Markets and Tariffs

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Welcome to Something More with Chris Boyd.

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Chris Boyd is a certified financial planner, practitioner,

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and senior vice president and financial advisor at

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Wealth Enhancement Group, one of the nation's largest

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registered investment advisors.

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We call it Something More because we'd like

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to talk not only about those important dollar

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and cents issues, but also the quality of

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life issues that make the money matters matter.

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Here he is, your fulfillment facilitator, your partner

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in prosperity, advising clients on Cape Cod and

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across the country.

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Here's your host, Jay Christopher Boyd.

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Welcome everybody to another episode of Something More

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with Chris Boyd.

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I'm here with our team members.

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I've got Jeff Perry, our co-host pretty

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much every week here.

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I've got Russ Ball and Brian Regan, all

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of us of the AMR team at Wealth

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Enhancement Group.

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And Brian is our senior portfolio manager and

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a good one for us to talk to

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this week as we're thinking about volatile markets.

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The markets have caught everyone's attention again, as

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we've had really following two very good years

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with market movements, a little bit of volatility

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reentering the scene.

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We haven't had much in the way of

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dustups when it comes to the market.

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And with the onset of tariffs being on

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the minds of investors, we've seen markets get

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a little dicey.

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And that's not to say that there haven't

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been some ups as well as the downs,

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but we've seen a decline from where we

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were earlier in the year.

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And I don't know, I'm sure all of

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you are feeling the same way, but we're

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hearing clients reach out a little more regularly

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with some concerns and some questions.

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How should we be responding to this?

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Is this something we're worried about?

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How are we dealing with it?

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So we thought this show would be a

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good opportunity to talk a little bit about

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our views as it relates to first on

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what's happening and two, how we're responding to

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that when it comes to our portfolios or

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how we have been positioning for it previously,

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and then a little bit of what may

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come out of that.

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So Jeff, what do you think?

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Did I cover everything as far as the

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setup there?

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I think you did.

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I think the key word that I'm hearing

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from clients past couple of weeks is uncertainty,

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right?

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What's going to happen?

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How does this affect me?

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Should we do something?

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Should we get in?

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Should we get out?

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You know, on both sides of that equation,

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just that uncertainty that people are feeling right

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now because of geopolitical events, political events that

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are on the front page of the newspapers

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or the first story off the news and

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makes people nervous.

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And I'm glad we had Brian on to

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get his perspective on how he views all

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this.

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Well, Brian, that's probably a good in for

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you to chime in.

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I mean, I think when we talked about

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this, the first thing you wanted our team

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to know and to be able to communicate

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with our clientele is just because markets are

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down, doesn't mean clients accounts are necessarily down

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for the year at this point.

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What do you want to focus on first?

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Yeah, it's interesting, right?

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When you say markets, what you really mean

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is like the S&P 500, right?

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I think that's what people are focused on.

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You're right.

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Yeah.

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But when I hear the word markets, I

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think of, you know, all the possible investments

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you could make.

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And there are markets that are doing well

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here in the beginning of 2025.

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And I think that's which are some of

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those, for example.

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Do you mind elaborating?

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Yeah.

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I mean, most notably, the fixed income market's

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doing really well here to start the year.

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Right.

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And most of our clients have a combination

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of stocks and bonds.

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So, you know, the first thing that I

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wanted to point out is that, you know,

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when I wrote an email to you the

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other day that, you know, let's let clients

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know that despite, you know, the tariffs and

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the drawdown that we've had recently, that the

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portfolio is probably in the black still for

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the year, despite all that.

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So, you know, this is a win for

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diversification when it comes to fixed income and

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individual stocks.

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Elaborating on just for a minute, if you

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don't mind.

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You know, last year, it seemed that it

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was a different kind of story than what

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we're having this year.

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The more focused on the S&P 500,

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the large cap growthier names seem to be

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better you did that Magnificent Seven or whatever.

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And then this year, you know, we're getting

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a little bit of a different story.

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Yeah, that's right.

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I mean, fixed income did well last year,

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too.

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So let's just say that, you know, that

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we are changing gears here.

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I think, you know, you want to dissect

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individuals, the stock market, right.

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The individual sectors of the stock market.

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And I think you're absolutely correct.

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Right.

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So, you know, the more indexed you were

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to the quote unquote Magnificent Seven, the better

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you probably did.

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And that's true over the last couple of

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years.

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But here in 2025, diversification in the stock

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market, not just, you know, not just having

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bonds in your portfolio, but within the stock

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market has helped out as well.

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We allocate towards a low volatility portfolio, which

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has done well in the black so far

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this year.

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International markets have done exceptionally well, including Europe

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and China.

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We don't really allocate towards China, but it

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has had notable performance here in 2025.

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And we have benefited from having an allocation

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towards, you know, the eurozone, which has done

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very well, especially now that Germany is moving

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off their austerity position.

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Finally, you know, we've had utilities in the

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portfolio for about a year now, and my

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view might have been unpopular at the time.

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It seems like people are kind of coming

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around to my way of thinking.

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But the idea was, we're going to get

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more growth out of this sector that we

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have historically.

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And for a variety of reasons, from from

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data centers to onshoring, to population growth.

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But at the same time, you know, it's

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a regulated market, which should should give us

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some support if things fall on the downside.

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And that's been the case, you know, we've

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had we've had nice performance from utilities as

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well.

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So, you know, this is again, one in

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the wind column for diversification.

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We've preached it.

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And, you know, we're certainly benefiting from it

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here in 2025.

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Yeah, that's a good point.

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Jeff, you want to add anything to that?

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I appreciate and agree with everything Brian said.

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I do have maybe a question that investors

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or clients might be thinking about.

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Does any of the moves, the political moves,

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the tariffs specifically, I guess, is what we're

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focusing on here.

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Have you consider any of the holdings, moving

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them in or out, you know, more or

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less based upon the action and the tariffs

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specifically?

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I'm trying hard not to have any knee

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jerk reactions, because I actually think it's a

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complicated subject.

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Believe it or not, I know that the

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opinions come, they come fast.

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And, you know, when you have a complicated

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subject, what I find is the best thing

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to do is to do nothing, contemplate what's

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going to benefit, what's going to, you know,

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be hurt, what's at risk, and be careful

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with how you move the portfolio.

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And that's part of the reason why we,

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you know, we make decisions quarterly.

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It's to not overreact.

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We don't want to make, you know, harsh

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reactions to one data point.

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What we saw in 2019 was that the

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tariff news changed regularly, right?

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You'd have a big announcement that $300 billion

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worth of goods from China is going to

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be tariffed, and then market would sell off

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10%.

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And then, you know, three weeks later, there

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would be some reversal, and then the market

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would rally 15%.

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So we want to be cognizant of that

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possibility and not overreact.

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And that might be a lesson for investors

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to recognize that it's very likely we're going

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to have some of that same kind of

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movements, you know, up and down.

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I don't know for sure, but that's what

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happened the last time we went through this

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with the same president, right?

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So it seems like most likely based on

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that historical experience.

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You know, Chris sent me a note yesterday

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afternoon, and he was asking me if his

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comment was accurate.

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And basically, it had two, you know, contrasting

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statements in it, which I think was what

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he was struggling with, right?

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In the first part of the note, he

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was saying, you know, this might be a

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detriment to growth, and we might see the

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Fed react by cutting rates.

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And then in the last sentence, he said,

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on the flip side of that, we might

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have inflationary pressures, and the Fed might have

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to react in the other direction.

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And the truth is, he was absolutely right.

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I mean, both those things are, even though

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they're contrasting, I think are both possible.

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And when you look at inflation expectations in

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the near term, in the longer term, they're

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at odds too, right?

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In the near term, inflation expectations ratcheted up.

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In the longer term, they actually went down.

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So what is the market telling us?

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Well, in the short term, they think this

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is going to be, you know, increase inflation.

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I wasn't sure whether I should say, you

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know, be a positive or a negative, because

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the number is expected to rise.

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And in the longer term, growth is expected

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to suffer from this.

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So, you know, tariffs are bad policy generally,

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and this is why, right?

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We're going to get inflation and negative growth

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from this, which is also why I don't

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necessarily think it will last.

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So, you know, that's the quick, I mean,

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this seems like it's a moving target, but

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maybe we can just do a quick review

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of what has been implemented, what is anticipated

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in the next month in terms of, it

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seems like there's a fair amount of tariffs

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that have been announced and anticipated.

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But as we saw just in the last

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few days, there's been like, oh, well, we're

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going to have auto manufacturing.

