The Radiohead Guide to Good ETF Investing

and simple. And so we've used many metaphors, the food store, the car. This one's a little closer to home for me personally, and it's so good that we had to consult our legal department first and we got their blessing. And if that doesn't wet your appetite, this will, which is this episode is going to be all about Radiohead and the ETF. So why Radiohead. There's a couple band that I hear and sometimes get ideas from for some reason, both Billy Joel and Radiohead. Their their song titles speak

to good financial advice, but Radiohead even more. And you know, you look at back in the day when people found hidden messages and led Zeppelin in the Beatles. I think it was more like satanic messages. I swear to you I find hidden financial advice messages in Radiohead lyrics. It is I probably just listened to too much Radiohead and I'm just like, it's too much. Do you think about two things basically Radiohead and ETF so, but when it

start troubling it out, there's something there. Well, joining us this episode will also be Rachel Evans, reporter with Bloomberg News who covers et F s and Rachel is a bit of an ETF head and Radiohead as well. So this one's gonna get. We're gonna get. This is gonna just be awesome. This could be too much, It could be too much, but bug of your seat belts. This episode Radiohead teaches you how to be a good et F investor. Hi, Rachel, Hey Joel, how's again? Good? Thanks

for coming on the shol delighted. So we know that aracle of the radiohead and we're going to get there, but I want to hear from you. What was your first Radiohead experience? So Radiohead for me began in my teen years growing up just outside Oxford, which is obviously where Radiohead is from, so you're like literally, you're like from there on the doorstep, on the doorstep. So my first experience with Radiohead live was going to see them

when I was fifteen years old. They did a homecoming gig in south Park, just outside Oxford, UM, and they had bands all afternoon and Radiohead was that the headliner. At the end of the night. Was one of the most amazing experiences of my life. It started to rain as they sort of started playing their final set. Everybody was kind of dancing around in the mud. It was fantastic, and their last song of the night was Creep, which they said they'd never play again. It was incredible. And

then your dad picked you up into exactly that. My dad came pick me up, picked me up with my my three other friends who were all a bit underage, drinking around then busted, busted, just drinking. Eric, your first Radiohead experience mine, and this is gonna age me. I'm not gonna say how old I was. Well, I guess I'm it was in college. We're going to find out, you get it, figure it out. But I was in college and Radiohead played at the Rutgrouds when it went

to Rutgers. They played at the Student Center. This is off of their first album, Pablo Honey, and they opened

for Belly. I don't know if you remember Belly. They were pretty good band, but they're you know, long forgotten, but they opened that that show, and uh, you know, I went for both really But then I saw them again on the Bench tour in San Francisco when I went out there on a bit of an excursion in life, and I saw them in a really small bar about three four inndred people and that was the Bens And

that that's when I got really hooked in. And I saw him a couple of times since then on different tours, and I saw them around the time Rachel saw them. That was the sort of post okay computer just pre kid A. That was their project. That was the best Radiohead I think. And so for both of you, what makes Radiohead so special to me? It was the fact that they kind of spoke to my inner ANX at

a time. You know, when you're you're struggling with all these feelings and you can't really express them because you know you don't have the emotional language to do so a Radiohead kind of came in there at that point, and they had this kind of viscerality with their lyrics. They were able to sort of describe feeling sort of blue and this world that you didn't really understand, and it's kind of like almost post apocalyptic imagery at times. Yet at the same time I found them very uplifting.

There was something so cathartic about actually sticking on the bends or ok computer even kid a turning it up, you know, whether you're in your car or in your in your bedroom, and then sort of listening to this music kind of take you to a place where actually things were better. Yeah, it actually speaks to me because I first listen to Radiohead in nineteen seven. I guess

somebody passed me headphones, which is a saying something. They were like literally over your ear headphones in a study hall and played the bins and big plastic cres came on, and I was like, I've never heard anything like this before, and it just really took me away. Also, they slip

in weird chords. His falsetto voice, which I think he got from Jeff Buckley, but to apply that to the sort of uh sound of the times with some a lot of minor chords I just worked well, and I agree it's it makes you feel a little less alone in the world, but at the same time it's uplifting, and it's also very artistic. The the stuff he describes and the way it's the sound you get it's like a movie in your head. It's very very visual, and I just all aspects of it are great. So let's

