Retail Trader vs. Hedge Fund Manager: Where Is the Real Alpha?

Chris, Tom, thank you so much for coming on odds on Open. Thanks for having us. Yeah, happy to be here, man. Who is in a better position to take risk? Retail freighters or hedge fund managers? Chris, let's start with you. Oh, boy. I guess it really means like, what do you mean exactly by risk, right? You know, so like, I guess I'd have to admit maybe a hedge fund is probably positioned a little bit better in terms of like control and to survive risk, right? Because there's kind of baked in diversification. You got hedging techniques, execution, financing teams, right? I'm sure some have some quantitative kind of risk systems built in. But, you know, my take would be that a skilled individual investor is really better position to take on concentrated risk, right? Reason being, you know, we don't have LPs. You know, we don't have, you know, redemptions that we have to deal with, right? We don't mandate, we don't bench marks, we don't have volatility targets. I think really importantly, we don't have any career risk that basically can sometimes result in misaligned incentives. There's no need for us to kind of like maintain a particular product that's been framed a certain way. So we really just have a lot more flexibility and our ability to take on those risk, especially if we understand kind of the time frame that we're investing under. So if by taking risk, you mean, you know, minimizing it, the hedge fund potentially has some advantages there, right? If you mean having the freedom to actually take on a large asymmetric risk when you identify an exceptional opportunity, which is like the cornerstone of my style of investing, I'd way rather be investing my money every single time. And I think we're at a huge inherent advantage to take on that level of concentration and to have full control over it and be really maneuverable when that happens. So I think it really depends on how you define risk. Tom, let's do your thoughts. Yeah, so well, first of all, I hope we come back to your incentives comment. But with that said, I think it actually revolves around what you define as some of these categories. Like, you know, one of my big sticks is that the hedge fund returns or a Pareto distributed, right? So the guys at the top make 80% of the money. Top 20% make roughly 80% of the money. And they do the right thing. And their view toward risk management is exactly the kind of thing you describe where it's deeply constrained, but that imposes limitations. Limitations that don't apply to, obviously, to retail. But retail is a Pareto distribution too. And somebody like you, Chris, you're stating these things from your perspective. But you're like a Ken Griffin kind of outlier compared to other retail investors. And you know it, most retail investors can't find their hat with both hands. Which is okay because they restrict themselves to doing things. They like recognize that they don't really know what they're doing. So they buy an index fund and they come back in five years and see what's happening. But for somebody to be an active engaged day trade, you're still somebody with your level of success is again, a major outlier and not the standard. So yeah, I actually would agree with you. I think generally speaking, the degrees of freedom are much larger for retail investors. You can do things that are much smaller, that are too expensive on a dollar's gained basis for a hedge fund. But the hedge fund is much more institutionalized. We've got better structure, we've got more people actually educated in the science of risk management than your typical retail investor. And then the other thing you want to look at is, okay, so let's forget all of that. Who's better? Let's worry about the word better. That you'd have to determine by results, right? And from that perspective, I think who's better at taking those risks is maybe a wash because the guys on the on the top end of the pre-do distribution of retail investors make gobs more money than the guys at the bottom who lose. And it's even steeper progression than it is in the hedge fund world where, you know, in roughly 25% of the hedge fund industry goes out of business every year and is replaced with another 25%. Roughly 40%, it varies year on year, but roughly 40% operate at a loss every year. And I would argue that of active traders who match your profile similar to yours, it's probably even higher a number that are losing money consistently. Also an open is sponsored by Onyx Capital Group, the top market maker in oil derivatives. They just released the fourth version of the terminal, flux. And there are two things in it worth knowing if you have oil exposure. First, it streams live fair value on 800 oil curves, including the ones that are hard to mark. Second, it carries their own positioning data. So you can see how the market is positioned long and short and at what price they got in. You can find it at flux.live and the link is in the description. Chris, any comment? No, I think it's fair. And I think we kind of both agree that, you know, both the way you define risk and also the way you would define the word better. I'll give it that to you. The word, how you define the word better is probably the most important kind of thing you have to determine to answer that question, right? Because better means a lot, better means a lot of things. Like you're saying, like for the individual investor, you know, sometimes, you know, risk to some extent doesn't even matter because, you know, a drawdown that would be completely unacceptable for an allocator. Again, based on the framework and the benchmarks and everything that's set for that fund that would be totally unacceptable. Like a 40 or 50% drawdown would be a career in rational. Yeah, but that's a completely rational and expected drawdown for a concentrated retail investor that had a multi-decade outlook whose objective is to compound returns that are meaningfully higher than what they can get in, you know, in the market, you know, just being in diversified funds. So it really depends on your objective because I think for a lot of retail investors, what I try to do is convince them to have a bucket of high-risk, high-reward capital, right, in their life and that high-risk, high-reward capital usually does have a duration of decades and I tell them to expect a 70% maximum drawdown if they're investing with leverage, which I actually surprisingly encourage people to do with that bucket of rubber of brisk funding. So again, there are a lot of gray areas here. But I think what I love is the flexibility that you get as a retail investor once you become a skilled retail investor and you're doing it the right way. Sure. I've had multiple situations where most of the management I've done has been market neutral or some sort of formally structured hedge product designed to lower volatility and use leverage to amplify returns. There's been lots of circumstances where I'd see circumstances like a good example was when the S&P collapsed under the mortgage bond crisis. I would have loved to buy S&P in my institutional book. I was a tutor at the time, but I couldn't do it because that's not the business I had sold. I had sold this market neutral strategy which had a direct thing. And the truth is, they didn't want to pay me to take on that S&P risk anyway. Tutor already had a guy doing that. His name was Paul Tutor Jones. He didn't need me to do it, right? So yeah, it's a big constraint that retail investors can be doing whatever and you see a dramatic event like that, you can exploit it. And I think the difference revolves around, it's more subtle than this. So I'm oversimplifying just a little bit, but it revolves around beta, really, right? I charge people two in 20. They don't want to pay me two in 20 for beta. You're managing your money. That's your beta. You have to be the guy that manages that beta which means you need to have a different approach to the expected drawdown because as using the S&P's an overwrought example, it's going to have a variance. So you need to size that correctly and maybe try and time it correctly if that suits you, but that's risk I can't take. So, you know, You're going to have a much higher return than I am some of the time and you're going to have a much lower return than I am some of the time Right because we're trying to do two completely different things Yeah, I think that's one of the biggest rubs. I have with the amount of money that gets allocated Two funds that are earmarked to kind of hit that low volatility Alpha, right, which is the vast majority of kind of institutional Wall Street and for some reason Yeah, and and there's I think there's a big question to be asked which is why like there are certainly some types of You know some types of investors or or or or capital where you you want that low volatility It could be you know people at the tail end of retire You know retiring. It could be various pensions that just need to have have certain outflows that they have to hit right Certainly that makes a lot of sense, but I think for the vast majority of people that are usually kind of have a time horizon of like 10 