The Best Investment I've Ever Seen

This may be the most important video I ever make and will ever make. I think this is the video that the masses need to see and all investors need to understand. This is about the best investment I've personally ever seen. Uh, it's the uh, the exchange traded fund, how hard it is to beat, and how it's just the best investment money can possibly buy.

Uh, to bring it over, I have a little uh, little piece from my book that I'm writing. Uh, I'm titling it "The Best Investment I've Ever Seen," which we're going over today, the ETF, the exchange traded fund. Uh, if I had to name the best, the single best investment vehicle ever created, it wouldn't be real estate, individual stocks, or even owning a business. It would be the ETF.

But to understand why, we first have to understand what makes an investment great in the first place. Uh, what makes a great investment? Well, before we even go over why the ETF is so great, what makes a great ETF? What makes the good funds good? Well, when we talk about quality, a few things that separate the best from the rest. Over decades of market history, certain patterns have consistently shown what drives long-term outperformance. So, if you look back in history, growth beats value, large cap beats small and midcap, and tech beats every other sector.

Now, does that mean we just own a tech, a tech ETF, VGT? No. No. But this isn't random. It's structural. What we do is we dive deeper. Why is it that these are performing so much better than everyone else? Well, growth companies, especially in the large cap tech, scale their revenue with low marginal cost. Meaning they can increase sales dramatically without taking debt or building more factories. Just take Microsoft for example. Think about Microsoft. What does it cost Microsoft to generate one more sale of Microsoft Office? Almost nothing. The software is already built. Every additional copy is nearly pure profit. That's such a crazy thing today. I mean, people don't realize Campbell Soup back in the day. You're selling food products that has a massive cost to it. If you want to sell a can of soup, you need to go buy more product to then sell that can of soup. You have waste. Um, think of Boeing for for example. Like the magic of low marginal cost is profits grow exponentially while expenses uh, barely move.

Now, going back to Boeing, contrast that with Boeing. If Boeing wants to grow revenue, it has to build more planes, more factories, hire more workers, expand its supply chain. Uh, it has massive capital expenditures that eat away at profits. Growth like this is slow and expensive. How big can grow Boeing get when they're always constantly needing to invest a dollar to make a dollar? I mean, just think about it. You have to build all those factories, all those workers. It's so tough to do so. And so, what makes a great investment is low marginal cost. You want something that's going to grow exponentially because all they need to do is they need more customers. They don't need to take on debt to produce more of what they're already selling.

Now, compare that to a company like Nvidia. Their earnings have increased 18x in just 2 years with no factories and no physical expansion. They scaled through innovation, not infrastructure. That's the biggest piece of the pie that people are missing. When you choose your investments, you need these style of investments. You need these high growth stocks. A lot of people like to choose value-oriented companies, companies that just simply can't keep up. It's just not possible. So when you invest, look for businesses that combine growth, scalability, profitability, not companies stuck in capital-intensive industries. That's exactly why the NASDAQ has dominated for decades and why I believe it will continue to win.

I mean, a lot of people like to go over NASDAQ, which we're about to get into, but the NASDAQ, the dot-com bubble, all that stuff. I mean, the NASDAQ is trading at a 32 P/E multiple at the time of this recording. That is not really that high. People keep saying bubble, bubble, bubble, bubble, bubble, bubble, bubble, bubble, bubble territory. No, come on, guys. The bubble was trading at a 200 times price to earnings. I mean, that is crazy. With almost no profits to back it up. These companies that were trading during the dot-com bubble, most of them weren't even profitable. I mean, how many companies would you want to own at a 200 times P/E multiple with no profits? Uh, and so when the bubble burst, many companies went to zero. Why? Because they weren't making money. It's just quite simple.

The survivors though became giants. They learned profitability, efficiency, and scale. Today's NASDAQ leaders, Microsoft, Apple, Nvidia, Google have fortress balance sheets, massive cash flows, and the ability to buy back shares at lower prices during downturns. That is the biggest thing that I want to highlight is people always love dividends, dividends, dividends. What they don't understand is that these companies that do stock buybacks are creating almost a floor on the way down. When when Apple sees their stock falling maybe 30%, what is Apple going to do with 100 and 200 billion on their balance sheet? You think they're just going to go sniff their money and stare at it? No. They're going to deploy that to buy back the shares. When they buy back the shares, they're basically holding the floor for you. How far can it go when Apple is shoveling the shares back because they want to buy them as cheap as possible? Apple believes in themselves. And what people don't realize is when you take shares off the balance sheet, now your earnings is going up. Guess what? You, if you've never seen AutoZone, it's one of the coolest stories and I should show you in a future video, but AutoZone is a slow-growing company. And it's one of the best performing stocks of all time. Why? When you do share buybacks, you don't actually need another dollar of revenue to grow earnings because guess what? Earnings per share goes off of your share count. If you are buying back your shares and your earnings or your revenues are stable, well, your earnings per share goes up because there's less shares on the balance or there's less shares outstanding. So, this creates a self-reinforcing floor under the stock, under their stock prices.

