Recap | Entering the Fall Conference with Simplify Asset Management
David Einhorn headlines fireside chat with Michael Green
*Disclaimer I have not been paid in any way to advertise Simplify or any of their products.
Thank you to
for inviting me as your guest to the 5th annual “Entering the Fall” conference. The event was packed with great speakers and content and practically zero salesy marketing of Simplify’s business. Many in the audience were professional institutional money managers, Simplify’s clients and prospective clients. So I was likely a fish out of water, but everyone was gracious and welcoming.If you are curious, why the South Korean flag? The South Korean President was visiting the NYSE that morning. Coincidentally Paul Kim, Cofounder of Simplify is Korean American.
I will summarize my notes, but keep in mind they recorded the day and will likely have the full replay available in the near future.
For those who have never heard of Simplify, think of them as a nimble and hungry startup (2020) that is growing fast in the ETF business, ie Proshares, iShares, Pimco, Vanguard etc.
An older interview of the initial start of Simplify, an interview from 3 years ago. Goes into the co-founders background and how Simplify got started.
You can find their entire line up on Morningstar or www.simplify.us.
They have a good variety of innovative ETFs, many that yield a distribution, like this one that caught my eye, YGLD 0.00%↑ which seeks capital gains and income. An actively managed ETF, it combines a gold futures strategy with an income generating options overlay.
Using futures, the fund aims to produce a 150% exposure to gold. The options overlay will focus on writing short term spreads on a variety of underlying assets, including equity, fixed income and commodity indices or ETFs.
The goal is to generate attractive income while providing leveraged exposure to gold.
One Sheet
Prospectus
The above chart is a layered chart since YGLD’s inception compared to /GC. Tracking pretty accurately, other than a small period when it lagged gold beteen March and April of this year. But YGLD also has an income distribution too!
Let’s get into the conference and my takeaways
General recurring themes
This is not a bubble
This is a bubble
“Nothing Stops this Train”
Valuations are elevated…BUT NO ONE CARES
10:05AM - 10:10AM
Coney Island Prep
Why We Are Here — Coney Island Prep with Karen Johnson
Inspiring stories from the hard work this charter school is doing to give kids in under privileged areas a great educational foundation and access to higher education and mentorships.
10:15AM - 11:00AM
Panel 1
Turing to AI with Ben Hunt, Jack Kokko, Michael Cox
Moderated by Dave Nadig
Dave (moderator) asked about are we in a bubble. Everyone on the panel said no but many of their arguments sounded like a bubble to me. The panel did not address deepseek news and lower cost to deploy in future. I was going to ask in the Q&A but it was the first session and as a guest you don’t tell the host their house is ugly.
Many discussed how AI frees up workers to do better work or better analysis. But what if the human can’t do better work and analysis. What if they themselves are capped at their own capacity. Just because you upgrade someone from a skateboard to a bicycle, doesn’t mean they will be more efficient. Maybe they will crash and burn.
“Nothing stops this train” was like a mantra.
Important skill sets for kids today. Critical thinking. Humanities. Sales and people skills. Presentation skills.
11:05AM - 11:50AM
Panel 2
The Future Is Now with Manish Dutta, Nick Ducoff, Robert Bogucki
Moderated by James Seyffart Michael Green (alternate)
Tokenization in context of Blockchain
Benefits: Speed, access, security, and settlement
Risks: fraud & crime, dilution (Circle ceo diluted down .3 percent).
Genius act cant share rewards or profits
Key details of the GENIUS Act provision
No interest payments: The law prohibits stablecoin issuers from distributing any form of interest or yield to customers simply for holding their stablecoins.
Preserves banking system: This rule is intended to prevent trillions of dollars from leaving traditional bank deposits in favor of higher-yield stablecoin products. The idea is to protect the U.S. credit system, which relies on bank deposits to underwrite loans for consumers and businesses.
