At The Money: Deregulation Will Free Your Portfolio (June 18, 2026)
The new administration promised deregulation and ending red tape to unleash business and animal spirits. An ETF allows you to deploy capital to take advantage of that theme.
Full transcript below.
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About this week’s guest:
Michael Gayed is Portfolio Manager for Tactical Rotation Management, one of the sub-advisers to the Free Markets ETF, FMKT. He is also the founder of Lead-Lag Media, which houses The Lead-Lag Report and related media properties.
For more info, see:
Personal Bio
Professional website
LinkedIn
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At the Money: Deregulation and the Free Markets ETF with Michael Gayed
TRANSCRIPT: Deregulation Will Free Your Portfolio
Intro:
I’m a bad boy for breakin’ her heart
And I’m free, free fallin’
Yeah I’m free, free fallin’
BARRY RITHOLTZ: Exactly one year ago, the Free Markets ETF launched—ticker symbol FMKT—designed to invest in companies expected to benefit from deregulation and free-market dynamics in the second term of the Trump presidency. I was intrigued by the concept and wondered what it might look like in the second half of this term. To help us unpack all of this, let’s bring in Michael Gayed. He is the portfolio manager for tactical rotation management, one of the sub-advisors to the Free Markets ETF. So Michael, I was intrigued by this concept. What was the original insight behind FMKT? How was deregulation becoming an investible theme that perhaps markets were underpricing?
MICHAEL GAYED: Yeah, and it’s interesting. So when Trump got elected—I’ve got this large network of advisors that I talk to, 350 advisors that I regularly talk to, which is why my calendar’s always so jammed—and one of the advisors said to me, you know what, it would be a good investment idea, something that focuses on deregulation. And he was kind of saying it off the cuff. I give the guy credit for coming up with the idea. And it’s like, that’s actually an interesting idea. Deregulation arguably makes the time to market faster. It increases margins, it should benefit earnings from a fundamental perspective, it should increase competition. So all that sounds like an interesting thesis.
MICHAEL GAYED: So I called up three other firms—one, which is the advisor, Tidal Financial Group, and then two other RIAs as sub-advisors, people that I’ve known. I wanted to approach this more from a VC standpoint. My other funds I launched on my own. This one I wanted to actually have partners on, because it’s a very different way from my style of investing, which is more risk-on, risk-off historically. And came up with the idea and said, okay, let’s go after it. Now, when I really was thinking through the idea, it’s like, all right, Trump is making it very clear that he’s going to go from “for every new regulation you want, I want two cut”—it goes from that to “for every new regulation, I want 10 cut.” And he’s actually gone more aggressive on that since he was elected.
MICHAEL GAYED: So: come up with a fund idea, figure out what sectors, what industries benefit the most from deregulation. And it has to be active, because these executive orders come out and you don’t know what’s going to be deregulated next. So you’ve got to focus in on that as quickly as possible. Now, deregulation is a very interesting buzzword. You hear a lot of people in the media talking about deregulation as a big tailwind for the broader markets. And I do believe that if you look at why the US has outperformed Europe so much—it’s not just because of tech, it’s because we don’t have as much regulation as Europe does. Regulation is a stopping point, a friction that hurts earnings and time to market.
MICHAEL GAYED: So came up with the idea for Free Markets. It’s an active fund, stock-picking. A lot of the focus is around sectors like industrials, financials, cannabis, nuclear, anything in the aerospace part of the marketplace—not so much tech. Maybe we can touch on that. We believe that tech is probably going to be regulated, and maybe AI in particular will be regulated, especially from a regulatory perspective in our business, the investment advisory business. But out of the gate, we had some pretty strong performance. About a year ago we launched; we had 4,000 traded shares on day one. A lot of interest in that.
MICHAEL GAYED: We had really strong performance. We were a thousand basis points over the S&P at some point. That ended up being a blessing and a curse, because obviously nothing closes a sale like a chart. People started chasing the performance of FMKT, and then we had a drawdown as we got back to “AI is the only play in town.” And right now we’re kind of meandering, but I do believe that the deregulation theme is here to stay. Even if you get a Democrat as president next go-round, the reality is, industries that have less regulation should at least theoretically outperform.
