#150 ETFs, Market Themes, and New Credit Ideas with Matthew Tuttle

Speaker A: Cool. Skyler. We just wrapped up with Matt. Uh, that was a lot of fun. Uh, Matt's a character, really interesting guy.

Speaker B: Yeah, it was great to hear kind of his thoughts on, kind of his perspective of the market on ETFs, where that's going and how he thinks about themes and trends in the space and what he's most excited about.

Speaker A: Right, yeah, yeah, we talk about some different sectors. Um, we talk about his like so they have a wealth management side of the business. So we talk a little bit about how he invests client capital. I was more interested in how he invests his own capital because he's got some good takes here.

Speaker B: Um, yeah, and it brought me back to my mutual fund ETF days, just how those products are created and spun up and how he takes advantage of that in real time because he's actually looking at anything in real time and making a decision and productizing it. Right. Which I think is pretty fascinating.

Speaker A: Yeah. Um, they have I think 70 ETFs. Um, and I also one of the interesting things was that he kind of gets away from bonds where he talks about uh, insurance companies and uh, he's getting into microstrategies, stretch products, um, digital credit. Yeah. Ah, which is super cool.

Speaker B: Um, that is cool.

Speaker A: We covered a lot here. Uh, this is a fun one.

Speaker B: Yeah, absolutely. Well, let's get into it.

Speaker A: Cool. Let's jump into it. Thanks for tuning into the All Funds Network podcast. My name is Mike Schroeder. Today I'm here with my co host Tyler Stiche and we are joined by Matthew Tootle. Matthew Tootle is the CEO and CIO of Tootle Capital Management asset management firm known for focusing on its uh, thematic investments, income strategies and actively managed ETFs. Prominent figure in the investment industry investment community. Frequently sharing insights, market trends and unique exchange traded funds through various financial media and social platforms. Matt, thanks so much for joining us today.

Speaker C: Hey, thanks for having me guys.

Speaker A: Absolutely. Uh, yeah, love to kick it off with just we'll get into all your ETFs and uh, you know, we'll talk about leverage and some different things, some sectors, some themes. Uh, but yeah, I'd love to just hear more about your background Matt and you know, how did you get it in the business?

Speaker C: Yeah, so I started investing in 1981.

Speaker A: Um,

Speaker C: I'm younger than I look so I've been around for a while and just got hooked on it. When I graduated from college I went to work in financial services and was really horrified by what I saw and kind of what Passed for advice. And Wall Street's like every other industry, they're there to make a profit for them. If the client makes money at the same time, great. You know, if they don't, you know, whatever. So went out, started my own wealth management firm after kicking around a bunch of different Wall street firms. Realized the only way to do it right is do it myself. Set up my own, um, wealth management firm. And, you know, we started doing things the right way. I had other wealth managers start to notice and they came to me and said, hey, can you do for us what you're doing for your clients? Can you manage money for us? Said, great, I'll, ah, set up a money management firm to do that. Migrated to ETFs in 2015 because I found that was just a much easier way to manage money. And then the ETF business just took off. Uh, we got out of the wealth management business. We actually just got back into it because nothing in the industry has changed and someone needs to do it. And I'm crazy enough to do that again. Um, but you know, that's kind of how we started. And you know, now we're sitting here, we probably have like 70 ETFs. I always lose track. And we manage about $5 billion. And on the wealth management side, we manage 100 million. We just started that and we're looking to really grow out that business as well.

Speaker A: I love it.

Speaker B: Yeah, that's exciting. How was, uh, going from. Obviously ETFs have been around for a while, but the whole active management situation versus passive, that conversation's always been front center for a lot of folks. How do you think about that getting in this space and early on where it's at today? Maybe.

Speaker C: Yeah, I mean, early on we were doing actively managed ETFs, and it was weird for people because they didn't really, they didn't really know what that is. And you know, now we do a lot of weird stuff, stuff. And you know, and people know me. I mean, I've done an inverse Jim Cramer etf. I've done an inverse Cathie Wood etf. I have a UFO Disclosure etf. So like, you know, people who don't like, know who I am at some point, they're, oh, wait, yeah, you're, you're that guy. Uh, you know, so now it's not a big deal because there's all sorts of innovation in the ETF field. But yeah, starting out, people are just like, wait, I didn't think you could have an ETF that wasn't an index. Oh, yeah, you definitely can. And that's really shifted. And we're really seeing. I mean, mutual funds now are a dinosaur. Which is somewhat of a shame because I grew up with Fidelity. You know, I told you guys, I grew up in Boston, same town as Peter Lynch. You know, everything. Fidelity, Fidelity, Fidelity. But, yeah, I mean, the world has changed, which it always does. So.