15 20 years plus for the most part on their money like they're giving up a lot To for that low kind of volatility alpha that most funds kind of go after and I just have to ask why it's because of this This fear of having that 50% drawdown in any given year which is completely irrational if you think about it And and it's just but again, I think institutions generally I'm not picking on you or any particular institution But it's all a product right it's an industry and it's a lot easier to sell something that looks like kind of You know lower volatility alpha where you don't have to necessarily beat the S&P 500 where you basically just have a Structure that you're putting together Difficult products. Yeah Yeah, it seems difficult for you know what we can debate whether or not most funds even achieve that objective But even if they did achieve that objective, it's an objective that is productizable That seems out of reach for for most investors. So it's like well of course I got to invest That my money with them, but should we even be wanting to do that with our money? If it's on a 15 25 year time horizon, right like like why are we giving up so much for the interim lower volatility When that really makes no difference with how we're looking to kind of grow our capital and when we're looking to access our capitals Not for way way way down the road I have another way of saying the same thing you've just did which is that our the product that my firm offers and that other firms with a similar institutional bent offer implies An element of Knowledge for portfolio construction. So the university of Texas Endowment doesn't need me to invest their beta an individual investor might But the assumption that's embedded in my product is that I've got a great way for you to beat the S&P go by the S&P Marginate two to one give me the rest of the money. I'll deliver a stable study return, which you will layer on top of The S&P less the cost of financing. You're still going to have a deep drawdown But because my product is added on to that you're not going to have as deep a drawdown. You're going to beat the market by you know I'm my fund as an example returns about 20% a year of very very low drawdown You can fund that on margin and about let's call it 5% That means you're going to make you're going to outperform the S&P by 15% Every year that you invest in both of those products. You have an S&P index margin You have assets with us the combination of those two returns together give you a better portfolio and that's the general principle behind the the strategy of delivering alpha without beta or stripping out all the beta stripping out as much of the gamma as you can get away with or at least having a strategy about the gamma, right? You want to you know, you have a little bit of a exposure to interest rates maybe or you have a little bit of a You know exposure to time a theta component, but the truth is those risks unless you're a bank and have limitless leverage you can apply to it Those risks don't really Show up much and has fun returns. It's mostly beta and gamma Yeah, I mean, I I would think you know if your fund is putting out 20% a year that First of all, that's a complete abnormally, right? I mean, we're doing okay. We've identified I thought it was over a longer time period so it feels like there's some There's some I don't know much about your fund, but that that's a huge number for a fund to put up right unless there's some Is there some hitting concentration risk? Is there some I'm not too familiar with your fund specifically, but that's Obviously a big number low volatility beta Yeah, and and the goal is you know you use leverage in a way that makes sense to use leverage So now as an unlevered return I Don't have this handy, but I'm betting without the use of leverage that roughly 20% a year probably would have been more like 11% But because we levered it When the the quantitative statistics said to do so we ended up with much more than that There is a variance to the the strategy, but it's very very low. We are risky adjusted returns quite high But that's not uncommon like you know, I've been In finance for 35 years. I started in research as a quant on the exotic swaps desk I learned risk management in the banking world. I was a JP Morgan And many of my peers did too. I went from there to more capital to cached into tutor investments where I was a PM Delivering or at least striving to deliver returns similar to what I'm doing now doing it in the same sort of ways Finding quantitative measures to deliver alpha with beta and gamma stripped off. That was the goal, right? You're not always successful at it and But generally speaking those guys in what what Ethan would call the pod shops at you know, Millennium say well I consider tutor kind of a pod shop as well, although Maybe it's scaled a little larger Most of the people in those seats as PMs are doing similar things in different markets and Some of them doing a discretionary basis some in a quantitative basis, but they're all striving to do the same thing is win every day if you can manage it So it's different and I find it very difficult to disagree with your take on it for a retail investor Because a retail investor isn't doesn't know enough about portfolio construction to know well He's going to think great. I'll go buy the S&P and I'll leverage it You know three to one or four to one or what it you know have very much leverage I can convince my broker to give me I'll put all that money in there and then I'll perform the S&P by a lot That's the kind of way people get out over their skis, you know There's a more to portfolio construction than just throw in some leverage But real quick Real quick Tom Chris said that he would almost encourage people to go through those 70% drawdowns I can't help but chime in. What are your thoughts on that? Well, I guess what are you trying to teach the kids today, you know? I You know I've had drawdowns And that's 70% but I've had drawdowns true painful drawdowns drawdowns and amounts large enough to give me great pain And you do learn something from it But I you know the thing I'm really sensitive to is I don't want to give anybody advice That is more likely to result in a negative outcome than a positive one You're going to give them the advice they should experience that 70% drawdown and some small portion Of the people you who take that advice from you will benefit from it dramatically and will do much better over the 10 or 15 year horizon that you're pointing to and Many of them will go underwater Certainly at least half of the you know the aspiring engineering students who want to be day traders Are going to go broke because Chris told me 70% drawdowns no problem So this is the moment I'm going to really pour on the leverage just going to or I'm going to hang on until it gets to zero I mean you know that a lot of people are going to think that way right so I'm I'm always very careful not to give any direct advice Unless the odds that that's going to benefit the person I'm speaking to are better than not I think you know the way I approach that type of risk conversation is is that most self-directed investors do not understand the concept of bucketing risk capital. So they have the majority, if not all, of their investment capital in a single account that is invested the same way. And sometimes that money is being invested to conservatively, sometimes that money is being invested irresponsibly. And what I try to educate people on is it's really important to bucket your money and invest it appropriately for the objective of that risk bucket, right? So what most people don't have is an account where they're able to actually take on concentration, where they're actually able to take on leverage for an account that's designed to be invested over decades. And for an account where it would be okay if you are levered 50, 60, 70%, and you have a reasonable amount of concentration in that portfolio that during the worst of times, there could be a 70% drawdown, not 100%, not a 90%, but again, if you're levered 50, 60%, and there is some degree of concentration, and what I mean by that is not having all your money invested in this. - Yeah, I'm fine. Translate into the language I'm accustomed to as you speak. - Yeah, that it would be normal under the worst of all worst case scenarios to have something that looks like a 70% drawdown in an account where you're continuing to contribute over time. So that's something that most people aren't willing to live with, but if you're looking to generate kind of 2X market returns to an 1/2X market returns sometimes higher, you have to have an account where you're willing to take on some concentration and some leverage, and that could start with $5, right? It could start by making trade-offs in your life because you're investing money that you think you can 30X, 50X, 80X over the course of 20, 30, 40 years, in a concentrated levered account. So you just view capital differently, and you're making trade-offs now in your life because you have an account where you can do that with, right? Listen, most wealthy individuals have money that is bucketed to take on concentrated risk