144: How to Profit From Market Uncertainty

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0:31Hello, friends. Guess who? That's right, it is I, the replacer. Once again, I've been called on, so you can play the new Call of Duty Black Ops 7 with three expansive modes, 18 multiplayer maps, and the tastiest zombie gameplay you've ever freaking seen. Call of Duty Black Ops 7, available now. Rated M for Mature. Hey everyone, and welcome back to the Rich Habits Podcast, a top 10 business podcast on Spotify brought to you by public.com. By the end of this episode, you're going to understand how to position your portfolio during one of the most uncertain years in recent memory and why generating monthly income might be your best defense against volatility and how these award-winning strategies are helping investors stay fully invested while getting paid to wait out all this chaos.

1:25My name is Austin Hankwitz and I'm joined by my co-host Robert Croak. Robert is a seasoned entrepreneur with lifetime revenues of over 300 million and I'm a multimillionaire in my late 20s with a background in finance and economics. As the show name might suggest every episode, we talk about rich habits as they relate to business, finance, and mindset. So Robert, what are we going to be talking about in today's episode? In this week's episode of the Rich Habits Podcast, we're talking about something that's been on everyone's mind, market uncertainty. As we head into the year's end and look forward to 2026, the markets are very unforgiving at the moment.

1:59We're seeing all-time highs while interest rate expectations keep shifting, doubts around the AI trade, and not to mention the longest government shutdown in history. So we're excited to welcome back to the show, Garrett Pailella and Troy Cates, the managing partners of Neos Investments, which by the way, you all have over $15 billion in assets under management and worked on and around Wall Street for decades now. So we're grateful to have some of the industry titans like yourselves joining us for the show. These guys have built one of the most innovative lineups as it relates to income-focused ETFs in the industry, which came with some major recognition recently.

2:37NEOS was just named Best Options Strategies ETF Issuer by ETF Express. Congratulations. SPYI recently earned a five-star rating on Morningstar as of October 31st. And QQQI was named Best New Active ETF at the 2025 ETF Awards. Together, you both bring decades of experience in options trading and portfolio structure, having built first-of-their-kind strategies that allow everyday investors to generate monthly income while staying fully invested in the indices that they believe in. Garrett, Troy, welcome back to the show. We're super excited to have you. Thanks, Austin and Robert. Glad to be here.

3:12Happy to be here. Thank you. So we've been big believers in your ETFs for years now. I'm going to assume a lot of our listeners know what NEOS ETFs are, SPYI and QQQI. We talk about them a lot. But for those of you that might be new around here and want a little bit of a refresher. Do you guys mind walking our listeners through what NEOS is and what sets you all apart from your competitors? Yeah, sure. So at NEOS, we are an innovative ETF issuer that's focusing on bringing out tax efficient income ETFs across your core exposures in your portfolio. So as Austin, you're mentioning the S &P 500 for SPYI, maybe it's the NASDAQ, maybe it's core fixed income, maybe it's Bitcoin, gold, real estate, allowing investors to really expose either their market views, their risk tolerances, but ultimately with the whole goal in mind of generating a consistent, reliable, tax-efficient monthly income that can help subsidize earnings or help reach retirement at a much faster rate.

4:07And as a fellow investor in NEO CTFs myself, I very much appreciate that you guys create these income-focused ETFs. I get paid hundreds of dollars, pretty close to$1 ,000 a month now for my NEO CTF. So I'm right there with you, and hopefully they'll allow me to retire early. So Robert, why don't you kick us off with our first question? Yes, let's dive right into what I think everyone is probably feeling right now, and that is uncertainty and doubt about the markets. We're sitting near all-time highs, which sounds great on paper, but we know there's an underlying anxiety as the Consumer Confidence Index currently sits at record lows.

4:41Interest rates are shifting, and we've had the longest government shutdown in U.S. history and an unpredictable tariff situation, and the AI trade is now being questioned as well. So from your perspective as investment managers who've been through multiple market cycles, how should investors be thinking about positioning their portfolios as we close out the year and look ahead to 2026 and maybe walk us through a year-end checklist when it comes to investing in the market for now and in the future? I think it's clearly on everyone's mind. We obviously are coming up, like you said, on all-time highs here, but it was an extremely volatile year.

