Lead-Lag Live

Hal Lambert on Politically Driven Investment Strategies, MAGA ETF Performance, and Navigating Deregulation Dynamics

• Michael A. Gayed, CFA

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Join us as we sit down with Hal Lambert of Point Bridge Capital, where he unveils the politically conscious investment strategies that are shaking up the financial world. Can political beliefs truly influence your investment portfolio? Hal makes a compelling case with his America First ETF (MAGA), which taps into companies backing conservative agendas. We sift through the impact of deregulation on sectors like industrials, financials, and oil and gas, painting a picture of how these areas could flourish under different political climates, particularly under a Trump administration.

Our conversation deepens as we explore the potential ripple effects of a Trump presidency on the industrial sector and beyond. With military giants like Lockheed and Boeing poised for growth, we discuss how continued military spending and domestic infrastructure projects may bolster these companies' futures. We also navigate the financial industry’s trajectory, considering how deregulation and Supreme Court rulings could spark sector-wide growth. Plus, we probe the MAGA ETF's performance during the Biden administration—could its winning streak continue with a shift in political tides?

In the concluding chapters, we turn our focus to the broader economic implications of deregulation. Are energy costs and inflation inherently linked to political leadership? We critically assess this, while also examining potential shifts in corporate strategies, such as the reduction of DEI programs, and the prioritization of shareholder value. Our episode wraps up with an insightful discussion on international trade dynamics and investment strategies, delving into the nuances of tariffs, currency strength, and market indices. Tune in to uncover how the complex interplay between politics, regulation, and investing could shape future market landscapes.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Point Bridge Capital and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommenda

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Speaker 1:

I'm interested in investing in companies that are focused on shareholders and shareholder values, and I think that that is another reason that you're going to see these companies perform well, regardless of whether it was Biden or Trump in the White House, I think Trump actually sets things up nicely.

Speaker 2:

Let's talk about how deregulation can impact the economy more broadly and your thoughts on what parts of the marketplace should really benefit the most you know, regulation is just an underlying cost where there's no product produced from it.

Speaker 1:

So you know, it's really kind of a sunk cost that is just kind of used to support bureaucrats and DCs you know, I guess, their salaries and they're sitting there behind their you know home office, because many of them aren't going to work these days Companies that are maybe run by more Republican-leaning executives and boards and employees. I think they're focused on different things than what farther left corporations and CEOs are focused on. I think they're more focused on return to shareholders, the shareholder experience, and not the quote stakeholders, which they've now expanded on the left to include outside interest groups and you know the UN and all these different groups.

Speaker 2:

This is a very well-timed conversation, given some of the news around Zuckerberg caving in to free speech. Apparently We'll be talking about that with Hal Lambert. This is a sponsored podcast of Leadlag Live, sponsored by Hal Lambert's firm, point Bridge, going to be talking about his MAGA, etf and thoughts in general as far as where markets are here, deregulation and a lot more going on as news comes in quite feverishly from what the Trump administration wants to do. So, with all that said, my name is Michael Guyatt, publisher of the Lead Lag Report. Joining me here is Hal Lambert, who I've had on Lead Lag Live a few times here. Hal, as usual, a little bit of an introduction to yourself, your firm and your fund.

Speaker 1:

Great, yeah, thanks, michael Hal Lambert. I have a firm called Point Bridge Capital based in Dallas, fort Worth, texas. I launched my firm 11 years ago. I launched the ETF over seven years ago, so it's got a pretty long track record. Overall, the ticker is MAGA, the official name is the America First ETF Point Bridge Capital America First ETF, so it's easy to find. If you Google any of that, it pops up. The website, for it is actually investpoliticallycom, which has all the information on the fund there.

