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INCOME ETFs - Who should own Income ETFs and who shouldn’t
Recorded: March 26, 2026 Duration: 1:00:10Space Recording
Full Transcription
Music Thank you. What is up?
What is up, everybody?
It is Evan, Stock Market News behind the account.
I'm going to get my account in here.
We got CryptoFit down below. This should be a great conversation. I am excited for it.
We're going to be talking about income ETFs. And yeah, these are some of the experts in the space.
I know this is a very hot area in the market, and I am excited to cover it more.
So I sent out some of those invites. We're getting some of the accounts up here.
Yeah, I appreciate you guys for hanging in.
The hope is that this becomes a nice series here that we got coming on.
We know there's a lot of people interested in this area.
So, yeah, I think some good conversations coming forward.
We're going to let them come up here.
I am sending them invites.
Let me also get my account up here as well.
All right.
We got them both up here.
Sometimes space can be a little weird at the start.
How are we doing, Saris?
Marcos?
I'm here, man.
Doing well.
Super excited to be here.
Beautiful, man.
All right.
Well, we'll give it
like one minute let some people come up what a day to uh do the space in the old market here
kind of exactly what i want right uh it to fall so we could buy more right
did you before we start did you make any purchases today? I know I did, and none of this being financial advice, but did you make any purchases?
Yeah, I made a little bit of a purchase on XQQI by Neos,
boosted NASDAQ 100 high-income fund.
A little bit of VU, a little bit of the Qs, and that's pretty much it.
So I kept it pretty simple.
I have my eye on HUD, too, but kind of buy range is in like the high fifties.
So kind of waiting to see if hood could get down towards like a lower valuation than 60
billion.
So I have my eye on hood too.
And my eyes are getting absolutely ripped out of my skull with it.
Cause every time I think it's a good time to buy, it just keeps going down.
But I buy the HOII rec shares fund.
That's one of my favorites on the hood.
Hopefully Bitcoin can go down a little bit more.
I think a lot of people were buying at 68 to 75.
But I think a lot of the,
if it goes like a leg down in the low 60s or high 50s,
I think that's a good buy too.
But I know the income Bitcoin funds
are getting scooped up by a lot of investors.
So that's also good to see too.
Yeah, I rounded out the BTCI purchase today to make sure I had at least a thousand shares.
My goal when I started a position is it's kind of like a race to a thousand shares for me,
but I want to get this thing going.
I see a bunch of people coming in.
So first and foremost, Marcos, thank you so much for being the first guest on a show I'm
kind of hosting with Wolf
that is dedicated to income ETFs.
They don't get as much, I don't want to say they don't get as much love because like on
your YouTube channel or people who are probably listening to this, that's maybe all the content
they get.
But I wanted to do something that was more educational, inspirational, and kind of entertaining.
And I think you fit the mold perfect.
So if you don't mind doing a real quick intro of mainly, you're not like the hugest X account
on planet Earth, but you have a very large YouTube channel and you do a lot of interviews
with fund managers, all types of funds, and you do have a little bit of education.
So you mind just dropping who you are real quick before I get started?
Yeah, man, totally.
So my name is Marcos Mia. I'm not the biggest X account, but I've been
posting a lot more in the last month. But I have over, I think, just under 54,000 subscribers on
YouTube, run a YouTube channel with my name, Marcos Mia, and basically make everything ETF
content. So from income to high yield, traditional dividend ETFs, S&P 500 growth ETFs. So just kind
of like the whole broad range of anything that has an ETF in the ticker, I'll most likely make
content about it. Lately, I've been doing a lot of interviews with fund managers more towards the
income space, just because a lot of the growth people don't really have much, I guess, content to kind of put out because
it's kind of easy to understand a basket of the high-flying tech stocks and you just own it,
right? Versus some of these income products, it's kind of complicated. So it's a lot more fun to
have funding managers talk about their products. So that's kind of what I do. I love talking about
ETFs and interviewing people about ETFs too. So I love what Wolf does too.
It's all about education, right?
And hopefully giving people some confidence to double down on their products when it goes down and own it for the long term.
All right, cool.
Well, let's start some of this fun education for entertaining purposes only.
So the title of this, who should own income ETFs and who shouldn't?
I think that's where I want to start with you
because people you talk to and people you see when someone tells you that they want an income
they want income funds in their portfolio what should be the first question or the first like
conversation point that you have back with them like what do you normally say to people why that's Why? That's always the first thing is why. And not from a lens of criticism, but more for
just generally, what's your goal for owning these products? Or what do you seek to
outcome for owning these products? And mainly the answer I always get is they want income now.
A lot of the biggest trade-offs for these income products is you're kind of taking an income now and sacrificing your upside for getting premiums, which are classified as not dividends,
but their distributions every single week or every single month. Sometimes it could be different
frequencies. But that's the real question I asked is, you know, why? So specifically, sometimes it
could be a different age. It could be a different goal. It could be a different risk tolerance, too, because some of these income products could be, they're generally a little bit, have more moderate risk than just pure equity upside exposure.
So that's kind of what I tend to ask people.
And just let them talk, too, because there's products for everybody.
And I try not to push one product versus the other because I know that everybody has different needs yeah that's exact i mean i i say it
kind of where i'm at in life right do your goals line up with your actions and for me personally
you know i've been lucky enough to be a good saver or you know invest in bitcoin early or something
and my job kind of sucks. And I need
income. I sound like that one commercial, like you need money, get it now. But that's the goal,
right? I need income now. And if my only goal is growth, long term net worth, this might not be
something that I would even I'd have that conversation back with them, right? Like,
do your goals line up with your actions? So you mentioned something kind of led me into the next
one. This is gonna sound so professional, dude. I got notes.
But like if we go off the rails or if somebody wants to come up on stage, feel free.
If you have a question for me or Margo or you just want to add to the conversation, this
will be very A and B. But I love getting people up here and just kind of seeing what you're
about or if anything that we talk about kind of hits home with you.
So you mentioned these aren't like necessarily dividend ETFs.
