Schwartz rejects the claim that passive flows inherently inflate markets. He argues that each passive purchase has a seller, style-flow evidence does not show a simple flight from value into expensive growth, and the clearest effect of indexing is lower fees retained by investors.

Every passive buyer still transacts with a seller
Style flows do not support a simple passive-bubble narrative
Active growth products also experienced outflows
Fee compression transfers money from managers to investors
More of the market could be indexed

“For every buyer there's a seller. So I just see fees coming out of the system.”
Jeremy Schwartz · 17:46

“I see it as a big win for investors are keeping the fees.”
Jeremy Schwartz · 18:45

#indexing#passive investing#fees#price discovery

Myth Buster46:12

How Crisis Losses Can Distort the CAPE Ratio

Schwartz argues that aggregate index earnings can be distorted when losses from a few collapsed companies offset profits from the rest of the index dollar for dollar. He respects CAPE as a long-term valuation framework but warns that accounting changes and crisis-era write-downs can impair its usefulness as a market-timing signal.

A few firms produced losses large enough to erase aggregate S&P earnings
Index-level P/E calculations can become misleading near zero earnings
Accounting rules changed the treatment of crisis losses
CAPE remained bearish soon after the 2009 rebound
Valuation measures may forecast returns better than entry and exit points

“He thinks that it has been one of the better predictors of long term returns. He thinks the earnings numbers are biased and that is…”
Jeremy Schwartz · 46:52

“in fact, you're you're better off buying when earnings are worth their worst than buying when the earnings are worth the better best.”
Jeremy Schwartz · 51:05

#cape ratio#accounting#valuation#market timing

Hot Take· 2

Hot Take54:22

Negative Real Bond Yields Are a Price Paid for Safety

Schwartz questions the rationality of locking in negative inflation-adjusted government-bond returns unless investors expect sustained deflation. He interprets Europe's negative real yields primarily as evidence of extreme risk aversion, distrust of banks, and monetary policy that penalizes cash holdings.

Negative TIPS yields guarantee reduced purchasing power if held to maturity
Deflation expectations could theoretically justify negative real yields
Europe retained aggressive monetary policy after US normalization began
Negative bank rates can make government bonds relatively attractive
Risk aversion may explain pricing better than return seeking

“You would say, I'm going to give the US government a hundred dollars and get back ninety dollars after inflation ten years later”
Jeremy Schwartz · 55:33

“It's just a sign of risk aversion that you don't trust money in the banks”
Jeremy Schwartz · 57:11

#bonds#real yields#deflation#risk aversion

Hot Take1:04:43

The Next ETF Disruption May Target High-Fee Alternatives

Schwartz predicts that investment technology will move beyond broad beta and increasingly challenge expensive active and alternative strategies. Wisdom Tree expected more long-short and alternative exposures to enter transparent public vehicles, while acknowledging that private equity cannot simply be placed inside an ETF.

Broad beta dominated the first phase of ETF growth
Technology will increasingly combine with investment strategy
High-fee alternatives remain open to disruption
Long-short strategies can move into public ETF structures
Private-market assets pose liquidity and structural limits

“the next ten years is gonna be all about how you marry technology increasingly with investments”
Jeremy Schwartz · 1:05:06

“We're doing more along short, more alternatives. We're gonna go after that too.”
Jeremy Schwartz · 1:06:23

#etfs#alternatives#technology#hedge funds

Explainer· 2

Explainer20:07

How Buybacks Changed the Meaning of Dividend Yield

Schwartz connects stock valuation to corporate cash flows and explains why US dividend payout ratios declined as stock options and buybacks became more common. A low dividend yield can understate total shareholder distributions when net buybacks reduce shares outstanding and support future dividend growth.

Dividends originate in corporate earnings
Stock options discourage dividends because payouts lower share prices
Buybacks now rival dividends as a use of corporate cash
Net buybacks reduce shares outstanding
Earnings-weighted indexes can capture firms favoring buybacks over dividends

“assets are president value of cash flows for stocks? Cash flows are dividends. Where do we do is come from? They come from earnings.”
Jeremy Schwartz · 20:40

“People are doing as much buybacks as dividends today.”
Jeremy Schwartz · 22:30

#dividends#buybacks#cash flow#valuation

Explainer33:39

Two Ways to Seek Fixed-Income Alpha Without Abandoning Rules

Schwartz outlines rules-based bond strategies that tilt a traditional aggregate index away from low-yield, high-duration Treasuries and toward constrained credit exposure. He also describes screening high-yield issuers for negative free cash flow so the most indebted borrowers do not automatically receive the largest weights.

Treasury issuance can dominate conventional bond indexes
Yield enhancement can tilt toward credit under duration constraints
Constraints limit excessive credit and interest-rate risk
Debt-weighted indexes reward the largest borrowers
Free-cash-flow screens can improve bond quality

“it tilts to credit in away from treasuries and a constrained fashion.”
Jeremy Schwartz · 34:35

“screening out bonds with negative free cash flow, not just issuing market cap, which gives the biggest way to the biggest indebted issuer”
Jeremy Schwartz · 34:59

#fixed income#bonds#credit#free cash flow

Story· 2

Story02:32

How Wisdom Tree Came Within Weeks of Missing Payroll

Schwartz recounts the existential pressure Wisdom Tree faced during the 2008-09 financial crisis. Assets bottomed below $3 billion, the firm raised capital in March 2009, and AIG unexpectedly became one of its investors before the market recovery began.