5:17We can remember back what April looked like and all the volatility there around the tariff announcements, around the pause, what the market did, the rally we saw after that when everything kind of settled down a little. And here we are into a new rate cutting cycle where we've had a couple of rate cuts from the Fed. Will we get another one next month in December? What will 26 look like? So it's really important to sit down as an investor and think about what do I need to do? How did this year work out for me? What were my goals that I set out for this year? And what do I want to look forward to next year?

5:50It's really taking accountability and looking at your portfolio, understanding what you're invested in. Do you have things that are crossing over where you have too much exposure to one name because you own a couple of different ETFs and they all have the same holdings or similar holdings? So it's really looking into that and understanding what you're invested in, what your real goals are. We were talking about Austin saying that he's almost at$1 ,000 a month in income from just the NEOs products. If that's something someone's looking for, they have to look through and say, all right, I'm getting that thousand dollars.

6:20Is it tax efficient? What does my end of year tax bill look like after all these distributions I've received? And it really should go into what your planning looks like for 26 and thinking about going into next year outside of what your goals are, thinking about what the environment might be like. Like, yes, we're coming off 2023, 25 % plus year in the S &P 500, 24, 25%. This year, another big rally sitting at all-time highs. Will it continue? What if it doesn't? Do you need to adjust any part of your portfolio for the risk you're taking to get out of that income or those returns? And it's really important to sit down and review all of that, at least on a yearly basis, but probably more often than that.

7:02But now's the time to do it and think about what you're looking for in 26. Yeah, I love this breakdown. And it really speaks to something that I say constantly. And that is, it's not what you make, it's what you keep. And I think you keep a lot more when you actually have a plan and a strategy and you stick to it. And Austin really covers it well a lot about active management, because so many people have this set it and forget it. And I'm so sick of hearing that. And they just don't really pay attention to what's going on. Where are they at with their taxes? Are they being tax efficient? And what can they do better year over year or quarter over quarter?

7:34So I really like that breakdown. I think it's important for everyone following along to make sure that they're paying attention to get those efficiencies and really keep as much of their money and their gains in their pocket and not somewhere else. Yeah, I think a lot of investors, especially these newer ones, are looking at this volatility and they're saying, maybe I should just sit on the sidelines and not participate. And it comes back to that old saying we hear a lot, which is time in the market beats trying to time the market. Right. That saying is for a reason. So for investors looking at this volatility and thinking like, maybe I should sit on the sidelines, maybe I should wait this out, how can NEO's funds actually help them use volatility to their advantage?

8:12Because what's cool about your funds is you're not asking people to choose between staying invested and generating income. You're giving them both of those options. So we'd love to hear from your perspective sort of how NEO's funds leverages volatility. Volatility, meaning obviously the underlying price movement of an asset, so-called the S &P 500, right? there is what's called an implied volatility. And then ultimately, what is the realized volatility? What ultimately happens? And when we at NEOs think about that, options, so options that you can invest in within your portfolio, get priced off of volatility.

8:47And we love it because you could take advantage of volatility and turn that into an income source in a way to actually reduce the volatility in your portfolio. So I think we've talked about it before, but using SPYI or QQQI as an example, that are larger kind of equity allocations to the S &P 500 or NASDAQ 100, right? You can be long SPI or QQQI, have exposure to the S &P or the NASDAQ, but how we reduce the volatility or use volatility as a way to source income is by selling what's called covered calls. And those covered calls are meaning that you're willing to have your portfolio appreciate to a certain level in value, but someone pays you that if it gets up a certain level, then you won't participate for the portion that you had sold a covered call.

9:33But what's the benefit of having that take advantage of volatility? And that's really what the question is, is if the markets don't go above that level or below, what you got paid can help buffer part of your portfolio. And so there's a lot of different ways to take advantage of what is volatility in the market, because there's income generating strategies that here at NEOs, we do in a variety of different ways. I mean, we have 13 different funds, you know, currently across different risk exposures, we're trading different options for those. And so what we love about the products for investors that are always trying to time the market is that's not what you do with the NEOs funds.

