balchunas in the house. Eric is senior etf. Give it up.

[Michael Batnik]

Let's go.

[Eric Balchunas]

Give it up. All right, guys. Eric is a senior ETF analyst at Bloomberg Intelligence covering the exchange traded fund industry. He is the author of the Bogle Effect, a biography examining John Bogle's lasting influence on investing, and co hosts the Trillions podcast, which explores the ETF landscape. Eric is back. So happy to have you excited.

[Josh Brown]

This is my favorite podcast.

[Michael Batnik]

It's fired up.

[Eric Balchunas]

Good.

[Michael Batnik]

Looks great. Keep getting more handsome.

[Eric Balchunas]

No, he's getting tan. He grew his hair out. It's combed.

[Michael Batnik]

Were you just in Europe? Where were you?

[Josh Brown]

He looks European.

[Eric Balchunas]

I couldn't.

[Josh Brown]

Paris and Madrid. Yeah, it rubbed off on me, I guess. Well, I went from Madrid to. I went from a Vanguard event in Madrid to a bitcoin event in Vegas, which is probably the biggest. I wouldn't recommend it. It's too much, too much too soon. You need a middle ground there.

[Eric Balchunas]

That's like almost you left. You are planet hopping right.

[Michael Batnik]

You saw in a cold plunge.

[Josh Brown]

That's light, light speed right there.

[Michael Batnik]

Yeah, yeah, Plaid.

[Eric Balchunas]

Where do you want to start?

[Michael Batnik]

All right, we're going to do a lot of ETF stuff today. We have the expert in the house. But I want to talk markets for a second because we showed a chart earlier in the year. It was February. We said this is like some weird shit. You don't see what's happening today very often. And that continues through it's now May. So several months later, back in February, before the war, the market was acting weird. You had stocks that were getting blown up all over the place and yet the index was at an all time high. And part of this is a market cap weighted story. But it wasn't just the S and P that was at an all time high. You also had the equal weight at an all time high with stocks getting blown up all over the place. So we shared this chart in February. John, chart on, please. We showed when 115 stocks fell at least 7% in a single session across a rolling eight day period. So basically a quarter of the index, full blower, blew up in a single day. And yet the mark was at an all time high. Okay, this was back in February. I said to chart kid yesterday, Hey, I think something weird is happening again today. The market was up 1.4% and yet I'm scrolling down the screen, I see a lot of stocks down.

[Josh Brown]

A lot.

[Michael Batnik]

Like a lot. There was a couple that were down 20. A bunch of stocks that were at 10. So again, he shared a chart. He made a chart. We had 20 stocks yesterday that were down 5%. At the same time, the index gained 1.4%. And similar to the chart that we just showed. John, go back and go forward. So go back please. Similar to the chart that we just showed, this type of price action normally happens in a bear market, short forward. And here of course, obviously we're not in a bear market. So when this happens, on average the market is in a 21% drawdown. So this is a combination of the cap weighting is throwing things off. AI is throwing things off. And of course it is earnings season. But some weird shit is happening again in the market and it's been happening all year.

[Eric Balchunas]

Would you like to explain the market? Well, how could this be?

[Josh Brown]

Well, first of all, this is why indexing rules. You have to worry about any of this. It's just going to work out. And the net result at the index is up. That's great. At the Vanguard event I was at, there was a reminder of that bessembinder study where 4% of the stocks create all the wealth. I mean, if half the stocks can't even keep up with Treasuries, there's something similar here. A lot of stocks just aren't that good, you know, and you have a couple that just drive the market. This is why it is important arguably to market cap weight. If you do index, equal weight can be good at times though, you know, if you think there's going to be. I feel like every fourth year the little guys have to catch up. International has to catch up.

[Eric Balchunas]

Not tactically equal weight, but strategically market cap weight.

[Josh Brown]

Yeah, I mean, I just did a note today looking at Ark and if ARK had just let their winners run Nvidia, Bitcoin, Tesla, that was good stuff. It would have been the greatest act of managing performance ever. But they have a discipline rebalancing like equal weighting and the equal weighted index.

[Eric Balchunas]

So they're cutting their winners.

[Michael Batnik]

You compared her to Baron.

[Josh Brown]

Baron didn't Baron let Tesla take over the whole fund? So Tesla was a 50% weighting at one point. Yeah, but Baron's up 750% in 10 years. The only active manager that we found that has beaten the queues. That's how hard it is. And he did it just by letting. And Kathy had Nvidia and Bitcoin too, by the way. Those were up 5x Tesla. So she had the best, a good eye. And she was an ETF because Baron got no flows because they did all in a mutual fund. So Cathie had the good eye to have be in an ETF and have those picks. But the rebalancing, I think held her back from like just totally exploding. Interesting tale. And rebalancing being absolutely critical coupling stock picking. I mean, you got to know like, when you have a real winner, don't mess with success. You know what I mean?

[Eric Balchunas]

Arc systematic.

[Josh Brown]

When we traded Jimmy Butler. Why would you trade Jimmy Butler? It makes no sense.

[Michael Batnik]

Tobias Harris over me.

[Eric Balchunas]

Hold on. But is ARK systematically rebalancing or it's their own kind of internal time to rebalance.

[Josh Brown]

So. So from what I know, they have a lot of like 35 stocks. Right. They may like that small Biotox Biotech stock, you know, a lot too. So if Tesla does well, you take your profits to keep it at 11%, 12%, then you can buy a little more of that other stock you like that went down. Yeah, but the problem is just like equal weighting, you end up funneling money to stuff that isn't doing that well and taking it away from the stuff that's just going to keep winning and winning. And that's why equal weighted underperformed market cap weighted since 90 by about a thousand percentage points. Even though it has good runs. And it's logical if you told somebody this, you're like, makes a lot of sense. Let's take profits. Because you don't know what's going to happen in the future. But it's almost like it's counterintuitive to just like, let this thing just like take over.

[Eric Balchunas]

It's interrupting the compounding.

[Josh Brown]

Yes.

[Eric Balchunas]

The thing is though, we're in a fairly rare period where we have the same market leaders for like the 15th consecutive.

[Michael Batnik]

Yeah, this is unusual.

[Josh Brown]

Well, this is another point that we brought up with the Mag 7 being 35% of the index because like, oh, is it concentrated? I think that they don't really doesn't seem like they enforce antitrust laws anymore.

[Eric Balchunas]

No, they did try under Biden, but

[Josh Brown]

it didn't work well, because we looked inside, you know, the Mag 7 has acquired 850 companies.

[Michael Batnik]

Wow.

[Josh Brown]

And some of these are massive, right? Like MGM and Whole Foods. And like Google, we look YouTube would be like the 20th biggest stock if they spun it out. And that's one of 270 acquisitions by Google. So if you look at the mag 7 is 70 companies, you chill out a little more. Plus, America isn't even that concentrated versus other markets. So a lot of what we do on our team is because there's so much like hysteria and hyper. What's the word I'm looking for?

[Michael Batnik]

Hyperbolic.

[Eric Balchunas]

Hyperbole.

[Josh Brown]

Hyperbole out there and histrionics that we're trying to, like, make everybody just calm down. Because you can midwit, overthink this. You could just midwit yourself into the poor house. Whereas the Jedi and the dumb dumb are like, hey, us stocks are good. It's just not complicated. Same thing with bitcoin. These guys are like, oh. I was like, look, if you really believe in it, you like it.

[Michael Batnik]

All right, well, buy the book.

[Eric Balchunas]

Geez. Well, no, but it's a really.

[Josh Brown]

But it might just own a couple good things. In fact, most of the people who go to, like the business schools and the cfa, they really should incorporate, like patience trainings and like, just time and how to like, let time pass. Because I think half the battle here is just not messing with it. The art of doing nothing, which is the last chapter on the Bogle effect. There's another plug for you, but it's

[Eric Balchunas]

a really important point that you make. And back to the thing with like, you know, Facebook bought Instagram and Google bought YouTube. And people, people in the antitrust side will say, well, if those companies had grown up to be their own thing, you know, actually worth it. But then you have to remind yourself, oh, wait a minute. The reason why Instagram has billions of users is because it got sucked into the Facebook vortex and then all these people were pushed to it. Obviously, Google search rankings have helped YouTube become the largest video platform. It wasn't a guarantee that they were going to own that spot. I don't know, 20 some odd years after the thing was formed. So we don't enforce antitrust. We are forced to invest in companies that are themselves collections of companies. But we shouldn't pretend like they didn't create these monsters themselves. It wasn't like they were just allowed to buy things. They built them. These were built products.

[Josh Brown]

Absolutely. But I look back, was the last market leader, George. I pretty sure. Anyway, I look back at the last time this, the number one stock, I think it was GE was like the number one stock in the S and P. Right. Is that right? Yeah. In like basically about 20 years ago. And GE, all told, acquired 70 companies.

[Eric Balchunas]

Yeah. Also a conglomerate.

[Josh Brown]

Yeah. But not 270.

[Michael Batnik]

Right.

[Eric Balchunas]

Yeah, I see.

[Michael Batnik]

So one of the reason why this is happening is because obviously AI is distorting everything.

[Eric Balchunas]

Yeah.

[Michael Batnik]

Creating mega winners and mega losers. There is so much dispersion within the index right now. Especially within tech. John, throw this up. This is from Barclays derivative research sources, Bloomberg Average. Big tech dispersion. So they're showing that big tech earnings dispersion has surged around recent announcements with Q1 2026 standing out as the highest on record. Datadog yesterday or today was up like 30 something percent.