And I think we need to kind of clear that up. Like there's dividend ETFs. That is where a company pays a dividend.
They, they can't just, I don't personally like dividend ETFs, right? I'd rather just see growth
in my underline if I'm going to, I want that. But then there's covered call ETFs. You know,
we're going to talk about those. There's bonds, there's STRC, there's call spread funds.
those. There's bonds, there's STRC, there's call spread funds. So do you decide, like, explain to
people, hey, there are differences in these high yield funds or income funds, or if they're just
covered call funds, or if they're, you know, target funds, do you overwhelm them with information
when they start to talk to you about, hey, man, I'm thinking about income funds, or do you kind of get my question?
Yeah, I mean, the first thing I'll always try to explain is like these, because when people wrap their head around these high income products, they look at the yield and they're like, all right, I could get a 8, 10, 15, 36%.
36%, you know, we've got 80%, 100% yields.
80%.
80%, 100% yields.
And so their really misconception is, okay, like these are dividends, which that makes
people feel comfortable.
You know, if it's a dividend ETF, you've heard of like the SCHD or the DGRO or any
sort of dividend stock, you know, it's kind of a quote unquote safer than owning just
a pure equity, low yield ETF.
And the main thing I try to tell people is like,
there's a there's a difference between distributions,
which are generally just premiums or quote unquote income
that are harvested from volatility of whatever index or stock
you're kind of doing the ETF on.
And then, of course, dividends are just basically coming
from the company's balance sheet,
preferably positive income versus negative,
and you're getting that distribution
or dividend every single quarter.
So that's the main thing I try to explain to people
is like there's differences.
Traditionally, it just depends on what kind of yield
we're looking at, right?
Like if it's a higher yield,
you're mostly taking on more risk than a lower yield.
And that's kind of the same thing with different ETFs
is like you should be kind of more,
have more of a criticism lens
when the yield is higher than lower.
That's the same thing with these income products.
It's a lot to tell people though,
because I know there's so many products out there
and not one product is designed for one person.
You got single stock income ETFs,
you got the baskets, you got themes,
you got like a regular index approach,
you got different types of ETFs, we're joining different strategies with leverage, with call spreads, put spreads. So it's a lot of things just that, that's a lot to tell people.
So I always try to ask specific questions before I give an answer. Yeah. And it's hard because
there's a lot of misconceptions around, you know, what are they doing? Are they just doing, you know, are they,
you know, just doing cover calls on the entire portfolio? Do they own half? So you're, are they
doing some leverage? There's so many different things that these fund managers are doing.
So what do you, what do you think the most common misconception though you see is with beginners?
Do you think it's kind of what you said, where they're just yield chasing? They look at a number,
they're like, okay, I'll put, I'll put, I'll buy it for a hundred dollars and it's kind of what you said where they're just yield chasing they look at a number they're like okay i'll put i'll put i'll buy it for a hundred dollars and it's going to produce
30 for the rest of my life and it's going to just stay there and then they get sad because
they see the chart you know we're going down and they're kind of confused is that like the
biggest misconception that you see i know that's what i see when i talk to people on spaces and
just in the community but the biggest misconception, if you like,
is that you'll get a guaranteed return of whatever the yield is.
So if it's like a target 15 or if it's promising like 36%,
that you'll kind of get that no matter what happens
in like a one-year timeframe.
But people don't know that you also have like pretty much all the downside
or even more depends
on the the ETF of course of the exposure of the underlying and so some people would say like okay
like um you know I'll hold this product and in about like I don't know this whole year I'll be
collecting my premiums and distributions and that's my return but technically you have to factor in
your share price growth or loss.
So, you know, you might be getting a 15% distribution, but you might be down more than 15% or you
might be up instead of 15, you're up only 10.
So that's kind of like the main lens I would try to take because a lot of people think
it's like risk-free income, which shouldn't be, which is not true because if that was
the case and everybody would pile in all their money
towards these products and we'd just retire right now
because I would love to get 15% every single year
without any downside risk or any market risk.
Well, that's the fun part about
all the Bitcoin treasury companies coming out right now
is that's their, you know,
they're saying this is what we're going to be able to do.
And that's a whole nother space I think we should have on that.
How do you feel about STRC, SATA right now?
Yeah, I'm not too familiar with the whole STRC trade right now.
I know that if Bitcoin were to go down, I think, to $20,000 over a two-year time frame,
then things would get kind of rocky for for the
11 yield that they're paying off right now every single annualized but it's monthly but um i think
it's a good trade if you understand like what's going on with it but everything has a risk right
like you should always have a lens of scrutiny i'm not saying strc is like the worst thing in the
world i definitely think it's better than a lot of what fixed income products are giving right
now with like a 3% to 5% yield.
But if we're talking about 10% yield back in before the whole FTX situation, I know
some of those Bitcoin companies were giving out 10% yield on USDC and then those companies
go under and then everybody else is out their money.
But I think it's a good trade.
I think it's something that people, if they're Bitcoin bulls and maxis, then that they should take into consideration.
But it's definitely a lot different from just a traditional income fund.
Yeah, it's so funny you mentioned that because I was part of that whole debacle way back when.
Because I've always been chasing yield because I know it's something I want to be home for my kids I want to be able to kind of use my time freely which I think
most people when we talk about who these are for that's what they're after right I have failed real
estate I've done you know I've bought and sold businesses successfully done things terribly so
anywhere in between and I know with uh Celsius I was in that one I don't know if you ever heard
of Celsius probably some people listening were in on that.
Same thing, you know, yield, everything went under.
Yeah, really, you know, you can do the math and factor that I think strategy, do not quote me on this math.
But the last time I checked, I think Bitcoin would have to be around $8,000 for over five years for them to potentially have to call
back some preferred shares.
And that's not even factoring in the volume of Bitcoin that they own.
That's just factoring in the cash supplies they have if Bitcoin went to that number.
But I thought about doing a post every day that people would like, like, hey, here's
how many years of runway STRC has if Bitcoin's at eight grand.
But moving on,
because I don't want to get nerding out there.
