Horizon Kinetics Medical ETF · NASDAQ:MEDX
Horizon Kinetics Medical ETF — Horizon Kinetics — Corporate Update (November 2023)
37 slides from Horizon Kinetics Medical ETF's corporate update, Nov 7, 2023
Slide 1: 3Q2023 portfolio update
3Q2023 portfolio update Steven Bregman November 7, 2023 © 2023 Horizon Kinetics LLC.®
Slide 2: The Topics for Today
The Topics for Today • It’s the Fall Busy Season for Financial Market Projections • Observation 1 • Observation 2 • Observation 3 • Observation 4, Which Gets its Own Section (The False Premise of the Fall Projections) • Segue into Contingency Investing (and the Systemic Risk Watch Box) • Fun Details
Slide 3: It's the Busy Season
It’s the Busy Season It’s the Fall back-to-business season for financial market projections 3 © 2023 Horizon Kinetics LLC.®
Slide 4: Seasonal financial market scenarios: Higher for Longer Scenario
Seasonal financial market scenarios Higher for Longer Scenario Higher for Longer Scenario - refers to the Federal Reserve maintaining short term interest rates at today’s 5 ¼% or so for longer than previously projected. The intent is to suppress economic activity – which has been more resilient than
Slide 5: Seasonal financial market scenarios: Hard Landing Scenario
Seasonal financial market scenarios Hard Landing Scenario Hard Landing - yet tighter monetary policy and higher interest rates. This would create a severe recession and pose a systemic risk to many parts of the economy. Tax receipts would fall, coincident with rising social support payments, causing
Slide 6: Seasonal financial market scenarios: Soft Landing Scenario
Seasonal financial market scenarios Soft Landing Scenario Soft Landing - economic activity subsides sufficiently to eliminate all structural inflation drivers without inducing a serious recession. • This would permit the Fed to reduce interest rates, and the world to revert to a 2010-2019 environmen
Slide 7: A few observations about seasonal financial market scenarios
A few observations about seasonal financial market scenarios Observation 1: Success depends on choosing the correct scenario and And none of these Fed policy centered anticipatorily reorienting a portfolio. Unfortunately, the success rate of conjectures and prospective portfolio economic predictions
Slide 8: A few observations about seasonal financial market scenarios
A few observations about seasonal financial market scenarios Two of Mr. Bogle’s ever-repeated Ten Rules of index investing : Observation 3: These asset allocation stances • Rule 3: Buy Right and Hold Tight. Meaning, establish the proper asset allocation are implemented, for the most and change it no
Slide 9: Under the Hood: What's in Your Index? ACWI Case Study
A few observations about seasonal financial market scenarios Under the Hood: What’s in Your Index? – ACWI Case Study The iShares MSCI ACWI ETF (ticker: ACWI) Of course, if the index fund • Designed to replicate the MSCI World All Country World Index, which covers the globe. It epitomizes the all-inc
Slide 10: The Axiomatic Paradox in Market-Cap Weighted Indexes
A few observations about seasonal financial market scenarios The Axiomatic Paradox in Market-Cap Weighted Indexes How to explain that the U.S. exposure is 4x its economic contribution to world GDP? The bizarre U.S. exposure is partly because market capitalization is what determines It is true that U
Slide 11: Under the Hood: What's in Your Index?
A few observations about seasonal financial market scenarios Under the Hood: What’s in Your Index? There is not much public discussion about whether any major index is It is impossible to achieve intended appropriately constructed or should itself be benchmarked or, just like allocations by relying
Slide 12: Observation 4, the ignored factors beyond the Federal Reserve's control
A few observations about seasonal financial market scenarios Observation 4, the ignored factors beyond the Federal Reserve’s control What if these scenarios completely miss, don’t even have the tools to recognize, more important risks? Factors beyond the Federal Reserve’s control? What if there are
Slide 13: Observation 4, The Need for Contingency Investing: In Plain Sight
A few observations about seasonal financial market scenarios Observation 4, The Need for Contingency Investing: In Plain Sight • The current average interest rate on the Federal debt is 2.6%. Maturity Schedule $ in millions Total • The yield on Treasuries almost across the maturity spectrum is 5% or
Slide 14: Observation 4, The Need for Contingency Investing: In Plain Sight
A few observations about seasonal financial market scenarios Observation 4, The Need for Contingency Investing: In Plain Sight Current Circumstance The Need for Contingency Investing: In Plain Sight U.S. Fed Debt, 9/30/23 $25.8 trill Projected 2023 budget deficit $1.7 trill* Interest expense, projec
Slide 15: Monetary Regimes and Inflation
Monetary Regimes and Inflation A study of hyper-inflationary episodes throughout recorded history Peter Bernholz, “Monetary Regimes and Inflation: History, Economic and Political Relationships.” It was only as recently as the late 1970s that the gold standard was finally abandoned globally. This may
Slide 16: Monetary Regimes and Inflation
Monetary Regimes and Inflation A study of 800 years of financial crises Carmen Reinhart and Kenneth Rogoff, “This Time is Different: Eight Centuries of Financial Folly.“ This Time is Different, by Carmen Reinhard and Kenneth Rogoff, details 800 years of financial crises. One of their graphs shows ho
Slide 17: Monetary Regimes and Inflation
Monetary Regimes and Inflation A study of hyper-inflationary episodes throughout recorded history Peter Bernholz, “Monetary Regimes and Inflation: History, Economic and Political Relationships.” All the hyperinflations were the result of sus- tained excessive government budget deficits, largely fina
Slide 18: Reality Based Contingency Investing Summation and Proposal
Reality Based Contingency Investing Summation and Proposal Data and reason suggest that the U.S. - as ultimately every other nation in recorded Risk Watch Box history did* - has reached a tipping point in its financial accounts, which are not in order. (because they can’t all be covered in The numbe
Slide 19: Implications of Federal Reserve-engineered decade of near-zero interest rates
A few observations about seasonal financial market scenarios Implications of Federal Reserve-engineered decade of near-zero interest rates Whether they bear out exactly as laid out in this 30 Yr Treasury Rate The average simplistic exercise, the implications for portfolio 30 Year Treasury Rate Impli
Slide 20: Securities Exchanges: An Important (and Index-Unavailable) Asset Class
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions An Important (and Index-Unavailable) Asset Class For a single asset, like gold or oil, a royalty is the quintessence of As the croupier for global financial transactions and risk asymmetrically positive economic exposure.