Speaker A: Yeah. And you said you got. You got into ETFs in, like, 2015. So before that, was it. Was it mutual funds that. That you were putting together for clients?

Speaker C: So we were doing separately managed accounts.

Speaker A: Okay.

Speaker C: But, yeah, most of what we were investing in was mutual funds. Um, in fact, I wrote my second book. I wrote it in 08, it came out in 09, and it was how to Use Mutual Funds to Invest, like endowments. And yeah, I was big into mutual funds. And then, you know, I saw, uh, the shift coming and was like, Yeah, I mean, ETFs just allow so much more flexibility than you get in a mutual fund. And, you know, been doing ETFs ever since. Can't remember the last mutual fund I ever bought.

Speaker A: What was, uh, the first ETF that you did?

Speaker C: First ETF I did was probably my, uh, Tut etf. T U T T. It was a tactical strategy that we were running for RIAs at the time. It's no longer around. The groups that I was working with are also no longer around. So we've morphed. But that was the first one.

Speaker B: Tutt Figure Firm, uh, Title Capital. I mean, as far as, uh, the mindset shift from investors. Can you talk a little bit about that? You mentioned briefly kind of just the change in migration of. Of kind of just the mindset of obviously more efficiencies, uh, tax strategies relative to ETFs, you know, some efficiencies there. Can you talk about what investors have seen over time, how that change has happened?

Speaker C: Yeah, well, I mean, you know, I think you've seen this massive migration now into ETFs, and, you know, and the mutual fund companies are realizing it. They're moving into ETFs, kicking and screaming as well, you know, individual investors. But, you know, a lot of that is really what came out of COVID So during COVID you know, you're sitting at home now, your boss isn't looking over your shoulder, and markets are moving, and you're trading, and you're getting connected to other investors over social media, over discords. And that has just become this major wave. And what it's done is it's Made the markets thematic in nature, where people are looking for these themes. So, for example, I just launched a photonics theme ETF on Friday. In three days, we're over $100 million in assets. And it is. I. I'm assuming you're taping this. It's a little past 10, so the market's been open for 38 minutes, and we've already traded $57 million.

Speaker A: Wow.

Speaker C: So, you know, you know, people are looking for what's that next theme? And you can't do that in a mutual fund. In a mutual fund, you buy it, you've got to hold it for 60 days. Yeah, I can buy an ETF and sell it a minute later. No, no, no harm, no foul. And that's the big shift we've seen. So a lot of our ETFs are designed around what are the hot themes, what are the hot stocks that investors want to trade and, you know, and I don't see that changing anytime soon.

Speaker A: Yeah. What. What's this one? Uh, uh, photonics.

Speaker C: Yeah. The ticker symbol is photo F O T O.

Speaker A: Cool. What is. What is that? Uh, and, uh, yeah, I want to get into kind of how you're coming up with these strategies, because I think it's great.

Speaker C: Yeah. So what photonics is. So everyone knows AI, but a lot goes into AI, and one of the big things we do, we're thematic investors. I write a daily newsletter on investment themes, and I think to make the most money in these themes, you want to look at where are the bottlenecks? So we know what AI is supposed to be able to do in the future, but there are bottlenecks towards it getting there. Wherever those bottlenecks come up, whatever companies surface to be able to fix those, those stock prices are going parabolic. One bottleneck is the speed and the amount of doubt. The so in. Understand, I'm not an engineer, I'm not a physicist, I'm an investment guy. But the way that data has typically flown is through copper wires. And the problem with copper wires is there's only so much you can feed through a copper wire at one time, and there's only so fast it can go. So the future is doing that through light, lasers, all sorts of different optics. So there is a group of companies that have popped up in that ecosystem. We call it photonics. And, you know, those are the companies that are providing those solutions, allowing the data centers to replace the copper wire with these optical solutions. So that's one of the bottlenecks that, you know, we're Big on. We launched a memory ETF yesterday. Memory is another bottleneck where AI needs a ton of memory. So now something that, you know, was a commodity item has now become scarce, and people are paying up for memory. The memory companies are also going parabolic. And another etf, we launched a, uh, couple of months ago. Space that's doubled in two months. I look at space as a bottleneck trade, because to make AI work, you need data centers. And the problem is you don't want one in your backyard. I don't want one in my backyard. Where are we going to put it? Elon says we're putting them in space. I'm not betting against Elon now. That's not happening tomorrow. But at some point, those data centers are going to be in space. So that's how we kind of teach people to look at these themes and. And then we launch ETFs around them.

Speaker A: Yeah, very cool. Um, talk to us a little bit about your research process. Cause you've, uh, you've definitely been on top of some of these trends. Like before, they're like, super mainstream. So, yeah, very curious just to see, like, you know, uh, the back end. How do you come up with this stuff? How do you. How do you find these trends before everybody else knows about them?