Meanwhile, we have small caps and unprofitable companies often pay employees with stock-based compensation. If you are unfamiliar with stock-based comp, it's when companies are paying their employees instead of taking money off the balance sheet or taking money that they probably don't have because they're not profitable, they are just basically diluting all shareholders and paying these, you know, you have these CEOs of $200 million companies that are making $30 million a year in in stock-based comp. I mean, that is completely diluting the shareholders. Like people don't realize the damage that does to the shareholder. You're pushing more shares into the market, pushing that price just lower and lower. And people are okay with taking that. Like, yes, can I have another one? Like, you want low stock-based comp. You do not want a lot of stock-based comp. Those are good companies to own. So, stock-based comp is diluting the shareholders. These companies can't do stock buybacks and uh, they don't have the cash reserves to weather a storm.

Think about a downturn real quick. Just think about it. If you have a company that or just a market in general and the companies are or all their prices are taking an absolute tank, which company do you want to own? Do you want to own Apple with a hundred billion on their balance sheet and cash flow positive, generating alpha and earnings per share? You're basically owning a profitable company. Or do you want to own another company that's diluting their shareholders through stock-based comp? They're not profitable. They have negative earnings per share. Uh, and they're just, they're just not a safe company to hold. Like who would want to own that? When times get tough, people are going to sell out of those small cap companies, which, mind you, Russell 2000, 80% of them are unprofitable and are high stock-based compensation. Those are the companies you're going to get hit with the hardest. These large companies are so profitable, they basically can create their own safety for you.

When recessions hit, these unprofitable small caps get crushed. Large profitable companies continue to grow and often emerge even stronger. How is that? Well, they're buying back their shares at a lower price. It's just how you want to buy the dip. They're buying the dip as well. They are coming back stronger. They are producing cash flow. These companies are compounding machines. They are literally going to compound whether you want to participate or not. That's just how these companies are. They're just so strong. They run our economy at this point. Uh, and that's why growth funds outperform over time. They keep the upside while protecting the downside. I mean, realistically, they have unlimited upside potential and a very low downside potential because they're so profitable and they can just buy back their shares in times of need. They would probably take some companies even take debt on to buy back their shares when the prices get so low because they know that with their profitability, they can pay back the debt.

Why value and dividend funds keep up? This is a huge point I want to say. People love value. Value is everything. I want to buy something cheap. People are so obsessed with Warren Buffett. Value investing. Value investing. It is proven over time that value investing just can't keep up in today's market. And people think that, oh well, we're just in a bull market. This is different. This is different. No. The world is changing. These companies have such massive marginal costs. Like they're just their margins are so high. Nvidia had their their earnings grew by 18x, 18x in the last two years. I mean, that's that's something that you can't even fathom. Like, people just don't understand that these companies are just so profitable. And so, and and value funds, I mean, they're trading at a value for a reason. They're trading at a discount for a reason. They're not growing as fast or some of them aren't growing at all.

So, I've seen people investing in AT&T. Oh, it's got a 6% dividend yield. I'll take that dividend all day. But the price hasn't moved in 20 years. Do you want to own that? I personally don't. I want these compounders that are just going to continue to push up as times go on. So, people love the idea of buying what's cheap. It feels safe. Buy, but cheap often means no growth. Like I mentioned earlier, if a company isn't more profitable in 5 years than it is today, your returns will flatline. So that's another thing. When you're investing in value, it's a value trap. That's a trap of value investing. Companies that look inexpensive uh, but have no path to expand.

When you're buying a company, what you're looking for is I want a company that in five years' time from now is going to grow my investment. I want them to be generating more revenue, more earnings per share. I want them to have done stock buybacks. I want them to have grown exponentially in five years. When you buy a value company, you're basically just buying value. And you know that in the next 5 years, you're going to own the same company. It's not going to have changed much, if at all, because they're not growing. It's just what it is.

