Healthcare is The Next Investment Wave

0:00This is an iHeart Podcast. Guaranteed Human Earners, what's up? Look, building wealth isn't just about making money. It's about knowing where your money is working for you. That's why we partnered with Empower. Empower is all about helping you invest well so you can go out and live a little. Their free Empower personal dashboard gives you a complete view of your financial life in one place. Track your net worth, monitor your budget, analyze your investments, set retirement goals, and more. You've worked hard for your money. Now make sure it's working hard for you. Download the Empower personal dashboard or visit Empower.com.

0:37Not an Empower client paid or sponsored. When traveling for events or festivals throughout the country, every dollar matters. We compare flights, prices, hotel rates, and restaurant options. So why wouldn't we compare rides? Personally, I always check Lyft before booking a ride. Prices can change throughout the day depending on traffic, weather, and what's happening in the city. If you're headed to a concert, out to dinner, or catching up with your friends on a Friday night, taking a few seconds to check lift could leave you with more money to enjoy the experience. Save money. Check lift. Ernest, what's up?

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1:56Learn more at Brex.com slash AF. Run a business and not thinking about podcasting? Think again. More Americans listen to podcasts, then add supported streaming music from Spotify and Pandora. And as the number one podcaster, iHeart's twice as large as the next two combined. Learn how podcasting can help your business. Call 844-844-IHEART. I would give you another sector that I think is really attractive, and I was talking to Ian about this, is healthcare. I think that's another area that we really should lean into because every single person here that's going to listen to this conversation is going to say, you know what, what do I do at my leisure time?

2:32I'm not sitting out drinking and partying and hanging out. I care much more about the infrastructure of my life than my health. That's why people are leaning into more drug use in a positive way. I'm talking peptides and other things. Right. But they're leaning into other opportunities to figure out where do we see growth? And NVIDIA has made some announcements. Some of these other companies have made announcements in their support for health care. And I think that could be a deviation that you can see pop up soon.

3:03From an institutional standpoint, what is the outside of the hyperscalers? What is the software sector need to do in order to rebalance and regain dominance? We talked about Intuit service. Now, there's some companies that are really beating up Adobe. When you guys are looking at things to potentially invest in, what would you need to see as a catalyst to the end? Yes, I'm going to have to point on this one and I'm going to just tell you why. So the way that we structure the investments here at Direction and and I think it's important, like I shared this about sort of who we are and the way we think.

3:36Like we launched products for investors to trade. We're not making the call of saying like, hey, this sector is going to recover versus this sector. We are saying, can we build in a trading vehicle in an area that's going to trade a lot? So some of those areas, I think some of those businesses, I'll just kind of share my two cents of what they need to do is I think they're going to need to either explore M &A opportunities with some of their cash to actually go out and maybe become a little more competitive. in the space, or they really need to invest in A &D or R &D to pivot their business. And we already know the sales cycle and how long that could potentially take.

4:18So, right, the term that everyone was talking about that we all grew up on was Mag7. Well, the Mag7 has now matured to the mangoes, right? Right. So that's the whole compartment. That's the whole part of the business where if Meta, and I think we talked about this yesterday, Ian, if Meta, Microsoft and some of these companies that we love, they own the cloud and the software space. But guess what they're doing? They're being beaten up because they're making investment for the future, but they have to make that investment for the future. And at the same time, they're also laying people off. Right?

5:00So we got to be mindful of what that looks like. So we don't launch products based off of what these companies should do. We launch the products based off of where the trading opportunities are for the market.

5:14What's your feel for the market? Are you bullish? Are you bearish? Do you think that when you said something regarding late stages, do you feel that this is the late stages of a bull market and we're ripe for a bear market? In the near future? So the old adage is bull markets don't die of old age, right? There's usually a catalyst that make them stop running. And what I would say is, for us, our view is that the market still has tailwind because of the support around earnings. But again, it's price to perfection. And what I mean by that is if any companies have any small disappointments, you're going to see disruption and volatility.

5:57That's just kind of where we are. And I also alluded to the concentration that we see in the marketplace right now. So in a late stage area, one of the things that I think investors all need to consider and do is they need to actually broaden out the diversification. Meaning pivot to maybe like equally weighted exposures versus these concentrated exposures. That's a very important point. And here's why. because if you have any major headwind that hits the max seven, your ETF, your exposure, your stock, your option trade, it's going to go the other way and it might go against you. So you might want to consider a way to balance out the risk of the Qs as an example, and maybe hold QQQE, which is an equally weighted ETF versus just holding the Qs.

