Ep 28: $AAPL Stock Impacts & Tools to Compare ETFs ($VOO vs $VTI)

Jess: Okay, I have a stock question.

Jessie: We know that Apple is one of the biggest stocks or companies in the S&P 500.

Jess: And if the S&P 500 is what we use to measure the stock market, how is Apple down 8% since the beginning of the year and the S&P 500 is up 8% since the beginning of the year? Like, make that make sense.

Jessie: Oh, Jesse, my, my protégé.

Jess: What a beautiful question.

Jessie: Way to break down market cap.

Jess: I love how we're breaking in all of the episodes together right now.

Jessie: We should even compare to ETFs or exchange-traded funds.

Jess: Way to break down how the biggest stocks can have an impact on the market because that changes.

Jessie: Everyone's asking about VTI and VOO.

Jess: Let's compare those.

Jessie: Vanguard Total Stock Market Index and Vanguard S&P 500 index funds.

Jess: So, yes, let's do it.

Jessie: Down the rabbit hole we go.

Jess: You're listening to Market MakeHer, the self-directed investing education podcast that demystifies the stock market in the most outside-of-the-box ways possible.

Jessie: Welcome to the circus.

Jess: I'm Jess Inskip, here to apply my 15 years of experience to make it all make sense.

Jessie: And I'm Jesse Nguyen, the beginner investor learning alongside you, stopping Jess from going into financial jargon land and asking all the questions you want to know and then some.

Jess: Okay, Jess, one of the first things that you taught me was about how all the indices or indexes are not the same.

Jessie: Some are market cap weighted and others are price weighted.

Jess: They are those elite clubs with specific criteria required in order to be a part of that index.

Jessie: Yes, it is.

Jess: I'm like a proud mom right now.

Jessie: Okay, so the S&P 500, that is the index with 500 of the biggest companies and it is market cap weighted, which means that the stocks, aka companies with the literal highest dollar market value, have a huge piece of the pie.

Jess: This is why the bigger ones can move the market way more than the others, right? Yes.

Jessie: So, the largest company was Apple and it's been dethroned by Microsoft.

Jess: And it always comes back to AI.

Jessie: It's really the themes that are shifting the market and that's why we come up with our investment thesis at the beginning of the year and see how it all plays out.

Jess: So the bigger companies change how? Explain market cap again for me.

Jessie: I want to understand how Apple is down so much this year so far, while the market is up looking at the S&P 500 indice.

Jess: All right, so market cap is the total value of all of the company's shares of stock.

Jessie: Like you literally take the amount of shares or stock outstanding and available on the market.

Jess: So everything that could be traded on the market, they only issue a certain amount of shares and you multiply that certain amount of shares by the market price.

Jessie: And since the market price changes constantly, the market cap can change constantly.

Jess: So example, this is as of today, what is today? I don't even know, everything merges together.

Jessie: March 6th, 2024.

Jess: Apple has 15.44 billion shares, a lot.

Jessie: And they closed at around 169, so 170.

Jess: So if you take that 15.44 billion shares and multiply it by their last price, their closing price, because the market closes up for, which is 169.12, that gives you a market cap of 2.61 trillion.

Jessie: But Microsoft, mighty Microsoft, they had an incredible year because JGBT, that's a craze.

Jess: Frenzy.

Jessie: I love it.

Jess: I can't survive without it.

Jessie: We use it every day.

Jess: I don't think we'd be able to do our podcast without it.

Jessie: It's just the two of us.

Jess: Not once a week.

Jessie: That's for sure.

Jess: But that's what made it the most valuable company in the S&P 500.

Jessie: And now their market cap is almost 3 trillion.

Jess: It's 2.9999, like the interest rate on my mortgage.

Jessie: So basically, the bigger total dollar value, that's how you evaluate the company, what it's worth, because a stock is literally a piece of a company.

Jess: So if you put all the pieces of the company together and their stock price, that's the value of the company.

Jessie: And that's their market cap.

Jess: So bigger company, bigger market cap, bigger piece of the pie.

Jessie: And Microsoft stole the pie.

Jess: Okay, that makes sense.

Jessie: So here's my question.