in various fields, various things, whether it's VC, early stage, whether it's in the real estate sector, right? Whether it's potentially in a certain type of fund, and regular people just do not have that wrist bucket, which is insane, it could start with $5, right? You just have to have it. You have to have the ability to grow capital and compound it over 20 or 30 years something that's gonna be meaningfully higher than market returns, and everyone has the ability to generate meaningful compounding over market returns in an account that has a little higher degree of concentration and leverage. That's it. Okay, so here's, I think you're co-mingling two conversations. First of all, with regard to your discussion of risk management, essentially what you're arguing for is that individuals should take the same kind of approach that say somebody like Paul Tutor Jones does. Have a bunch of buckets, have a bunch of different strategies, have a bunch of different things that are hopefully uncorrelated, that are going to benefit you in different ways, some of them will be high risk, some of them will be low. That portion of your conversation is impossible to indict, it's absolutely correct. I think the statement that breaks down for me, the problem, the thing I have the biggest problem with is, you say everybody has the ability to get two or three or whatever times returns, and I don't think that's indemonstrated in any way. Like, yes, they can and should take an appropriate perspective on how they manage risk. Yes, they should have differing strategies that are uncorrelated, and if they're looking to optimize, then some of those strategies should be higher risk that feature higher concentration. But how are they gonna know? I mean, I've met, I've met farmers, I don't wanna say anything more specific than that, who've been wildly successful and ended up with $20,000,000. Who didn't know the first thing about technology, but thought he should invest in technology. And he has no expertise for a concentrated bet. He, what is he basing that concentrated bet on? You know, while I was talking to my friend and they said they really liked this product, even that would be something, they don't even have that. They have a news story that somebody told them or, or even worse, something they read on social media, you know, where that information is all about, you know, express preference versus revealed preference. People say a lot of things that aren't necessarily how they really feel, right? So, as a risk management function, I absolutely agree with you. Have the ability? I think empirically we can say that, based on past evidence, many of them do not. You do, I don't dispute it. You have a perspective and a vision on how to do that kind of trading. And based on all reported information, you've been very successful at it and muzzle-toff. Good for you, but most people can't match your combination of skill and analytics and intuition and whatever else it is that you're actually basing it on. That combination of things doesn't exist across everybody's world, in my opinion. Yeah, I mean, listen, it's a process getting there. But, you know, I think what's so interesting about my background is I just do not have any expertise that would traditionally be associated with finance or even technology or mathematics. I've gotten to know many, many thousands of people over the past 20 years and I can't speak to necessarily to every profession, the farmer necessarily, right? But I think there's this smoke screen that an ordinary person doesn't have the skill set. I would argue the opposite that ordinary people have the ultimate skill set and that they are so deeply rooted into the real world. Not by necessarily just reading social media, but many of them just being part of that world and being deep in the conversations of what people are doing every day, what we're feeling, what we're spending our money on, how our culture is changing, how consumer behavior is changing, how product trends are shifting, that most ordinary people are perfectly suited to occasionally see things in the real world and connect the dots to monstrously big investment opportunities. And I think stories like Tesla, right? Back in the late 2000s and teens, and it's not just Tesla, it's hundreds of companies that regular people, and I know this 'cause I've been doing this now speaking to people for two decades, that they are seeing these trends early. They saw AI, they saw AWS early. They saw Salesforce early 'cause they were working at a company that took, you know, started using Salesforce and every single other person at the sales conference was going through the same onboarding process that they were and they realized, dude, this is gonna be huge early on, right? When Salesforce was basically defining what a CRM was and you just happen to be working in a sales job in corporate America, there's hundreds and hundreds of examples and you don't need to nail them all, you need to nail like one or two or three over the course of your entire life, right? And when you see things-- - Oh, long term, long term, that's true. - Yeah, an apple, for example, with the iPhone. I mean, there's just so many examples when you look through some of the biggest, you go over the last 30 years and you look at some of the biggest investments that could or could not have been made by an individual. 75% of those were easily seen by ordinary people first, right? So if you just retrain your brain to observe the world and connect dots, this is all that I do. I'd have no financial infrastructure. I utilize zero fundamental analysis, zero technical analysis. I have virtually no tool sets. All I do is observe the world see change happening in the world, the change could be technology like AI. Two years ago, right? - I mean, I'll tell you the other side of that, because I can't speak to the other side of that. How I make my living, the thing that I do is I look for mistakes, right? When someone is buying when they should sell and selling when they should buy and so and so and so. That's how my fund profits. We calculate for value or something resembling it, we have a model that we use that we use to determine which for value looks like and what the term structure is. We can't, multiple dimensions. And when something goes out of whack, when the S&P sells off, you know, 40% in a day, we buy some. of it, right? And, you know, it's sort of like the economists complaint, you know, everybody always says economists have predicted 10 of the last five recessions. Well, your retail guys got Apple right maybe and they got Tesla and they got the AI boom and they got all of this stuff right. But they got 50 other things wrong in the meantime and they bet on all of those too. So they're in lies the problem, right? You maybe you're I don't know this is the first time we've met we've never spoken before. But it sounds to me based on exclusively on this conversation like the thing you have is maybe a little bit more discipline than most people and you tend to think longer term. So you're not looking for something that's going to be, you know, up today or up this week and then down next week or whatever. You're not going to get pulled into that trap. We're trying to make a rational decision over a time horizon shorter than you require to make a rational decision, which is a trap that a great great many traders and not just individual traders, institutional traders as well fall into, right? So a common problem that the best quantitative strategies have been making profit of for decades now. So maybe that's the trick. I don't know. I do know that I know a lot of retail investors who have made a vast amount of money. I know very very few day traders, which is holding period shorter than, you know, a day or a couple of days or something on those lines. I'll restate the thing I just said, which is I know a lot of retail investors that have made money only because they held for a very long time. I know very few day traders who ever made anything like real money, the vast vast majority. I would say probably something like 99% lose inevitably. It's an extremely rare thing that a retail short holding period trader makes a lot of money over the long term. Yeah, I think the clear things up, Tom, I, you saw I'm not a day trader. I, I'm very against anyone, regular people, professionals really doesn't even matter. I'm just really not into that world at all. And I think one of the biggest traps that ordinary self-director investors fall into is trying to replicate what they think institutions are doing, whether they, it's day trading or technical day trading or any other number of short term strategies. And that's never been what I'm about. Like I, I basically don't even look at the stock market for the most part on a daily basis, right? So 95% of my focus is observing the world and connecting dots and doing deeper research to assess the degree to which a publicly traded company might benefit or be harmed by some major change that's happening in the world due to technology, culture, consumer behavior, literally anything, right? The weather, anything. So I'm not even really looking at stock price or looking at