Investing in AI 'Check Writers' v. 'Check Cashers,' How Crypto Changed Habits

SPEAKER_1 (0:00)

Joining us now for more is Mario Payne. He's the founder of Tomes Financial. Mario, good to see you this morning.

Mario Payne (0:06)

How are we doing today?

SPEAKER_1 (0:07)

Doing well. All right, let's jump into this. NASDAQ's sitting at a record high. What are we watching for to see if this is just a head fake?

Mario Payne (0:17)

Oh, I don't think it's a head fake. From a long-term investment standpoint, we know over time the market historically goes up. So we're going to have more gains. We're going to have ups and downs along the way. But if people are diversified in their investments, then I think they're going to have their money grow over time. We talk about ETS. We like to lean into the ETS that are actually equally weighted, right? QQQ, we're doing amazing right now. But looking at something like QQQE, that's equally weighted. So if the market does go down, we're equally weighted. We might not lose as much at the market downturns.

SPEAKER_1 (0:46)

You say that investors need to remain disciplined rather than emotional. And at times, when you have volatility, that can cause an investor reaction and emotional reaction. How does one stay disciplined?

Mario Payne (1:00)

Very easy. If you have a plan, you need to stick to it, right? Mike Tyson always said, if a person gets punched in the mouth, it changes their plan automatically. But if your plan stays in place, if you're a long-term investor, you know the market's going to have its headwinds, it's going to have its tailwinds. So if you stick to your plan during the ups and downs of the market, you should be successful.

SPEAKER_1 (1:17)

The AI trade seems to be back. You had AMD crossing a trillion dollar mark for the first time. Meta off to the races. A lot of that is just thanks to Metamuse being at the top of the App Store. It's stuff that everyday people understand and can relate to.

How do you get away though from FOMO? Because sometimes people start to chase big gains and they don't know if there's something there for continuation. What's your thought on that?

Mario Payne (1:44)

Well, my thought is that they actually need to separate the AI trade into two paths. We have the check cashers and we have the check riders. Those check riders, the hyperscalers of the world, those are the ones that run right in the checks. So if we diversify, maybe not all our money, but some of our money into those hyperscalers. But then the ones that are actually casting the checks, those are the ones I'm looking to the most because those are the ones that theoretically speaking might grow more. So if we diversify between the check cashers and the check riders, then that's the clear path into AI.

SPEAKER_1 (2:13)

Let's go back to your point about ETFs. This year, I feel like every other week I hear about a new ETF starting out. Some of them are very correlated to certain, like let's say it's a mags ETF, for instance. Just hypothetically speaking, I'm not naming one in particular right now.

You've got more than a trillion dollars flowing into ETFs. Why are so many ETFs popping up right now?

Mario Payne (2:37)

Yeah.

It's a new rave. When I started as a financial advisor in 2007, it was all about mutual funds.

Then we had Union Investment Trust. But over time, you have your consumer or the retail investor, they get smarter. The great thing about ETFs, you can have passive ETFs where you just kind of buy and hold. You have active ETFs that are trading, but there's also ETFs that are more systematically per sector. Now, I believe the next five years is actually going to be influencer ETFs. You see these huge people on Instagram or social media. Just think, if a person on social media has a million followers, right, and every follower invests $1,000, that's almost over $100 million in one ETF. The average ETF is about $100 million now.

SPEAKER_1 (3:18)

Okay, I could see that, but what would be in an influencer ETF?

Mario Payne (3:24)

That's the great thing because typically, like with us, we launched our fund back in 2022 through advisor shares. We gave a strategy, but they also gave an overlay. So it could just be at the discipline portfolio, where 80 or 90 percent could be in MAG 7, or it could be in the sector. And then they just kind of give their picks here, there, and what the ETF does, the ETF does. We are in an influencer economy, right? We have all these stars on social media, and a lot of people are driven towards those stars. So I think ETF creation companies would love to have an influencer with a big following to fund their ETF.