Go ahead.
I feel like it's kind of the same thing
of just the regular market, right?
Like US has been the trade for the past decade,
but there could be, you know,
I'm not saying that there's a lost decade ahead of us,
but, you know,
it sometimes could be a little bit beneficial
for people to have like some international exposure
because, you know, god forbid a big bear market that's prolonged more than a
couple of years um people should be diversified so um that's why i'm always a big fan of like
having like a little bit of exposure here a little bit exposure there um maybe people could dabble a
bit with the whole strc trade yeah and honestly if we have a lost decade, like I'm, I'm stoked for
income funds because they're, they're going to capitalize on volatility. They're going to
capitalize, uh, kind of in a, in a sideways mark. So I think it'd actually be pretty good. Um,
all right. A 25 year old comes to you and says, I just put my whole account into JEPI, JEPI,
10% yield. What do you, what's your first thing you would say to them? Obviously not advice, but a young, a 25 year old comes to you. What do you, what do you what's your first thing you would say to them obviously not advice but
a young a 25 year old comes to you what do you what do you say to that right I'll be like all
right you're definitely going to be underperforming the S&P by a little bit um probably by I don't
know three to four percent but um I would say oh my goodness I would probably just try to convince them that if they want the income, fine.
But if they really want to have like, you know, the main thing as a young person is
I think you should be looking for total returns.
You should be looking for the best returns that could be for you in the next 10, 20,
30 years.
Because compounding at 15% is way different than compounding at eight.
I think JEPI is like historically done like with share price and income distributions. I'm almost
positive it's done like 3% or maybe 4% less every single year than the S&P. If you compound that
three to 4% year over year over decades, that's a huge change in somebody's wealth when they're near retirement.
So I would say, you know, more so of, okay, if you want the income, then fine. There's better
options, in my opinion, than JEPI. I would say JEPI is a lot more conservative than a lot of
the income products that we see now. But I would definitely try to come at something like, okay,
you should just try to get just regular S&P 500 exposure instead of just JetBee's basket of similar exposure with the S&P.
But maybe they could, if they really want the income, then you could also use the distributions
to fund other positions.
Like if you have a growth position or the S&P, like a regular S&P position.
But it's definitely not something I would recommend to go all in on.
I think it's pretty foolish at that age age just because you could always switch it over.
You could always just go pure S&P and then have some growth exposure.
And then when you're near retirement, you could just flip on the switch of distribution ETFs or income funds.
And that would be a way better option than just pure JEP exposure at 25.
And that's what more people, I think they want to do that in theory. But I think
the younger crowd right now is, is obsessed with like the barista fight, like lifestyle and concept
of like, all right, Hey, maybe if I can just get 1500 bucks a month, I can, you know, only work
20 hours a week instead of 40. And then I can go, I don't even know when kids nowadays, I swear
teenagers are like nicer than nicer than when I was around
because they like hold doors and shit open for me.
So I'm not dissing them whatsoever,
but yeah, they want to enjoy their time.
Maybe they don't want to work that hard, but we'll see.
I don't know if you see that
where it's the younger generation
kind of trying to get in right now
because they're just trying to get a little bit of income
and then maybe they're foregoing some of that growth,
like you said.
I mean, it's also different economical times.
They feel as if most of these younger investors
feel like they need the income now.
It also gives them that margin of safety too.
I mean, for just looking at pure inflation,
it's not, I don't think it's 2% to 3% year over year.
I think it's a lot more than that, of course,
which is why you have a lot of people piling into
like a Bitcoin and high yield products and just trying to get more exposure than the S&P to hopefully outperform it.
Because if you're getting 12%, then your real return is really like nine, something like that.
But I definitely think it's more of a comfort thing too. Like if you're getting all these
distributions, it could be comforting to know that if something were to happen with your job,
I know AI is a big fear, too.
I mean, AI is taking a lot of people's jobs.
I think it's going to be taking a lot more people's jobs out of college, which is why you're seeing a lot of young people buy these income products and try to trade the market to hopefully outperform it, which I think is quite foolish, too.
But it's definitely at different times than a decade ago uh which i think is wonderful
i think that there's a lot of products for different people um and it's only going to get
bigger in the next you know few years but it's definitely more of a comfort thing than just um
you know buying it just because of the yield well i know personal experience, right? Like I had my yield portfolio, I think I was up to 195,000
a year. And then I was like, okay, bro, what are you doing? Like I knew I was,
some of these funds were going to road. I'm still talking, you know, I'm still monitoring
spreadsheets, looking at what I'm doing. But ultimately it's like, do I want to have to
worry about such a calculated reinvestment program? Or do I want to have to worry about such a calculated reinvestment program?
Or do I want to start to look at other products that maybe the growth just – Michael Coe is on the – from YieldMax Spaces every week.
And he always mentions this really well about one of their funds, Big E, Big Y.
He's like, it should grow enough to outpace inflation, and you should be able to collect your 12% yield.
Now, I think that's even – once again, none advice here, but I think that's even risky.
I still think if you're just going to try to live off 12%, that's way too high. I think maybe
hopefully your growth with inflation, reinvest 4%, maybe live off 8% is something I would
personally feel more comfortable with. But yeah, so there was, there's such a huge debacle and there's huge drama in our community.
Sometimes there's people
kind of like fighting within.
I'm from CrossFit, the company.
So we fight with each other
all the time, all the affiliates.
This gym sucks, that gym sucks.
And I feel like that happened
with some of these funds, right?
They're like, oh, that only erodes.
Or look at, you know,
NVDY versus NVII
and they cross compare. and i'm like guys just
different products look good in a portfolio at separate times we had the misty community oh my
gosh dude the misty community when strategy was close to 500 and people were taking helox out
in their home they're like this is never gonna go poorly and now they want to come back this is like a long
rant you're going to respond to this in a second but now they want to come back and be all mad at
Yilmax it's like you should not have taken a heel lock on your home when strategy's at 500 bucks
and think that nothing's going to happen to Misty if you look at Misty in total return
compared to strategy I mean they're they're on par with one another. So do you think, comment on that,
but then long-winded question,
do you think that we have just completely screwed
the word total return as a community
because it does matter and it is real?