what other traders are doing or what's happening in today to the stock market ever. It's really about, and I think I would argue you're promoting exactly the thing that I think retail investors should concentrate on. Longer term horizons don't be so scared of the variance because yes and peak goes up, it goes down. It's just how it goes. You can't have profit without occasional drift to the loss. And don't try and make a decision in a period of time that is shorter than you require to make a rational decision. If it takes you two days of analysis to decide in a rational way, don't try and trade it every day because you, by definition, are making an irrational choice. You're just trying to be, you know, the, get in line with the crowd and hope that you can get out in time. It's a fatal conceit. So yeah, and, and Ethan, this brings us back around, right? I mentioned as we were leading in, we're probably going to end up agreeing on a bunch of things. I agree absolutely with everything you say. I think it's the right approach to risk. I think it's the right approach to, you know, sort of the time horizon variance perspective. I really don't have any complaints. The only difference is that we're trying to do two different things for two different groups of people. Yeah, Tom, I'm going to ask you a question because this has been coming up a lot lately. I don't know why in the last few months, this, this topic comes up amongst investors. It's like a hot topic right now. So triple leveraged ETFs, okay? Cause you meant, cause you mentioned it, you mentioned, you know, kind of the technique earlier on about just getting in the S&P and leveraging up, right? So you look at a triple leveraged ETF over the course of multi decades. And I'm not talking about, you know, narrow ETF, time at the S&P or yeah, the S&P, the QX, right? Everything is out another symbol. I wouldn't ever go near it. Yeah, we have, we have like a lot of studies out now that kind of tried to reverse engineer that over a very long period because they haven't existed that long, right? So they try to go back 80 years, and reverse engineer it. And it's really interesting. If your dollar cost averaging over just about any long time period, you're generating roughly two X ish mark on a 3X levered ETF, you're generating about two X market returns on a broad based S&P, whatever, right? So what, what, what are, I look, I just like to throw the question out there, cause it's so, so controversial. And I get it because it's like, it's a 3X ETF. And most people are told, stay away. You never invest long term. But we have a lot of meaningful research data extrapolated over 80, 90 years to show that especially with a dollar cost averaging strategy, how these are basically, and then there's no guarantees in life, right? There's still going to be a certain amount of tail risk, right? A theoretical tail risk. But if you look at the theoretical tail risk and how low it is theoretically, and you compare that to the two X return, right? I mean, you could make a meaningful argument that people should consider that with some piece of their long term strategy. No? So I would say that the only issue is that you're taking on risks there that you don't really understand, like, why is a 3X S&P 500 not returning 3X? It's returning to. And the answer is, there's a cost embedded in there that isn't 100% clear to the person who's buying the 3X fund, having to do with futures data and expiry and role dates and things along those lines, that they use to get the leverage into the ETF. Just imagine you had limitless credit in your brokerage account and you bought the S&P and levered it two to one and they charged you 5% to do that. Well, that 5% is a clear, identifiable amount that you know you're paying for the leverage, right? It's an easy number to understand. The way those levered ETFs work with futures is it embeds a time decay component of the future, which is much more difficult to analyze and to distill out. Now, the good news is you said there's tail event risk, yes. But during a sphere enough tail event, you know, all assets correlate to one. So you're already hedged, right? If a tail event, it'd be very difficult for me to imagine that a 3X levered ETF will outperform on the downside much more than on the upside. You know, you're going to get maybe 3X on the way down, certainly at that moment. But overall, you're going to get something close to the similar sort of leverage function because state is independent. It's a time function. The question is how quickly does that future decay? There might be, there's innovations in the market that might make that easier. Like there's something called a perpetual future, which has gotten very popular thanks to the crypto space, which makes that theta component a little easier to understand for most people. That might be combined with levered ETFs. And then you get a levered ETF that you can look up the, you know, the ratio and the, you know, distribution documentation, you'll be okay. But with that said, yeah, look, I, I have no, I, if what you want to do is take on risk and you're confident that you're on the right side of it, market's only going to go up right now. Fine. By all means, by 2X, you know, by 3X, that's not, it's not the kind of thing I would do because what you really want is you want that beta in that trade. You don't want all those other risks that are coming along with it. But if the numbers look great, the number I was like, good, there's really no disputing. - Yeah, I mean, listen to me, it's all about just statistical data, right? So again, what kind of extrapolating over 70, 80 years, I think, you know, with dollar cost, they're returning like 1.85 in market returns, right? Through good and bad, right? Obviously good and bad. And you have to be able to have a long, long time horizon because there is, you know, meaningful short-term risk, you know, if you need to pull your money out during, - No, we gotta be able to hold your death around time. No doubt about it. - Yeah, but it's just, I think it's an interesting, again, 'cause I think the area of risk management and the concept of leverage and concentration is one of the most important concepts for ordinary people, which is crazy, 'cause people go nuts when I say this, 'cause they're like, "Wait, you can't be talking about leverage and concentration to ordinary people." I'm like, "Yes, you can. You can, if it's inside of a designated account that has the correct objective and understands how that will fluctuate over time, right?" So again, it's not about taking your college kids, you know, your kids' college education, it's not about taking your retirement money that you absolutely have to have, but certainly I just preached that we should all have this other bucket of capital, - Yeah, you're gonna do better than you will on the Crap's table, that's for sure. So the money that you would drop in the casino on the way to your room, throw that in the 2x ETF, I'm sure you're gonna do better over long term. - Yeah, hey, a 1.8 market return, people would do anything for that, right? And we have a vehicle that theoretically, it's like theoretically, you know, does that with some degree of extreme tail risk for not understanding how bad the future can be relative to the past, of course, right? So, you know, the last 90 years aren't necessarily the true determinant of the next 90 years. We could have a market that actually goes down 96%, like it's theoretically possible, right? But again, you have a bucket. - Yeah, the thing you need to think about though is that when that happens, other things will be happening too. And it could be the amount of you worth anything in a 96% S&P drawdown is bullets. - Exactly, exactly, right? And we're also worried about this stuff. We're worried about these theoreticals without understanding, you know, you're screwed 100 other ways if that happens, right? So like, people plan so much for failure in very few actually plan for success, right? A prepare themselves and actually make strategic moves assuming things go well, which historically, things go well when it comes to finance, right? Because there are aligned incentives, right? Across capital markets to protect capital markets. - That thing can change things go well until they suddenly don't and then they go wrong all their ones. - Like, yeah, I mean, listen, things go wrong, but certainly it seems like things go wrong to a lower degree than in the past, because again, incentives, right? Incentives of capital markets, incentives of governments, basically the world is essentially, I'm gonna use the word too big to fail, which is a really meaningful statement. It's a statement we haven't used a lot, is 2008. But it's, listen, I learned that lesson in 2008 and I actually haven't forgotten it because I think we're probably in one of the biggest, too big for fail times in history that no one's talking about. Everyone's so unbelievably concerned right now about the market and about AI and you know, AI stocks becoming such a large part of the market, right? And being such a highly concentrated industry, right? Like, everything's revolving around basically one product