Speaker C: Yeah, so the key there is you gotta use your brain. Um, you know, by the time Wall street is 10 telling you about a theme, it's already too late. It's already been out there. Everyone's in it, time to move on. So I'll give you an example. One of the best ones we caught was European Aerospace and Defense. And we launched that ETF right after the election of Trump, too. And we did that because we're looking. All right, Trump, Trump won. What is the Trump trade? And everyone was saying, oh, drill, baby, drill. No, that's not it. Because, yeah, he wants to drill for U.S. oil, but he also needs low oil prices. That doesn't help the energy companies. I still think you want to own the energy companies, but that's not the trade. But what we noticed in Trump, one, he doesn't like paying for NATO and paying for their defense. Is that likely to happen in Trump, too?

Speaker A: Sure.

Speaker C: I mean, Trump is Trump. He has not changed. We're going to have the same thing. The difference, though, is during Trump, too, you have Russian tanks in the Ukraine, and everyone's scared to death they're going to roll into Poland. And if they roll into Poland, history tells us what happens. That's World War Three. So we think Trump, too is going to come in, say, NATO. You guys are on your own. All the NATO countries are looking at Russia like, oh my God, we got to start spending money, doing it at home. That played out perfectly. And that fund was up like 75% last year, you know, so that's one thing we look at. We're doing the same thing now with UFO disclosure, where I told people months ago, a, the government's going to announce aliens exist, which for my investment thesis, really doesn't matter. It just makes it a lot more fun. And B, they're going to start noticing that companies like Lockheed Martin, Raytheon and Northrop Grumman are sitting on technology that is way more advanced than what we're seeing. And that's all playing out exactly like I told people it was. But you just got to be able to think to do that. The other thing we do is we teach people what I call the thematic investment hierarchy. Identify the major themes, look around, you know, read. Use AI to help you. So let's just say, all right, we understand AI is a major theme. Start off, who are the obvious winners? And for AI, the obvious winners are, you know, mostly the Mag 7 names and a couple others. But that's, I mean, that's done. Those companies are M must owns, but everyone knows that. Then what you got to do is, who are the suppliers to the winners? What companies do the winners need to keep being winners? Who are the suppliers to those suppliers? Who are the suppliers to those suppliers? Keep going. And if you keep going, if you keep peeling that onion, you are going to be ahead of 99% of the other people who are still focused on Nvidia. Like, great, you should own Nvidia. But everybody knows about Nvidia. And you own Nvidia 500 different places in your portfolio. You know, now we did photonics. The next thing we're on to is glass substrates. And you know, in, in looking at other aspects of memory, looking at other aspects of space, and just keep peeling the onion.

Speaker B: Yeah, that's really interesting. Um, Matt, regarding the kind of, just the different themes or opportunities that you're seeing. How many, just curious, how many, uh, ETFs are you spinning up every year? Because as we all know, it takes a good amount of time to productize the theme, you know, four to six month lag, uh, to create a product. How do you think about that from a timing perspective?

Speaker C: So what we do is we file for everything that's top of mind. What could be. Because, you know, the process is, if I come up with an ETF idea today, best case scenario, it launches in three months. So what I've got to think of is, all right, I've got to look forward three months. What are the most likely scenarios? And I don't know what's going to happen. I don't have a crystal ball. And the thing with technology is it is constantly changing. So I'm throwing everything up against the wall. And then three months from now, we look and we're like, uh, yep, yep. No, no, no, no, no. Yep. And then Those are the ETFs we're going to launch. So you know that that's how we go about it. And I'll launch as many. So for us, from a business standpoint, 20 to 25 million in assets in an ETF is break even. So I will sit there and say, all right, do I see a pathway to get this ETF to break even? And, you know, I've been doing this for 11 years. I'm not always right. But, uh, I, you know, I got a pretty good sense for what's going to work and what isn't. And if I think it can work, we will launch it. So we've got probably 70 ETFs right now, and I'll launch as many as I think I can make work.

Speaker A: That's great. Uh, how important is it to be first to the market with these different trends?

Speaker C: So it is massively important to be first to market. And if you're not first to market, you have got to be demonstrably better. So, for example, another group beat us somewhat to photonics. They launched an ETF they called, like, lithography and photonic Semiconductors. Number one, the name is stupid. Nobody knows what that means. And number two, you have to go through, you know, to number five to get a real photonic stock. So in my mind, RETF was much more of a pure play in photonics. And people are realizing that, you know, on the other hand, we are second to memory. The guys who are first to memory have like 16 billion in their ETF. We're not going to get anywhere close to that. You know, we're just. I mean, I'll be happy if I get 100 million in it, you know, so that one being first was very important. Being second, well, we'll get the table scraps. You know, I think there are advantages to RETF over them, but they are such a behemoth now, it's not going to really matter.