bring it back to the E. T. F. Rachel. When we came to you and said we're going to do this episode and kind of told you about the idea of the hidden financial meetings within the lyrics, had you ever thought about that before? I wouldn't say that I had necessarily so, so for me, the thing with radio Head that that has always been an interest is the

very anti capitalist in nature. Like when you've listened to their lyrics and when you think about kind of your the imagery that they use along with their albums, a lot of it is quite anti business. It's questioning the

power that corporations have over us. It's looking at impact on climate chain your average investor, right, well, yeah, so so I was like, oh, interesting, But then like I started listening to the lyrics and that's what kind of really got me because actually, one of the great things about Radiohead that I've always loved about them is that whilst their imagery is very dense and you can interpret it,

it in many different ways. And one of those ways is indeed to think about it from the perspective of advice for investing. And I think this speaks to why it works is because they you know, they went to art school in Oxford. They were going to be painters, but they were like, we can't make a living there,

so we'll get together and do music. And so their stuff is abstract and just like looking at a painting that is not crystal clear what it is, people can draw different things, and I think that speaks to not that they're writing about investing, but that you could interpret many things from their lyrics. Hey droll here, Now that I'm the editor of Bloomberg Business Week, I pulled a few strings for our loyal podcast listeners. Go to business Week mag dot com slash trillions right now for a

thirty day free trial. If you like what we're doing here on trillions, you're gonna love the stories that we published in Bloomberg Business Week. Here's that special offer one more time. Go to business Week mag dot com slash trillions for your free thirty day trial. Thanks. Okay, so let's just go straight into it because we get to listen to some Radiohead Okay, Rachel, what song are we gonna listen to? First? We've got anyone can play guitar

from Radioheads, Pablo Honey. Okay, so why did you pick that song? So, I mean, this song really shows you kind of like anyone can play guitar. You can pick up you know, your acts, and off you go. You're off to the races. You can be in a band. Right, That's what Radiohead was kind of saying with us. But the same really applies for for ETFs. You can, you know, go on your your brokerage account, you can go to

your advisor. Anyone can buy an ECF. They are very very accessible products there at fees that anybody can really afford um and you can kind of trade in and out of them when you want to. Anyone can do it, and there are several combinations. Just like chords, there's different ways to do it. And it's like you said, the guitar is interesting. It is a really accessible tool for that has really allowed a lot of people who wouldn't

otherwise be in music to do music. The thing that I understands out to me is that it's really not that complicated, right, and that's sort of like the simplicity of this is sort of ultimately an interesting place to start with. Okay, so so what's next? So next up, we have everything in its right place from the semin allowed kidd ap, I can actually see Tom York singing into a microphone right there. How about the leap from

anyone who can play guitar to that. Yeah, that's it's only ten years a right, A little bit jarring perhaps, but it's like and so, Eric, what do you like about that song? Well, first of all, the sound is just you know, you're just it stops you. But the reason I thought this was a good one to pick was this is ascid allocation in a nutshell, and that

also is part of the accessibility. You know, you have stocks, you have bonds, it's not that difficult and it's like a pie, right, So what percentages do you want of each as a class? You plug in the E T F and that's ultimately everything in its right place. So I think it speaks to acid allocation, and they've done studies that your decision on what percentages to put in those asset classes, it has much more determinant on your returns than the securities you select within the class. So

it's huge, right, Good advice from Tom York. Excellent advice from Tom York. Next one up, we've got air bag from Okay computer. What are the lyrics that are that resonate with you? So, so Tom talks about Tom York obviously to his friend's Rady heads Ley singer Tom Tommy boy, Yeah, Tommy why as we call him in my household. So he talked about how last night and air bag saved

my life. And he's talking about this jack knife juggernaut to where which you know, assumably some kind of vehicle who's which is sort of turned over on the road, and how he's kind of born again and saved where his air back. Now this applies to e t S because to Eric's point about asset allocation, you need to be thinking about your portfolio in terms of risk and reward. Right, you don't want to be all in in risky e t f s. You want to have some kind of

air bag there that's a protective element. So that might be looking at kind of a treasury z t F for example, a way to kind of like put your money to work while still having something that's that's pretty safe. The other thing I like about this is that we're jumping around in time right, Like we're covering so many different albums here. Yeah, we're not going in chronic That's that's what makes it cool. This is not chronological order.