Speaker 1:

And I launched this fund namely to give investors an opportunity to invest in companies US companies that share their political ideology from a corporate standpoint, and so, obviously, being seven years ago, I was way ahead of some of the ones that are much more recent and, I think, actually have a little bit more convoluted way of doing things. This is a rules-based ETF. I took the political contributions. I took the political contributions of the PACs and employees and I screened those companies that give the most, both on a dollar and percentage basis, to federal candidates for office. So you know, companies will come out and say lots of different things and over the past seven years, most of it's been pretty left the more recent changes and things that we're going to talk about today are very interesting when you look at, like, what a Mark Zuckerberg has done today. But I wasn't really paying so much attention to what they were saying. I really wanted to see where they were giving their money, because that's really important, on who wins elections in the House, the Senate and, obviously, the presidential. So what are these companies doing with their money, the PAC's money and their employees' money? And that was giving me a very good idea of what they were thinking politically internally within their company. And again, it was a way for investors to invest in those that are supporting the candidates that they would want to do, or at least would want to support as well.

Speaker 1:

So over half the country now, as we know from this last election, falls into this category, at least from a political view standpoint, and I think the fund, the MAGA ETF, is a great opportunity for them to put their money behind those same views. It's diversified it's 140, 150, depending on the screening, but right now it's about 140 equally weighted names in the portfolio spread across all the sectors. So the heaviest sector, by the way, in there is industrials, which has actually done pretty well over the last few years, as most of you know, it's heavy into financials, it's heavy into oil and gas. So I think it's teed up nicely for where I think things are going to go overall over the next few years, for where I think things are going to go overall over the next few years, and so I think Michael and I are going to talk about that today, on what I think the opportunities are for 2025 and going forward.

Speaker 2:

All right, so let's get into that. Since you mentioned industrials, which I think is typically seen as more of a Republican favored type of sector, industrials have actually done pretty well. I mean, a lot of people talk about tech, but industrials in general, even though over the last three years actually done pretty well. I mean a lot of people talk about tech, but industrials in general, even though over the last three years have done fairly well, make the case for industrials as being beneficiaries under Trump.

Speaker 1:

Well, I mean, some of the companies that fall into industrials are military type companies. So obviously, trump is talking about ending wars, but the military spending is going to still be there, and so you're going to have peace through strength is the term many people hear, and that's that's, I think, going to continue. There's not going to be. There's going to be changes, I think, in the military industrial complex, as it's somewhat sometimes called, whether you're talking about Lockheed and Boeing and General Dynamics, raytheon, those types of companies, but it also includes companies like Caterpillar, and I think, when you look at things like a Caterpillar and you look at what's going to need to happen again from a construction standpoint in the United States, you're still going to see a lot of spending in those areas. And I think then, if you look at the same thing on the financial side, one of the things I think we're going to talk about today is, I think financials are going to benefit quite a bit from the deregulation push that's about to happen under the Trump administration. Biden, just this year, 2024, his administration put in, which we all know it's not Biden doing this, right, I mean, he's not doing it, it's his staffers, and most of them are very far left. They've put in over a trillion dollars of new regulations into the economy this year, just in 2024. It's a massive number. Those are going to get rolled back and I think one of the big beneficiaries of the rollback in regulations is going to be financials, because they're highly regulated. I think you could see some major major changes there in that space. And you also have a Supreme Court ruling that happened last summer that is very favorable to being able to maintain the deregulation, because the courts ruled they overturned what was called Chevron deference, which was giving these agencies whether it was the EPA or the SEC or FINRA, any of these government agencies were given massive latitude to just slap on new rules to corporations with no vote in the Congress. There's no, there was no oversight on any of this. It was simply bureaucrats in DC deciding hey, you need to fill out this form going forward. Bureaucrats in DC deciding, hey, you need to fill out this form going forward, you need to do this reporting, you need to do these stress tests, all of these things that were not legislated in the mandates, that they just expanded on and grew and grew and grew. You're going to see massive rollbacks of that and they're not going to be able to come back, because these companies can now challenge in court and they're going to win, because if it's not written into a law that's been voted on by Congress, the courts are no longer going to give deference to the administrative state. They're going to look at the law and go it's not there, you can't do it, and those are going to be massive cost savings.

Speaker 1:

So you're looking at, you know the estimates are what? 15% growth in the S&P 500 for 2025. If we get some more deregulation in there quickly and early, I think that number could be higher. You're seeing, you know, yesterday was a good day, today is a sell-off day. I think the markets are actually, even though they are I'm not going to sugarcoat it they do appear expensive. But when you compare the United States to the rest of the world, where else are people going to put money? China. People aren't putting money in China anymore. That's been pulled way back International. I think is very difficult to make a case there. When you look at the problems all over Europe, I think it's very difficult to make a case in Latin America. It's going to be US focused again and I think you know with the money supply that's grown so much over the past few years. That's one of the reasons the stock market's propelled higher. I think you're going to see inflation come down under Trump, deregulation happen and I think those are recipes for continued move higher in the markets.