The financial crisis threatened Wisdom Tree's survival
Schwartz watched the crash while on an Asian cruise
The firm was close to being unable to make payroll
A March 2009 capital raise helped bridge the crisis
Assets later grew to roughly $45 billion

“Like we were weeks away from not being able to make payroll?”
Barry Ritholtz · 04:33

“We definitely had you know, a capital raising in March of O nine. Um, and that put us on.”
Jeremy Schwartz · 04:39

#financial crisis#wisdom tree#startups#asset management

Story06:42

The Wharton Job That Redirected Schwartz's Career

Schwartz describes meeting Jeremy Siegel after the technology bubble and abandoning a planned semester in Australia to work with him. Exposure to Siegel's research, conversations, and doubts about conventional indexing led directly to Schwartz's long-term work in investment research.

Schwartz met Siegel shortly after the technology bubble
He took two years away from school to work on Siegel's books
He helped research alternatives to conventional market indexing
The relationship created his path to Wisdom Tree

“Never went to Australia. Took off like two years of school to work for him full time on his books.”
Jeremy Schwartz · 07:53

“I just dedicated really my life after that towards working with him”
Jeremy Schwartz · 08:01

#mentorship#wharton#jeremy siegel#career

Q&A· 1

Q&A30:43

Why Performance-Linked ETF Fees Are Hard to Implement

Schwartz likes the consumer logic of charging less when a manager fails to outperform but identifies a structural obstacle in public funds. Investors enter and leave at different times, making it difficult to align performance periods, fee calculations, and incentives fairly inside an ETF wrapper.

Performance-linked fees align conceptually with consumer interests
Underperformance should reduce what the investor pays
Public vehicles contain investors with different holding periods
Timing who pays which fee is operationally difficult
Separate accounts make alignment easier than ETFs

“If you're manager, you're trying to outperform. Your manager doesn't outperform, you should pay less.”
Jeremy Schwartz · 31:08

“Properly timing up who's paying what when is not a straightforward proposition in the public vehicle like ETFs”
Jeremy Schwartz · 31:37

#fees#etfs#incentives#fund management

Tool· 1

Tool26:25

The Digital Tools Financial Advisors Can No Longer Ignore

Schwartz explains Wisdom Tree's investment in Advisor Engine and its portfolio-construction services for financial professionals. The tools digitize onboarding, account opening, portfolio analytics, factor analysis, stress testing, and portfolio mapping while preserving the human-advisor model.

Advisor Engine provides a full practice-technology stack
Digital onboarding and account opening are becoming standard
Portfolio tools can expose factor risks and stress scenarios
Clients of all ages increasingly expect digital access
Technology complements advisors rather than merely replacing them

“It's a very digitizing your investment practice and that's gonna be an increasing part of what we do over time.”
Jeremy Schwartz · 27:06

“if you're still in the paper world, clients are going to go to firms that have the digital offerings.”
Jeremy Schwartz · 30:27

#financial advisors#technology#portfolio tools#robo advisors

Takeaway· 2

Takeaway59:25

Why Developing People Can Outrank Career Success

Schwartz says Siegel regarded his long-term influence on a younger colleague as especially rewarding despite commercial success from books and investments. Schwartz wants to reproduce that effect by trusting talented people early, giving them meaningful responsibility, and remaining open to being challenged.

Mentorship can be more rewarding than conventional success
Siegel's influence became Schwartz's model for leadership
Wisdom Tree's founders trusted Schwartz with research leadership at 27
Young talent benefits from responsibility as well as instruction
Mentees must actively embrace and push the relationship

“the impact he had on me over time was like just more even more rewarding. So I hope to have that influence on people who…”
Jeremy Schwartz · 59:55

“the trust and confidence in just seeing talent and trying to help you put them in a position to do well.”
Jeremy Schwartz · 1:00:39

#mentorship#leadership#talent development

Takeaway1:11:30

The 2008 Lesson Dividend Investors Cannot Ignore

Schwartz says the financial crisis exposed a weakness in relying on historical dividend resilience without controlling sector exposure. Financial companies were unusually prominent among dividend payers, so apparently attractive value and income signals concentrated investors in the epicenter of the collapse.

Dividend strategies had historically offered downside resilience
Financial companies paid a large share of dividends before 2008
The crisis was atypical for dividend-based downside protection
Value signals can conceal sector concentration
Future products need explicit sector-risk controls

“I think I learned more about sector concentration risk and just the risk of overly becoming concentrate in sectors despite what their value signals might…”
Jeremy Schwartz · 1:11:56

“how can you control for sectors in a way that you don't get overloaded in those times of crisis.”
Jeremy Schwartz · 1:12:13

#dividends#sector risk#financial crisis#portfolio risk

Frameworks in this episode

Currency Exposure Separation

ETF Option-Premium Portfolio Review

Fundamental Rebalancing Discipline

Insights & moments

⚡Myth Buster· 2

Why Passive Investing Is Not Destroying Price Discovery