Speaker A: Yeah, that makes sense. Liquidity is king.

Speaker C: Yeah.

Speaker A: Uh, when you mention 20, uh, 5 million is kind of like the break even for these. So how do you, how do you go about getting 25 million into these ETFs?

Speaker C: So we do a lot of marketing, but we do marketing different. So most ETF shops, they're going to hire what's called a wholesaler. He's going to call up financial advisors and say, hey, my fund is so cool. You should buy it. We don't do that. So I am unique, I think, in that, you know, I'm an active investor, active trader. I'm not active trading anymore. I don't have time. I just buy my own ETFs. So one of the things I do is I launch ETFs. I want to own. Um, but I understand this stuff. Uh, so we market based on thought leadership. I do a lot of stuff like this. We do our own webinars, we do our own podcasts. I write a daily newsletter where I give you a ton of free information. And, uh, we have called out, I mean, the people who follow our newsletter. I can't, from a compliance standpoint, say, buy this stock, Buy this stock. Buy this stock. But I'm going to tell you what I'm looking at. I'm going to tell you what interests me. I'm going to tell you where you may want to look. And we've, you know, people will email me like, man, you're making me a whole lot of money for free. And, you know, fine. I, you know, I love doing that. And they're not buying my ETFs or buying stocks that, you know, hey, I'm noticing this stock is moving. And, you know, this is cool. So we do a lot of that. And, you know, I think when you add a lot of value to the marketplace, value comes back to you. And, you know, people know who we are. You know, they know that our products are not marketing gimmicks. Like, there are a lot of, you know, a lot of ETFs out there. You know, hey, we do this, and then you look at the holdings, you're like, you really don't. We don't do that because again, I, I, my entire portfolio is in my ETFs. You know, when I want photonics exposure, I want photonics exposure. When I want space, I want space. And, and we give people that, and I think they appreciate it.

Speaker B: Yeah, absolutely. What are your, I mean, obviously a lot of people are talking about the whole 60, 40 model. The portfolio model is pretty much dead, right? I mean, what are your, what are your thoughts on that? Obviously you'll probably have a few things to say given your current setup, uh, with ETFs.

Speaker C: Yeah.

Speaker B: Love to hear your perspective.

Speaker C: So it should be dead. The problem, or one of the problems that Wall street has is we advance in, in every area of our lives. The advice Wall street is still giving to people is from the 50s and I could argue it didn't work then, it doesn't work now. Uh, and there are a lot of reasons it doesn't work. A, on the equity side, markets are thematic. You're not addressing that. B, bonds are not a risk reducer in your portfolio. A lot of that advice came from when I started investing. Bonds were a risk reducer because interest rates were 22%. They had no direction to go but down. You know, now they're 4 or 5%. And we saw in 2022, Liberation Day, the beginning of the Iran war, that if bonds in your portfolio hurt you, they did not help you. So we are not believers in the 6040 portfolio. What we think you ought to do, thematic equity sleeve, hard money, hedge gold, crypto, digital credit. What we call better than bonds, property and casualty stocks, pre merger SPACs, which are basically T bills with an option and then tail risk, but real tail risk. Something that if you wake up tomorrow and the market's down 20%, you're up 20% in that part of your portfolio or somewhere in that realm. That's how we construct portfolios for our wealth management clients, in my mind, blows away the 6040 portfolio.

Speaker A: That's good. Uh, that's interesting. And yeah, we've definitely seen especially over, like you said, the last couple of years, bonds have not been a great hedge, especially like longer duration bonds. Uh, yep, I know those got crushed. Like you said in 2022. Um, uh, how do you invest in your, your own portfolio?

Speaker C: Exactly how I just mentioned.

Speaker A: Mhm.

