Latest / Masters in Business / Liz Ann Sonders on Behavioral and Sentiment Measures in Markets

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Liz Ann Sonders on Behavioral and Sentiment Measures in Markets · Masters in Business

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
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  Speaker 2: This is Master's in Business with Barry Ridholds on Bloomberg Radio.
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  Speaker 2: This week on the podcast what Can I Say, I
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  Speaker 2: have the delightful liz Anne Saunders on She is the
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  Speaker 2: chief investment strategist and member of the firm's investment committee
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  Speaker 2: at Schwab. The firm has eight and a half trillion
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  Speaker 2: dollars on its platform. We've been working with Schwab for
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  Speaker 2: a long time. Liz Anne was one of the earliest
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  Speaker 2: guests on the show, and we reminisce a little bit
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  Speaker 2: about that first appearance. I don't know what else to
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  Speaker 2: say about her. She's so insightful and so knowledgeable and
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  Speaker 2: has such a wonderful perch overseeing eight and a half
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  Speaker 2: trillion dollars of both individual mom and pop investors advisors.
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  Speaker 2: They're the biggest platform as a estonian for advisors. My disclosure,
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  Speaker 2: my firm also uses them, and she just sees the
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  Speaker 2: world from a place that not a lot of people
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  Speaker 2: in the industry get to do. Not only do they
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  Speaker 2: have a giant research team, but she gets to see
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  Speaker 2: fun flows. She gets to see a huge amount of
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  Speaker 2: activity from the inside, and she on a regular basis,
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  Speaker 2: speaks to investors, speaks to advisors, speaks to institutions. She
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  Speaker 2: is as much in the mix and the thick of
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  Speaker 2: what's going on in the world of investing as anybody,
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  Speaker 2: and that combination of her unique Perchin perspective and her
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  Speaker 2: deep experience as either a fund manager or a strategist
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  Speaker 2: for the past thirty eight years unparalleled in the world
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  Speaker 2: of investing. I found this conversation to simply be delightful,
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  Speaker 2: and I think you will also, with no further ado.
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  Speaker 2: Charles Schwabs Liz Ann Saunders. I listened to the first
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  Speaker 2: conversation we had. It's like the second year I was
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  Speaker 2: doing this. It was twenty fifteen. You were great, I
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  Speaker 2: was awful.
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  Speaker 1: That was not the first time we met. I remember
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  Speaker 1: that conversation nine years ago, but that was not the
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  Speaker 1: first time we met.
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  Speaker 2: The first time we met was my first time doing television.
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  Speaker 2: I remember that in a tiny little room around a
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  Speaker 2: round table with Larry Kudlow, and I'll never forget banging
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  Speaker 2: down two die cokes, walking out the door to go
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  Speaker 2: to the men's room, and the producer grabs me, let's go,
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  Speaker 2: We're live, and that was it. I sat there for
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  Speaker 2: an hour with my back teeth floating. And that I
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  Speaker 2: remember a friend said, your fidgety, don't move around, don't
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  Speaker 2: just pick a spot to look. And the spot was
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  Speaker 2: your front teeth, which are perfect and white and still
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  Speaker 2: perfect and white. Well, and I know why, well, I
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  Speaker 2: know why.
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  Speaker 1: In between that time that we first sat down and
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  Speaker 1: did this and then this is a couple of years ago.
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  Speaker 1: Now we live in Naples, Florida, and it was the
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  Speaker 1: night before Thanksgiving. We walked out of a restaurant and
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  Speaker 1: I just walked off the curb the wrong way. Oh,
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  Speaker 1: and the first thing to hit the pavement, your teeth
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  Speaker 1: was my teeth.
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  Speaker 2: So those are not now.
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  Speaker 1: Parts of it chipped, the part of the right front
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  Speaker 1: tooth and the tooth next to it. And fortunately my
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  Speaker 1: sister's next door neighbor was a dentist, and he went
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  Speaker 1: in Thanksgiving morning and really and fixed it.
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  Speaker 2: You know, I t boned a car. I was the
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  Speaker 2: t boney right in front of my dentist's office. And
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  Speaker 2: when I called the next morning, say hey, I chipped
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  Speaker 2: my front tooth I needed fixed, they said, oh, you too.
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  Speaker 2: There was a bad accident in front of that was me. Yeah,
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  Speaker 2: that was me. My wife was really upset. I totaled
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  Speaker 2: her car at like five miles an hour. An suv
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  Speaker 2: plowed into.
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  Speaker 1: Us totaled five miles an hour.
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  Speaker 2: So I was making a left. The person behind me
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  Speaker 2: thought I was going straight and tried to pass me
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  Speaker 2: on the left. So literally I meant a left right
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  Speaker 2: into them. And it's funny because that was a pandemic purchase,
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  Speaker 2: a very inexpensive twenty seventeen Panamera fors which everybody walked away.
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  Speaker 2: I mean, we were a little banged up, but you know,
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  Speaker 2: a giant suv just crunched us. And what's terrible is
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  Speaker 2: when you see the car afterwards and you see the
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  Speaker 2: driver's door, like, holy cow, how did I just how
• 4:36
  Speaker 2: did it walk go in there? That was like geez.
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  Speaker 2: Whenever people say you don't need to buy a new car,
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  Speaker 2: it's like, I want the latest, greatest.
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  Speaker 1: With airbags with one hundred and seventy seven arabs.
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  Speaker 2: By the way airbags come down, you can't sit. It
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  Speaker 2: was so disorienting because I'm trying to turn the wheel and.
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  Speaker 1: I can't imagine driving in a car without a seatbelt on.
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  Speaker 1: Before we started this ferry, we were talking about our
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  Speaker 1: age and baby boomers. When I was brought home from
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  Speaker 1: the hospital in nineteen sixty four, it was in my
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  Speaker 1: mom's lap.
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  Speaker 2: Okay, I'll tell you. I'll take that a step further.
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  Speaker 2: My dad had this giant I'm trying to it was
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  Speaker 2: an Impala, and we used to lie on the rear
• 5:22
  Speaker 2: deck under the back window, like if there's an accident,
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  Speaker 2: you're a projectile right out.
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  Speaker 1: We had a station wagon. We'd go from northern New
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  Speaker 1: Jersey to Brooklyn to visit grandparents, and sleeping bags would
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  Speaker 1: be laid out in the back.
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  Speaker 2: And now you can't take a kid home from the
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  Speaker 2: hospital without the right not just a car seat. It
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  Speaker 2: has to be the right car.
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  Speaker 1: I'm not saying what was going on back in the
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  Speaker 1: sixties was the right thing.
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  Speaker 2: It toughened you up. You go through a few windshields,
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  Speaker 2: you know, you learn.
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  Speaker 1: To dust your specially. I haven't had that.
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  Speaker 2: All right, let's get serious. So everybody knows you as
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  Speaker 2: the chief investment strategist at SCHWAB, But let's roll back
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  Speaker 2: to the early part of your career. You get a
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  Speaker 2: BA in economics and polysi from the University of Delaware.
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  Speaker 2: What was the original career plan?
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  Speaker 1: I didn't have one, none, well, not in college.
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  Speaker 2: No.
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  Speaker 1: In fact, what started as that double major ultimately morphed
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  Speaker 1: into the official degree being in international relations. But to
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  Speaker 1: be perfectly honest, I just decided to study a couple
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  Speaker 1: different areas that were very broadbrush because I didn't know
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  Speaker 1: what I wanted to do when I graduated international relations.
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  Speaker 2: So you go to the Kennedy School and then become
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  Speaker 2: a diplomat.
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  Speaker 1: Well, you know, I thought about going to graduate school
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  Speaker 1: right away for political science. I looked into American University,
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  Speaker 1: and then I thought to myself, I don't know what
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  Speaker 1: I want to do yet. So all I knew throughout
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  Speaker 1: the latter part of my undergraduate years is that I
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  Speaker 1: wanted to live and work in New York City. That
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  Speaker 1: was the dream without a latch. Grow born in bay Ridge, Brooklyn,
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  Speaker 1: then early part of childhood in Marstown, New Jersey, then
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  Speaker 1: outside of Philadelphia and Westchester, Pennsylvania. Then of course went
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  Speaker 1: to Delaware and then New York City for twelve years,
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  Speaker 1: and then Connecticut. Raised our kids in Darien, Connecticut. And
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  Speaker 1: now I'm based in Naples, Florida.
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  Speaker 2: Right, do you have a little golf cart and your.
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  Speaker 1: Put no golf cart now, but of Vespa.
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  Speaker 2: Okay, oh that's fun. So you come out of college,
• 7:26
  Speaker 2: how did you end up at Avatar Associates working with
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  Speaker 2: Marty's wide.
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  Speaker 1: So I interviewed across the spectrum of industries, and they
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  Speaker 1: were all interviews for grunt positions, entry level positions. But
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  Speaker 1: I had interviews at a few Wall Street firms, both
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  Speaker 1: large and small. I think I interviewed at a marketing
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  Speaker 1: firm and ad agency because I didn't know what I
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  Speaker 1: wanted to do. But I had some familiarity with Marty
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  Speaker 1: because in college, one of the courses that I took
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  Speaker 1: a requirement was, in addition to reading the Wall Street
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  Speaker 1: Journal every day, was understanding what had happened in the
• 8:01
  Speaker 1: world of financial markets throughout the week. And I had
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  Speaker 1: a professor give me a little sort of hint. He said, Hey,
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  Speaker 1: just watch Wall Street Week on PBS on Friday nights
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  Speaker 1: Closer Kaiser at eight thirty to nine o'clock. Then you know,
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  Speaker 1: you go out and you start your weekend. And I did.
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  Speaker 1: And Marty was on that show really from its inception
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  Speaker 1: in the early nineteen seventies. And for those that remember
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  Speaker 1: the show, you also remember that that predated anything that
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  Speaker 1: exists Now.
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  Speaker 2: That was the Orisontal for that show. Before there was
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  Speaker 2: three or four different financial news networks.
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  Speaker 1: And it was millions of viewers every week. It was
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  Speaker 1: that eras version of Must see TV on the subject
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  Speaker 1: of the market. So I had some familiarity, but in
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  Speaker 1: advance of the interview, I also did more research on
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  Speaker 1: Marty on his side of the organization, which was the
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  Speaker 1: mutual fund, hedge fund, investment newsletter side, and then the
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  Speaker 1: avatar side that I ultimately joined, which was the institutional
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  Speaker 1: money management firm that Barry is a reminder in nineteen
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  Speaker 1: eighty six, the process of doing research on a person
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  Speaker 1: or a firm, there is just Google them. No, there
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  Speaker 1: was no Google. There were no computers, there was no Internet.
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  Speaker 1: So I was in the library with the microfiche machine
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  Speaker 1: and literally turning the crank and reading newspaper articles. So
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  Speaker 1: I had some background and had two interviews, and honestly,
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  Speaker 1: just the voice inside my head said, this feels right.
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  Speaker 2: You're there for thirteen years, nineteen eighty six to ninety nine.
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  Speaker 2: That was the Great bullmarket. Tell us a little bit
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  Speaker 2: what it was like during that period, and then we'll
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  Speaker 2: talk about what it was like working with Marty's Y
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  Speaker 2: for the late Great Marty's wife.
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  Speaker 1: So again I was on the avatar side of this
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  Speaker 1: Wyg Avatar broader organization, which was institutional money management, managing
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  Speaker 1: money for a lot of large corporate plans and foundations
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  Speaker 1: and endowments. And I was a portfolio manager, so I
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  Speaker 1: was doing bottom up rec search and picking stocks. But
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  Speaker 1: it was with the context of the top down analysis
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  Speaker 1: that Marty brought to the picture I learned throughout that
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  Speaker 1: thirteen years. And part of the reason why I took
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  Speaker 1: advantage of an opportunity that presented itself to move over
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  Speaker 1: to US Trust was I was much more interested in
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  Speaker 1: and fascinated by the top down and not the bottom up.
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  Speaker 1: I did love picking stocks, it just wasn't where my
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  Speaker 1: passion was. So my observations were more keen on what
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  Speaker 1: Marty and his models were doing in the context of
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  Speaker 1: the big picture and monetary policy analysis and investor sentiment
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  Speaker 1: and behavior, and that was where I really found my
• 10:44
  Speaker 1: passion was in that top down analysis.
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  Speaker 2: So let's talk a little bit about Marty's Wig, one
• 10:50
  Speaker 2: of that era's most famous investors and traders. The technical
• 10:56
  Speaker 2: crew know him for the ZWYG thrust Indicationlater he created
• 11:01
  Speaker 2: the coal ratio. But he's also the guy who coined
• 11:05
  Speaker 2: the phrase don't fight the fed. Tell us a little
• 11:09
  Speaker 2: bit what it was like to work with Marty's why.
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  Speaker 1: I adored Marty, you know, rest in peace. He was quirky.
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  Speaker 1: He could have a temper, but never about the big stuff.
