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Welco nutrileons, I'm Joel Weber.
And I'm Eric Balchunis.
Excited to have a newcomer on the podcast today who's kind of a big deal. Yeah.
I mean I've known him for a while. I remember my first book, The Institutional ETF Toolbox, I interviewed him. He was one of like thirty people I interviewed. He was really good. He came from the institutional world, so he really knew that world and this sort of called them unnatural barriers for ETFs in that world. Then he joined Redholtz and he's been blogging there and he has a podcast called Animal Spirits. Ben Carlson, I know him
as a Wealth of common Sense. That's kind of his name of his brand, and he writes books and is always he's just really has great data, great takes. Classic sort of big long advisor as I call them, meaning that unlike the big short people who are like out there looking for tops and trying to be cool, like Christian Bale, these guys do the opposite. They're like, don't worry about it, so they invested, go along, and their their clients get rich.
Okay, So Ben Carlson, who's the director of institutional asset Management at rich Holds Level Management, this time on Trillions riskin Reward. Ben, Welcome to Trillions.
Hey guys, glad to be here. Eric.
It's funny you and I talked a number of years ago and you said, Hey, I'm writing this book and I want I might want to call it the Big Long as opposed to the Big Short. And I liked that idea, and actually I was going to ask you first, but I talked to my publisher and I said, what if we call this the Big Long? And they said it's a little too cute. It's a great name, but it's a little too cute. So we said a lot of risk reward instead.
Riskin Reward though kind of an obvious title. What took so long for somebody else to claim this title?
I know, right, Yeah, that's my whole thing.
It's just it's attached at the hip, like you don't get one without the other, and that's kind of the point of it.
What made you decide this was the moment to do this book?
I mean, I think this is kind of what I've been thinking about and writing about in my blog for the past whatever twelve years I've been doing. It is just I've been writing about the idea of long term investing, and I constantly get pushback from people. There are certain people who just can't wrap their head around this idea. And I get because some people just don't have the personality for it. And I think a lot of investing is like your own emotional makeup and personality, and some
people just can't wrap their head around it. So like, hey, but what about what happened in Japan and what about the nineteen seventies inflation and what about this crash? And what about this bad period? And people are constantly giving me the like the exceptions to the rules and sod.
Yeah.
So I said, fine, I will do this myself. I'll play Devil's advocate. I'll show all the bad stuff that can and will happen, and then I'm still going to show you why it still makes sense to have a long term mindset.
By the way, the book that we were in Arizona at the pre future Proof conference called Wealth Stack that they have and this book idea big long I was going to try to follow these four people or five advisors, just like Michael Lewis did with the big Short and just different kind of younger, up and coming advisors who were the complete opposite of these big short people. They saw something no one else saw, which is just don't
do anything. I mean, you could say a lot of Vanguardians feel that way, but I just thought it was cool idea. That book turned into the Bogl effect. Sometimes I'll have an idea and it'll morph into something else. But I do have a chapter where I reference Big Long advisors in the Bogle effect. But I think Big Long would have been fine. But risk and reward is good. It's very clear what it is, and I think you do a good job one of the things. So let me just jump into a couple of things that I
was interested in when I read the book. What would happen if you only purchase stocks at the absolute peak of the market, which is a whole other thing because people are like, oh my god, it's so overvaluated. That is a way to keep people from actually hitting the buy button. It's like, oh, I'm gonna wait, I'm gonna wait, I'm gonna wait. Well, what if you just bought at the worst possible times? You study this, the result be.
Yeah, It's funny because I started my blog in twenty thirteen, and that's right when we finally hit new all time highs again after the Great Financial Crisis. And at the time, everyone goes, oh, no, we hit an all time high again. Remember what happened the last time we hit all time highs? The market crash, And people, even back then, this is twelve thirteen years ago, are like, there's no way this is going to last. It's it's going to fall off a cliff. And I said, okay, fine, let's pretend that
does happen. You put your money into work right now, the market falls off a cliff, what happens? And so I looked at this, this theoretical guy, Bob, and he only bought over like his forty year period of investing. He bought at before the nineteen seventy three crash, he bought before the nineteen eighty seven crash.