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Well, we'll hold off on that.

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You know, some of this can change and

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it is fluid, but what are we seeing?

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00:10:34,640 --> 00:10:38,060
How much is this tariff change?

272
00:10:38,420 --> 00:10:39,300
What are the amounts?

273
00:10:39,480 --> 00:10:44,000
And then how impactful is that on what

274
00:10:44,000 --> 00:10:46,560
that means to maybe GDP or, you know,

275
00:10:46,600 --> 00:10:48,000
the growth of the economy?

276
00:10:48,700 --> 00:10:49,280
I guess we should.

277
00:10:49,800 --> 00:10:51,680
Maybe start off with a tariff, huh?

278
00:10:52,180 --> 00:10:54,120
Well, I was going to say maybe we

279
00:10:54,120 --> 00:10:56,640
should tell listeners it's 11 o'clock on

280
00:10:56,640 --> 00:10:57,920
March 6th.

281
00:10:57,920 --> 00:11:01,620
Okay, because it may be very different a

282
00:11:01,620 --> 00:11:03,060
day or two from now and this is

283
00:11:03,060 --> 00:11:03,460
out there.

284
00:11:03,640 --> 00:11:05,000
A day or two could be different this

285
00:11:05,000 --> 00:11:05,480
afternoon.

286
00:11:06,000 --> 00:11:06,940
Right, right.

287
00:11:08,740 --> 00:11:09,380
So.

288
00:11:10,340 --> 00:11:12,760
It's unbelievable how right you are.

289
00:11:13,820 --> 00:11:18,100
A tariff just to review is essentially an

290
00:11:18,100 --> 00:11:21,580
added tax on goods being brought into the

291
00:11:21,580 --> 00:11:25,960
country so that it makes those tariffs more

292
00:11:25,960 --> 00:11:29,440
costly, those goods more costly and therefore less

293
00:11:29,440 --> 00:11:33,060
appealing relative to the thought is to a

294
00:11:33,060 --> 00:11:38,740
domestically produced product, trying to inflate the appeal

295
00:11:38,740 --> 00:11:43,000
of producing goods and services in the United

296
00:11:43,000 --> 00:11:45,540
States versus brought here from other parts.

297
00:11:45,660 --> 00:11:48,980
Which is a reason, one of the reasons

298
00:11:48,980 --> 00:11:50,720
to do tariffs, right?

299
00:11:50,760 --> 00:11:54,820
Is you're trying to bolster your domestic production

300
00:11:54,820 --> 00:11:56,040
of a given product.

301
00:11:56,040 --> 00:11:57,720
That's the stated objective, I think.

302
00:11:57,880 --> 00:11:58,400
One of them.

303
00:11:58,520 --> 00:12:01,300
Or to punish the senator.

304
00:12:02,000 --> 00:12:10,300
There's also the issue that it is usually

305
00:12:10,300 --> 00:12:13,280
met with reciprocal response.

306
00:12:13,760 --> 00:12:18,940
So then our goods become a harder to

307
00:12:18,940 --> 00:12:20,600
sell in other parts of the world.

308
00:12:22,820 --> 00:12:27,220
It also does to the point about another

309
00:12:27,220 --> 00:12:29,200
reason it may be advantageous and all this

310
00:12:29,200 --> 00:12:33,800
focus on the expenses of government, which we've

311
00:12:33,800 --> 00:12:35,200
seen a lot of attention on over the

312
00:12:35,200 --> 00:12:36,180
last few weeks.

313
00:12:37,520 --> 00:12:40,260
There's also, you know, this is a revenue

314
00:12:40,260 --> 00:12:43,280
source for government as well.

315
00:12:43,280 --> 00:12:47,780
So in any case, I think the bigger

316
00:12:47,780 --> 00:12:50,500
picture that Brian, you know, bottom line of

317
00:12:50,500 --> 00:12:54,120
minute ago is that ultimately this has historically

318
00:12:54,120 --> 00:13:00,280
been considered bad policy because it slows the

319
00:13:00,280 --> 00:13:00,700
economy.

320
00:13:01,000 --> 00:13:07,980
It has an adverse impact generally.

321
00:13:08,540 --> 00:13:12,840
And we've been in this prolonged effort to

322
00:13:12,840 --> 00:13:18,920
create markets, to open up markets around the

323
00:13:18,920 --> 00:13:19,120
world.

324
00:13:19,240 --> 00:13:20,700
So our goods can be sold there, their

325
00:13:20,700 --> 00:13:21,500
goods can be sold here.

326
00:13:21,900 --> 00:13:25,000
It creates some thought as it creates a

327
00:13:25,000 --> 00:13:29,860
greater interdependence and a lesser likelihood of adversarial,

328
00:13:29,980 --> 00:13:36,080
you know, risk of conflict around the world.

329
00:13:36,080 --> 00:13:39,540
And so that it is desirable to have

330
00:13:39,540 --> 00:13:42,800
more open markets.

331
00:13:42,800 --> 00:13:45,600
There is, I think, a focus on fairness

332
00:13:45,600 --> 00:13:49,420
in this administration that is all this being

333
00:13:49,420 --> 00:13:53,640
done in a way that is mutually beneficial,

334
00:13:54,400 --> 00:13:58,640
probably worth, you know, more scrutiny than I'm

335
00:13:58,640 --> 00:14:00,200
able to provide right now.

336
00:14:01,260 --> 00:14:03,840
So in a perfect world, there'd be no

337
00:14:03,840 --> 00:14:06,400
tariffs in or out, right?

338
00:14:06,500 --> 00:14:07,920
And for total free market.

339
00:14:09,540 --> 00:14:10,020
I agree.

340
00:14:10,640 --> 00:14:12,640
But we don't have that here.

341
00:14:12,800 --> 00:14:15,240
And many other countries charge us to send

342
00:14:15,240 --> 00:14:15,680
our goods.

343
00:14:15,880 --> 00:14:16,800
They have tariffs on us.

344
00:14:17,240 --> 00:14:18,980
So I think that's what you're getting at.

345
00:14:19,480 --> 00:14:19,680
Yeah.

346
00:14:19,940 --> 00:14:21,300
So I think that's part of the motivation

347
00:14:21,300 --> 00:14:24,840
as well as to try to air quotes,

348
00:14:25,100 --> 00:14:27,020
you know, level the playing field, so to

349
00:14:27,020 --> 00:14:27,280
speak.

350
00:14:27,900 --> 00:14:30,080
But in any case, you know, I can't

351
00:14:30,080 --> 00:14:34,880
help but think of Ferris Bueller and the

352
00:14:34,880 --> 00:14:38,260
class, the lecture they have on economics, they're

353
00:14:38,260 --> 00:14:42,120
talking about tariffs and the challenges that that

354
00:14:42,120 --> 00:14:45,480
brought about when it came to the Great

355
00:14:45,480 --> 00:14:45,880
Depression.

356
00:14:47,220 --> 00:14:52,600
But in any case, so tariffs are part

357
00:14:52,600 --> 00:14:56,360
of what's driving investor concerns when it comes

358
00:14:56,360 --> 00:14:58,480
to the stock market because of the unknowns

359
00:14:58,480 --> 00:15:01,160
as to how much this will have impact.

360
00:15:01,400 --> 00:15:03,580
And I start off asking Brian if he

361
00:15:03,580 --> 00:15:06,680
had any insights as to what kind of

362
00:15:06,680 --> 00:15:07,720
impact this might have.

363
00:15:07,780 --> 00:15:09,720
Are there any metrics you can share that

364
00:15:09,720 --> 00:15:11,720
might be useful for our audience, Brian?

365
00:15:14,420 --> 00:15:14,620
Sure.

366
00:15:14,800 --> 00:15:17,880
So I think it's going to increase PCE

367
00:15:17,880 --> 00:15:21,220
by between 50 and 100 basis points or

368
00:15:21,220 --> 00:15:23,920
a half percent to one percent if this

369
00:15:23,920 --> 00:15:24,360
persists.

370
00:15:24,540 --> 00:15:24,720
Right.

371
00:15:24,720 --> 00:15:28,180
And that's the key keyword if this persists.

372
00:15:28,460 --> 00:15:30,440
And if that's the case, I think it'll

373
00:15:30,440 --> 00:15:33,000
be very, very hard for the Federal Reserve

374
00:15:33,000 --> 00:15:35,540
to cut rates if we do have a

375
00:15:35,540 --> 00:15:40,220
growth scare, which we're having a growth scare.