Jess: If Apple is down a lot this year, about 8% as of today, March 6, 2024, but the market measured by the S&P 500 is still up by 8%, what's the impact here? Apple is the biggest celebrity in the elite club.

Jessie: They're Beyonce.

Jess: And Microsoft is, guess who? My girl, Taylor Swift.

Jessie: I'm guessing it's Taylor Swift.

Jess: Yeah, it is.

Jessie: I don't know why I whispered that.

Jess: But Apple's, they've been around for a really long time and they've innovated for a really long time.

Jessie: They're the OG original innovators.

Jess: They take products and they completely reimagine it.

Jessie: That's their business model.

Jess: And they do a great job at that.

Jessie: Microsoft is an established company, but because of AI and they're just pushing forward, whereas Apple, I think, likes to take their time.

Jess: That's their business model.

Jessie: Microsoft is just capturing that AI market share and they're really, really shining because it's taking off.

Jess: And you just had to use Taylor Swift's analogy too, huh? Yeah, the problem.

Jessie: It's nice to have Beyonce in there this time.

Jess: It's true.

Jessie: They're a force of nature.

Jess: So Apple gets most of their revenue from iPhone sales.

Jessie: We know that from the stock episode.

Jess: I think we, do we use them as an example when we do this? I'm sure.

Jessie: I think in the stock market episode too.

Jess: We've used them the whole time, basically.

Jessie: Not sponsored.

Jess: Because they're always the top one.

Jessie: That's true.

Jess: Until now.

Jessie: That's a good point.

Jess: So most of their revenue is from iPhone sales.

Jessie: They haven't been doing that great, which makes sense if you think about like the overall market theme and the Fed being super restrictive.

Jess: But the big issue is that they're not doing that but the big issue was China.

Jessie: Huawei is this new competitor within China that's just taking market share from their iPhone sales and their iPhone sales were down 24% is what they said.

Jess: And that's going to have a huge impact on their earnings because 50% of their revenue comes from iPhone sales.

Jessie: But we can't forget, do you remember the iPods, Jessie? Yes, I still have mine.

Jess: That used to be a big piece of their revenue too before the iPhone was a thing.

Jessie: So sometimes these big sell-offs, I personally think that financial advice before longer term buying opportunities, as long as there's free cash flow and the other things that we look at when we're talking and assessing stocks, which we're not going to go into detail today.

Jess: But if you want, please comment.

Jessie: The iPod used to be a primary revenue driver.

Jess: Things change.

Jessie: It's not anymore.

Jess: The iPhone is.

Jessie: But Apple's the original inventor.

Jess: They're the ones that are going to come in.

Jessie: They're the innovator.

Jess: They have WWDC in June.

Jessie: I have high expectations.

Jess: That's when they do the things, right? Yeah.

Jessie: That's where they release all the new shiny things and Tim Cook gets on the stage and unveils their latest and greatest.

Jess: Since the stock market's forward looking, there's always pent up demand into events like that.

Jessie: We've explained forward looking enough, right? Yeah.

Jess: iPhone sales could also be down because they haven't released a new one yet.

Jessie: So I'm sure when the new ones come out, there's a surge again in iPhone sales.

Jess: And then that probably is part of it, I would think too.

Jessie: Yeah.

Jess: I love it when you do the thing and there's no planted questions.

Jessie: So that's the anticipation.

Jess: They have had a chat GPT like model for a very long time.

Jessie: They've used AI in a lot of their iPhone apps.

Jess: There's thoughts of an app store integrated.

Jessie: You know how we've been advocating for Clippy to come in for Microsoft, but Apple also has Siri.

Jess: There's so many opportunities that they have and they have been working on a chat GPT model since July of last year.

Jessie: And you can even go on their website.

Jess: They have job openings all around artificial intelligence.

Jessie: So you know they're working on something because you can look at that type of data.

Jess: So something is coming.

Jessie: We have only had little hints so far, but Tim Cook himself said they're going to unveil something later on this year.

Jess: And I believe it would be within the iPhone.

Jessie: If you have an AI integrated iPhone, then sales come and you integrate AI.

Jess: So I'm calling Apple the AI sleeper.

Jessie: And it has the ability to push the markets higher.