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  Speaker 1: It was more about the little stuff. If he couldn't
• 11:22
  Speaker 1: find his pencil, and you know, he would toss a phone.
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  Speaker 1: But he was really sort of warm and fuzzy, but
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  Speaker 1: had that. He was always sort of anxious and nervous,
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  Speaker 1: and a lot of people who just observed him from
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  Speaker 1: afar took it as well, He's just bearish all the time.
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  Speaker 1: It wasn't the case. I mean, he was essentially a
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  Speaker 1: market timer, for lack of a better word. He was
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  Speaker 1: an tactical acid allocator.
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  Speaker 2: And one of the more rare successful market.
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  Speaker 1: Times, unbelievably successful, and had to do with the discipline
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  Speaker 1: of the models that he used and how he segmented
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  Speaker 1: economical equids, investor liquidity, and then technicals and breath conditions
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  Speaker 1: and understood how they melded together. And you know, it
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  Speaker 1: wasn't The history of working for him wasn't without some
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  Speaker 1: periods that he didn't quite nail, but the big ones
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  Speaker 1: he really nailed.
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  Speaker 2: When I was early in my career, I read the
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  Speaker 2: book Winning on Wall Street, which I think came out
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  Speaker 2: in like ninety five or ninety six.
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  Speaker 1: Well, the original one came out earlier than that, but
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  Speaker 1: there were there were additions that followed that, but it's
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  Speaker 1: still a mustreet.
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  Speaker 2: And my takeaway from that is market timing is one
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  Speaker 2: part science where you're crunching numbers and looking at history,
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  Speaker 2: but you can't get away from one part art where
• 12:46
  Speaker 2: after you're watching the markets for decades like him, there's
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  Speaker 2: an intuitive feel where just something starts to smell wrong
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  Speaker 2: and when the data lines up and your spidey sense
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  Speaker 2: starts to tangle. And he never quite said it that way,
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  Speaker 2: but I very much got the sense that all the
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  Speaker 2: data was there to buttress the fact that, hey, I've
• 13:09
  Speaker 2: been watching markets for fifty years and something wicked this
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  Speaker 2: way comes.
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  Speaker 1: The gut instinct was extraordinary. It was always again in
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  Speaker 1: the context of the models that he was very disciplined about,
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  Speaker 1: but there was that just added little piece, and it
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  Speaker 1: certainly came into play with regard to what essentially was
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  Speaker 1: his crash call.
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  Speaker 2: So let's talk about that. So he's a regular on
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  Speaker 2: Wall Street Week with Lewis Rukeiser. I could still see
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  Speaker 2: the dollar sign in the street, the s for the
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  Speaker 2: street in the in the logo the Friday before Black Monday,
• 13:45
  Speaker 2: he goes on Rukeiser, what does he say.
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  Speaker 1: For those that don't remember the show? And it's you
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  Speaker 1: know what every other goes by? I still hear all
• 13:53
  Speaker 1: the time. Oh my gosh, I miss Wall Street Week.
• 13:55
  Speaker 1: I miss Lou? What was he like? What was Marty like?
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  Speaker 1: And younger people just never heard of the show. They
• 14:01
  Speaker 1: have no idea who who short Kaiser is, and that's
• 14:05
  Speaker 1: kind of sad for somebody that's been around for as
• 14:08
  Speaker 1: long as I have. But the structure of the show
• 14:10
  Speaker 1: with Lou would come out. He would do ten minutes
• 14:13
  Speaker 1: or so of a monologue and it was really brilliant writing.
• 14:18
  Speaker 1: He wrote them all himself. There was humor, there was
• 14:23
  Speaker 1: great intelligence on what had happened in the market. There
• 14:26
  Speaker 1: was really important reminders around what matters and what doesn't.
• 14:29
  Speaker 1: And he was just sort of a calming force and influence,
• 14:33
  Speaker 1: especially during tumultuous times. But then he would walk over
• 14:37
  Speaker 1: to the table where at the table was Lou and
• 14:40
  Speaker 1: the three regular panelists that were on that evening, and
• 14:44
  Speaker 1: there was twenty one two three panelists on an ongoing basis,
• 14:49
  Speaker 1: and he would have a conversation with each panelist and
• 14:53
  Speaker 1: then all four would go over to the sofa area
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  Speaker 1: and interview the special guest for that night. So this
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  Speaker 1: was the middle part of the show show where he
• 15:01
  Speaker 1: was talking to the panelists, and Marty was his typical
• 15:06
  Speaker 1: and I think Lou asked him, and you can find
• 15:09
  Speaker 1: it on YouTube.
• 15:10
  Speaker 2: It's a.
• 15:13
  Speaker 1: Bunch of them, a bunch of them, are that's the
• 15:15
  Speaker 1: one to watch?
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  Speaker 2: Yeah? Absolutely, And I.
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  Speaker 1: Think Lou said, boy, you sound a little trouble. Do
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  Speaker 1: you think we have a bear market? And Marty basically said, no,
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  Speaker 1: I think the market's going to crash, And then he
• 15:27
  Speaker 1: went further to talk about the nature of what it
• 15:30
  Speaker 1: would look like, the probability that it would happen, but
• 15:33
  Speaker 1: then there would be a retest, but then once you
• 15:36
  Speaker 1: had the retest, the decent chance that you'd be off
• 15:38
  Speaker 1: to the races again.
• 15:39
  Speaker 2: Pretty much exactly exactly what happened. Like, It's not just oh,
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  Speaker 2: the market's going to lose some points on Monday. He
• 15:46
  Speaker 2: laid out like the next six months and it's exactly
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  Speaker 2: what happened.
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  Speaker 1: And it had to do with the interest right backdrop
• 15:52
  Speaker 1: at the time and tighter monetary conditions, but also the
• 15:56
  Speaker 1: spidey sense to your point, around the the innovation of
• 16:01
  Speaker 1: the time of portfolio insurance and felt that that was
• 16:06
  Speaker 1: sort of unwinding and wasn't going to represent the insurance
• 16:09
  Speaker 1: that a lot of people thought. And he was on
• 16:12
  Speaker 1: that the hedge fund side of the dual organization so
• 16:18
  Speaker 1: could be could swing for the fences a bit more
• 16:21
  Speaker 1: than we could on the institutional side. And I don't
• 16:24
  Speaker 1: remember the exact percentages, but was very aggressively long heading
• 16:29
  Speaker 1: into what the pre crash peak was in August, and
• 16:33
  Speaker 1: then started aggressively both selling and moving to the short
• 16:37
  Speaker 1: side of things, heading right into the weekend before the crash.
• 16:41
  Speaker 1: And we did something similar on the institutional side, not
• 16:45
  Speaker 1: the same extreme, but close to fully invested to a
• 16:48
  Speaker 1: very very low equity exposure.
• 16:50
  Speaker 2: And people may not remember nineteen eighty seven was at
• 16:54
  Speaker 2: least up and through September was a robust year in
• 16:57
  Speaker 2: the market. We were up like thirty or forty percent,
• 17:00
  Speaker 2: like a really substantial gain, and despite the twenty two
• 17:05
  Speaker 2: point seven percent crash, I think we finished the year
• 17:09
  Speaker 2: like up one percent.
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  Speaker 1: I think it was one point eight percent. And you
• 17:12
  Speaker 1: know what, Barry, I'm glad you mentioned that, So indulge
• 17:15
  Speaker 1: me if you would, on a tangent here. One of
• 17:18
  Speaker 1: the things that I have never done, and no one
• 17:20
  Speaker 1: at Schwab has ever asked me to do, is what
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  Speaker 1: I think is the silly exercise of things like yourine
• 17:25
  Speaker 1: price targets. Now, in part that's a way for institutional
• 17:30
  Speaker 1: strategists to be measured against one another, and the sort
• 17:33
  Speaker 1: of narrative embedded in that I suppose might matter to institutions,
• 17:37
  Speaker 1: but our eight plus trillion dollars of client assets are
• 17:40
  Speaker 1: for the most part, individual investors. Nineteen eighty seven is
• 17:44
  Speaker 1: a perfect example of that. If I, at the beginning
• 17:46
  Speaker 1: of the year had said the market is going to
• 17:49
  Speaker 1: be up less than two percent, that might have sent
• 17:52
  Speaker 1: the impression that it was going to be kind of
• 17:54
  Speaker 1: a boring year and patted myself on the back at
• 17:58
  Speaker 1: the end of the year. But the path that the
• 18:02
  Speaker 1: market took to start at the year and then ended
• 18:06
  Speaker 1: up one point eight percent was nothing resembling what one
• 18:10
  Speaker 1: might infer if you had just heard the year end
• 18:13
  Speaker 1: price target of essentially a flat market.
• 18:17
  Speaker 2: So I love the mental exercise that Wes Gray of
• 18:21
  Speaker 2: Alpha Architect does. Hey, if you knew with perfect clarity,
• 18:26
  Speaker 2: if that bird landed on your shoulder and told you
• 18:29
  Speaker 2: here's where equity prices are going to be in ten years,
• 18:33
  Speaker 2: position your portfolio for that. He says, even God would
• 18:39
  Speaker 2: get fired as a portfolio manager because the drawdowns can
• 18:43
  Speaker 2: be so vicious. And what do you mean you're fully invested.
• 18:47
  Speaker 2: The market is down, you know, thirty forty percent? You
• 18:50
  Speaker 2: didn't see this.
• 18:51
  Speaker 1: When markets are going up, the benchmark is either an
• 18:56
  Speaker 1: index like the S and P five hundred, or you
• 18:58
  Speaker 1: know someone you know that's making even more money than
• 19:00
  Speaker 1: you are. But it's amazing how quickly the benchmark turns
• 19:04
  Speaker 1: into cash or a positive return when markets are going down.
• 19:07
  Speaker 2: So let's talk a little bit about a day in
• 19:10
  Speaker 2: the life of a chief investment strategist at an eight
• 19:13
  Speaker 2: trillion dollar firm. I have to assume every day is
• 19:16
  Speaker 2: a little different.
• 19:17
  Speaker 1: I was going to say, it depends on the day.
• 19:19
  Speaker 2: So take us through a typical day. What's it like.
• 19:21
  Speaker 1: Well, there is probably nothing typical about a day, but
• 19:26
  Speaker 1: on the rare occasion where I have a decent block
• 19:29
  Speaker 1: of time where I am not on camera or traveling,
• 19:34
  Speaker 1: I do a lot of research. I remember when my
• 19:37
  Speaker 1: daughter was in middle school and she's twenty four years
• 19:39
  Speaker 1: old analysis, and she's the youngest. It was a long
• 19:42
  Speaker 1: time ago. The school had a career day and I
• 19:44
  Speaker 1: was asked to come in as one of the representatives
• 19:46
  Speaker 1: to have kids rotate through the classroom. They assigned you
• 19:49
  Speaker 1: to and talk about what you do, particularly for a
• 19:52
  Speaker 1: job like mine. The directive from the principle was try
• 19:56
  Speaker 1: to get the seventh graders to understand what you do.
• 19:59
  Speaker 1: So I started by saying, well, basically, I read, write,
• 20:02
  Speaker 1: and talk. So that's what I spend my typical day
• 20:05
  Speaker 1: doing is some form of reading, writing and talking. And
• 20:08
  Speaker 1: the reading part is the digestion of just a fire
• 20:12
  Speaker 1: hose of information, proprietary research, internal Schwab research, all the
• 20:17
  Speaker 1: research that I get from the variety of research sources
• 20:21
  Speaker 1: that we have, analyzing data, analyzing every economic report that
• 20:25
  Speaker 1: comes in, everything happening in the market on a day
• 20:28
  Speaker 1: to day basis. Even though I don't take a trading approach,
• 20:31
  Speaker 1: just looking at technicals and breath statistics and leadership and
• 20:35
  Speaker 1: factor analysis, et cetera, et cetera. And then I spent
• 20:39
  Speaker 1: a lot of time both literally and figuratively, on the
• 20:42
  Speaker 1: road talking to our clients, both the retail clients as
• 20:46
  Speaker 1: well as advisor services. Now, in this post COVID environment,
• 20:50
  Speaker 1: it's not quite as much as used to be the
• 20:54
  Speaker 1: case in terms of travel to do in person events.
• 20:57
  Speaker 1: It's maybe sixty percent back in that direction, but we've
• 20:59
  Speaker 1: all adopted to the.
• 21:01
  Speaker 2: Use of Isn't that a better balance?
• 21:02
  Speaker 1: Doesn't it's a better balance, and it's efficient. I used
• 21:06
  Speaker 1: to I used to go over to Asia once or
• 21:08
  Speaker 1: twice a year to see many of our clients that
• 21:10
  Speaker 1: are based over there, and the trips would involve some
• 21:15
  Speaker 1: combination of Hong Kong, Shanghai, Beijing, maybe Singapore, and I
• 21:19
  Speaker 1: would do a breakfast event, a lunch event, a dinner event.