[Eric Balchunas]

Today.

[Michael Batnik]

Today, yeah. The software names are catching a monster bid.

[Eric Balchunas]

Fortinet 21% today up after earnings. And then you can find one that's absolutely crunched. So it's all over the map.

[Michael Batnik]

Lastly, in terms of the calming down the hysteria, which I know you love to do, so do I. There is a lot of talk about a bubble. Is this a bubble? Is this like the 90s? We were talking about this yesterday. To me, I know, like, listen, I throw it on the word bubble, like casually, but if you're actually debating it, to me, the meaning of the word bubble is prices today for which you cannot possibly plausibly justify at any fundamental future state. And that's just not where we are today, in my opinion. I think that the prices for a lot of these companies, even though the price seems to make sense, seems to be egregious. Look what the earnings are doing. And maybe the earnings are temporary, but the price is responding to the earnings. So last thing, Eric, and then you can go the. Somebody made this chart. Blue Kurdick Market Insights could leave after this. He said Blue Kurtic Market Insights has a chart of the NASDAQ 100 showing the annual count of a daily plus or minus 1% move. And there are 17 updates in the NASDAQ 100 so far year to date. And in 2000 there was 103 and in 1999 there were 69 and the year before that there was 62. We are not seeing anywhere near the type of euphoric price action, indiscriminate buying that we saw in the late release.

[Eric Balchunas]

I'd love to see you rerun this, but just with the socks.

[Michael Batnik]

Yeah, the socks are going mental.

[Eric Balchunas]

The socks would look like 1999. Yeah, sorry, it definitely would. Yeah, right, Yeah.

[Josh Brown]

I mean, guy on our team who he left, but he did a study and found that they weren't quite as stretched as the Four Horsemen in, in the late 90s. And. But they're, they're stretched. So the problem is people were saying this 200% ago too. So like, when do you pull the trigger? My thesis is if you are that nervous about equity valuations and you think like, instead of calling a top and like rooting for like chaos, just Buy more cash or buy hard assets. Or maybe you could even buy, like, put options. Like, I think it's. There's a way to be optimistic stocks and be ready for the fall versus being the Mr. Big Short Guy. I think that's where I would go,

[Eric Balchunas]

but depends on what you. If you were selling a newsletter, you need to. Seriously.

[Josh Brown]

Yeah, no, I get this.

[Eric Balchunas]

That is my substack.

[Josh Brown]

Yes.

[Eric Balchunas]

And I need to call the top. And then when it goes against me, I need to get increasingly negative. Yeah.

[Josh Brown]

Oh, no, I see it. I see it. The problem with that is somebody should invent a service that keeps track of them, like batting averages. I mean, and then when they go on TV, it says, oh, I'm batting, you know, 0.07%. It's just like, you know, the opportunity cost of listening to somebody who's had 20 top calls that are wrong is astronomical. But here's the thing. I don't think anybody's listening anymore. I even see the headlines and the columnists and the economists. It's especially heavy under Trump because a lot of stuff makes everyone like, oh, my God, everything's going to hell. But, like, the VOO people, ivv, even Spider, all of the cheap beta people are unfazed. ETFs took in a record amount of money last year, and they're about to break that record again this year.

[Eric Balchunas]

What are those records?

[Josh Brown]

Okay, so there's three major records. Flows, volume and launches. Last year saw 1.5 trillion in flows. 1,100 launches. That's four a day. I know. Job security.

[Michael Batnik]

Oh, my gosh.

[Eric Balchunas]

1100 ETFs launched last year.

[Josh Brown]

Yeah, I remember once we were at inside ETFs. We were outside at the front. Yeah, we were outside one of those fire pits, and smart beta was all the rage. And you leaned back, kind of took your sip of your drink. He was like, we need a new factor.

[Eric Balchunas]

Yeah, I did say that.

[Michael Batnik]

Is that 2015.

[Eric Balchunas]

Turns out I invented it. We'll talk about it in a little while.

[Josh Brown]

So volume was 65 trillion last year. All those were 20% over the old record. This year, they're headed for 2 trillion. 90 trillion in volume, which is. And about 1200 launches. So everybody's happy. Who's like, retail advisors? They seem to be not. I wish there was a way to measure the sentiment from people who are buying holders. The Vanguardians of the world versus the headlines. The gap is so wide right now, it's weird. So I don't know what to say. Like, I think you're right. You get more clicks and more attention. If you're like, oh man, it's time to worry. But we've on our team, we keep throwing these headlines in the chat and like, oh, here we go again. And the market goes up 20% after that. So it's just difficult because nobody knows the future.

[Eric Balchunas]

I do you want to know what's going to send people into a rage? I'll tell you the future right now.

[Josh Brown]

Go ahead.

[Eric Balchunas]

I'm not going to tell you like what, what it's going to mean for prices. But here's what's going to happen. This is really going to send people off the deep end. The people who have been naysaying the bull market not even for 10 years, like for 10 months, this is going to really piss them off when this Iranian thing fizzles out without some sort of catastrophe. Price of oil probably doesn't hover back down to 60, but maybe just sticks around. 70s, 80s, okay. No major conflagration, no real ceasefire. It just kind of is okay. That's an outcome that the bears don't love. Then we don't get a private credit blow up. We don't get a private equity blow up. We don't get like one of these major funds like literally going to zero. So that doesn't happen. So you get gas prices come down, no private equity blow up. Earnings continue to grow throughout the rest of the year. And then Space X comes public, doesn't blow a hole in the side of the NASDAQ. OpenAI comes public, doesn't destroy everybody who invests in it. And if you're bearish throughout all of this, and every one of these things represents the reason for the next bear market. Right? And none of them plays out for you.

[Michael Batnik]

That's it.

[Eric Balchunas]

Like, where are we going next?

[Josh Brown]

I want one of those.

[Eric Balchunas]

You'll see the next pandemic. Like, what are you even gonna say?

[Josh Brown]

I have to think there's a. They have to be having internal existential crisis. But I also have this other theory that the people saying that literally are long vu. Like I think everybody is long vu, but because you have to get clicks and there's all this noise. Um, I don't know. I wish you people's holdings when they, when they write, like, I wish at the bottom it told you, like exactly what their portfolio is.

[Michael Batnik]

Taleb has a great line. He said, don't tell me what you think. Show me your portfolio.

[Eric Balchunas]

Yeah, A.

[Josh Brown]

So there's a lot of noise out there.

[Eric Balchunas]

A wholesaler for one of the big three Index providers who shall remain nameless. A million years ago once told me about all the macro hedge fund masters who had index portfolios set up like very quietly. Now they also owned a ton of their own hedge funds so it's not like they weren't also eating their own cooking. Yeah, but I do agree with you. There is some element of like it feels too good to be true. I'm not selling. But just in case let me tweet some negative shit out just to like make it look like I'm not like an insane wild eyed bull.

[Josh Brown]

But wait, was it, was it Morgan Housel who was like being skeptical and negative looks like you care whereas being optimistic looks reckless.

[Michael Batnik]

Reckless and naive.

[Eric Balchunas]

Especially in hindsight if something bad does happen.

[Josh Brown]

And Tom Lee gets a lot of crap for this because he's being right. Yeah, but directionally you would have made a lot more money listening to him even if his price targets weren't hit.

[Michael Batnik]

The risk of embarrassing ourselves. We are at all time highs and we're being very positive and very negative to the bears. Understandably. So there is some weird shit happening with at the index level to make room for SpaceX. What's going on? Because I don't know that the market can survive a trillion dollar IPO at this point, can it?

[Eric Balchunas]

It's not $1 trillion though.

[Michael Batnik]

Okay.

[Eric Balchunas]

They raised.

[Michael Batnik]

How much money does it need to raise? Between that and anthropic, how much money

[Josh Brown]

will it like when it enters the market looking to.

[Michael Batnik]

What are they saying I'm making? Is it 100 billion? What are they looking at?

[Josh Brown]

Well I heard there was going to IPO at 1 to 2 trillion.

[Michael Batnik]

So how much are they selling?

[Josh Brown]

I don't know.

[Eric Balchunas]

Well figure, figure. 10 to 15%.

[Michael Batnik]

All right, so 100 to 200 billion.

[Eric Balchunas]

You think there's not a. Oh my

[Josh Brown]

God, the stock market. What is it, 80 trillion or something?

[Eric Balchunas]

What's the size of the U.S. i think there's 100 billion for. I think there's a. I don't think they're raising that much because they've raised so much money in the private market. Yeah, they have so many shareholders. They have a lot of people who think they're shareholders but aren't.

[Josh Brown]

Yeah.

[Eric Balchunas]

Which is a whole other interesting thing that's going to happen with all the SPVs and all the Russian doll. Like, like how many versions of this SPV is existing on someone else's balance sheet. But like I, I feel like, I feel like it's so obvious that that should be the market. Top that it probably won't be. It should be. It's poetic. If you get a trillion and change $ipo from Elon Musk and that is the last day the NASDAQ goes up for the year. It would make perfect sense to me.

[Josh Brown]

Yeah. The other thing is a lot of people who are out there saying all these index fund investors, they don't know what's coming. And I'm like, yeah, we do. Honestly.

[Eric Balchunas]

Yeah. 2% sleeve in SpaceX that's coming.