Jess: And last year, the whole stock market was all about the Magnificent Seven.

Jessie: They held up the entire market, which is, I knew you were going to ask that question.

Jess: Alphabet, Google, same thing.

Jessie: Amazon, Apple was in there.

Jess: Meta, aka Facebook, Microsoft, NVIDIA, and Tesla.

Jessie: So those are the seven stocks called the Mag Seven.

Jess: Now the Mag Six, because Tesla's kind of out of that.

Jessie: But they carried the stock market last year.

Jess: That's what we call a narrow, narrow rally.

Jessie: And this year, and when we say market, we mean S&P 500, like you said at the beginning, because you're a great protege.

Jess: This year, it's all about the other 493.

Jessie: It's broadening out.

Jess: And that's a good thing.

Jessie: But that also means last year, everything got tech heavy because those seven stocks that I just listed are very technology oriented, which I personally don't mind, because I think we're in the midst of this technological revolution, even a medical revolution.

Jess: However, from an investing perspective or self-directed investing perspective, it's going to make your portfolios more growth oriented, which means it's going to be riskier.

Jessie: And you may not even know it.

Jess: And that's something we should talk about to assess and understand the impact of these big shifts on the overall market, but also your portfolio.

Jessie: Yeah.

Jess: We want everyone participating in the group project, not just that one person carrying the whole team.

Jessie: So that makes sense.

Jess: And this is what they mean by diversification and not having too much of one thing then, right? It's not just individual companies.

Jessie: It's their sector too.

Jess: Yeah, it is.

Jessie: Sector being information technology in this case.

Jess: Oh my goodness.

Jessie: I had to find a word you said.

Jess: The tables are turning.

Jessie: The tables are turning.

Jess: They are.

Jessie: We should compare VTI and VOO now, but we need to use a tool.

Jess: Let's use a tool.

Jessie: It's been a while.

Jess: Ooh, a tool.

Jessie: A fave.

Jess: Tool time.

Jessie: We will have a little jingle for that.

Jess: It's a tool.

Jessie: I do neighbor.

Jess: Okay.

Jessie: So if you're just listening, we are, Jess is sharing her screen to show us a tool to help us see the differences between VOO and VTI.

Jess: We'll try to describe it as best as we can, but if you tune in on Spotify or go to our YouTube channel, you'll be able to see what we're looking at as well.

Jessie: So we are comparing VOO and VTI.

Jess: First of all, these are both index funds and there are lots of indices.

Jessie: They track separate indices.

Jess: So anytime you have a fund, it has an investment objective.

Jessie: That's what it attempts to do.

Jess: But if you want all the details or something called a prospectus, so we're using Merrill's Fund Story today, not sponsored by them or anyone.

Jessie: Might be one day, who knows, but this is on every brokerage firm.

Jess: They're going to have all of this data.

Jessie: They just display it differently.

Jess: So when you log into your brokerage firm and you put in a symbol and you see the security details, this is what we're describing today.

Jessie: All right.

Jess: So first and foremost, I've got them side by side.

Jessie: The S&P 500 ETF Fund and the Vanguard Total Stock Market Index Fund.

Jess: Stay with us.

Jessie: We'll be right back.

Jess: Ready to plug into the future? Join myself, Sean Leahy, and me, Andrew Maynard, on Modem Futura, where we explore the technologies shaping our futures.

Jessie: We bring the experts, the insights, and a whole lot of curiosity to every episode of Modem Futura as we boldly go where no one else has gone.

Jess: So join us as we navigate the intersection of innovation and humanity, uncovering the stories that will define our collective futures.

Jessie: Subscribe to our YouTube channel, Modem Futura, wherever you get your podcasts.

Jess: We'll see you there.

Jessie: See you then.

Jess: Okay.

Jessie: So the VOO is the S&P 500 ETF Fund.

Jess: So that one just mirrors everything in the S&P 500.

Jessie: That's right.

Jess: So VTI is Vanguard Total Stock Market Index Fund.

Jessie: What does that mean? That's where we're going to click in and say, what is this fund? That's why I like this tool.

Jess: VOO, it attempts to track the performance of the S&P 500.

Jessie: So these are what are called passive funds, both of them, which means they're that mirror.