Speaker 2:

So a good question, which is not a plant, by the way. This is a legit question off of X. From $14 at the COVID lows to $47 today for the MAGA ETF an incredible return during the Biden administration. Do you foresee an even better return during the Trump administration? So obviously the fund is focused on conservative values, republican side of things, but obviously you don't need to have that be the case for it to perform right. So let's make the argument for why that is going to be better.

Speaker 1:

Yeah, you know I set this up. It really wasn't set up necessarily to be kind of one side or the other on whether an administration is going to be favorable or not favorable. All of these companies that are in the ETF give money politically. So the argument could be made which I think people do make is that when you give money to Washington DC, these companies that do this and have done it for decades, and they're getting favorable treatment out of DC. So you could argue that it's also a play on on that. And so when you're, when you're giving money politically and you want certain regulations or you want deregulation, you want those kinds of things to happen. You know they can. They can work to make those things happen with Congress. There's nothing illegal about it there's. I don't even consider it.

Speaker 1:

You know people may call that the swamp and certainly the corporations are up there, but their corporations are obviously made up of people, whether it's employees. And the swamp and certainly the corporations are up there, but their corporations are obviously made up of people, whether it's employees and then investors. They're up there looking after their interests. If they're not there, they can run into problems with politicians deciding out of the blue. Hey, we need to do X, y and Z. And the next thing you know that company has some serious cost issues or problems, so they're up there making sure that that doesn't happen to them and I think it benefits the companies.

Speaker 1:

And then, secondly, I think also companies that are maybe run by more Republican leaning executives and boards and employees. I think they're focused on different things than what farther left corporations and CEOs are focused on. I think they're more focused on return to shareholders, the shareholder experience, and not the quote stakeholders, which they've now expanded on the left to include outside interest groups and the know. The UN and all these different groups have nothing to do with the shareholders. You know I'm not interested in investing in those types of companies. I'm interested in investing in companies that are focused on shareholders and shareholder values, and I think that that is another reason that you're going to see these companies perform well, regardless of whether it was Biden or Trump in the White House. Well, regardless of whether it was Biden or Trump in the White House, and I think I think Trump actually sets things up nicely for corporations to do well in general.

Speaker 2:

And certainly even corporations that you know are not politically aligned are going to benefit, because it's going to benefit the entire economy. You said something that was interesting prior to that question. Interesting prior to that question. You said you expect inflation will come down under a Trump administration which is very much against the mainstream narrative that he's going to have these pro-inflationary policies, especially around tariffs. I happen to agree with you because I think deregulation is inherently disinflationary, which we can touch on. But why do you think outside of maybe that inflation would drop under Trump?

Speaker 1:

Well, I think one of the main factors in inflation has been the cost of energy. It's in everything that's produced. Natural gas is used for manufacturing plants, energy oil is turned into gas for automobiles, which trucks use to ship food to our grocery stores. I mean it is literally in everything. So when you reduce energy costs, you're going to reduce the underlying inflation associated with that and the way. I predict that he does that, because a lot of people say oh yeah, that'll happen, but it's going to take a while. Now I think the Saudis can open up the spigot pretty quickly and reduce energy costs by reducing the price of oil, and I think he has a very good relationship with the saudis.

Speaker 1:

Biden had a terrible relationship with them. They wouldn't even take a meeting with him. They had no interest in lowering oil prices for him. Uh, biden used up the strategic petroleum reserve to try to uh counter. That didn't work, of course. So here we are sitting in the 70 roll level. I think trump can work very quickly to try to get that down to.

