Welcome to Trader Talk. I'm Kenny

Pulkar, your host. And today I am joined

by Jared Blickery, who's the Yahoo

Finance Markets and Data Editor, along

with Michael Monahan, who is a partner

and portfolio manager at Founder ETFs

and the Founder 100 ETF, which I think

is a fascinating product. So, we're

going to talk about that. Actually, I

want to kick that off and talk about

that specifically because I think that's

a great concept. So tell the audience a

little bit what you mean by the founder

100.

>> With the founder 100, we have a

portfolio of what we believe to be the

hundred best founder companies in the US

stock market. The reason we chose to do

that, we looked at historical data that

said that founder companies tend to

outperform by three times versus a

board-hired CEO.

>> So give me a couple of examples just so

people understand what we're talking

about. Couple of companies.

>> Yeah. So our stump speech is we own

Nvidia but not Intel. We own Dell but

not Apple. We own Capital One, not

American Express. We own Monster

Beverage, not Coca-Cola.

>> So, in these in these companies, uh, a

lot of these founders, so there's a

complaint that these super voting shares

that they have are actually a detriment

to shareholders, but you're kind of

positioned the opposite way. You're

like, these companies we want to invest

in because the founders have a bigger

stake.

>> Yeah, we we we've looked at that and

that seems to be an emotional statement

that people make, but the data doesn't

show that. The data shows that the super

voting founders outperform

>> well because they have so much skin in

the game, right? So they want I would

imagine that they'd want to outperform.

So how long is this your ETF been ex

existed?

>> So we launched the product December 18th

of last year. There's a companion index

on Bloomberg that looks that you can

look up under founders that has a 27year

track record.

>> And so how's how have you been

performing? So, we went through the SAS

apocalypse and uh we did a draw down

then and that's one thing we should talk

about is where the draw downs do and

don't happen in these products. But ever

since the war uh started in late

February, we've outperformed the S&P 500

in the war backdrop.

>> I think that's great. I think it's

really fascinating. I want to talk more

about that, but we have so much so much

other stuff that I want to get to. And

so, let's just talk about we're talking

about founders, we talk about growth. um

where do we think the next kind of wave

I mean right now we're in the middle of

this AI revolution which I think is

still very much in the early stages I

don't think this is anywhere near being

over yet but talk about you know either

within that tech space adjacent tech

space adjacent to the tech spaces where

do we see the growth coming from or

where are you seeing it coming from so

the products that we use every day

that's not where the uh profits are

coming from that's where a lot of the

growth is coming from but you know open

AI that that IPO is a big question mark

right because he wants a billion or a

trillion dollar valuation. That's going

to be hard to do. But the further you

move away from the AI user, you get

from, you know, the data centers to the

chips and all the way to electrical and

power. That's where the most profits are

right now,

>> right? And I think that's actually maybe

one that's less understood by a lot of

the investing public. People just want

AI, they think Nvidia, I have to or MU,

I have to own. Those are names I have to

own. When actually there's huge

opportunity away from that.

>> Yeah. Yeah, the picks and the shovel

shovels, the optical components, the

power components, uh the uh the

construction companies that build out

the data centers.

>> HVAC and plumbing even.

>> HVAC and plumbing. Very interesting.

>> Yep.

>> In in in that group when you talk about

the adjacent names, are there founder

companies in that group that are

interesting to you?

>> I think there's, you know, founders all

up and down the spectrum. You know, we

talked right before the three of us sat

down together. I was with a large $50

billion industrial company the other day

and by implementing sensors into their

AI stack, they took an upsell process

that with humans did a million dollars a

month is now doing $14 million a month

with their AI sensors.

>> Right. Because the AI has has created

that much more opportunity for them.

>> Absolutely

>> right. And we're seeing that I mean

you're seeing that now during earning

season. You're seeing that in a range of

companies that have that have reported.