Jess: VOO is just the S&P 500.

Jessie: We've talked about that a lot.

Jess: VTI, there's a bunch of indexes, so it's still passive, but it measures the investment return of the overall stock market.

Jessie: There are, I believe, 3,000 securities in the Vanguard Total Stock Market Index Fund, where there are 500 in the S&P 500.

Jess: So a lot more stocks.

Jessie: Okay.

Jess: So VTI is way more diverse.

Jessie: Not necessarily.

Jess: Just because you have more stocks does not mean that you're diverse.

Jessie: And we're going to go through that, but that's a great question.

Jess: Head's in the right spot.

Jessie: Whenever you're investing something, I would love it for everyone to be able to give a one sentence of what it is, what they do, and how they make money.

Jess: When we have a fund, we want to just be able to say, okay, VOO is a index fund that tracks the S&P 500.

Jessie: VTI is an index fund that tracks all of the US total stock market, all the stocks that are there.

Jess: So both of these funds are majority stocks because that's what's within their indices, but there are other funds that have other securities.

Jessie: And if you'd want to know that, you'd find it here.

Jess: It's like a funnel approach that we're going to do when we compare and contrast.

Jessie: Okay.

Jess: So both are like 99% stocks, basically.

Jessie: Yeah.

Jess: The exchange traded fund, they trade on the secondary market.

Jessie: It's in the name, so you can buy and sell them like a stock.

Jess: Right.

Jessie: So here's where the interesting part comes in.

Jess: They are both very similar, actually, in composition, meaning their sector exposure.

Jessie: So the S&P 500 is 30% information technology.

Jess: So all the tech stocks, which is driving the market and the world, to be honest.

Jessie: So that's something that I would look for.

Jess: This is considered market weight would be the S&P 500.

Jessie: It's got 13% financials and then 12.7% healthcare.

Jess: Basically, all of the sectors that these funds list, it has almost the same percentage amount.

Jessie: I don't even see hardly a difference.

Jess: Yeah.

Jessie: Do you? I don't.

Jess: No, they're basically the same.

Jessie: Yeah.

Jess: Just because you have more stock does not mean that you're more diversified in terms of diversification.

Jessie: I mean, it's more diversified because there's a lot of different companies, but I bet you, when we drill into information technology, that it's the same top 10 holdings that are driving these stocks or funds.

Jess: Because S&P 500 isn't all just US stocks.

Jessie: It's just the top companies.

Jess: It's US stocks.

Jessie: Oh, they are US? They are.

Jess: That's a good question.

Jessie: So they're both US stocks? They are.

Jess: Would these two be different? Well, we're going to get there, but this is why it can't be scripted, guys.

Jessie: So Microsoft is 7%, but they both have the same top holdings.

Jess: Basically, there's some variation there, which is interesting.

Jessie: Lots of Microsoft, that's the top holding for both.

Jess: Apple is the second for both.

Jessie: And then Nvidia is the third for both, followed by Amazon.

Jess: But do you see how there is more concentration on the higher stocks on this list for the S&P 500 versus the total stock market? But it's still really high.

Jessie: These are all mostly, all of these stocks, less the Berkshire, will fall under the AI umbrella, less Eli Lilly.

Jess: So the only major difference I see here is Tesla is in the top 10 for VOO.

Jessie: It is not in the top 10 for BTI.

Jess: And Eli Lilly is in the top 10 for BTI, not VOO.

Jessie: And Eli Lilly has actually had a great day today, but biotech is coming back.

Jess: Whole different conversation, but they have the same concentration in health care.

Jessie: So I find that very interesting.

Jess: But you want to know what's driving it, the decision makers.

Jessie: They have the power to move the entire index.

Jess: So now I would look at performance.

Jessie: And this is why I wanted to pull up this tool, is because we're going to look at fees and performance for a hypothetical investment of $10,000.

Jess: So we could compare and contrast if we invested off of real prices, $10,000 and nothing else, inclusive of fees, starting back in 2014, 10 years ago.

Jessie: So what performed better? So they both have the same expense ratio over time since 2014? Yep.

Jess: That's interesting.

Jessie: I thought one was going to be higher than the other.