• 21:23
  Speaker 1: The dinner events might have up to one hundred and
• 21:25
  Speaker 1: fifty two hundred people, smaller other events, but at the
• 21:28
  Speaker 1: end of a trip it was a brutal travel trip.
• 21:31
  Speaker 1: I might have interacted in some form with several hundred clients.
• 21:36
  Speaker 1: I now do a quarterly webcast for those same clients,
• 21:39
  Speaker 1: and there have been webcasts on which we've had more
• 21:42
  Speaker 1: than five thousand. Wow, clients, So there is an efficiency
• 21:46
  Speaker 1: to continue to weave that in.
• 21:48
  Speaker 2: There's no substitute for the face to face. But sometimes
• 21:52
  Speaker 2: it's like, do I really need to go here to
• 21:56
  Speaker 2: meet with thirty people? It just seems so some of
• 22:00
  Speaker 2: the takeaway from a little bit of zoom, a little
• 22:03
  Speaker 2: bit of webcasts have become hey, we can be more
• 22:07
  Speaker 2: efficient and more productive. Absolutely, all these tools existed ten
• 22:11
  Speaker 2: years ago. The pandemic seems.
• 22:13
  Speaker 1: Fair for us to right. Absolutely. And then as you
• 22:18
  Speaker 1: and I sit here having this conversation, a relatively new
• 22:23
  Speaker 1: component of my day to day activity is I know,
• 22:26
  Speaker 1: co host a podcast.
• 22:28
  Speaker 2: I know that. How are you enjoying that?
• 22:30
  Speaker 1: Love it? Absolutely? Love it? So we launched it. I
• 22:32
  Speaker 1: think it was November of last year. I co hosted
• 22:35
  Speaker 1: with my colleague Kathy Jones, who was our chief fixed
• 22:39
  Speaker 1: income strategist, So she's my counterpart on the fixed income
• 22:43
  Speaker 1: side of things, where my bias is on the equity
• 22:45
  Speaker 1: side of things. And we have just very open, honest conversation,
• 22:50
  Speaker 1: sort of you're a fly on the wall hearing what
• 22:53
  Speaker 1: we would talk about. It's very unscripted about what's going
• 22:56
  Speaker 1: on in the markets, and we talk about the FED
• 22:58
  Speaker 1: and economic data and what's a head for the week.
• 23:01
  Speaker 1: And we typically also have guests both in weekly. You're
• 23:03
  Speaker 1: doing weekly, We're doing it weekly. It drops on Fridays.
• 23:07
  Speaker 1: It's audio only, so we can have external guests, internal guests.
• 23:12
  Speaker 1: Any people can be wherever they are, and a wide
• 23:16
  Speaker 1: range of guests that we have had. We had Claudia
• 23:20
  Speaker 1: som we had al Rabel talking about commercial real estate.
• 23:24
  Speaker 1: We had Dolly Lenz of real estate fame talking about
• 23:28
  Speaker 1: residential real estate. We've had internal guests like our own
• 23:30
  Speaker 1: Mike Townshend talking about what's going on in Washington. So
• 23:34
  Speaker 1: that's been an absolute blast.
• 23:36
  Speaker 2: Isn't this not to toot my own horn, but isn't
• 23:39
  Speaker 2: this just such a pleasant formatte not three minutes? There's
• 23:44
  Speaker 2: no camera in your face. You know, the world is
• 23:48
  Speaker 2: not black and white, and investing, especially has so many
• 23:52
  Speaker 2: shades of gray, and to develop really have a decent
• 23:57
  Speaker 2: explanation as to what's going on five minutes really is tight.
• 24:03
  Speaker 2: Write it really is so to go into that sounds
• 24:07
  Speaker 2: great and I love that description of what you do
• 24:10
  Speaker 2: is reading, writing and talking is really is great. I
• 24:14
  Speaker 2: wanted to ask you something you mentioned all of the
• 24:19
  Speaker 2: internal schwab clients, you have advisors, you have individual clients
• 24:25
  Speaker 2: like I would love to be let loose on that
• 24:27
  Speaker 2: data to see what they do in response to markets.
• 24:32
  Speaker 2: How do you look at the behavior of whether it's
• 24:36
  Speaker 2: professional or institutional or just mom and pop traders. Do
• 24:40
  Speaker 2: you guys monitor that and say, here's the sentiment. It
• 24:44
  Speaker 2: looks like people are starting to get really panic.
• 24:46
  Speaker 1: We do, and there are a variety of forms that
• 24:49
  Speaker 1: we disseminate that type of information out into the public sphere,
• 24:53
  Speaker 1: which is not something I do formally. There are groups
• 24:57
  Speaker 1: that put that together, but I have access to the information,
• 25:01
  Speaker 1: and you're right, particularly as it relates to the sentiment
• 25:03
  Speaker 1: in side of things. I have been a sentiment watcher
• 25:05
  Speaker 1: for my thirty eight years in this business, learning a
• 25:08
  Speaker 1: lot about the power of sentiment from Marty's wig. But
• 25:11
  Speaker 1: I think it's important to look at both attitudinal measures
• 25:15
  Speaker 1: of sentiment and behavioral measures of sentiment. And behavioral measures.
• 25:19
  Speaker 1: With eight plus trillion dollars of client.
• 25:21
  Speaker 2: Assets, someone's going to be acting in it's.
• 25:23
  Speaker 1: Probably a pretty good eye into the sort of psyche
• 25:28
  Speaker 1: and behavior of individual investors. So it is absolutely something
• 25:32
  Speaker 1: that I incorporate in the analysis. It's in addition to
• 25:35
  Speaker 1: broader metrics that go beyond just schwab things like fundflows
• 25:39
  Speaker 1: and obviously the put call ratio and other ways to
• 25:42
  Speaker 1: measure the behavior of investors. But it's in conjunction with
• 25:45
  Speaker 1: those more attitudinal measures, and that comes from sources like
• 25:50
  Speaker 1: AAII American Association of Individual Investors. But frankly, a lot
• 25:54
  Speaker 1: of the attitudinal measures of sentiment I pick up just
• 25:58
  Speaker 1: from talking to our clients on the road. That's where
• 26:01
  Speaker 1: the spidey sense that the gut feel comes in. And
• 26:05
  Speaker 1: now being very active on social media too, particularly Twitter
• 26:09
  Speaker 1: slash x. By the way, I am not active on
• 26:12
  Speaker 1: either Instagram or Facebook. However, a very troubling, huge rash
• 26:19
  Speaker 1: of impostors on those platforms of me not just trying
• 26:24
  Speaker 1: to get followers.
• 26:25
  Speaker 2: Yeah, I was kind of surprised you.
• 26:26
  Speaker 1: Were kitching pitching things like.
• 26:28
  Speaker 2: Your big bitcoin advocate.
• 26:30
  Speaker 1: Apparently that is not me, by the way.
• 26:33
  Speaker 2: Not on Facebook, I'm not on.
• 26:36
  Speaker 1: I'm not active on Facebook. I'm not And I've had
• 26:38
  Speaker 1: a rash of impostors on Twitter.
• 26:40
  Speaker 2: I was about to say, you know, Elon Musk is
• 26:44
  Speaker 2: touting groc as their AI and I would never subscribe
• 26:48
  Speaker 2: to that until they were able to demonstrate, Hey, groc
• 26:52
  Speaker 2: has gotten rid of all the spam bots, and it's
• 26:55
  Speaker 2: gotten rid of all the like I'm constantly reporting fake backes.
• 27:00
  Speaker 2: I'm sure, and how c not. It's so easy to identify. Well,
• 27:07
  Speaker 2: if a I can't do that, then it is worthless.
• 27:10
  Speaker 1: It is, and it drives me crazy.
• 27:13
  Speaker 2: That it's gone away anyway.
• 27:14
  Speaker 1: Twitter, somebody will think it's me, right, and it's somebody.
• 27:20
  Speaker 1: It's an account with you know, seven followers and nine
• 27:24
  Speaker 1: not not that, not that I'm on you know, Taylor Swift,
• 27:27
  Speaker 1: but to.
• 27:28
  Speaker 2: Be fair, your call on doge coin using the handle
• 27:34
  Speaker 2: lizen Sunder's nine seven three one four six nine it
• 27:38
  Speaker 2: was pretty well.
• 27:39
  Speaker 1: Time good for her, for her, for him or it
• 27:42
  Speaker 1: or whatever. It's a North Korean Yeah, no, so for
• 27:46
  Speaker 1: for people who might not have been following the actual me,
• 27:49
  Speaker 1: it's at Las Anne Sanders. There's there's no e at
• 27:53
  Speaker 1: the end of a hand. There's Saunders is not spelled
• 27:55
  Speaker 1: with a Z. There's no numbers added to it, there's
• 28:00
  Speaker 1: It drives me crazy, and.
• 28:02
  Speaker 2: It's it should be one of those things that are
• 28:05
  Speaker 2: just so easy to fix, and he is otherwise distracted,
• 28:11
  Speaker 2: So it is something that yeah, that's pretty good. And
• 28:14
  Speaker 2: I remember when you first when we when we spoke
• 28:17
  Speaker 2: last time twenty fifteen, I.
• 28:18
  Speaker 1: Think I had just joined Twitter. Yeah.
• 28:22
  Speaker 2: And for people who don't follow liz Ane Saunders, but
• 28:25
  Speaker 2: you should, and I retweet you on a regular basis.
• 28:29
  Speaker 2: You put up some really nice charts, some good tables.
• 28:32
  Speaker 2: Everything is databased, everything is fact oriented. It's none of
• 28:37
  Speaker 2: the stuff that I see from you. And this is
• 28:39
  Speaker 2: why I appreciate your feed. Is you know, I really
• 28:42
  Speaker 2: think the market has another leg up here about ten
• 28:44
  Speaker 2: to fifteen percent. Then we get a pull up.
• 28:46
  Speaker 1: There's none of that, there's no bit just because I
• 28:48
  Speaker 1: you know why, I don't know. I can't do that.
• 28:51
  Speaker 1: That's right, and by the way, nobody knows. Nobody can
• 28:54
  Speaker 1: do that. It's not what we know that matters, meaning
• 28:57
  Speaker 1: about the future, what the market's going to do. It's
• 28:59
  Speaker 1: what we do along the way. It's as simple as that.
• 29:02
  Speaker 2: It's a little bit of a stoic philosophy. You can't
• 29:05
  Speaker 2: control the world. All you can control is your reibator,
• 29:08
  Speaker 2: what happened, your behavior, And that's very challenging for people
• 29:12
  Speaker 2: to accept.
• 29:14
  Speaker 1: Fear and greed are really really powerful emotions, especially as
• 29:18
  Speaker 1: it relates to our money, because we care a lot
• 29:22
  Speaker 1: about our money.
• 29:22
  Speaker 2: So let's talk about fear and greed. Let's talk about
• 29:25
  Speaker 2: twenty twenty two and twenty twenty three. Twenty two was
• 29:29
  Speaker 2: a tough year. We had double digit declines in fixed
• 29:34
  Speaker 2: income and equities. I think the SMP was down about
• 29:39
  Speaker 2: almost twenty percent. Then NAZAK was down about thirty percent.
• 29:42
  Speaker 2: What was twenty twenty two like for you? Dealing with
• 29:46
  Speaker 2: a lot of clients and investors concerned about what was
• 29:49
  Speaker 2: going on?
• 29:50
  Speaker 1: You know, one of the most interesting things about twenty
• 29:52
  Speaker 1: twenty two was to tie this into the sentiment conversation
• 29:56
  Speaker 1: that we just had and the differential times between behavioral
• 30:00
  Speaker 1: measures of sentiment and additudinal measures of sentiment. I'm sure
• 30:04
  Speaker 1: you remember the first big wush down into June of
• 30:07
  Speaker 1: twenty twenty two that at the time was the hope
• 30:11
  Speaker 1: for Okay, maybe this is the wash out point, in
• 30:14
  Speaker 1: part because some sentiment measures were at extremes AAII. I
• 30:18
  Speaker 1: don't remember whether it was exactly around the low of June,
• 30:22
  Speaker 1: but sometime in that spring early summer period, the percentage
• 30:26
  Speaker 1: of bears in the weekly AAII survey went to a
• 30:31
  Speaker 1: record high and commensurately, the percentage of bulls went to
• 30:34
  Speaker 1: a record low, but it wasn't matched by the behavioral measures.
• 30:39
  Speaker 1: In fact, AAII, in addition to their weekly or you
• 30:42
  Speaker 1: bullish or you bearish? Are your Neutral survey, they also
• 30:44
  Speaker 1: track the equity exposure of their same.
• 30:46
  Speaker 2: Time My favorite data point of that.