It's financial advice order. It's been like high fideality, right, you see the financial were arranging his CDs by like order of his life. So this grouping though was loosely this is not that complicated, right, pretty much what's our next group? And going to be good behavior? So good behavior? Why is that relevant topic in this conversation? That was half of our episode with betterment behavior? If you behave badly, it doesn't matter that you save all this money on

lower costs or you get less capital gains. You can really destroy a lot of gains if you make bad decisions and market time and so behavior is really a huge deal, which is nique aspect of the E t F because there's part of it that also sort of can encourage bad behavior because it's so easy to use exactly this is more applicable to ets than any other type of structure because they are so convenient you can

get in and out whenever you want. So behavior is even more important with E t S. Okay, So, first song in our good behavior section optimistic from kid As did you pick this one or didn't Rachel pick this one? I did because I'm on Twitter a lot. And there's these people called perma bears, and they get a lot of airtime on television because calling the next sort of crisis. Remember, Michael has made all the people who called the financial

crisis into like superheroes. So everybody's trying to call the next downturn. And ultimately, if you listen to them, especially in the last eight years, you would have definitely done worse than just doing nothing. And so optimism is huge, and I find that the best investors are the most optimistic, the ones who stick to their plan, believe in it, and get rid of the noise. Next up next, Little

by a Little from the King of Limb. It's one of them more recent albums, What did So This is kind of a parable in like how to think about your E T F returns? Now you don't want to think about you know, sort of getting necessarily in a year in terms of your returns. You need to be thinking about this slowly compounding um amounts of money kind of coming into your ETFs, gradually going up and gradually returning you the big but whatever the index gives you, right,

that's what That's what ETF does. Well, that's what traditional passive index tracking ETF does. So you don't want to be thinking about like that. This is not about, you know,

getting rich quick. This is about investing for the long term and little by little that should pay off, basically the opposite of bitcoin investors, right, Okay, uh what I What I also liked about that one was like, that's the most recent Radiohead song I think on our list, right, Yeah, this was from King of Limbs, which was I wouldn't put this in there like top Echelon. I put them in the middle level in terms of how good they were, But there's some gems on their lotus. Flower in particular

is as good as anything they've done. Which also leaves me a question that I haven't asked either of you yet. How many times do you think you've seen radio Head live? Probably eight over or under under. Sadly, I'm at three. Though, I do have with me today my T shirt from my first ever gig, which I'm going to actually, and I'm a bit hot already. This is great. I love

I love, Actually I have the same. I'm like, whatever, Yes, this is this is It's play on that monkey one where the the where they have the no eyes, no mouth, right, except it's like modern day gen X. You don't have to cover your mouth. I got it. You have to stalk talking to the microphone. Well, I know I had to explain things to you, so I was given the visuals to help help it go fastest. So how many concert t shirts do you still have? I probably have.

I probably have two. Over the years, I probably bought four. But I have a framed poster in my office area that I really kept. But a lot of a lot of the stuff I bought is kind of come and go. You've liked pretty ahead for such a long time. I have to ask, do you still have a cassette? No? But I have CDs. Yeah, I have a couple of CDs.

And I thought, yeah, I have some cassettes. Used to make mix tapes for the car, and then inflicted on my family so that we would all get in there and you know, i'd have like a little remix from the Bend. How did you How did your parents feel about your radiohead? So, my dad's pretty cool. My dad was all right. He was obviously came picked me up from the concert, so he was. He was with it. My mom not such a big fan. My brother, yeah,

it wasn't into it. I think he was more kind of getting into sort of the pop things at the time. Those those cassette mixes were not so highly prized on on those family road trips and prized by me but no one else. Okay, last song in the good behavior section, We've got I might be wrong from Amnesiac? What album was that? From Amnesiac? So they recorded two albums at the same time back in two thousand, two thousand one kind of a first part became kid a second with Amnesiac.