Speaker 1:

Let's call it the high 50s in price for a barrel of oil, which I think, by the way, I think oil companies will do fine under. There's an offset there of costs that you can still make up with the ability to drill more and produce more oil, even though it's necessarily going to be at a lower price. The most oil guys I know and I know lots of them they don't want massive inflation in the country because of high oil prices, because ultimately they all know that leads to real problems in the underlying economy overall. I mean, when you get up into $100 oil that's just not good for anybody and the oil companies. It's kind of like a short-term little sugar high. They get the higher prices for a short period of time, but then they know ultimately the economy goes into the tank and everybody suffers. So it's not that these you know Biden put out this thing oh, these greedy oil companies. No, the ones that I know and I know a lot, they're not interested in having oil prices so high that it's going to crush the economy. So I think everybody's on the same page there.

Speaker 1:

And then I think when you see that happen, I'm not a believer in this higher interest rates. You know we've had the 10 year going up in yield, which is part of the reason you're seeing some of these sell-offs in the market as we start to see inflation numbers reported lower, you're going to see that tenure adjust back down, I think, and so you know it's a fool's errand to try to predict interest rates, so I'm not going to step out too much on a limb there. But I don't see massively higher interest rates from here. So you know, 25, 30 basis points one way or the other is not the end of the world. It's a matter of do we go significantly higher in interest rates? I don't see it happening, and so when you get a combination of lower inflation and you get interest rates even stable or lower and you have deregulation, I think it just tees things up very nicely for the underlying economy and therefore for the markets.

Speaker 2:

So we've touched on deregulation a little bit, and the last thing I saw was that Trump wants for every new regulation to have a rollback of 10 others, which is more aggressive than what I think he did in the first administration. Let's talk about how deregulation can impact the economy more broadly and your thoughts on what parts of the marketplace should really benefit the most.

Speaker 1:

Yeah, I mean, you know, regulation is just an underlying cost where there's no product produced from it. So you know, it's really kind of a sunk cost that is just kind of used to support bureaucrats in DC's, I guess, their salaries, and they're sitting there behind their home office because many of them aren't going to work these days pushing out papers. So it really is a negative drain on the economy. There's just no aspect of it that then turns around and makes the economic growth better. So, anytime and you're right, trump, I think in the first term it was get rid of three regulations for every new regulation and, like you just said, I think he's now saying 10. So it's going to be very interesting to see what Doge does and how this deregulation. But it looks like Congress is on board, it appears to be. They're talking about shrinking government, they're talking about reducing, you know, the power of DC over over the economy. So I think it looks we'll see what happens. I mean, it's just the swamp is difficult to navigate and it's slow, and the Democrats are going to be fighting to slow anything down that they can. I mean, unfortunately, I'm not sure why, but but they love regulation and you know women like you know, congress, or Senator Elizabeth Warren, she, she loves to have regulation and talks about it all the time, especially on banks, especially on, you know, the companies that are out there lending to consumers. She views they're all just trying to take advantage of the consumer and so therefore, she wants to highly regulate them, which I don't see that as being the case.

Speaker 1:

I think the banks are important in the economy and so when you talk about a group that should benefit, as I said, those especially, I think regional banks will do well. You're going to also see a more friendly mergers and acquisition environment. I think M&A will pick up here, because there's been a hostility to companies merging under the Biden administration. Now the steel company, the US steel, merger with, I guess, nippon. I don't think Trump's in support of that either, so that looks like that's headed to court now to try to fight that cancellation, that merger. So we'll see what happens there. But I do think, in general, most mergers are going to be able to go through, and you're now seeing it, you know, on the tea leaves with with a company like Meta. You know Mark Zuckerberg has realized he made some serious mistakes over the past let's call it six years, and I think you know he just appointed Dana White to his board. I think it was. Was it Dana White that he appointed to his board, or yeah, I think it was Dana White.

Speaker 2:

Everyone's been commenting to me on that. Exactly, right, yeah.

Speaker 1:

And which I mean that would have been unheard of, uh, six months ago, like no chance that would have ever happened. Uh, he also hired a new corporate responsibility person that's a Republican. Um, so it's going to be interesting to see the movement to all things kind of that Trump ran on, which, again, I think is going to be beneficial for the companies as well. I mean, I think it'll be interesting to see. I'm going to screen for political contributions in 2024 soon as part of my fund, and it's going to be interesting to see where Meta comes out. I suspect they're going to still be on the Democrat side, but we'll have to see when the final numbers get out there on what happened and whether Mark Zuckerberg and some of what his money does Problem is, a lot of those employees are probably still giving to Democrats, but they're moving in the right direction and I think we'll see some surprises in new companies.