10:09These are ones that you can dollar cost average, you can continue to add into your portfolio. And the idea is that they're going to have lower volatility than that underlying index like the S &P 500. And if it's paying you a monthly distribution of call it, you know, 1 % a month, then that's going to allow you the ability to generate income and stay invested for those times when the markets may be down. And those options have paid you money in your portfolio. So what I think is so interesting about what you said is that you gave that example of like SPYIs 1%, right? Or so monthly distribution.

10:42You guys are doing about a 12 % distribution rate right now in SPYI. And what we forget as investors is that volatility is the toll we pay to invest, right? And I think the stat is there's 29 times on average that the S &P 500 will contract by 1 % in a trading day throughout the year, right? So there's about two dozen times that we're going to have some volatile days in the stock market looking at the S &P. Now, just to make sure we're on the same page about how this works specifically, Garrett, what you were saying is like, OK, with these covered call option contracts, we sell the option contracts out of the money.

11:22Right. So there's some appreciation that could continue to rise as the markets move up into the right. But as we experience these days of volatility, they're offset by the income generated by selling this covered call. So for example, if we have a 1 % pullback in the S &P 500, yeah, the price of SPYI, just like the price of VOO, like the actual ETF itself, will come down. But that price is then offset by the 1 % yield that is paid via a monthly distribution to your investors. And so sure, the price came down a little bit, but that yield offsets the price. And so when you look at the total return on that period of time, it could even be in the green.

12:01And in this instance, I know it happened in April, outperforming the underlying index. I'm pretty sure QQQI outperformed the NASDAQ 100 during the Trump tariff tantrum we had in April because of the income generated. So I appreciate you walking us through how the volatility can kind of aid in your strategy of generating income inside of people's portfolios, allowing them to not have to choose between staying invested and generating that income. So before we ask Garrett and Troy our next question, got to give a shout out to public.com because investing towards your financial future is the only way you'll ever be able to retire.

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13:12So that old 401k you haven't touched in a while or your IRA that's sitting on that boring broker you hate using, roll those over and claim your free 1 % match. That's right. Fund your account in five minutes or less by heading to public.com front slash rich habits to claim your 1 % match today. Paid for by public investing and full disclosures in the podcast description. All right, let's now jump back to our interview with Troy and Garrett. And I want to piggyback that. Now, I know you have QQQI for the NASDAQ 100, but you also have QQQH. So can you explain the difference between those two for our audience, especially those that are more risk averse?

13:49Maybe they're closer to retirement or they're focused more on capital preservation. Can you walk us through the difference there so people understand which may be the better option for them? Sure. It's a great question. When you're thinking about investing in the NASDAQ 100, a lot of people will look towards just QQQ as their pure beta exposure. But once they get into the realm of wanting to earn income off of that portfolio but still have access to those growth leaves, QQQI really comes into play and they could see it. And, you know, right now it has currently has around a 14 % distribution yield.

14:22So you're getting over 1 % a month, but you're still invested in all 100 plus names of the NASDAQ 100. What we wanted to do with QQQH, which is our hedged version, is still give you exposure. So you're still long all 100 plus names of the NASDAQ 100. You're still writing a call out of the money on a monthly basis and not covering 100 % of the notional. So you're still getting that upside appreciation if the market moves higher. You could still even get some appreciation past the strike price because we're not writing on 100 % of the notional, which is important in a lot of our products. But the idea is if we could take some of that premium and buy a long put spread.

15:00So using the NASDAQ 100 index options that we're using on the call side, now we're using on the put side too. And we're going into what is called a put spread collar. So we're selling that call. We're buying the put spread. And what's that put spread look like? meaning we're buying a long put a little bit out of the money, usually around 5%, 6%, 7 % out of the money, depending on volatility. And then we're selling that put or selling away that insurance further away, call it 10 % to 15%, maybe 20 % out of the money, depending on volatility. And what that does for you is it lowers your volatility in the portfolio, still provides an income stream, a tax-efficient income stream, but it smoothens out the return profile.