>> Yeah. Not only not only the companies

that are reported, we can go back to the

last uh BLS, that's Bureau of Labor

Statistics, non-farm payroll report that

we had on Friday and there was an

incredible bifurcation distance between

the AI construction and the residential

construction. So you take a look at

residential homes, those jobs, uh

including the contractors, they lost

44,000. And then you look at the data

the the the industries where you would

have the data centers. doesn't break out

AI specifically, but you have 126,000 to

the upside. So, there's a big imbalance

there, but you are seeing pockets of

strength, and they're big. Well, but

it's interesting because today or over

yesterday, over the weekend, uh,

Governor Abbott from Texas came out with

this headline article now saying that

even Texas is kind of putting up putting

the brakes on AI data centers, which I

think it's okay to put some regulation

around it because they don't want it

necessarily spinning out of control, but

I think you have to be careful not to

bring it to a screeching halt the way

Kathy Hogle did in New York.

I I would agree there because you know

the not in my backyard is a very valid

complaint because people's people's

electric bills are going up and I read

>> is that true? I don't know.

>> I don't know if that's true.

>> I've seen evidence. So I've seen studies

both ways and I think overall you take a

look at electricity prices rising. There

are other in there other factors there.

You know energy cost costs are up. So

it's hard to isolate.

>> That's right. Energy cost costs are

going up. And so I think that's more the

more the issue in terms of higher

utility prices than it is data centers

because data centers they've got to pay

for the they've got to pay for the

energy they're using.

>> They're going to go to space anyway and

then we don't have to talk about it.

>> That's right. That's right. And so when

it goes to space that'll be the next

issue. Right.

>> Well and so much development behind the

meter whether it's the fuel cells with

Bloom Energy which is a holding of ours

or whether it's the you know Caterpillar

being sold out on their big gas

turbines. That's why I give that gentle

push back. I'm not sure it's affecting

residential power prices given that the

data centers want to have their own

captive power so they're not beholden to

anyone else.

>> And so that's a very interesting that's

a very interesting perspective because

the anti-data center people will not use

that argument, right? Because it doesn't

fit their narrative, right? They want to

use the argument that, you know, it's

causing utility bills to to skyrocket

all over the place. When I don't

actually think that that's true and I

think there was there was another

article about data centers being, you

know, all self-contained, right?

Self-contained. They're not drawing

water from the system. It's like a it's

like a radiator. It's all

self-contained. So, it's not it's not

it's not putting extra stress on the

community

>> in as much as commodity prices are

fungeible and you know they might drive

up the price of uranium at some point.

But yeah, I hear your point there.

>> Right. But I also think the other thing

is that and Mark Zuckerberg came out uh

either today or yesterday talking about

they need people that are building these

data centers need to actually come out

and have a conversation with the

communities to talk about the benefits

that this data center is going to bring

to this community. the money that's

going to generate how that's going to

impact infrastructure spending, school

spending for the kids, right? Better

schools, better quality schools, better

paid teachers. That's right. Better.

That's a much better argument. But I

think they haven't done that up to this

point. And I think Mark Zuckerberg, you

know, he he he penned a piece to an

oped, right? Um and he was talking about

that that's what needs to happen next.

And I think that's a brilliant way to

look at it.

>> Yeah. And I think some of the other uh

big model providers have done the

opposite of that. they've sold a little

bit of fear, right, when they should

have been talking about the opportunity.

And I think Mark's really leaned in. Uh

he's not only talking about how to help

the teachers and the firefighters, but

he's really put his money where his

mouth is on job training. Meta's got

this program now. Well, they'll train

you in a trade, guarantee a job. And if

you raise your hand at the end and say,

"I don't want to work for Meta." Go work

for someone else. But they just want to

grow the trade opportunities uh for the

communities that they're investing in.

>> Interesting. He's another founder. He's

another founder. He sure is.

>> He's another got to be one of your

names.

>> He's a founder. He's got super voting

shares. And you know, we talk about the

moral authority to pivot and change when

need be. Mark is really uh you know, an

example of that.

>> He pivots.

>> I got a question. Is it too early or is

SpaceX in your ETF?

>> We own SpaceX. Uh we bought it on the

IPO print. As an old trader, uh

yourself, you know, the head of the desk

at Morgan Stanley did a superb job on

print one. That was amazing. I I I look

I'm a Goldman guy, but I got to give it

to Morgan Stanley. I believe that is the

best print ever executed in an IPO in

history.

>> The opening trade print.

>> Wait, so just to clear it up, did you

buy it at the IPO price or did you buy

it on the opening print?

>> There's a difference, right?

>> We're not quite a big enough fish to get

the love the love from Morgan Stanley.