Slide 21: Long Term Growth Persistence
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions Long Term Growth Persistence NYSE US Case Study: For the last 50 and 30 years, stock Cash Equities U.S. trading volume on the NYSE expanded far more rapidly NYSE Trading Volume Share Nominal Corp. Annualized Growth Volume
Slide 22: Historical Profitability – NYSE Case Study
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions Historical Profitability – NYSE Case Study NYSE Membership Lease Rates & Seat Prices Seat Lease Rates Lease Rate An untrammeled look at the NYSE’s profitability is the 1985-2004 Prices ($) (%) period preceding its demutua
Slide 23: Correlation Independence and Earnings Persistence
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions Correlation Independence and Earnings Persistence Corporate Earnings NYSE Volume Year S&P 500 TR In principle, an exchange should be able to maintain profitability Collapse YoY Change even amidst market volatility, so lon
Slide 24: Long-Term Growth Persistence II – A Better Version
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions Long-Term Growth Persistence II – A Better Version Nominal JPX Trading Volume JPX GDP The prior statistics about the long-term growth of Annualized Growth Share Vol. (in ¥) share trading volumes on the Tokyo Stock 50 Year
Slide 25: Long-Term Growth Persistence II – A Better Version
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions Long-Term Growth Persistence II – A Better Version The New York Stock Exchange is now only one line of business within the Intercontinental Exchange, which acquired it in 2006. Within the Exchanges Segment of ICE, cash eq
Slide 26: Long-Term Growth Persistence II – A Better Version
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions Long-Term Growth Persistence II – A Better Version NYSE Annualized Growth Cash For NYSE, while the 50-year growth of trading volume was Equities impressively robust, the past 10 and 20 years not so Share Nominal U.S. Corp
Slide 27: Robust Product Expansion Track Record and Potential
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions Robust Product Expansion Track Record and Potential Futures and other derivatives, as they are now mostly What They Said* thought of, barely existed prior to the 1970s. At that time, 1972, About the first Currency Futures
Slide 28: Robust Product Expansion Track Record and Potential: CME
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions Robust Product Expansion Track Record and Potential: CME Of the very first financial futures in 1972: it took 15 years for FX Futures to begin approaching annual volume of 100,000 contracts. Ultimately, volume rose anothe
Slide 29: Robust Product Expansion Track Record and Potential: OCC
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions Robust Product Expansion Track Record and Potential: OCC (Options Clearing Corp.) Options contracts from all of the exchanges must be cleared through the OCC. • Over the 50 years from 1973 to 2023 (9-month run- rate) the
Slide 30: Economic Breadth and Diversification
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions Economic Breadth and Diversification The extraordinary growth of interest futures trading And lately, Treasury futures open interest has been across North American Exchanges since the 1980s. rising by the month, to new re
Slide 31: Economic Breadth and Diversification
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions Economic Breadth and Diversification Nearly every significant asset is linked to the derivatives market in some way, and the aggregate volumes and offerings continue to grow, as a direct Securities exchanges seem to be be
Slide 32: Asset Allocation: Exchanges as the Better Mousetrap
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions Asset Allocation: Exchanges as the Better Mousetrap Over the past 20 years, securities exchanges have outperformed the economies and major stock indexes of just about every nation, not just the U.S., to a remarkable degre
Slide 33: The Competition Question: Not a Zero-Sum Game
Securities Exchanges – The Croupiers for Financial & Risk Control Transactions The Competition Question: Not a Zero-Sum Game Exchanges don’t have to compete in the traditional business manner, because securities trading is not a zero-sum game. Essentially, trading begets more • First, they each tend
Slide 34: How to invest in blockchain technology? Regulated Securities Exchanges
How to invest in blockchain technology? Regulated Securities Exchanges The direct connection to blockchain and cryptocurrency is through two Regulatory forces will cause crypto trading important dimensions. to gravitate or be shepherded toward the • The first is the pure market demand dimension: exc
Slide 35: The Digital asset class might eventually become the second largest in the world
How to invest in blockchain technology? The Digital asset class might eventually become the second largest in the world Global fixed income markets, in terms of issues outstanding, were about Exchanges, large and small, will likely be $130 trillion in 2022. Global equity market capitalization was ar
Slide 36: Indexes vs. Our Contingency Planning Portfolio
Indexation’s Historically Extreme Vulnerability to Systemic Risks Indexes vs. Our Contingency Planning Portfolio Sector ACWI S&P 500 Observation Energy 5.0% TPL 3.4% None Index weightings are far below the 0.02% in This table highlights dramatic economy’s exposure to oil & natural royalty philosophi
Slide 37: Important Disclosures
Important Disclosures Past performance is not indicative of future results. The information contained herein is subject to explanation during a presentation. Note that indices are unmanaged and the figures shown herein do not reflect any investment management fee or transaction costs. Investors cann