15:38So that put spread collar, if you have a market that suddenly starts moving lower, that put spread can kick in and protect you. We're not hedging it down to zero, so it's not a fully hedged portfolio, but it'll give you that measure of downside protection along with the premium that you received, as you were describing earlier, Austin, from that short call to give you a nice downside protection for a portion of the portfolio. Now, if the market turns around and moves higher, you're still positioned to potentially capture a good portion of the upside, which is really nice, which you don't see in a lot of hedged products.

16:11So we really look at it as if you're liking QQQI, but you're really thinking, yes, like Robert said, you're going more towards those retirement years. You want to be a little more risk averse. You want to be more conservative, but you still want to be in the equities. You want to be involved in the growth of, say, the NASDAQ 100. QQQH might be a good option to give up some of that income and have a smoother return profile with a little bit of downside protection. Yeah, I'm just kind of looking here at the price of QQQH during the Trump tariff tantrum, because that's kind of like the volatility we're talking about, right?

16:42When things are really moving around and the markets are up, down, left, right, in circles. And it seems like QQQH outperformed QQQ, right? So your hedged product outperformed the NASDAQ by like 8 % during that period of time, which is material for a lot of investors, especially as the near retirement. Maybe you're focused on that capital preservation. So I appreciate that walkthrough, Troy. Let's not talk about crypto. A lot of our listeners know about BTCI because we had you on for episode 92, which I think was titled something like how to capture the Bitcoin dividend or something like that.

17:15So one, what is BTCI just as a quick reminder? And And then two, do you have any updates on, you know, maybe other sort of ETFs that could be coming around the corner as it relates to cryptocurrency? And finally, how do you see these cryptocurrency focused covered call high income ETFs fitting inside of an existing well diversified portfolio for investors? So for BTCI, we're giving investors exposure to spot Bitcoin, kind of how we've talked about, you know, getting exposure to S &P or NASDAQ. and we're instituting the same kind of covered call structure that we had talked about that I walked through that Troy had just talked about as well in that we're actually able to trade Bitcoin index options.

17:57So there's an institutional index option contract. And so you get exposure to spot Bitcoin. You get to put on these laddered covered call strategies that we've been talking about to take advantage of Bitcoin volatility. What we love about it is Bitcoin volatility is insane, right? When you compare that to equities or other core allocations within your portfolio, for a little bit of frame reference, Bitcoin volatility sits around 60 versus the S &P historically around 18. And that's when you've looked at Bitcoin being a little bit more institutionalized. I think most people would say after 2025 and the growth of all the ETPs that can give you exposure.

18:36And so you're able to harness the opportunity for us to focus really on about a 25 to 30 % annualized distribution rate by selling these covered calls. But I think as we talked earlier, maybe an S &P covered call, the out of the moneyness of those options. So where we set them away from where the current market is in an S &P might be one to 4 % on average for Bitcoin. We're talking more in like the 10 to 20 % range, right? And we only put call options on a portion of the portfolio. And so what's really nice about that product has been having a significant an amount of the upside of Bitcoin, but really harnessing the fact that volatility is so high, you could be generating in that 25 to 30 % annualized distribution rate.

19:18I think as we think about more products in that segment, for the audience who does know us, we don't launch funds just to launch funds because we think they'll be great. We launch funds because we really find offering structural solutions in investors' portfolios allows them to choose the product that fits best within their portfolio, their risk tolerances. We're huge on always telling people, like, don't buy what your friend told you to buy. Buy what your risk tolerance is willing to hold. Buy something that's helping you get to your estate planning goals. And so we're looking to have a follow-on extension within the digital asset space coming up hopefully soon with an Ethereum high-income product.

19:54So it's going to have a very similar structure to what our Bitcoin is, but of course, exposure to Ethereum as another digital asset that people could integrate into their portfolios. I appreciate that breakdown. And, you know, Robert and I are always saying, you know, crypto exposure could make up between, let's call it 5 % to 15 % of someone's total invested capital. Are you seeing, you know, when it comes to BTCI and perhaps what this new ETF would turn into with Ethereum, are you seeing a similar kind of profile from an appetite perspective or obviously BTCI is closing in on a billion dollars of assets under management.