376
00:15:40,360 --> 00:15:45,860
I mean, the Atlanta GDP, GDP now stat

377
00:15:45,860 --> 00:15:49,180
fell dramatically, fell more than six percent from

378
00:15:49,180 --> 00:15:51,280
four percent to negative two point eight percent

379
00:15:51,280 --> 00:15:52,980
within a couple of weeks.

380
00:15:52,980 --> 00:15:59,460
So that estimate is almost always wrong.

381
00:16:00,260 --> 00:16:04,220
But directionally, that's a scary move.

382
00:16:04,400 --> 00:16:04,500
Right.

383
00:16:04,520 --> 00:16:07,960
So even if it's half right, we're in

384
00:16:07,960 --> 00:16:08,780
negative territory.

385
00:16:10,700 --> 00:16:14,120
So this is concerning.

386
00:16:14,300 --> 00:16:17,520
Between Doge and tariffs, I think that it

387
00:16:17,520 --> 00:16:21,740
seems like the relative confidence of the consumer

388
00:16:21,740 --> 00:16:23,900
is not good.

389
00:16:24,460 --> 00:16:26,540
The consumer sentiment surveys, which I put almost

390
00:16:26,540 --> 00:16:29,620
no stock into, are as ugly as they've

391
00:16:29,620 --> 00:16:30,500
been in 50 years.

392
00:16:31,400 --> 00:16:33,020
And the reason I put no stock into

393
00:16:33,020 --> 00:16:34,600
them normally is because they're very political.

394
00:16:36,400 --> 00:16:40,120
And the, you know, who answers surveys, it's

395
00:16:40,120 --> 00:16:41,640
usually, you know, one demographic.

396
00:16:42,320 --> 00:16:45,020
So, you know, you can discount that significantly.

397
00:16:45,020 --> 00:16:47,020
But when they're seeing numbers that are basically,

398
00:16:47,260 --> 00:16:49,280
you know, just falling off a cliff and

399
00:16:49,280 --> 00:16:53,140
terrible, you know, it's something something to note.

400
00:16:53,300 --> 00:16:54,520
It's at least a data point, even if

401
00:16:54,520 --> 00:16:55,180
you discount it.

402
00:16:55,660 --> 00:16:57,860
And the fact that, you know, it's political

403
00:16:57,860 --> 00:17:00,640
is, you know, it's a fact.

404
00:17:00,640 --> 00:17:03,380
But the people who you would think would

405
00:17:03,380 --> 00:17:09,400
be politically motivated to say sentiment's good seem

406
00:17:09,400 --> 00:17:10,599
to think that sentiment's bad.

407
00:17:11,060 --> 00:17:12,680
So that's kind of moving in the opposite

408
00:17:12,680 --> 00:17:15,960
direction of what you would typically assume through

409
00:17:15,960 --> 00:17:16,720
the political lens.

410
00:17:16,720 --> 00:17:19,980
So, you know, there's not a lot of

411
00:17:19,980 --> 00:17:22,200
good data points going on right now there.

412
00:17:22,819 --> 00:17:25,319
If I'm going to look for optimism, you

413
00:17:25,319 --> 00:17:28,180
have a lot of high quality stocks that

414
00:17:28,180 --> 00:17:30,780
are going on sale.

415
00:17:31,220 --> 00:17:34,280
And that's something that I'm enthusiastic about.

416
00:17:34,500 --> 00:17:40,080
You're seeing the 10 year treasury rally significantly.

417
00:17:40,300 --> 00:17:41,960
So that's that's not only good for your

418
00:17:41,960 --> 00:17:42,540
fixed income.

419
00:17:43,780 --> 00:17:46,320
But if we have some stability at lower

420
00:17:46,320 --> 00:17:48,040
rates, you know, it's going to be good

421
00:17:48,040 --> 00:17:49,720
for the real estate market.

422
00:17:49,840 --> 00:17:52,640
It's going to be good for stocks, you

423
00:17:52,640 --> 00:17:53,520
know, all things equal.

424
00:17:54,200 --> 00:17:56,640
So those those give you reason to to

425
00:17:56,640 --> 00:17:57,460
be more confident.

426
00:17:57,620 --> 00:18:01,480
Now, given the interest rate situation and the

427
00:18:01,480 --> 00:18:03,360
kind of general sell off, I usually call

428
00:18:03,360 --> 00:18:05,660
these liquidation events because they sell, you know,

429
00:18:06,520 --> 00:18:07,200
indiscriminately.

430
00:18:07,200 --> 00:18:08,740
It's usually just it seems like people are

431
00:18:08,740 --> 00:18:13,400
raising, raising cash because they need it or,

432
00:18:13,560 --> 00:18:15,120
you know, to pay debt service or whatever

433
00:18:15,120 --> 00:18:15,500
it is.

434
00:18:16,140 --> 00:18:18,240
You know, I think that's a great opportunity

435
00:18:18,240 --> 00:18:20,720
to up the quality in your portfolio.

436
00:18:21,180 --> 00:18:24,820
I was just in a WEG macro meeting

437
00:18:24,820 --> 00:18:26,740
and that was my recommendation to everybody.

438
00:18:26,960 --> 00:18:30,680
I said, this is an opportunity to clean

439
00:18:30,680 --> 00:18:33,100
out things that might be more speculative, might

440
00:18:33,100 --> 00:18:35,820
be more cyclical and add to quality and

441
00:18:35,820 --> 00:18:41,400
secular, secular strength names that you can be

442
00:18:41,400 --> 00:18:43,240
more confident that you're going to get at

443
00:18:43,240 --> 00:18:46,220
a nicer price, you know, today than you

444
00:18:46,220 --> 00:18:47,420
did a couple weeks ago.

445
00:18:48,540 --> 00:18:50,280
Yeah, it's worth talking a little bit about

446
00:18:50,280 --> 00:18:53,680
how we've been positioning for some of these

447
00:18:53,680 --> 00:18:56,740
issues as well when it comes to some

448
00:18:56,740 --> 00:18:59,980
of our discretionary managed strategies within our team

449
00:18:59,980 --> 00:19:01,580
for our clientele.

450
00:19:02,340 --> 00:19:04,780
You know, we can maybe talk a little

451
00:19:04,780 --> 00:19:08,380
bit about some of the ways that we've

452
00:19:08,380 --> 00:19:13,140
tried to be in a good position for

453
00:19:13,140 --> 00:19:16,260
volatility, which has now begun.

454
00:19:16,940 --> 00:19:17,880
Do you want to talk a little bit

455
00:19:17,880 --> 00:19:20,920
about that, Brian, whether it's tips or whether

456
00:19:20,920 --> 00:19:24,060
it's the way you talked earlier about the

457
00:19:24,060 --> 00:19:28,200
utilities and low volatility positions in the mix

458
00:19:28,200 --> 00:19:30,440
of the portfolio on the stock side.

459
00:19:31,000 --> 00:19:32,780
Maybe talk about the fixed income side a

460
00:19:32,780 --> 00:19:35,040
little bit and then our buffered strategy.

461
00:19:37,510 --> 00:19:40,870
Yeah, so, you know, we've been banging the

462
00:19:40,870 --> 00:19:44,370
drum that the S&P 500 is very

463
00:19:44,370 --> 00:19:47,810
concentrated for a while, for at least nine

464
00:19:47,810 --> 00:19:50,310
months, you know, and we've made an effort

465
00:19:50,310 --> 00:19:51,410
to diversify away.

466
00:19:51,610 --> 00:19:54,950
So diversify, diversify, diversify has been, you know,

467
00:19:54,990 --> 00:19:59,390
our mantra and we don't have, you know,

468
00:19:59,390 --> 00:20:01,630
excessive exposure, in my opinion, to any one

469
00:20:01,630 --> 00:20:05,710
single name when you look through the portfolio

470
00:20:05,710 --> 00:20:06,910
to the underlying holdings.

471
00:20:07,010 --> 00:20:08,910
And that's very much on purpose.

472
00:20:09,070 --> 00:20:11,650
And I think it has insulated us from

473
00:20:11,650 --> 00:20:13,970
a lot of these sizable moves that we've

474
00:20:13,970 --> 00:20:15,850
seen from some of the biggest stocks in

475
00:20:15,850 --> 00:20:18,230
the market, you know, over the last couple

476
00:20:18,230 --> 00:20:18,570
of weeks.

477
00:20:18,730 --> 00:20:20,410
So, you know, I think that's number one.

478
00:20:20,470 --> 00:20:21,790
You know, we mentioned the low vol strategy.

479
00:20:21,870 --> 00:20:22,730
We mentioned utilities.

