WEBVTT - The World Outside Tech Stocks 0:00:00.400 --> 0:00:03.840 Strap on your parachute. It's time for What Goes Up 0:00:04.120 --> 0:00:13.560 with Sarah Ponzick and Mike Reagan. Hello and welcome to 0:00:13.640 --> 0:00:17.880 What Goes Up, a Bloomberg Weekly Markets podcast. I'm Mike Reagan, 0:00:18.079 --> 0:00:21.000 a senior editor at Bloomberg, and I'm Katie gray Felt 0:00:21.040 --> 0:00:23.600 filling in for Sara pod sect this week. And Katie, 0:00:23.880 --> 0:00:26.880 as I understand, you're celebrating a big cat birthday this week. 0:00:27.000 --> 0:00:29.160 Is that right? You know? Mike, I was hoping you'd 0:00:29.200 --> 0:00:30.880 bring it up, but I have to correct you. It's 0:00:30.880 --> 0:00:34.960 actually a cat anniversary. We got Katrick five years ago, 0:00:35.400 --> 0:00:39.879 but his birthday is actually in July. Oh, it's an anniversary, okay. 0:00:40.000 --> 0:00:42.400 But Katrick was a big scam, wasn't you. Didn't you 0:00:42.440 --> 0:00:44.680 think you were picking up like a hairless cat and 0:00:45.040 --> 0:00:48.640 you got this Harry cat instead. It's true, it's true. 0:00:48.680 --> 0:00:52.280 So Katrick is a Russian Peter Bald and for listeners unfamiliar, 0:00:52.320 --> 0:00:55.800 that's one of the hairless cat breeds. And uh, we 0:00:55.880 --> 0:00:58.360 got him from a breeder in Western Canada and she 0:00:58.600 --> 0:01:00.680 told her she sent us some baby pictures and he 0:01:01.120 --> 0:01:03.880 has some funs and she was like, don't worry, he's 0:01:03.880 --> 0:01:06.600 gonna lose seventy percent of his hair once he starts 0:01:06.600 --> 0:01:08.880 to grow up. And uh, I mean we're five years 0:01:08.920 --> 0:01:12.480 in and it hasn't happened. But fingers crossed, all right, 0:01:12.800 --> 0:01:14.920 all right, good. Once you have it, you don't want 0:01:14.920 --> 0:01:17.240 to lose it. I would not want to lose my hair, 0:01:17.240 --> 0:01:21.240 I'll tell you that. But anyway, Uh, this week on 0:01:21.280 --> 0:01:25.479 the show, yet, we're record highs for benchmark US equity indexes. 0:01:25.880 --> 0:01:29.880 This despite some of the deadliest days yet of the coronavirus. 0:01:29.920 --> 0:01:32.440 So what about that rotation we've all been hearing about, 0:01:32.480 --> 0:01:35.480 from stay at home winners to the reopening stocks. We'll 0:01:35.480 --> 0:01:38.840 talk to a strategist about what she's advising clients for 0:01:38.880 --> 0:01:41.360 the rest of the year and next year, and of 0:01:41.400 --> 0:01:44.600 course we will close out the show with our tradition. 0:01:44.840 --> 0:01:48.240 The craziest thing I saw in markets this week, Katie, 0:01:48.280 --> 0:01:52.840 I trust you came prepared. No offense to Sarah, but 0:01:52.960 --> 0:01:55.720 she sets a pretty low standard. I think you can think, 0:01:55.800 --> 0:01:57.840 I think you can out to We're pretty easily. I'm 0:01:57.840 --> 0:01:59.800 just gonna I'm just gonna throw that out there. I'm 0:01:59.800 --> 0:02:03.400 just kidding Sarah. But anyway, let's get to this week's guest. 0:02:03.440 --> 0:02:05.800 We're very happy to have her on the show for 0:02:05.880 --> 0:02:10.239 the first time. She is a senior wealth strategy associate 0:02:10.400 --> 0:02:15.600 at UBS Private Wealth Management. Her name is Jacqueline Reman. Jacqueline, 0:02:15.600 --> 0:02:18.160 welcome to the show. Thanks my thanks Katie, it's great 0:02:18.200 --> 0:02:20.720 to be here. Thank you for having me so, Jacqueline, 0:02:20.720 --> 0:02:22.280 I'm trying to picture what it's like to be a 0:02:22.280 --> 0:02:25.600 strategist at a at a wealth management shop these days. 0:02:25.720 --> 0:02:29.160 There must be a lot of confused clients, you know. 0:02:29.160 --> 0:02:31.880 I picture people saying, well, what should I do by 0:02:31.919 --> 0:02:34.880 Tesla and bitcoin? And or buy a Tesla and filled 0:02:34.919 --> 0:02:38.200 up with bitcoin? But I'm just curious, you know, it's 0:02:38.280 --> 0:02:41.120 such a weird market this year. We've obviously had the 0:02:41.120 --> 0:02:45.280 recession and yet this raging bowl market. What are the clients? 