Then you have the small cap trap. The idea that smaller companies have more room to grow. In theory, sure, makes sense. I totally get it. You have a $200 million company. They can grow to four billion just like Nvidia did. I get it. But in reality, 80% of the Russell 2000 isn't even profitable. I mean, these companies, high stock-based comp, no profits. Like when the markets tank, you'll notice the Russell tends to do much worse. When interest rates went up, a lot of people thought that all these tech companies and everything were going to struggle. They don't because they don't need it. They don't need it. They don't need debt as much to grow. And the Russell 2000 got hurt way more. That's why when you see these interest rates getting cut, the Russell is actually recovering a lot faster. Uh, they rely heavily on on uh, stock-based pay, have limited scalability, and most never make it uh, to sustainable profitability.

Look no further than ARK, the poster child of speculative small cap innovation that turned into massive underperformance. Like look at this thing. In the last 5 years, ARK has produced you a 2.5% return and if you bought at the peak, you'd still be down. 5 years ago, think about that. Five years ago was COVID. Everybody when you were buying this in COVID, you have still five years down the road made zero returns. You haven't made any money at all. And some have still lost money. And people might say, "Oh, well, if you kept dollar cost averaging in the valley, you know, you might you'd be up by now. You'd be up. You would you would have dollar cost averaged." Are you gonna feel comfortable dollar cost averaging into a fund that has done nothing in the last five years? I mean, that has no proven track record, has no the ARC Innovation ETF, mind you, they're charging a 75% expense ratio to underperform the index. People are like, "Oh, this is this is an innovation ETF. They're looking for innovation." They don't even know what they're looking for. Like, let's be real. They they have no methodology to what they're just basically throwing darts at a board and praying that they and they hit. I mean, they're just basically saying what people want to hear and charging a 75% expense ratio to do poorly. I would not advise anyone to ever invest in Arc Innovation because I think it's such a poor investment. It's done so bad. Everyone thought Kathy Wood was the GOAT. She was the next Warren Buffett. Turns out um, she was a wolf in sheep's clothing.

So, this brings me to the topic of my video, the best investment of all time, the ETF, the exchange traded fund. The most efficient wealth-building machine ever designed I've personally ever seen. An ETF takes all those lessons, growth, scalability, diversification, discipline, and packages them into one investment.

Here's why ETFs changed the game. Think about it. Low barrier to entry. You don't need a massive down payment like real estate. You can start with $10. Now, back in the day when I first started investing in Erade, it was $10 commission per purchase, per sale. Uh, so the the bar entry was higher, but it wasn't high. Uh, but you did have to I would recommend at that point saving up a thousand bucks before you bought in because why would you dollar cost $10 if you have a commission of $10? You wouldn't even, you'd be just breaking even. So it just doesn't work out. Um, unlike real estate, think about real estate for a minute. Like you need a 20% down payment to go buy a rental property. And so the bar to entry is you're going to have to sit there and save up 20% to go buy your rental property. That's going to take you anywhere from 2 to 5 years. That money is going to be sitting in cash because you can't have it being volatile because if it goes down, you can't buy your property when you want to. So you're now you're losing out on opportunity cost to buy your rental property. Put 20% down and to get rid of your PMI insurance. And it's just, it's so much harder to do.

You get instant diversification from day one. You own dozens and hundreds of companies. And people go, "Oh, well, the S&P 500, hundreds of companies. 560% of the top 10 companies uh is the holdings. You have 10 companies is 60% of the entire ETF." Well, then go buy an equal-weighted fund if that's what you want to do. But market cap has proven to win in the long term. Why? You are not uh, you're basically not trimming the flowers and watering the weeds. You're letting your flowers grow. You're letting your winners keep winning and run, and you're basically letting your losers slowly die off in the background. And that is why market cap is so big. I mean, as Nvidia is becoming a bigger and bigger piece of the market, it was becoming a bigger and bigger piece of my portfolio. It. I didn't own almost any Nvidia 3, 4 years ago and now it's 12% of my holdings. I just think about that. And now whatever Nvidia does, I'm going to ride along with it. If they go down, there will be a new company to take the top holding. That's just how it works. Market cap works. It does.

Uh, liquidity, buy or sell at any time. There's no waiting, no paperwork. Think about it. When you sell a house, you can't just sell it tomorrow and take your cash out and walk away. You have to go hire an agent. You have to go post it for sale. Um, and there's commission fees. You have to pay three to six percent in commission fees to sell a home. And brokers, there's so much work, so much paperwork. It's awful to go through the process of buying and selling a home. It's not fun for anybody. No one enjoys doing it. Uh, and with this, I could sell my ETF at any given moment. There's there's nothing stopping me. I just press the sell button. Cash is in my pocket tomorrow and then I can go buy whatever I want to do.