Jess: Asking the right question.

Jessie: So if I'm comparing which ETF I want to buy, I do want to see the cost.

Jess: And then I also want to look at their performance.

Jessie: If you would have invested $10,000 in VOO in February of 2014, you would make $32,929.

Jess: That's great.

Jessie: Yeah.

Jess: VTI was $31,007.

Jessie: That's a difference of what, like 1,900 bucks? Yeah.

Jess: That's percentage-wise quite a bit.

Jessie: Yeah.

Jess: But there are bigger line leaders in VOO, which is higher risk.

Jessie: And higher risk always equals higher reward.

Jess: Higher risk, it means on the downside and on the upside.

Jessie: Yeah.

Jess: So that makes sense why we see that.

Jessie: Moving on.

Jess: Does this show you the beta? It does.

Jessie: I love that you asked that.

Jess: Also, since we showed you past performance, it's very important to know that past performance is not going to be any indication of future results.

Jessie: That was a disclosure.

Jess: Oh, okay.

Jessie: Investing involves risk, in case you didn't know.

Jess: I bet you do.

Jessie: Including risk that you could lose all your funds.

Jess: Now looking at market returns.

Jessie: So what did it return each year? Which is very interesting.

Jess: Last year, the stock market was up 26%.

Jessie: VTI was right in line.

Jess: And I think it's because of the concentration.

Jessie: VOO over three years was about 10%, whereas VTI was 8.45.

Jess: This VOO, the S&P 500 fund, over the long run is outperforming VTI, which we saw when we compared the 10,000.

Jessie: That's just another view to look at the same thing.

Jess: Okay.

Jessie: Yeah.

Jess: This is the one, tracking error.

Jessie: Have you ever heard of tracking error? No.

Jess: All right.

Jessie: This means your objective is to mirror the index.

Jess: How good are you at doing that? We're comparing two different funds that have two different indices and trying to understand if we want to do that.

Jessie: But maybe we land on VOO, but I want to look at SPY or compare it with something that is exactly the same.

Jess: I would look at tracking error.

Jessie: So this tells me that VOO has a great tracking error.

Jess: It's 0.01%.

Jessie: And that's normal.

Jess: There's going to be a tracking error because in order to create an ETF, you have to physically buy and sell shares to have a share creation process in order to have the ETF.

Jessie: Supply and demand is just going to cause some variation.

Jess: That's a whole different concept.

Jessie: That would be a really deep rabbit hole, but we can go there.

Jess: That's a day.

Jessie: Yeah.

Jess: But VTI has a 1.73% tracking error.

Jessie: So they're not staying on target 1.73% of the time? Yeah.

Jess: I was thinking of like a target, like a bullseye and like, you know, VOO is like pretty much almost in the dead center of the bullseye and VTI is like a little bit off center.

Jessie: That's it.

Jess: That's it.

Jessie: But it doesn't mean it's bad.

Jess: Yeah.

Jessie: It's still like in that circle or pretty close to it or that main center.

Jess: Yeah.

Jessie: A tracking error doesn't mean that it underperforms or overperforms.

Jess: It just means it doesn't act just like the index.

Jessie: So, so far, VOO is kind of the winner.

Jess: I mean, it's outperforming over the long run.

Jessie: It is more aggressive.

Jess: So we'd have to consider our risk tolerance.

Jessie: But in comparison, so far, I'm choosing this one, beta.

Jess: You called that out.

Jessie: Would you like to explain beta, Jessie? Well, I remember that the stock market, I mean, the S&P 500 has a beta of one.

Jess: And that basically tells us if something is like riskier or less risky than the stock market performs.

Jessie: So if there's a beta of two, that means it might be riskier, but you might get more return or you might lose more.

Jess: Right? Yeah.

Jessie: A beta of two means it moves two times more than the market.

Jess: That is a...

Jessie: Yeah.

Jess: Two times.

Jessie: So it makes sense that the VOO beta is one because it's mirroring the S&P 500, right? Yep.

Jess: Exactly.

Jessie: So at the time span we're looking at, the beta is 1.03 because like it moved just a tiny bit, let me say, faster? Yeah.

Jess: Up or down.