[Josh Brown]

Not even the SpaceX. Just in general, it's like, dude, we understand what corrections are. Like we have a diversified portfolio. Like things go down. It doesn't mean it's not good long term. Like it can go down for a whole year. 2022 is awful. And everything's up after that. Generally speaking. I think again, I come back to Bogle and Buffett a lot and both of them are like, you know, just buy US stocks and just wait. Like it's not complicated. And those are the two like masters, right? You can trust them. They're like on like Yoda level of markets. They're not like slinging anything cheap. And they would say the same thing and they know it's tough to time, but they would say, look, if you can't handle a 50% drawdown, don't be in stocks.

[Michael Batnik]

But what's going on the committee level with, with, with, with these names.

[Josh Brown]

What do you mean?

[Michael Batnik]

With SpaceX?

[Josh Brown]

Yeah. So SpaceX is volt. So Dave Nadig, who you know. Well, we had a, not a debate, but we had a discussion on.

[Eric Balchunas]

I know him so well. I call him Dave Nautic Naudig. Yeah, that's how well I know.

[Josh Brown]

You say nutting, I say Nadig. Let's call the whole thing off. Anyway, he'll love this. Okay. So anyway, he doesn't like that nasdaq's going to change the index to let it in. I'm a little more liberal on this front because as an investor I kind of want exposure. Tesla went up, I think 60% in the first year, even though it went down a couple days after the IPO. Like things can still go up after it IPOs, but so what if it goes down? The other thing is a lot of IPOs back in the day would have time to grow as small caps, mid caps, large caps. So the index rules made sense. If you're coming in as. It's like LeBron going right to the Lakers or I mean the Cavs skipping college. If you're coming in that big and good, you could Argue that, that you skipped a lot of the growing that you would. The rules were made for. So I don't know, it's complicated. I would just say, you know, investing, be careful.

[Eric Balchunas]

And for the listener, just the controversy that you're describing. SpaceX got some sort of a guarantee by the index provider. How did this whole thing go down?

[Josh Brown]

They had a vote and it said like, yeah, Nasdaq, Yeah.

[Eric Balchunas]

So NASDAQ said to Space X, if you go public on our exchange will include you in the nsf.

[Josh Brown]

I don't know if there was some deal like that. It was. Again, it's something like this. They had a vote that they're going to change the rules to let NASDAQ in. I mean the SpaceX in. I think it's 15 days after the IPO now.

[Eric Balchunas]

Why is it so important to SpaceX to be included in the index that quickly?

[Josh Brown]

Well, again there's.

[Eric Balchunas]

They need the liquidity.

[Josh Brown]

Well, because right around that time blackrock and State street both filed for their own version of the qs. So the thesis, this is a thesis. We can't prove it, but the idea is that a lot of the asset managers have a lot of demand for SpaceX but they don't want to go like Ron Baron and just shove it in one of their funds. That's not their style. But if it's in the queues and they have Q's products, then they can have their wholesalers have SpaceX somewhere.

[Eric Balchunas]

Can I ask you a tangential question to that, Michael? And I noticed this and I didn't bother clauding it, so you'll be my. Claude, why all of a sudden are there these competing NASDAQ 100 funds coming out? Was there some sort of moratorium on them being able to.

[Josh Brown]

There's a lot of theories here. We get into some real.

[Eric Balchunas]

Like what are the theories?

[Josh Brown]

Okay, one theory is that when.

[Eric Balchunas]

Let's back up. So Invesco owns the Triple Q. Yeah. It used to be Power shares.

[Josh Brown]

Yeah.

[Eric Balchunas]

Or Invesco stole Power shares or they are Power.

[Josh Brown]

Then Invesco had a vote that turned it into an open end fund.

[Eric Balchunas]

Okay.

[Josh Brown]

And by doing that there's no more forced marketing dollars. And there's some people think that might upset NASDAQ because it, it means they, the queues aren't going to be marketed as much because when you're an open end fund, it's better for Invesco because they get more revenue. Unit Trust has earmarked money for marketing like a 12B1 fee open and ETFs don't. And a couple of the early ETFs like the QS and Spy are earmarked as unit. They're unit trust, so they have an earmark for marketing.

[Eric Balchunas]

There's a guaranteed amount of money to the final four.

[Josh Brown]

Yes.

[Eric Balchunas]

Right.

[Josh Brown]

So if they go to an open end fund, that goes away. So there's that.

[Eric Balchunas]

When do they make that change?

[Josh Brown]

That was six months ago, five months ago.

[Michael Batnik]

Didn't Invesco break even on the queues or something like that?

[Eric Balchunas]

I don't know, like most of the economics.

[Josh Brown]

Yeah, yeah, yeah, yeah.

[Eric Balchunas]

Okay. Famously.

[Josh Brown]

Yeah. So then I did not know if there was some special exclusive contract. But all I know is ishares followed for accused product and then State street did. This all happened around when NASDAQ also said we're going to let SpaceX in within 15 days. So I'm not sure which of these dots are connected or if they're just coincidental, but something's up, you know, so clearly I think the cues is going to be how maybe some of the big ETF providers are able to say we have SpaceX too. Because listen, the thing with private credit and private equity. Private credit came out, nobody really cared. But private Equity is sexy. SpaceX is sexy. People know this company and they know OpenAI, they know Neuralink they want some of this. And these companies aren't going public anymore, so they can't get them in small caps really. And so the private equity area is pretty sought after.

[Eric Balchunas]

And the venture backed, venture backed private

[Josh Brown]

equity and going to space and doing all this stuff, everybody sees it as a growth industry. So I don't blame people for wanting SpaceX exposure like it's pretty natural to me. But the thing is, at some point all of the people in early are looking to exit get their money. And does that cause the price to go down and do retail get.

[Eric Balchunas]

That's why SpaceX cares what index they're in. Because if you're not at an index, you're not going to have the liquidity for a thousand shareholders to exit inside of the first year. And when I say a thousand shareholders, I don't mean retail, I mean funds that have been investing in space X for 10 years. And that's sort of the point of the IPO. They could raise money privately indefinitely, I assume. Yeah. Okay, so the actual point of the IPO is exit liquidity.

[Josh Brown]

Yeah.

[Eric Balchunas]

For people that have been in this thing forever, took a huge swing. Yes, they've made money. It wasn't guaranteed that they would make money.

[Josh Brown]

Yeah.

[Eric Balchunas]

And now they want to take a profit. They have, they have their own investors and their own funds. That's the purpose of this going public. Now the other thing that I think is that it's important to them what index they're in. Cuz they don't want to have something that drops in half because everybody's trying to sell. That's been, you know, it's a long lived asset. Most companies aren't private for this long and don't get this big.

[Josh Brown]

It's totally unusual.

[Eric Balchunas]

So it should have an unusual index inclusion situation.

[Josh Brown]

I'm more okay with it. I understand other people's pushback on it. Because indexes are all about rules. And if you change the rules, people get touchy.

[Eric Balchunas]

There's also people that just flat out don't like him or don't trust him.

[Josh Brown]

That's the thing. When it comes to Elon or the administration, you have to say like, do you have to sort of do some math? Does this person just hate Elon?

[Eric Balchunas]

Yes.

[Josh Brown]

And you have to do like calculus. It sucks. I hate to have them do that, but it's a good point.

[Michael Batnik]

So Eric, from 2015, 14 to 2019, 20, whatever, your. Your coverage was sort of boring. Now that you were doing anything wrong. I just mean the, the industry was boring. It was the race to zero.

[Eric Balchunas]

Yeah.

[Michael Batnik]

There was no new launches.

[Eric Balchunas]

It was, it was all right. It was all about passive, passive.

[Michael Batnik]

It was exhaustingly boring. And hot sauce entered the chat.

[Eric Balchunas]

Exhaustively boring.

[Michael Batnik]

It was. Well, weren't you bored in 2017?

[Josh Brown]

The reason I liked it is I always saw Vanguard and this sort of push for cheaper fee wars as punk rock. It was something that came in and it was so brutal and it kind of made everyone on Wall Street a little nervous. And I thought that was interesting. It was a huge disruption. So there was conflict and some punk rock in that whole movement.

[Eric Balchunas]

Duncan and I didn't think that your podcast was nearly as boring as Michael did.

[Michael Batnik]

Not his podcast. Not his podcast, his coverage.

[Josh Brown]

The other thing is that fee war created what is now investor utopia. We have just arrived at the mo the greatest time to ever be investor. You can get everything for under five bips. It's done. That's why this tokenization stuff, I'm like,

[Eric Balchunas]

okay, market exposure is solved. It's free.

[Josh Brown]

Yeah. I'm like, easy. You're going to. I can. I don't have to get out of bed. I used to say you can just roll out of bed and grab your phone. You can grab your phone in bed. Type in this and Own anything in the world for like, under five bips in a second, commission free.

[Eric Balchunas]

We're so jaded. Nobody cares.

[Josh Brown]

I know, but that's. That's amazing.

[Eric Balchunas]

And I agree. I agree.

[Josh Brown]

People. People have to sometimes remember how that took a long time to get to.

[Eric Balchunas]

Eric. A mutual fund that never called a broke call. The broker on the phone.

[Michael Batnik]

How much? How much. How much did it cost to buy a mutual fund back in the day?

[Josh Brown]

The.

[Michael Batnik]

The transaction fee.