0:02:45.320 --> 0:02:47.880 What's top of mind for for your clients these days? 0:02:47.880 --> 0:02:50.520 Are they worried about this euphorian the market? Were they 0:02:50.760 --> 0:02:53.280 all in ready to sort of power the market higher, 0:02:53.320 --> 0:02:56.480 ready to take risk? Yeah, and that's a great question. 0:02:56.600 --> 0:02:59.840 I know right now, our clients are really you know, 0:03:00.080 --> 0:03:03.200 looking at the economic data that we're seeing and seeing 0:03:03.200 --> 0:03:06.079 what's going on with the markets, and it causes confusion because, 0:03:06.160 --> 0:03:08.880 like you said, record number of COVID cases that we're 0:03:08.960 --> 0:03:14.160 experiencing right now, record hospitalizations, we're hearing about high unemployment, 0:03:14.240 --> 0:03:16.840 and it's hard to understand how that's happening, and yet 0:03:16.880 --> 0:03:19.520 the market's hitting record has So what we talked to 0:03:19.560 --> 0:03:22.080 our clients about is how important it is to really 0:03:22.160 --> 0:03:26.359 decouple that economic data from what we're seeing with the markets. 0:03:26.720 --> 0:03:29.240 We know that the markets forward looking, it's looking to 0:03:29.320 --> 0:03:32.760 a vaccine already being out and widely distributed by the 0:03:32.840 --> 0:03:37.720 second quarter of one and the economy really reopening in 0:03:37.760 --> 0:03:41.440 the third quarter. So the economy is a lacking indicator, 0:03:41.480 --> 0:03:43.840 which we know, so that data hasn't caught up to 0:03:43.920 --> 0:03:47.440 the forward looking reality that the market is trading on. 0:03:47.720 --> 0:03:50.040 So we're really telling clients to, you know, remember to 0:03:50.120 --> 0:03:53.440 keep that separate and to understand that it makes sense 0:03:53.440 --> 0:03:56.760 that they're fearful with everything that's going on with coronavirus. 0:03:57.280 --> 0:04:00.720 That being said, you know, the market's trading positively on 0:04:00.800 --> 0:04:03.960 the news that the vaccine will be out by the 0:04:04.080 --> 0:04:07.240 end of the second quarter, and you know, we're we're 0:04:07.240 --> 0:04:09.640 looking ahead to that. So Jacqueline, I want to ask, 0:04:09.680 --> 0:04:11.840 you know, we make the point that the economic recovery 0:04:11.840 --> 0:04:14.760 and the market recovery are separate things. But you know, 0:04:14.840 --> 0:04:17.400 do you worry that the markets are looking ahead too much? 0:04:17.600 --> 0:04:20.240 And I mean, for example, small caps had their best 0:04:20.279 --> 0:04:23.400 month ever in November, value had its best month ever. 0:04:23.880 --> 0:04:26.800 Is there a risk that we get to and all 0:04:26.839 --> 0:04:29.240 the good news has already priced in? You know, we're 0:04:29.279 --> 0:04:31.599 not seeing that. You know, what we're doing right now 0:04:31.720 --> 0:04:34.520 is really looking at what got us to where we 0:04:34.560 --> 0:04:36.599 are and knowing that what got us here and won't 0:04:36.600 --> 0:04:39.440 get us there. So what we're looking at is making 0:04:39.440 --> 0:04:42.719 adjustments in the portfolio for that next leg. We do 0:04:42.880 --> 0:04:45.120 like small and mid caps. We do think that they 0:04:45.279 --> 0:04:48.200 are cyclical and have further room to grow as the 0:04:48.240 --> 0:04:52.279 economy reopens um. And then we're also being selective in 0:04:52.320 --> 0:04:58.840 what sectors were overweighting within the portfolio, like consumer discretionary, healthcare, financials, 0:04:59.200 --> 0:05:02.800 and industrial. So obviously then the big, the big elephant 0:05:02.800 --> 0:05:05.000 