So go ahead and speak to that.
I mean, I just feel like a lot of these income investors just need to understand the risks of everything
and need to prepare for the worst case scenario. It's definitely fun to get distributions every
single week, every single month. But I think a lot of those people were just overexposed
to one or two things and they didn't have a diversified portfolio.
Whereas they had a diversified portfolio, maybe with a beta that wasn't more than one or two, maybe not two, but just over one, they could have just had a lot more less downside risk.
But total return is always going to be the king.
We get to debate every single day about what total return looks like.
And as a community, I think whether you're an income investor or just pure growth or
you don't even like income or growth, you're just maybe in a fixed income.
Total returns will always be the king, in my opinion.
In terms of how uh just like uh how
much to live off of i know eight percent's been a big quote for everybody who's just pure income
investing i definitely don't think that a lot of the products out right now could have a 100
percent no drip i think you have to read just to reinvest a little bit of it. 25, 50% is probably like my,
near 50% is kind of like my idea of like what people should reinvest.
And I also think like 8% is kind of high.
I mean, if we're looking at traditionally,
like if you want infinite money,
I think three to 4%,
sometimes even 2% is king
because technically I believe there's like a study out there where you could live off of two to three to four percent, sometimes even two percent is king because technically,
I believe there's like a study out there
where you could live off of two to three to four percent
and have enough money to withstand your whole life
but then pass that along to, you know,
your kids or the future generation, right?
So that's where I think that when people try to say eight percent
or even just like the whole biggie,
like, you know, I think the biggie is fine, but to expect outperformance for the S&P versus
the S&P plus like enough income to be inflation, maybe, you know, I'm not, Michael Kopp probably
knows a lot more about their own products than I do.
But I think people should always lean on the more, you know, more precaution, like be more
conservative.
That's always my take is always be more conservative because it's better to be more conservative and have outperformance or have a better outcome than to be less conservative and kind of go under that.
That's kind of my take on that.
Do you think that – and feel free.
I know we got a lot more people listening now.
By all means means come on
stage talk to me or marcos about anything you like dislike won't hurt our feelings maybe you
think we're ridiculous totally fine and this is a ridiculous statement right some people will say
hey why don't you just you know buy the underlying or you know buy vti whatever whatever your growth
strategy is and then just you just do your own options.
And I will say from personal experience, Jay Pestertelli from YieldMac sent me his book,
awesome, amazing book, read the whole thing, felt like an absolute idiot,
tried to do my own options, and now here I am.
My risk tolerance is extremely high.
So here I am bag- the two X leverage funds of
strategy, Robin hood, this, you know, and those are expensive lessons for me to learn. I can afford
to, to learn them, but I got greedy because I'm like, Oh, options, nothing can ever go wrong.
Right. Do you think that people are better off dabbling in options and then maybe just holding
some stuff for growth? or would it be maybe a
better idea for them to experiment in what you know getting an income fund feels like first
does that make sense yeah those two different things i definitely think that if you're a
beginner or intermediate level investor even maybe even near towards experience, I just think it's just you should just be focusing on just letting the ETFs do their thing.
There's a lot more active management than you think.
And when people always say like, oh, yeah, like I'm going to just sell options on SoFi
or I'm going to sell options and generate income on strategy.
It works for a little bit sometimes and then you could just get burned all it takes is
like one or two bad days and just absolutely destroyed um a lot i know it's super popular
to do your own options on uh the t triple q that's very popular trade and you could do pretty
well in a week but then all it takes is one bad day and you can get burned pretty bad. And I get pretty frustrated when people try to sell some sort of course or some sort of
options strategy that always wins with the cover calls because it's not always the case.
You know, sometimes you might lose.
So I think it's better for people to just go towards the income products themselves.
But also I've seen people do pretty well too when they do their own options,
dabbling and having their own, you know, growth products do their thing.
Sometimes they have like a little hedge in their portfolio, which is fine.
But yeah, all it takes is a couple of bad, bad trades and you kind of lose that,
lose all the gains that you had.
So you might have been better off.
Sometimes I tell people,
you're just better off in cash than just doing the options yourself.
So yeah, seriously,
you're just better off doing the options
just buying short-term treasuries.
So it just really depends.
I'm always a big fan of just letting
let the managers do it themselves.
I mean, this is their livelihood.
So I'd rather trust them than myself.
And you could do a lot of research on ETF issuers now because there's a bunch of content
out there.
It's funny because I joke with people all the time.
There's an emotional section.
I have a whole topic coming up on emotions.
I don't want to get there yet.
But there is an emotional aspect of this, right?
When you're doing your own options, you definitely have to have to have a system of strategy and keep your emotions in check but i wanted to touch
real quick before i move on to emotions like a lot of people don't understand return of capital
this was the biggest topic this year in spaces and just in the community and certain people
like they kind of get it honestly even some I'll talk to like a
professional accountant on spaces and we would bring them on they barely get it like it's it's
something that I think people need to look into try to understand but when a fund says hey you
know return of capital they don't necessarily know that yet now have you found that when you talk to
some of the fund managers do you grill them with that question because they'll do these what is it 191a
i think is what it's called maybe that might be wrong yeah the 191 notices i mean yeah 191a notice
it doesn't necessarily mean that's what it's going to be in the year end like i know for me taxes this
year i was like oh sweet i should be about 100 return to capital wrong you know i still got caught with like 30 grand worth so i don't know i think people should be about 100% return to capital. Wrong. You know, I still got caught with like 30 grand worth.
So I don't know.
I think people, what do you think to return to capital?
I mean, there's definitely some products that actually do return your capital.
There's more than people think.
Some ETF fishers who say that they don't either are, I think, just flat out lying or just
don't really, or there's great marketing tactics. But some products do return some of your capital
a little bit, or sometimes pretty often. But I know a lot of people, the retail space has
become more sophisticated. So they're not really, or at least issuers
aren't trying to, or at least they're lowering their distributions, believe it or not.