6:45And then someone's going to come back and say, well, should I hold QQQM? That's more of a momentum That's still a concentrated bet. That's going to put you right back where you were. Should I hold QQQI? That's going to be more income-based. If you just looked on par, you're not getting the exposure that you want. You're trying to clip a coupon with that particular product. So if you're going to say, hey, where do I get my exposure today? You should be thinking about broadening out your risk and understanding that, you know, we're going to be a little probably choppy for a little while. Can you just explain that for the audience?

7:16People might not be familiar as far as, like you're saying, equally weighted as opposed to. And you can use QQQ as an example. Yeah, so QQQ, most of the indices, the way that they're created, they're created with what is called market cap weighting. So based off the size of the company, that will be basically the percentage that they get inside of the ETF. Because I'm using the Qs for the sake of this narrative and conversation, that's the NASDAQ 100. So it's the top 100 tech companies for the most part. If you look from a sector perspective, the majority of those stocks fit into the information technology space.

7:49So it's heavy tech weighted. Because the MAG-7 has such a concentration of the top positions, your risk is concentrated in just how those four or five stocks do. Right? That's simple. Equally weighted just basically as an ETF in which the one that I just shared is QQQE. It's actually 1 % exposure across the board for every security that's in that index. So that's 100 securities, 100 positions at 1%. Why does that matter? Because now we spread out the risk and then we get exposures to other positions that might do well. And one of the names that I kind of shared on a call the other day was Palo Alto Networks.

8:36That's not in people's top 10. Nobody's holding that. But if you look inside, that's a nice position. It's actually had a really strong run. They have really good covenants. They have really good relationships and good free cash flow. That's somewhere that people might want to get exposure to, but they're not getting exposure to that. So that's why a QQQE in a late stage cycle would make more sense opposed to just trying to capture the run up of a concentrated position. you've had an extensive career in finance i wonder if there's something that you learned as a professional that changed the way you invested personally right like for a retail investor who's new there's obviously things that you've seen and you have access to that you're like wait i wish people would have turned out about trade yeah um so let me i gotta i gotta preference this so you guys actually have more freedom than i have and balao you know this from having your security licenses, right?

9:34I have my, I have my series seven. I have my 63. I have a bunch of security licenses that I can't trade anything for the most part. We have to submit through compliance. So you have more flexibility than I have. The one thing that I've learned, um, is

9:51the, the math matters on the downside. It matters more on the downside than even capturing the upside because the impact of loss is so great. However, greed and fear are our two most innate characteristics. And you know this, you ain't made no, I'm going to say, I'm going to speak like us. You haven't made any positive decisions when you've been emotionally charged, right? Like it never happens. So, so my key takeaway from like my career is that just staying in the game is better than trying to win the game. And that's what people tend to forget. So when the market gets volatile, they tend to sell, right?

10:29We just have the same terrible buying behaviors. We tend to sell. We think it's going to, you know, the shoe is dropping. It's, you know, the sky is falling. So my ability to stay in the market and control my emotions have been the most supportive aspect of winning.

10:49I get from a diversification standpoint to be equally weighted. That tells me you may see somewhat of a correction, but how long do you stay equal? Good question. So I think the equally weighted could be a core position and it's complementary position. So let me just give you a couple of different ways to think about it. Most people, if they're going to hold two core ETFs, they're going to hold likely QQQ and VOL. Right. Like, just give me a head nod if we're right. OK, we're on the same page. So one, you're already starting to get some overlap between the two positions anyway. Right. Just as far as information and tech goes.

11:26But now what I'm thinking is you want beta when you know the market is going to have a strong tailwind and run up. so you had we had beta from 2015 to 2020 then it got real volatile and then what happened excuse me the beta trade was on at the bottom of 2020 and 2021 you're like get in the market didn't matter what you had the ai trade is the exact same so right now it's all run up it's all pulled up together but now what are we seeing we're seeing now more of a trader's market where the opportunity to find dislocations is actually supportive of the environment. So you can trade as an example.

12:06Everyone's excited. How could you not be excited about Micron's earnings? Micron's earnings are through the roof, but look at the stock price. Stock price is back at$1 ,100. The peak was$1 ,250. It's not even back at its peak and it's crushed it. So it's not even strong enough to pull the entire space up. So being that the case, now I want to start to think the market to saying, hey, should I go out and find a new asset class and or another area that I can buy to gain value? That's the storyline there. That's what you should feel. That's what you should sense. That's what you should see. The market rewards the surprise to the upside and or making sure that you meet the objective that you set out.