He bo Yeah, he Bob.
He bought before the dot com crash, and he bought before the Great financial crash. And I said, but what if he just kept his money in He built up cash, he put it to work at these like four worst possible times ever, and he kept his money invested in the market. He didn't touch it after that, and the results were actually pretty good. Nick Madjuli, our numbers guy ran the IRR for me, and I think it was it was still like eight percent per year or something.
Was crazy because he said, I cash the whole time. And I said, like, even though he was the worst investor ever, the world's worst market timer, he became a millionaire and that to this day. I wrote that in twenty fourteen. It's my most popular blog post of all time. People still read it every year, but I also get a ton of pushback on it, and so that was
again the idea I wanted to update that study. I wanted to write about that for the book in just why I think time horizon is by far the most important thing for investors to define when they invest in anything, and.
Tell us more about what that time horizon looks like. When you updated it Bob's time horizon.
Yeah, it looked even better. But the funny thing is I also did some other variations of this, and I said, well, what if you just bought at like the lows, you built up your cash and at the lows of the crash you bought, you still did better just dollar cost averaging in so obviously dollar cost averaging works better than buying at peaks, of course, but if you just built up your cash for years and years and years and just put it to work at the bottom of the
Great Financial Crisis or the bottom of the dot com boom, you know, after a burst, you would have still done better just dollar cost averaging. And that's the point is like, no one has the bad no one has bad enough luck to only invest in the peak, but no one is good enough to invest at the bottom of these things and time it perfectly. And if you just take that element out of it, the idea that like you're gonna wait for the dust to settle, or you're gonna
time it perfectly. That's the idea that if you just like put in money on a regular basis, which is how most people invest anyway, you're gonna do fine.
Yeah, there's a great stat and hear about the sixty forty portfolio, right, which a lot of ETF investors use. Historically, if you held a sixty forty portfolio for one month, there's a sixty four chance, sixty four percent chance that you would have had a positive return. But if you held it for ten years you were up one hundred percent of the time, and then he has these charts twenty years one hundred percent, five years ninety five percent.
I mean, the odds are just so good. Do you find that people that are your clients and out there investors? Obviously with these kind of returns it's easier. But are they generally just constantly nervous or are they getting good at just like not even paying attention to their own doubts or the sort of doomers out there.
I mean, there's definitely still people who are nervous all the time, but I think that investors have absolutely become better at this stuff. I think the last twenty years people have had it beaten into their heads. And Eric he wrote about the bugle head stuff, right. I think people have learned for years and years people said, listen, don't run out of the store when the stock market goes on sale, right, And we've seen that with the flows.
Right.
Anytime there's been a bear market this decade, the flows increase and people invest, and we get that from clients too. But I think on the whole, retail and DIY investors are so much better behaved than they were in the past.
Yeah, and I want to just jump in here one thing in the Bogle effect that I pointed out, and I want to get your take on it. I know your advisors, and I give advisors a lot of credit. It is a very useful job, in my opinion, because people out there like this is like when I go to the Pep Boys, I don't know crap about the car, and I don't want to know any thing about it, and I want to trust somebody who like tells me, do I really need new break pads?
You know?
And an advisor does that with your portfolio, so there's always going to be a need for that. However, I do think the advisor's job was made a lot easier that Vanguard got an index fund down to about three basis points, because you can marry that thing and even with the markets it going down, at least you're in the what you feel is the best deal possible, like
you're off the market. Back in the eighties and nineties, people would date I think five star managers, and I think just creating a marriable product I think is half the battle.
Thoughts, Yes, it's way easier to rebalance into the pain when you know what you're investing in, Like you know that the whole stock market is not going to go to zero. It's you know, the thing I like to say about index funds is that, like, you never have an index fund that that decides to take a step back because it wants to spend more time with its family. That happens to heads for the managers all the time. Right, your index fund is not going to go through a divorce.