I mean, you've probably seen it.
Some issuers are lowering their yields.
So they're trying to not give people back their capital because they thought at first,
oh, we want the most income.
We want the highest income, highest yields.
And now that's not the case.
So they're just lowering their yields and their distributions. But return of capital with 1981 notices, I know that it's just an estimate for
that month. So it's not really the actual rock classification until you get your taxes or that
your statements come tax season. So it's just an estimate. I know some people got burned though,
where they thought it was like 100% rock or like 98% rock.
And then they get their actual rock classification at the end of the year when it's all calculated.
And it's like mainly ordinary income.
So they're like, oh, shoot.
I thought I was going to pay little to no taxes.
And then they get a fat slap in the face with pure ordinary income.
And sometimes they have to pay ordinary income on products that are negative.
So not only did you lose money on the ETF, but then you have to pay taxes on the distributions that you thought was positive and it's actually negative.
So it's definitely something people should be aware of.
But there's some issuers that do the Section 1256 classification to kind of help with any ROC that isn't or distributions that aren't classified as ROC.
Because at the end of the day, it's just a label to delay taxes and reduce your cost basis.
So more ROC is better than less ROC, in my opinion.
But also issuers that have the Section 1256 is also a lot better than no 1256.
Section 1256 is also a lot better than no 1256.
But it's not an NLBL because I know some products like a Devo, for example,
they don't do any Section 1256.
But who cares if you're getting half rock and some ordinary income
when you're up like 40% or something like that?
Well, I think too that leaning into the motion side,
I think so much of this matters. People are happy when they, their entry point. I mean, I think in income funds, your entry point matters so much. I'm posting a lot about BTCI right now. I'm not going for their other one, i don't want to be greedy i've seen what they did you know with btci over you know it's got a good history right now but
people are like man your cost base is 33 bucks i'm like guys that's okay like i understand your
cost base might be 55 or something of that nature but you know the underlying is bitcoin and it
should rebound with bitcoin but no one's upset so no one's upset at btci if they enter you know
at the lows no one's upset with a rob Robinhood covered call fund when they entered way down here and they ride it all the way up.
But I think people got to understand that can change very quickly too.
Do you think there's something psychologically satisfying about seeing the income hit every week, every month?
And do you think that the emotional component is kind of underrated?
Because I don't want to say it can become like an addiction, but it might not be that far off.
Do you think that that is why there's so much kind of money flowing into these things,
just the addiction to getting paid? I mean, it's a rush, right? You get $100 here,
$100 there, sometimes $1,000. I've seen $10,000 income payments from
people. So it's definitely a different rush. But I would say for more experienced level investors,
it's not as much of a rush as you think. Because once you understand the product, you're like,
okay, this is a different part of my return. So it's more of a rush when the underlying is going up.
That's when it's a rush.
Because not only are you getting, hopefully you're participating in what the underlying does,
but then you're really capitalizing on those distributions because most likely they'll increase
when you have a big move in the underlying when it goes up.
It's definitely a rush for a lot of people.
It's definitely fun.
It's definitely exciting because you could use
those distributions to fuel other positions, which I think you could do that as well. I wouldn't say
it's the smartest move, but I always think you should drip at least some of your position back
into the fund that paid you. But in terms of emotions, I think that when people look at income
funds, they would just look at the chart and just be like, I'm not going to buy it.
I'm almost positive that Robinhood, for example, had a – someone did, I think, a statement on
a research on Robinhood. I'm almost positive that since 2020, they – I don't know. Don't quote me
on this, but since 2020, most of their investors have broken even since trading and holding their positions in Robinhood because of that gambling effect.
I wouldn't be surprised if investors in these income products just buy at the top and aren't doubling down when it's down.
Because most of these products launched when Marqueo was doing fabulously well.
And now we're seeing a pullback in a lot of the high-flying, high-volatile names, which
harvested a lot of yields.
But then now they're just getting absolutely destroyed in this weird market where we're
in a war with Iran, where we have valuations that are going down, AI kind of affecting
all these other plays.
But people should really be thinking about, okay, you know, BTCI is down, Bitcoin's
got slapped, all these products that I own are down.
I got to just double down on it.
Instead of pointing fingers at the issuer saying fix this fund, it's like, no, it's
just what the underlying is doing.
So I think the real emotional play is being able to buy when the market's down.
In this case, you're down like quite a bit on your Bitcoin positions, Ethereum positions, single stocks on the HUI, HOI. You should be doubling down now. And that's when
the real money is going to be made. Because yes, you might get your distributions every single
week, every single month, but you're not going to get a positive result unless you see a strong
move in Bitcoin going up or a strong move in your underlying going up to get back to your original cost basis,
or at least close to as possible
because you have to also factor in your distributions
as a form of a return.
So it's definitely a psychological play.
And of course, everybody's going to be super happy
when market sort of recovers towards these names
because now we're seeing a lot of energy,
materials, industrial plays do well.
And quite frankly, that's not in these income products because there's low yield to be harvested
from those. So I think people should really psychologically think of doubling down their
positions when they're down versus caring about the distributions because they'll come when you
get, you know, your yield is going to be higher now
because of the fund went down but the real fun is when the underlying is going up and you're
getting those payments not when you're going down and falling knife and you're getting those
payments along the way yeah for sure and it's everyone claims it's so easy to you know to buy
when you know we're at a war with iran or something's going on but it's hard i mean it's so easy to, you know, to buy when, you know, we're at a war with Iran or something's going on, but it's hard.
I mean, it's, it is emotionally hard.
So do you think that like the media, you know, social media outlets, whatever, overhypes, yield chasing, or do you think it's like a legitimate strategy that's getting misapplied?
misapplied and what I mean by that is do you think that the fund managers since
you interview so many of them are they obsessed with marketing are they almost
being predatory on people who need income now or do you think you're not
you're not gonna like out certain you know fund managers certain groups but
yeah I'm sure in your head you're like like, oh man, maybe a little bit.