in the room is tech. You know, I wonder to 0:05:05.120 --> 0:05:08.520 be what I worry about. I tend to worry a lot, 0:05:08.600 --> 0:05:12.040 so maybe I I overworry. Uh as you get older, 0:05:12.520 --> 0:05:16.000 you uh, maybe you worry too much. But it's hard 0:05:16.040 --> 0:05:18.919 to me for me to imagine this sort of rotation 0:05:19.200 --> 0:05:24.440 into the cyclical consumer, financial, industrial type of stocks and 0:05:24.600 --> 0:05:29.600 out of tech without kind of a nasty looking market 0:05:29.640 --> 0:05:32.000 from the thirty thousand foot index level. You know, how 0:05:32.320 --> 0:05:35.440 how do you rotate out of Apple and Amazon and 0:05:35.440 --> 0:05:37.719 into you know, I don't know, airlines and that sort 0:05:37.720 --> 0:05:41.200 of thing without sort of having a nasty day in 0:05:41.240 --> 0:05:43.960 the market with the you know, selling off these big 0:05:44.000 --> 0:05:47.280 mega cap names, is that a risk or is it 0:05:47.400 --> 0:05:49.520 going to be sort of more of a mild you know, 0:05:49.600 --> 0:05:52.040 take a little profit on tech and and and take 0:05:52.080 --> 0:05:54.359 a flyer on some of the cyclical names that we 0:05:54.400 --> 0:05:58.520 won't necessarily ever put at risk that these record levels 0:05:58.520 --> 0:06:01.359 for indexes. Do you think, you know, I think the 0:06:01.400 --> 0:06:03.760 second part of what you said, Mike is exactly it. 0:06:03.920 --> 0:06:07.960 In our portfolios, we're not eliminating tech all together. We 0:06:07.960 --> 0:06:11.480 we like tech within our tech space. We're adding certain 0:06:11.560 --> 0:06:15.040 spaces that are more cyclical, like digital transformation, the five 0:06:15.160 --> 0:06:19.120 G enabling technologies, cyber security. But that doesn't mean we're 0:06:19.160 --> 0:06:22.080 removing those mega cap tech names. Were definitely you know, 0:06:22.120 --> 0:06:24.920 still keeping them within the portfolio. And what we know 0:06:25.080 --> 0:06:28.280 is we we see that historically when there's a ten 0:06:28.360 --> 0:06:30.520 or twelve percent pull back in tech, like we saw 0:06:30.560 --> 0:06:33.479 this fall. We know that it's usually followed by a 0:06:33.520 --> 0:06:37.000 twenty percent or even higher rebound within the next six months. 0:06:37.040 --> 0:06:39.800 So um, yeah, we were keeping tech in the portfolio 0:06:39.880 --> 0:06:42.400 for sure. I want to follow up on Mike's question, 0:06:42.680 --> 0:06:45.479 drill down a little bit more on where tech fits 0:06:45.520 --> 0:06:48.880 into the rotation. It felt like in the really early innings, 0:06:48.960 --> 0:06:51.280 you know, right after we got that fiser and buy 0:06:51.320 --> 0:06:55.080 in tech news that it turned into cell tech And 0:06:55.600 --> 0:06:57.760 I'm just curious to know the next stage of the 0:06:57.760 --> 0:07:01.200 reopening trade. What does it look like. Is that it 0:07:01.240 --> 0:07:04.240 is an economic recovery where growth is rebounding. Is that 0:07:04.360 --> 0:07:07.680 necessarily bad news for the tech sector. Yeah, we don't. 0:07:07.720 --> 0:07:09.520 We don't see that as bad news at all. We 0:07:09.560 --> 0:07:13.280 don't see them as being overpriced. We think that it's 0:07:13.280 --> 0:07:17.520 appropriately valued, largely given what the expectations are for future 0:07:17.760 --> 0:07:20.200 cash flow and also given how low rates are. And 0:07:20.440 --> 0:07:22.360 we yeah, we don't see that as a bad thing 0:07:22.400 --> 0:07:26.160 at all, you know, Jacqueline. One interesting preference from you 0:07:26.160 --> 0:07:29.000 guys as mid cap It's it's interesting you don't often 0:07:29.040 --> 0:07:31.880 hear people talk about midcaps, perhaps as much as they should. 