[Eric Balchunas]

So I don't think I've ever told this story here before, and it only takes 10 seconds to tell. The first time I ever bought a stock ever, ever, I was 18, and I called my dad's broker and his name was Jerry. He was at Merrill lynch in, like, Huntington, Long island, and just mocking me the entire time like, oh, yeah, you want to buy what? What do you want to buy? Like, And I don't even blame him. Like, looking back, in hindsight, I don't blame him. I totally get it. It's like, ugh, I gotta take this call. My client's son. Hang on. Hang on a sec, guys. I can almost picture the golf putter in his hand as, you know, the cordless phone in between his chin and his shoulder. So for whatever reason, I gave him some ticker symbol of some stupid oil stock somebody told me to buy. The whole experience was so humiliating. And I knew it. At the time. I was old enough to know that I was being mocked, right? Most people even aren't. And then, of course, the stock goes down five points. It was like 13. It went to eight. I was so humiliated by the purchase, I was afraid to call him and ask him why it was down. And, like, that stuck with me. So I'm with you. Anytime I see somebody creating ways for people to not have to go through that and be able to invest, I do think it's punk rock. I do think it's cool. And we probably take for granted how much easier it is today for an 18 year old to put their first trade in and not feel like a total asshole versus even 25 years ago or maybe even 15 years ago.

[Michael Batnik]

How do you like me now, Jerry?

[Eric Balchunas]

So, yeah, by the way, speaking of punk rock, Jerry's probably a fan of the show now.

[Michael Batnik]

Speaking of punk rock, you make the best metaphors with music with ETFs. Have you not been to a concert at Future Proof?

[Josh Brown]

No, I. Well, okay, I think we haven't seen you. First of all, the Future Proof, you tend to have it right after Labor Day.

[Eric Balchunas]

Yeah, it's like, is that the first one for you?

[Josh Brown]

Well, it's the first week of school. I have two young kids.

[Eric Balchunas]

It's just.

[Josh Brown]

It's a weird time. I gotta go out there. It looks great. And you have the one in Miami that competes with Vettel for two weeks.

[Eric Balchunas]

I'm not sure that's two weeks after Labor Day this year, but I went

[Josh Brown]

to the first one when it was called. What?

[Michael Batnik]

No, no, no, no.

[Josh Brown]

It wasn't called Future Proof.

[Eric Balchunas]

Nope. Don't even say.

[Josh Brown]

This was like when Pearl Jam was called on a Friday. No, Radiohead was called. Radiohead was called on a Friday.

[Michael Batnik]

You're thinking of Wealth Stack. Different event.

[Josh Brown]

Yeah.

[Eric Balchunas]

That was not this.

[Josh Brown]

Yeah, it was close.

[Eric Balchunas]

It wasn't close because I was on stage. Like, what were the similarities?

[Josh Brown]

It was the same core group.

[Michael Batnik]

We're outside now.

[Eric Balchunas]

Yeah, I don't think so.

[Michael Batnik]

In the words of.

[Eric Balchunas]

Well, Nick is saying we invented that one, too, so. Whatever.

[Michael Batnik]

In the words of Nikki Santoro, I'm over here now.

[Josh Brown]

Okay.

[Michael Batnik]

All right. Hot Sauce. So the.

[Josh Brown]

Yeah, it got a lot more interesting.

[Michael Batnik]

For sure, the fees have bottomed.

[Eric Balchunas]

He just squirmed that he didn't even confirm that he's going to come to a future.

[Michael Batnik]

He's not Kelly.

[Eric Balchunas]

It's like the. It's like the 15th.

[Michael Batnik]

No, but the concerts, dude. The concert, the music.

[Josh Brown]

Yeah, I know. Who'd you get last year? It was like, somebody pretty good.

[Michael Batnik]

We had Bush Better than Ezra in Miami. We had better than. What was the name of the band?

[Eric Balchunas]

Never had better than Ezra. Oh, we. Ezra Ray. We have. So it's like a Comedy. It's Mark McGrath from Sugar Ray.

[Josh Brown]

Oh, perfect.

[Eric Balchunas]

With the guys from Better Than Ezra and Tonic. And they're cool.

[Josh Brown]

I call that Gen X yacht rock.

[Michael Batnik]

You all perfect. You would have loved it.

[Josh Brown]

You need to get Hoodie next time. And Todo at Sprocket, we had Blues

[Michael Batnik]

Traveler and Bush and.

[Josh Brown]

Perfect.

[Michael Batnik]

It was so good.

[Eric Balchunas]

We had Third Eye Blind. We had. We've had some amazing.

[Josh Brown]

Listen, tell me, was Bush closed with Come down, or was it the My Brother in LA song?

[Michael Batnik]

He was so close.

[Josh Brown]

Everything's End.

[Eric Balchunas]

He opened with Everything's End.

[Josh Brown]

Okay. They have, like, five bangers.

[Eric Balchunas]

Come down was probably the Closer.

[Josh Brown]

It's a good song.

[Eric Balchunas]

And I think they did Glister in, like, two songs before. It was a great closer.

[Michael Batnik]

No, Machine Head was the opener.

[Eric Balchunas]

Oh, they open with Machine. You're right.

[Michael Batnik]

This is the first strum on the guitar with. Oh, my God. You gotta come. All right, so Fees have bottomed chart five. Please, Fee the active, the asset weighted ETF expense ratio has made a. In my opinion, a. Well, permanence is tough because there's so much money coming into the. The free. The free ETFs. But whatever, it's made a local bottom because there's new hot shit. Like, things are. Things are thinging.

[Eric Balchunas]

The average fee bottom that is now lifting off the bottom slowly.

[Josh Brown]

Yeah, this was the scariest chart on Wall street because it's like. It's sort of like the rising sea levels. When's this gonna stop? Are we in trouble? 17 bips. Looks like it's where it's bottomed. And the reason it's going up is you do have a good chunk of money going into the degen hot sauce that all charges 1%. The buffers, they all charge 90 bips. And then legacy active is charging 30 to 40.

[Eric Balchunas]

Go into the. Oh, the degen.

[Josh Brown]

Dgen.

[Eric Balchunas]

He said degen like it's French.

[Josh Brown]

Degen. Do you say degen?

[Michael Batnik]

I say degen. I never heard. I never heard de.

[Eric Balchunas]

It's degenerate. But everyone's.

[Josh Brown]

It's degenerate. But I'm saying. Okay, well, no, I said degenerate.

[Michael Batnik]

Yeah, they say gasoline.

[Josh Brown]

That's literally part of the word degenerate.

[Michael Batnik]

Yeah, no, you're right.

[Josh Brown]

Listen, do you say potato?

[Eric Balchunas]

You have a se on the Simpson. You have a se on the Simpsons, when Mo is making fun of Homer for saying, oh, your garage.

[Michael Batnik]

What do you call it? A car hole.

[Josh Brown]

Oh, that's good.

[Eric Balchunas]

That's good. So the 1100 ETFs that launched last year, a lot of them are nowhere near a 5 basis point. Like they. These are 70 basis point active things.

[Josh Brown]

I call it the hot sauce arms race.

[Eric Balchunas]

Yes.

[Josh Brown]

Because a lot of them will not make it. In fact, Ethan on my team did a good study of, like, so many are launching. There's like 452x stock ETFs now, but there's only like 40 billion. So it's like 100 million or something per ETF. On average, there's 3 billion per ETF. So in other words, it's flooded with supply, but you only need one hit to make it. So, like Granite shares launched 2x Nvidia, it's got like 5 billion. That makes that person 50 million a year in revenue. So you just need one. So they're going to, as Ben Johnson put it, you know, fire up the spaghetti cannon and just go crazy.

[Eric Balchunas]

What does it cost to keep these almost dead ETFs alive? Very little. Right?

[Josh Brown]

Very little. But They I would say around at 1%, maybe 30 million, you need to have a break even point.

[Eric Balchunas]

Which means they can all basically trade forever.

[Josh Brown]

Here's what's also brilliant. Most of them are long. So a lot of these guys came with quantum computing 2x and I was like, oh, these gonna sell? First of all there was enough interest cause they go up a lot. The volatility on some of these is like 20x the S& P. I mean it's F. It's like the ghost pepper of like hot sauce. Anyway, they pick us stocks that are in growthy areas. So you get a little bit of flows. Then the market appreciation gives you assets too. So you're profitable. You only need a little bit of flows. And then the market appreciation, you're set.

[Eric Balchunas]

I was talking to the guys that launched. I was talking to the guys that launched. I guess the skill is either A being so efficient that you could launch a ton of shit or B be a really highly attuned, almost like a tastemaker or not a taste maker.

[Michael Batnik]

I know what you're saying.

[Eric Balchunas]

Somebody that just like sees, oh, everyone's gonna be that.

[Michael Batnik]

You gotta skate to where the ETF is going.

[Josh Brown]

Yeah, they used to have these people at big brands, they'd have like somebody who just knows what the cool things are. You have to have a good ear to the ground for what. And Tuttle is a good example. He says he is kind of a degen trader. He'll admit it. And he makes products that he would like to trade. So I don't know if someone who's like from the legacy asset management could do this. Well, you kind of have to be one of those people.

[Eric Balchunas]

I think the Roundhill guys are great at this. They're great at the DRAM thing. They just broke 2 billion.

[Josh Brown]

That's it. By the way, this is an insane story though. Brilliant.

[Eric Balchunas]

Tell the story.

[Josh Brown]

So the memory trade, which is these three memory stocks. Micron, SK, Hynix and SAM.