Distinction from third parties: While the issuers themselves are blocked from paying interest, the law does not prevent third parties, such as crypto exchanges, from offering their own reward-bearing products to stablecoin holders.
Aims for regulatory clarity: By drawing a clear line between yield-bearing financial products and non-interest-bearing payment instruments, the GENIUS Act offers regulatory clarity to the stablecoin market.
Tether has a valuation as high as OpenAI with only 100 employees
12:35PM - 1:20PM
Panel 3
(I had to miss this as I went home to check on my wife for lunch. We are expecting soon)
China: Paper Tiger, Steel Dragon, or Wyld Stallyns? with Brad Setser, M. Taylor Fravel, Paul Isaac
Moderated by Christopher Getter
1:25PM - 2:25PM
FIRESIDE CHAT 1
The Singularity Is Nigh? with Josh Wolfe
Moderated by Michael Green
This session was my favorite session of the day. The amount of topics ranging from religion/atheism, AI becoming a religion, science, and the future was really enjoyable.
Josh Wolfe cofounded Lux Capital and has a long track record of success. He notably went bullish on NVDA when they were only a $13B company still trapped in gaming console upgrade cycles.
Some future sectors that Josh was bullish on:
Muscle Loss mitigation and repair (Ozempic and Statins)
What is driving this thesis are demographics and the overall health picture today. The growing older population for one. And use of GLP-1, Statins, etc are reducing muscle and bone health. There have been studies using female mice where they found pregnant mice boost the production of bone while the babies pull the calcium as they grow in the womb. There are efforts to commercialize a drug to help humans obtain similar benefits. Also noted that treatments for men are saturated, ED, Hair loss, etc. But women are underserved and will be a focus in futureNeuro treatments such as for Alzheimers
With AI many are outsourcing many brain functions for tasks. And Alzheimers trends are risingMuch like AWS allows you to scale up processes in the cloud without building infrastructure, a new wave could be outsourced experiment labs where you can fire up real experiments without a costly buildout of centrifuge equipment and staff, with AI powered feedback loops and recommendations
If we see a slowdown in capex growth and data center buildouts, we may see a boom in maintenance rather than building new. A lot of entrepreneurs will thrive in this environment.
Josh talked about his journey from growing up Jewish to becoming Atheist. And generally how religious radicals are the intolerant sect of the varying religions.
I do agree that intolerance is the prevailing mood today, not just in religion. It almost feels like intolerance is a religion.
Speaking of, Josh also pontificates that there will be evangelical entrepreneurs who take advantage of people and become popular Techno religion ministers. Many will flock to AI as a religion because some entity or being called AI, is responding back praising us, empathizing with us, providing guidance in times of need when they can’t get it elsewhere.
Michael Green poignantly said, “If you don’t give people religion, they will create one.”
Switching back to tech, Josh sees 50%+ of inference compute will be done on device (Phone, computers, etc). So he sees the current capex for data center expansion to be full of potential risk and a race to the bottom on price for the consumer. Ultimately the consumer wins. He also pointed to the vendor financing dynamic, just like I noted in my title podcast “I give you money to make AI, you buy my chips ok? | Rinse Repeat”
Watch for private AI Defense company "Anduril.” Especially if they ever IPO.
He believes PLTR valuation is unjustified.
Private Equity new rules will create a ton of capital from retirement, but there will be many losers. Lots of “shitty” funds.
On topic of what kids should be learning today he turned inward to his own family. Noted one daughter accomplished the task at hand by drawing. The other using AI. He wants them to be proficient with all types of AI as a second language, but also continue to grow human skills. Sales, making presentations, interpersonal skills, high EQ.
Josh sees that the white collar of the job market will be impacted more than blue collar type careers by AI.
The session ended with the question of who will win the AI race. He didn’t give a definitive answer but noted that Google/Alphabet was counted out but are now neck and neck as a leader. And they will likely crush prices down to pressure OPENAI. Amazon is way behind but could be a dark horse.