12:45It does not like negative surprises. And the negative surprise, in my opinion, just looking at that is, well, we're not being rewarded anymore for that holding we pivot and place capital elsewhere. If your best finance people are doing expense reports, chasing receipts, or spending time on month-end close, it's time to get Brex AF, a gentic finance that eliminates that work before it starts. Learn more at brex.com slash AF. Run a business and not thinking about podcasting? Think again. More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora. And as the number one podcaster, iHeart's twice as large as the next two combined.

13:25So whatever your customers listen to, they'll hear your message. Plus, only iHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business? Think iHeart. Streaming, radio, and podcasting. Call 844-844-iHeart to get started. That's 844-844-iHeart. The World Cup is underway and it's been incredible. On our podcast, The Away End with Daniel Alarcon and John Green, we're talking about the games that have delighted us, the teams that have inspired us, what we're loving and what surprised us, all through the lens of being massive fans of the world's most beautiful game.

13:58Daniel, this tournament has been magical so far. The expanded field of teams has created some incredible matchups that have already made this World Cup one to remember. And now things get even more exciting with the intensity of the knockout rounds as the field is whittled down to one World Cup champion on July 19th. When you say it like that, I get a pain in my heart that the tournament is over. But there's a lot of soccer yet to go. And if the first few games of the round of 32 are any indication, anything is possible in the lead up to the final. We've got it covered from an ultra's perspective here on The Away End.

14:32So listen to The Away End with Daniel Alricone and John Green on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

14:43A decade ago, the ethanol kingpin of Iowa became the king of corn in Brazil. So we met with a lot of larger farmers, went from Bahia to Tocatines to Mato Grosso. And he brought a team of executives. They were going to help the country get in on a gold rush. Carbon and its derivatives are going to be really the next great commodity that the globe's going to trade. But back home in Iowa, trouble was brewing. If you live in Iowa, your land, your water and your voice could all be at risk thanks to a man named Bruce Rastetter. Now people are questioning if his climate solutions have anything to do with climate at all.

15:21You gotta give Bruce and the guys credit. They're Republicans. They don't give a s*** about any of this now. On this season of Drilled, Carbon Cowboys, the story of how the ethanol kingpin of Iowa became the king of corn in Brazil, and what it tells us about the limits of technology and markets to solve the climate crisis. Listen on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Here at the Happiness Lab, we're serving up some hot takes for the summer. Big ideas that just might reshape how you think about your well-being. Like, we've been thinking about the loneliness epidemic all wrong.

15:55You can be lonely in a marriage. You can be lonely at a party. I don't think loneliness is actually about solitude. Loneliness is about something much bigger. Or that we should get rid of small talk altogether. We talk about current events. We talk about what you do for a living. But not, do you love what you do for a living? Is this your dream job? or that the mental health crisis isn't what we think it is, and that kids today are doing better than we assume. It was really disorienting for us as researchers to be so wrong about our hypothesis. We are so scared that we are going to underreact to a severe challenge that we tend to overreact.

16:31For more surprising ideas backed by psychological science, check out our new series, Happiness Hot Takes. Listen to The Happiness Lab with me, Dr. Laurie Santos, on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Well, place capital, but the next question would be where, but... Yeah, I gotta ask you that. Yeah, for real. But I want to ask you about crypto, too, because you mentioned crypto early, and it has been beaten up. Specifically, you know, Bitcoin is something that has a lot of people nervous because there's still talk that it could go down even further than it has been.

17:13And during this whole AI run, during the NASDAQ run, during all of this stock market run, crypto has not gone up at all. And Bitcoin is down 50%. But if you look at XRP and Ethereum, they're down worse than that. Solana. And then, you know, now you're starting to, it happens all the time. Now you're starting to hear people saying that crypto is a scam and there's no point in Bitcoin. has no eccentric, no eccentric value. Even Mark Cuban, I think he's, no, was it Mark Cuban or was it, no, the guy that owns Barstool? He said that, yeah, he's saying, well, he's like, maybe Bitcoin is going to zero.

