Dave Nadig’s 16 Pages of Zine, 15 Minutes of Truth

Dave Nadig, President & Director of Research, sat down with attendees at the ETF Beach House at Future Proof Citywide to talk his zine that included musings on the state of the industry, the trustless landscape advisors must increasingly navigate, and more. Below is the transcript of that conversation. 

2026 Market Structure Is In Shambles

All right. Thanks everybody for coming. My name is Dave Nadig. I'm the president here at ETF.com, who does not sanction anything that's going to happen in the next 15 minutes. These are my personal thoughts from my personal zine that I send around. So what is a zine? It's 16 pages of silliness strapped by four pages of cardboard. I'm going to walk through some thoughts on the ETF industry and particularly market structure and how we're not getting that right. And I'm going to take about 15 minutes to do this. So let's go ahead and open this up. I don't have any slides. I just have the zine. 

So on the inside back cover this is the original quote from Chesterton's fence. You may have heard this phrase. The idea of Chesterton's fence is that if you walk down the road and you see a gate across the road, somebody probably put it there for a reason, and therefore bulldozing the gate down because it's in your way should be done with caution. You should take some time to understand why. 

In market structure right now, we have given up on this idea entirely. We are simply plowing over pieces of market structure, plowing over pieces of jurisprudence in the financial services industry i.e. who gets sued for what? Who gets a pardon? Who doesn't? We're just running through all that stuff ripshod and I think that that's a bit of a problem. The reason it's a problem is that reality is compromised, page two. 

The data, the rules, the systems that we rely on are no longer what they used to be. And that's not — this is not a political statement. I don't care who you want to vote for. This has nothing to do with that. This has been a problem for a decade. You can blame anybody what you want, but the reality is the institutions and systems we rely on to keep our clients safe, to keep our own money safe, are now in question.

Next spread here is "Spy versus Spy", the old thing from Mad Magazine. And I think that it's where we are right now. We have got white hats and black hats in the ETF industry. Some folks are on your side, some folks are trying to get your money. Those are the white hats and the black hats. Now, I want to be really clear here. Just because somebody has a product I think is a bad product does not mean I think they're a bad person, okay? And we need to separate that out here. There are thousands and thousands of financial products out there, and some of them are terrible, but that does not mean the people who made them are evil. So we can put that to the side.

But it does mean that you, as an advisor or an investor, have to have an opinion on this. You need to believe that the people you're working with are at least saying they're on your side. You need to at least have that kind of proof. Now, a lot of this is squishy narrative stuff. This is not about having a due diligence process that correctly checks the white hat box. It's really about what kinds of decisions do you want to make. 

ETF Efficiency Doesn’t Guarantee Strategy Soundness

I want to do a little bit of looking at where we came from. This is the little set of charts you're never going to be able to read on, reproduced out of my photocopier at home with toner running out. But we've got $13 trillion in assets, 5,000 ETFs, and so many more coming. The share class stuff that's coming, we could easily have another thousand tickers by the end of this year if everybody really gets rolling on this stuff. That makes your due diligence problem harder and harder. 

The other thing I think we have to pay attention to is issues like concentration, diversification. There are real passive effects happening in the markets. As somebody who spent my entire career on the index side, I want to acknowledge there are real impacts on the indexation of financial wealth. And this chart here from Todd Sohn at Strategas sort of points out that maybe this time it's different. We've never had this kind of concentration and return pattern in the last 25 years. The tide to pull the numbers. Those are real issues. And that's before we get to any of the geopolitical stuff. 

Alright, so what do you do with this as somebody who's trying to pick ETFs? On this page, you've got Futurama, one of my favorite comics of all time, animes of all time. There are three truths that I think we need to know about the ETF market. Yes, if you're investing, it should probably be through an ETF. It's the most efficient thing we've come up with. But the ETF itself is no guarantee of anything. It's just a very, very good shell, and the things you put in that shell can be absolute garbage. And there's nothing about the ETF infrastructure that keeps your sucky idea from being a trade. Nothing, nothing will prevent that, so that puts it right back on you. 