Speaker 2:

Well, I guess that's the issue with a lot of these companies like Meta that are changing their tune. I mean, OK, so sure they're going to allow for more free speech and have it be more community notes as opposed to fact checkers, but the culture is still more liberal. I mean, the employees are not going to suddenly change. You're not going to fire a bunch of them and hire more conservatives.

Speaker 1:

So it seems like it's just really a lot of lip service. Yeah, it very well could be, but when you say they're not going to fire a bunch of employees, they might fire a bunch of employees. You know, I'm sure it's bloated. I mean I can't imagine. You know that, I mean from people I've talked to. I mean there's a lot of very high paid people that work like four hours a day, all right. So you know, I'm sure there could actually be some cost cuts done at Meta and so we'll see where that goes. But yeah, I don't anticipate there's going to be massive changes in what they're doing with their money and their corporate dollars. But I'm glad to see it and I hope that they will continue to move in the direction of free speech and an open dialogue and not censorship and attacks, which is really where they've been.

Speaker 1:

But as far as back to, you know, the overall market as a whole. You know we started off this year until today the markets were up again after a 25% year in 2024. And some of the same stocks were kind of leading higher. You've got some of the communication to semiconductor stocks. Nvidia was up huge yesterday but also selling off big today. So I think you are going to see some near-term volatility here. We're going to have earnings coming out in the fourth quarter. Fourth quarter earnings coming out, I guess, starting maybe in the next week or so with the early reporters and then on into February. So that's going to be an important time period as they give guidance for 2025. They now know who won the election, they know who won the House and the Senate, they can see kind of what legislative priorities are happening. So I think we're going to get a lot of insight into where 2025 is going to be over the next let's call it four weeks.

Speaker 2:

So what? Going back to MAGA, is there anything that suggests that maybe some companies are going the other way? I mean, we're talking about companies that are going more towards the sort of Trump side of free speech. Have we seen any public companies that are pushing back on that like loudly?

Speaker 1:

Not really. Who was it that was recently saying that they were going to continue to remain kind of left? I can't recall. Michael, there's been one company that was a fairly well-known like consumer brand. That was. You know they were going to continue to, you know, lean into the woke agenda and they said they weren't, they weren't changing so, but otherwise you've really not seen that.

Speaker 1:

And so I think I think there's a lot of let's put it this way I think a lot of these boardrooms after this election. I'm sure there's gonna be a lot of these boardrooms after this election. I'm sure there's going to be a lot of board meetings where having this new administration is going to be a discussion point and what they need to do internally to get with the times, because I'm sure many of them were sitting back just waiting for November to see who won, and now that they know, I think you're going to see more and more announcements of, hey, we're getting rid of the DEI programs, we're getting rid of these woke policies, and again, I think that's just healthy for the internal companies themselves. It's going to, I think, boost employee morale and I think, in general, you're going to see positive things happen because of that. It won't be immediate, but over the again, over the next few years, I think it's going to be a kind of a return to sanity for these companies, where you know we're going to, we're going to focus on shareholders, which is what I think, again, where the focus ought to be is on shareholder value. That's, that's what your job is.

Speaker 1:

If you're a publicly traded company uh, you're not a 501c3, you're not supposed to be out there, um, you know, giving money away to different woke causes, and I mean that that's. Let your shareholders decide where they want to give their money. I'm not a big fan of corporations, uh, giving massive amounts of shareholder money, uh, to their favorite uh groups. Um, and I I just think that that really ought to be done, unless, hey, if you're the largest owner, mark Zuckerberg can do what he wants if you've got significant share. But the problem is, most of these CEOs own less than 1% of the companies. They're effectively hired employees, they're hired staff and they're there for the shareholders. They shouldn't be there for some sort of third-party agenda, which is what many of them have done.

Speaker 2:

One thing we haven't talked about and I'm curious to hear your thoughts on this is how real estate maybe home building gets impacted under a Trump administration, because I think that's what people care most about. You know the price of homes and affordability, and a lot of that is very localized, obviously, but are there certain federal policies that are being floated around that you've seen or heard under Trump that could make housing more affordable?