But do you think that these are getting misrepresented
for people who really need money?
I think of, so Ms. Roundhill,
we'll have her up here one day for sure.
She shared her story.
So go look her up and she got a YouTube channel,
but she basically like lost her job.
Like I need these income funds to live off of.
And she does a great job with like managing,
figuring things out. But do you
think that there's a little bit of predatory marketing on people like that? Or do you actually
think it's just a legitimate strategy and they're really not trying to go after them?
Ooh, that was a deep question. Yeah. So to answer your first question,
I think that the media kind of portrays income investors as chasing 80% plus. I know there was a big podcast that came out last year
that got a lot of hits. I forgot the podcast name, but it came out towards the whole
summertime where all these products were performing fascinatingly well. And it had a 70%
yield and it was kind of keeping up. There was not much to have erosion with that because
Underline was performing super well. But I think a lot of the media portrays income investors as
chasing uh ultra high yields nosebleed yields um which i think is is dumb because uh i would say
that those vehicles are more for trading vehicles uh than long-term holds. But I wish media like CNBC or a lot of these people who write articles,
maybe Bloomberg, were to maybe interview people or just write more of their content
on the income investors now, which I think are investors who are holding maybe lower yield
products, like 8% to 20%. And those products that are in the 50%
plus range are just single stock positions, which have a higher volatility than the market.
And so it's a different type of strategy. Investors aren't going all in on those products,
first of all. If you are, then I really pray for you. But I just wish that media didn't have a
criticism of investors who are putting everybody in a criticism of those of investors who putting
everybody in a hole of your everybody owns 80% yields and they don't know what they're
doing.
So that's kind of my first take.
In terms of the ETF issuers, I was actually I'm in New York City right now.
So here for a trip, meeting with a couple of issuers, actually.
So I was actually in one of their beautiful 25th floors in Manhattan.
And we were just talking about their strategy.
And I was telling them, like, you know, a lot of these issues say growth plus income, right?
But when you look at the chart on some of these products, like in the last year, like the NASDAQ is up, I believe right now in the last year, it's up 18%.
And the NASDAQ 100 Cover Call ETF is up, I'm looking at one of them, it's up one.
So how do you say you have growth plus income?
That's not growth to me.
That's just income.
You know, your distribution was income.
So I think that's one of the marketing strategies that they tell people is, you know, we are
here for growth plus income.
And that's not the case.
You're just getting pure income.
If you look at the total returns, yes, it's probably like 16% versus the NASDAQ at 18%.
But the return was income, not growth.
That's my first take.
My second take is I feel like a lot of these issuers aren't really selling.
Some of them are selling yield.
You know, some of them are selling, you know, you could get 60%, 70%.
But I wouldn't say that they're selling the dream of like living off of income.
Maybe one or two issuers are, or they used to.
I mean, they're not really on the media anymore.
But I feel as if it's a retail base that's really selling these uh living off of income type
of uh strategies it's not the issuers because the issuers could get a huge fine by the sec if they
even try to remotely say that these are for people to live off of income or stuff like that it's the
retail base and the influencers base but i would would say mostly retail people on Reddit, on Blossom, on X,
they're saying that you could use these products and live off of the income.
Or like, hey, I'm using it to live off the income one day.
When they haven't even had a – they haven't even really taken a distribution for an expense,
which I think is pretty funny because they're getting these distribution payments.
And I'm like, oh, have you used it to pay off an expense?
They're like, no, no, no.
We're just reinvesting it back into the ETF.
I'm like, well, what's the point of having the cover call if you're not using it for
your income needs?
But yeah, it's definitely retail selling that dream, which I think is possible for a lot
of people.
I know a couple people that are actually using the income for retirement, but they have a
well-diversified portfolio, right?
It's not just one or two products.
It's some fixed income products and bonds, some growth exposure, traditional dividend
ETFs, and then all these cover call income funds and high yield funds. So that's one thing. A lot
of the retail base though now is selling margin. They're literally telling people, okay, if you
could get a 20% yield or a 15% yield or a 30% yield, why not use margin? And then you could use the
distributions to pay off some of the margin, which works in a great environment, perfect environment
that works. But over the long term, I don't think that's the best strategy long term, especially if
you want to use it for retirement, because retirement should be really hands-off investing.
True retirement is kind of just like hands-off investing, do your own thing, not just actually
managing your portfolio and worrying about the market every single day because you're
on margin or you're overexposed to one or two different asset classes or one or two
different single stock exposures.
So I think retail is doing a big push, which I think is fine.
But people should really be thinking about long-term effects of this stuff.
I know there's a house money was a big term
when the whole Misty thing was doing well.
You know, if you get the
wait one year,
Misty's up like 80%.
You can get, once you pass your
the 80% yield, once you get it back
like that, everything else is house money.
That's not the case.
It's just not true.
Like, there's no way you can get an infinite money glitch off of off of these products so retail is doing a big a big push which is great
i love seeing retail doing their thing but i would there's maybe more education around what could go
wrong which i love you hosting this space because you know hopefully long term maybe you guys be
talking about what could go wrong.
I think that that's the main misconception that people or issuers aren't saying is like what could go wrong versus what could go right.
Because they only talk about what their product does
in an upward trading market or a sideways market,
never about when the market is going down.
So people always think, oh, like, you know, if I get 30% yield,
who cares if the market is down 20%?
I'm collecting 30% yield.
But I'm like, you're still down though.
Don't think this is all risk-free.
Have a lens of scrutiny and do your research.
And once you figure out that you're confident in a fund, then boom, you kind of have your own strategy.
Yeah, and that was like – so now you know two people.
Because if I have to use these income funds
to fund my lifestyle and then you'll get the people on x who are always like get a job loser
you know i love that because i'm like i we try you know there's there's simply not that much
out there especially if kids and you're you know you have family you're so but that's kind of my next question that was a great great rant right there it if i'm just
saying okay who who are these for overall like you need to have a well diversified portfolio
summit growth whether you said bonds like cash whatever's going on you can't just expect
bam i nailed the bottom of of hood and i'm all in on hooey or h-o-i-i or something i'm just
going to ride that up the shitty part though is that you you could actually do that on accident but you got extremely
extremely lucky i like to joke around with people and i had a post a couple weeks ago and i was like
now might not be the worst time to he lock your house and go into misty and you should have seen
like the people and i'm like i'm'm not saying do that. My Lord.
