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We're seeing a retail investor revolution: analyst

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CEO and CIO of Tuttle Capital Management, Matthew Tuttle, joins Yahoo Finance to discuss what meme stocks investors should think about investing in to avoid FOMO and how the retail investor revolution has changed the market.

Video Transcript

MYLES UDLAND: All right, well, investors love talking about things in four letter acronyms. You've got TINA, There Is No Alternative. Of course, borrowing from Drake, we've got YOLO, You Only Live Once in the market. And then, of course, FOMO, the Fear Of Missing Out.

And we've got a new ETF out that can help investors play on some of the FOMO trades that are out there in the market. And joining us now to discuss is Matthew Tuttle, CEO and CIO of Tuttle Capital Management. So Matt, let's talk about this ETF and what's in the FOMO strategy. And I guess, how you are thinking about the idea of what exactly it is investors are afraid of missing out on, given the current setup for markets.

MATTHEW TUTTLE: Yeah, so the way this is designed is what's FOMO is a moving target. So if you look at the markets today, obviously it's the meme stocks. It's stocks that are popular with retail investors, stocks that are popular with hedge funds, innovative technology. And interestingly, and this is something that surprises a lot of people, it's value stocks. Because with the reopening trade going on, you've seen a lot of money piling into value.

So those are kind of the themes that are in the ETF right now. But like I said, it's a moving target. What is FOMO can change on a daily basis, weekly, monthly. So it's something that we're watching very, very closely.

BRIAN SOZZI: Matt, speaking of moving targets, these meme stocks continue to be all over the map. Have you taken any positions?

MATTHEW TUTTLE: Oh, yeah, we definitely have. So we think what's going on with these meme stocks, you know, you see a lot of Wall Street saying, well, this is a temporary mania. We don't think so. We think this is a retail investor revolution that is not at all like what happened in the late '90s.

So this is a phenomenon that's here to stay. So this is definitely something we're making sure we incorporate into the fund. It's not a massive part, because obviously, as you guys have seen, this stuff is really volatile. But it's definitely something we want to have in the fund.

MYLES UDLAND: Now, on the other side of that, so you're getting a little bit more cautious on some of the pure play crypto plays. And obviously, you know, you've-- Tesla is a way to play it. And MicroStrategy is a way to play it. But you're looking at a couple of names that basically pivoted their whole business to becoming miners, and got caught up in however you want to phrase it, the meme trade, crypto trade, whatever it might be.

MATTHEW TUTTLE: Yeah, so crypto is something that we include in here. You know, obviously there's not a ton of options. So we use some of the exchange traded products that are available. We do go into the blockchain companies. We just did recently get out of pretty much all of that stuff.

We rebalance the ETF on a weekly basis, yeah, every Monday, market on close. So we had some blockchain stocks. We got out of that. A couple of weeks ago, we had some of the exchange traded products. We got out of those.

But you know, certainly Bitcoin, and crypto, and blockchain is going to be a part of this fun going forward. It's just we're looking at the trends. And we're going to be in it sometimes. We're going to be out of it other times.

JULIE HYMAN: When retail investors are thinking about how to get into this stuff, I mean, do they have to be super attentive, do you think? Is this like something you can buy and hold? Or do you have to be really on top of it?

MATTHEW TUTTLE: You've got to be really on top of it. So we're looking at it really from three angles. First off, we want to try to look for stocks that, you know, have a high short interest, but a high short interest with a rabid fan base, whether that's retail guys, whether that's hedge fund guys, or insiders.

Second thing we look at is we look at these stocks that are in an uptrend, and we want to buy into that. But the third thing we look at is we want to buy the dips on these things. Cause I mean, watch any of them and the pattern is the same. The stock will go up some ridiculous amount of money. Then it'll retrace a big chunk of that move. And then there'll be a second wave, a third wave. So we want to buy those dips.

But we also weight our holdings by volatility. So we'll own these stocks. But you know, they're going to be a smaller percent of the portfolio. And we're rebalancing weekly. So you know, we may hold it for a week and then be out of it.

MYLES UDLAND: All right, Matthew Tuttle, CEO and CIO of Tuttle Capital Management. Matthew, appreciate the time this morning. Thanks for jumping on.