Jessie: Yeah.

Jess: More.

Jessie: It takes bigger swings.

Jess: It's a more intense roller coaster.

Jessie: Yeah.

Jess: And this one's five years.

Jessie: Pretty similar though.

Jess: It is.

Jessie: But if we were pulling up the QQQ, for example, which tracks the NASDAQ 100, that should have a beta around 1.2 or 1.6, depending.

Jess: But now that the S&P 500 is more technology, it has less of a beta, which is interesting.

Jessie: Yeah.

Jess: That is interesting because I bet like prior to 2023, so like maybe in 2022 or 2021, like QQQ would probably have a higher beta, right? You're right.

Jessie: As the stock market becomes technology because it's market cap weighted and it's the biggest companies.

Jess: And that's why that methodology makes sense.

Jessie: The biggest companies drive the stock market because it's literally where the value is.

Jess: If something were to happen to Apple and go under, we've got bigger problems.

Jessie: Right.

Jess: A lot of big problems.

Jessie: We also want to look at dividends.

Jess: Oh yeah.

Jessie: They both give dividends.

Jess: VTI and VOO both pay dividends.

Jessie: The SEC requires a 30 day yield and then a trailing 12 months yield.

Jess: The way we're looking at it right now, we're kind of saying like, oh, be more likely to pick something like VOO just because it's got like a little bit better of everything that we've looked at so far.

Jessie: Not ton, like they don't differ that much, but VOO is like doing a little tiny bit better right now.

Jess: But something that could change your mind on that could be the dividends.

Jessie: Like if VTI gave you 5% dividends or something like that, that could like kind of balance it out more, right? It could.

Jess: But then that's the type of investor you are.

Jessie: And that's why investing is personal.

Jess: Are you someone that is trying to protect the wealth that you've grown and you need an income off of it? Because that's taxed differently.

Jessie: It's taxed as income.

Jess: Or are you more growth oriented where you're trying to grow your wealth before you get into that? Or you can be a combination.

Jessie: So it really depends on what your individual investment objective.

Jess: I'm personally growth oriented right now.

Jessie: I want to grow mine as much as possible.

Jess: But I'm absolutely going to switch that around when I get older, near retirement.

Jessie: Yeah.

Jess: Does it make sense to buy both of these ETFs? The difference is the price.

Jessie: Oh, yeah.

Jess: What is the price? So VOO is $468 a share.

Jessie: VTI is $253 a share.

Jess: But we also have fractional shares now.

Jessie: So does that even matter? So that makes a difference, too, though, because if they're pretty similar, yeah, VOO might be a little bit better in some of these areas.

Jess: But like VTI is way less money per share.

Jessie: Does that give you more bang for your buck? I mean, I don't know.

Jess: No.

Jessie: I would be like, now I'm thinking like, oh, why wouldn't you get VTI then? It's like way less money.

Jess: They could change.

Jessie: What's in these ETFs could change.

Jess: Absolutely could change.

Jessie: Yes.

Jess: And the price, no matter what you invested, would have almost the same performance.

Jessie: That's what I would look at.

Jess: But it can change because these have different investment objectives.

Jessie: But right at this moment, what we're looking at, they are very, very, very similar.

Jess: Now, if you were concerned with price, we just pulled VOO because it's popular.

Jessie: There are a lot of other index ETF funds that track the S&P 500.

Jess: And if we were concerned about price, we could go look at those and compare and contrast.

Jessie: That's a good point.

Jess: OK.

Jessie: Now, here's where it gets interesting.

Jess: So you know how we always give you the hard way where you can go through and analyze them yourself? Getting into the easy way is very interesting now.

Jessie: This is where we're also getting some changes.

Jess: Morningstar and CFRA and LIPR are going to rate these funds and their different categories.

Jessie: So overall, Morningstar gives VOO five stars, but it gives VTI three stars.

Jess: And if you want to dive deeper into it, you can read the reports.

Jessie: CFRA, CIFRA, five star for VOO, four star for VTI.

Jess: They'll go into why, their reward versus risk, and the cost.

Jessie: Interest.

Jess: Says it's a little more expensive.

Jessie: They use a machine learning technique.

Jess: Look at that.