The ETF is the best investment in the world. Low costs, no brokers, no commissions, and ultra low expense ratios. Look at this fund right here. You're getting all this 50% returns last year, 50.12% returns last year, and an average of a 15% return all for the price of 0.04%. That's $4 per thousand or 10,000. I mean $4. You're paying someone $4 per 10K to beat the market, to just destroy the market. SCHG has done fantastic and you have to put zero thought in and you fork over four bucks. I mean, just think about that. That is annually. Yes. But over the long term, even if you have millions in this fund, you will never even have paid even a fraction of what you pay in that one commission for one property. These things are so, so cheap to own and they're so efficient. Like, you just simply cannot beat these. I mean, you cannot beat these funds. They're so good.

And they automatically rebalance. The ETF constantly self-cleanses itself. It removes underperformers and adds new winners without triggering taxable events for you. It essentially we own, we owned just think back to the VOO, they owned IBM was one of their top holdings in 2000. IBM, just think about that. When's the last time you heard of IBM doing anything? IBM isn't even a top 10 holding anymore. As IBM became a worse company, something came to replace it and they kick it out of the index if they want to. That is, you're always getting the best of the best and you're never even having to think about that. That is truly passive. Completely passive. You don't have to research, rebalance, monitor. The system does it for you for $4 per 10,000. I mean, really think about that. How incredible is that? You get all that for four bucks. You're getting a someone who's managing it and doing a fantastic job. And it's completely passive. Not like real estate. Real estate is not completely passive.

Compare that to real estate, which people often call the best investment of all time. Who calls it the best investment of all? Rich Dad Poor Dad. Robert Kiyosaki, creator of of Rich Dad Poor Dad. He thinks the best investment of all time is real estate. You can take leverage. You can buy these properties. Um, Donald Trump built a multibillionaire. He uh, owned all these uh, properties, used all this leverage, built up himself a nice property portfolio. Fantastic. That's awesome. With real estate, um, you need a massive down payment. Like we went over earlier, bar to entry is a lot harder. You're concentrated in one location. It requires constant management, debt, and time. Sure, it can be profitable, but it's active, leveraged, and risky.

Just think about that. Let's go over it real quick. You have one location. Now, okay, you save up your $150K for your $700,000 home, which is where I live as a starter home. Now, you have one. You don't have one investment class. You have one investment. You own one home, one property, one location. You're not diversified. You took leverage on that. You have to take leverage unless you have $700,000 sitting in cash. And at that point, I mean, that's why would you pay cash for a house anyways? But you must take debt to buy a home. Oh, debt is so risky. You can't do it to buy stocks. But take a $600,000 loan to buy a house. What's the What's the big deal? Oh, it's a primary residence or a rental property. Your your renters will pay it down for you. Well, if they stop paying the rent, what happens? That's when you default on the loan or you've got to cover that rent and your mortgage now. So now you have all that risk and debt and all that management. Think about it. The plumbing breaks. What do you got to do? You got to fix it. The fridge breaks. What do you got to do? You got to replace it. The garage stops working. There's on and on and on and on. Repairs, maintenance, and guess what? You have to always if if your tenants move out, you got to go do it. And if you don't, you got to you got to hire a property management company. And that just eats into your returns. Housing already has terrible returns. Average of 5%. The only thing that makes it so great is the leverage you're taking. And so you're taking this already low return asset and paying a management fee now to own it. So just throwing that out there. It's active. It's leveraged. It's risky.

ETFs are the opposite. It's liquid, diversified. I mean, seriously, you can put in a dollar and and you get 500 companies right away. It's low cost and passive. Yet, they've created more wealth for average investors than any other vehicle in modern history. Just think about it. Owning the S&P 500. How great, how great is that? Even Warren Buffett himself says when he dies, he wants his wife to own a simple S&P 500 ETF. Just write it. I mean, it it literally can be passed down to generation to generation because it's self-cleansing. It's always alternate. It's always changing. When I die, my kids can take over my ETF and it can just continue to perform and perform and perform because that's what it's done and it'll always continue to do because it always kicks out the losers and replaces it with the new winners of the age.