480
00:20:23,110 --> 00:20:28,490
We mentioned, you know, we changed our value

481
00:20:28,490 --> 00:20:28,990
portfolio.

482
00:20:28,990 --> 00:20:31,210
We talked about our international allocation.

483
00:20:31,870 --> 00:20:34,850
Those are all ways of taking that high

484
00:20:34,850 --> 00:20:39,310
concentration from the growth names in the S

485
00:20:39,310 --> 00:20:41,730
&P 500 and spreading out the risk.

486
00:20:42,210 --> 00:20:43,670
And like I said, we've had some things

487
00:20:43,670 --> 00:20:46,450
do really well on particularly international and low

488
00:20:46,450 --> 00:20:47,490
vol and utilities.

489
00:20:48,770 --> 00:20:51,050
And, you know, that's, again, you know, mark

490
00:20:51,050 --> 00:20:52,450
one up for diversification.

491
00:20:52,850 --> 00:20:55,770
Now, we also thought that this could be

492
00:20:55,770 --> 00:20:56,770
a distinct possibility.

493
00:20:56,770 --> 00:20:59,730
In the last quarterly, we talked about how,

494
00:20:59,770 --> 00:21:04,330
you know, the Trump policies, although initially very

495
00:21:04,330 --> 00:21:06,870
much favored by the market after him being

496
00:21:06,870 --> 00:21:10,890
elected, mostly because I think the prospect of

497
00:21:10,890 --> 00:21:16,450
further tax cuts, you know, them being maybe

498
00:21:16,450 --> 00:21:18,770
made permanent rather than, you know, the sunsetting

499
00:21:18,770 --> 00:21:19,130
provision.

500
00:21:19,990 --> 00:21:21,330
There was a lot of optimism.

501
00:21:21,330 --> 00:21:24,990
But we looked at the different policies and

502
00:21:24,990 --> 00:21:26,470
saw that almost all of them had an

503
00:21:26,470 --> 00:21:28,910
inflationary effect or all of them did have

504
00:21:28,910 --> 00:21:29,910
an inflationary effect.

505
00:21:30,650 --> 00:21:32,930
And tariffs are, you know, they're not only

506
00:21:32,930 --> 00:21:35,010
inflationary, but they're depressive as well.

507
00:21:35,190 --> 00:21:38,990
So, you know, we added tips to the

508
00:21:38,990 --> 00:21:41,670
portfolio in the last quarter, and that's also

509
00:21:41,670 --> 00:21:43,130
been beneficial to the portfolio.

510
00:21:43,470 --> 00:21:45,650
We've probably stayed shorter in duration than the

511
00:21:45,650 --> 00:21:47,270
average person or the average investor.

512
00:21:47,270 --> 00:21:51,030
Or inflation protected treasuries, just for clarity, if

513
00:21:51,030 --> 00:21:52,190
people aren't familiar with the term.

514
00:21:52,750 --> 00:21:54,830
We probably stayed shorter in duration than the

515
00:21:54,830 --> 00:21:58,190
average investor, and that's very much because, you

516
00:21:58,190 --> 00:21:59,730
know, we are going to be insulated if

517
00:21:59,730 --> 00:22:01,250
there is a rapid rise in interest rates

518
00:22:01,250 --> 00:22:01,970
in the longer term.

519
00:22:02,870 --> 00:22:04,910
But we very much have a barbell strategy

520
00:22:04,910 --> 00:22:05,330
right now.

521
00:22:05,410 --> 00:22:07,750
I mean, we're basically, we have short term

522
00:22:07,750 --> 00:22:10,110
and we have intermediate term in equal weights.

523
00:22:10,630 --> 00:22:12,630
And, you know, that's worked out for us

524
00:22:12,630 --> 00:22:12,850
here.

525
00:22:13,530 --> 00:22:17,210
And we also have a strategic income fund

526
00:22:17,210 --> 00:22:18,710
that we want to take advantage of any

527
00:22:18,710 --> 00:22:22,210
short term increases and spreads, which we've seen

528
00:22:22,210 --> 00:22:24,130
spreads be very, very tight for a long

529
00:22:24,130 --> 00:22:24,550
time.

530
00:22:24,770 --> 00:22:26,410
Spreads are the difference between what you get

531
00:22:26,410 --> 00:22:30,390
paid on a non-treasury bond and a

532
00:22:30,390 --> 00:22:31,030
treasury bond.

533
00:22:31,670 --> 00:22:33,370
And, you know, it's a good way of

534
00:22:33,370 --> 00:22:36,670
measuring the credit risk in the market, but

535
00:22:36,670 --> 00:22:37,910
also how much you're getting paid.

536
00:22:38,530 --> 00:22:40,070
And you haven't been getting paid very much.

537
00:22:40,070 --> 00:22:44,550
And I think the risk is only increases

538
00:22:44,550 --> 00:22:45,090
with time.

539
00:22:46,030 --> 00:22:48,550
So, you know, it's been an interesting market.

540
00:22:48,670 --> 00:22:51,250
We're not in any credit oriented bonds to

541
00:22:51,250 --> 00:22:52,650
any significant degree right now.

542
00:22:53,050 --> 00:22:55,130
We have a very diversified equity portfolio.

543
00:22:56,410 --> 00:22:58,950
And, you know, we've been very short in

544
00:22:58,950 --> 00:23:00,270
duration and not taking a lot of interest

545
00:23:00,270 --> 00:23:02,410
rate risk, which has really insulated our portfolio

546
00:23:02,410 --> 00:23:06,330
and why, you know, I believe that our

547
00:23:06,330 --> 00:23:10,390
strategies are doing, you know, fairly well here,

548
00:23:10,510 --> 00:23:12,130
you know, at least in the black, despite

549
00:23:12,130 --> 00:23:14,250
a difficult S&P 500 performance.

550
00:23:15,550 --> 00:23:19,050
So it seems that we've had some of

551
00:23:19,050 --> 00:23:23,330
these steps taken to try to be prepared,

552
00:23:23,690 --> 00:23:26,730
one by, you know, this diversification, both within

553
00:23:26,730 --> 00:23:30,730
stocks and within asset classes and this barbell

554
00:23:30,730 --> 00:23:32,090
fixed income approach.

555
00:23:32,940 --> 00:23:36,570
For our most conservative investors, we've also opted

556
00:23:36,570 --> 00:23:39,570
to include a strategy that has a little

557
00:23:39,570 --> 00:23:41,770
bit of a risk buffer to it on

558
00:23:41,770 --> 00:23:48,150
the downside that can help be helping when

559
00:23:48,150 --> 00:23:51,030
these kind of events occur to take some

560
00:23:51,030 --> 00:23:53,750
of the sting out of the movement of

561
00:23:53,750 --> 00:23:54,790
the portfolio.

562
00:23:55,930 --> 00:23:59,430
Brian, we've also talked, you know, you mentioned

563
00:23:59,430 --> 00:24:01,890
one of the drivers for, you know, some

564
00:24:01,890 --> 00:24:03,410
of the concerns we had was not only

565
00:24:03,410 --> 00:24:07,690
this concentration, but, you know, we've talked about

566
00:24:07,690 --> 00:24:10,910
valuations a lot over the last several months,

567
00:24:11,070 --> 00:24:13,130
you know, on the show and with our

568
00:24:13,130 --> 00:24:13,570
clients.

569
00:24:14,190 --> 00:24:15,950
You know, you've said in the past that,

570
00:24:15,990 --> 00:24:17,890
you know, valuations don't really are, you know,

571
00:24:17,890 --> 00:24:19,510
you can't really use them as a timing

572
00:24:19,510 --> 00:24:25,170
mechanism for when to make changes, but it

573
00:24:25,170 --> 00:24:26,210
can be insightful.

574
00:24:26,550 --> 00:24:29,350
You know, how do you measure valuation?

575
00:24:29,350 --> 00:24:31,890
You don't really like the PE as the

576
00:24:31,890 --> 00:24:35,930
preferred way to do that, but this notion

577
00:24:35,930 --> 00:24:38,810
of trying to look at valuation, have we

578
00:24:38,810 --> 00:24:44,490
seen any material improvements with just modest volatility

579
00:24:44,490 --> 00:24:46,030
we've seen in the last few weeks?

580
00:24:47,130 --> 00:24:49,930
Has it, you said some things are looking

581
00:24:49,930 --> 00:24:50,570
more attractive.

582
00:24:50,990 --> 00:24:53,530
Is it having an impact in some of

583
00:24:53,530 --> 00:24:57,250
the most expensive parts of the market?