Speaker 1:

Well, yes, yes, I mean when you have 20, I think it's closer to probably 30 million people in the country illegally. They're living places, they're living in rented houses, they're living in apartments. That drives up the cost. It's a pure supply and demand. So if you've got a higher demand for housing and you don't have an increase in supply that can keep up with it, prices go up. You know, it's that simple, and so I think the immigration changes will probably lead to some better pricing for housing. You know, you hear this. You know, I hear it every now and then people talk about well, who's going to build the houses? Like housing companies are using, especially the big publicly traded ones. Many of the employees they have are here legally into the country, and so I don't think the difference between those that are building the houses and those that have come in in the last three, four years is the difference there. As far as building the homes, what it's really doing is driving demand for supply. When you have that many and we see it in big major cities like New York and Chicago they're spending millions of dollars to rent out hotels to put people in, and of course that's not permanent. They have to then go find housing. So that drives up rent prices across the board. It just does so. I think that change is going to be a factor and again, if you can get interest rates lower, which I think you can, once Powell gets more comfortable, that inflation is going to come down. That also will help with housing values. And it also helped with construction, because obviously these companies borrow money to build the homes and people borrow money to buy the homes, so that'll help with that supply demand balance.

Speaker 1:

And, Michael, one thing I'll it's kind of a pivot on the topic, but we, you know, we didn't you briefly mentioned the tariffs and the tariffs the tariffs are are a big topic and people keep trying to use that as a reason Every time the market's down on any given day. Anything you read says oh well, people are worried about the tariffs. Like, okay, they weren't worried about the tariffs yesterday, but they're worried about the. And you know, look, what's already happened. I mean Justin Trudeau is gone from Canada. That would not have happened if Donald Trump had not won the presidency. I mean, he just made him look terrible on the world stage. He already had terribly low approval ratings in Canada and now he's gone, and part of that was I'm going to throw tariffs on. As soon as he said I'm going to throw tariffs on you, he got on a plane and flew to Mar-a-Lago. As soon as he said I'm going to throw tariffs on you, he got on a plane and flew to Mar-a-Lago.

Speaker 1:

So you know those are negotiating tactics and you know same thing with Mexico. If you don't get control of the border and help us with this, you're going to get tariffs. Well, guess what? We barely sell anything to Mexico. Okay, Mexico's economy is 100% dependent on the US. It's just flat out is. And so if, if, if Mexico, if we don't, if we didn't sell another product to Mexico, it would not impact our GDP basically at all. So the leverage is all on our side. So either they're going to get with the program and not and stop, you know, letting millions of people flow through their country, from Central and Latin America up through to the United States, then they're going to have some problems. And so I think they're going to make the right choices, and Canada is going to make the right choices. They already have. They're getting rid of Trudeau. So I'm just not.

Speaker 1:

I don't see tariffs as being a major problem and, again, part of what Trump does.

Speaker 1:

This is all about America first, when you have companies that and, by the way, this includes Europe where they put tariffs on our goods but we don't do anything on tariffs on their side.

Speaker 1:

So we want fair trade and that's not fair trade. Most of these countries in the world put tariffs on our goods and we don't put them on theirs. Why? Because they're trying to protect their home industries and their jobs in their countries. China is a big problem with all that, and so I think they're all going to come to the table with Trump, because they know he's serious and I just don't see it being a factor. Look, when he did it the first time prices we didn't have inflation under Trump and he was doing tariffs from day one and there wasn't a big spike in inflation. Inflation, as most people know, is driven by the printing of massive amounts of money at a faster rate than GDP growth. I mean, that's what it is, or borrowing massive amounts of money and doing it at a much higher level than the GDP growth of the country. That's what's happened over the past three, four years and that's why we've had inflation, which has crushed middle income and lower income people in the United States.

Speaker 2:

Where I was going to go with all this is I wonder at what point do you think the dollar strength becomes a real problem, really for everybody else? But if everybody else starts suffering because of funding stress, it's going to impact the US, at least at the margin. I know you're not focused on the currency side as much, but clearly there's a link between Trump and dollar strength. Any thoughts on how that plays out the currency movement, because that's going to have all kinds of global implications.

