Hey folks!
Today was my last day at VettaFi, almost exactly 4 years to the day from when I joined Tom Lydon and Tom Hendrickson at what was then called “ETF Flows” - a small company that ran ETFdb.com and ETFTrends.com. I had jumped there from being CEO at ETF.com for the previous few years.
Clearly I can’t hold down a job.
I’m enormously proud of the team at VettaFi and the work I had a chance to be a small part of. From a cold-engine-start in 2022, VettaFi went from an idea (I mean, “Vetta” means “The Knower” in Sanskrit, it was always ideas) to recently being acquired by the TMX Group, a phenomenal organization at the forefront of rational human capitalism. No regrets, just pride and a tinge of sadness at letting it go. I’ve had Lana in my head all week:
“When you know you know,
When you know you know,
Its time, it’s time to go.”
I leave an incredible team doing great work, and about to capstone two years of building with a great conference (Exchange, in Florida).
So, Leaving the ETF Terrordome? Nah.
I first stumbled into ETFs in boardroom at 525 Market Street, SF in 1993. Wells Fargo Nikko, my employer, was hearing a pitch from the Amex on this crazy idea they had to take what the Toronto Stock Exchange had done with TIPS (the very first ETF), and bring it to the U.S. masses. I was a child, and getting people coffee I believe. Nate Most, godfather of ETFs, held court, and I didn’t understand any of it. The chicken-egg of how to get the first trades done, and the first assets in, seemed insurmountable.
I lacked imagination.
30 years later, most of my career has been spent in and around the ETF industry, for two big reasons.
1: People. That sounds silly, but as a relative-weirdo compared to everyone else I know in finance outside the ETF-ecosystem, the individual human beings I’ve been working with all this time are wildly creative, divergent, challenging and human. The Bro-Culture of Wall St. deeply offended me in the 1990s, so I never fit in at B-school or immediately after. But the quants, nerds, indexers and academics? They were my people. They were the ones playing Magic: The Gathering or Chess in the lunch room.
I still feel that way. The ETF industry — even as big as it’s gotten — is full of genuinely good people. From the folks at Women in ETFs who got way ahead of the curve in breaking down some barriers, to charitable funds of Simplify, or even the climate work of Blackrock (however controversial). From small players to large players, no matter how cynical you want to be, my experience has been that the ETF ecosystem has harbored more of the good folks than anywhere else in Finance. So no, I don’t plan on taking my marbles and joining some tech company.
2: Capitalism’s Local Optimum. The second less old-softy answer is that I have stayed focused on ETFs because at every turn — from the launch of SPY three decades ago to the launch of Spot Bitcoin ETFs last week — the ETF wrapper has for very good reasons been the locus of innovation, good regulation, efficiency and effective capitalism.
And let me just say it out loud: I think the world has huge problems. I would prefer they get fixed as best they can, because in general, I’m kind of in the camp of “minimize suffering, maximize flourishing” when it comes to my fellow, potentially imaginary humans that seem to inhabit the planet with me. To change anything, really, you need some kind power — some kind of force, or mechanism of action. You need leverage.
Money is the way most of the world embodies and manipulates power — and certainly the narrow Western-culture dominated, theoretically-democratically governed, capitalist society I am most familiar with. So to fix the world, you need to either accumulate a lot of money, or influence a lot of money.
Here’s a chart from one of my stump-speech decks:
If Money is power, than the ETF has become, essentially, the power grid, and financial advisors and asset managers are the ones running that power grid. After all, ETFs remain the single most efficient mechanism of moving large amounts of money from activity A to activity B. Virtually everything interesting in markets now flows through the ETF ecosystem.
That’s why ETFs matter. Of course lots of folks do a lot of good in the world without participating in the ETF ecosystem in any way. But for a neurospicy rabbithole-diving curiosity-monkey like me, standing in “ETFs” has let me dive deep into the weeds in every corner of the world that has ever interested me.
So am I going to walk away from ETFs? Hardly. But the most interesting stories about market micro-structure and regulatory arbitrage in ETFs may be in the past — after all, it’s a hugely mature industry, and the day-to-day of launches, flows, and sales are extremely well covered by younger, smarter people than me, from Lara Crigger, Todd Rosenbluth and the rest of the team at VettaFi, to the crazy good work being done by the teams at Bloomberg, Morningstar, CNBC, Yahoo, Strategas, CNBC, and every mainstream financial media outlet.
Well then what? Moving Beyond Diagnosis
If I had to pick one throughline for what I want to write about (and more broadly, the work I’m planning on doing) it’s best summarized in this piece I wrote for ETF Trends.
In short, I want to keep tackling the question of how to actually engender change in broken systems, in a world of institutional decay. I want to explore what often seems like a world on fire from a lens of optimism and hope. So to me, it means writing to questions like these:
How can the individual make an impact in a complex adaptive system like western democratic capitalism.
Are there places where a “phase shift” can cause rapid, positive change, as they often do in complex adaptive systems? (as Ben Hunt from Epsilon Theory has been suggesting for a decade?)
Should advisors (and the rest of us) focus on nudging the hyper-agents towards positive-sum outcomes (the billionaires and influencers)? Or should we root for their demise?
Is it possible to “invest” from this side of the gap, knowing (sadly, but with some certainty) that some of the crises facing the planet will not be resolved in a positive way? (Pick your crisis; some ships have sailed.)
Can existing systems that re-enforce or even encourage multi-polar traps be changed to encourage better societal outcomes without ekpyrosis — that is, burning it all down?
We are in a world of nearly-negative institutional trust in every organ of power from corporate America to the federal government to academia and religion. How can we create communities of purpose to actually make a difference? Is it all about DAOs and pop-up philanthropy?
How do we keep our filters open enough to update our models, without falling victim to the maelstrom of disinformation and despair?
What are the roles of language and culture in a world without trust?
Those are actually the easy questions. But the hardest question I’m going to keep asking is the shortest one:
Why?
Over the last 4 years - which not-coincidentally includes the pandemic - my narrow view of reality seems to contain a large number of very smart professional people questioning the very foundations of Western Democratic Capitalism. That questioning — that “why?” — can be seen in the explosion of “Wisdom Schools” — Sam Harris’ Waking Up, Tom Morgan’s incredible work on storytelling and curiosity, Kyla Scanlon’s fresh-eyed skepticism, Brian Portnoy & Crew’s “Funded Contentment” framework at Shaping Wealth … Heck even Ray Dalio hits the Why’s in his book Principles. I’ve met dozens of folks (particularly financial advisors) working with the highest of high-net worth families and the most influential C-suite dwellers not on budgets and investing, but on the point of accumulating all this wealth and power. On meaning. On the Why?
I think the Why? is having a bit of a renaissance, and I suspect the Why? of it all will help answer all the other questions. I don’t know the answer to Why?, but I do know it’s not about taking mushrooms and jumping into ice baths to increase your performance or live forever. It’s about the individual search for a meaningful life and the bodhisattva desire to help other fellow travelers, which is, shockingly, something that seems to be Taboo when we are also talking about money and power.
What to Expect
What now? I’m gonna crank out content on the regular here. I suspect I’ll produce an even mix of “normal” stuff you’d expect from an ancient ETF analyst, and stuff you’d expect from a random nerd who loves music and stories and the still quiet places inside. You can choose to only subscribe the money stuff if you like, I won’t be offended.
In the meantime, I’ll be in the woods.
Cheers, Dave.
Great piece, Dave.
Though I’m not sure I’d agree that you didn’t fit in during B-school. Your presence there was one of the highlights.
Congratulations! Never sitting still. Looking forward to hearing about your next adventure.