WEBVTT - What Really Is a Safe Haven? 

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Marrin Talks

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<v Speaker 1>Your Money, the personal finance edition of Marin Talks Money

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<v Speaker 1>and these bonus podcasts. We talk about the best strategies

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<v Speaker 1>for making the most of your money. I'm married some

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<v Speaker 1>deetweb and with me Senior Border of Money to stilled

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<v Speaker 1>author John Stappack Hi John hil Okay, John, there is

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<v Speaker 1>a lot going on this week. We've got rising tensions

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<v Speaker 1>in the Middle East. We're worried that conflict is going

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<v Speaker 1>to engulf more of the regions. So we really wanted

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<v Speaker 1>to take a moment right now to talk about exactly

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<v Speaker 1>how people should be looking at their portfolio in this

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<v Speaker 1>kind of environment. And I kind of don't know why

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<v Speaker 1>we're bothering because I already know what you're going to

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<v Speaker 1>say and exactly the same way as you look at

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<v Speaker 1>your portfolio in any other environment, am I right?

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<v Speaker 2>Yeah. The phrases that wonderful producer sum Are sent over

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<v Speaker 2>for the topic of this podcast was the phrase safe haven.

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<v Speaker 2>There are phrases I hate more in finance, but it's

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<v Speaker 2>very high on the list because.

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<v Speaker 1>For him, I apologize for him, doesn't mean it not personal.

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<v Speaker 2>She's just having them at me viewers. Hell, hr.

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<v Speaker 3>Enough enough.

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<v Speaker 1>What is what you're trying to say that there is

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<v Speaker 1>no such thing as a safe haven in a risky world?

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<v Speaker 2>I know, I think it's more safe haven is very

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<v Speaker 2>dependent on what you're trying to protect yourself. Well, for

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<v Speaker 2>a start, it's like it implies that when people write about, oh,

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<v Speaker 2>what safe haven should you go for now that war

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<v Speaker 2>has erupted, it kind of implies the kind of market

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<v Speaker 2>time and that they always complain about otherwise. So there's

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<v Speaker 2>this idea that you should suddenly move all your money

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<v Speaker 2>to cash or something like that, just because it's kind

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<v Speaker 2>of scary. Headline has has come over, and there are

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<v Speaker 2>always scary headlines coming over. I mean, I think tensions

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<v Speaker 2>in the Middle East is probably the one kind of

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<v Speaker 2>constant of my entire lifetime, and there is always something

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<v Speaker 2>going on. There is always something to be worried about.

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<v Speaker 2>So there's that, But there is also the safe having thing.

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<v Speaker 2>Cash is a safe haven in as much as its

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<v Speaker 2>value will not go below its nominal value. So if

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<v Speaker 2>you put ten pounds in the bank or you know,

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<v Speaker 2>under your mattress, it will still be ten pounds in

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<v Speaker 2>ten years time, but will ten pounds still buy you

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<v Speaker 2>the same amount of stuff. No, it won't, so it's

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<v Speaker 2>lost value in real terms. So it's actually not a

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<v Speaker 2>safe haven, you know, if you're about to get inflation.

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<v Speaker 2>Same goes for bonds, which aren't as volatile. They don't

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<v Speaker 2>go up and down as much as equities, but if

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<v Speaker 2>inflation comes along, they're going to be watch worse for

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<v Speaker 2>you than probably equities will be.

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<v Speaker 1>Cash is a safe haven if you're getting an interest

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<v Speaker 1>on it that is above the right of inflation. If

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<v Speaker 1>your main priority, and john whether you like it or not,

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<v Speaker 1>the main priority for lots of people is simply to

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<v Speaker 1>maintain they're purchasing power. So if they have cash and

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<v Speaker 1>they have it in an account, the interest rate of

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<v Speaker 1>which covers both the tax on the income and inflection,

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<v Speaker 1>even if they're even at the end, they're good.

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<v Speaker 3>That's the safe heaven.