So the trash that's incoming. If we go to Oscar the Grouch here, the stuff that we're going to see is all going to be in this wave of what I call degen gamblification of investing. Most of this stuff, you'll be very, very easy to keep away from. Like you're not going to have a problem finding which stuff is which, but it's the actual gambling stuff. Obviously, the event contracts business, it's meme coins, it's insider trading funds, which there are now about 30 of that are all based on the idea that somebody's got information you don't have, and it's the AI slop. Corgi's filed over I think it's 184 now? 200 ETFs they have filed because they are a Y Combinator-backed startup, so they can file anything they want because those filing fees came way down a few years ago. So Corgi could very easily just come to market with a few hundred products in a day. End of the story — if your investment thesis involves a meme, you don't have an investment thesis.

Problematic Spaces in ETFs

Let's talk about three specific areas where I think we got real problems. There are a lot of income oriented products out there arguing for your dollars right now. Most of them shouldn't get it. Most of the high income, options-based products that you read about are garbage. Not because they don't do exactly what they say on the tin, but because the tax implications are wild.

You have no idea how you're going to get taxed if you own one of these things. You could have owned MSTY all year long in 2024, and in 2025, you would have gotten 100% the opposite tax treatment they told you you were going to get all year. You went from 100% Return of Capital to 100% current income. No advisor ever wants to have that conversation with their client, right? These products are not for you. It doesn't mean all equity income is bad: products like JEPI from JP Morgan, like there are rational ways to approach taking equities and getting some income out of it. But 2x anything with an options overlay is never going to be it. 

Second thing private equity, private credit. We're going to have a session on here on this later. For the most part I want you to understand I want you to ask the question why you're getting access, because the answer is never because you're the smartest and earliest money when it comes to something that's privately held. Now, maybe your firm does have access to crazy awesome private equity stuff that I don't know about. God bless you. The stuff that's coming in the ETF wrapper is deeply problematic. 

We've already had a sort of blow up in the making with XOVR and their SpaceX position. We'll see how that works out. The SEC is clearly not paying any attention at all, so we'll just see where it ends up. The private credit stuff luckily has been fairly low boil in the ETF market, but I wouldn't necessarily count on that.

There really isn't a Blue Owl in the making. There's not an immediate blow up you can point to and say, “Aha, these guys are going to get liquidity restricted," but it's going to happen. It's just a question of when and where. So I'd be very skeptical of that. It's not that all private credit is bad, but most of it's probably not useful for your clients.

Degen leverage, just say no to all of this stuff. I put up this little chart. You probably can't read of the 2x leveraged QBTX, which is D-Wave. Fantastic company doing amazing stuff in quantum computing. I'm obsessed with the company. The 2x levered fund went bananas, right? The rebalancing that has to happen to these things make them both the most incredible wealth creators and wealth destroyers I think the world has ever seen. It's like, I don't even know, it's Shiva destroyer of worlds or something. 

Post-Modern Due Diligence

So what do you do with all this post-modern due diligence? What do you actually do in a world where you don't know who to trust, where the products are coming out faster than you can keep up with? I would point people to something very nerdy if you turn it sideways, there's this book by Ian Gilchrist called The Matter with Things, which is a reinvestigation of lateralism in your brain. And the point of that is, the problem with your left and right brain isn't that they do different things, they just pay attention differently.

And we're very used to paying attention very narrowly in finance. Right? We do due diligence. We read the 10-K, we go through all the stats we're supposed to go through, and I think we lose the big picture. Animals are great at this. Every one of these birds out there can keep track of the predator and the thing that's on the ground that they want to eat at the exact same time.

The average Future Proofer, pardon my stupid sketch of myself isn't going to be doing that. We're going to be focused on whatever sort of running in front of us. So due diligence means stepping back, asking bigger questions like, “Who is this firm? Why are they selling me to this, selling me this? Why am I reading this now?” Those kinds of questions are the important ones. 