584
00:24:59,030 --> 00:25:02,470
Yeah, I mean, just take Nvidia, for example,

585
00:25:03,610 --> 00:25:05,250
you know, it's in a 15% drawdown.

586
00:25:05,510 --> 00:25:07,630
I don't think the growth expectations are any

587
00:25:07,630 --> 00:25:09,690
worse really than they were prior to the

588
00:25:09,690 --> 00:25:10,530
last earnings call.

589
00:25:11,450 --> 00:25:14,570
So, you know, that stock, which is either

590
00:25:14,570 --> 00:25:16,290
the biggest or second biggest stock in the

591
00:25:16,290 --> 00:25:19,690
market on any given day, you know, to

592
00:25:19,690 --> 00:25:21,970
me looks cheaper, just objectively cheaper.

593
00:25:21,970 --> 00:25:27,170
So yeah, I mean, I do think it's,

594
00:25:27,410 --> 00:25:28,410
you know, when you have a sell-off,

595
00:25:28,490 --> 00:25:29,390
there's going to be opportunities.

596
00:25:29,730 --> 00:25:32,070
I do think it's important.

597
00:25:32,530 --> 00:25:33,610
You know, you mentioned one of the reasons,

598
00:25:33,890 --> 00:25:35,090
you mentioned that I don't like the PE

599
00:25:35,090 --> 00:25:36,950
ratio, which I don't, that's accurate.

600
00:25:38,450 --> 00:25:41,370
So if the PE ratio, forward PE ratio

601
00:25:41,370 --> 00:25:42,590
happens to go down on the S&P

602
00:25:42,590 --> 00:25:46,830
500, you know, I'd love to know, did

603
00:25:46,830 --> 00:25:48,010
they bring the E down too?

604
00:25:48,570 --> 00:25:50,110
Yeah, that's something I was going to ask

605
00:25:50,110 --> 00:25:50,550
you next.

606
00:25:50,870 --> 00:25:52,410
What's the outlook for earnings?

607
00:25:52,590 --> 00:25:55,370
It seems like tariffs are likely to, if

608
00:25:55,370 --> 00:25:58,530
they stick around, it's not just a negotiating

609
00:25:58,530 --> 00:25:59,690
ploy of some kind.

610
00:26:00,910 --> 00:26:05,690
That would have some undermining impact on earnings.

611
00:26:06,070 --> 00:26:09,210
Is that, or at least price, it would

612
00:26:09,210 --> 00:26:11,270
have some inflationary effect on the cost, right?

613
00:26:11,610 --> 00:26:13,410
But it seems like it would have some

614
00:26:13,410 --> 00:26:14,470
consequence on earnings.

615
00:26:14,630 --> 00:26:15,150
Is that not?

616
00:26:15,150 --> 00:26:16,670
Yeah, when you look at the entire market,

617
00:26:16,750 --> 00:26:18,250
I don't know how margins don't come in,

618
00:26:18,350 --> 00:26:18,990
right?

619
00:26:20,570 --> 00:26:22,030
This is either going to get passed on

620
00:26:22,030 --> 00:26:23,130
to the consumer or it's going to get

621
00:26:23,130 --> 00:26:24,490
eaten, taken to margins.

622
00:26:25,010 --> 00:26:26,910
That's going to be worse with small cap

623
00:26:26,910 --> 00:26:28,590
than it is with large cap.

624
00:26:29,590 --> 00:26:32,730
But I think it's an inevitability, right?

625
00:26:32,830 --> 00:26:35,010
And I think right now we're just thinking

626
00:26:35,010 --> 00:26:41,070
about what sectors and what stocks are going

627
00:26:41,070 --> 00:26:42,530
to be impacted more.

628
00:26:43,070 --> 00:26:46,730
And I think it's inevitable probably that margins

629
00:26:46,730 --> 00:26:47,750
will be cut.

630
00:26:48,270 --> 00:26:50,210
But if margins are cut and revenue goes

631
00:26:50,210 --> 00:26:52,170
up because they can charge through higher prices,

632
00:26:53,950 --> 00:26:55,350
the E might be fine.

633
00:26:56,630 --> 00:26:59,490
But I think that's what we're all trying

634
00:26:59,490 --> 00:27:01,470
to sell right now, right?

635
00:27:01,570 --> 00:27:03,710
And that's kind of why I said this

636
00:27:03,710 --> 00:27:05,550
is a complicated subject and we don't want

637
00:27:05,550 --> 00:27:07,350
to necessarily make a knee-jerk reaction.

638
00:27:07,350 --> 00:27:07,910
Yeah.

639
00:27:09,030 --> 00:27:10,990
So I always preach I want to be

640
00:27:10,990 --> 00:27:12,570
proactive rather than reactive.

641
00:27:13,530 --> 00:27:14,470
And what does that mean?

642
00:27:14,550 --> 00:27:16,110
Well, I want to make a portfolio that

643
00:27:16,110 --> 00:27:19,810
can weather kind of surprise changes and go

644
00:27:19,810 --> 00:27:21,690
up with the market when it's going up

645
00:27:21,690 --> 00:27:24,230
and hopefully give a little bit of a

646
00:27:24,230 --> 00:27:25,450
buffer when it goes down.

647
00:27:27,630 --> 00:27:29,850
But if you are just reacting to the

648
00:27:29,850 --> 00:27:31,310
news headlines on a day-to-day basis,

649
00:27:31,310 --> 00:27:32,830
you're just going to get whipsawed.

650
00:27:32,830 --> 00:27:37,550
You know, this isn't an easy science and

651
00:27:37,550 --> 00:27:39,090
it's not even necessarily a science.

652
00:27:39,190 --> 00:27:40,490
I think there's some science and some art

653
00:27:40,490 --> 00:27:40,810
to it.

654
00:27:40,930 --> 00:27:43,330
And there's an overwhelming amount of data points

655
00:27:43,330 --> 00:27:46,270
and opinions that are being thrown at, I

656
00:27:46,270 --> 00:27:47,670
will say thrown at me right now.

657
00:27:47,910 --> 00:27:50,950
And what you need to do is take

658
00:27:50,950 --> 00:27:54,170
some time, maybe have some sleepless nights, which

659
00:27:54,170 --> 00:27:57,650
there's no shortage of for me, and think

660
00:27:57,650 --> 00:27:59,290
through what's important and what's not.

661
00:27:59,290 --> 00:28:02,050
And ultimately, you know, you guys have heard

662
00:28:02,050 --> 00:28:05,030
me say a million times, you know, earnings

663
00:28:05,030 --> 00:28:06,290
and interest rates are going to drive the

664
00:28:06,290 --> 00:28:08,270
total market and consistency and growth is what

665
00:28:08,270 --> 00:28:09,970
I'm looking for in individual stocks.

666
00:28:12,290 --> 00:28:14,050
Nothing's changed in that calculus, right?

667
00:28:14,150 --> 00:28:15,690
So when it comes to the individual stock

668
00:28:15,690 --> 00:28:18,830
portfolio, I'm looking at my portfolio and I'm

669
00:28:18,830 --> 00:28:22,330
saying to myself, is this company not as

670
00:28:22,330 --> 00:28:24,290
consistent as I thought it was?

671
00:28:24,290 --> 00:28:26,930
Because if it's going to get, if the

672
00:28:26,930 --> 00:28:28,490
whole business model is going to get upended

673
00:28:28,490 --> 00:28:32,910
because of, you know, an event like this,

674
00:28:33,010 --> 00:28:34,950
which we knew would be possible, then I

675
00:28:34,950 --> 00:28:36,730
made a mistake and I need to re

676
00:28:36,730 --> 00:28:37,790
-evaluate, right?

677
00:28:38,890 --> 00:28:42,090
At the same time, is there a consistent

678
00:28:42,090 --> 00:28:46,370
company out there that's growing that's not in

679
00:28:46,370 --> 00:28:49,210
my portfolio that I'm getting a nicer price

680
00:28:49,210 --> 00:28:50,950
on today than I was two weeks ago?

681
00:28:50,950 --> 00:28:52,930
And, you know, those are the questions I'm

682
00:28:52,930 --> 00:28:54,070
asking myself.

683
00:28:54,410 --> 00:28:57,490
Now, when it comes to earnings, when it

684
00:28:57,490 --> 00:28:59,150
comes to interest rates, they're decidedly lower right

685
00:28:59,150 --> 00:29:00,550
now, at least the long-term rates.

686
00:29:00,690 --> 00:29:02,270
So that's in the plus column.