• 30:48
  Speaker 1: And at the time where you had record high bearishness
• 30:51
  Speaker 1: record low bullishness, the equity exposure was only slightly often
• 30:55
  Speaker 1: all time high. So that was a classic example of
• 30:58
  Speaker 1: what they what they're saying, and what they're doing are
• 31:01
  Speaker 1: sort of diametrically opposed. Fast forward to the October twenty
• 31:05
  Speaker 1: twenty two period, there was a little more of that
• 31:09
  Speaker 1: across the spectrum, wash out the puke phase as I
• 31:12
  Speaker 1: like to call it, using a very technical term. That
• 31:16
  Speaker 1: was also a period where because the Magnificent seven or
• 31:21
  Speaker 1: the Grade eight, you know that the small handful of
• 31:23
  Speaker 1: ten now right now it's getting shrunk, that those stocks
• 31:27
  Speaker 1: were dragging performance down. But what was interesting about the
• 31:31
  Speaker 1: October low was what was going on under the surface.
• 31:34
  Speaker 1: So the indexes at the October low had taken out
• 31:38
  Speaker 1: their June low, but under the surface you were seeing
• 31:40
  Speaker 1: much improved breadth. You know, positive divergence, to use that
• 31:44
  Speaker 1: technical term, and that was a more compelling point in
• 31:49
  Speaker 1: the market. Again, the message from us wasn't the bottom
• 31:52
  Speaker 1: is in, but the message was this looks more compelling
• 31:57
  Speaker 1: than what was happening in June because you had that
• 32:00
  Speaker 1: sort of double wash out in sentiment and you had
• 32:04
  Speaker 1: that under the surface improvement in breadth where even though
• 32:09
  Speaker 1: you know the generals were retreating, there were more soldiers
• 32:12
  Speaker 1: kind of approaching the front line.
• 32:14
  Speaker 2: And the October twenty twenty two lows were slightly below
• 32:19
  Speaker 2: the June lows. And so the technicians will say that's
• 32:24
  Speaker 2: a double bottom, but I recall seeing some people say, uh, oh,
• 32:29
  Speaker 2: we're going to start a whole new leg down over here,
• 32:31
  Speaker 2: and it's hard to see that with sentiment that negatively.
• 32:34
  Speaker 1: Not only that, but again the fact that breadth under
• 32:36
  Speaker 1: the surface was truth.
• 32:38
  Speaker 2: Yeah, And you know, same thing at my firm. We're
• 32:41
  Speaker 2: not market timers, we're not traders. In my personal account,
• 32:45
  Speaker 2: I went out and bought a bunch of QQQ calls
• 32:48
  Speaker 2: and Spider calls just to play around, and Russell two
• 32:51
  Speaker 2: thousand calls. Spiders did well, Russell's did nothing, and the
• 32:55
  Speaker 2: cues crushed it. Over the next year. But that has
• 32:59
  Speaker 2: to be a challenging period. What sort of halls and
• 33:03
  Speaker 2: do you get panicky conversations with investors?
• 33:07
  Speaker 1: You know, one of the differentiations that I've observed over
• 33:12
  Speaker 1: my many years at Schwab is during some of the
• 33:16
  Speaker 1: really tumultuous eras twenty twenty two, maybe not as significant
• 33:21
  Speaker 1: as the COVID decline or certainly the global financial crisis,
• 33:25
  Speaker 1: is there is a pretty direct correlation between the ability
• 33:30
  Speaker 1: with the withstand volatility and tough market environments with whether
• 33:34
  Speaker 1: you sort of have a discipline strategic acid allocation plan
• 33:38
  Speaker 1: versus more of the day traders, the wing it kind.
• 33:41
  Speaker 1: That's where you see the bigger emotional swings versus our
• 33:47
  Speaker 1: clients that have taken that what we sometimes call an
• 33:49
  Speaker 1: advised approach, where they've got that long term plan, they
• 33:54
  Speaker 1: have a financial plan, they've got a strategic acid allocation
• 33:58
  Speaker 1: structure that is tied to everything personally about them, that
• 34:02
  Speaker 1: they have the disciplines around diversification, periodic rebalancing, and they
• 34:07
  Speaker 1: tend to ride through the tougher times much better than
• 34:10
  Speaker 1: the kind of wing it type investors.
• 34:12
  Speaker 2: So let's flip it on its head. Twenty twenty three
• 34:15
  Speaker 2: S and P five hundred up almost twenty five percent,
• 34:18
  Speaker 2: and nas deck up more than double that. What do
• 34:21
  Speaker 2: you do with people who suddenly become uber bullish and hey,
• 34:26
  Speaker 2: this is this is a new something. We have to
• 34:30
  Speaker 2: be in it to win it. How do you call
• 34:31
  Speaker 2: it that?
• 34:32
  Speaker 1: You're like, last year was so dominant by such a
• 34:36
  Speaker 1: small handful of names. It got less extreme as the
• 34:39
  Speaker 1: as the year concluded. But at around the midpoint of
• 34:44
  Speaker 1: last year, you not only had the Magnificent seven accounting
• 34:47
  Speaker 1: for more than all the performance, but you had a
• 34:50
  Speaker 1: record low percentage of the index outperforming the index itself, and.
• 34:55
  Speaker 2: Forty five stocks did better than twenty five percent one
• 34:59
  Speaker 2: hundred and forty four STO and the S and P
• 35:00
  Speaker 2: five hundred if I'm remembering correctly, right, output.
• 35:04
  Speaker 1: Wells way, which is low to look at that. So
• 35:08
  Speaker 1: at the low point of last year, even today, if
• 35:13
  Speaker 1: you look at the percentage of the SMP that has
• 35:15
  Speaker 1: outperformed the index over the past twelve months, it's only
• 35:19
  Speaker 1: twelve percent. That's close to an all time low.
• 35:22
  Speaker 2: If give me those numbers again, twelve to.
• 35:24
  Speaker 1: Twelve percent of the overall S and P five hundred.
• 35:27
  Speaker 2: So you're talking sixty stocks.
• 35:29
  Speaker 1: Right have outperformed the S and P over the prior
• 35:31
  Speaker 1: twelve months. Now, if you start to shorten that twelve months,
• 35:35
  Speaker 1: it gets better. So right now it's around forty percent
• 35:40
  Speaker 1: of the index has outperformed the index over the past month.
• 35:43
  Speaker 2: Really, that's much broader. All we hear is people saying
• 35:48
  Speaker 2: the market is narrowing. This is how bulls end.
• 35:50
  Speaker 1: It's just it's broadening.
• 35:51
  Speaker 2: It's going the other way.
• 35:52
  Speaker 1: So even justice, yes, it is even just among the
• 35:57
  Speaker 1: magnificent seven. Now last year, so that Moniker came because
• 36:00
  Speaker 1: those were the seven largest stocks right in the SMPN
• 36:02
  Speaker 1: and the Nasdaq. They're not the seventh largest anymore. Six
• 36:05
  Speaker 1: of them are still the sixth largest, but Tesla has
• 36:07
  Speaker 1: dropped down. It's kind of bouncing between the ninth and
• 36:09
  Speaker 1: the ten spot. So leap frogging Tesla has been. Berkshire, Hathaway, Eli,
• 36:13
  Speaker 1: Lilly and Broadcom has been, you know, kind of breathing
• 36:16
  Speaker 1: down Tesla's neck. Last year, they were the seven largest
• 36:20
  Speaker 1: stocks consistently throughout the year. They weren't the seven best performers,
• 36:23
  Speaker 1: but they were all strong performers double and triple digit.
• 36:25
  Speaker 1: You only had to go down to the sixty third
• 36:28
  Speaker 1: ranking within the S and P five hundred to capture
• 36:31
  Speaker 1: all seven of those names year to date. As you
• 36:33
  Speaker 1: and I are recording this, three of the seven stocks
• 36:38
  Speaker 1: are ranked year to date performance in the bottom quintile,
• 36:42
  Speaker 1: so they four of them have three of them have
• 36:44
  Speaker 1: a four handle in terms of the ranking. So that's Tesla, Apple,
• 36:50
  Speaker 1: and Alphabet. Now Nvidia is still the best proing stock.
• 36:53
  Speaker 1: But you've got this massive spread in terms of performance
• 36:57
  Speaker 1: among just that group of names, and you have the
• 37:00
  Speaker 1: sort of stealthy breakouts happening in areas like industrials, even
• 37:04
  Speaker 1: to some degree in financials.
• 37:07
  Speaker 2: And which have been a giant laggered for right forever.
• 37:10
  Speaker 1: But you know, sectors and groups and categories, there's rotation.
• 37:15
  Speaker 1: I think all l sqel's that's a healthy thing. I
• 37:18
  Speaker 1: think still a bit more work needs to be done.
• 37:20
  Speaker 1: But in terms of back to the original part of
• 37:22
  Speaker 1: your question, you know, how do you navigate this? First
• 37:24
  Speaker 1: of all, understand what's actually going on in the market,
• 37:27
  Speaker 1: and understand that indexes can often paint a very different
• 37:31
  Speaker 1: picture versus if you look under the surface. And that's
• 37:34
  Speaker 1: why in my latest report I said that this may
• 37:37
  Speaker 1: be more of a duck market than a bull market.
• 37:39
  Speaker 2: That's that's a quite literally a question I have explained.
• 37:42
  Speaker 2: I love the metaphor of a duck explained.
• 37:45
  Speaker 1: So it was I guess is the quote originally is
• 37:48
  Speaker 1: attributed to Michael Kaine, who's talked about a duck being
• 37:51
  Speaker 1: very calm on the surface but paddling like the dickens underneath.
• 37:54
  Speaker 1: And to put some numbers behind what I mean in
• 37:57
  Speaker 1: this context, that both the S and P and the
• 37:59
  Speaker 1: Nasdaq are still trading around all time highs with in
• 38:02
  Speaker 1: the case of the S and P, no more than
• 38:05
  Speaker 1: a two percent draw down from a year to date
• 38:07
  Speaker 1: high maximum draw down. It's a little bit worse is
• 38:10
  Speaker 1: three percent for the Nasdaq, but that's at the index level.
• 38:12
  Speaker 1: Let me just use the Nasdaq as an example of this,
• 38:15
  Speaker 1: and as you and I are doing this first week
• 38:17
  Speaker 1: in March, we're not very far into the year, but
• 38:19
  Speaker 1: the average member Nasdaq member maximum draw down from year
• 38:25
  Speaker 1: to date highs is negative twenty two percent.
• 38:27
  Speaker 2: That's big, it's big.
• 38:28
  Speaker 1: That's bear market level decline. So there's a lot more
• 38:31
  Speaker 1: churn going on under the surface. And I think, especially
• 38:36
  Speaker 1: in this environment, you want to understand what's going on
• 38:38
  Speaker 1: under the surface, not just make assumptions about the market
• 38:42
  Speaker 1: at the index level because of what has been that
• 38:46
  Speaker 1: bias in terms of performance to just a relatively small
• 38:49
  Speaker 1: handful of names.
• 38:50
  Speaker 2: So those data points that you bring up are really
• 38:53
  Speaker 2: quite interesting because there has been an increasing chorus of
• 38:58
  Speaker 2: people talking about passive flows and indexing are destroying price discovery.
• 39:05
  Speaker 2: David Ihorn a few weeks ago said passive is destroying
• 39:09
  Speaker 2: value and it's damaging market structure. You're essentially making the
• 39:13
  Speaker 2: case that there's plenty of price discovery, that it's not uniform,
• 39:18
  Speaker 2: that money isn't just flowing into names blindly. If Apple,
• 39:23
  Speaker 2: Alphabet and Tesla are in the bottom quintile of performers
• 39:28
  Speaker 2: when they are amongst the top ten biggest stocks, that
• 39:32
  Speaker 2: really contradicts Oh no, means there's.
• 39:34
  Speaker 1: Just there's other stuff going on.
• 39:36
  Speaker 2: It's not just fun now houses.
• 39:39
  Speaker 1: Passive did just surpass active in terms of the amount
• 39:43
  Speaker 1: of money in passive ETFs and funds versus active. That
• 39:47
  Speaker 1: just happened at the end of twenty twenty three. But
• 39:51
  Speaker 1: dispersion is up and correlations are way down, and I
• 39:55
  Speaker 1: think that that's supportive of activity, and that is not
• 39:59
  Speaker 1: me saying sell all your passive vehicles and back up
• 40:02
  Speaker 1: the truck and load up on active. We have always
• 40:05
  Speaker 1: for years thought there's a home for both active and
• 40:08
  Speaker 1: power and settle in portfolios. The point is more that
• 40:13
  Speaker 1: active in general and broadly has just not been playing
• 40:17
  Speaker 1: on a level playing field with passive. I think that's improving,
• 40:21
  Speaker 1: and it's your right. There is price discovery again. A
• 40:23
  Speaker 1: lot of that has to do with the return of
• 40:25
  Speaker 1: the risk free rate and an environment in the zerp.
• 40:28
  Speaker 2: Era competition with bonds, you mean, and just.