Speaker C: And you know, in, in my own etf. So I will have a certain part of my portfolio that is thematic equities. And that's going to be, you know, kind of these asymmetrical themes like photonics and memory. We balance it out with something we call halo, which stands for heavy asset, low obsolescence. And what that is is it's the traditional value companies. But the problem with value investing now is that, you know, is a company undervalued because Wall street just hasn't seen it yet, or is it undervalued because AI is going to put them out of business and they're the walking dead. So you can't just say, and I would argue you couldn't in the past, but certainly now you can't just say, hey, a company's got a low pe, I'm going to buy or a low book to sales or PEG or whatever value metric you want to use. So what we're looking for is, all right, I want the traditional value names, but I'm looking for companies that have assets. If a company has assets, AI is not putting them out of business. The people AI is putting out of business are our product is our people. All right, well, your people are now going to be clawed and so you're toast. But if I run a copper mine, AI is not putting me out of business. Not only is it not putting me out of business, AI needs copper, data centers need copper. And a copper mine can use AI to mine more efficiently. If I run a railroad, you're not putting me out of business. If I am an oil driller, you need energy. A, you're not putting me out of business. B, you need energy. If I'm a utility, AI needs a bigger electrical grid, you need the utilities. So we balance out, uh, the asymmetrical plays with the halo plays on the equity side. Then what we do is we've got a component we call better than bonds. In that component, I want to own property and casualty insurance companies, because what those are in effect is a bond fund that tries to make money. So most bond funds or bond ETFs, they're benchmarked against an index. But what does a property and casualty insurance company do? You pay your premium, it takes your premium and invests it in bonds. But they're, they're not looking at an index, they're just, we want to make money off of this investment. So you've got the equity kicker of your invested in a stock. The underlying is bonds. And that historically hasn't been that correlated with the market. And when the market goes down, it's been safer. The other thing we want is pre merger SPACs. A SPAC is a blank check company. I give you $10, you put it in a bank account, you invest it in T bills, you go out and you try to find a public company or private company to take public. Once you do, I then get to vote. Give me my money back plus my T bill, interest or yeah, I like this deal. And maybe my $10 is now 12 or 13. I like that better than bonds.

Speaker A: Mhm.

Speaker C: And we like to add a component of gold and crypto along with what's called digital credit. Love Digital Credit, that is preferred shares issued by companies like MicroStrategy and Strive that pay 11 to 12% that, you know, stay pretty stable. Even as bitcoin is going up and down. We're launching an ETF for that. We figured out a way to get that 11 to 12% to be 14 and a half. So I'm really excited for that. That'll be out, um, either later this month or next. And then the other piece is tail risk, you know, having ways that if the market goes. Not the market goes down 5%. I mean, as we're speaking, the market's down like 50 basis points. That, you know, that. That's, you know, that's a rounding error. It is what it is. You know, you deal with it. I'm talking about you wake up in the market's down 20 or 30. You want something in your portfolio that's going to be up 20 or 30. That gets complicated. We've got an ETF for that coming out either later this month or next month as well. That one's been two years in the making. I can't wait. The ticker symbol on that one, I love. It's called. Oh, no. Oh, no.

Speaker A: I love it. I love it. This is. This is really interesting. Yeah, I mean, you have a lot of really good takes there. I think you're, uh, you know, kind of getting away from bonds and the, you know, investing in these insurance companies, uh, investing in products like Stretch, Uh, really innovative. So I love to see it.

Speaker C: All right, cool. You know what? Stretch is so awesome.

Speaker A: Yeah. Check out. If you guys haven't already, like, looked at Stretch, check that out. Microstrategies. Uh, and if you're checking out Stretch,

Speaker C: check out SATA as well. So say it. Our ETF is going to invest in Stretch and SATA. Uh, SATA pays a little bit more. SATA also pays daily. I mean, I think that's overkill, but they pay daily and they pay a little bit higher rate than Stretch does.

Speaker A: Uh, cool. Are they doing the same thing with, like, using Bitcoin?

Speaker C: Same deal. So SATA is from Strive. Stretch is from M. Uh, Micro Strategy.

Speaker B: Yeah, I actually just wanted to kind of peel back on you a little bit on the AI side, obviously, from an investment theme perspective. Obviously pretty pronounced in the marketplace. What are your thoughts, just from an internal firm perspective on AI. Are you guys using AI internally through your research? Different use cases that always get spread up in conversations? We have.

Speaker C: Yeah, we are using AI a ton. I, uh, think Claude Cowork is a game changer where, you know, we, you know, A lot of our trading systems, I run out of Excel because it's so customizable and, and now I can go in and Claude, I want to be able to do this, this and this. It does it for me. That's insane. Um, it helps on the research. It's not like, you know, I see people, oh, you know, Claude can pick all your stocks for you. I, I, I, I don't think so. I don't think it's there yet. But what it can do is it can a, it learns you, you and you know, so it knows what I'm looking for. And I use Claude, I use Chat GPT, I use Grok. You know, depending on what I'm trying to do, it can certainly help you take a whole bunch of information and pull out the stuff that, that I want to know. And it'll give you a starting point. I'm never going to go in and be like, hey, Claude, what, what should I buy? But I will ask it for advice and sometimes, um, Video and buying Apple. What do you think? Or, and then I might take and put in Chat gbt. Hey, you know, Chat GPT. Here's what Claude said, what do you think? And then Chat GBT might say something. Then I may put it back in quad. Hey, here Chat GBT is pushing back. What do you think? And it's helpful. So it's really like I've got, you know, I'm the portfolio manager, I make the decision. But I have the world's smartest research analyst at my desktop giving me advice that I'm either going to take or I'm not going to take. And I think that's a game changer where now, you know, our industry is set up. You've got the PM and you've got the analysts. I would not like to be an analyst right now because I think Claude can replace that. It's not ready to replace the pm. Someone is still got to say, uh, no, I'm not doing that. But it's definitely going to replace the.