>> The IPO price is 135. The opening print

was 150. Just so we're

>> that's what I'm getting at is he gave

folks like us the opportunity to buy at

a a price cuz it was showing 175 plus

pre-market but that's the experience

that he had to say the real buyers folks

like us then look the capitals and the

t-ros and the phto the people are going

to actually build a position we're much

closer to that not way up here and so

what he did is he put the print on where

the real demand was and that took real

judgment

>> which and it was the right thing and I

agree with you I thought it was

considering what It could have been. I

thought it was I thought it was actually

very very well handled. And we saw what

happened. The stock traded up to two and

a quarter over the next two or three

days. I think a lot of that was just it

was just this excitement. Everybody

wanted in, wanted in, wanted in. And

some people just wanted in so bad they

were felt like they were being fomoized,

right? They're going to miss out on this

opportunity. And uh which is fine, but

then we see what happens, right? It kind

of adjusts. And now they

>> you got a 50% off ticket and now you 900

million shares came to for sale last

week. Now it just came unlocked. it

didn't hit the market, right? There were

people that thought 900 million shares

were going to hit the market the next

day. Um, and I think if that were the

case, it would have been like a

secondary anyway. They would never have

allowed it to all these people just hit

the sell button all at once. They would

have tried to gather up and create a a

print, right? But I didn't even see that

happen. I didn't even see talk of a big

print happen.

>> They had a nice day. So that was

Thursday. They had a nice day Thursday.

Next day they had their best day ever.

And I think it's just look IPOs. I I'm

going to quote some data from Jay Ritter

down at University of Florida. He

started 9,000 from 1975 to 2021. 60% of

them uh after 3 years were down. And so

IPOs are kind of a a risky proposition

if you're on if you're buying from day

one.

>> But you got cut you it got cut in half.

So you got the opportunity now.

>> Well, look what happened to Meta. Let's

be honest. They opened that at

>> 45 or 48 traded down to as low as 16 or

17, you know, in in the week. That's why

they called it face plan. Yeah. Well, I

I'm going to I'm going to jump in with

some super nerd stuff on on the Meta IPO

and let's get to the broader IPO as

well. Meta had two really wild things

happened. Number one, the NASDAQ's

computer systems went down that morning

and UBS who was getting all the retail

order flow cuz remember they had done

the Schwab deal. I was sitting next to

Seth Miller who traded the position.

>> They had lost computer systems. They

didn't know. So, the biggest participant

of the day had no idea what their

position was all day long. So, those

were externalities that were very unique

to Meta.

>> Right. Agreed. But let's but let's dig

back into your to your to your your

curve of sorry to cut you off on the

IPOs. We've been looking about how we

want to grow our SpaceX position. And so

we went all the way back to Google and

said how do these things trade? Is there

a curve we can look at where they bounce

back to is it the last private round? Is

the private round before?

>> Right. Right. And we saw you know I

actually thought as we moved into last

week this was coming under pressure I

think ahead of the Thursday you know

release unlock. Uh and it traded all the

way down to like 108

>> and and I was in the camp. If I kept

saying below 100 is where I'm going to

start to dip my toes, you know, and it

came this close. That was traded back at

130. I didn't dip my toes, but I think

there's still another opportunity. The

>> these very good names, you almost rarely

never get a chance to buy at what you

want.

>> And I think that's Let's talk about the

discipline of long-termness. So for

people that do want to invest in it,

figure out what the price you want to

own. I had decided that 2 and a/4

trillion was the absolute max. 175

looked good. It bounced down to what

almost a little over a trillion. But the

key is decide where you think the value

is and if it gets there then have the

the discipline to buy it.

>> So your value was double digits. I

wanted like do you as a

>> I thought it was going into the high

80s. I really thought it was going

there.

>> Do you as a technical trader though do

you have in your head like I want to see

a minimum two months 3 months of

>> No. I just thought if it I was honestly

I was fully prepared. If it broke 100 I

was going to say I'm going to start to

you know I'm going to start to just dip

my toes right if it goes lower because I

thought it was going to be the 80s. I'd

just buy it on the way down. Um, now it

hasn't. So, I have to rethink the

situation. It's trading back at like

almost IPO almost IPO price. It was 135.