But just understand entry.
If you did that at the top, you are, I mean, I feel so bad for you.
I'm not saying do that right now either.
But understanding timing is everything.
And if you ride that wave up, like you're going to feel good for a while.
But if you get used to that, don't expect that to happen forever.
There's no way.
But yeah, I want to chime in on that too because i think i think timing doesn't really matter if you're just investing in like a broad base basket like s&p
nasdaq nasdaq 15 um or some sort of maybe not thematic etfs but just regular index based etfs
like the russell um uh you know basically the indexes i like is like the russell 3000 or the russell 2000 uh s&p one s&p
500 nasdaq 100 you can just buy those and dca and it'll be just fine it's the one that are just
single stock exposures or maybe like smaller baskets that are super concentrated i just
fundamentally think that a lot of people shouldn't own those if they aren't ready to trim or sell out
of the position because it it's emotional, right?
You might be up 30%, 40% on it,
getting the premiums every single week or every single month.
And you just think, you know what?
What's the worst that could happen?
Which, of course, we've seen with, for example,
when Huwe released, I remember being like,
I want to be surprised if Robinhood goes up a lot more.
And of course it did.
And you saw Huwe just pay out a massive distribution. And you got the share price growth too, because Robinhood was going to like, just breaking through everybody's
calls. And you really collected the return, the total return when you sold it eventually.
If you're holding it now, you're probably down. You're most likely you're down. So it's all about
making trades, emotional decisions for you when you feel like a position
is overvalued, when you want to trim the position to become less exposed and rebalance your
portfolio.
And those aren't the emotional trades that I think people are going to be doing, which
is why I'm a big fan of people just buying a broad-based indexed ETF that pays income
because you'll make more money with that long-term likely
if you are ready to make the emotional decisions
when you sell or trim a position.
Now, when you say that, you're talking about,
obviously, we have QQQI, SPYI.
That's what you're kind of telling people
if they ask you a question like that.
Yeah, like I'm a huge fan of the SPYI, QQI by Neos.
I'm a huge fan of the T-I, QEQI by Neos. I'm a huge fan of the TSPY, TDAC, TapAlpha,
Devo, IDVO, QDVO by Amplify,
GPIQ, GPX by Goldman,
JABB, JABQ by JP Morgan.
And I'm also a big fan too
of the slightly leveraged ones too
by Neos and TapAlpha.
Just because I think that long-term,
those will be the better funds my
opinion not the better funds but those will have a higher total returns my opinion in the next 5-10
years than the non-levered ones but it's the single stock ones you have to be careful of
uh like the rex has a fascinating lineup but those are going to be trades too um maybe uh when you
buy nvi double i like you know that it's going to be a little bit volatile on
side because of video is a kind of a volatile stock, but you have to make those trades when
you're ready for it.
It's kind of like the whole BTCI, like maybe people should have sold some BTCI when Bitcoin
was out over 110 or 100,000.
You could have trimmed a little bit and then maybe put some of that position in a bond position or put that position in a CSHI by Nios and collected some premium from just basically like a bond.
And when the market reverses or if your position becomes underexposed, then you have that cash there.
So that's kind of my take on it.
People should do the research on everything, but there's definitely so many tips we're talking about i feel like we could go on for hours on the different types of
etfs everybody has because i feel like there's so many issuers now with so many etfs now versus a
year ago is the space too crowded and it's almost getting more confusing do you think um i feel like
the space has isn't that crowded that that you think because if we're thinking
about like etf issuers i could probably count off like the good ones on my finger so i don't think
it's overcrowded i just think that there's because there's i mean if we're being honest with ourselves
there's probably like only like 10 to 15 products that people own in their portfolio versus,
or at least compared to the whole income investing landscape.
Of course, there's hundreds of income products, but they're mostly single-stock ETFs.
So in terms of overcrowdedness, I wouldn't say it's that overcrowded.
I feel like it's becoming more mature.
So if you're a new issuer coming out with new products, what makes you different? Because you don't want another Me Too product.
But I think there's a whole arsenal you could choose from now, which I think is amazing because
now back then we only had QYLD and XYLD. And then we had what? JEPBJEPQ. And then now you have
anything you can think of, there's an etf for it or it's going to
be coming out very shortly so i don't think it's overcrowded just yet i think that the issuers who
are here are going to are going to stay and if there's a new issue coming out um it's going to
be hopefully something that we haven't seen yet which hopefully could provide value to somebody
that didn't own it in the first place yeah for sure i'm going to'm going to give people, just because I want to respect your time,
I know that we definitely could go on forever.
So if you wanted to hop up on stage,
now would definitely be the time
because I have a few final
ending questions, but feel free to
hit the little button at the bottom,
hop up on stage.
Can you hear me?
Am I checking my check?
Sorry.
When I started this space, I didn't know if you guys were able to hear me or not.
But I would love to hear your thoughts, Marcos, on these.
There's some of the ETF providers that are putting out 15% target income, 25% target
income.
I'm curious your thoughts on those and conversations you've had with the people around them.
It feels like a little bit of a middle ground.
Maybe some of the lower ones could even actually fulfill that growth and
income target in there.
Have you seen, I imagine we're going to see more experimentation in that area.
So I'm curious, just your general thoughts.
Yeah, I know VistaShares is that's kind of their bread and butter as a target.
15, uh, those, in my opinion, are just going to be pure income plays.