And so I think that idea and that's why it instant sho't have such a hard time you talk about my nonprofit world, Eric, Whenever there would be an actively managed fund, it could be a hedge fund, could be an actively managed stock picker. Whenever they would get hit a rough patch, it was always really especially if they're discretionary. How do we know whether we should lean into the
pain or whether we should give up on them. It's way easier to lean into the pain for a rules based strategy like an index fund or some sort of ETF like that, because you know it's going to come back eventually.
These things are cyclical.
You know, a lot of what you laid out here is about how behavior is the more important part than being brilliant and obviously that comes through in a lot of your writing too. So when you've thought about this and brought it to the book, what is the great psychological mistake that investors keep repeating?
I think that there isn't one for every person. I think everyone has their own blind spots, and it's about understanding, like what's the lesser version of you? Because everyone has the regrets, right. The Bezos talks about regret minimization, like what are you going to regret more being too con servative in your portfolio and missing out on gains or
being way too aggressive and taking part in losses. And there is no right answer if I think it's about knowing yourself in like your own emotional makeup.
And I used to be this.
Diehard person who thought everyone should be a Jack Boga decightful put all your money into index funds and just lose the password, right. But some people really just don't have the ability to do that. And I think it's fine as long as you can admit that. Some people say, listen, I know I'm young and I should have all my money in stocks, but I just can't do that because it won't allow me to sleep at night. So I keep twenty percent of my portfolio and T bills or something.
And I think that's perfectly fine as long as you understand the trade offs that you're taking.
Let's talk about that a little bit, because as the market keeps going up and up, and it is obviously historically stretched valuation wise, and I think what I find useful is and I want to get your take on diversification instead of like calling a top or shorting the market, which I feel like is what some people out there are either advising or doing themselves. It must suck to root against you as stocks like because they always prove you wrong. And why do you want to root against
like companies doing well? And it just seems like a really rough way to live. These big short people want to bees whereas okay, you're nervous about it, why don't you just put more money in T bills or a goal or real estate, Like, just take the new money and put it into something that's not the stocks. That way, you can still root for your stocks, but you're adding
to things that help you sleep at night. With that said, how do you know consider that and what else can you diversify into besides sponds?
Yeah, I'm a big preacher of the fact that there is no free lunch in investing. But diversification's pretty darn close, right in terms of a risk management tool. And so I think that you diversify not only by asset class. So that's stocks, bonds, cash for some people, that's now alternatives, and there's a lot of different things that that could be. But then within those those buckets, I think you have to diversify by you know, geography and market cap and
then strategy in a lot of cases. And I think what a lot of people learned. Bonds are the most boring part of the market obviously, but in twenty twenty two, when inflation went sky high and interest rates went from zero to five percent what felt like overnight, and people in there BN d ETF go, wait a minute, my bonds just fell twenty percent.
What the heck? This is supposed to be the safe part of my portfolio.
So now I think people have learned, oh, maybe I need to be diversified in my bonds too. So I need to have some T bills to account for the fact that rates might rise, and I need to account for that I might need tips to account for inflation, and so I think thinking through these things. It's not just like a one decision thing anymore. You might have
to have further diversification. The hard part is you're always apologizing about something in your portfolio, and you have to be That's the other trade off is you have to be like, Okay, I know that these two pieces are going to fall and do poorly and they're not going to keep up when the rest of my portfolio is doing good.
But you have to have it in the back of your mind.
That each part of your portfolio has a specific job for a certain environment.
Now, what about buffer ETFs. I thought what you just mentioned in twenty twenty two, when stocks and bonds both went down and the sixty to forty went down, I think especially boomers older investors freaked out that had never seen that before. Buffer ETFs are now close to one hundred billion dollars in assets. They came out of nowhere. These are ETFs that basically use options to sort of like lock in a type of downside. The cost is you give up some upside, so it's options to use
a more sculpted outcome. They're very popular. I get it. To me, it's like taking a xanax kind.
Of you know, fluff your pillow, help you sleep at night.
Yeah, I mean, or pop a pill. I equate them to XANX because they do curing anxiety, but you give up a lot. And the alternative guys they're always like, oh, these buffers are bs.
You got it.
You should come to alternatives. But the alternatives are so expensive and are they even hedged. It's tough to evaluate. I'll turn to funds in general. What's your take on that? If somebody were looking for something other than the sixty forty because of what happened in twenty twenty two.