essentially, right? However, that product is quickly becoming a too big for fail industry globally amongst governments and society and security and national sovereignty. Okay, like, in my life, I've never witnessed a too big for fail sector arise as quickly as this one has. But again, I think people are just afraid of the theoretical risk where they should be afraid of not being part of the likely upside reality of what capital markets is. And we know this, the best investors historically are the best because they utilize leverage, right? They just utilize leverage. And I'm just a big proponent of ordinary people understanding what leverage is in responsible ways to use it inside accounts that have objectives where leverage is appropriate and concentration. - So I'm sure you read what happened to the situational awareness fund that stupid kid from Bay Area. - There's such a thing as too much leverage and too much concentration, right? - Yeah, and for everyone, I wish you well in advancing your message with prudence. But I can find a bunch of kids like one trip to Reddit or financial Twitter or whatever they call it now. We'll deliver 10,000 kids. You think about markets in exactly that same way. The entire crypto industry virtually, thinks of it that way because they all come from the venture capital world where you invest in 10 things, five go bankrupt, you know, two break even, three, two make money a little bit, and then one is an asteroid and you make money overall on your targets 20% a year, you know, whatever. That's how they think about risk. But that isn't how it works in crypto, in crypto everything's correlated. How are you gonna get, you're gonna invest in 10 things that are correlated in 98%. You're not invested in 10 things, you're invested in one thing. And there are countless engineering students in undergraduate courses everywhere in the planet right now, building a trading model, thinking, oh yeah, I just need to build up enough sentiment or whatever and find some way I can concentrate on my risk. And I'll buy this perpetual future and if it goes up 10%, that means I have 10% more leverage. So I'll buy 10% more of it. And if it goes up another 10, now I'm, you know what I mean, they're trying to use it as a multiplier for a lottery ticket. And man, that's just, it's a fatal conceit, as is delivered by situational awareness fund. - I have thoughts on that and they're pretty strong because I was one of those kids, right? So I was the kid back in the day when nobody was doing this way before crypto, way before anyone ordinary used to use leverage. But I was investing with options, you know, back in the day, you know, mid 90s, you know, touch-tone trading in college, right? On a pay phone, doing that stuff and losing all of my money, right? But, you know, the truth is, when we're young, we have less money to lose and that is the best time to learn these really hard lessons. - I guess so. - I think so, definitely. - You want to get in all your fights when you're a kid because an eight-year-old doesn't really going to hurt you that badly, you know? - Yes. - And now to your son's being when you're a child, you're fine when you go into the biker bar at 28, you know, to avoid it because you've been in a bunch of fights, you know? - Exactly. And listen, all these guys are in their 20s. They're losing a ton of money. They're making a ton of money, losing a ton of money. They're going to learn their lesson. Their brains are going to complete forming, right? By the time they hit their mid-upper 20s, hopefully, they're going to really understand risk better. Those lessons will be meaningful of the money that they lost. And I really believe, and I'm starting to see this the last few years, that age with age and with experience and with loss most, I would say almost all of these young traders are kind of quickly evolving to become way more responsible. I'm seeing them invest way more diversified now. They're diversified across a spectrum of investments. They're using leverage more responsibly, right? And that's just what happens as we get older, we get wiser, right? There'll always be the degenerate. And listen, it's, you know, the guy who's still at the trial, you know, at age 60 or 70, but you can't control for that. That's always going to be a minority of humanity. - I'll be honest with you, I've seen it too. It used to be, you know, 10 years ago, I would get, you know, emails or messages through social or whatever of, you know, kids in college. And they would say, hey, I've got this really great back test. I'm sure it's really, it's going to make a lot of money All I need is investment. can you take a look at it? And it was always the same thing. There was some overfitted, 20 variable, quantitative strategy that ran, traded S&P futures, front month contract, only used extreme leverage. And it was just this fantasy of back testing. And I don't get those back testing emails anymore. And I think it's because everybody's figured out that back testing is a worker fiction in the quant world. That doesn't mean anything. It's not real. It's maybe an indicator on where you can look, but it's not the kind of thing anybody will invest in. I used to get mountains of those. And I think the young investor world has educated themselves enough to know that a back test is a starting point. It's not, hey, I've got a great model now, you know what I mean? They've learned something about overfitting, which were by far the two biggest errors that they were making a decade ago. Now it's the high frequency stuff, right? Everybody's dying to get into high frequency because Jane Street will pay a million bucks in your first year or whatever. But that road's coming to an end to now. They're exploiting just about all of the predictable alpha in that space. There isn't. I mean, I'm sure there's going to be new advances, they're going to make more money, whatever. But the growth rate is going to be deeply suppressed. And I think the kids are figuring that out too. So I generally speaking, I would agree with you, you're right. I think the last 10 to 15 years, there's been a big improvement in the youngest class of investors. I still see them all over Twitter saying absolutely ridiculous stupid things, which to be frank, I'm kind of glad for because I profit from those mistakes, you know. So at least 10 times, remember this. But remember this, we got what, 30 new million investors over the pandemic, right, for the first time. So we've never had this type of an avalanche of newbies coming into the market. And they have to go through all the stuff, right? They have to go through all the stuff. You probably went through it when you were really young. I went through it as a teenager, all the books, all the strategies, all the things to kind of find myself as an investor. And you can tell them, but they just have to go through it. They have to make money, they have to lose money. They have to understand that they really don't know what the hell they're doing, right? 100 times over. It's a lesson that no one can teach you except experience. I know doubt about that, unfortunately. And loss. And loss. How do you think? It's all part of the process. Guys, I want to talk a little bit about the way you view strategies. I'm happy there's a good amount of agreement, although to be fair, it would have been cool to have a little bit of fire in the conversation at a little bit, made way through. I want to talk about strategy construction. So Chris, I think you touched on your strategy there where you see change and you bet on it, but could you give a more comprehensive overview of that strategy? And I'd love for Tom to critique it as an institutional money manager. Yeah. So, you know, I coined it back in 2007, I guess, when I started writing my book, Social Arb, right? I think I called it Information Arb back then. I call it Social Arb today, but basically, you're identifying behavioral change in the world. We're just any change, quite honestly. You're translating that change into like economic consequences. You're recognizing an expectation gap, okay? And you're sizing the trade. So it could be observing, you know, any type of meaningful shift that's happening in the world, the technology could be what happened with AI, what happened with, you know, the mobile phone, with cloud computing, with CRM software. It could be often its consumer product shifts, right? Like changes in shopper behavior, right? Like what's coming on trend? It could be fashion trends. It could be weather, you know, one of my most famous trades was assessing the Hellstorms every spring through people that were conducting searches for roof repair and getting real time insight into the severity of hell damage and then trading a company like Beacon Roofing, a month before the insurance reports came out that hedge funds were using to assess Beacon Roofing's level of demand. So I was like a full four weeks before hedge funds, because they didn't know how to use Google Trends at the time, believe it or not, 16 years ago, correctly. So are they weren't creative enough? So it could be assessing anything that's happening in the world and you're basically connecting the dots to