Speaker B: Yes, yeah, definitely. Obviously it can get you to a decision faster from your point of view. Right. There's still all that data move quickly and a fast moving market anyway. So I think that's your, yeah, definitely important notes there.

Speaker C: Yeah, I mean it is. There's so much and I get so much Wall street research. Just dump it in. You know what I'm looking for Anything in this report that I need to pay attention to. Yeah. These five names and here's why.

Speaker A: Huh.

Speaker C: Uh, all right, take that further. Okay. Great.

Speaker B: Uh, all right.

Speaker C: You know what? I like that one. Name. Thank you. I'm gonna buy that.

Speaker A: What's. What's a market narrative that, uh, almost, you know, everyone believes today that you think could completely unravel in the next couple years?

Speaker C: Um, you know, the obvious one is markets always go up. You know, a lot of the people trading, you know, in this day and age are younger and have only seen markets go up. And, you know, when they have seen them go down, they haven't gone down for a long time. Um, yeah, I've been around since 1981. I've seen a lot of weird stuff. Um, but I also know markets don't always go up. And another one along those lines is this time is different. This time is always somewhat different. But there are certain laws of markets that never change. At some point, a lot of this is going to unravel tomorrow, five years from now, a year from now. I don't know. Uh, you know, we tell people, deal with it. Position sizing. So I told you I own my photonics ETF. It's 0.6% of my portfolio because, I mean, these stocks could go up 300% in a couple of days. They could go down 50% in a couple of days. I don't know which. I'm gonna own it, but I'm not going to own enough to hurt me if it goes down now. Again. Also, I'm old. I've made my money. I don't need to 10x my portfolio. It would be fun if I did. I'll take it. But I'm much more worried about losses at this point in my life than I am about gains. And you've got to be very cognizant of that, too, sitting here in what may be a bubble, but it may not be a bubble. We don't know. We'll know after the fact.

Speaker A: Yeah, 100% is, uh. Do you think the macro environment has changed significantly over the last couple years?

Speaker C: So the key issue with the macro environment right now is we are staring at the possibility, and it's only a possibility of stagflation. And you guys look a lot younger than me. You probably don't remember the 70s. I do. The 70s sucked. You know, stagflation's a problem because, uh, the Fed has tools to deal with inflation, and the Fed has tools to deal with a recession. They don't have tools to deal with both of them at the same time. If both happen at the same time, we have a problem and we're not there. Yet and we may never get there. But you know, you watch oil creeping back as we speak to $100 a barrel. You watch what interest rates are doing. Interest rates are going up. Why are interest rates going up? Because bond traders realize there's a possibility of a lot of inflation on the horizon. I need to be paid more to own this bond because of inflation. And then you see economic numbers slowing, you see the consumer who's got to be hurting. I mean, you know, oil has been close to $100 a barrel now for what, a couple of months? Uh, you know, inflation is always higher than they tell you it's going to be. So, you know, that's where we're going to be laser focused. And the tell is going to be interest rates. The bond market will tell you what is going on. If you see the 10 year interest rate start to get over 5%, you've got to be concerned.

Speaker A: Yeah, yeah, 100%. Yeah. I think about that with like, I do some real estate investing on the side and it's uh, something I think about where it's like if I, you know, I feel like the property values haven't dropped and it's almost like the stock market, it's like the stock market just keeps going up. Uh, you know, these properties, prices just keep going up. But it's like at a certain point, you know, if rates start going up even more, uh, they haven't impacted the price negatively yet. But uh, right.

Speaker C: I mean in 2008 was a perfect example of what can happen and it gets exacerbated by fomo. You see it in the stock market, people piling in, piling and piling in. And the problem is when they want to get out, it's like shouting fire. In a crowded theater. You've got a thousand people have got

Speaker A: to fit through, everyone's trying to exit,

Speaker C: and everyone on the other side of that door knows they have to and they're going to take advantage of that as well. And same thing happens in the real estate market happened in 2008. You know, you own 30 homes, leverage to the hilt, you were overextended, you had to sell, price didn't matter. And the other guy on the other end knows price doesn't matter. You know, so you, in that situation, you want to be the guy on the other end, you want to be the buyer, which is why you want to have tail risk protection in your portfolio and don't go crazy. You want to be the buyer, which for when everything goes on sale, but versus I'm Buying everything up.

Speaker A: Ah, where do you think the ETF industry is headed next?