We had Bruce Bond on our podcast right when the buffery TEFs came out and they were the first ones to do it right, and Michael and I my coast looked at each other afterwards and said, these things are going to be massive. Just the ideal a loone because it's a behavioral thing, and you're right. The quantitative guys hate these things because they go, why don't you just
put your money in a seventy thirty portfolio? You probably get the same thing, right, but it's the behavioral piece where you can have some sort of certainty in terms of, like I'm going to have bookended.
Right.
Sure my upside is capped, but so is my downside. And I know what range I'm generally going to be in, and I think one of the areas, especially when rates were so low for so long, people wanted to find a middle ground, like I know I have stocks here and I have bonds or cash here. That's like my barbell, Like what do I have in the middle? And the
middle thing is the hardest for people to find. Advisors have been looking at forever, and I think people are looking at as that middle ground in terms of yes, I'm giving something up, but especially for like retirees who are just so worried about listen, They've got they have more money in their portfolios than they ever thought possible
because this bowl market has been raging so long. So it's kind of like how do I protect some of those gains and how how do I avoid huge losses while also maybe giving myself a chance to earn a little more than I can get in casher bonds.
Ben, I want to bring it back to risk and reward. You have a lot of charts and infographics, highly visual that we might not be able to show on the podcast, but walk us through one of your favorites.
Yeah, I think I counted.
I think I did fifty two charts and tables for the book, so I'm very data heavy. I like the stories, but I like the numbers too. Okay, here's one of my favorite ones. If you look at the S and P. Five hundred and this book covers like the last hundred years or so of markets and all the bad stuff that can happen. The worst starting point in US stock market history was September nineteen twenty nine, right the stock market fell eighty six percent over the next three years
in the Great Depression. If you would have invested in September nineteen twenty nine, in held your stocks, reinvested the dividends for thirty years, you would have had a total return of eight hundred and fifty percent seven point eight percent annual return. And that's the worst thirty year return you could have gotten in the S and P f F pick any month over the past one hundred years. The worst return over thirty years you've got was roughly
eight percent per year. It's just mind boggling. And the funny thing is that the best return you got would have been starting in nineteen thirty two at the bottom, which is like fifteen percent per year. So that's like the time rising thing that Oh my gosh, that's inclusive of an eighty six percent crash and you still earned eight hundred and fifty percent.
That's the worst thirty year return in this period.
Let me ask about that, because you're kind of talking about the US stock market, which I think is the eighth wonder of the world. That's another book idea I had. I wanted to write about the Nasdaq one hundred, that frickin' index is. I mean, it's like, how on earth is it so good? But then I wanted to dive in why the US is so different. I think our stock market is special because you have now show Japan, which
I get on Twitter a lot too. It's like you put something that's like, now do Japan, Well, Japan had like a long dead period, but other countries have too, and now International had a good year, but now the flows are coming right back to the US because the US is now roaring again. Just seems like International has these like mean reversion headfakes the last six months or a year, but for the most part, the US is just on another level. There's more trillion dollar companies here.
Obviously there's more billion dollar companies. The environment here is very much about taking risk. The people here are from a lot of different backgrounds. People come here for this capitalist economy. I mean, is America just special and we should just acknowledge that and keep that as the majority of the portfolio or could the things you described in the book happen in another country for the next fifty years.
Yeah, I do think there is something to like our appetite for risk in the dynamism we have here. It's funny because I write of the book, Japan was arguably the biggest financial asset bubble of all time, and they don't That's like the only one they've ever had in the nineteen eighties. Like we have a bubble once every seven years here. It seems like, you know, we just we can't help ourselves. It's like in our DNA, for some reason, we take risk and that risk gets amplified.