687
00:29:02,730 --> 00:29:04,650
When it comes to earnings, I think it's

688
00:29:04,650 --> 00:29:06,470
probably going to have to get ratcheted down.

689
00:29:07,990 --> 00:29:10,630
And it's a matter of degree.

690
00:29:11,770 --> 00:29:14,430
But when you have lower interest rates and

691
00:29:14,430 --> 00:29:16,010
lower earnings, they might be offsetting.

692
00:29:16,550 --> 00:29:18,490
And that's something that you need to consider.

693
00:29:19,870 --> 00:29:21,830
So, you know, luckily I don't have to

694
00:29:21,830 --> 00:29:23,270
make any macro calls today.

695
00:29:23,910 --> 00:29:26,150
The quarter doesn't end for another three weeks

696
00:29:26,150 --> 00:29:28,670
and I have time to take in the

697
00:29:28,670 --> 00:29:31,190
variety of opinions and look at what the

698
00:29:31,190 --> 00:29:35,830
consensus opinion is for earnings growth and reassess

699
00:29:35,830 --> 00:29:36,850
my valuation model.

700
00:29:37,450 --> 00:29:39,130
And we feel like we're positioned pretty well

701
00:29:39,130 --> 00:29:40,550
for what's going on, you know?

702
00:29:40,990 --> 00:29:41,430
Exactly.

703
00:29:41,550 --> 00:29:42,970
I mean, that goes back to being proactive

704
00:29:42,970 --> 00:29:44,050
versus reactive.

705
00:29:44,730 --> 00:29:46,570
You know, I think if our clients were

706
00:29:46,570 --> 00:29:49,190
to look at their portfolios today, I think

707
00:29:49,190 --> 00:29:50,430
they'd be pleasantly surprised.

708
00:29:51,530 --> 00:29:54,790
And, you know, I'd rather them be pleasantly

709
00:29:54,790 --> 00:29:58,150
surprised during a nervous moment than be, you

710
00:29:58,150 --> 00:29:59,630
know, elated when things are great.

711
00:30:00,130 --> 00:30:02,090
Let me give Russ a chance to chime

712
00:30:02,090 --> 00:30:02,490
in here.

713
00:30:02,710 --> 00:30:03,490
Yeah, thanks, Chris.

714
00:30:04,210 --> 00:30:05,570
Yeah, I did have a question for you,

715
00:30:05,590 --> 00:30:05,790
Brian.

716
00:30:05,890 --> 00:30:09,150
I guess going back to this topic of

717
00:30:09,150 --> 00:30:16,550
diversification and valuations, I watched Bloomberg in the

718
00:30:16,550 --> 00:30:19,270
morning, and I saw some international fund managers

719
00:30:19,270 --> 00:30:21,810
come on to talk about Europe and international

720
00:30:21,810 --> 00:30:22,630
markets more broadly.

721
00:30:23,050 --> 00:30:25,130
I have no doubt they're running to the

722
00:30:25,130 --> 00:30:26,590
microphone these days, you know?

723
00:30:26,790 --> 00:30:27,230
Yeah, yeah.

724
00:30:28,630 --> 00:30:30,290
So, curious about your thoughts.

725
00:30:30,370 --> 00:30:31,090
You mentioned it earlier.

726
00:30:31,470 --> 00:30:33,670
But, you know, what are your thoughts on,

727
00:30:33,710 --> 00:30:36,710
you know, this kind of movement towards these

728
00:30:36,710 --> 00:30:39,730
international markets, towards Europe specifically, you said China

729
00:30:39,730 --> 00:30:40,210
as well.

730
00:30:40,830 --> 00:30:43,130
Is it just trying to get away from

731
00:30:43,130 --> 00:30:44,890
some of these U.S. names that might

732
00:30:44,890 --> 00:30:46,850
be, quote unquote, overvalued?

733
00:30:47,290 --> 00:30:49,950
Or is there more substance to it?

734
00:30:50,210 --> 00:30:52,210
And is Europe finally coming out of the

735
00:30:52,210 --> 00:30:54,170
doldrums that they've been in for quite a

736
00:30:54,170 --> 00:30:54,590
long time?

737
00:30:57,530 --> 00:30:59,550
As a general rule, we have an allocation

738
00:30:59,550 --> 00:31:00,810
towards international stocks.

739
00:31:00,890 --> 00:31:02,530
It's part of our diversification strategy.

740
00:31:02,690 --> 00:31:05,710
This isn't the tactical move that we have

741
00:31:05,710 --> 00:31:08,610
to have an allocation internationally.

742
00:31:09,250 --> 00:31:13,350
What we do have as our chosen allocation

743
00:31:13,350 --> 00:31:15,790
in our ETF mutual fund strategies is a

744
00:31:15,790 --> 00:31:17,430
fund that is fairly concentrated.

745
00:31:18,350 --> 00:31:19,810
And that's purposeful.

746
00:31:20,030 --> 00:31:24,090
We want to have a good allocation to

747
00:31:24,090 --> 00:31:27,010
the best names in the international market.

748
00:31:27,750 --> 00:31:29,310
And I think that we're achieving that.

749
00:31:29,430 --> 00:31:32,190
So the idea is if the All Country

750
00:31:32,190 --> 00:31:35,070
World Index XUS is up five, we want

751
00:31:35,070 --> 00:31:36,130
to be up a little bit more than

752
00:31:36,130 --> 00:31:36,370
that.

753
00:31:36,570 --> 00:31:38,810
And then if we're doing that, then we

754
00:31:38,810 --> 00:31:41,090
can be a little bit underweight international stocks,

755
00:31:41,670 --> 00:31:43,510
particularly since we don't like being in China,

756
00:31:44,290 --> 00:31:49,030
and still participate if the international market rallies.

757
00:31:49,310 --> 00:31:52,670
And I believe that over the last couple

758
00:31:52,670 --> 00:31:54,870
of months, we've seen that that strategy has

759
00:31:54,870 --> 00:31:55,890
worked out for us.

760
00:31:57,770 --> 00:31:58,970
Of course, I wish I had a lot

761
00:31:58,970 --> 00:32:01,410
more of it when it does 7%

762
00:32:01,410 --> 00:32:02,890
than the S&P 500 is down.

763
00:32:03,810 --> 00:32:07,090
But nevertheless, I think we've achieved the diversification

764
00:32:07,090 --> 00:32:08,890
goal there.

765
00:32:08,890 --> 00:32:11,790
When it comes to China, we don't touch

766
00:32:11,790 --> 00:32:14,890
it or try not to as much as

767
00:32:14,890 --> 00:32:15,590
we can.

768
00:32:16,990 --> 00:32:18,870
And here's my basic reasoning.

769
00:32:19,310 --> 00:32:21,550
It's actually illegal for Americans to own Chinese

770
00:32:21,550 --> 00:32:22,490
stocks in China.

771
00:32:23,930 --> 00:32:26,370
When you buy a Chinese stock, you don't

772
00:32:26,370 --> 00:32:27,650
actually own the company.

773
00:32:27,850 --> 00:32:29,910
You own a legal structure in the Cayman

774
00:32:29,910 --> 00:32:33,770
Islands or somewhere else that sells you a

775
00:32:33,770 --> 00:32:38,150
certificate stating that you will get the economic

776
00:32:38,150 --> 00:32:41,770
benefit from the Chinese stock.

777
00:32:42,210 --> 00:32:45,030
So the Chinese could turn around and say,

778
00:32:45,210 --> 00:32:49,750
well, that workaround is no longer palatable to

779
00:32:49,750 --> 00:32:50,010
us.

780
00:32:50,490 --> 00:32:52,450
And then you don't have anything.

781
00:32:53,110 --> 00:32:56,010
And given the geopolitical tensions with the West,

782
00:32:56,410 --> 00:32:58,010
I don't know if that's a gamble I

783
00:32:58,010 --> 00:32:59,150
necessarily want to take.

784
00:32:59,450 --> 00:33:00,310
I don't know if that's a gamble I

785
00:33:00,310 --> 00:33:00,870
want to take ever.

786
00:33:00,870 --> 00:33:03,990
But especially considering that.

787
00:33:06,190 --> 00:33:09,170
Even if you do like it, the government

788
00:33:09,170 --> 00:33:12,330
there, they're historically a communist regime.

789
00:33:13,210 --> 00:33:16,050
And they'll change on a dime if they

790
00:33:16,050 --> 00:33:16,430
think.

791
00:33:18,270 --> 00:33:19,730
They did this in 2018.