• 40:31
  Speaker 1: You know, the zerp Era zero percent interest rate. That
• 40:34
  Speaker 1: was the support for zombie companies and companies that really
• 40:38
  Speaker 1: had no business you know, existing. And I think with
• 40:43
  Speaker 1: that return of the risk free rate, it is it
• 40:46
  Speaker 1: has brought about more price discovery. It is represented a
• 40:49
  Speaker 1: reconnection of fundamentals to prices. Not every day, not every week.
• 40:54
  Speaker 1: You still get these you know, captriven concentration problems in
• 40:58
  Speaker 1: the market like last year, but that's starting to ease
• 41:01
  Speaker 1: a bit. And if you're only looking at the index
• 41:04
  Speaker 1: level and you see certain ugly days, I think the
• 41:07
  Speaker 1: real story, which is arguably a more optimistic story, can
• 41:12
  Speaker 1: often be found under the surface, not on the surface.
• 41:15
  Speaker 2: That's some really fascinating stuff. And I love that perspective
• 41:20
  Speaker 2: of here's what the chatter is saying, but when we
• 41:23
  Speaker 2: look at the data, it's telling you something else. All Right,
• 41:25
  Speaker 2: last question on Schwab.
• 41:27
  Speaker 1: You've been there, I think later twenty four years.
• 41:31
  Speaker 2: So your next year is twenty five years. Yes, that longevity,
• 41:36
  Speaker 2: first of all, is unusual.
• 41:37
  Speaker 1: Well two for all intents and purposes. Two jobs and
• 41:40
  Speaker 1: thirty eight years not too bad. So that's not common
• 41:44
  Speaker 1: on Wall Street.
• 41:44
  Speaker 2: I think it's definitely increasingly rare. The question is, tell
• 41:50
  Speaker 2: us what's kept you at one place for a quarter
• 41:54
  Speaker 2: of a century.
• 41:56
  Speaker 1: A lot of it has to do with the culture.
• 41:58
  Speaker 1: And I give tremendous amount of credit to the man
• 42:02
  Speaker 1: behind the firmly Chuck Schwab, and who is still with us,
• 42:06
  Speaker 1: and he's still a pretty active chairman, and I know
• 42:10
  Speaker 1: him personally as well as professionally, and his vision of
• 42:15
  Speaker 1: what Schwab should be and has turned into is it
• 42:19
  Speaker 1: really I think separates us from maybe the typical Wall
• 42:22
  Speaker 1: Street firm, because you know, our sort of marketing tagline
• 42:26
  Speaker 1: of sorts of through clients' eyes is actually legitimate. And
• 42:30
  Speaker 1: I think the perspective of the individual investor, what they
• 42:34
  Speaker 1: maybe not want, but what we know they probably needs.
• 42:37
  Speaker 1: Just very different than the institutional world, and I think
• 42:40
  Speaker 1: approaching investing through the eyes of individual investors is just
• 42:46
  Speaker 1: a different ballgame. And there was nobody that preceded me
• 42:51
  Speaker 1: in this role. So when Schwab acquired US Trust in
• 42:53
  Speaker 1: two thousand, it was only ten months after I had
• 42:56
  Speaker 1: joined US Trust, Chuck and and our CEO at the time,
• 43:01
  Speaker 1: Dave Patrick, came to New York to meet all the
• 43:04
  Speaker 1: US Trust executives and they sat down with me and said,
• 43:06
  Speaker 1: we want to create this role of chief investment strategist
• 43:10
  Speaker 1: any interest I'm making a longer conversation very short. I said, yep,
• 43:14
  Speaker 1: hell count me in. And the rest is sort of history.
• 43:16
  Speaker 1: But they gave me a lot of free rain to
• 43:20
  Speaker 1: sort of create this role, but with my full knowledge
• 43:24
  Speaker 1: based on what I know was their mission around the
• 43:27
  Speaker 1: organization of this is through individual client size, and that's
• 43:31
  Speaker 1: a reason why we don't try to do things like
• 43:33
  Speaker 1: market timing or year end price target. It's about long
• 43:36
  Speaker 1: term planning and strategic acid allocation and just understanding how
• 43:43
  Speaker 1: markets work and how behavior comes into the mix. So
• 43:46
  Speaker 1: it's just been a great platform for me and I
• 43:50
  Speaker 1: love it. I hope I'm there for a.
• 43:52
  Speaker 2: Lot another twenty five years.
• 43:54
  Speaker 1: Well, boy, that would be interesting. So let me she
• 43:58
  Speaker 1: my mom's age.
• 43:58
  Speaker 2: Then you mentioned the culture at Schwab. Let me share
• 44:03
  Speaker 2: a perspective. I don't know if I ever shared this
• 44:06
  Speaker 2: with you. So my firm launched in twenty thirteen with
• 44:13
  Speaker 2: very little money. TD was our custodian.
• 44:18
  Speaker 1: I think i've heard of TD right now, part.
• 44:21
  Speaker 2: Of Schwab and the first couple, and we just the
• 44:25
  Speaker 2: reason we did that is our prior firm. The clients
• 44:29
  Speaker 2: were custody to TD, and it made it just a
• 44:32
  Speaker 2: single letter, you know, LA, in order to transfer the
• 44:36
  Speaker 2: accounts over. And it took us about a year or two.
• 44:41
  Speaker 2: After you hear it for the hundredth time, where we
• 44:45
  Speaker 2: would go on a road trip. So we were a
• 44:47
  Speaker 2: small shop, but you know, between our media exposure and
• 44:50
  Speaker 2: everything else, had a national footprint and we would go
• 44:54
  Speaker 2: to Seattle or San Francisco or Chicago or Austin, Texas
• 44:59
  Speaker 2: And do you hear it like the nineteenth time, Hey,
• 45:03
  Speaker 2: we love you guys. I would love to have you
• 45:06
  Speaker 2: manage our portfolio. But we've been with Schwab and we're
• 45:09
  Speaker 2: not leaving them as our custodian. Let us know as
• 45:12
  Speaker 2: soon as Schwab is one of your platforms. You know,
• 45:15
  Speaker 2: you can only only have to hit me over the
• 45:17
  Speaker 2: head with a hammer fourteen times before I'm like, hey,
• 45:20
  Speaker 2: maybe I may. And now we have I think we have.
• 45:24
  Speaker 2: I'm doing this off the top of my head. You know,
• 45:26
  Speaker 2: four billion plus on the Schwab platform from essentially nothing
• 45:32
  Speaker 2: years ago. Well, you guys have won a great part.
• 45:34
  Speaker 2: You know. I don't again, I always like to disclose things,
• 45:37
  Speaker 2: but it was it was dumbfounding in the beginning, where
• 45:42
  Speaker 2: it's like I don't understand they're a custodian.
• 45:45
  Speaker 1: Why now it's a partnership. I'm glad you use that.
• 45:48
  Speaker 2: That's what we ended up learning is oh, the culture
• 45:51
  Speaker 2: at Schwab and the way they do things. This isn't
• 45:55
  Speaker 2: just hey, leave your money with us. We'll send you
• 45:57
  Speaker 2: a statement every quarter and that was it. It's a
• 46:00
  Speaker 2: very different relationship. And to Chuck's credit, you guys created
• 46:05
  Speaker 2: something that did not exist amongst most custodians beforehand. Am
• 46:11
  Speaker 2: I over now?
• 46:12
  Speaker 1: No, no, not at all. And we are you know,
• 46:14
  Speaker 1: by far the largest in terms of not just custodying
• 46:19
  Speaker 1: assets for the RAA community, but representing that partnership in
• 46:23
  Speaker 1: everything from research and trading and succession planning. It is.
• 46:30
  Speaker 1: It's an important part of our business for sure.
• 46:32
  Speaker 2: Let's talk a little bit about the markets and the
• 46:34
  Speaker 2: economy today, starting with all right, we're at all time
• 46:38
  Speaker 2: highs and the Nasdaq where at all time highs in
• 46:41
  Speaker 2: the s and P five hundred. I've heard a bunch
• 46:43
  Speaker 2: of people on TV come out and say, oh, you know,
• 46:46
  Speaker 2: this makes me nervous. What does the data say about
• 46:50
  Speaker 2: what all time highs in broad indexes mean for the
• 46:55
  Speaker 2: next couple of quarters.
• 46:56
  Speaker 1: Well, it starts to years that have a lot of
• 46:59
  Speaker 1: momentum do tend to carry through. But there's with any
• 47:04
  Speaker 1: data point like that, if you're looking at aggregate data
• 47:06
  Speaker 1: or averages, there are always exceptions to those roles. And
• 47:10
  Speaker 1: as we already talked about, there's been a lot more
• 47:12
  Speaker 1: churn under the surface and when you pick up if
• 47:14
  Speaker 1: you're only looking at index level. But to say that
• 47:17
  Speaker 1: this has been a unique cycle, both on the market
• 47:20
  Speaker 1: side of things and the economy side of things, is
• 47:22
  Speaker 1: the ultimate understatement. And I think that to be an
• 47:25
  Speaker 1: analyst of the market and one of the nice things
• 47:29
  Speaker 1: for me as strategists at SCHWAB is that I get
• 47:31
  Speaker 1: to wear the two hats of both market strategists but
• 47:34
  Speaker 1: also economist. We don't have a separate chief economist, and
• 47:37
  Speaker 1: I like that because I get to marry the views.
• 47:40
  Speaker 1: I'm not beholden to somebody else's view on the economy.
• 47:43
  Speaker 1: And on that front, the nature of this economic cycle
• 47:47
  Speaker 1: helps to explain why we've had so many funky things
• 47:50
  Speaker 1: happen in terms of the market cycle, and it's we've
• 47:52
  Speaker 1: been using the rolling recessions terminology because that's actually what
• 47:57
  Speaker 1: has happened in the early part of the pandemic during
• 47:59
  Speaker 1: this stimulus fueled piece of that cycle, that all of
• 48:04
  Speaker 1: that stimulus was essentially funneled into the goods side of
• 48:06
  Speaker 1: the economy because we had no access to services. That
• 48:09
  Speaker 1: was the breeding ground of the inflation problem with which
• 48:12
  Speaker 1: we're still dealing. But we subsequently went into recession like
• 48:15
  Speaker 1: conditions for many of those goods oriented categories like manufacturing
• 48:19
  Speaker 1: and housing. Housing related a lot of consumer oriented products
• 48:22
  Speaker 1: and goods that were big beneficiaries of the lockdown phase.
• 48:26
  Speaker 1: And we've gone from hyperinflation to disinflation to some deflation
• 48:30
  Speaker 1: based on certain categories of goods. But of course we've
• 48:33
  Speaker 1: had the later pickup and off setting strength on the
• 48:35
  Speaker 1: services side, and you've seen that roll through in terms
• 48:38
  Speaker 1: of market behavior too, And it just makes this backdrop
• 48:43
  Speaker 1: kind of an apple compared to history's oranges, and I
• 48:47
  Speaker 1: think we have to be mindful of that when trying
• 48:50
  Speaker 1: to gage where we are in the market cycle, where
• 48:52
  Speaker 1: we are in the economic cycle. It's just a very
• 48:56
  Speaker 1: unique period.
• 48:57
  Speaker 2: Any other historical parallels that come up, I personally hate
• 49:02
  Speaker 2: the nineteen seventies parallel, because you certainly know the employment picture,
• 49:06
  Speaker 2: the inflation picture, the geopolitics, everything was just so much
• 49:11
  Speaker 2: worse than what we're dealing with.
• 49:13
  Speaker 1: It a very very different backdrop relative to the nineteen seventies.
• 49:16
  Speaker 1: I guess the only comparison that we're witnessing right now
• 49:20
  Speaker 1: is the desire on the part of the Fed and
• 49:22
  Speaker 1: maybe Powell in particular, to not repeat the mistakes of
• 49:26
  Speaker 1: the nineteen seventies in terms of monetary policy premature, you know,
• 49:30
  Speaker 1: hanging of the victory banner, easing policy, only to see
• 49:34
  Speaker 1: inflation sort of its head again. So I think that
• 49:38
  Speaker 1: is maybe one similarity in terms of what the playbook
• 49:41
  Speaker 1: is for the FED. But I totally agree with you
• 49:43
  Speaker 1: that the nature of what was driving inflation, the backdrop
• 49:46
  Speaker 1: in terms of geopolitics and demographics and labor versus capital
• 49:51
  Speaker 1: is not a mirror of what we're experiencing right now.
• 49:53
  Speaker 1: But I think the FED took some lessons from the
• 49:56
  Speaker 1: mistakes back in that.
• 49:58
  Speaker 2: Era if you're looking for parallels, and I think you're right,
• 50:02
  Speaker 2: this is totally unique, but the immediate period after war
• 50:06
  Speaker 2: war is kind of similar. You have all these gis
• 50:10
  Speaker 2: returning and all this pent up. Hey, we couldn't do
• 50:13
  Speaker 2: all these things, and a spike in inflation that came down,
• 50:18
  Speaker 2: unemployment collapse because you had all these people coming back
• 50:22
  Speaker 2: to work.