But yeah, I think that Japan situation is a really good precursor for the US. It's funny because some people say, like, why would I have my money in anything else besides the S and P or the NADZEK one hundred like these are obviously the biggest best companies in the world, and other people say, oh my gosh, the concentration is too much. I needed diversify, and I think Japan is a great illustration of and this is way to the extremes, but Japan was forty five percent of the US stock
market in nineteen eighty nine. It was bigger than the United States. And even if you take the whole world, so you invested in the entire world, since then, you were up like nine percent per year. And that's that's from Japan going from forty five percent of the index to five percent. So what happened? The other countries brought it up right? They The US of course was part of it. All these other countries did really well. I
think a good baseline for most investors. Because people ask me this all the time, do we need international Bogo says, you know, forty percent of revenues and s top five hundred companies come from overseas. Kind I've heard a lot of these stats. The US currently makes up like sixty
to sixty five percent of the global market cap. I think that's a pretty good baseline if you wanted to start and you say, Okay, if I'm super worried about concentration in the US, maybe I do a little more international. If I'm really a big US person, maybe I do less international. I think that's a good starting point, is like the global market cap. But I do think that, you know, people around the world wake up just like us and want to get better their station in life,
and I do. My contention is AI is going to be the thing that really flattens information. You're already seeing Eric, you're following this like South Korea, the ETF is going nuts. A lot of these companies in China are neck and neck with us on AI. I do think AI is the thing that that could potentially just you know, make it easier for people anywhere around the globe to start a business, to have an idea. And I don't think that it's going to be just like contained within our
borders anymore. That's kind of my contention. And again it's like a risk if you would have done that for the past fifteen years invested internationally.
You're going, why would I do that? So that's another trade off. Thing.
I love that you brought up hot sauce. You don't call it hot sauce. But you talk about the fun accounts, carve out five to ten percent of your portfolio as a behavioral release, valve and go nuts. We have noticed that the flow show this, and I would say, like a good chunk of new ETFs are hot sauce. They're aimed at this real small part of the portfolio. So it seems like people are like, Okay, I'm gonna get
married to cheap beata, whether it's bonds and stocks. I'm paying five BIPs, but I got it's going to be really boring to watch this grow for forty years. It's like watching a tree grow in your backyard. I want to have a little fun and take part in some speculative investments while I wait. And you've got a lot of people serving this up. I would say concentrated stock pickers, thematic ETFs, leverage funds, crypto, there's a majority of things
prediction markets could be in this. You say it's actually potentially a behavioral hacket, actually could help behavioral wise as an advisor, how have you seen people do that? Like are they able to do the five temper sent and quarantine it to that or does it drive them crazy? Like how does that hot sauce part of the account help or hurt people as you see it.
Yes, I think people like to have some limitations, and so I think having a ceiling on it and not just saying like it's a wild West, go nuts with whatever you like if you as long as you have that limitation and you box it in. I think for a lot of people it scratches an itch and it allows them to leave the rest of the portfolio alone. And for some like we have some clients who for them it's not a stock picking portfolio, but it's hey, listen,
I do private investments among friends and stuff. Help me, Like, I want to say no to more people, but I can't. So he said, okay, put.
A dollar amount on it. Every year.
Here's the dollar amount you can say yes to these private startup investments. And then when the bucket is filled, then you're done. And they're like, great, that's the perfect way to do it, because I can finally say no to these people and say, hey, listen, this is the allocation I have to these investments.
Once it's gone, it's gone. And I think that's the.
Same thing with these And the funny thing is is that if you have five to ten percent of your portfolio, and like your robin Hood account, you're trading and you're buying zero day options and leverage funds, You're probably gonna like ninety percent of your attention is going to be on that five or ten percent, Like you're going to be checking it constantly, And I think it's a good It's a good reminder like if you had all of your portfolio doing this speculative stuff, you'd be a wreck
all the time, right, because you're constantly checking it and looking at it and thinking, you know, like double you know, second guessing yourself. And that's why I think like sizing it correctly is the right move.
Barry Holds calls that a cowboy account. What's your favorite way to label that? Behavioral hack?
Oh? That's good.
Yeah, I call it the fun account, which barriers is probably better better than mine.
Okay, So everything that you've laid out here, if I was looking back on my investing journey, this would have been great to have heard when I was starting out, Right, what's the takeaway that you want to give to those people who are just beginning there investing journey?
Yeah, I think that risk means different things to different people.
At different stages of life.