0:07:31.880 --> 0:07:33.920 I mean, I guess if you want to sort of 0:07:34.160 --> 0:07:37.080 take advantage of that size factor. Everyone goes from one 0:07:37.240 --> 0:07:39.239 one end of the spectrum to the other, mayither mega 0:07:39.240 --> 0:07:42.640 caps or small caps. Is that part of it? Is? 0:07:43.120 --> 0:07:45.720 Is midcaps just sort of a forgotten space that that 0:07:46.160 --> 0:07:47.960 you know, maybe there's not a lot of ETFs that 0:07:48.000 --> 0:07:50.480 track it. There's you know, I don't think there's any 0:07:50.520 --> 0:07:53.400 futures on any of the MidCap indexes. It's just kind 0:07:53.400 --> 0:07:57.200 of this forgotten corner of the market that maybe gets overlooked. 0:07:57.560 --> 0:07:59.440 Is that part of it? Yeah? I think so. And 0:07:59.520 --> 0:08:02.239 we know at we've seen that they've lagged large caps 0:08:02.360 --> 0:08:05.360 largely this year. We know that they're more cyclical in nature, 0:08:05.680 --> 0:08:07.840 and we think that they're going to really be a 0:08:07.840 --> 0:08:11.360 beneficiary of the further stimulus that we're expecting to come 0:08:11.840 --> 0:08:15.600 in the coming weeks and the broader economic recovery as well. 0:08:15.880 --> 0:08:19.400 And to follow up on the stimulus package, I mean, 0:08:19.440 --> 0:08:21.560 it feels like the New trade wards just back and 0:08:21.600 --> 0:08:25.240 forth on the stimulus headlines, and I mean I'm wondering 0:08:25.520 --> 0:08:28.520 does the size of the stimulus package matter this week 0:08:28.720 --> 0:08:31.600 or matter to markets at this point, whether it's five 0:08:31.680 --> 0:08:35.720 hundred billion like McConnell's pushing or nine hundred billion. I mean, 0:08:35.960 --> 0:08:38.320 does it matter or do markets just want to see 0:08:38.400 --> 0:08:41.760 something at this point, some sort of fiscal bridge to 0:08:41.840 --> 0:08:45.240 when we actually do start to see the vaccine being distributed. 0:08:45.720 --> 0:08:48.480 What we think is just you know, knowing, like you said, 0:08:48.520 --> 0:08:51.960 that there will be a stimulus package, regardless of the size, 0:08:51.960 --> 0:08:54.720 will be viewed as a positive, and like you said, 0:08:54.720 --> 0:08:56.839 going back and forth on the size, whether it's five 0:08:57.080 --> 0:08:59.800 dred billion or you know, closer to a trillion or 0:09:00.040 --> 0:09:03.080 I know they're saying nine twelve billion right now, and 0:09:03.280 --> 0:09:06.080 just knowing that that has been passed, I think we'll 0:09:06.120 --> 0:09:09.040 allow consumers to breathe a sigh of relief and will 0:09:09.080 --> 0:09:28.400 be a positive for the markets. It kind of reminds 0:09:28.440 --> 0:09:30.920 me of the trade war last year. You know, progress 0:09:30.920 --> 0:09:34.560 in the trade were more progress today. It's it's a 0:09:34.600 --> 0:09:38.320 similar story. It's almost like the talk of it and 0:09:38.440 --> 0:09:41.520 the anticipation of it almost feels like what really gets 0:09:41.520 --> 0:09:44.320 people excited. I wonder, you know, if it turns into 0:09:44.320 --> 0:09:47.360 a sort of a show me, show me the results 0:09:47.400 --> 0:09:50.280 now afterwards. So um, I think it's gonna be interesting 0:09:50.360 --> 0:09:53.160 to see how that all pens out. Katie, I wanted 0:09:53.200 --> 0:09:55.480 to ask you about a prettytioning story you had out 0:09:55.480 --> 0:09:59.400 this week too about obviously everyone is gearing up were 0:09:59.520 --> 0:10:03.840 Tesla to be added to the SMP. Some interesting stats. 0:10:03.840 --> 0:10:08.319 They're about so much alpha being generated for fund managers 0:10:08.400 --> 0:10:12.199 by owning Tesla that guess what, once it joins the index, 0:10:12.679 --> 0:10:15.280 that's all gone. Walk us through what that story was about. 