20:28So like, Where do you find the happy medium? Where are you seeing right now in the markets as it relates to who these investors are and kind of where they keep it in their well-diversified portfolio? Yeah. So we're seeing allocations in Bitcoin to be in that more growth-oriented, higher octane part of the portfolio. Although when we're talking to advisors, we're thinking financial advisors that are managing money on behalf of a lot of their end clients. They're definitely viewing that from an asset allocation perspective of like, I don't want to miss out. It's run a lot. we all think that this is going up over a period of time and whether they call it 150 whether they're calling it a million right they're all saying i need to have some exposure my clients are asking me for exposure but i need to know that i can bucket it into more of that like high risk so we're seeing that in i'd say maybe part of like the equity bucket to where hey i'm invested in the nasdaq 100 i like growth innovation ai but i'm going to take the next level up from that and be invested in Bitcoin, in Ethereum, and making that at least at a minimum, like a couple percentage point allocations with the investors that are comfortable with that.

21:33And then seeing how that grows in scales, certainly more younger investors, they're putting it as a larger percentage, but definitely starting to see that institutional application and use case for the end clients. That's what I love what you guys are doing at Nios because you're meeting investors where they are. You're not building products that aren't going to help them now. You're not building products that only help people that have super high net worths. So whether someone wants exposure to the S &P, NASDAQ, Bitcoin, or something else entirely, you guys are building income generating solutions for them.

22:06And you're not asking them to abandon the parts of the market they already know and believe in. And that is why we love NIO so much. And it seems like you guys have also had some big announcements over the last few months with new additions to your suite of ETFs. Do you want to give us a little rapid fire on those for our audience? Can you give us a little sneak peek? Sure. I mean, since the past few months, we did launch another couple of ETFs. We launched our NEOS Gold High Income, which is IAUI. That one has had a great adoption. We've definitely seen a lot of investors, a lot of advisors talk about how they've always had to have an allocation to gold, but could never earn any real income off of it outside of just peeling some off every once in a while.

22:45So it's a really nice product that has really gathered some attention. And then our international fund, NIHI, which is our MSCI IFA high income ETF. That one we partnered with MSCI to get out, get exposure to the investable market outside of the US and Canada and offer an income solution there. And then as Garrett was saying, we have the Ethereum product that's in registration right now. So hopefully we can get that out soon along with a few other products. So we have a total of six in registration. And as Garrett was saying earlier, we don't try to just bring products out to throw things at the wall and see what sticks.

23:21We really thoughtfully bring things out where we're seeing investor demand, where we're having real conversations with people saying, this is a place in the market where they could use income. So the other products include one that's an MLPI, MLP and energy infrastructure funds, one where we're doing what's called our boosted series. This would be a levered version of SPI-I, QQQI, and BTCI. So we're excited to bring those out. And then we're also looking to bring out an equity long short with option income on top of it. So really excited about this next batch of ETFs that we're trying to get out to the market, hopefully, maybe by year end or going into early 26.

24:00Now, before we ask Troy and Garrett, our final question, got to give a shout out to Blossom. You guys have heard us beat the drum on this one all year long. But if you haven't already considered checking out Blossom Social Network, you really got to go give it a try. We know a ton of our Rich Habits podcast listeners made it out to their tour earlier this fall, and they said that they had a lot of fun. It's really cool how they're bringing and connecting investors together from all across the country. Yeah, I've heard people call it the Facebook for investors, and that's exactly the way to think about it.

24:28We're enjoying spending so much time on the platform, and they do a really good job. We're on Blossom because the community is different, right? People actually share their strategies, their wins, their lessons. It's open, it's supportive, it's transparent. Exactly. You can follow us, see our real holdings even track when we add a position. It's like learning by seeing from real portfolios, not random opinions. So if you're serious about building wealth or just want to surround yourself with investors who think long term, be sure to join Blossom. It's completely free. It's very fun. We're both on there.