So your your risk as a retiree with a mature portfolio for like bear markets and crashes, is far different than someone who's young, when human capital is their biggest asset, right, And the biggest asset for people who are retired is their financial assets. It's a house in their portfolio. For young people, it's human capital, and so a bear market is an opportunity for young people, whereas it's a big
risk for people who are older. And I think that's the idea, is trying to reframe what risk means to you at different stages of your investing life cycle.
Okay, Ben, this may be the first package trade. What came first, the book or the ETF?
I tell you what this is like the busiest six months of my life because I was getting a book to the finish line and an ETF for the finish line, and they came out.
Within two days of each others.
So my book was released on May twelfth and ETF came out two days later on May fourteenth.
I did not plan at.
It just sort of worked out might be the future here.
And this CTF is called the Goaltender, which GTND is the ticker now I immediately thought of like minute bowl, blocking a shot when it was on its downward arc, and that's called goaltending. But this is about a soccer goalie, is that right?
Yeah, that's the metaphor I think is okay, yeah, Josh Optimus when I came up with it.
And it's funny because it pirs nicely with the book because my whole idea about behavior is that some people need a release valve.
Okay.
And so for our wealth management practice, you know, ten or eleven years, I guess, we started a separately managed account tactical strategy in twenty fourteen, and the idea was like, if we're going to put client, there's clients who just can't sleep at night because they worry about what's going to happen if there's a forty or fifth percent crash.
And I lived through that in the Great Financial Crisis, and I lived through that in the dot com bubble, and yes, I survived those and I held through but man, it was terrible. I need something that will see me through this. And for most people, the you know, the answer will be, well, put your money into bonds or cash, and some people say, but I don't want bonds and because that's lower perspective returns, So what else do you got it for me? And so we just decided to
create a tactical strategy. And coming out of the Great Franship Crisis, all these tactical strategies were downside risk, right, we're going to hedge downside volatility. But then none of them allowed you to invest in the upside too, And so we said, if we're going to do a tactical strategy, we wanted to be able to protect the severe crashes, you know, these thirty forty fifty percent, you know, just death spirals, but.
We want to take part in the bull market too. So how do we do that.
We look at all these different things, earnings and macroeconomic variables, We look at every single variable we could find. But if we're protecting against a short intermediate term, what does all that lead up to? It's just price, right, And so that's it. That's where trend filing came from. And so we've been doing this strategy for clients for years and we put ten or twenty percent of their portfolio
in a trend following strategy, completely rules based. You know, we're following like moving averages and then if Volatiley picks up and a stock market breaks through those moving averages, we go more defensive. And what we found is that it's a great way for a lot of clients to again leave the rest of their portfolio alone, because they know this piece is going to be, you know, their potential savior.
It's like a chameleon. It's going to move into whatever. Yeah, okay, interesting, And that glt n D is the ticker, no gt and gt n D and so what.
Are the holdings been? Yeah, how do you manage to do all that?
Yeah, so we've been we've been doing this for years. We just it's it's all US large cap stocks. If it's risk on, and we have a number of different signals, we look at it. And the reason that we decided to go from a separate managed to count to ETF is because we would have clients come to us and this is in taxable money and they would say, Okay, I was just in a bowl market for three years. You gave me great gains in this. Now we get a signal to sell and you're going to hit me
with a tax bill. No, just keep it long only. And so we said, well, geez, this it defeats the purpose of this, and how do you get around that in ETF? Right, because you can do the trades in ETF by going from risk on to risk off. Because a lot of these trend folling strategies, because the market moves so fast these days, you could get a down ten percent month and guess what, You hit your triggers and you sell, but then the market goes back up the next ten percent and you get right back in.
So a lot of people are going, wait, you're going to sell lock in taxes and then buy right back in because you get these whipsaws. And that's like the downside of trend filing. That's like the insurance premium you pay that sometimes you get a whipsaw. You know, the stock market doesn't always fall thirty percent just because of fall ten percent. So the ETF structure is perfect for
something like this. So we said, we kept having to put all of our client assets into tax deferred retirement accounts, but people with just tax bill accounts were kind of like, hey, we're not even going to give you this because it's not tax efficient. The ETF structure completely fixes that problem.