Um, but I still think there's some

volatility ahead in the market. So, I

think there's going to be another

chance. Now, look at I may change my

mind. Maybe it's not coming back down to

the 80s. But if it comes, you know, but

it might be coming back down to the lows

again, and that might be another might

be a reason for me to

>> to rethink my my strategy. But one or

the other, I think it's one of those

names you got to buy and just hold it.

you know, you just got to buy and own

it.

>> You know, that's that's our our theme is

these generational founders who know how

to deploy capital, who know how to

build, who know how to use speed as a

strategic advantage. You buy, hold, and

wait,

>> right? And in this case, you're really

buying you're buying Elon Musk. And

yeah, well, just like you do in Tesla,

but this is a this is a little bit

different story. And I think this is

much more exciting story than Tesla was.

Yeah. I never owned Tesla just cuz I

never did, but I think SpaceX is a

different story. What's interesting to

me is it's an AI story first. I mean

that's you read the perspectus and it's

all over page page one. That's where all

the forward guidance comes into play and

they're spending I think it was $16

billion on capex for AI. They took in

2.7 billion. Then you got to look at

their Starlink uh operation which is

funding everything but they're also

their volumes are going up but on

reduced prices.

Look, Elon usually figures things out in

the end, but you got to understand

there's going to be a lot of volatility

in the meantime.

>> And that's fine, but like I said, you I

think you have to buy and just hold it.

And you got to be able to you got to be

able to ride that wave, right? And

actually, you got to be able to be

strong enough that if the if it if it if

it sinks and the story hasn't changed

and you still like it, you got to you

got to be able to add more to the

position, right?

>> If you still like it.

>> If you if you still like it. I mean, if

you like if you liked it at 150, then

you got to love it at 100.

>> I've heard that before. Right. And

that's why I think you've got to do the

pricing work when you're not being

emotional and things aren't moving

around. And and that's what got us so

comfortable with the IPO is I started

kind of two months before the IPO. I was

having dinner on Katie Trail and I just

sketched out on a napkin. I'm like, man,

these guys could do 200 billion in three

years. I'm like, it's not that

expensive. And then Morgan Stanley came

out with their 330 number, which is I

think what sort of the institutional

community used and Goldman threw out

450. I think people are doing the 330

number

>> and what I think made it hard to do and

maybe I said this on your show was

>> there normally Wall Street analysts want

a staircase to get to the growth and in

this case it's a figurative and literal

rocket ship so you can see the growth

you can see where it's going but you

need a giant ship to get there

>> but it is a rocket ship that's right

>> and then with 3x le or 2x leverage which

you had on day two or three and then

options on 2x leverage instruments it's

That's crazy,

>> right? All right. So, listen, let's move

on because we need to talk about the Fed

and we kind of need to talk about the

message that we're getting from Kevin

Worsh, right? I think he tends to be a

little bit more hawkish. I think he I

also love the fact that he's going back

to a kind of an Allen Greenspan model

where less is actually more in terms of

how much he says and who he allows to

say it, right? Because I think at one

point, you know, during Bernani and

Yellen and and Powell is that, you know,

they'd have their FOMC meeting and then

every one of the 18 members went out and

started talking to the media and

everyone's got their own perspective and

point of view and it created a lot of

chaos in the markets. I think for not a

lot of reason.

>> People were watching the reports and

saying, "Oh, what does the Fed think

about this?" Instead of looking at the

actual numbers, that pendulum started

swinging under Bernani in reaction to

the global financial crisis. There was

so much bad press for the Fed. I think

they went too far.

>> Yeah. But and so the point was I

understand it during the crisis, you

know, when people were panicked, I

understand they were trying to be more

transparent and all that stuff. The part

that the part that towards the end here

that was making me crazy was that every

time if they didn't hear what they

wanted to hear the the community or the

algos or the tra they'd stamp their feet

and scream and yell and yo, you need to

tell me exactly what you're doing. Well,

what is that, right? You green spin

never did it. I actually thought the

markets did I thought the markets did

fine on the green spin. You know, were

there days of volatility? Of course they

were. But I think Kevin Walsh is right.

Not not painting himself into a corner,

not telling them every little thing that

they're thinking about doing. Let the

market figure it out.

>> Little less transparency in terms of

where the Fed is coming from, I think is

a good point.