I still remember going down to the shops the day that Amnesiac was released, got a left from school with my friend's mom. Brilliant. If you were in the US, I would have seen you with the record. Amnesiac was my Bloomberg terminal password for the first five years I was here. Ye amazing. Yeah, that was an amasiac one amn easiac too. Then I started using my kid's names because that's like there's numbers. Now they make you do capitals and yeah, I will tell you those Amasa. I

like that. Um okay, and why do we pick? I might be wrong? So this one I think speaks to behavior because if you have your plain vanilla core and we talked about just hanging in there a little by a little, but let's face it, people like to speculate. That's okay. You know, it's okay to take some money and put that on something you think might go up. So take something like Russia small caps or Palladium, you know, something that's a little out there high flyer. Sometimes these

do not work out you think they should work. Uranium is a good example that one has a great story, but it always goes down. It just goes down and down and down. You can cut your losses, okay, it's okay to met you're wrong because a lot of people lose extra money by thinking that it's going to turn around and and it never does. And one uh metric people use a lot for this is the two hundred moving day average. So if the price of the e

t F falls below it's two moving day average. That's known as the death cross, and a lot of times people will look at that as the time to get out, like it's just gonna get worse from there. So it's okay, you don't need to like marry every idea you have for like a good trade. The death cross almost sounds like a Radiohead song. They're probably working out something with that right now or an album. Okay, So that grouping was good behavior. The opposite of good behavior is bad behavior.

And we also have some songs that we picked for that, the first one being Just from the Bad, one of my favorite songs. They're teaching some personal responsibility here they are. Yeah, so the song itself a sort of deals with a rather unfortunate relationship going bad. But in terms of personal investing advice, I think that's some really interesting takeaways, right. I mean, if you look at the financial crisis, one of the things that the people lamented after everything soured was, oh,

I didn't know. Now, there is a lot of responsibility that advisers and sellers of products have to make sure that you have the information. You should be able. You shouldn't being missouled something, you should know what it is. But when it comes to e t F, there's so much information in the public domain, you as an investor have to take responsibility for what you own and to

go and read the prospectives of what you're buying. To take one example, you could look at kind of emerging market equity e t F for example, Um, some of these are hedged, some of them aren't. You need to know that some of them hedge all of the currencies within them. Some of them hedge some of the currencies and optimize that hedge. Now, unless you actually read the small print, you don't know that. And if you don't know that, you could get burnt when something bad happens

in the markets. I'd riff off of this with our next one, which is which is fake Plastic Tree, the same concept here, which is the same album, same album. Yeah, the vents and look, there's a lot of things that look pretty good. I mean that either the name is very nice to kind of the cereal awl, the cartoon character on front. But there's a lot of things that you don't need. There's a lot of noise out there,

and I think that sort of speaks to that. The green plastical, the affection is fake Blood, good from God. That's soothing. Eric, put your later Away, Rachel, what do you like about that song? I mean that song to me has always been one of the finest radio Head songs. I think lyrically it's fantastic. It's musically beautiful and haunting. Um and yeah, it builds to a really kind of great finale where you can kind of like pretty much

scream it loud and yeah, it's it's great. Does the business, Yeah, that one was just top of my list. Although The Bins is funny, it's all about bad behavior and yet it's it's like the best album ads. Eric will probably back me up on. I think, you know, they wrote

it when they were twenty seven. Let's face it, we were all doing bad things at age seven, and you're kind of fighting yourself at that age, and so I think they they kind of settled down, had kids in their music became more about judge, you're looking at the outside world. But The Bends I think was very much about stuff going on in like their life and trying to get your act together. Yeah, I agree, Like the

first couple of albums are kind of very personal. They feel like they're they're dealing with their own personal demons, and then as they kind of move out, they start looking at consumerism, commercialism, all that kind of stuff, and thinking about climate change and like next track, next track. Also sticking with the bends, we have high and dry. So okay, lyrics in there. Two jumps in a week.

I bet you think that's pretty clever, don't you, boy So to me, obviously, thinking with an investor hat on, this is about the perils of trading too frequency frequently. So basically what you want to be thinking about when you're trading is not really trading, Like you only want to be moving in and out of an ETF if you're changing strategy, if there's a really profound reason for moving. If you're jumping in and out twice in a week, like the song talks about, then all you're doing is

racking up costs. It costs money to trade, um, so you don't want to be doing that too frequently. And I think trading isn't the worst thing in the world, but say that for the institutions and the professionals. But even then there's been some evidence that it's it's tough for them because the more costs again, you know, the more you trade. It's sort of like the you know, the casino. If you go and the more you gamble, the more likely the house will win. So I think

that's definitely speaks to that as well. I'll throw one other quickie in here on this whole behavior is where I end, then you begin, which is kind of a creepy song. It's it's good though. I think it's about his father, but I don't know. I can't confirm that to abstract, but I think it is. There's some products out there that retail vestlers probably should just have like a hard stop, don't touch, and I would put VIX products in there. I'd put anything that holds futures, oil futures,