Now, with that being said, like I said earlier, the ARC Innovation Fund, there are bad ETFs. Not all ETFs are created equal. Some are gimmicky uh, disguised as innovation. Take ARC for example. High fee, actively managed ETF, chases trends instead of following a proven methodology, charges hefty expense ratios, and has massive underperformed, massively underperformed the market. Or consider, uh, I'm going to get some hate again because people hate when I talk about this, the covered call ETFs, which lure investors with these 12% yields. They sound great until you realize those payouts come at an expense of your long-term growth. I've done it time and time again. QYLD. This thing's been out for since 2013. [Music] One of the best performing bull runs of our history. I mean, I'd hate to see what this thing does in a bear market. One of our best bull runs in our history. This thing's down 31%. Just eroding every day. NAV erosion. NAV erosion. And yes, I'm not factoring in dividends. That's just price return. Let's factor in dividends. You have a 48% return versus 120% in 5 years. It's not an investment I'd like to own. These things charge 6% expense ratios which you're going to pay every year to get an underperforming asset. Why would people do that? That's like paying a high commission on a home that you know needs a lot of work and overpaying for it and it's going to appreciate, do terrible appreciation. It just doesn't make any sense. It's just why would you own it? I wouldn't pay 6% to own the underlying. Oh, but I'm getting income. No, I'm sorry. It's destroying capital share. It's it it produces no earnings. It produces nothing. These are just contracts that they're selling. I mean, covered call ETFs are awful if you're trying to accumulate wealth. They're literally selling away the upside of your investment for short-term income. Over time, the NAV erodes and you end up poor even at those juicy yields that keep coming in.

Now, people are like, "Oh, well, you take the income, you take the income." That's fantastic and you can take the income, but as you take that income and that NAV, some of them have been had a steadier NAV in bull runs and we'll see how they do in the long term, but you can take that income and you'll notice you have a negative 31% return on your price. So, you have lost on your price and you're just taking this income that's also eroding over time. Try this exercise for me. Go find a single covered call ETF that has outperformed the S&P for over a 10-year period. I know for a fact you will not find a single one. And if you do, drop it in the comments below. I'd love to hear about it.

I will say these products are ever changing and people are noticing these products are coming out day by day by day. And why would that be? Just think about it for a second. Why do we need all these products? I think it's awesome. They do offer a lot of options, but who's really making the money on these products? Is it the investor or is it the managers that are charging these high expense ratios giving you lower returns after tax returns that are awful? Um, why? Because they destroy the very little thing that makes ETFs powerful, compounding growth. It just, it just doesn't make any sense. Uh, so why ETFs will continue to create generational wealth? By ETFs or by design, ETFs are built to win. They automatically evolve, stay diversified, and minimize taxes, all while tracking the best performing companies on Earth. You're always going to be grabbing the best of the best because of the methodology that you're investing in. You only need one ETF. You can do three, four, five. Doesn't really matter. Just hold it, ride it, and just know that what you're investing in, you need to go with your methodology. Back test it. Look at why are these companies winning? If you understand why the companies are winning, you never fear downturns because you know what you hold is greater than everything else. If I'm owning Q uh, Q yield in a downturn, I already know that this is not the product I want to be owning in a downturn, locking my upside, not letting me recover with the market and just staying down. It's just not what I want.

They are quite literally the best investment I and I'm assuming you and the whole general public uh, public will have ever seen. In my personal opinion, all these people are trying to pick stocks, invest in single stocks, trying to beat alpha, they really should. The masses should be investing in ETFs. It just, you're going to have better returns over the long run. Not because they're exciting, but because they're engineered to quietly, consistently, and relentlessly build wealth over time. If you own a high-quality, growth-oriented ETF, you own innovation, scale, profitability, and resilience. The exact traits that define every legendary company and every great investment outcome. And the best part, you don't have to lift a finger. They're completely passive. You don't have to do anything. You can literally sit on your thumb for the next 10 years and guess what? You'll wake up, you'll probably have more money than you did 10 years ago. It's just how the nature of the beast works.

ETFs are the best, best investment I've ever seen. I hope you got value out of this. And I hope that no matter what you do, you're holding some form of ETFs in there. Like I said, this was a this was out of the book I'm writing. I hope you like it. I hope it brought you value. I hope it makes sense. Um, I do want to finish off with this isn't financial advice. This is purely for entertainment. Uh, but I do think this is a message that needs to be heard. So many people I I follow are talking about the next hot stock, writing, buying calls on Beyond Meat, and I made three 3,000% in a week. And I'm like, that's just, that's not sustainable over time. Realistically, the general population should be owning ETFs for the long haul and just riding dollar cost averaging and just sticking to it. You'll appreciate over time, I promise you. But thank you for checking out the video. I hope you enjoyed it. Uh, please like, comment, subscribe. I'd love to hear your feedback. And uh, we'll see you in the next video. I appreciate you stopping by.