>> Okay. So tell me so tell me now what the

Fed the in interest rates the the

Treasury market reaction. 10 years of

are higher, 30 years are higher and

Kevin W hasn't done a thing.

You know, it's one of our our three

waves the market and the final wave is

kind of what's going to go on with

inflation and rates. And we talk about

this phantom rate cut where we think

because Wars went in with a mandate to

to take rates down, the economic data is

really not giving him the room to do

that. But we think because of his

mandate, he'll get a chance to leave

rates unchanged a little longer than

maybe another Fed chair would.

>> Right. And unchanged. I actually I'm in

that camp, too. I don't think rates

going up, but nor do I think they're

going down. at least not the rest of

this year, right? I think I I think that

the I think that the the market at the

long end, the bond market at the long

end is going to do a lot of the work for

the Fed so he doesn't have to do

anything, right? He can just sit here

and almost just jawbone and sit and

wait.

>> Well, the problem is when you when you

abdicate your job to the bond

vigilantes, you lose a lot of uh you

know, you lose control. And I think him

being vocal in that regard is probably

refreshing because I think, you know,

previous Fed chairs might have uh not

brought that to light. But I I'm a

little uncomfortable with the fact that

he's very vocally comfortable with the

uh bond market doing it work.

>> Yes. But the Fed doesn't control the 10

and 30.

>> Not directly, but the threat is there.

Yield curve control thread is there and

then operation twist 3.0 is there.

>> Okay. But his argument is he thinks

there's way too much money in the

system. He wants to tighten it, right?

He's already said he's made it very

balance sheet. He wants some balance

sheet. He wants to tighten it. I think

which I think is the right thing to do.

I I think they left it. They left

quantitative easing for way too long.

>> And I think that's the reality.

Inflation comes from printing money

without productivity catching up. So

he's really leaning in to some strong

economic theory there. Well, the I mean

the bottom line is you take a look at

earnings, you take a look at uh the

engines of growth. This very well could

be they could be bailed out by all of

this even if they made a a misstep, a

bad policy decision.

>> Well, what was it last week? The

productivity um the productivity number

went up right on th Wednesday before the

uh

>> quarterly. Yeah, it showed an increase

which was actually pretty bullish,

right? That productivity is going up.

It's going to help GDP. It's going to

help the the economy. It's a good thing.

Then AI is at the was at the kind of

crux of this this this increase in

productivity.

>> Yeah. And productivity booms. So another

thing we did ahead of the SpaceX IPO was

looked at all of the big innovations

from from uh steam engine, electricity,

railroad and what happens is there's a

lag factor and the main reason is you

organize your workflows around the

previous system and it takes 3 to 5 to

10 years to reorganize reorganize around

the new technology and that's where the

boom comes

>> right. cept on now is probably going to

be accelerated. Everything just seems to

move a lot faster.

>> Yeah. May not take that long, right?

>> It is. But if we think about corporate

America, they're trying to figure out

how to bring AI in, but it's still in

their traditional system. So, it's

applying AI to the traditional systems

rather than 3, 5, 10 years from now,

it's a completely new system.

>> That's interesting. I I think it's

probably good if it goes slow, a little

bit slow.

>> Well, I I would agree. I would agree.

Yeah. I I would agree. Going slow is

okay, but not not too slow. No. And

because then you risk the you know go

backwards

>> because we've got to make the new jobs

that didn't exist fa as faster or faster

than the ones that are taking out. out.

And if I could go back to the steam

engine one more time, that's my favorite

example. When they switched from steam

to electricity for the first half decade

in the factories, you didn't have any

productivity gains because they set the

factory up in the same way they did a

steam engine. About a half a decade or a

decade later, they said, "Wait a minute,

we don't have to be on a single belt

because we could put a electric motor

anywhere." And that's when you had the J

curve of productivity. So that's what I

think we're going to see with AI as

well.

>> But how old were you in the steam when

that story happened? When did that J

curve begin?

>> You have a great handle on that story.

Yeah.

>> All right. So, let's talk about just

where we think um uh what inning we

think the AI trade is in. Are we still

very much in the early stages of this? I

think we're very much in early stages,

but

>> yeah, I think this this plays out at

least over decades. Um and probably it's

going to be frontloaded into the first

and we're just a few years in. So, very

early.