BARRY RITHOLTZ: So let’s stay with that concept of deregulation. How do you define what sectors benefit from deregulation? And then how do you hone in on what companies within those sectors are going to be the biggest beneficiaries?
MICHAEL GAYED: So arguably it would be very hard to do either of those outside of using AI—which we actually built out: a whole workflow and AI screening process to figure out exactly that. Which sectors, which industries benefit, which individual companies are mentioning deregulation the most in earnings transcripts. So we’ve got multiple filters that are looking at valuation, that are looking at where SG&A is impacted by regulatory costs. And in some ways you can argue it’s obvious, right? It’s like, think about industry-wise, sector-wise, what has the most regulation. Banks, sure.
BARRY RITHOLTZ: Right, financials, no doubt.
MICHAEL GAYED: No doubt, right. Especially with Dodd-Frank—and then you’ve got to roll back Basel and all that, which is the deregulation side. Cannabis, right? So you saw Trump obviously trying to get ahead of the Democrats, you can argue, with some of this reclassification on the cannabis side. So we’ve got Tilray in the portfolio. Nuclear, right? Obviously, with all this AI build-out, you’re going to need energy. So you’ve got to make the time to market for getting nuclear plants up shorter, to meet the growing demand of speed of implementation of AI data centers. So it’s all the stuff that are bottlenecks—that’s the way to think about it.
MICHAEL GAYED: So we do a lot of screening, we do a lot of AI, we look at executive orders when they come out, we determine from the AI output, does this make sense? And then we’re just going granular—which companies, in theory, benefit the most. So a good example of that is Robinhood. Robinhood is kind of at the forefront of financial deregulation, very forward-thinking company. But then on top of that, on the crypto side, they’re big players. So you hit on all areas of the deregulatory focus from the Trump administration, which, again, is not going to go away. It’s hard, once you deregulate something, to re-regulate it—at least that quickly.
BARRY RITHOLTZ: Unless there’s a crisis, it’s almost impossible. FMKT’s mandate says at least 80% of assets go into companies expected to benefit from regulatory shifts. What’s the remaining 20%?
MICHAEL GAYED: Yeah. So, arguably, it goes to how do you define what benefits from deregulation. But 5% of the portfolio can go into Bitcoin and Ethereum—that’s listed in the prospectus. Now, that was done on purpose—
BARRY RITHOLTZ: Any crypto, or just those two?
MICHAEL GAYED: Just those two. And we can go into gold as well. And if you’re talking about what a free market is—which is unencumbered by regulation—those are, almost by definition, a free marketplace, right? When it comes to the crypto space and gold in particular. So we can do a little bit, and we’ve gone into that in the past. Obviously momentum has been weak, so we’ve gotten out of it—part of the active nature of it, trying to avoid these big declines in those positions.
MICHAEL GAYED: But that’s—from almost any perspective, in order to be considered a theme, you have to have that 80% threshold. So part of it’s ironically a regulatory requirement: to say that if you’re going to be focused on a particular theme, you’ve got to have at least 80% of your portfolio in that. The reality is, every single holding to some extent has some kind of deregulation tie into it. Some of it’s direct, some of it’s more indirect. But there’s always a justification for why we’re positioning in particular names.
BARRY RITHOLTZ: So the fund kind of sits at the intersection of markets and politics. And I’ve long cautioned against allowing partisan politics to influence investing. You are really trying to walk a line where it’s not a political-expression ETF, but rather a policy-driven theme. How do you balance that? How do you keep this from becoming a darling of one side or the other?
MICHAEL GAYED: Yeah. It’s like, politics goes into policy, policy goes into profits, right? So it’s really more about the profit side, the fundamental aspect of it. We’ve gotten that question before—it’s like, all right, so you end up having a Democrat come in place, and it seems like it’s a Republican fund. I’d argue it’s not, because even under a Democratic regime, there will be some sectors that will be deregulated that the Democrats like—like alternative energy—in which case the holdings change. Because now that’s where the focus on deregulation might be.