2:30PM - 3:15PM
Panel 4
Credit Is Due with Joe Hegener, Michael Green
Moderated by Cameron Dawson
Interesting session in a world I don’t operate in. The theme of “Nothing stops this train” came up again. In 2022 there was a record number of maturing debt and many in the industry thought it would cause a bomb to go off. But it didn’t. A lot of out of court workouts with payment in kind terms.
In private debt, a payment-in-kind (PIK) is a way to pay interest by adding the interest amount to the loan’s principal balance rather than paying cash. This feature offers flexibility to borrowers by conserving cash for growth or difficult periods, but it increases the total debt owed and the potential for higher credit risk over the long term. PIK loans are a common tool in private credit, particularly for business development companies (BDCs) and middle-market companies, with various structures like full PIK, split PIK, or toggle PIK options available.
Joe H doesn’t expect a blowup anytime soon, especially once Trump places a low rate Fed Chair next year.
Michael was skeptical because all of this credit is issued on equity so it is an equity bubble. Not a credit bubble.
The comparison of Meta came up that they are now participating in variable interest entities like Enron.
For those new to this term:
Variable interest entities (VIEs) became infamous due to Enron’s use of these structures, which were a type of special purpose entity (SPE), to hide massive debts and inflate earnings by moving assets off the balance sheet
Another direct comparison to Enron was how Meta is now trading energy.
3:45PM - 4:30PM
Panel 5
(I missed 99% this session)
Vol Harvesting — Picking Up Pennies? with Benn Eifert, Hari Krishnan, Shailesh Gupta
Moderated by Cem Karsan
The only notes I have toward the end.
Cracks between asset classes is where the action is today
Commodity volatility is more sticky and less volatile than equities right now
4:35PM - 5:35PM
FIRESIDE CHAT 2
Still Broken? More Broken? Never Broken? with David Einhorn
Moderated by Michael Green
Packed house for this one. While it was a continuation of the themes and structural problems in the market I have shared here, here, here. here, and here, below are my notes from the conference:
Convergence to finding “Value” is forever gone, so in that context the market is more broken than ever
If the definition of the market is return on capital, it is still broken
If the definition is speculating what the price will be in the next day, 1 hour, 1 min, 1 millisecond, then it is working
People never talk about valuations anymore
Michael Green said “Shouting the emperor has no clothes on a nude beach”
After taking away the sect of the market that seeks value, mutual funds and their managers, no one on Wall St is trying to uncover value
1995 10% speculative. today 17% (MG)
David feels this is too conservative of an estimate and that less than 2% of market participants know to ask or seek value
David believes we are in or close to a recession
Valuations are elevated, but it doesn’t mean we can’t rally 20%
Information is no longer valuable, most don’t even care anymore
Michael agreed and referenced a study that when a stock goes into an index, the data produced from the company and or the industry goes down, not up
There is no functioning SEC so the wolves are running wild
Suitability for individual investors or families is no longer considered. You want to go long or short 1 day expiration options go right ahead
Yet online poker in NY is illegal
David is not being nostalgic or seeking sympathy. He has adapted to the market and had come to grips that the old market will not be coming back
5:40PM - 6:25PM
Panel 6
(I unfortunately missed this one. Ran home to make sure my wife had food and dog was walked, but rushed back to make the happy hour)
Trend Is Your Friend with Andrew Beer, Charlie McGarraugh, Kathryn Kaminski
Moderated by Paisley Nardini
6:25PM - 6:30PM
Wrap Up
Concluding Remarks by Paul Kim
Paul thanked the attendees, his staff, the venue, and lastly his and his team’s families for putting up with their sacrifices as a young startup grinding to grow Simplify Asset Management. It was a very human and emotional speech.
I was glad to have met a few of the Simplify team including Paul during the happy hour.
While I never heard of Simplify prior to Michael Green’s cv, their ETFs are definitely on my radar now.
Thank you! good bullets abt Einhorn. The silent majority is the passive majority