Next page on attention. What this means is you've got to think a little bit less with your head and a little bit more with your heart. And I know that that sounds lefty, crunchy feely, but what I mean is you're going to have to develop actual trust. You're not going to be able to say, “Oh, well, Schwab says, this fund's okay. I can count on Schwab to have done that for me." No, you're going to have to say, “Okay, what is this fund with this guy who runs this quant model? Oh, that's a firm I've never heard of. Who's the guy?" Go talk to him. Find the stuff he did online. 

You're going to have to develop real trust in those processes. Because if something goes wrong and things tend to go wrong once in a while, you're the one on the hook for it. And none of the things that you used to rely on, like shame or enforcement or the, you know, people not being able to get another job. None of those things matter. None of them matter anymore. We've already seen that, right? So actual humanity and actual discernment about who is on your side and who is not is really important.

I put the Lucy in the football thing at the bottom, because I feel like that's the world advisors are in right now. We're constantly trying to trust that that football is going to stay there when we kick it down the field for our clients. And increasingly, this industry is trying to pick up that football right before you get there. So that's you. You got to be careful of that. 

Third thing here on the due diligence front would be semantic war. I think everybody realizes that whatever they used to believe about the news, and reporters, and financial journalism, and all that stuff, whether you love it or hate it, it's not the same as it once was. So I would ask that you look at the people you follow and ask how much you trust them. We've talked a bunch already on the stage about AI and how it's changed writing about finance. There are people who used to publish 500 words who publish 5,000 words. Guess what? A lot of that's coming from AI. It's not coming from them.

You are the one who has to discern where in that semantic warfare between moving the Overton Window towards things that you used to think were impossible, like, say, sports betting in a fund are now. Oh, okay. We could do that, right? We've shifted the window of what's acceptable so far that you're the only one who gets to decide whether it's gone too far.

AI, Identity, and the Ravine

A couple of last quick questions here. Speaking of AI, on the second to last spread here, I don't think AI is either the best thing in the world or the thing that's going to destroy humanity. I think what it mostly is, is going to be an accelerant towards people really thinking about meaning, right? That particularly wealthy people like your clients in an age of AI, a lot of the things that used to give people meaning, like "I read a lot, I pay a lot of attention to this conversation, I'm a major participant in this version of a Twitter conversation." All that stuff's gone away. So I think in this age of like either AI acceleration or everybody hates it and we're arguing about it, having a sense of actual purpose — like, what are you actually doing? Why do your clients actually care? Why are they coming to you? Those are the things that are going to matter because the AI stuff is very unpredictable. 

And then the last little panel here comes from Samara Cohen at Blackrock — thank you —which is you're going to have to get really good at answering this question about what is real. Like, what do you actually believe, whether it's individual data points, whether it's somebody who comes and makes a pitch in your office like that should always be the first question: what is actually real?

Last page on the ravine. There's some old zines where I've been writing about this forever, but I do believe that we are sort of in the middle of this institutional collapse that people like Neil Howe or Ben Hunt have been predicting for a number of years. I think you can see it in the institutional decay happening around us. Actual institutions are just disappearing, like we used to have USAID. Maybe we needed it, maybe we don't. But it doesn't exist anymore. We're going to do that over and over again, and we're not going to slow that down with an election. I think this is a trend we're going to see. We're going to dismantle a lot of institutions and then we have to rebuild.

So what does that mean for us as humans and investors and people trying to deal with our families and clients? I think what it means is we have to relentlessly think forward, because it's so easy to get caught up in the finger pointing backwards and saying, “But we used to rely on that," or “We dismantled this," or "I thought the SEC was going to handle that," or “Why isn't FINRA going nuts on that?” None of that matters. There is only building forward from here. 

So if you see a gap, if you see something in the industry, if you see something in your client's lives that you think is a mismatch for the reality, it's on us. It's on you to actually get in front of them and say, “No, we got to think forward. We can't think about what we lost. We've got to think about what we're building." So that's it for me. Thanks, everybody.