>> I I think we're early. People are just

figuring out how to use these tools. And

to the point I just made, we haven't

even reorganized our systems yet to take

advantage of these new tools and

processes,

>> right? So this idea, you know, in June

when we were having when we're having

pressure in the tech industry and they

were selling all these great names off

and everyone's talking about, oh, the AI

trade is overdone. It's, you know, it's

it's on its way out. I you almost have

to laugh you almost have to laugh at

that conversation. M they traded

Microsoft down to 350. Where's the trade

take? 450. You know, it went from 350 to

450 in a matter of feels like days, but

maybe it was a couple of weeks.

>> Yeah. Things went on sale. I I the whole

SAS apocalypse was way overblown and

that was there was evidence of that way

back in February, but the multiples for

a lot of software companies kept

shrinking. Then you saw the chip

companies got hit. That was a market

clearing event for for my for myself.

And so as soon as we saw that kind of

wash out, you saw Mag 7 come back. You

got the old leaders in AI leading again.

Well, because they oversold, you know,

some of it was, you know, the trader

types, the algos, their leverage

products that that that need to

rebalance, right? And they and they sell

these names only because they have to

rebalance it, not because some

fundamental, nothing fundamental really

changed. And that actually creates

long-term opportunity for investors, not

day traders, investors, right? That

suddenly we see Microsoft trading 350.

I'm scratching back going, "This has to

be a screaming buy." I I do want to see

Okay, you take the the top of the socks,

where was that like 13,000? Then you go

to where it sold off just below 10,000.

I want to see that midpoint exceeded. I

want to make sure the shorts are out and

then you got an easy ride to the highs

and I think we have new highs.

>> Right. So, we're we're running out of

time here, but I want I want your view

on two things. Is

>> is there midterm volatility still ahead

of us in the market? And then where do

we end year? What does it look like at

the end of the year? I think we have a

Yeah, I think there's definitely the

possibility of a midterm surprise,

although I don't even know that it's

going to have anything to do with

midterms because anything can happen in

this political atmosphere. By the end of

the year, I think we reclaim the highs

or I think we're on our way to

reclaiming the highs depending on what

happens in, you know, the end of Q3.

>> A bunch of the big firms out there have

8,000 as a target at year end.

I I think we continue to climb the wall

of worry, right, that you know, we've

made some progress on the upside and,

you know, something will be around the

corner that we don't anticipate. You

know, we've got stability in the Middle

East. It could get unstable again. So, I

think we go high.

>> We have stability in the Middle East. I

don't think today I don't think we have

that today. Yesterday we did, but I

don't think today we

Yes, that that Yes, that's the point,

you know. That's exactly the

>> So, where do you think because I you

give me just a broad sense of where you

do you think the markets do you think

the overall market's in a good place in

terms of year end? Do you think we're

going higher from where we are today?

>> I think we're going higher. You know,

the the the growth reports are coming

out. Um, you know, I'll use Palunteer as

as my favorite example is, you know,

when when Alex put up backtoback 100%

quarters, people just said, "Okay,

you're just growing into your previous

multiple." But when he did it again and

he's probably going to do it in next

quarter, stocks need to respond. So I

think we're seeing stocks um respond.

You know, talking about the hyperscaler

starting to work again, people are

starting to believe these growth

numbers. And I think there was a change

that spooked the market is that these

near monopolies, right? Google Adwords,

uh Meta Display Ads, these were near

monopolies and now they're getting into

businesses that aren't near monopolies.

They're very good businesses. And I

think it just took investors a while to

digest that.

>> So listen, speaking of that, I gotta

tell you, I just finished reading The

Philosopher in the Valley, which is the

Palunteer Alex Karp story. It's a great

book. You should, if you have time, you

should really check it out. It's a great

book. Um,

>> uh, and I enjoyed it very much. In any

event, gentlemen, listen, uh, the time

goes by very quickly. I appreciate I

appreciate coming here. I appreciate

meeting you. I'm going to start paying

attention to the Founders 100 ETF. I

want to look it up and see what it's all

about. See what's in there. And yeah,

and TripleF, is that what it is? That's

a ticker symbol. That's a symbol. Triple

F. Perfect. And so until the next time,

take good care.