792
00:33:19,930 --> 00:33:20,870
I believe it was 2018.

793
00:33:21,070 --> 00:33:23,690
They believed that the tech sector was doing

794
00:33:23,690 --> 00:33:24,150
too well.

795
00:33:24,230 --> 00:33:25,450
And they basically just killed it in a

796
00:33:25,450 --> 00:33:25,670
day.

797
00:33:26,550 --> 00:33:28,390
So you think of that, that's why we

798
00:33:28,390 --> 00:33:28,990
stay out of China.

799
00:33:29,490 --> 00:33:33,110
Generally speaking, international is going to be challenged,

800
00:33:33,210 --> 00:33:35,470
I think, because of demographics in the long

801
00:33:35,470 --> 00:33:35,750
term.

802
00:33:36,010 --> 00:33:37,430
If you think of Europe, they have a

803
00:33:37,430 --> 00:33:38,150
declining population.

804
00:33:38,350 --> 00:33:39,890
Japan, they have an aging population.

805
00:33:40,050 --> 00:33:41,390
China has an aging population.

806
00:33:42,610 --> 00:33:46,090
The only real growth you're seeing in population

807
00:33:46,090 --> 00:33:49,010
might be in South America and the EMEAs,

808
00:33:49,190 --> 00:33:50,690
Africa and the Middle East.

809
00:33:51,070 --> 00:33:53,350
So if you could find something in those

810
00:33:53,350 --> 00:33:54,370
areas that you want to hold for the

811
00:33:54,370 --> 00:33:57,750
long term, maybe that's something you're interested in.

812
00:33:57,750 --> 00:34:00,690
I do think that's always a good reason

813
00:34:00,690 --> 00:34:02,370
to go out of your way.

814
00:34:02,630 --> 00:34:03,910
Yeah, I just want to chime in on

815
00:34:03,910 --> 00:34:04,790
this notion.

816
00:34:04,970 --> 00:34:07,790
If we talk about the All-Country World

817
00:34:07,790 --> 00:34:11,050
Index that you typically refer to, Brian, it's

818
00:34:11,050 --> 00:34:14,010
typically about 60-ish percent U.S., 40

819
00:34:14,010 --> 00:34:18,230
percent non-U.S., correct, roughly, in that

820
00:34:18,230 --> 00:34:18,630
ballpark?

821
00:34:21,239 --> 00:34:22,820
It's a little bit more U.S. than

822
00:34:22,820 --> 00:34:24,120
that now, but yeah, in the ballpark.

823
00:34:24,969 --> 00:34:28,400
And so I think when we think about

824
00:34:28,400 --> 00:34:32,840
our foreign exposure, that's our comparative as to

825
00:34:32,840 --> 00:34:34,060
how much do we want to have.

826
00:34:34,139 --> 00:34:37,520
And we've been consistently, in our own team

827
00:34:37,520 --> 00:34:41,239
here, we've been consistently underweight international relative to

828
00:34:41,239 --> 00:34:44,520
that benchmark with the equity exposure we have.

829
00:34:45,360 --> 00:34:48,719
That is probably the question over time.

830
00:34:49,000 --> 00:34:53,540
Will we want to alter that weighting?

831
00:34:53,540 --> 00:34:55,540
I think a lot of that is relative.

832
00:34:55,820 --> 00:35:00,320
How do we envision economic and market movements

833
00:35:00,320 --> 00:35:05,320
relative to the U.S.? And that's how

834
00:35:05,320 --> 00:35:09,540
we would negotiate that, navigate that decision as

835
00:35:09,540 --> 00:35:13,000
to how much foreign exposure do we want

836
00:35:13,000 --> 00:35:15,480
to embed in our clients' portfolios.

837
00:35:16,240 --> 00:35:18,880
If we thought there was a prolonged opportunity

838
00:35:18,880 --> 00:35:23,140
for outperformance relative to the United States, I'm

839
00:35:23,140 --> 00:35:26,440
sure we would escalate our foreign exposure.

840
00:35:28,080 --> 00:35:31,180
The question is, is that our expectation today?

841
00:35:32,080 --> 00:35:34,580
And I think right now, Brian, correct me

842
00:35:34,580 --> 00:35:38,240
if I'm wrong, your expectation for Outlook is

843
00:35:38,240 --> 00:35:41,400
not necessarily that Europe or other foreign markets

844
00:35:41,400 --> 00:35:44,900
are as likely to consistently outperform the United

845
00:35:44,900 --> 00:35:47,640
States as we'd expect today the U.S.

846
00:35:47,680 --> 00:35:51,240
to outperform or be a solid performer within

847
00:35:51,240 --> 00:35:52,100
that context.

848
00:35:53,460 --> 00:35:55,180
Yeah, I think that's accurate.

849
00:35:55,680 --> 00:35:57,360
And if you look at the equity, it's

850
00:35:57,360 --> 00:36:01,440
about 70% North America, which means it's

851
00:36:01,440 --> 00:36:06,480
30% other, about 5% China.

852
00:36:06,640 --> 00:36:09,540
It's recently been changed pretty significantly.

853
00:36:09,800 --> 00:36:12,000
So if you strip that out, we're looking

854
00:36:12,000 --> 00:36:15,040
at about 25% international.

855
00:36:15,040 --> 00:36:19,240
Our portfolios are about half that in international.

856
00:36:19,660 --> 00:36:21,420
And then we have a beta of about

857
00:36:21,420 --> 00:36:25,980
1.2. So it's accelerated a little bit

858
00:36:25,980 --> 00:36:26,680
because of the beta.

859
00:36:26,940 --> 00:36:31,260
So we're underweight, but we're not crazy underweight.

860
00:36:31,600 --> 00:36:33,960
And I think hopefully we're getting the benefit.

861
00:36:34,340 --> 00:36:37,220
In addition to that, up until very recently

862
00:36:37,220 --> 00:36:39,340
and still in one of our portfolios, we've

863
00:36:39,340 --> 00:36:41,600
had emerging market bonds, which has worked out

864
00:36:41,600 --> 00:36:43,320
really, really, really well for us.

865
00:36:43,320 --> 00:36:45,900
And so instead of having exposure to the

866
00:36:45,900 --> 00:36:47,680
stock market, some of these companies, we've had

867
00:36:47,680 --> 00:36:50,840
dollar denominated debt, which, as you can imagine,

868
00:36:50,920 --> 00:36:52,140
is going to be more consistent.

869
00:36:53,020 --> 00:36:55,200
It paid a nice yield for a while.

870
00:36:55,740 --> 00:36:57,280
And we did pretty well in that without

871
00:36:57,280 --> 00:37:00,220
taking an abundant amount of risk while getting

872
00:37:00,220 --> 00:37:01,340
some international exposure.

873
00:37:02,740 --> 00:37:03,900
Jeff, let me give you a chance.

874
00:37:03,980 --> 00:37:05,600
Anything you want to chime in on?

875
00:37:07,200 --> 00:37:11,040
I'm thinking about this in conversation relative to

876
00:37:11,040 --> 00:37:15,120
the recent market lack of correction.

877
00:37:15,580 --> 00:37:15,680
Right.

878
00:37:15,760 --> 00:37:18,360
So we talked about this in other times

879
00:37:18,360 --> 00:37:20,600
when we've had Brian on about corrections.

880
00:37:20,800 --> 00:37:22,960
We didn't have a correction of 10%

881
00:37:22,960 --> 00:37:26,340
on the S&P in 2024, I believe.

882
00:37:26,480 --> 00:37:28,700
And we're not there yet now.

883
00:37:28,800 --> 00:37:30,980
But I was wondering what Brian thought.

884
00:37:30,980 --> 00:37:34,880
We're talking about the geopolitical tariff impact on

885
00:37:34,880 --> 00:37:36,440
the market and the volatility of it.

886
00:37:36,520 --> 00:37:39,160
But as we know, it's normal to have

887
00:37:39,160 --> 00:37:42,460
corrections in prices in healthy markets.

888
00:37:43,020 --> 00:37:47,840
So do you think about this drawdown, these

889
00:37:47,840 --> 00:37:50,700
difficult days that we've had, that this could

890
00:37:50,700 --> 00:37:54,820
be just part of a normal market correction?

891
00:37:57,280 --> 00:38:00,100
Well, corrections typically don't happen for no reason.

892
00:38:00,100 --> 00:38:03,040
I mean, it's usually some kind of news

893
00:38:03,040 --> 00:38:03,520
headline.