Jessie: But you can read the full report just to understand it, which is great.

Jess: That's why I love it.

Jessie: We have access to this.

Jess: I don't think I've heard of LIPR.

Jessie: LIPR, just another fund rating company.

Jess: So they say five for VOO and four for VTI.

Jessie: So if you don't want to do all this analysis yourself and you want to just do the easy way that we always talk about and look at what the analysts say, the analysts are all saying that VOO is five stars.

Jess: None of them think VTI is five stars.

Jessie: So that tells you something.

Jess: I mean, VOO definitely outperformed VTI.

Jessie: But VTI, it's multi-capitalization.

Jess: So they're not the same at all.

Jessie: The fact that they're very, very similar, I'm actually kind of surprised by.

Jess: Yeah, me too.

Jessie: There's some variances, but they're similar in forms of dividend.

Jess: VOO is large cap, whereas VTI is lots of caps, including those smaller companies.

Jessie: And if you care about environmental, social, government practices, which we all should, this is actually compiled here.

Jess: And I think we should have a whole episode on that because there's a lot of changes coming in the pike for that.

Jessie: Oh, really? Really good changes.

Jess: I think it's going through hearings or proposals where they're going to require every publicly traded company to say what their biggest climate risk is and how they're addressing it.

Jessie: Oh, good.

Jess: Yeah, because some of the companies that have good ESG scores to me are questionable.

Jessie: I'm like, there's no way.

Jess: I agree.

Jessie: There's some flaws with it, though, because it's honestly a newer concept.

Jess: Yeah.

Jessie: Which is sad.

Jess: It shouldn't be.

Jessie: But it's not all an equal measurement.

Jess: So if it's not an equal measurement, then how do you know if the data is true or not? And that can be a problem.

Jessie: I'm glad that there is a rating and we're getting in the right direction.

Jess: But this new legislation is going to definitely make some differences.

Jessie: If we were looking at that, the MSCI does that and VOO has the higher one at a 6.6 out of 10 and VTI has a 6.4.

Jess: Well, so even though VOO costs a little bit more, I mean, kind of a lot bit more per share, it has the better scores and, I mean, outlook and everything, return and all that stuff.

Jessie: Yes.

Jess: Over the time period we've been looking at it.

Jessie: As of right now, I feel like it's a winner, but it can change.

Jess: It can change because there's different investment objectives.

Jessie: These are really different funds, even though they seem the same at the moment.

Jess: I love a useful tool.

Jessie: It is a useful tool.

Jess: These are quite similar, yet very different.

Jessie: Certain securities can drive the market.

Jess: And that's why we started today talking about Apple and its impact on the market and bringing it back to your investments and how it impacts it.

Jessie: Because investing is very personal.

Jess: It's your personal risk tolerance.

Jessie: As you can see, just because you have a lot of stocks doesn't mean that you're necessarily diversified.

Jess: Both of these are highly concentrated in technology.

Jessie: 30% of it is technology.

Jess: And those rely on 10 stocks, basically.

Jessie: I also need to correct myself earlier.

Jess: I said, I think it has 3,000 securities.

Jessie: It has 3,749 security.

Jess: It's a lot more than 500.

Jessie: It is a lot more than 500, which means, sure, it's diversified because you're depending on a lot more companies.

Jess: It is the same type of diversified in comparison to sectors.

Jessie: I guess risk factor could play into that.

Jess: Yeah.

Jessie: Well, I think the point is, if you are just saying something has more stocks, it might be better.

Jess: We just showed you how to compare and contrast it.

Jessie: I'm not saying one's better than the other.

Jess: I'm not going to do that.

Jessie: It's just transparency and to be able to see what you're investing in.

Jess: And if you really want to know, that's why everything comes with a prospectus.

Jessie: Yeah.

Jess: Yes.

Jessie: Thanks for joining us on today's stock adventure.

Jess: I guess that's ETF adventure.

Jessie: And be sure to join us every Friday for new episodes.

Jess: As always, feel free to ask us any investing questions you have on any of our social platforms or via our website at marketmakeherpodcast.com.

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Jess: Remember, investing involves risk.

Jessie: There is always potential to lose money when investing in securities.

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