anything that uses derivatives and leverage ETFs. And I think that's good, just to have a hard rule on that. They're like power tools. You love your effects. Why why wouldn't they You should have been a police academy. Okay, yeah, i'd agree with that. I mean, like when you think about leveraged e t f s, I mean, these are very much intended for traders, right, They're not intended for

for retail. And sure, I mean you can be well educated about how they work, but you've really got to sort of understand, and I think for the vast majority of people that that own them, they don't and they

get hammered by the roll costs. The same could be said for some of these kind of more sort of faddish thematic e t f s. Not to name names or anything, per se, but I think there's a few out there that perhaps are trying to to jump on the bandwagon of something that's been been in the news or seems to be popular, um, and that perhaps there's not really a compelling investing argument to be in them. Okay, so let's listen to that. Okay, So this is a pretty epic back of T shirt set list that we've

just kind of rolled through. They put the cities on the back, not the songs, but I'm putting the songs on this one. This is your shirt, Yeah, my shirt, my rules. What is somebody going to get out of all of this advice about how to use et f s more effectively? It comes back to the whole thing we talked about about writing Capitalism's cotails. Why are you doing this? Why are we here? I'm still pondering it ever since you asked it the first time. Don't go

that deep with that. Let's go second level. Second, the reason is because you want to retire, you want to send your kids to college, just basic stuff, right, So all of this is so you can do that and if you get you know, a little wealthy along the way, that's that's a bonus. Rachel. There's a song that I know you want to include to kind of help about sign off on this idea, which one is that how I made my millions? There you go there, Okay, so how I made my millions? Okay, now, Joel, you're crying

balling over here? Why do I Why do I listen to that? No, I'm joking, it's really it's beautiful. But we're not done because you can't end on that note. Yeah, that's a little even from my radio head standards, that's a little so chin up here, because two plus two equals five should as shuch a dream to putter? Ah? So what ah, it's makes a fun Two plus two

equals five gets to the power of compounding interests. There you go, I mean it is you know that there's always that people that people talking about if you bought such and such at you know, ten and dollars, it really is true if you can just get in and just hang in there. I mean that stuff compounds and just get an just get a get a get a hook in there, just do something. That's why UM and

this song it's it's interesting. This is a Orwellian phrase from the book and it was really about brainwashing, and we're turning it into a positive about compounding interest with E T S. So that's a bit of a stretch, but I think it works. It's power of radiohead. You can apply it to betterything. Okay. Closing question, Rachel, you probably know this by now. We like to ask people what their favorite E T F taker is. However, I'm going to change the rules slightly and ask you a hypothetical,

what do you think tom Yorke's favorite EF. So I had a good long think about this UM and the conclusion that I came up with for for what Tom's favorite at F was given that this is Tommy why a good friend? Given that this is twenty years since okay computer came out, I thought he m quite like robo. Yeah there you go, and everybody paranoid android that is robotics. Yeah, yeah, you're right, that's a good one. That's more creative than mind minds, probably a little too. What do you think

Tom's would be? I would go with the Climate Leadership et F though, which is all about Yeah, but that that's Tom. You're in a nutshell climate change and like computer robots. Rachel Evans, Bloomberg News, Thank you so much, thank you. Okay, So we reached out to the radiohead because we just we had just done this episode and we were just like, we have to hear what they have to say about this. So it was like almost Eric's dream. He got to email the band and here's

what they had to say. I did, but you're not giving me credit for finding the email of the manager. I had to go to some serious chat rooms in blogs that only fans like me would know. But anyway, I got it. So I emailed the band's manager, Chris Hufford. He here's what he says back to me. Thanks for the l Eric, but I'm afraid none of the band are available best Chris, so at least it got back to me and respect, respect, proser rating. Thanks thanks for

listening to trillions Until next time. You can find us on the Bloomberg terminal Bloomberg dot com. Apple podcasts, and probably a bunch of other places I haven't heard of yet. We'd love to hear from you. We're on Twitter, I'm at Joel Webber Show, He's at Eric call Tunis, and our guest Rachel Evans is that Rachel Evans Underscore and Why Trillions is produced by Jordan Bell with help from Magnus Henrickson. Francesca Levie is the head of Bloomberg Podcast. Bye