the economic consequences of that thing. And then the degree to which the investing world either sees that or doesn't see that, right? And so that's where the information asymmetry comes in. And then there's a process, of course, which is assessing are there other things that are happening to that sector or that company that are equally to more important than that one thing that you discovered that you think is going to have an economic consequence for that company. And is there a time frame when you're able to assess when you believe other investors will start to see that thing that you found, like in the case of the Hellstorms, right? You know that this insurance report goes to hedge funds on this date and you know that's when they're going to see the data and that's when they're going to trade it. So you can open up an options trade with it expiring, you know, shortly after that period of time. It could be something as simple as a movie that you think the world doesn't really assess how big of a deal this movie is going to be like when I traded Lionsgate back in the day when they came out with, oh my gosh. What was Hunger Games? Hunger Games. Yes, Hunger Games, right? One single movie changed an entire publicly traded company, right? And because I was able to assess early traction that was cultural of that book series and how big that movie was going to be that was a game changer or even stranger things for Netflix. You know, there was a time when you know you could not really assess the degree that each show was having the impact that each Netflix show was having on user growth because there were a couple metrics that funds would use to assess viewership of the shows. But the truth was that every top Netflix show had roughly the same amount of viewers. Like if you take oranges, the new black was roughly the same as stranger things. But if you were able to assess the cultural depth of interests in a show meaning irrelevant from how many people are watching it on Netflix, how many people are talking about that show at the water cooler at work, right? That is going to then spread to family members and friends and people saying, you know what? I keep hearing about this show stranger things. Maybe I'll get a Netflix subscription and watch it, right? When I was able to assess that, that was one of the biggest trades in the history of Netflix, right? Is that quarter that stranger things came out and the degree to which that actually grew subscriber, subscribers, new subscribers for Netflix? Well, the only way to assess that was monitoring conversational data and the volume of conversational data around that show and comparing it to known benchmarks, historic benchmarks of other hit Netflix shows, right? And stranger things was about three X any other show that they had ever made in the history of the company, right? So that was an anomaly for Netflix. But if you weren't monitoring conversational data, which no one really did at back at the time, besides me, in that manner, you just didn't have an insight into it. So again, that's the concept of what I call social art. It's really information asymmetry where ordinary people are looking in places that institutional traders and just investors generally tend not to be focused on, right? So we're not trying to play the game that hedge funds play. We're playing a completely different game with completely different alpha, right? So we're not trying to go head to head with hedge fund strategies, we're trying to leverage our own insights as ordinary people that are deeply rooted in the real world. And we're constantly seeing these things because we're living life. Whereas, you know, for better or worse, not making fun of Tom here, but most institutional finance, most of institutional finance tends to look the same, be of the same type of data. demographic mix, affluent, living in the same areas of the country, right, reading the same things, expose to the same type of lifestyle, connection where as ordinary people have way more access to more diverse data on a daily basis. So that's the concept of social art. So there's a couple of things. So first of all, what you're doing, it's admirable that you came up with it on your own, but it's sort of a mimic of that fact that like good ideas happen simultaneously all over the place. If you were to go to a tiger cub or a firm that had a big long short, low leverage, long short hedge fund or long only hedge fund, even more so, that's exactly the kind of information they were looking at. Like it doesn't take that much knowledge to learn how a company is structured, how cash flows are recognized through the company process, what, you know, what things impacted or whatever. The difference is that where you could go across multiple industries, anything in the US or the world, in those hedge funds, generally speaking, those guys are cornered into a particular industry for expertise purposes. So the media guy would know about your Netflix story and somebody else would know about, you know, the roofing story, whatever that's, but that sort of analysis is the input for the company and they were all analyzing that. The thing that you seemed to have gotten early was that you were tapping all this information from the internet, which I think now that's probably a standard in many firms. In fact, I'd be surprised if they didn't buy systems to make it easier to distill that information off the internet, the same sort of information. You know, they've got substantial resources hedge fund industry. With that said, I think it's a great trade, it's a great strategy. I think especially given the other advice that you offer, it's got legs even today. I just, I wonder if the industry will, will not have caught up with most of the offer that it has generated over time. No strategy lasts forever, right? Like, you thought of it first, so you made a lot of money on it. The guy who thought of it 10 minutes after you made less money on it than you did. The guy who thought of it three years later, well, you've already taken, you know, I don't know, $50 million out of the market that way. So that $50 million isn't available to him, right? So he's going to make even less on it and trades get crowded. Everything you're saying seems like it should be correct, right? It's just not. It's astonishing to me. Like, you know, I spent five and a half years, I had a company, I had this company called ticker tags. It was the first social data intelligence company. We sold the hedge funds, right? So I sold into most of the big funds. I sold the company to Jeffrey Spank eventually to M-science. But I spent five years in my life sitting with the biggest hedge funds in the world teaching them on observational data and conversational data and how to interpret our data as part of their trade analysis. And it was crazy to me because these funds were on one account. 2007, right? Or 2011? No, no, this is 2015, 2016. And these funds had massive kind of quantrooms by then. And they had a lot of fundamental guys. And they just couldn't put the pieces together. They just, they basically just refused to do it. So like, I'll give you an example, you know, like one of my biggest trades. It was a company called Elf Cosmetics, I don't know if you're familiar with Elf, they're reasonably big company now. But at the time, they just sold cosmetics into Walgreens and CVS, like they were a drug store cosmetics brand, $7 for a product. And this one influencer, his name was Jeffrey Star, had, got a video, got 10 million views, talking about this one product of theirs that was as good as the $60 product. It was called the Elf Primer Puddy. And I was like, wow, this is a game changer, like the entire all of like teenage makeup, like, like internet was talking about this product, right? And so I went to Walgreens and I just sat there all day and I watched moms coming in with their teenage girls buying every Elf product off the shelf and I was like, this is it. And I made a massive investment in Elf because of this one video. But I called some Wall Street Analyst who were following, these are the biggest analysts on Wall Street, right? That follow the cosmetic sector and I said, hey, did you see the Jeffrey Star video? Did you see the Jeffrey Star video? And they said, who's Jeffrey Star? And I actually called the fund, a fund that I knew was trading, a lot of cars and I spoke to one of the, and I said, hey, did you, I would just ask one question. Who's Jeffrey Star? So even amongst investors, their entire job is following just that sector. I mean, that's their expertise. They trade like eight companies, eight or nine companies in that sector and that's it, right? They were so oblivious to this content creator who did a random video on YouTube, they're just so far removed from this world. Even today, 2026, you would think they would have caught up. It's been almost 10 years, right? And still I'm regularly engaging with funds and fund managers and they're asking me for what I'm seeing. I'm like, how do you, they refuse to read TikTok comments, okay? Because that's where I get most of my alpha from, TikTok comments. And they just refuse to do it. They just think it's ridiculous. I