Speaker C: ETF industry continues to innovate. Uh, they're looking at prediction markets. Whether that'll work or not, I don't know. Um, I have not gone there just because I don't like the idea of launching an ETF and then it's dead in two years. And I know there are ways you could. I can't wrap my head around how to create a perpetual product in prediction markets, but someone will get there. You know, one of the things we're trying to do is 3x and 4x single stocks. Um, you know, we're trying to do stuff on IPOs. With SpaceX, you've got people looking at compute futures. So, you know, the ETF market is going to continue to innovate. Right now it's thematic. People are trying to, you know, they see what we did with photonics, we see what another guy did with memory. Everyone is looking at what's the next hot theme. But it's going to keep moving, but it's going to keep innovating. It's come a long way from, you know, spy and just, you know, an index of 500 for sure.

Speaker A: How do, um, how do you think about the younger generation in terms of, you know, is the younger generation, what, what are they doing better than, uh, previous generations and you know, what are, what mistakes are, are you seeing from younger folks in the market?

Speaker C: So I've got three kids in their 20s. Um, they are all at this age, a million times smarter than I was when I was that age. But what I also see, and, and I think it's, you know, the technology, um, you know, in, in all the stimulation. I, I think younger people have problems thinking where, you know, I, I understand in this tunnel, but if something happens outside, that doesn't compute. And uh, I have some younger people work for me and we had a situation yesterday where something happened outside and one of my guys did something. I was like, how, how could that even make sense to you? I just, it, it was just inconceivable to me. Now we fixed it and it was fine, but I'm still sitting here. Like, how? I, I just, I don't understand how you could look at that and be like, yes, this, this is what I should do. Uh, you know, so I think there's that, you know, I also think the younger generation grew up, you know, post Covid. They're not ready for the things that come out of left field. I've seen, you know, Black Monday. I'VE seen oil go negative, I've seen Volmageddon. So, you know, whenever someone tells me this can never happen, I'm going to come back and say, but it will. And it will happen more than once in your lifetime. And I think younger investors, they just haven't seen it, so they don't understand. And Also, you know, 2008, if you were doing the stupid Wall street stuff, uh, you lost 60%. Now it's one thing on paper to say, oh, you know, no big deal, lose 60%, it'll come back. It's another thing to be sitting there a, ah, year away from retirement with $1 million in your portfolio and then a couple of months later it's 400,000 and you're looking at working for the rest of your life and seeing how that feels, but also seeing what stupid things does it make you do? Because at some point you flip from, I know this is going to come back. I'm just going to hold to, I've got to get out because my portfolio is going to zero. So I think the younger generation has not seen that. And like I see, you know, one of my kids, his portfolio, it's 100% semiconductors, he's making money hand over fist. But, uh, I'm explaining to him, look, there's an average annual return that you should get. If you are getting much more than that, there's something in the markets called the reversion to the mean. You're going to revert back to that average annual return. For that to happen, you're going to take a massive drawdown. Now, I don't know when it's going to be. Could be Tomorrow, next day, 10, 10 years from now. But at some point you're gonna get your ass kicked. And he's never seen it. I don't think he understands it. And again, when you look at it conceptually, yeah, whatever, I can handle it when it actually happens.

Speaker A: Yeah, we've all got to learn the hard way.

Speaker B: That's right.

Speaker C: Right. I've learned a lot of things the hard way. You know, my first investing with real money, I, I lost a ton. But I learned what not to do. And I learned I gotta get good at this because I thought it was easy because the first trade I made made money and then the next 10 didn't.

Speaker A: Yes.

Speaker C: So that was a great lesson. My first real, you know, I had other forays, but my first real foray at like 21 with some real money, I got my butt kicked. And that was the best thing that could Happen.

Speaker A: Gotta learn it early. It's always best time to learn it.

Speaker B: Yeah, you always learn from the harder lessons, right? The things that really hurt the most.

Speaker C: Everything is too easy. And you start thinking it is always gonna be like this. That's when you're screwed. Because it won't. If it were that easy, the Forbes 400 would be the Forbes 40,000.

Speaker A: A great point, actually, on. On your son, too. It's, uh, you know, what do you tell someone like him, um, when it comes to these situations? Or do you kind of tell him, you know, take a little bit off every level or.

Speaker C: So I do. Um, you know, and he'll call me m. Like, oh, I'm making tons and tons of money. Sell some, um. Or hedge. Oh, I'm getting my butt kicked.

Speaker A: Yeah.

Speaker C: Buy More. You know, I'm always trying to reinforce that lesson. You want to do the opposite of what 99% of the people are doing. 99% of the people. Oh, my God, I'm making so much money. I'm going to be a billionaire by next year. No, you're not. You're going to give a lot of that back. Take some profits. Or hedge, hedge your portfolio. Oh, my God, I'm getting killed. This market's going to go down forever. No, it isn't.