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<v Speaker 2>That's true as long as you've got enough money. If

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<v Speaker 2>you've retired and say you're seventy five, and you now

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<v Speaker 2>know you've got enough money to last you for the

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<v Speaker 2>rest of your life, and you can find an account

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<v Speaker 2>that pays in real terms, and you're going to keep

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<v Speaker 2>up with it for again, the kind of the rest

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<v Speaker 2>of your life. Then yeah, that's probably what it's close

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<v Speaker 2>to safe having as you could get. If you're twenty five.

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<v Speaker 2>You can't put your money all in cash because you're

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<v Speaker 2>not gonna have enough to retire on when you come

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<v Speaker 2>to retire, So you're going to have to do something

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<v Speaker 2>with it, whether you like it or not. And again,

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<v Speaker 2>sort of history shows that over the very long term,

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<v Speaker 2>equities deliver the best real returns. Hopefully. I mean, yeah,

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<v Speaker 2>you cannot. You can always point to oh yeah, but

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<v Speaker 2>Japan might happen, or you know, it might turn that that.

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<v Speaker 2>You know, you're in Germany or Russia right before the

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<v Speaker 2>revolutionary before the same World War. The only safe having

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<v Speaker 2>is to diversify. See Stick some money in gold because

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<v Speaker 2>it kind of protects against kind of crazy events and

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<v Speaker 2>also kind of fiscal uncertainty. Stick some money in cash

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<v Speaker 2>because it gives you the optionality I'll typically kind of

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<v Speaker 2>keep up weigh inflation, but it won't it won't grow

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<v Speaker 2>you enough to retire on if something bonds in case

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<v Speaker 2>of deflation basically, and you have the rest in equities

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<v Speaker 2>for the kind of growth side. And I mean, obviously

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<v Speaker 2>it's it's a bit more complicated than that depending on

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<v Speaker 2>your own personal circumstances, et cetera, et cetera, et cetera.

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<v Speaker 2>But I think those are the four primary colors of

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<v Speaker 2>asset allocation, and really how you'd have split between those

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<v Speaker 2>blocks down to what your goals are and anything that

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<v Speaker 2>makes you think I should be running for a safe

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<v Speaker 2>having well that you need to stop and think, well,

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<v Speaker 2>wait a minute, why am I thinking this right now?

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<v Speaker 2>Because there hasn't been a point at which you should

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<v Speaker 2>have all of your money only in one asset unless

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<v Speaker 2>you're confident you've get accessable and you can work out

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<v Speaker 2>exactly what's going to harm you. I mean, even two

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<v Speaker 2>thousand and eight, which was the WOSCA financial crisis of

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<v Speaker 2>life times and quite possibly will be the worst financial

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<v Speaker 2>crisis of our life times, there wasn't something you could

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<v Speaker 2>describe as a see if haven permanently see if even there, employee,

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<v Speaker 2>if you put all your money at the US dollars

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<v Speaker 2>or something like that had been the best trade at the time,

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<v Speaker 2>but again it had been a one off trade.

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<v Speaker 1>You are making a lot of sense, But I suppose

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<v Speaker 1>that the key point here is there will be a

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<v Speaker 1>lot of investors who are still spite listening to this podcast,

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<v Speaker 1>very very overexposed to the US, possibly under exposed to gold,

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<v Speaker 1>possibly not with very much cash, and possibly under exposed

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<v Speaker 1>to non US equity markets. So even though we've talked

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<v Speaker 1>about this a lot over the last few years, the

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<v Speaker 1>US market will still the best place to be until

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<v Speaker 1>relatively recently, not anymore and not this year, but until

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<v Speaker 1>relatively recently, so a lot of listeners, we'll still have

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<v Speaker 1>that portfolio, that sort of one trade portfolio that is

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<v Speaker 1>very avoid the US and doesn't have much So really,

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<v Speaker 1>I think what we're saying at the moment is that

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<v Speaker 1>if that is you, now is a time a bit late,

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<v Speaker 1>but you know, it's all fine. Now is the time

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<v Speaker 1>to look at them and say, do I really want

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<v Speaker 1>that heavy exposure to one country with extremely expensive equities

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<v Speaker 1>or might it be better to cut that down going

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<v Speaker 1>to countries with less expensive equities and also into some

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<v Speaker 1>of the things that are traditional head just such as

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<v Speaker 1>cash and gold. And of course, if you want to

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<v Speaker 1>hedge we were talking about this earlier, if you want

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<v Speaker 1>to hedge against done the trouble in the Middle East itself,

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<v Speaker 1>then possibly holding some energy and oil in particular is

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<v Speaker 1>a good way to do that.

