New FOMO ETF debuts on the market
Matthew Tuttle, Tuttle Capital Management CEO, joins Yahoo Finance Live to discuss the new FOMO ETF and outlook on meme stocks.
Video Transcript
KRISTIN MYERS: All right, let's pivot now. It's time for our ETF report brought to you by Invesco QQQ. We're joined now by Matthew Tuttle, Tuttle Capital Management CEO. Matthew, I want to start here with the value and growth narrative that we've been seeing lately. We see a lot of conversations around that positioning. How are you guys thinking about it, especially as some folks are thinking about the ETFs? Is it more in value? Or are some folks still going after those big growth names?
MATTHEW TUTTLE: So I mean they're going after both. And it's a constant battle, day in, day out. You've got some days that are growth days, some days that are value days. You've got the majority of Wall Street now saying, hey, it's value. And, you know, and what we try to do is we'll just go where the trends tell us. And right now, we're positioned more in value than anything else. We certainly don't want to ignore growth. So I mean, we're not trying to time anything and saying, hey, we're going to be 100% in value because that's a recipe for disaster. And no one can time that stuff. But certainly, right now, we've got a tilt towards those value names because that's just been where money is going lately.
ALEXIS CHRISTOFOROUS: And I want to draw some attention to a brand new ETF that you have. And by brand new, I mean, I think it launched yesterday. And I love the ticker symbol. It's FOMO, for Fear Of Missing Out. Tell us about the stocks that are part of this ETF, and why did you feel the need to do this?
MATTHEW TUTTLE: So we felt the need to do it because thematic investing has gotten real popular lately. And we just don't like the way that it's being done. So what you end up with is you end up with these narrow-based indexes that are built based off of what happened in the past, not necessarily what's going to happen going forward. They don't rebalance frequently. So they get out of sync with what's going on. And they tend to be-- have some real heavy weightings in certain areas or certain stocks.
So what we said is, look, we want to be extremely agile. We want to be able to go wherever FOMO happens to be. Because where it is, is going to change over time. I mean, right now, you know, a lot of FOMO is in value because that's where the ball is, and that's where we're going to go. The other thing we wanted to do is we wanted to rebalance weekly, so we could really stay in harmony with what's going on. And we also want to weight our holdings by downside risk. So we've got the GameStops and the AMCs, but they're 1% positions, you know, not five, 10, or something like that.
KRISTIN MYERS: So I do want to ask you about that because as you just mentioned, you guys do hold those meme stocks. And I think that's something that so many folks have said you need to absolutely stay away from them. Some of the valuations are just absolutely crazy, especially when you look at some of the companies. So I know you're mentioning it's a small percentage. But why were those meme stocks still so attractive to you?
MATTHEW TUTTLE: So they're attractive to us because they're attractive to other people. So we're not looking at this on a fundamental basis. We're following the market trends. And really, you can't even look at these stocks on a fundamental basis. You can't look at them the way you've historically looked at stocks. I mean, I love playing poker. And I play poker. I like to play poker with people who know how to play the game. When you play with people who, you know, are inexperienced, what they're doing is going to be totally and completely unpredictable. And it's not going to make any sense.
And that's these meme stocks. If I try to take what traditionally I learned through years of finance and tried to apply it to this stuff, crypto, the same thing, it's not going to work. So all we're trying to do here is we're following the trend, but we're having it in a position sizing that if this stuff does go to zero, it's not going to kill us.
ALEXIS CHRISTOFOROUS: And what about your thoughts on a crypto ETF? You know, the timetable has been pushed back. It looks like we're not going to get one here in the US anytime super soon. But is that the same kind of situation where you yourself wouldn't necessarily run out and buy it, but you're just-- you're going to be reacting to market trends?
MATTHEW TUTTLE: Exactly. And it would probably be something we'd have, you know, a 1% position in or so. You know, I think that if there's demand for it, we should have it. They've got it in other countries. So I mean, it's something that we should have here. And we've got some ideas that, you know, if it ever does come about, look for another ETF out of us.
KRISTIN MYERS: Curious to know, as you were mentioning in that FOMO ETF, you're essentially talking about a lot of-- it sounds like potentially a lot of turnover happening in that ETF, as you're constantly balancing and shifting around some of the holdings in that ETF. Just as you're looking out over the next six months, let's just say, through to the end of the year, curious to know how much rebalancing and shifting you think you guys are going to have to do in that ETF.
MATTHEW TUTTLE: It all depends on the market. The markets right now are constantly changing. The last thing I'd want to do is-- I mean, so right now, we've got a value kill. Last thing I'd want to do is be locked into a value kill for six months because maybe that's not the right place to be. So if the market just kind of chugs along and things aren't really moving around, things aren't changing, there's a solid uptrend to some stuff, then we won't have to shift a lot. But if we shift back towards growth, back towards the high flyers, or if there's a shift towards inflation sensitive or shift towards financials or something we haven't even thought of, then, you know, we're going to move the portfolio to where it needs to be.
ALEXIS CHRISTOFOROUS: We had John Petrides of Tocqueville Management on earlier, and he was talking about how much money is sort of sitting on the sidelines right now. What have inflows and outflows been like for ETFs recently? I know they were quite high at the beginning of the year. Have they grown since then? Have they already peaked and are starting to come down? What are you seeing?
MATTHEW TUTTLE: No, so we're seeing that the flows have peaked. What's interesting is, you're seeing flows out of, you know, the market cap weighted indexes, which I would argue are somewhat obsolete at this point. You're definitely seeing flows into thematic. You know, that's what the individual investor wants at this point. And you're seeing flows out of mutual funds, which, quite frankly, are dinosaurs, you know, at this point.
KRISTIN MYERS: All right, I have to admit, I'm curious to see how the returns are going to shake out, out of this FOMO ETF. Matthew Tuttle, Tuttle Capital Management CEO, thanks so much for joining us.