894
00:38:03,940 --> 00:38:10,660
So yeah, I think if you're going to

895
00:38:10,660 --> 00:38:12,420
be a stock investor, this is the kind

896
00:38:12,420 --> 00:38:14,380
of volatility that you signed up for, right?

897
00:38:14,400 --> 00:38:16,380
That's why you get the long term performance.

898
00:38:18,280 --> 00:38:21,280
And I realize I do this professionally.

899
00:38:21,560 --> 00:38:23,640
So I've trained my brain different than the

900
00:38:23,640 --> 00:38:25,380
average person.

901
00:38:25,380 --> 00:38:30,440
But I always say that the money is

902
00:38:30,440 --> 00:38:32,400
made when the market's going down.

903
00:38:32,700 --> 00:38:34,640
And it's just realized when the market goes

904
00:38:34,640 --> 00:38:35,180
up, right?

905
00:38:35,240 --> 00:38:37,460
This is when you need to do the

906
00:38:37,460 --> 00:38:37,880
job.

907
00:38:38,800 --> 00:38:43,180
If interest rates were steady and news headlines

908
00:38:43,180 --> 00:38:47,140
were benign and the markets were ratcheting up,

909
00:38:47,340 --> 00:38:51,240
well, we pretty much just go to the

910
00:38:51,240 --> 00:38:51,820
beach, right?

911
00:38:52,480 --> 00:38:57,860
But this is what I studied for all

912
00:38:57,860 --> 00:38:58,300
those years.

913
00:38:58,400 --> 00:38:59,700
This is what I've been training for.

914
00:39:00,080 --> 00:39:05,100
And in some ways, I think since I've

915
00:39:05,100 --> 00:39:08,000
been working with Chris and the AMR team

916
00:39:08,000 --> 00:39:10,520
back before we were the Wealth Enhancement Group,

917
00:39:12,580 --> 00:39:16,940
we had a bear market in 2018.

918
00:39:16,960 --> 00:39:18,720
We had a bear market in 2020.

919
00:39:18,900 --> 00:39:20,560
We had a bear market in 2022.

920
00:39:21,820 --> 00:39:26,360
And this isn't anything that we haven't been

921
00:39:26,360 --> 00:39:28,740
through before as a group.

922
00:39:29,660 --> 00:39:33,000
And we've gotten through it and grown assets.

923
00:39:33,600 --> 00:39:36,480
And I think we've made some really, really

924
00:39:36,480 --> 00:39:38,480
good decisions during those times as well.

925
00:39:38,840 --> 00:39:41,040
And that's my focus.

926
00:39:41,460 --> 00:39:44,900
What are we going to do when we're

927
00:39:44,900 --> 00:39:46,440
given the fat pitch?

928
00:39:46,540 --> 00:39:49,080
Are we going to swing or are we

929
00:39:49,080 --> 00:39:49,820
going to strike out?

930
00:39:51,400 --> 00:39:53,620
And I'm looking to swing.

931
00:39:54,300 --> 00:39:55,380
I'm looking for opportunities.

932
00:39:55,720 --> 00:39:58,060
And that's what you can do if you're

933
00:39:58,060 --> 00:39:59,900
being proactive and not reactive, right?

934
00:40:00,020 --> 00:40:03,780
If you aren't prepared, if you have an

935
00:40:03,780 --> 00:40:06,160
overly aggressive portfolio, if you're taking too much

936
00:40:06,160 --> 00:40:08,880
risk, well, then when something like this happens,

937
00:40:08,980 --> 00:40:10,440
you're almost in the position where you have

938
00:40:10,440 --> 00:40:11,340
to sell, right?

939
00:40:11,380 --> 00:40:12,800
And then you get these liquidity events.

940
00:40:12,800 --> 00:40:16,060
But if you've already built a responsible portfolio

941
00:40:16,060 --> 00:40:21,100
and you're getting a negative reaction to the

942
00:40:21,100 --> 00:40:23,400
market, you could sit back and say, hey,

943
00:40:23,460 --> 00:40:27,120
look, I got some firepower and I got

944
00:40:27,120 --> 00:40:29,000
the bat on my shoulder and I'm looking

945
00:40:29,000 --> 00:40:30,000
for great opportunities.

946
00:40:30,880 --> 00:40:32,420
So that's what we're doing.

947
00:40:34,300 --> 00:40:36,020
That's probably a good place for us to

948
00:40:36,020 --> 00:40:36,900
pause the show.

949
00:40:37,320 --> 00:40:39,200
Thanks, everyone, for your participation.

950
00:40:39,380 --> 00:40:40,720
Brian, appreciate the perspective.

951
00:40:41,260 --> 00:40:43,000
Help people get a sense of how to

952
00:40:43,000 --> 00:40:44,680
make sense of what's going on in our,

953
00:40:45,540 --> 00:40:47,460
just there's a lot of news, a lot

954
00:40:47,460 --> 00:40:48,720
of things to pay attention to.

955
00:40:49,100 --> 00:40:53,160
And we're trying to help people navigate that

956
00:40:53,160 --> 00:40:58,200
and hopefully be anticipating some of the volatility

957
00:40:58,200 --> 00:41:01,280
that comes along and how to be prepared

958
00:41:01,280 --> 00:41:03,940
and then look for opportunities as they emerge.

959
00:41:04,580 --> 00:41:07,640
So thanks, everyone, for your participation.

960
00:41:07,640 --> 00:41:09,960
And I'll just mention as we close out,

961
00:41:10,040 --> 00:41:11,820
if anyone would like a little help along

962
00:41:11,820 --> 00:41:14,100
the way, if you're finding it difficult to

963
00:41:14,100 --> 00:41:16,420
navigate these markets and would benefit from a

964
00:41:16,420 --> 00:41:18,600
little bit of a second opinion, maybe get

965
00:41:18,600 --> 00:41:21,160
some insights, don't hesitate to reach out to

966
00:41:21,160 --> 00:41:21,320
us.

967
00:41:21,460 --> 00:41:22,000
We're here to help.

968
00:41:22,180 --> 00:41:28,640
What is the AMR-info at wealthenhancement.com.

969
00:41:28,840 --> 00:41:30,500
And we're happy to be a resource to

970
00:41:30,500 --> 00:41:31,460
you if you need any help.

971
00:41:31,680 --> 00:41:34,200
Until next time, everybody, keep striving for something

972
00:41:34,200 --> 00:41:34,460
more.

973
00:41:37,640 --> 00:41:38,740
With Chris Boyd.

974
00:41:38,840 --> 00:41:41,180
Call us for help, whether it's for financial

975
00:41:41,180 --> 00:41:45,100
planning or portfolio management, insurance concerns, or those

976
00:41:45,100 --> 00:41:47,140
quality of life issues that make the money

977
00:41:47,140 --> 00:41:48,260
matters matter.

978
00:41:48,700 --> 00:41:51,900
Whatever's on your mind, visit us at somethingmorewithchrisboyd

979
00:41:51,900 --> 00:41:55,080
.com or call us toll-free at 866

980
00:41:55,080 --> 00:41:58,740
-771-8901.

981
00:41:58,840 --> 00:42:02,620
Or send us your questions to AMR-info

982
00:42:02,620 --> 00:42:04,580
at wealthenhancement.com.

983
00:42:04,580 --> 00:42:06,680
You're listening to Something More with Chris Boyd

984
00:42:06,680 --> 00:42:07,520
Financial Talk Show.

985
00:42:07,660 --> 00:42:10,160
Wealth Enhancement Advisory Services and Jay Christopher Boyd

986
00:42:10,160 --> 00:42:12,460
provide investment advice on an individual basis to

987
00:42:12,460 --> 00:42:13,000
clients only.

988
00:42:13,160 --> 00:42:15,140
Proper advice depends on a complete analysis of

989
00:42:15,140 --> 00:42:16,320
all facts and circumstances.

990
00:42:16,600 --> 00:42:18,420
The information given on this program is general

991
00:42:18,420 --> 00:42:20,460
financial comments and cannot be relied upon as

992
00:42:20,460 --> 00:42:22,020
pertaining to your specific situation.

993
00:42:22,280 --> 00:42:24,220
Wealth Enhancement Group cannot guarantee that using the

994
00:42:24,220 --> 00:42:26,240
information from this show will generate profits or

995
00:42:26,240 --> 00:42:27,320
ensure freedom from loss.

996
00:42:27,540 --> 00:42:29,700
Listeners should consult their own financial advisors or

997
00:42:29,700 --> 00:42:31,800
conduct their own due diligence before making any

998
00:42:31,800 --> 00:42:32,640
financial decisions.