BARRY RITHOLTZ: Right. Solar, wind—solar is more a Democrat issue than a Republican issue.
MICHAEL GAYED: Exactly. And I go back to: well, if that’s the case, then yeah, you’re going to have deregulation there, and then the holdings shift. Energy is a big part of the theme behind FMKT, which obviously makes sense, because Trump is so focused on releasing as much domestic oil as possible and removing frictions there. So it benefits from that. But then it’s just a shift. You want to follow the policy, because following the policy is where profits end up coming from, and policy has winners and losers. And often the winners are things which are favored, which tend to be things which will get to market faster—which is exactly what deregulation is. So I don’t view it as a political play. I think it’s just the nature of the beast: you will have certain parties that will favor certain sectors and certain industries. How do they do it? By either providing funding directly, or by making for less friction for those companies.
BARRY RITHOLTZ: That makes a lot of sense. It also means that trying to come up with some rational benchmark is almost impossible. How do you figure out what your frame of reference is? The S&P 500 doesn’t seem right. What do you use for a benchmark?
MICHAEL GAYED: Yeah. And it’s interesting. We have to have a benchmark from a regulatory perspective, because that’s how regulators think about these things. For us, it’s more about the entire landscape of the equity universe—is the fund outperforming or not? Now, again, we outperform the S&P strongly. The S&P, to your point, is not really a proper benchmark for a Free Markets type of fund, because the S&P now, I’d argue, is an AI index. I’m sorry, but the S&P 500 is no longer as diversified as people think it is. It is a thematic fund.
BARRY RITHOLTZ: Under large-cap growth.
MICHAEL GAYED: Large-cap growth is what it is. It’s basically AI. I mean, that’s—
BARRY RITHOLTZ: It’s AI, it’s semiconductors, it’s software—go down the whole list.
MICHAEL GAYED: The whole thing, right. Exactly right. So I think anybody that’s looking at FMKT is looking at it from the standpoint that they believe in the thesis. And a lot of small-business owners believe that deregulation is more important than taxes, because that impacts their day-to-day activity and working. And I go back to: finding a benchmark is more a function of your own personal financial requirements. It’s not about, are you beating the S&P? Does this fit your objectives from a risk-return perspective? Does it make the journey from an investment perspective better?
MICHAEL GAYED: And a lot of the Free Markets positions are parts of the marketplace that the market has not rewarded. There is a value tilt, interestingly enough, when you look at the holdings of FMKT. Sure, there are some of these more speculative positions that we have that you almost have to have a position in, like Archer and Joby. I know your colleague Josh Brown talks about Joby quite a bit, and Archer as well. Those are classic deregulation plays, because of the focus around flying taxis, basically, and deregulation as far as the FAA side goes. But there’s a value tilt. So if there’s an environment that favors value, it’s going to favor Free Markets anyway.
BARRY RITHOLTZ: So let’s talk a little bit about some of the most recent holdings I was able to look up. Some are pretty obvious—you mentioned Robinhood, KeyCorp, Citizens Financial, even Blackstone. Some of them, I had to scratch my head: Palo Alto Networks, ADM, Oracle. The financials are obvious because of the deregulation. Oracle seems more like a political “hey, Larry Ellison is a big buddy of Trump”—his son is in the midst of the whole mayhem with Viacom and all of that. How do you distinguish what’s the beneficiary of deregulation and what’s politically favored? How do you separate those?
MICHAEL GAYED: Well, to some extent, if you’re politically favored, you’re going to try to put deregulation in place, and the way that looks is in the speed with which government contracts take place. So—
BARRY RITHOLTZ: I was thinking more along the lines of M&A and antitrust rules.
MICHAEL GAYED: That as well, for sure. In the case of an Oracle, there’s something called FedRAMP—Federal Risk and Authorization Management Program—which, without getting too deep into it, is a way of getting approvals to get a government contract, to sort of be in a pipeline for an RFP. Last year, the Trump administration did something that basically removed a lot of that friction, so it wouldn’t take as long to apply for a government contract—which directly impacts Oracle. That’s the kind of deregulation which is important, because it’s all about speed to market.