It's very interesting. This is so far in the future, Like, this is futuristic stuff. You're for an advisor.
Packaging a book and an ETF.
Yeah, I mean just just the fact that they're on this behavioral stuff writing books about it. Ben, I've traveled a lot throughout the world over the last two years for especially our e you have some depth event has grown, and I go to these different countries and there aren't people like you there. They're really not. They're harder to find here in America. Seventy five percent of all the assets in the advisory world are fee based. That means
you get a percent of the client assets. Well, of course you're gonna try to pick cheap, good stuff because it's coming out of your money. Most people get paid by the mutual funds. Still, that number will be one percent some places or two And I'm like, you guys need more rid Holtz type people. If because ETF growth is going to be intercorrelated with the growth of fee
based advisors, do you guys plan to expand overseas? Why do you think that's so difficult for such an obvious idea not to take realt quicker internationally.
It's funny.
I've done a few speeches overseas, Like I've been to Italy a few times. They brought me to Canada some of these places and they tell me, like, listen, we're probably like seven to ten years behind the US in terms of advisors, like we're trying to catch up, and so they bring me over there to kind of educate
them and the stuff that we've learned. One of the reasons we haven't gone over ses yet, especially, it's because so much of the stuff we do is financial planning wise, like the tax laws are all different, and so we would really need some boots on the ground to better understand that. But they the good news is a lot of these places are they see what's happened here and they're trying to make it.
But it's funny. Like I went to Italy.
My first speech I did there was in like twenty fifteen, and they were like, listen, for years, all the wealth in this country has been in government bonds and real estate. We're trying to explain the stock market to these people, right, So I give them the Bob Strategy about the world's worst market timer. So they're they're I think they are finally getting around to like okay, index funds and follow the market and beta like they're getting there, But you're right,
they're they're far behind. And I think hopefully the information age is bringing them into this faster, but you're right, the rest of the world is kind of far behind us in the RA space.
Why are so many advisors getting into the ETF business and is there more to come?
Yeah, So we worked with ETF Architect, which is Wes Gray's firm that did this, and they do it for a lot of advisors and we ask them about this and a lot of it is like separate manage accounts and just the tax efficiency of the ETF structure allowing those trades within the ETF to not give someone a tax bill.
It's funny.
I think we've shifted in this in the industry. People wanting alpha from their investments, right, like we're going to outperform the market. And I think the indexing wave kind of people kind of finally figured it out like, Okay, meeting the market is really hard, We're just going to
stop trying. But now the new thing is tax alpha, right, and people are way aware that it's not my gross returns that matter, it's my net of everything, net of expenses, net of taxes, and people are coming to us and saying, like, how can you give us some more tax efficient framework? Because we're sitting in all these gains. We want to defer as long as we can, and this structure is perfect for that. So there's tons of advisors who're going through this process. Then you have things like the three
fifty one exchange. I mean, we're getting into the nitty gritty here, but you know, you can defer taxes longer you can defer the taxes, the greater your wealth can grow.
People love that kind of stuff.
That's what clients are looking for in terms of solutions these days.
Final question for you, Ben, what is your favorite ETF ticker other than your own?
Oh man, that's a great question because people sit on these things right. It's like a it's a game and you hear a new one and you go, oh, that's a great ticker. Where did you Where did you find that? I always thought the cow ticker was pretty good. What What are some of your guys's favorites.
I mean, moo gets brought up a lot that's similar to cow. People love animals. Yeah, hack is one of my favorites.
I like verbs Eric's thesis if it's both noun and verb, yeah, it's a yeah.
If it's a noun and a verb and a word, ye's it's.
A sweet spot. Yeah.
Oh yeah, all.
Right, Ben Carlson, congrats on two launches, Risk and Roar the Book and Goaltender the ETF. Thanks for joining us on Trades. Thanks guy, Thanks for listening to Trades. Until next time. You can find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, or wherever else you like to listen. We'd love to hear from him. Hit us up on Social Trillions, just produced by Magnus Hendrickson and Kishov Pundia. Bye