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<v Speaker 3>Is that fair. I think that's basically what you're saying.

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<v Speaker 2>Oh, no, thing that is fair, And I think yeah.

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<v Speaker 2>I mean if you had all of it explores, then

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<v Speaker 2>that way, that has been a certain failure of diversitytion

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<v Speaker 2>and asset allocation or you on your part or in

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<v Speaker 2>the part of your financial advisor or whatever, and it

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<v Speaker 2>would be a good idea to, you know, think about

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<v Speaker 2>rectifying that.

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<v Speaker 1>Yeah, and I sup the it's also another opportunity for

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<v Speaker 1>us to remind people that if you hold a global

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<v Speaker 1>ETF you are not diversified.

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<v Speaker 2>Yeah, I mean it's still something like sexty odd percent

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<v Speaker 2>is going to be in US equities, and that hasn't

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<v Speaker 2>always been the case. Because I think that's the other thing.

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<v Speaker 2>People sometimes think, oh, yeah, but hasn't that always been

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<v Speaker 2>the case, and it's like, well no, actually, really it

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<v Speaker 2>really hasn't. That's a symptom of us or valuation.

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<v Speaker 3>Yeah, so you see that exemplified in the market.

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<v Speaker 1>Okay, I'm not sure there's really much more that we

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<v Speaker 1>can say about that. And we talked, we talked in

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<v Speaker 1>our markets around up earlier in the week about crypto

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<v Speaker 1>and how it hasn't really been working as a hedge

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<v Speaker 1>or a particularly good diversifier over the last short period.

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<v Speaker 3>That remains a case, right, Yeah.

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<v Speaker 2>I don't think that if you are a fairly hands

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<v Speaker 2>off investor, you really need to body about having kept

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<v Speaker 2>to exposure and your portfolio again that and against it.

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<v Speaker 2>I don't think that it's all a scarm. I don't

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<v Speaker 2>think we're going to wake up one day and it's

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<v Speaker 2>going to be vanished.

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<v Speaker 3>He does.

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<v Speaker 2>Really, I'm urging here. I don't want all the tweets.

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<v Speaker 2>I don't want all the.

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<v Speaker 1>Tweets, all right, I haven't got anything more to say,

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<v Speaker 1>have you, John.

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<v Speaker 2>I don't think it's just it's this straightfall stuff. Diversification

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<v Speaker 2>as an allocation, that's your safe haven. It rains.

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<v Speaker 3>Yes, and don't forget.

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<v Speaker 1>This is the key point we talked about there on

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<v Speaker 1>a couple of podcasts with Gas recently, that if markets fall,

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<v Speaker 1>let's say they fall, let's say global markets fall twenty

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<v Speaker 1>five percent or something like that, the ones that will

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<v Speaker 1>recover that fastest are most likely to be the ones

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<v Speaker 1>that were cheapest in the first place. So it's worth

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<v Speaker 1>thinking about that. The UK, Latin America, where else is.

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<v Speaker 3>Cheap, honestly just about.

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<v Speaker 2>Cheap the moment I imagine markets, particularly ploy could do

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<v Speaker 2>with the day in the sun. But then you have

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<v Speaker 2>said that for a while.

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<v Speaker 1>Yeah, got a few good imagining markets podcasts coming out,

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<v Speaker 1>By the way, everyone listen.

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<v Speaker 3>Out for those excellent Thanks for listening for this week's

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<v Speaker 3>Marren Talk to Your Money.

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<v Speaker 1>If you like our share rate, review and subscribe wherever

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<v Speaker 1>you listen to podcasts.

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<v Speaker 3>Also be short to follow me and John.

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<v Speaker 1>On exceor Twitter at marins w and John underscores to epic.

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<v Speaker 1>This episode was produced by Semisadia, Production support by Moses

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<v Speaker 1>and Questions and comments on this show and all our

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<v Speaker 1>shows are always welcome.

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<v Speaker 3>I'll show Email is Marror Money at bluebook dot net.