BARRY RITHOLTZ: So let’s talk about Palantir and Archer Daniels—similar situation?
MICHAEL GAYED: There’s an element of that as well. Again, AI companies tend to not be the strongest deregulation plays, but Palantir does have an aspect of that, because, again, speed to market for them is around government contracts for defense. So it was never a major, major holding in the fund, but it made sense to us to have some kind of exposure to it. And then on the energy front, and Palo Alto—it’s like, anything that’s tied to AI has to be deregulated from a bottleneck perspective, which is energy, electricity, utilities. So there is a reasoning behind data-center permitting and utility usage, and the deregulation that comes from that. I keep going back to this idea that what you own matters a lot less than how much you own of it.
MICHAEL GAYED: So a large part of the active nature of FMKT is, yes, we’re being thematic on deregulation, but we’re also actively trying to see, is there momentum in this or that deregulation play, to weight that heavier. So a lot of the holdings in the top 10 are not based on how strong the deregulation fit may be. It could be just: there’s a deregulation fit and there’s strong momentum—we want to be there.
BARRY RITHOLTZ: Gotcha. That makes a lot of sense. So we talked about financials, technology—healthcare is another deregulation issue. But I want to ask you about the defense sector and energy. When the war with Iran began, how does that affect how you look at the portfolio, and what is a potential beneficiary of this quicker, more frictionless, deregulatory environment?
MICHAEL GAYED: Yeah. When the war took place—we meet once a week, me and the other portfolio managers—when the war took place, we said, all right, we’ve got to get some defense companies in here, and then figure out which defense companies benefit the most from deregulation. And they’re kind of in bed with each other, government and defense, obviously. So it’s all about speed. If you’re going to go to war, you’d better have faster speed of bringing things to market. So it hasn’t been a major, major thematic play, but arguably it goes back to: if it’s about government contracts and it’s about speed, then deregulation is about removing the friction to get something to the government’s agencies’ hands to get approved.
MICHAEL GAYED: It’s interesting—I don’t view Free Markets as a geopolitical play. I view it more as, if you believe that deregulation is how you have more profits, then you’re simply trying to figure out which companies benefit from that the most. And arguably there’s more art than science to that. But it’s not as catalyst-driven as much as it’s more about executive orders that are taking place.
BARRY RITHOLTZ: All right, final question. How do you separate genuine deregulation tailwinds from talking points and narrative? More specifically, how do you distinguish a company that’s talking about receiving regulatory relief from one whose margins or growth rates are actually improving?
MICHAEL GAYED: Yeah. And that goes back to it’s art versus science. To some extent, there are some very clear cause-and-effects on the deregulation side impacting certain companies. But to your point, a lot of it is going to be analyzing SG&A and fundamental line items, looking at and seeing what CEOs and executives are saying on earnings transcripts. One of the filters is, how many times is deregulation mentioned by various people at companies as a driving factor—because they’re not going to say it unless it’s somewhat true, you would think.
MICHAEL GAYED: So it is not as clear-cut, which is why, again, it needs to be active. It’s not something you can quantitatively say, this is the highest deregulation score. So a lot of this comes with judgment—which is why it’s good that I have a team, not just me, that’s coming up with these allocations, and just trying to be fast in terms of figuring out where to position. This has been a very odd environment, right? Because Trump’s been talking about deregulation, a lot of people were excited about deregulation, but deregulation has a lag. So any executive orders from last year, you’ll start to maybe see this year showing up in the actual earnings. The market, I think, is still largely undervaluing the impact of deregulation. And if that’s the case, then toward the end of the year you have a re-rating, and then you start seeing it filter through in the bull market, just as a rotation away from this AI-focused passive bid.
BARRY RITHOLTZ: Really interesting. So to wrap up: if you’re intrigued by the concept of deregulation, of reduction of frictions, of more opportunity for companies to throw off the yoke of big government—I say as a New York left-coaster—you can actually get exposure to that through active ETFs like Free Markets. I’m Barry Ritholtz. You are listening to Bloomberg’s At the Money.
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