just think there's still a gap. Will it eventually be filled in time? People get younger, you know, older people move out of the industry, younger people that are internet native and social media native and content creator native become fund managers, I guess, become investors. Yes, in time that alpha will go away, but it's astonishing. I've been doing this now for almost 20 years, trading this one strategy and the alpha is almost as big today as it was then. What do you think the odds are that there's no one that's sitting on the thing with that information? What would you put the odds? It's not about getting the information. Is about. Well, that's certainly the beginning though, right? I mean, maybe they're not interpreting correctly, maybe they're, maybe you're seeing something that they aren't. It could be. I don't know. I'm not even talking about that. You just nailed it. It's about being able to properly understand and interpret and assess what's happening. It's cultural, right? Sometimes, sometimes the wording is wording. They don't even understand because they're not a 19 year old woman, right? So it's an inability to, it's a true lack of interest in going down that wormhole and getting very good at that one type of methodology. And I won't name the firms. I'll just tell you this, pretty much all the big ones I engage with, and they were, they would all look at what I was doing. And they're like, we don't understand how to systematically institutionalize this approach because the words keep changing. They can never develop a five year correlated analysis between this conversational data accelerating and this stock moving or this revenue needle moving because the product didn't even exist. The way people speak about that is different now than it was two years ago, right? There were so many nuances to being a social arbiter that retail investors are fine with because they'll go deep. They'll go really deep. And you're probably going to be fine with the two on the institutional side. The only problem is that's a level of data analysis is probably reserved for the quants. And they want something that's registered and structured. I would argue now that I've been working with natural language parsing for a long, long time. And LLMs, very likely going to solve the problem that you're describing here. The quantity is my bet. So I would say you're right. Probably some guy at Citadel or a team of guys at Citadel to use a front leading example, working at that information, probably going to trade if they have longer horizon trading involved. And once they do it, it's six months and everybody else is doing it too. Your correct AI is going to get us there, right? Even with AI, someone has to, again, there are a lot of gray areas with this type of methodology. So you could have an AI system even, and they're being almost in infinite ways, number of ways. to interpret how to trade that data. So in time, it will all, the alpha will be gone. I agree, every type of alpha will eventually be gone theoretically. Because the world has changed and people are doing different things and making different mistakes. Yeah, absolutely agree with that. I tell investors to focus on the next few years, right? Because like, I have a pretty good window into the next few years and have a fairly high level of certainty that you can be a social orb trader trader and still find massive alpha in the market because the subject matter is infinite, right? So it's every piece of information in the world, every change that's happening and how it connects to every single publicly traded company in just an almost infinite number of ways. So it will take some time and there's still plenty of time, I think, left to be a social orb trader as an ordinary person. And for the most part, you're not competing with institutions because they're not deploying this strategy. You're probably right. The rank and file, you're probably out in front of them still for the hedge fund world. I'd be surprised if the front runners weren't already doing something similar, but that's a long way from leading off and as you say, it's a wide variety of options and here's the other thing. Even when it's fully embedded in the hedge fund industry, they're doing everything you say to do, they've got AI, doing all the other things that you say are difficult and it's all being quantified, it's all getting traded. There's still going to be a million opportunities. There's just going to be a smaller and shorter lift and that's always been an area where retail has had an advantage. You can do a trade that you think you're going to make half a million dollars on and that's a substantial trade for an individual. For a 20 billion dollar hedge fund, it's a little bit more of a challenge to get involved in something that you think you're only going to make half a million dollars on because you've got to go on to do something else, you know what I mean. Unless you can find a way to slice through that information in a systematized way that makes that half a million seem like part of 20 billion a year or whatever, there's really no way to commit the resources for it. So yeah, you've got a model that clearly works and I wish you luck with it. Yeah, listen, and the great thing about it is it's something that is highly approachable to the ordinary person where the ordinary person has a meaningful advantage. It's a recent example, I don't know if you know the company Vita Koko, it's the coconut water company, right? And they're publicly traded, so it's like a pure play, very simple pure play company. They had a sound, a song go viral on TikTok, like I don't know, seven, eight months ago, and this song going viral across TikTok, which they have these viral sounds, right? Which most hedge fund managers, I probably don't even know what a viral sound means if I talk to them, I can guarantee you almost, they would be like, what the hell are you talking about, Chris? A viral sound on TikTok, you don't know what that is. Well, a viral sound went nuts that was related to Vita Koko and they ended the stock ended up going up, I think 30 some odd percent on earnings because of a lift in Gen Z traffic to the brand because of that viral sound on TikTok, ends up giving them the biggest quarter in the company's history out of nowhere, stock jumps 34% on earnings, right? And this is just one of thousands of examples of social Arab opportunities where an ordinary person that understands how to sift through TikTok and surface things that are happening and then connecting dots to publicly traded companies where there would be an economic consequence, right? And again, could hedge funds do this in the future? Absolutely, they could. Today, based on my existing conversations with hedge funds still, they just are in the dark, completely in the dark and just focused on other things that are more systematic, more repeatable that they can deploy larger dollars into. So again, as retail investors, you could make a million dollars off that Vita Koko trade, a million bucks and it's a life changing trade for you. You don't need to make 400 million off the trade, right? So we're playing a different game. And so I try to like tell retail traders, we don't have to compete with institutional traders at the game they're playing. We could play a totally different game and win. So the only thing I would suggest that maybe you have this issue is one of the things that constrains us in the hedge fund world for people that are doing discretionary trading, akin to the kind of thing that you're doing is that you're trading your own money that untyes your hands. That's important. You need that. In our world, you need to be able to convince people that there's good cause behind a discretionary trade, right? You don't, you are not just anointed as your congratulations. You are now allowed to decide, go ahead and bet, you know, $50 million in lever dollars every single day in the equity market. That's not how it works. These these ideas are developed. There's this process of controlling the structure and that control probably will limit the rate at which hedge funds can embrace this kind of thing because it's got to be done on discretionary side. So so I would and that's again, that's another argument in support of the business model that you're pushing. I want to double tap on incentives. You know, it goes back to the start of the conversation. Tom, you said, let's double tap on that. And I would love to hear it from you. What are, can you break down that component of how it's so important for for fund managers and how it kind of impacts our conversation now? Sure. So Ethan knows I at one point I was head of equity trading for about a billion dollar fund. I had guys coming to me with their strategies, you know, multiple times per day. I would interview about 10 of them or we something along those lines for a couple of years. I um, people would come to me with that overfitted back test and say, well, this is just a back test. Come back to me when you have real results. If they did come back with real results, very often the results would include a component of beta. I would say, well, I don't need you to trade beta. I