Uh, just because like, for example, OMA is their
highest AUM fund. And when you think about it, it's just doing a monthly cover call on
Berkshire Hathaway's and Warren Buffett's holdings. And I don't think that has a beta more than the
S&P. So anyway, the S&P has done, what, 10.5% since inception inception i guess now it's about 15 in the last
five or ten years but you're going to just see your returns mostly as income so you're not going
to see like much share price like capture like you're not going to in the next five years i'll
get that money you're not going to see like a 40 50 share price return non-cluing the income so
i think that targets are interesting because i'm not a huge fan of targets. Targets
are just like, they should just not be fixed. They should be flexible because what if the
underlying isn't given 15%? What if it's giving like 12% in this different environment? Then
that 3% spread is going to be your return of capital return principal so i think that the targets are super interesting because that's
more of a marketing tactic than anything um you could go back to interviews with people and they've
barely said oh you know we've given out 15 or 12 or 25 because um we think that that's enticing for
investors so that's just more of a marketing play but i think that the
the highest target is that i would personally like for index is 15 and then for a single stock
approach 25 which i think yield max is 25 on their target 25s i think you must also just target 12s
too so targets are are cool but i would would prefer flexibility on the yield because if the yield or the market can't give you the target, then it's better to pay less than the target and the preserve nav than to overpay than what the market gives you to fulfill that target.
So that's my approach.
But also it helps people too because I know some investors, like there's some ETFs that
just don't do a cover call.
They just give you back like 1% a month or like 1.25% a month.
And that's like a reliable return stream, which people could just like budget out every
single month.
Like, oh, we're always going to get this much payment every single month because it's supposed
to give you back that target yield.
So that's different
too but definitely more of a marketing tactic which they're more flexible on it and um i just
think that the targets are a lot better than than the products that are in the ultra high nosebleed
yield range yeah and like their their marketing for that should be i like the drunken is it drunken miller's
one they have yeah target 15 the drqy and so it's like yeah and so okay prove to me if i'm smart
enough to know that this is a basket i want to be in or soxie for example like that's a target 12
from yul max but it's far outperformed because of you know what was in that basket right and so
there's timing on those too so i think the biggest marketing play for those is we should we should see share price appreciation then if i know what
i'm going into or like let's say there's metals i know metals are going to come there's a target 15
of metals or just something like that i think that's more play on just you as a good investor
versus you know trying not to get lucky and just saying, oh, okay, I'm just going to pick Omaha or whatever just to go off.
But cool, cool.
All right, well, I'll leave a couple of fire-offs here.
If you could tattoo one rule about income investing on your arm, what is it?
One rule?
Not that you're going to do that.
Oh, man.
I would probably say, oh oh that's a great question one rule i would
probably say look for income funds that have income as a secondary objective
in the primary trajectory growth um that's what i would say i wouldn't i mean i know
most of these anchor products are primary objective is income, but I would much prefer a pure, like a, a true growth plus income ETF.
Or even if it just says growth plus income, fine, because those are going to be a little bit more sustainable than the ones that are just pure income.
And then they always say, oh, we, you know, our secondary objective is to provide upside appreciation
in a rising bull market.
And I'm like,
your nav is going to erode over time
and you're going to have a reverse split.
So if I could tattoo something,
it would probably be like,
growth plus income.
If I could give a main message,
growth plus income,
and I'm pretty sure that would be a tattoo
that would age well in the next 5, 10, 20 years.
What a dope tattoo that would be.
Exactly.
That would be fantastic.
Get on my neck.
Well, dude, I appreciate it.
Yeah, right on your neck.
I have a ton of tattoos and like I have this random, I mean, from basketball day.
I have like 17 basketballs on me.
I don't even know where they're at anymore.
It's just all over.
But yeah, they do. That would age age well some of my ink's not gonna age
that well but marcos i appreciate it bro have fun in new york and if there's i mean places where
people are gonna find you are mainly on youtube right yeah youtube um i'm on substack too so it's
kind of a new outlet but yeah definitely here definitely here. I'll be posting some tweets, YouTube and yeah,
man,
I'm super happy to be here.
I want a question for you though,
is what's,
what do you think is the biggest advice you would give to an income
investor?
When they ask you,
what's one advice you would give to me?
If you could only give me one piece of advice and never talk to me ever
again about income ETFs.
I would say if I me one piece of advice and never talk to me ever again about income ETFs. I would say if I had one piece of advice, you have to be bullish on the underlying either single ticker or the basket.
Because that's all that truly matters in this thing.
Like if you're not bullish on something, don't just invest in something for a percentage of income because you like the way it looked on a screen.
percentage of income because you like the way it looked on a screen, you need to understand the
fundamentals of the actual, whether it be a company, whether it be a basket, whether it be
an industry, that's what you need to focus on versus just the yield. How do you like that?
That's exactly what I would say, man. And you put it there perfectly. So I really appreciate your
time. I really appreciate Wolf. I think Wolf's always doing a lot of big things in this space. And there's a reason why they're the number one hosting of spaces because they're trying to provide educational and informational content to people. So I really appreciate Wolf for setting this whole thing up and you too, Andrew.
This was a fantastic conversation.
They're both putting out really great content on X.
We know a lot of people are interested in Income ETFs.
That was a really interesting hour.
I was listening to the whole thing.
It was great.
I know people are interested in it.
If you were a fan of this, you should definitely be expecting more of this.
Make sure you're following Marcos and Andrew, CryptoFit, up here.
We'll improve your experience on this app.
Andrew, anything you want to close this out with?
No, that was great.
Thank you guys for hosting, and Marcos, have fun in New York.
For sure, man.
Cheers.
Wait, wait, wait.
Real quick.
You're going to the High Yield Conference in Vegas?
It wasn't on my radar, but if you want me to go, man.
Come on.
I mean, it's literally like I live in Orange County
Or near Orange County, so it's kind of like
Dude, I live in Flint, Michigan
I will do anything to get out of Flint, Michigan
If you're going there, I'll make an appearance, okay?
How about that?
Rex is sending me there
I mean, I haven't officially booked a ticket
But we've been chatting about it for the last week
So they're part of it
How about this?
Since you're going, I'll go.
So I'll make an appearance, man.
Hell yeah.
Nice.
You can't miss me.
For sure.
All right.
See you guys later.
Appreciate you all.
Have a great one, team.