17:50So what is your thoughts on, on the crypto space, Bitcoin? Yeah. So one, I think, you know, investors should think to think about it twofold. If you're a trader, right, then just identify your best opportunities to trade within the space. It just is what it is, right? I'm not here to tell you which asset class is going to be in favor for a week or two. If you're a trader, you should continue to trade the asset classes if liquidity is there and the opportunity for you to have conviction in the trade. So that's one. The second thing is, I think there has to be bifurcation in crypto versus Bitcoin, just because of the association of Bitcoin.

18:33Bitcoin is seen as the store of value, all these other components of it that you already know. The other thing is it's not sticking with the narrative that it outpaces inflation. That's the bigger question and challenge. It's like, okay, who owns it? It was in Epstein's emails. There's a lot of different things. I saw something recently, like people were calling for Satoshi to move his wallet or do something over the next 12 months. there's a lot of headlines associated with Bitcoin. So whatever you're going to do, you should just trade it, have your options there. When it comes to the rest of the ecosystem, I think the one question we all should ask, and it should be the only question is, is there utility?

19:13Is there utility in the project? That's the number one question. And then if you start with that, and then you look to say who has real contracts, real partnerships, the same way that we're currently evaluating a lot of these crypto, these AI projects today, you should look at crypto the exact same way. Because even if we have, let's just say a cloud system that's hyper-connected, that's more data, you have more devices that you're connected to. I got two laptops, I got two phones. Security is the number one threat to everyone, which means we need accounting systems that are structured, that are transparent, that are secure.

19:52So if we're moving data, if we're moving assets, if we're moving anything on these rails. You want them to work for the institutions. Now think about what's happening in crypto. While I was at the New York Stock Exchange, we announced an alternative trading system or network, which will be trading tokenized securities. You see every exchange announcing what? Tokenized securities. You see more support around banks and tokenized treasuries because we want to remove the friction and we want to support the movement of assets freely. Now, I'll tell you, I think this is the dot-com bubble moment for crypto.

20:29They're going to be clear winners and they're going to be clear losers. I think so. In the near future, absolutely. Because we have to get the washout moment. People forget Amazon was down 90 % during the dot-com bubble. People forget that. Today is a staple. It's a hallmark. We can't think of life without it. But that's where we are, I think in the maturity of this particular asset class. The washed out moment is upon us. I think that's a fair moment. I think that's a fair assessment of where we are. Fair assessment. I got to start thinking about AI in terms of how disruptive it's going to be.

21:06We know education. We know healthcare for good reason. I wonder what your thoughts are on financial services. And at some point, will we have AI managed ETFs? Because I feel like institutional has always had algorithmic ways to trade. And now you're intensifying that by having artificial intelligence. So what do you see the future of financial services with this? You guys are coming with the haymakers on these. So two things. The first is, I think. If your best finance people are doing expense reports, chasing receipts, or spending time on month-end close, it's time to get Brex AF, a Gentic finance that eliminates that work before it starts.

21:52Learn more at brex.com slash AF. Run a business and not thinking about podcasting? Think again. More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora. And as the number one podcaster, iHeart's twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only iHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business? Think iHeart. Streaming, radio, and podcasting. Call 844-844-iHeart to get started. That's 844-844-iHeart. The World Cup is underway and it's been incredible.

22:29On our podcast, The Away End with Daniel Alarcon and John Green, we're talking about the games that have delighted us, the teams that have inspired us, what we're loving and what surprised us, all through the lens of being massive fans of the world's most beautiful game. Daniel, this tournament has been magical so far. The expanded field of teams has created some incredible matchups that have already made this World Cup one to remember. And now things get even more exciting with the intensity of the knockout rounds as the field is whittled down to one World Cup champion on July 19th. When you say it like that, I get a pain in my heart that the tournament is over.

23:03But there's a lot of soccer yet to go. And if the first few games of the round of 32 are any indication, anything is possible in the lead up to the final. We've got it covered from an ultra's perspective here on The Away End. So listen to The Away End with Daniel Alricone and John Green on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

23:27Here at the Happiness Lab, we're serving up some hot takes for the summer. Big ideas that just might reshape how you think about your well-being. Like, we've been thinking about the loneliness epidemic all wrong. You can be lonely in a marriage. You can be lonely at a party. I don't think loneliness is actually about solitude. Loneliness is about something much bigger. Or that we should get rid of small talk altogether. We talk about current events. We talk about what you do for a living. But not, do you love what you do for a living? Is this your dream job? Or that the mental health crisis isn't what we think it is.