• 50:24
  Speaker 1: It's not perfect, no, but I think you're right. It
• 50:27
  Speaker 1: was a military war, not a health war, which was
• 50:30
  Speaker 1: the case this time, but had some of those same
• 50:32
  Speaker 1: characteristics in terms of supply demand imbalances and the drivers
• 50:37
  Speaker 1: of inflation. Obviously, there are plenty of differences, not least
• 50:42
  Speaker 1: being what happened on the other side of it, with
• 50:45
  Speaker 1: which you know, massive amount of military personnel coming back
• 50:49
  Speaker 1: into the private sector and into the civilian workforce, and
• 50:53
  Speaker 1: the rebuilding of the global infrastructure. That is one era
• 50:57
  Speaker 1: that I have used often as a reference point, with
• 51:01
  Speaker 1: that differential being military war versus health war.
• 51:04
  Speaker 2: So let's talk about some of the other differentials because
• 51:06
  Speaker 2: I think they're informative. Not only did we bring a
• 51:10
  Speaker 2: lot of technological usage forward or things that existed. Look,
• 51:14
  Speaker 2: we've had FaceTime for fifteen years. It's not like it's new,
• 51:18
  Speaker 2: and screen shares and other things like that, but they
• 51:21
  Speaker 2: just became more widely adopted.
• 51:24
  Speaker 1: It was forced adoption because we have no choice. We
• 51:26
  Speaker 1: had no choice.
• 51:27
  Speaker 2: But today we have office buildings that are not running
• 51:32
  Speaker 2: full documency. Return to office has been you know, we're
• 51:37
  Speaker 2: sixty percent seventy percent back. You have a lot of
• 51:40
  Speaker 2: hybrid work, you have a lot of people working from home.
• 51:43
  Speaker 2: How does this affect how you perceive the economy? What
• 51:45
  Speaker 2: does this mean for things like hey, commercial or residential
• 51:50
  Speaker 2: real estate investment?
• 51:51
  Speaker 1: Yes, so commercial real estate tends to get thought of
• 51:54
  Speaker 1: too monolithically. Commercial real estate is a very broad category, obviously,
• 51:57
  Speaker 1: and it's inclusive of not just the world of offices,
• 52:01
  Speaker 1: but you know, multi family residential and warehousing and retail
• 52:05
  Speaker 1: and healthcare facilities, et cetera. So we can't paint commercial
• 52:09
  Speaker 1: real estate with one broad brush or segments within SIRI
• 52:12
  Speaker 1: that are quite healthy versus say office, and even withinn office,
• 52:16
  Speaker 1: of course, big differentials in terms of urban versus suburban.
• 52:20
  Speaker 1: Certain regions in the country are doing much better. There's
• 52:23
  Speaker 1: the different parts of the country have larger percent that
• 52:27
  Speaker 1: have gone back into that more typical office structure. And
• 52:30
  Speaker 1: then of course the exposure to commercial real estate, which
• 52:34
  Speaker 1: is yes down into the smaller regional banks, many of
• 52:37
  Speaker 1: the same banks that suffered the most from last year's
• 52:41
  Speaker 1: mini banking crisis. But even there there's you know, a
• 52:45
  Speaker 1: vast array in terms of maturity schedules and what type
• 52:49
  Speaker 1: of commercial real estates exposure. On our podcast, one of
• 52:52
  Speaker 1: the recent guests that we had on that I interviewed
• 52:55
  Speaker 1: as actually a friend of mine, Al Rabel, who is
• 52:57
  Speaker 1: the founder and CEO of kan Anderson, a big, huge
• 53:00
  Speaker 1: private equity private real estate company, and although they're specifically
• 53:04
  Speaker 1: more involved in student housing and senior housing, he's an
• 53:08
  Speaker 1: expert more broadly, and I asked him at the outset
• 53:12
  Speaker 1: of the interview, I said, let me ask you an expert,
• 53:14
  Speaker 1: and I'm not an expert, a question about how I've
• 53:17
  Speaker 1: been terming it, how I've been describing it and feel
• 53:20
  Speaker 1: free to tell me you're dead wrong, Lezanne. I think
• 53:22
  Speaker 1: it's this is not a Lemanesque kind of problem. It's
• 53:24
  Speaker 1: more of a slow moving trade wreck or a simmering
• 53:27
  Speaker 1: problem over time. And fortunately for me, he said, yes,
• 53:30
  Speaker 1: that's I think an app to descriptive. That doesn't mean
• 53:33
  Speaker 1: the problems aren't still ahead of us, but it's over
• 53:35
  Speaker 1: a more graduated period of time, and with some of
• 53:38
  Speaker 1: the carnage will come opportunities. And that was maybe a
• 53:41
  Speaker 1: more interesting part of the conversation is some of the
• 53:44
  Speaker 1: sort of distressed firms looking at this as an eventual
• 53:47
  Speaker 1: opportunity to come in and acquire some of these properties,
• 53:51
  Speaker 1: you know, significant discounts. So with carnage comes opportunity.
• 53:55
  Speaker 2: I'm glad you brought up private equity because during the
• 53:58
  Speaker 2: era of zero interest rates, when you couldn't really find
• 54:02
  Speaker 2: any sort of yield in the public markets, private equity,
• 54:06
  Speaker 2: private debt venture right, pretty good numbers. Seven eight nine
• 54:11
  Speaker 2: percent yield versus two three percent. Now that the risk
• 54:15
  Speaker 2: free rate is in the threes or fours, and muni
• 54:20
  Speaker 2: bonds are giving you the tax equivalent of, depending on
• 54:23
  Speaker 2: the state, six seven eight percent yield, how do you
• 54:26
  Speaker 2: think about private equity.
• 54:28
  Speaker 1: Yeah, it's not my area. So I'm going to answer
• 54:31
  Speaker 1: the question by tying it back to something that is
• 54:36
  Speaker 1: I spend more time thinking about. To the point you
• 54:40
  Speaker 1: made in the early part of asking that question was
• 54:44
  Speaker 1: what was a shift in the zero interest rate environment
• 54:48
  Speaker 1: by many investors that were looking for anything resembling a
• 54:52
  Speaker 1: decent yield, and it forced them just out the risk spectrum,
• 54:56
  Speaker 1: whether it was two riskier segments of the fixed income market,
• 55:00
  Speaker 1: or into the publicly traded equity markets, or to your point,
• 55:04
  Speaker 1: into the private markets, be a private equity or venture.
• 55:07
  Speaker 1: And for many of investors, they weren't really comfortable with
• 55:11
  Speaker 1: that kind of risk. And it's not just the risk,
• 55:14
  Speaker 1: but for many investors it's the transparency and liquidity that
• 55:17
  Speaker 1: they had to give up. Now we have an environment
• 55:20
  Speaker 1: wherein essentially hold to maturity risk free treasuries and things
• 55:25
  Speaker 1: like you know, money market funds, A lot of money
• 55:28
  Speaker 1: has has gone back in that direction. On that note,
• 55:31
  Speaker 1: and this is somewhat tangential, but I think it's important.
• 55:33
  Speaker 1: Too many people view the six trillion dollars that's sitting
• 55:37
  Speaker 1: in money markets as some maybe not imminent, but some
• 55:40
  Speaker 1: huge source of funding for the equity.
• 55:43
  Speaker 2: Market ysh on the sideline.
• 55:45
  Speaker 1: On the sidelines, I think a lot of that money
• 55:49
  Speaker 1: is actually probably fairly sticky. It's money that represents the
• 55:52
  Speaker 1: cash needs or the liquidity side of acid allocation and
• 55:57
  Speaker 1: isn't sitting there just waiting to go into riskier assets,
• 56:02
  Speaker 1: be it public equity markets or a private I think
• 56:05
  Speaker 1: a lot of that is probably fairly sticky.
• 56:07
  Speaker 2: And it migrated to money market funds because of the
• 56:12
  Speaker 2: five whatever five point three percent yields after a drought
• 56:17
  Speaker 2: of decades of not getting any sort of fields. Hey,
• 56:20
  Speaker 2: I could earn a real rate of return, relatively risk free. Great,
• 56:25
  Speaker 2: I'm gonna reduce my risk profile and capture some of this.
• 56:30
  Speaker 1: That's a great thing.
• 56:31
  Speaker 2: I've never really understood that cash on the sideline. The
• 56:35
  Speaker 2: other thing that's related, and you might see it from
• 56:37
  Speaker 2: your perch at Schwab. Whenever we people talk about fun flows,
• 56:42
  Speaker 2: look at all this money flowing into equity funds or
• 56:45
  Speaker 2: flowing out. It seems like it's a year behind what
• 56:49
  Speaker 2: the market's doing. The market crashes and then there are
• 56:53
  Speaker 2: fun flows out Look at twenty one or twenty three.
• 56:56
  Speaker 2: Even as the market is rallying, the funds are flowing
• 56:59
  Speaker 2: in the.
• 56:59
  Speaker 1: Opposite, performance chasing up and down. That's you know, as
• 57:02
  Speaker 1: old as the day is long.
• 57:04
  Speaker 2: It's just that simple. It's just performance chasing.
• 57:07
  Speaker 1: You know. The other thing about the six trillion dollars
• 57:09
  Speaker 1: that's in money market funds is yes, that's an all
• 57:11
  Speaker 1: time record in level terms, but relative to total stock
• 57:16
  Speaker 1: market capitalization, it's nowhere near a record. So you have
• 57:19
  Speaker 1: to be careful. First of all. Number one, I think
• 57:22
  Speaker 1: it's a mistake to our point that we just made
• 57:24
  Speaker 1: that this is not sort of short term cash on
• 57:27
  Speaker 1: the sidelines, that it's just itching to jump over under
• 57:30
  Speaker 1: the equity side of things. But even if you make
• 57:32
  Speaker 1: that assumption, the firepower has to be put in the
• 57:35
  Speaker 1: context of share of market capitalization, and there it's nowhere
• 57:39
  Speaker 1: near a record high.
• 57:40
  Speaker 2: That's really interesting. So we've talked a little bit about
• 57:43
  Speaker 2: the FED. We haven't really delved into too much about inflation.
• 57:48
  Speaker 2: You hinted at it before, and CPI peaked in June
• 57:51
  Speaker 2: twenty twenty two. How do you look at where we
• 57:54
  Speaker 2: are today in the first quarter of twenty four and
• 57:58
  Speaker 2: what does that mean for people's ports.
• 58:00
  Speaker 1: So we think the disinflation trend is still largely intact,
• 58:05
  Speaker 1: but it doesn't mean it is linear and we'll quickly
• 58:09
  Speaker 1: get down to the FEDS two percent target. Obviously, there's
• 58:12
  Speaker 1: a lot of components within inflation metrics, not to mention
• 58:16
  Speaker 1: lots of ways of measuring inflation. And we can talk
• 58:19
  Speaker 1: about the FED Preferred measure of PCE, and then there's
• 58:22
  Speaker 1: core PCE or supercore supercore, you know, X shelter, and
• 58:26
  Speaker 1: there's the differentials in terms of how things like the
• 58:29
  Speaker 1: shelter components are measured and calculated and what share they
• 58:33
  Speaker 1: represent of metrics like CPI versus PCE. I'd say one
• 58:37
  Speaker 1: of the more important things that has happened this year
• 58:40
  Speaker 1: is number one, Powell and other members of the FED
• 58:44
  Speaker 1: have emphasized more the rates of change, the three month
• 58:48
  Speaker 1: rate of change, the six month rate of change, and
• 58:50
  Speaker 1: then specifically in the sixty minute interview that Powell did
• 58:55
  Speaker 1: following the January FOMC meeting, he started talking more about
• 58:59
  Speaker 1: the twelve month right change. I think that that was
• 59:01
  Speaker 1: a way to almost quantify the notion that they want
• 59:04
  Speaker 1: to make sure that if in one inflation comes down
• 59:07
  Speaker 1: to or near the target, that there's sustainability to that
• 59:12
  Speaker 1: that it's not just sort of a quick shot down
• 59:14
  Speaker 1: and they fear the risk of it moving back up again.
• 59:17
  Speaker 1: In terms of what's happened very recently is that not
• 59:21
  Speaker 1: only did we have the hotter than expected January CPI report,
• 59:26
  Speaker 1: for both CPI and PCE, the three month rate of
• 59:30
  Speaker 1: change has turned back up, the six month rate of
• 59:32
  Speaker 1: change has turned backed up. The twelve month hasn't yet.