Speaker 1:

Yeah, I hear you and I get that a lot of companies want a weaker dollar because it helps with exports. But a strong dollar helps, you know. Also because you know the country the United States is stronger is I think people are wealthier in the country when you have a strong currency. So it's a balancing act. There's a short term and a long term. But you know, when you have a stronger dollar then it makes companies that otherwise would maybe not do certain things in the United States. They'll be here and they're just going to have to manage their hedges around it.

Speaker 1:

But I've never been a big believer in trying to weaken the currency. Just kind of over time continue to weaken and weaken and weaken. And you had it going on all around the world, right, everybody wanted a weaker currency, everybody wanted to. It was kind of a race to the bottom on currencies and I don't think that long term that's a that's a very healthy thing. In general it just I think. I think a country longer term is better off when you have a strong currency. That's mainly a strong currency because your economy and your growth is strong and so I think as long as we can have strong economic growth, I'm not all that concerned about the dollar.

Speaker 2:

Let's go back to MAGA for a few minutes here. Equal weight, as we've discussed before, has been suboptimal relative to market cap weighted indices, obviously really for 10 years. I mean you can make that argument when you look at relative performance. Do you think we're maybe headed towards an environment where, in general, equal weight, independent of the strategy, makes more sense? Yeah, I mean equal weight.

Speaker 1:

I think when you look at the MAGA fund and you look at what people have owned, let's say, over the past 10 years, as you said, if you've owned the S&P 500 or you're investing in the S&P 500, as we all know, there's seven, eight stocks in there that make up what is it? 35% of the index, so it's really not diversified. You're investing in those stocks and, by the way, if you invested in those stocks and then you owned MAGA on the side, you would have outperformed, because MAGA has outperformed the equally weighted S&P 500. So I would just say that you're making a bet on a handful of stocks and it's worked so far. And look, I'm a big fan, I think. I think NVIDIA is a great company. They don't do the right thing politically. They're not in the MAGA fund, but I certainly own NVIDIA away from the MAGA fund, and so I think people can certainly do that. They can. They can balance portfolios around ETFs and certain stocks and I think that's probably going to be an interesting way to manage money over time versus simply just going out and buying the S&P 500 index. So I think when you look at an equally weighted portfolio yes, those have not done as well as the market cap weighted S&P 500. But the S&P 500, from a stock selection standpoint, I would argue hasn't been that great. The market cap of NVIDIA and Apple and Google and Meta and those companies, microsoft, that's what's driven their performance. And when you make those equally weighted, their performance isn't very good, meaning the stock selection away from those has not been great, meaning the stock selection away from those has not been great.

Speaker 1:

So I would advise people to take a look at certain tech companies that they may want to own over time and balance it with other types of investments, one being MAGA that I think would make sense for people. And then you've also got to balance it with you know at what point you know and this has been the case for a while but at what point do the law of large numbers really come into play? I mean, when you're getting companies that are $3 trillion that's larger than the economies of many countries around the world. You know, can a $3 trillion market cap become, you know, a $4 trillion, $5 trillion, 6 trillion dollar market cap? At some point that number gets, you know, so large that you can't. It doesn't make sense from the standpoint of an overall economic balance within even the whole global economy. You're just larger than many countries and it becomes very difficult. So we'll see what happens. I mean I'm not calling for.

Speaker 1:

You know big problems in those large cap companies because of AI. I think AI is what's powered them continue to allow them to kind of power higher. But you know, overall software last year underperformed. So if you look at software within the S&P 500, so if you look at software within the S&P 500, I think it was up about 16% versus 25% for the S&P. So you know software historically has been one of the drivers of performance and it wasn't last year and it may start to continue to still have some problems overall. So it's again a handful of companies and so I would recommend people look to diversify away from just those six, seven stocks.

Speaker 2:

Is it fair to say that MAGA is more of tilted towards value versus growth style investing?

Speaker 1:

Yeah, definitely. I mean, there's very little tech in MAGA, it's like one and a half, two percent, and so I would definitely view it in the value category. You know, obviously, as most people know, value is pretty heavy in financials. This is pretty heavy in financials. You know it's in materials, basic materials. You know oil and gas, industrials those are kind of the top sectors and that tends to be in those value indexes and those value portfolios. That tends to be in those value indexes and those value portfolios. So, yeah, you could certainly compare it to, you know, russell 1000 value or S&P 500 value if you wanted to kind of look at numbers and see how it compares to the other what I would categorize as value type companies.

