Healthcare is The Next Investment Wave

**Bilal** (0:00)
I will give you another sector that I think is really attractive, and I was talking to Ian about this, is healthcare.
I think that's another area that we really should lean into, because every single person here that's going to listen to this conversation is going to say, you know what, what do I do at my leisure time? I'm not sitting out drinking and partying and hanging out. I care much more about the infrastructure of my life than my health. That's why people are leaning into more drug use, in a positive way. I'm talking peptides and other things, right? But they're leaning into other opportunities to figure out where do we see growth, and NVIDIA has made some announcements. Some of these other companies have made announcements in their support for health care. And I think that could be a deviation that you can see pop up soon.

**SPEAKER_2** (0:49)
From an institutional standpoint, outside of the hyperscalers, what does the software sector need to do in order to rebalance and regain dominance? We talked about Intuit Service. Now, there's some companies that are really beaten up. Adobe, when you guys are looking at things to potentially invest in, what would you need to see as a catalyst to then invest yourself in?

**Bilal** (1:11)
I'm going to have to put on this one, Ian, and I'm going to just tell you why. So the way that we structure the investments here at Direction, and I think it's important, like I shared this, about sort of who we are and the way we think. We launch products for investors to trade. We're not making the call of saying like, hey, this sector is going to recover versus this sector. We are saying, can we build in a trading vehicle in an area that's going to trade a lot? So some of those areas, I think, some of those businesses, I'll just kind of share my two cents of what they need to do is, I think they're going to need to either explore M&A opportunities with some of their cash to actually go out and maybe become a little more competitive in the space, or they really need to invest in A&D or R&D to pivot their business. And we already know the sell cycle and how long that could potentially take. So, right, the term that everyone was talking about that we all grew up on was MAG-7. Well, the MAG-7 has now matured to the mangoes, right?
So that's the whole compartment, that's the whole part of the business where if Meta, and I think we talked about this yesterday, Ian, if Meta, Microsoft and some of these companies that we love, they own the cloud and the software space. But guess what they're doing? They're being beaten up because they're making investment for the future, but they have to make that investment for the future. And at the same time, they're also laying people off.
Right? So we gotta be mindful of like what that looks like. So we don't launch products based off of what these companies should do. We launch the products based off of where the trading opportunities are for the market.

**SPEAKER_3** (3:00)
What should feel for the market? Are you bullish? Are you embarrassed? Do you think that when he says something regarding late stages, do you feel that this is the late stages of a bull market, and we're ripe for a bear market in the near future?

**Bilal** (3:18)
So the old adage is bull markets don't die of old age, right?
There's usually a catalyst that make them stop running. And what I would say is for us, our view is that the market still has tailwind because of the support around earnings, but again, it's price to perfection. And what I mean by that is if any companies have any small disappointments, you're going to see disruption in volatility. That's just kind of where we are. And I also alluded to the concentration that we see in the marketplace right now. So in a late stage area, one of the things that I think investors all need to consider and do is they need to actually broaden out the diversification, meaning pivot to maybe like equally weighted exposures versus these concentrated exposures.
That's a very important point. And here's why.
Because if you have any major headwind that hits the max 7, your ETF, your exposure, your stock, your option trade, it's going to go the other way, and it might go against you. So you might want to consider a way to balance out the risk of the Qs as an example, and maybe hold QQQE, which is an equally weighted ETF versus just holding the Qs. And then someone's going to come back and say, well, should I hold QQQM? That's more of a momentum that's still concentrated bet. That's going to put you right back where you were. Should I hold QQQI? That's going to be more income based. If you just looked on par, you're not getting the exposure that you want. You're trying to clip a coupon with that particular product. So if you're going to say, hey, where do I get my exposure today? You should be thinking about broadening out your risk and understanding that we're going to be a little probably choppy for a little while.