Speaker A: Yeah.

Speaker C: By the dip.

Speaker A: Yeah, yeah, definitely. Definitely need to, uh. Yeah, hedge. How do you. How do you think about sentiment? Is that something that you, uh, you know, incorporate into your investments at all? Uh, think about what, like, market sentiment? You know, how positive, negative people are about, you know, different stock sectors?

Speaker C: I mean, not. Not really. Yeah. I mean, if anything, I want to be the opposite. But, uh, you know, sometimes, like, especially now, I mean, these stocks just keep going day after day after day, and I think you can overthink it where it's like, I mean, you know, this is overvalued. Everyone's in it. I'm not gonna buy, like. No, I mean, I'm gonna buy it again. I'm gonna position size accordingly. And I know in the back of my head, yes, sentiment is way extreme here. Um, you know, and it. I'm conditioned to buy the dip. So, you know, when the market's selling off and everyone's negative, it's just my conditioning. I want to be a buyer there. So, you know, I'm cognizant of it, but it doesn't really factor that much in, you know, to what I'm doing.

Speaker A: Uh, is that if you were to build a portfolio today, for the next 10 years, what are, uh, you know, a couple, maybe two or three themes that you'd, uh, you know, want to include in this portfolio.

Speaker C: So the problem is you can't. You've got to have your head on a swivel. Especially now, you know, investing is not. Set it and forget it. You know, could you theoretically say, I'm just going to buy the queues and hold on to them? You could. You know, you may be. You may be. Okay. I mean, I think that is less than ideal. Like right now. I know the themes that I want to be in. I don't know, those are, uh, the themes I'm going to want to be in in 10 years. My guess is they're not. My guess is there's going to be new technologies and new things and new companies that I'm going to want to be in. Which, again, is why it's not that easy. I can't just say, hey, I'm going to put this portfolio in place and I'm going to go, you know, go into cryostasis for 10 years and come back and it's going to be great. Maybe it will be, but chances are I'm going to miss out on a lot. So I think you've got to constantly. And one of the reasons why I write my newsletter every day, like, people are like, oh, my God, you're giving me so much information for free. It's like, uh, I'm doing it for me. I'm forcing myself every single day to do a deep dive on what is going on. So I'm always thinking, what's next? What's next? What's next? So that's why I can't answer that question. Because, I mean, 10 years from now, everything is going to be, I'm just

Speaker A: learning about photonics here. It's market, uh, Scott Siebel, right?

Speaker C: And if we were talking 10 years ago, what the heck is AI? Like, I don't know what that is.

Speaker A: 10 years ago, it was. It was nothing. Five years ago, you know, just crazy, right?

Speaker C: I mean, it was really Nvidia's earnings report in May of 2023, where the whole world is like, what is this?

Speaker A: How, how frequently do you rebalance your portfolio? Is it just kind of as, as things change, or do you try to do it on a quarterly basis?

Speaker C: So I don't really rebalance unless something gets out of whack. Uh, what I do do is so again, I don't have time to trade anymore. I do have one of my ETFs. It's Memy Mimi. That's my top 20 ideas. I try to keep, you know, a, not a longer term, an intermediate term view, but you know, we'll probably do two or three trades in that every week where, you know, I'll swap out, you know, a name here and there. I try not to be too active, but you know, I'm watching and I'm seeing. So like, you know, one of the things that we did a couple of days ago is I saw money shifting towards some of the semiconductors. So, you know, we shifted a little towards some of the semiconductors. So I'm not going to trade just to trade. When I see something, I'm going to do something cool.

Speaker A: Makes sense. Um, yeah. Before we wrap up here, Matt, any uh, any, anything you want to leave our audience with or any, uh, you know, sectors, uh, you're most excited about right this minute?

Speaker C: Yeah, I mean it's right now. It's the AI bottlenecks. It's photonics, memory and space size. Those accordingly. You know, you're not early at this point in any of those areas. Uh, but they could still run a lot. I mean space, we're not even in the first inning. Um, and do not believe the conventional wisdom. The conventional wisdom is usually neither. It's not conventional, it's not wisdom.

Speaker A: Awesome. Ah, Matt, this has been a lot of fun. Uh, this is great. I really appreciate you joining us, sharing your insights. Um, where could people go to connect with you and learn more about Tootle Investments?

Speaker C: Yeah. So our website is tuttlecap.com t u t t l e c a p dot com. There's a pop up for our free newsletter. Our ETFs are on there. Contact us form, shoot me an email, ask me questions. That's the best place to find me.

Speaker B: That's great. This has been a great conversation, man. We'll make sure to include all your contact info in the show notes as well. We appreciate your time.