Speaker 2:

Do you think that from an index constitution perspective, this is going to be one of the busier years for you as you think through and go through the analysis on these companies changing their tune?

Speaker 1:

Yeah, there'll be some. I think there'll be some pretty good changes here. That'll happen kind of going into the summer. Numbers for political contributions they start here in a few weeks for 2024, but then they get cleaned up and redone and that kind of thing. So they really kind of really become more final, kind of in the April timeframe and you start to get because some of the PAC money doesn't. It takes a little bit of time to get all the data and the reporting data done and filed and uploaded. So I think going into, you know, early summer, that's when I'll do a reconstitution and and rescreen all of these companies for the political contributions last couple of years and so obviously we'll do something then, michael, and talk about what those changes were. But I would anticipate there'll be changes.

Speaker 2:

I have a feeling you and I are going to be doing a lot of things in the future. That's between us. What did we miss? Is there anything that we haven't talked about that's worth sort of stressing? When it comes to MAGA the environment I am a fan of the product. I'm not saying that because you're a client and it's a sponsor conversation. In general, I think equal weight is way overdue. I think deregulation helps. Equal weighting versus indexation Indexation is primarily tech. Tech is clearly anti-Trump. Now they're trying to kiss up to Trump, but Trump is not having it. I think it's going to be the way it plays out. So I think equal weighting makes a lot of sense and again, you have the results and everything you're saying is very logical. But for those that are maybe skeptical on MAGA, what would you say to them?

Speaker 1:

Yeah, I would just say that I come from a portfolio manager background. That's what I've done historically. I was at JP Morgan as a portfolio manager, I did it at Credit Suisse First Boston, and so I understand how to control for risk, and so that's the reason I did an equally weighted is. I think I've constructed a portfolio that people can, you know, advise their clients on and invest in and they're not going to look up and, have you know, have this thing blow up on them, not saying it can't go down and if the market goes down it'll go down, but with 140, 150, depending on the screening at the time equally weighted names, all large cap, us-based companies, it's going to be unlikely that this is going to be some sort of problem within your portfolio, and I deliberately constructed it that way, and so I think people should feel comfortable that they can look at the track record over 7 years I think it was 2022.

Speaker 1:

It was a big down year in the market. Maga was, I think, flat, maybe down 1% when the S&P was down a tremendous amount. So if we're going to have a big sell-off in the market, it's typically going to come from those 6 or seven stocks that are not part of the MAGA portfolio, so I think people can get comfortable with it. Take a look at it. I'm available if anyone wants to have a conversation about it or you can email me, but it's out there, the record's there now over seven years, so you should be able to get comfortable, at least from a risk standpoint. And then it goes to what's the client preference, and I think there's a lot of people that are supporting Trump. I think a lot of your clients are out there supporting Trump and did support Trump, and so I think this is an interesting thing for people. People I've talked to love the idea, they love the ticker. You know it's a way for them to feel like they're part of the movement and not kind of anti the movement when it comes to their investment side.

Speaker 2:

Hal, for those who want to track more of your thoughts. Obviously you're on Fox Business quite a bit and a few other places, but where would you point them to?

Speaker 1:

Yeah, I would go to for the for the MAGA ETF it's investpoliticallycom, and then there's Point Bridge Capital, so you can go to pointbridgecapitalcom as well and there's information on my firm and there's also video clips on these. So I tend to post my Fox Business or CNBC or Fox News hits on those websites so people can see what I've said historically about this and what I've historically said about interest rates, what I've historically said about the Fed. So there's lots of information out there for people to look at. And again, it's all invest politically is the main one for the ETF itself.

Speaker 2:

Again, folks, this was a sponsored conversation by Point Bridge. The MAGA ETF is certainly worth paying attention to. Appreciate those that watch this live and I'll see you all in the next episode. Thank you, I appreciate it.

Speaker 1:

Thanks, Michael.

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Michael A. Gayed, CFA

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