[Eric Balchunas]

Samsung, SanDisk.

[Josh Brown]

I think it's Samsung.

[Eric Balchunas]

Samsung, right.

[Josh Brown]

They control 95% of the memory. And these AI data centers are desperate for high bandwidth memory. So obviously there's demand. But you couldn't get all three in an etf. You could get two of them in the South Korea etf. So people started buying that. Roundhill noticed and was like, wait, why don't we do one and throw Micron in there and. And we'll jack up the weightings using swaps because the diversification rules make it tricky. So they give you like 67, 65% of the portfolio is just those three companies and it's the only one that gives you all three at that weighting. And it came out and I was a little like asleep at the wheel. I was shocked. It traded 250 million the first day. I'm like, what? These are crazy numbers now. Yesterday it traded like more than Chevron. Like it's trading like in the billions in a month. And it's got 3 billion in assets. This is insane for a theme ETF. It's the best debut by a mile.

[Eric Balchunas]

These are the guys that did meta so. So early that Zuckerberg had to buy the ticker.

[Josh Brown]

Yeah. Which by the way, we've had Will

[Eric Balchunas]

Hershey on the show.

[Josh Brown]

Did you hear that? With Tuttle had the SPAC ETF.

[Eric Balchunas]

Okay.

[Josh Brown]

That he never closed the ticker was SPCX.

[Eric Balchunas]

So they wanted for SpaceX.

[Josh Brown]

So he. Well, this back ETF was like living in oblivion. But instead of closing it, he let it hang around just in case and it just changed tickers to something else, which I can't prove it, but that would indicate that they did buy it for SpaceX.

[Eric Balchunas]

Oh, interesting.

[Josh Brown]

So that's a whole. So I think the issuers are out there reserving tickers for private companies.

[Eric Balchunas]

I was going to say, if I buy that ETF right now, will I get SpaceX?

[Josh Brown]

No, no, not at all. You'll get a really like beat up spac.

[Eric Balchunas]

You'll get a not available message on your, on your brokerage account because can't do it.

[Josh Brown]

But hot sauce. We have a thesis that, you know, a lot of the portfolios have gotten pretty. People have stopped dating five star managers and they've gotten married to like VU and bnd and they're like, I love this portfolio. I am off the market and I'm going to, I'm going to be with this for 50 years. But they want to have a little speculative fun on the top.

[Eric Balchunas]

Still want to have a fling.

[Josh Brown]

They want to have their flings.

[Eric Balchunas]

Couldn't agree more.

[Josh Brown]

So people have the fun account, they have trading and they went wild and crazy there. So I think the hot.

[Michael Batnik]

Ashley Madison of ETF issuers, God, he

[Eric Balchunas]

can't tell you these people are in his coverage universe. I agree with that. I agree with that. People are, you know what, because you asked the question, you asked this question earlier about Bitcoin. Why can't people just be both? I have always said this. Why can't someone say with 80% of my money, I want a low cost, tax efficient index market cap weighted portfolio and then with 20%, I want a core and explore and I want to do other stuff that's not representative within the index. And why do I have to be part of a tribe? And most people, they don't even. They're not even. Most people are not even burdened with that question. They just do whatever they want. Who's paying attention?

[Josh Brown]

The flows would tell you that's what people are doing. 80% goes to cheap something active or passive, and 20% goes to hot sauce. And give me a chart. 6.

[Eric Balchunas]

John, by the way, this is yours. So this is. This illustrates this point, I think, pretty well. What you're saying here is.

[Josh Brown]

Well, this is this number, right?

[Eric Balchunas]

This is the fact number of funds.

[Josh Brown]

There's more active ETFs than passive ones now. Okay, look at that.

[Eric Balchunas]

That is crazy.

[Josh Brown]

Isn't that crazy?

[Eric Balchunas]

This is not dollars. This is number of funds.

[Josh Brown]

This is the number of funds.

[Eric Balchunas]

But what's crazy about this is there was literally no market for active ETFs as recently as 10, 11 years ago.

[Michael Batnik]

Yeah, look at the gap.

[Josh Brown]

I know. So none. By the way, that white line is only 10% asset share. So there's obviously this huge flooding of active products because try competing with the other line. What are you gonna do, like fight Vanguard and blackrock? You can't make it. It's too brutal.

[Eric Balchunas]

Game's over.

[Josh Brown]

So that's where you have to launch. But the one. Do you have the chart that has the beta adjusted fee demarcation line, by the way. Okay, listen to me, listen. This is my E equals MC squared.

[Eric Balchunas]

All right?

[Josh Brown]

I need a catchy moniker for this. So if you have something better than.

[Eric Balchunas]

I got you covered. This is terrible.

[Josh Brown]

Okay, why did active equity stock pickers finally make it in ETFs? Because that was a big thing. They could never break. Nah.

[Eric Balchunas]

Kathy.

[Josh Brown]

Yes, well, Kathy's Cathie was one example. But now you got dfa, you've got Capital Group, JP Morgan. Why are they all.

[Eric Balchunas]

She proved that it could work. I'm telling you, it's her.

[Josh Brown]

Yeah, but there's another thesis here, which is this, okay? If you look at active share and expense ratio and you draw a 45 degree angle a line and you look at the most successful products and you look at where product see outflows. If you're above that, you're. You're in the mix. You can get money. If you're below that, it's very difficult. Why? Because Vanguard made beta free, so you cannot charge for beta.

[Eric Balchunas]

Stop. This is saying the more active you

[Josh Brown]

are the more you can charge, the

[Eric Balchunas]

more you can charge. Isn't that logic.

[Josh Brown]

Because people have no fee sensitivity in hot sauce, but once you get into the core, people are very fee sensitive.

[Eric Balchunas]

Wait, but isn't there a better way to say this though?

[Josh Brown]

Go ahead. Cheap or shiny?

[Eric Balchunas]

No, I think it's retail advisor.

[Josh Brown]

Yeah, but I think even an advisor.

[Eric Balchunas]

If they're gonna stop. Gotta go off mic for a second. This is where the advisors live. Sorry? This is where the advisors live. Yeah, yeah. Very inactive. Therefore. Therefore the advisors can explain to their clients.

[Josh Brown]

Yeah.

[Eric Balchunas]

Like what the fund is going to do, what it mimics. Yeah. Okay. The advisors don't live here. Yeah. They don't want that level of active.

[Josh Brown]

You're right.

[Eric Balchunas]

Okay. You know who buys this shit? You know, buys a shit. People that really do want something that deviates from the market because they're not baking it into a back test for a financial plan. Yeah, I mean, am I crazy?

[Josh Brown]

I agree with you.

[Eric Balchunas]

Okay.

[Josh Brown]

And DFA rules. And Capital Group's very good at that too. I would call that like it's low. It has less career risk. Yes. If you're low. Active.

[Eric Balchunas]

That's what I'm trying to say. But explain yourself. You're not doing that.

[Josh Brown]

But back in the day, all those tickers would be in the lower right hand corner.

[Eric Balchunas]

Cause they'd be mutual funds.

[Josh Brown]

Yes. And you wouldn't buy them. So if DFAC was over on the lower right hand corner, you wouldn't buy it because you're like, why am I buying beta for 90 bips?

[Eric Balchunas]

Too expensive and too close to the benchmark.

[Josh Brown]

Yes, 100%. So here's my metaphor. It's like a bag of potato chips. Just charge me for the chips, not the air.

[Michael Batnik]

Oh, that's good. That's very good.

[Josh Brown]

If you do that, you can make it in this world as a non beta person.

[Eric Balchunas]

So your message is. This is really important. Your message is, if you're going to launch an active etf, be very active. And then you don't have to explain why it's priced where it's priced.

[Josh Brown]

That's why half the launches are wild and crazy.

[Michael Batnik]

All right, so earlier I said what I think a bubble is.

[Eric Balchunas]

Yeah.

[Michael Batnik]

But there is another part of a bubble, which is the behavior. Right. The way that investors are behaving. And right now, our boy Todd Stone has a chart that shows. Here comes the 2x hynix funds.

[Eric Balchunas]

Let's do it.

[Michael Batnik]

We're looking at the 1 year percent change.

[Eric Balchunas]

I've been waiting on this for a

[Michael Batnik]

Minute of the Bloomberg of flows into some of these ETFs. And I thought it was kidding, by the way. Multiple ETFs. Literally a file for the 2x and most of our listeners don't even know who SK Hynix is. It's a South Korean memory stock. It's basically that and Samsung are 50% of that index. But the flows, the one year flows are completely off the charts, completely insane. And this is, this is, this is euphoric behavior.

[Josh Brown]

Yeah, well, that's the price. There haven't been any launched. They're dying to get those launched.

[Eric Balchunas]

However, those are just filed.

[Josh Brown]

Those are just filings. Okay, so after all the other stuff he has there is the percent performance. We don't have flows. Believe me, it will be a hit. But I've got a great data point for you. We have a note coming out on this this week from Rebecca. In Asia, the SK Hynix. There's a 2x version in Hong Kong. It's so popular because especially in South Korea where the degen per capita is like through the roof. Certain Asian countries love to gamble. This ETF is the fourth biggest in the country already. It's 8% of the whole ETF market.

[Eric Balchunas]

2x SK Hynix is the biggest ETF.

[Josh Brown]

The fourth biggest.

[Eric Balchunas]

Fourth biggest.

