Transcript
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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.