can get my own beta. You've got to give me what's different from beta. So basically what a hedge fund was from my perspective was always looking for was an uncorrelated return. If I have, you know, the S&P 500 in one hand and I have another asset that goes up as well, but is completely uncorrelated, I can combine them and lever it and get an even higher return than either of them. So this is portfolio construction done in the hedge fund style. You are dealing with a completely different investor class. They're controlling their own beta. So I would argue that beta manifests a different set of incentives. But it's not that I don't think the incentives in the hedge fund world will allow us to make as much, like I think it's a category error to say, well, a hedge fund doesn't even beat the S&P. Well, my hedge fund doesn't beat the S&P, but I'm 20% a year. So add my return to the S&P and guess what? You're beating the S&P. But I'm not selling that beta. I'm not selling the S&P. So I don't beat the S&P. So it's sort of a criticism of the incentives, I think, is a mistake. And that's where that question came from, Ethan early on, that the fact that we're doing two different things. Chris, you talk about how there's still so much opportunity for retail traders to trade discretionarily. And Tom's made that point about you're extracting a lot of the value. And you're still extracting a lot of the value. And you say that it hasn't been armed away. Maybe parts of it will be. Why are you sharing it online with all these retail traders? Why are you writing a book? What's the incentive for you when you can extract so much of it yourself and make clearly lots of money? Well, I have already, right? So I'm kind of closing out an 18 year run. I've generated, I don't know, 80 million off of 20,000, initial 20,000 dollars over 18 years and 60 some percent annualized returns over 18 years. And I have nothing left to prove for myself, right? Like I, for people that know me, I have a a charitable foundation, everything I do at this point is to contribute. to the foundation, but my overreaching goal in life is to help solve the wealth gap. And I think the best way to solve the wealth gap is to bring every human on earth into the investor class. And one of the ways that we can do that is to inspire people to be investors, right? So I love getting out there just talking about my strategy because, listen, I'm a guy that I get-- I have zero interest in technical trading. I have zero interest in diving into deep fundamental analysis, right? I think I'm more similar to the 99% of people in the world than either that technical trader or that fundamental trader is. And I want people to know that you can have fun with investing. You can start investing. And if you just see one or two or three things over the course of your life, it could be seeing that Jeffrey Star video and being early on to the health trade, right? It could be getting in a Tesla before others realized how special of a moment that was in the late 2010s, when you were inside of one of the first EVs. It could be holding an iPhone in your hand and going, you know, an iPhone 1 and going, this is a game-changing moment for humanity. Or it could be an engineer at a company and realize, oh my gosh, cloud computing is taking over. This AWS that Amazon has is going to be a game-changer for Amazon. Or quite honestly, it could have been three and a half years ago, getting on to chat GPT for the first time and going, my goodness, this is going to be the biggest thing that's ever happened to my entire life. I'm going to sit down for a minute and do a little bit of research on who's going to benefit from this AI thing. OK? And if you would have just done that three and a half years ago, you would have quickly come to a determination that a company like Nvidia was the obvious primary beneficiary. And been like, you know what? This is wild. I've never seen anything like this in my life. I'm going to put some money into this company in video. All right? And any human on Earth has the ability to just live their life, see the world changing, connect dots to investable opportunities. You don't have to be a MathWiz. You don't have to be a financially pedigried, Wharton grad. All right? You don't have to be that person to do what I did, which is generating tens of millions of dollars. I'm just a normal guy. I had a normal job. And I realized I could do this. And it compounded over two decades. You don't have to actively trade. You could just be in the market. And that's the best part is that just by doing this and getting excited about being an investor, being part of the investing class, that basically convinces you to take more of your money and put it into investments as opposed to spending. And that alone makes you a winner. Whether you beat the S&P or not, almost doesn't matter at that point. The fact that I just brought a methodology to you that makes sense that you could have fun with. And you might be able to knock it out of the park. If you find the next Tesla or the next elf or the next NVIDIA over the course of your everyday life, you're just going to end up putting more money into your investment account. And you probably didn't even have one before that. So you've already won just by being part of the investor class and getting this interest in allocating your money towards investing as opposed to just allocating your money to consuming every day for the rest of your life. So that's why I'm doing this, that's why I'm on YouTube, that's why I'm on X. I'm sharing the methodology 'cause I think I can make a real difference in the world. I think, and I had, like, dude, there was no such thing as a social arbitrator 15 years ago, 16 years ago, the way I define it, right? Now we have hundreds of thousands of social arbitrators that are conversing on a daily basis, doing the exact thing that I do, talking about what they saw on TikTok, this comment, like what's trending cultural shifts, fashion shifts, like shifts in weather patterns, politics, anything that's changing, they're connecting dots to investable opportunities. And I love it, man, I just love it. It's so fun to see. So nothing against institutional traders, all right? Against Tom, we're just playing two totally different games. And-- - That's very true. - You know, we can both, we can both be right. I know you weren't a big debate here, but we can be both be right within our own domains for our own objectives of what we're trying to achieve. - I love it, Tom, any closing thoughts. - Oh, no, this is where I expected it to go. Look, I disparage retail investors as a client, yes, in the same way that retail investors disparage hedge funds, right? When I talk about retail investors, I'm not talking about a guy like Chris, who's obviously applied some thinking to it, he's got a plan, he's got a methodology. It's discretionary, but so what? So is most of investing still. So I don't mean that. What I'm talking about is, just empirically, the vast majority of short duration retail traders tend to lose. That doesn't mean they have to lose, and it doesn't mean they're stupid. In fact, I would argue that intelligence has absolutely no relationship to how successful someone is in the market. Is being smart and advantage? Generally, yeah, but I can show you a lot of really smart people who have blown up repeatedly and lost everything repeatedly and still don't have anything. So it's not a question of intelligence at all. It's a question of knowledge. Chris has found a way to distill knowledge in an important way rather to look at information and turn that into knowledge, right? What we do on the institutional side is a different thing. We, it matches that description, we take information and we turn it into knowledge. It's just a, it's a different class of information and it's done with a different goal with regard to risk management. You know, 20% returns with peak drawdown of 1.4%, pretty powerful in the institutional world. By my account, Chris outperforms me substantially over the last, what was it 18 years, right? But he had some drawdown in there. So it's a different, it's a different sort of discipline. That's all. - Yeah, I would close it from my standpoint saying, okay, institutional investors often have more resources and different types of resources. We as individual investors have way more freedom. So it's not about who has the better machine. It's about, you know, which advantage matters more for the specific opportunity that you're chasing. So like, I love being a retail investor for the things that we're trying to achieve because we have so much flexibility, so much freedom to basically do whatever we want, however we want and we're able to kind of get in the niches of opportunity that for the most part institutional traders either are not interested in or not aware of or not willing to get involved with. So, you know, we can, like I said, we can both win. We can all win at this game. It's not, you know, it's an expanding pie. - Well, sir. - I love it. Thank you guys both for coming on the pod. This was awesome. - My pleasure. Great to see you. - Happy to be here. - It's good to meet you. - Any time, man.