[Josh Brown]

But it's not even a year old. Think about that. That would be the equivalent of launching 2x Tesla here and all of a sudden it's as big as vti.

[Eric Balchunas]

But can I ask you. But can I.

[Josh Brown]

The percentage of the weighting of that market of this one ticker is.

[Eric Balchunas]

But can I ask you an obvious question? Can't the dollar amount in that fund get cut in half in one day?

[Josh Brown]

Yeah, if there's a 50% drawdown.

[Eric Balchunas]

Okay, I own a stock.

[Michael Batnik]

Wait, if it gets cut in half, where does the money go?

[Eric Balchunas]

It goes somewhere else. But no, but I'm just making the point. I own a stock called Shake shack. It fell 35% today. Wait a minute.

[Josh Brown]

Well, you mean in your index? I don't want to have a picker account.

[Eric Balchunas]

No, I own it. Personally, I don't own it like professionally. My personal hold.

[Josh Brown]

Is it a hedge?

[Eric Balchunas]

Yeah, right. It's a hedge against me being dangerously malnourished.

[Josh Brown]

There's a New York City ETF that Ethan might buy to hedge his rent.

[Eric Balchunas]

So that stock fell 30. I don't think it closed down 35%. But my point is that could happen to any stock at any time. That ETF will lose half of the dollars in there.

[Michael Batnik]

And South Korea will be in. The country will go into a great depression.

[Josh Brown]

That's part of the fun, but because

[Eric Balchunas]

I'm just making the point. Oh, you know what? You know what else I was thinking about? I wanted to ask you. There's a difference between an RIA getting to $10 billion versus an ETF getting to $10 billion.

[Josh Brown]

Oh, yeah.

[Eric Balchunas]

Because the RIA, even if they're giving horrible advice, it does not have the potential to go to 5 billion. An ETF. That can happen in a week. One allocator says, you know what? We're switching from this fund to that fund.

[Josh Brown]

Yeah.

[Eric Balchunas]

It's not. These things are not equivalent, Eric.

[Michael Batnik]

I was talking to a friend of mine yesterday who runs a big giant asset management company, and one of their popular ETFs has a ton of money in it. And he said to the CFO, just model it at 50% less, like for cash flow purposes. Just pretend it's pretend.

[Eric Balchunas]

Yeah, because it's a mirage. It's not like aum, like, oh, we raised this money client by client.

[Josh Brown]

This happened with DXJ and ark. These were flavor of the months for a while.

[Eric Balchunas]

Yeah.

[Josh Brown]

They went from nothing to, I don't know, let's just say 20, 30 billion, but then down to like 7. Now people are like, oh, my God, it's a failure. I would say, no, just draw the line from nothingness to 7 billion and you're fine. It is. It's sort of like it's better to have love and lost and be at 7 billion than to have never loved at all and be in oblivion. So some of these products come out and they're.

[Eric Balchunas]

Finish that thought. Wait, finish that thought, though. An investment firm that goes from 30 billion to 7 billion. Yeah, it's like the Titanic.

[Josh Brown]

Yeah.

[Eric Balchunas]

That's the difference between etf, aum, hundred percent.

[Josh Brown]

You guys are in a different boat.

[Eric Balchunas]

Okay.

[Josh Brown]

And that's why I agree. I've always thought this like, the advisors understand psychology and emotions that the asset managers really don't. They're just putting products out. You're supposed to use them as you see fit. They're just fulfilling demand in the marketplace. Some of these are used by direct retail, though. They don't need to worry about you. A lot of these are direct retail. They're bypassing you. But you guys have different needs. But you're very well represented in the ETF flows. That's why VTI and Voo and Spy, M&GLD, a lot of those are. In fact, most of the flows goes to this stuff, I mean, it's just we've. What else can you say? Like, okay, you know, voo is great. Like, it took in. It takes in. Vu grows at 1.25 billion a day. Isn't that crazy?

[Eric Balchunas]

Almost no matter what.

[Michael Batnik]

Where do you think that money's coming from? Is it coming from 401k rollovers? Like, part of it.

[Josh Brown]

Okay. It's coming from target date funds. It's coming from just vanguardians who feel nothing.

[Eric Balchunas]

You know, they're just 1.25 billion a

[Michael Batnik]

day into just that one fund. It's so much money.

[Josh Brown]

Well, it's about 800 million a day. The other part is asset growth because it went from like 600, no, 560 billion to like 900 billion in a year. Like, it's grown more than a billion a day in the past year. But the flows are. Have never been seen. 7,50 million a day is crazy. That's just in flows. Even if it goes down. So it takes in, I don't know, 150 billion a year. This year it could be a little higher.

[Eric Balchunas]

It's really remarkable.

[Josh Brown]

It's crazy. But it's such a. If there's a perfect etf, it might be that you could say vti. But then with vti, you get small caps. Bogle tended to lean a little.

[Michael Batnik]

It's the same thing. Who cares?

[Josh Brown]

Well, the reason.

[Eric Balchunas]

Are they the same price in Buffett's? Are they both. What are they, three basis points?

[Josh Brown]

Yeah, they're both three.

[Eric Balchunas]

Okay.

[Josh Brown]

Vti. Get. VTI is a little better for behavioral, because if small caps have a good run or value, you don't have to worry about it. You own it.

[Eric Balchunas]

Right.

[Josh Brown]

But for people who can stand like a little small cap, like, regime change for a minute, Buff Buffett would probably recommend Vu because in his letter to Berkshire investors, like, 10 years ago, he

[Michael Batnik]

just buy the S and P. This is three years. Nobody cares. It's the exact same.

[Josh Brown]

Yeah, it doesn't matter really, at the end of the day, I mean.

[Michael Batnik]

Well, I want to ask you about the prediction market ETFs.

[Josh Brown]

Yeah.

[Michael Batnik]

So I think that if there is enough liquidity. This is not my idea, but I think it's a good one. Let's say that there's enough liquidity on some of these exchanges where, let's say there's contracts that have $10 million of liquidity, whatever the number is, and there's an ETF that buys up every single. Yes for anything trading over 85 cents. Because if something's over 85 cents. It probably happens not 15% of the time, but let's say 12% of the time. All right, great. That's a 12% annual turn. Even if there's some slippage. 10%. And then you could get more aggressive, say, no, no, I only want to buy things that have a 70% outcome. And then you could slice it up and say, I want to do that, but only for sports. And then you could say, I only want to buy the guarantees. So I want to buy the 95 cents NFL favorites and I will make my 4 1/2% return or whatever it is. Like, I think all that's coming.

[Josh Brown]

The sports is an interesting one because there's some lawsuits and legislative issue with sports, but the political stuff is the first one they're trying to get past.

[Michael Batnik]

So how is that going to work?

[Eric Balchunas]

Well, they're going to an ETF that incorporates bets from the prediction market around politics.

[Josh Brown]

Yeah. So the ones that are slated, they actually had effective data Monday, but we think they'll probably be pushed back a little bit, I think. Who's launching Roundhill, Bitwise and Granite Shares.

[Eric Balchunas]

Okay.

[Josh Brown]

So the first ones that are. Were slated. Again, we don't know if they'll launch are Republican win in 2028. Republican or Democrat win in 2028. One's president, one Senate, one's House.

[Eric Balchunas]

Why can't I just do that on cow? She like a normal person.

[Josh Brown]

Because the ETF is in your brokerage account.

[Michael Batnik]

Yeah.

[Eric Balchunas]

So.

[Josh Brown]

And it's a little more trusted and it can get liquid down.

[Eric Balchunas]

Is the thing.

[Josh Brown]

Yeah. That the people said the same thing about crypto. You could have gotten crypto easily. People like ETFs because they're liquid, they're trustworthy. They do what they say they're gonna do.

[Eric Balchunas]

Tickers.

[Josh Brown]

They like tickers. They're in the brokerage account. It's just. It's better in the plumbing.

[Eric Balchunas]

People that don't wanna move money.

[Josh Brown]

That too.

[Eric Balchunas]

Like, it's already. My money's at Schwab. I just wanna do.

[Michael Batnik]

If it goes. So whichever outcome, does the ETF just get liquidated after that?

[Josh Brown]

It'll either roll over to the next one or liquidate like a termination event.

[Eric Balchunas]

We have things like that. We have things like that already. Right. But the bul. That are the bond maturity.

[Josh Brown]

Yeah. Okay, good one.

[Eric Balchunas]

So we have. So we have.

[Josh Brown]

Yeah.

[Eric Balchunas]

It's not structure.

[Josh Brown]

The. The reason. And I want to get your take on this. It's interesting to me that say, you know, when the. There's a presidential election or the Fed and all the analysts come out and say oh, if Trump wins or Warren wins, this is going to happen. And then like half the time it doesn't happen. Like the opposite happens every time. But basically, yeah, these eliminate that.

[Eric Balchunas]

I love that you just get to

[Josh Brown]

bet on the macro event. There's no like guesswork.

[Eric Balchunas]

You want my take. That's what everyone wants. And I think it's. You're so right. You had people buying oil stocks for Trump's first term. Cuz he was on the, he was on the campaign trail saying things like drill baby, drill.

[Josh Brown]

Yeah.

[Eric Balchunas]

Didn't mean anything. Oil was the worst performing sector.

[Josh Brown]

Clean energy crushed under Trump. So even if it makes no sense.

[Eric Balchunas]

So if you were allocating like this is my Trump basket and then this is my Hillary basket. It's almost, it's astrology.