• 59:35
  Speaker 1: But based on how these things work, if three month
• 59:37
  Speaker 1: is moving up, six month is moving up, twelve month
• 59:40
  Speaker 1: is probably going to start moving up. And that's part
• 59:43
  Speaker 1: and parcel of why the shift has occurred from a
• 59:46
  Speaker 1: March start to then it was a May start. Maybe
• 59:49
  Speaker 1: it's not until June, and you've really condensed the expectation
• 59:52
  Speaker 1: around the number of rate HIGs. Not to mention that
• 59:54
  Speaker 1: there are a few strategists out there more recently that
• 59:57
  Speaker 1: are saying maybe they don't cut it all this year.
• 1:00:00
  Speaker 1: I think the market definitely was way over at SKIS
• 1:00:02
  Speaker 1: earlier in the year when it expected not just a
• 1:00:04
  Speaker 1: March start, but six rate cuts. There was just nothing
• 1:00:07
  Speaker 1: in the data that the Fed is supposed to be
• 1:00:09
  Speaker 1: monitoring on either side of their dual mandate that suggested
• 1:00:12
  Speaker 1: such an aggressive pivot and I would also say to
• 1:00:14
  Speaker 1: a lot of investors. I was saying at the time,
• 1:00:16
  Speaker 1: be careful what you wish for. If you think after
• 1:00:19
  Speaker 1: the most aggressive tightening cycle in forty years that in
• 1:00:22
  Speaker 1: short order they're going to pivot to an aggressive rate
• 1:00:24
  Speaker 1: cutting cycle, the background conditions supporting that are probably not
• 1:00:28
  Speaker 1: what you would want to see, either as an economic
• 1:00:30
  Speaker 1: participant or as a market participant.
• 1:00:32
  Speaker 2: So you wear an economics hat. I have this discussion
• 1:00:36
  Speaker 2: all the time with people. Someone said, imagine how great
• 1:00:39
  Speaker 2: the economy would be if oil was thirty dollars a barrel,
• 1:00:43
  Speaker 2: And I said, hey, if you want thirty dollars barrel oil,
• 1:00:46
  Speaker 2: you need a really deep recession. Yeah, global, it doesn't
• 1:00:49
  Speaker 2: happen out of context the idea of careful what you
• 1:00:54
  Speaker 2: wish for, you want six rate cuts. That means the
• 1:00:56
  Speaker 2: economy is recession, is having a hard time. So since
• 1:01:01
  Speaker 2: since we have you wearing the economists hat, where's my recession?
• 1:01:05
  Speaker 2: I was promised.
• 1:01:06
  Speaker 1: Recesses, so we had the rolling recessions, but I.
• 1:01:08
  Speaker 2: Was promised a full recession in twenty two and then
• 1:01:10
  Speaker 2: twenty three, and not only did we not have recession,
• 1:01:15
  Speaker 2: unemployment fell to the mid threes. GDP is robust. When
• 1:01:21
  Speaker 2: you look around the world, this isn't all right. Everybody
• 1:01:25
  Speaker 2: is with the cleanest shirt in the hamper. It's not
• 1:01:28
  Speaker 2: that we have a robust growth economy and the rest
• 1:01:32
  Speaker 2: of the world that doesn't seem to be.
• 1:01:33
  Speaker 1: So here's what happened. It's in the context of this
• 1:01:36
  Speaker 1: whole notion of the roll through when we had the
• 1:01:40
  Speaker 1: individual sectoral recessions in manufacturing and housing and housing related
• 1:01:44
  Speaker 1: and a lot of consumer and products, and it did
• 1:01:47
  Speaker 1: end up with negative GDP for the first six months
• 1:01:49
  Speaker 1: of twenty twenty two. The reason why.
• 1:01:52
  Speaker 2: Negative not a real basis On a nominal basis, it was.
• 1:01:55
  Speaker 1: It wasn't but you had and not that back to
• 1:01:57
  Speaker 1: back negative GDP quarters is the definition of a recession.
• 1:02:01
  Speaker 1: It's not. It never has been the definition of a recession.
• 1:02:03
  Speaker 2: Thank you for saying that.
• 1:02:05
  Speaker 1: When people say, well, the traditional or the typical, it's not.
• 1:02:08
  Speaker 1: The NBER has been the official arbiters of recession since
• 1:02:11
  Speaker 1: the mid nineteen seventies, and two quarters in a row
• 1:02:13
  Speaker 1: of negative GDP has never been the definition. The key
• 1:02:17
  Speaker 1: line perhaps within that much more comprehensive definition that the
• 1:02:21
  Speaker 1: NBER uses, that helps to explain why six months of
• 1:02:25
  Speaker 1: negative GDP ultimately wasn't declarative recession. Again, not because it
• 1:02:29
  Speaker 1: was two quarters in a row. But the key part
• 1:02:32
  Speaker 1: of the NBER's definition is spread across the economy. The
• 1:02:36
  Speaker 1: weakness that led to the first half of twenty twenty
• 1:02:39
  Speaker 1: two having no real growth in the economy was concentrated.
• 1:02:43
  Speaker 1: It was concentrated on the good side of the economy.
• 1:02:45
  Speaker 1: Manufacturing we had the offsetting strength, and services service is
• 1:02:49
  Speaker 1: a larger employer by far, helping to explain the resilience
• 1:02:52
  Speaker 1: in the labor market. The services components of inflation are
• 1:02:55
  Speaker 1: stickier by nature, including the shelter components, helping to explain
• 1:02:59
  Speaker 1: the roll through in inflation. And again it's just another
• 1:03:04
  Speaker 1: example of a unique nature of this cycle. So I
• 1:03:07
  Speaker 1: think when I look forward, I think, okay, So if
• 1:03:10
  Speaker 1: and when services has their day in the clouds and
• 1:03:13
  Speaker 1: we start to see more than just some cracks that
• 1:03:15
  Speaker 1: we've started to see, like an ism services employment component.
• 1:03:19
  Speaker 1: Going back into contraction territory, what you may get is
• 1:03:23
  Speaker 1: you have a roll through of recoveries in areas or
• 1:03:26
  Speaker 1: at least stabilization that have already taken their hits. A
• 1:03:29
  Speaker 1: lot of people have you no landing as best case scenario,
• 1:03:32
  Speaker 1: there's going to be a landing, you know, at some
• 1:03:34
  Speaker 1: point the plane lands. But I do think a near
• 1:03:37
  Speaker 1: term no landing scenario might also mean a no cutting scenario.
• 1:03:40
  Speaker 1: And then the question, which I don't know that I
• 1:03:42
  Speaker 1: have an answer to, is what exactly has been propelling
• 1:03:46
  Speaker 1: the stock market? Is it the prospect of easier monetary policy?
• 1:03:50
  Speaker 1: Or is it that growth has more than hung in
• 1:03:52
  Speaker 1: there and that translates to better top line growth that
• 1:03:55
  Speaker 1: are bottom line growth. Maybe a little bit of both,
• 1:03:57
  Speaker 1: but it's hard to sort of isolate one or the
• 1:04:00
  Speaker 1: other is the key driver.
• 1:04:01
  Speaker 2: I'm so glad you brought that up, because anytime I'm
• 1:04:04
  Speaker 2: at a dinner party, i'm out a barbecue, I'm somewhere,
• 1:04:07
  Speaker 2: and the dominant narrative is thrown at me. So what
• 1:04:13
  Speaker 2: happens to the markets if the FED doesn't cut sooner
• 1:04:16
  Speaker 2: or later? And my answer is always, why do you
• 1:04:19
  Speaker 2: think that whatever that news headline is is what's driving
• 1:04:23
  Speaker 2: the markets? First of all, it is one hundred factors.
• 1:04:26
  Speaker 1: Or a million a million factors, right?
• 1:04:28
  Speaker 2: And second, just because it's on TV or online or
• 1:04:32
  Speaker 2: in the newspapers, doesn't I love that?
• 1:04:34
  Speaker 1: And I, you know, I know it's the job of journalists.
• 1:04:38
  Speaker 1: If I if I'm doing an interview on the phone
• 1:04:40
  Speaker 1: with a print reporter, if I'm going on a TV program,
• 1:04:44
  Speaker 1: and especially if questions are concentrated around what the market
• 1:04:46
  Speaker 1: is doing you know that particular day, right, and the
• 1:04:50
  Speaker 1: question is always some form of you know, what drove
• 1:04:52
  Speaker 1: the market today or what turned the market at you know, midday,
• 1:04:56
  Speaker 1: as if the market is sort of this inanimate thing
• 1:04:59
  Speaker 1: that just sits around waiting for one particular news headline,
• 1:05:03
  Speaker 1: And on any given day, any given week, if you
• 1:05:08
  Speaker 1: just change the sign on what the market was doing,
• 1:05:11
  Speaker 1: I could come up with plenty of things to point
• 1:05:13
  Speaker 1: to to say, this is why the market boomed today,
• 1:05:16
  Speaker 1: or this is why the market went down.
• 1:05:18
  Speaker 2: It is kind of silly, but no one likes the answer.
• 1:05:20
  Speaker 2: How do I know?
• 1:05:21
  Speaker 1: Right?
• 1:05:22
  Speaker 2: People are not satisfied.
• 1:05:23
  Speaker 1: I try more often than not to answer questions, especially
• 1:05:27
  Speaker 1: that are about sort of what's the market going to
• 1:05:29
  Speaker 1: do with I have no idea? And then sometimes I
• 1:05:32
  Speaker 1: pause for a fact that, well, that's the truth. I
• 1:05:34
  Speaker 1: assume you're going to have follow up questions for me,
• 1:05:36
  Speaker 1: and that's not what the listeners of the viewers want
• 1:05:39
  Speaker 1: to hear. I don't know, But anyone answering that question,
• 1:05:42
  Speaker 1: that's the honest answer.
• 1:05:44
  Speaker 2: Undred percent, And people don't realize that makes the matters worse.
• 1:05:48
  Speaker 2: The journalist writes up the story, someone else writes the headline,
• 1:05:53
  Speaker 2: and they're looking for the clickiest, most slations thing to
• 1:05:57
  Speaker 2: pull out. How many times have you read a story
• 1:06:00
  Speaker 2: where you read the headline.
• 1:06:01
  Speaker 1: And the story is, what's we're going to do with it?
• 1:06:04
  Speaker 2: Right? It's really true. I don't know is probably the
• 1:06:07
  Speaker 2: most underused phrase on Wall Street, and it really should
• 1:06:11
  Speaker 2: be because you know, first of all, it's great when
• 1:06:14
  Speaker 2: you're doing on live TV you get a question, so
• 1:06:17
  Speaker 2: where's the marketing to be in a year? How am
• 1:06:20
  Speaker 2: I supposed to know? Nobody knows?
• 1:06:23
  Speaker 1: It's and again, like nineteen eighty seven's example, even if
• 1:06:26
  Speaker 1: you nailed nineteen eighty seven and said flat, the market's
• 1:06:29
  Speaker 1: not going to do anything, No one's going to be, Oh,
• 1:06:31
  Speaker 1: yes it is. The market is going to do a lot.
• 1:06:33
  Speaker 1: It's right, it's not going to end the year with
• 1:06:34
  Speaker 1: much to show for it.
• 1:06:35
  Speaker 2: That's really funny. So, given everything we've said about the markets,
• 1:06:39
  Speaker 2: the duck paddling underneath, what's going on below the surface,
• 1:06:43
  Speaker 2: how should investors think about forward expectations, what should they
• 1:06:49
  Speaker 2: think about, Hey, you know we've been seeing the twenty
• 1:06:52
  Speaker 2: tens the market. What do we averaged thirteen fourteen percent
• 1:06:55
  Speaker 2: a year, even with some bad quarters in that the
• 1:06:58
  Speaker 2: rest of twenty twenty was amazing, twenty one was huge,
• 1:07:02
  Speaker 2: twenty three was huge. Here we are starting out twenty
• 1:07:05
  Speaker 2: four strong. At what point should investors begin to moderate
• 1:07:10
  Speaker 2: return expectations.
• 1:07:11
  Speaker 1: The discipline of rebalancing keeps you in gear in perpetuity
• 1:07:15
  Speaker 1: without having to figure out, Okay, is this the moment
• 1:07:17
  Speaker 1: I want to lessen risk on my portfolio or take
• 1:07:20
  Speaker 1: more risk in my portfolio? But I think the two
• 1:07:22
  Speaker 1: key risks right now have more to do with called
• 1:07:25
  Speaker 1: the internals of the market than anything out there that
• 1:07:29
  Speaker 1: we're observing as risk. Obviously, you know, geopolitics and the
• 1:07:32
  Speaker 1: election and black Swan risks are always the potential. But
• 1:07:36
  Speaker 1: I think sentiment and valuation now the one important caveat
• 1:07:40
  Speaker 1: around saying sentiment and valuation are a risk in this case,
• 1:07:43
  Speaker 1: meaning sentiment's scotten pretty frothy both attitudinal measures and behavioral measures,
• 1:07:48
  Speaker 1: and valuation is fairly stretched. Is the important caveat is
• 1:07:51
  Speaker 1: neither even at extremes represents anything resembling market timing tool.