[Josh Brown]

It is.

[Eric Balchunas]

Whereas this is like do you think Trump wins or do you think he loses? And if you think he wins, how much are you willing to risk?

[Josh Brown]

Yeah.

[Eric Balchunas]

Or how much do you want to make? Here's what you'll have to risk.

[Josh Brown]

It does.

[Eric Balchunas]

That's what everyone wants.

[Josh Brown]

Now imagine we could do economic releases like cpi, Fed. I think all the economic stuff will be prediction marketed but then we're going to get into some weird stuff. You know like some of these issuers are going to launch some like it's going to turn into silly season.

[Michael Batnik]

Hold on.

[Eric Balchunas]

Before the silly season, Chalamet breaks up with Jenner. Yeah.

[Josh Brown]

What's the name of Taylor Swift's baby

[Michael Batnik]

Before the silly season.

[Eric Balchunas]

I think that there are going to

[Michael Batnik]

be global economic efficiencies created on these platforms.

[Josh Brown]

Yeah.

[Michael Batnik]

Hear me out. The wisdom of the crowd. Surveys are totally broken.

[Josh Brown]

Totally, totally broken.

[Michael Batnik]

They do not work. If there are legitimate economic data points, things that can bring money to put to have some clarity there. And not that this is going to move, move the economy but like will Tesla deliver 500,000 car units or something like that?

[Eric Balchunas]

Yeah.

[Michael Batnik]

But if you could do that at things that matter.

[Josh Brown]

Yeah.

[Michael Batnik]

I think that we can have some better clarity into what's actually happening in the economy.

[Josh Brown]

Yeah, it, it'll. I mean honestly this macro guesswork game, so much of it will be irrelevant.

[Michael Batnik]

Show me the number, show me the market.

[Josh Brown]

Yeah, you could just bet like will there be a recession in 12 months and like if you are worried instead of like hedging with something so you don't, you could just use that. I mean some people would argue like the options market allows some of this. You can just buy a put option now.

[Michael Batnik]

It's so clear. Who do you trust that are the economists?

[Josh Brown]

Yeah, I mean, and I think polymarket really was born out of the fact that the political polls were really bad and polymarket had a better read on, like, what was happening. So I think people are more open to these being, like, a real market. But it is interesting. It's a whole new world. And the thing with Polymarket, though, and these prediction markets is it's endless possibilities. Once the ETF and that marries, it's going to be again, ETFs never a dull moment, man.

[Michael Batnik]

It's a wild one to us.

[Josh Brown]

It's like, I don't know what's going to happen, but I do think some of these will be bigger hits than people think. Will we be in a place in a couple years where people are literally using these in their portfolio and it's completely, like, seen as legitimate? Not sure.

[Michael Batnik]

I don't think so.

[Josh Brown]

But I do think for people who are, like, hedging the market or speculating, these could come in handy because you can eliminate.

[Eric Balchunas]

Yeah. The question of whether or not they'll come in handy is going to be a function of the amount of liquidity. Like, if there's enough people that are willing to make these bets, which I'm not sure about. It seems like right now there might be for some things and not for others.

[Michael Batnik]

It's a lot of sports.

[Eric Balchunas]

So we had the CEO. We had the CEO of Schwab on stage, and we asked him, like, would you rule out ever having prediction markets? He said no, but he said, like, it's 88% sports betting or whatever, and they don't want to be in sports betting. But he did say, we think that there might be investor value to having economic predictions.

[Josh Brown]

That's the CEO of Schwab, CEO of Schwab.

[Eric Balchunas]

So, you know, they're having meetings about it. They're not dismissing it out of hand. Now, is Schwab going to be the first mover?

[Michael Batnik]

No, Thomas. Peter Fee at Interactive is.

[Josh Brown]

They don't need to be.

[Michael Batnik]

Peter Fee is psychotically bullish on the prediction market.

[Josh Brown]

Is he?

[Michael Batnik]

Yeah. Psychotically bullish.

[Josh Brown]

Yeah. I'm leaving a little room for I don't know. But I would say that the other objection we already addressed, why do you need an etf? And I think we addressed that. So I think, again, ETFs are the great standardizer. They take everything that's frictiony or out there and they just bring it right to you in a format you're comfortable

[Eric Balchunas]

with, a package that people. It's like I don't have to do this myself. Yeah, this is like this expresses my view with one trade.

[Josh Brown]

Pricing transparency with the equity market. So everything trades like they basically equitize everything. And that's what's happening here. So it's interesting. That's definitely taken more of my mind share lately thinking about how this will play out.

[Eric Balchunas]

Eric, can we do a little lightning round before we let you go?

[Josh Brown]

Sure.

[Eric Balchunas]

Okay. What the death of the mall trade can tell us about the AI freakout?

[Josh Brown]

Yeah, I don't know if you have the chart, but remember the death.

[Eric Balchunas]

We had it. It wasn't great. We threw it out. Okay, I'm just kidding. John.

[Josh Brown]

Remember the death of the mall? You were supposed to go long Amazon. In short xrp.

[Eric Balchunas]

A lot of malls did die.

[Josh Brown]

Yeah, but a lot of companies are not idiots. They figured out how to like sell stuff on the Internet like Walmart. And so if you look 10 years later, XRT outperformed clicks and empty, which were two ETFs that literally did the death of the mall trade. What's empty is shorting brick and mortar.

[Michael Batnik]

I don't remember that.

[Eric Balchunas]

Get out of here. That that existed. Yeah. And ironically went to zero.

[Josh Brown]

Yeah, well the daily rebalancing probably was part of that corrosion.

[Eric Balchunas]

Okay.

[Josh Brown]

Clicks was going long online, short brick and mortar.

[Michael Batnik]

And that didn't work either.

[Josh Brown]

It underperformed. So XRT beat both of them by a lot. But then guess what beat XRT by a lot. Vu. So here's my point. This whole thing of like AI everyone freaks out. Who's the winners and losers? I'm like, these companies are probably The

[Eric Balchunas]

S&P 500 is the winner.

[Josh Brown]

That's the winner. Because you know why? These companies are not dumb. They're run by smart people. They're going to incorporate AI.

[Eric Balchunas]

Some will.

[Josh Brown]

Yeah, there's a couple that you know, might not make it. But over time that that online Internet commerce ended up floating up into the VU like it ultimately gets rewarded in that market cap weighted situation.

[Eric Balchunas]

I know you listen to every episode of the show we had a guest on last week who is structurally like going to belong for the next 30 years. Some of these software companies. And that was his comment, he said of the top 20 e commerce companies in America, how many of them do you think were a new economy post Internet? And how many do you think were old economy? And I think 15 of the 20 largest E commerce websites are run by companies like target. Yeah, like 15 of 20. So that's what you're.

[Josh Brown]

We arrived at the same point.

[Eric Balchunas]

Yeah. Okay. It's a great point. I'm curious what your thoughts are about

[Josh Brown]

gold.

[Eric Balchunas]

Oil ETFs, they sort of had had a great oil. Gold had a great year last year. Oil had a good start to the year leading up into the hostilities. And now it seems like it's no man land. No man's land. When you show us the trillion and a half dollars coming into ETFs, a lot of it active. Are these ETFs still attract the commodities, still attracting their fair share? Are they less popular than they used to be? Like, where do those things stand these days?

[Josh Brown]

GLD was a top 10 or last year. It definitely sees flows. People love GLD and iau. Those are. There's no weird stuff.

[Eric Balchunas]

Staples.

[Josh Brown]

Yeah, you're not rolling futures there. So people do like those. Gold seemed to be a trading thing. I don't know if people were just all of a sudden allocating. It seemed like there was a lot of fomo. Same with silver and then some came off. So I think gold is.

[Eric Balchunas]

You still don't have a great oil etf.

[Josh Brown]

Don't mess with oil. USO is a wolf in sheep's clothing. It's why we invented the traffic light system. Basically it rolls futures and so some years you can have roll costs of 30%. So you can get the call. Right, but like lose a lot of money. Be careful. So I would look at that as like a rated R movie. USO investors use GLD would be more

[Eric Balchunas]

like XLE for that instead.

[Josh Brown]

Yeah, I would use xle. We have Vince Piazza who works in bi. He likes crack because crack is refiners. And if the straight of Hormuz was closed, you got to get oil from other places where it's not as it needs more refining. So this is kind of like long equity plays around oil. That I think makes sense because there's no weird derivative action. Are you very careful if you're going to use USO? Just trade it.

[Eric Balchunas]

Are US investors allocating to international ETFs to the extent that you would expect them to be, given how well those markets have finally started to do over the last 18 months?

[Josh Brown]

Not as well as they have done, but a little better than normal. Because I think a lot of investors have seen this movie before. International comes back, it has a good six months. It's a short film really. And then all of a sudden the QS is like that bus meme and they gotta see more. But there has been some movement to like IFA IEFA a little bit but not a ton. Most of the money, if I look at flows like year to date. I'll give you the top five is voo, SPY M, vti, and then vxus is international.

[Eric Balchunas]

SPY M. Spy.

[Josh Brown]

Mm. Oh, SPY M. By the way, you'll love.

[Eric Balchunas]

This is the cheaper spy.

[Josh Brown]

Yes, it's the offspring of SPY that is basically been programmed to avenge iemg. No, it's because VOO knocked off SPY as the biggest ETF in the world and State street was like. And I took that personally. So they basically lowered SPY M's fee to two bips and they changed the index and it's getting inflows. Oh, my God. Yeah. Obviously at one point in this year, it had more than voo. I've never seen VOO more.

[Eric Balchunas]

Second, not more money in it. More inflows.

[Josh Brown]

More inflows. Okay, but the asset chart is like this. It's parabolic.

[Eric Balchunas]

State Street's like. State Street's like. Oh, yeah, yeah.

[Michael Batnik]

Why? You know, if you're allocating 500 million a billion a basis point, no basis point matters, I guess.

[Josh Brown]

Yeah, that's what I'm saying. Like, a lot of people, if it's the same thing, they'll just sort by fee.

[Michael Batnik]

Right.

[Josh Brown]

So the power of one basis point when it comes to cheap beta. That's why you don't want any part of cheap beta. Like, imagine competing there, how brutal that is. Yeah, that's why that white line goes straight up. Because who can. Who wants to deal with that?

[Eric Balchunas]

All right, more in the lightning round. Are you surprised? Or maybe you're not surprised by the almost complete non effect of the popularity of custom indirect indexing on flows to ETFs. Because this was the thing people in the ETF land were worried about, like a couple of years ago.

[Michael Batnik]

You were never worried.

[Josh Brown]

Not me.

[Eric Balchunas]

You were not worried.

[Josh Brown]

Thank you. Thank you for acknowledging that.

[Eric Balchunas]

But.

[Josh Brown]

But like, I was skeptical before. It was cool.

[Michael Batnik]

You were.

[Josh Brown]

I was also skeptical. Esg before it was cool.

[Eric Balchunas]

How did you know that custom and direct indexing would not have an impact on the size of the ETF market?

[Josh Brown]

Simple. Everything seems to be going towards cheap and simple. These were going towards. These are not cheap, they're more expensive and they're more complicated.

[Eric Balchunas]

Right.

[Josh Brown]

Then they also. They're active in a way. So forget the active. Passive. I used to say cheap, simple, passive. But active is more embraced. So I cut. I killed the passive. But the idea that you would want to go from like one line item to like 4,000, I get the tax advantage, but that does run out. And I think just in general, people like simplicity. I do think there's a niche purpose for them. It's not that ultra high net worth.

[Michael Batnik]

It's pretty big. The custom indexing is pretty big.

[Josh Brown]

Yeah, but what's pretty big to you?

[Eric Balchunas]

I think it's the money is not coming out of ETFs only into.

[Michael Batnik]

It's not a threat to ETF. But how big is custom index in the world? Do we know?

[Josh Brown]

I was never bearish. Totally. I was bearish versus the hype.

[Michael Batnik]

I'm going to guess. I'm going to guess it's. I'm going to close to a trillion.

[Josh Brown]

Yeah, let's say it's a trillion.

[Michael Batnik]

Right.

[Josh Brown]

So that would be like 1.2% of all fund assets.

[Michael Batnik]

Wow.

[Josh Brown]

Yeah, So I said it'd be lower than, you know, maybe 2 or 3% tops.

[Michael Batnik]

Yeah.

[Josh Brown]

So I'm even saying it will grow a little. I just find it to be like very specialty to me. It was for advisors to direct indexing. What the hell is a thing called where you write around?

[Michael Batnik]

Oh, Vespa.

[Josh Brown]

No, wait, you stand up on it.

[Michael Batnik]

Oh. What?

[Eric Balchunas]

All this is called a segue.

[Josh Brown]

Segue. So direct indexing is the segue of

[Eric Balchunas]

bullish on the segue. I was wrong.

[Josh Brown]

Yeah. It was supposed to revolutionize transportation. It's used by mall cops.

[Michael Batnik]

You were bullish on the segue.

[Eric Balchunas]

I was.

[Josh Brown]

Bill Gates was. I mean, didn't all these big.

[Eric Balchunas]

Everybody was. There were people that saw the prototype and they said this is going to force entire cities to redesign themselves. And then it didn't.

[Josh Brown]

That's direct indexing.

[Michael Batnik]

That's hilarious.

[Josh Brown]

But it is used by mall cops and city tours, so it does have some use.

[Eric Balchunas]

Okay.

[Michael Batnik]

Ben and I were segwaying around D.C. the other day. It's great. I love it.

[Eric Balchunas]

Yeah.

[Josh Brown]

No, like, like I said, it's. It exists. But the hype was way too much.

[Eric Balchunas]

All right, last. Last but not least, Jalen Brunson.

[Josh Brown]

I hate him.

[Eric Balchunas]

Under or over 26 and a half points tonight. Tomorrow night.

[Josh Brown]

Tomorrow night. Under.

[Eric Balchunas]

Well, this will be air.

[Josh Brown]

We're going to grind, you guys.

[Michael Batnik]

Are you going? Come, come, come to the game.

[Josh Brown]

You're going Paul.

[Michael Batnik]

We're going Paul Jar.

[Eric Balchunas]

Paul Geor. Sixteen and a half over. He better or else you're not even.

[Michael Batnik]

He's gonna shut the bed tomorrow. He was hot last night. At least in the first half.

[Josh Brown]

He's good because he knows he's the third fourth option. He's like, really? He. I thought he was going to Be bad. I. I underrated his ability to. He's got a smooth jump shot.

[Michael Batnik]

Very, very.

[Eric Balchunas]

Nick's minus 105. 76 is minus 115. You're a fan, so you can't.

[Michael Batnik]

That's a problem.

[Josh Brown]

Well, this.

[Eric Balchunas]

It's. It's.

[Josh Brown]

It's kind of a must win.

[Michael Batnik]

We're at home kind of.

[Josh Brown]

If we don't win this, it's probably over.

[Eric Balchunas]

Listen, it'd be.

[Josh Brown]

You hate that I say probably.

[Eric Balchunas]

You want me.

[Josh Brown]

You want me to just like die now, don't you?

[Michael Batnik]

No, I know.

[Eric Balchunas]

I'm not.

[Michael Batnik]

I'm not a khaki Knicks fan. You guys just don't have the guys. You don't have the bench. So you. You.

[Josh Brown]

You know, you have this guy McBride. He's like your seventh guy at the.

[Michael Batnik]

He'd play 25 minutes for you.

[Josh Brown]

I know, but that's what I'm saying.

[Michael Batnik]

40 minutes for you.

[Josh Brown]

This effing guy.

[Eric Balchunas]

Yeah.

[Josh Brown]

At the worst time. He hits like a shot.

[Michael Batnik]

Yeah. Deuces money.

[Eric Balchunas]

He could do that. And you have a corner three. Anytime. Anytime he does that, the crowd gets so hyped.

[Josh Brown]

So you have that extra guy, that seventh man in him. That is. We don't have. And that could be the edge. But keep in mind, I think Tyrese Maxey has underwhelmed. He's better than he's playing.

[Eric Balchunas]

Still so young. He's going to be great. He looks like he's going to be great.

[Michael Batnik]

He's great.

[Josh Brown]

He is great.

[Eric Balchunas]

They can't use him for that many minutes, though. And wonder why he can't play defense in the fourth quarter.

[Josh Brown]

Yeah.

[Michael Batnik]

I don't think the all NBA teams came out yet, but he'll be third team, I think.

[Josh Brown]

Like I said, we beat the hated Celtics.

[Michael Batnik]

You did?

[Josh Brown]

For America.

[Eric Balchunas]

Yeah.

[Josh Brown]

And we exercised the big demon.

[Eric Balchunas]

We heard all that. Eric Balcher and his ladies. Hey, Jeff.

[Josh Brown]

You feel fine? It's okay if we lose.

[Eric Balchunas]

Did you have fun on the show today?

[Josh Brown]

I did, always.

[Eric Balchunas]

All right. What's the name of your bitcoin book? Both sides of the coin.

[Josh Brown]

Yeah.

[Eric Balchunas]

All right. Are we promoting that yet or. It's too early. The pre orders.

[Josh Brown]

No, not yet.

[Eric Balchunas]

Okay. When is it coming out?

[Josh Brown]

Late October, early November.

[Eric Balchunas]

Come back and talk about it.

[Josh Brown]

I would. Yeah. Mike is in the book.

[Eric Balchunas]

Okay.

[Josh Brown]

I quoted about 40 people and Mike is. Mike's quotes are the best.

[Eric Balchunas]

Would you lose my phone number? I. I wouldn't want to be in it. I.

[Josh Brown]

Well, you were on the top of the bogle book. I. I go around the horn when it comes to your shot.

[Eric Balchunas]

I have not.

[Josh Brown]

I honestly, Barry was all over Bogle, too.

[Eric Balchunas]

I know less about bitcoin. I know absolutely nothing.

[Josh Brown]

Well, I know I said I like Michael because of the spike pointer.

[Eric Balchunas]

Well, the audience. The audience appreciates. It's unbelievable your encyclopedic knowledge about asset management ETFs. You real. I mean, it's really a pleasure to have you here. So I want to say thank you on behalf of the audience for coming by. We'll have you back this fall when the book comes out. We want to thank all of you out there in compound land, all the pounders. Thank you. Thank you guys so much for listening, for watching. If you want to leave a review on Spotify, Apple, YouTube, today would be a good day to do that. What do you guys think? John Duncan. Yeah, Perfect day. Perfect day. Go ahead and do that. Our special thanks to Eric Balcunas. Guys, we'll talk to you soon. Thanks again for watching. Thank you for listening. Good night, Sam.