• 1:07:56
  Speaker 1: As we all learned in the nineteen nineties, valuation can
• 1:07:59
  Speaker 1: get stress and sentiment can get stretched, and that can
• 1:08:01
  Speaker 1: last for years. What it does is set up maybe
• 1:08:04
  Speaker 1: a risk factor to the extent there's a negative catalyst
• 1:08:07
  Speaker 1: when you sort of have everyone on one side of
• 1:08:08
  Speaker 1: the boat and your priced for perfection. But again, that
• 1:08:11
  Speaker 1: environment can last. But I would certainly put both of
• 1:08:14
  Speaker 1: those in the risk column. In terms of what could
• 1:08:17
  Speaker 1: the potential negative catalyst be that could cause a contrarian
• 1:08:20
  Speaker 1: move relative to optimistic sentiment, well, we've already talked about
• 1:08:24
  Speaker 1: a lot of them. It could be something outsized in
• 1:08:26
  Speaker 1: terms of inflation or the Fed policy. You know, reaction function,
• 1:08:31
  Speaker 1: geopolitics is ever present. Given that twenty twenty three was
• 1:08:34
  Speaker 1: a very low volatility year, you've got the likelihood of
• 1:08:37
  Speaker 1: mean reversion, and you throw the election into the mix
• 1:08:39
  Speaker 1: as a potential volatility driver. I don't think that's a stretch. Otherwise,
• 1:08:43
  Speaker 1: I think you stay up in quality within the equity
• 1:08:46
  Speaker 1: portion of the portfolio. I think factor based investing makes
• 1:08:49
  Speaker 1: a lot more sense than monolithic groups of stocks or
• 1:08:52
  Speaker 1: even maybe at the sector level investing based on characteristics
• 1:08:55
  Speaker 1: and looking for quality companies with strong balance sheets and
• 1:08:59
  Speaker 1: ample interest coverage and strong free cash flow and positive
• 1:09:02
  Speaker 1: earnings trends and revisions, and apply that analysis across the
• 1:09:06
  Speaker 1: spectrum of sectors and even cap ranges.
• 1:09:09
  Speaker 2: Really informative and insightful. Let's jump to our speed round
• 1:09:13
  Speaker 2: our favorite questions that we ask all of our guests,
• 1:09:17
  Speaker 2: starting with tell us what's entertaining you? What are you
• 1:09:19
  Speaker 2: watching or listening or streaming these days?
• 1:09:22
  Speaker 1: So I don't read a lot of books. Every once
• 1:09:25
  Speaker 1: in a while i'll listen to them, but I'm a
• 1:09:26
  Speaker 1: big podcast listener. Aside from our own and yours, I've
• 1:09:30
  Speaker 1: always been a fan of mass.
• 1:09:32
  Speaker 2: I always tell people you don't have to mention.
• 1:09:34
  Speaker 1: No, no, I've been a regular listener of Masters in
• 1:09:37
  Speaker 1: Business in podcast form and listening to you on the
• 1:09:39
  Speaker 1: on the radio. So even in the beginning, I'm a
• 1:09:42
  Speaker 1: longtime fan. Now well, because I was a guest sort
• 1:09:45
  Speaker 1: of in the beginning, you.
• 1:09:46
  Speaker 2: Weren't sort of. You were one of the early guests.
• 1:09:49
  Speaker 2: When I couldn't get anyone on, I worked my way
• 1:09:52
  Speaker 2: through my personal phone book.
• 1:09:54
  Speaker 1: And then when you couldn't get anybody on, you got
• 1:09:57
  Speaker 1: me on.
• 1:09:58
  Speaker 2: Yeah, no, no, seriously, the general response to requests was no.
• 1:10:04
  Speaker 2: When I asked somebody I knew personally, I don't mean
• 1:10:08
  Speaker 2: you weren't anybody when I asked someone I knew. All Right,
• 1:10:11
  Speaker 2: I'll do you a favor, because really, nobody's paying attention
• 1:10:14
  Speaker 2: to this. That was then now it's ten millions.
• 1:10:17
  Speaker 1: But I am, but I am. I am a fan.
• 1:10:19
  Speaker 1: Grant Williams has a few podcasts and he always has
• 1:10:22
  Speaker 1: really fascinating guests.
• 1:10:24
  Speaker 2: On very eclectic Mix, very eclectic mix.
• 1:10:27
  Speaker 1: But I like that it's often macro focused. And there's
• 1:10:31
  Speaker 1: a number of other podcasts sporadically that I'll listen to
• 1:10:33
  Speaker 1: outside of the world of finance. I'm a big SmartLess fan.
• 1:10:37
  Speaker 2: Oh sure.
• 1:10:38
  Speaker 1: I mean they're just so funny and so lovely and
• 1:10:40
  Speaker 1: brilliant and.
• 1:10:41
  Speaker 2: I think they just saw yourself for an ungodly amount
• 1:10:44
  Speaker 2: of money to them. Yeah.
• 1:10:47
  Speaker 1: Yeah's and then streaming. I guess the one that I'm
• 1:10:51
  Speaker 1: in the midst of now is Feud Capodi versus the Swans. Really, yes,
• 1:10:56
  Speaker 1: so it's it's not a documentary, but it's you know,
• 1:10:59
  Speaker 1: based on true stories, but with great actors playing parts,
• 1:11:03
  Speaker 1: and it's multi episode and so that's that's a good
• 1:11:05
  Speaker 1: one that I'm into right now.
• 1:11:06
  Speaker 2: So I kind of know the answer to this question,
• 1:11:08
  Speaker 2: but I want to ask in any way for anyone
• 1:11:11
  Speaker 2: listening this deep into the podcast, tell us about your
• 1:11:14
  Speaker 2: early mentors who shaped your career.
• 1:11:16
  Speaker 1: So Marty's why clearly obviously LUCIERU Kaiser in terms of
• 1:11:21
  Speaker 1: my entree into the world of television and learning what
• 1:11:25
  Speaker 1: matters and what doesn't matter. And I got it, Chuck Schwab.
• 1:11:28
  Speaker 2: I know you said you're you're too busy reading research
• 1:11:31
  Speaker 2: reports to read a lot of books in addition to
• 1:11:34
  Speaker 2: Winning on Wall Street by Marty's why, any other books
• 1:11:37
  Speaker 2: you would recommend to someone?
• 1:11:38
  Speaker 1: And yes, So one of the best books I ever
• 1:11:41
  Speaker 1: got about investing was given to be my Marty when
• 1:11:43
  Speaker 1: I started the business in nineteen eighty six. And it's
• 1:11:45
  Speaker 1: a little book. It's paperback. A lot of people have
• 1:11:47
  Speaker 1: probably heard of it, but Reminiscences of a stock Court.
• 1:11:50
  Speaker 1: It's just so fabulous and I also like and it's
• 1:11:53
  Speaker 1: similar in its sort of size and structure with paperback.
• 1:11:56
  Speaker 1: Where are the customer's yachts?
• 1:11:58
  Speaker 2: Uh huh?
• 1:11:58
  Speaker 1: So those are my two. And then you know Winning
• 1:12:00
  Speaker 1: on Wall Street. You know I gotta plug Marty's book
• 1:12:03
  Speaker 1: and that still resonates even today right now at times
• 1:12:07
  Speaker 1: I'm listening to a book and I'll listen to, you know,
• 1:12:09
  Speaker 1: fifteen minutes at a time, and then not listen to
• 1:12:11
  Speaker 1: it for months and months. Is by Nathaniel Philbrick, and
• 1:12:14
  Speaker 1: it's just the history of Nantucket, where OHI is my place.
• 1:12:17
  Speaker 1: I spent parts of the summer and about the era
• 1:12:20
  Speaker 1: from the sixteen hundreds into the seventeen hundreds when it
• 1:12:23
  Speaker 1: was the whaling capital of the world. And so that's it.
• 1:12:27
  Speaker 2: I'm going to share a book with you only because
• 1:12:30
  Speaker 2: you are now in Naples. I just finished reading Bubble
• 1:12:33
  Speaker 2: in the Sun, the History of Florida real Estate Booms
• 1:12:38
  Speaker 2: and Busts, and the theory is the Florida real estate
• 1:12:43
  Speaker 2: boom in the twenties is the biggest migration in US history,
• 1:12:48
  Speaker 2: and it's collapse was one of the factors that led
• 1:12:51
  Speaker 2: to the Great Depression. It's an deeply researched, absolutely fascinating
• 1:12:56
  Speaker 2: All right, good, I think you get add it to
• 1:12:58
  Speaker 2: my list. Two questions. What sort of advice would you
• 1:13:03
  Speaker 2: give to a recent college grad interested in going into
• 1:13:07
  Speaker 2: finance or investment?
• 1:13:08
  Speaker 1: I would say, and This is advice I would give
• 1:13:11
  Speaker 1: to a college grad going really into just about any industry,
• 1:13:15
  Speaker 1: but I think maybe finance a little bit more. Too
• 1:13:18
  Speaker 1: many college grads then coming into finance, it's about, well,
• 1:13:21
  Speaker 1: what did I learn in college? What courses did I take?
• 1:13:23
  Speaker 1: To be early? Honest, it doesn't matter. You're not bringing
• 1:13:26
  Speaker 1: something into the mix that the company doesn't already know.
• 1:13:29
  Speaker 1: So the more broad advice I always give to people
• 1:13:32
  Speaker 1: who are starting out and they're going through the interview processes,
• 1:13:34
  Speaker 1: there always seems to be this strong desire to come
• 1:13:37
  Speaker 1: across as interesting, be interested, focus more on being interested
• 1:13:41
  Speaker 1: than being interesting.
• 1:13:42
  Speaker 2: Huh. Good advice. And our final question, what do you
• 1:13:46
  Speaker 2: know about the world of investing today? You wish you
• 1:13:49
  Speaker 2: knew thirty six years ago when you were first getting started.
• 1:13:53
  Speaker 1: To start early and young.
• 1:13:55
  Speaker 2: Start early and young. The magic of compounding, the.
• 1:13:58
  Speaker 1: Magic of compounding. And even if it means sacrificing a
• 1:14:02
  Speaker 1: little of the pleasures when you're much younger and you're
• 1:14:05
  Speaker 1: trying to divide a very small amount of money into
• 1:14:08
  Speaker 1: you know, fun versus savings versus work, is starting early
• 1:14:13
  Speaker 1: is just so powerful, even if it's just putting it
• 1:14:15
  Speaker 1: in some version of Savings.
• 1:14:17
  Speaker 2: Liz Anne, this has been just absolutely delightful. Thank you
• 1:14:21
  Speaker 2: so much for being so generous with your time and
• 1:14:24
  Speaker 2: allowing me to really improve on our first conversation, which
• 1:14:30
  Speaker 2: in preparation for this I listened to and was just
• 1:14:32
  Speaker 2: utterly mortified.
• 1:14:33
  Speaker 1: Oh I disagree with you, diose to you because I
• 1:14:37
  Speaker 1: didn't listen to the whole thing at your suggestion. I
• 1:14:40
  Speaker 1: listened to the first five or ten minutes, and I
• 1:14:44
  Speaker 1: still remember it like it was yesterday.
• 1:14:46
  Speaker 2: I remember sitting in that darkened room around that round table, you,
• 1:14:51
  Speaker 2: me and Larry literally my first television appearance. I want
• 1:14:55
  Speaker 2: to say that was like three something crazy. So anyway,
• 1:15:00
  Speaker 2: we have been speaking with the delightful Liz and no
• 1:15:04
  Speaker 2: E Saunders, chief investment strategist at Schwab, helping to oversee
• 1:15:09
  Speaker 2: over eight trillion dollars on their platform. If you enjoy
• 1:15:14
  Speaker 2: this conversation well, be sure to check out any of
• 1:15:17
  Speaker 2: our previous five hundred discussions we've had over the past
• 1:15:21
  Speaker 2: ten years. You can find those at iTunes, Spotify, YouTube,
• 1:15:27
  Speaker 2: wherever you find your favorite podcasts. Be sure to check
• 1:15:30
  Speaker 2: out my new podcast at the Money, short ten minute
• 1:15:35
  Speaker 2: Questions and Answers with experts about your money. I'm really
• 1:15:41
  Speaker 2: enjoying doing this podcast to just get to the meet
• 1:15:45
  Speaker 2: of an issue ten minutes. You can find those in
• 1:15:48
  Speaker 2: your master's and business speed. I would be remiss if
• 1:15:51
  Speaker 2: I did not thank the craft team that helps us
• 1:15:53
  Speaker 2: put these conversations together each week. Robert Bragg is my
• 1:15:58
  Speaker 2: audio engineer at tik of Albron is my project manager.
• 1:16:03
  Speaker 2: Anna Luke is my producer. Sean Russo is my researcher.
• 1:16:08
  Speaker 2: I'm Barry Radolts. You've been listening to Masters in Business
• 1:16:13
  Speaker 2: on Bloomberg Radio.