0:10:15.400 --> 0:10:19.280 I think that's a sort of an overlooked interesting thing 0:10:19.320 --> 0:10:22.080 about active management is how one way to beat the 0:10:22.120 --> 0:10:25.920 index is this stellar, incredible stock that is fifth the 0:10:26.000 --> 0:10:28.680 sixth biggest company in the country now and is not 0:10:28.760 --> 0:10:32.079 in the index. What what did you learn reputting that story? Yeah, 0:10:32.120 --> 0:10:35.720 so an interesting second derivative of Tesla being added to 0:10:35.760 --> 0:10:37.960 the index is that it's kind of taking away as 0:10:38.080 --> 0:10:41.960 secret weapon for you know, a lucky set of active managers. 0:10:42.000 --> 0:10:43.760 So we crushed the numbers and we looked at two 0:10:43.840 --> 0:10:47.320 hundred and fifteen with at least five hundred million in assets. 0:10:47.640 --> 0:10:50.720 We found that just twenty one of them hold Tesla, 0:10:51.160 --> 0:10:53.480 and the ones that do, again, they are benchmark to 0:10:53.480 --> 0:10:55.440 the SMP five hundred, I should say that, and just 0:10:55.480 --> 0:10:59.840 twenty one of them hold Tesla, and of that or 0:11:00.000 --> 0:11:03.160 eating the benchmark, which can pretty much be tied back 0:11:03.200 --> 0:11:06.679 to the fact that Tesla is up five percent this year. 0:11:06.720 --> 0:11:09.840 I mean, it just seems to keep growing. So, I 0:11:09.840 --> 0:11:13.480 mean active has had a hard year in general. I mean, 0:11:13.600 --> 0:11:17.040 first you had the SMP five hundred being dragged higher 0:11:17.080 --> 0:11:20.440 by just a handful of really five megacap tech names, 0:11:20.800 --> 0:11:23.040 and it's hard to beat the benchmark if you're not 0:11:23.200 --> 0:11:26.240 overweight those names. And now for the ones that had 0:11:26.320 --> 0:11:29.600 found this edge in Tesla that could potentially, you know, 0:11:29.679 --> 0:11:31.920 be taken away. It is said to be taken away 0:11:32.240 --> 0:11:35.839 on December one. So we spoke to Matt Bartolini at 0:11:35.880 --> 0:11:39.360 St Street Global Advisors, who said that, really, this just 0:11:39.480 --> 0:11:44.240 creates another hurdle, another headache for active managers looking, you know, 0:11:44.360 --> 0:11:48.120 just to outperform in what has just feels like it 0:11:48.360 --> 0:11:52.320 was going straight up the SMP five hundred up until August. Really, yeah, Jacklin, 0:11:52.480 --> 0:11:55.120 I'm curious how from you know, a professional on the 0:11:55.120 --> 0:12:00.480 wealth management side of the business, how off been to 0:12:00.640 --> 0:12:04.600 these sort of phenomenal, high flying story stocks like that 0:12:04.679 --> 0:12:07.160 get brought up in conversation. I just picture a lot 0:12:07.160 --> 0:12:09.920 of clients calling you guys up and being like, put 0:12:09.960 --> 0:12:11.760 it all in Tesla, put it all in Tesla, or 0:12:11.840 --> 0:12:14.160 put it all Nickli whatever the hot stock of the 0:12:14.200 --> 0:12:16.040 week is is that you know, I am I making 0:12:16.080 --> 0:12:18.760 that up? Or is that sort of a common discussion 0:12:18.800 --> 0:12:22.000 you guys have with clients, Well, you know our clients. 0:12:22.040 --> 0:12:24.520 The way that we work with clients is that we 0:12:24.640 --> 0:12:29.040 do goals based investing, So our entire investment process is 0:12:29.080 --> 0:12:31.680 based around a financial plan and then from there we're 0:12:31.679 --> 0:12:37.360 setting an acid allocation and making sectors security selections based 0:12:37.360 --> 0:12:40.240 on where we see things going long term. So we 0:12:40.559 --> 0:12:43.000 don't really talk as much about single stock as we 0:12:43.040 --> 0:12:47.000 talk about sectors acid allocation and how that fits in 0:12:47.040 --> 0:12:49.920 with the plan. So, you know, typically no, but when 0:12:49.920 --> 0:12:51.600 you hear a story like that that gets a lot 0:12:51.600 --> 0:12:53.720 of attraction on the news, of course, yeah, it comes 0:12:53.800 --> 0:12:59.360 up in conversation certainly. So I'm noticing in your notes, Uh, 0:12:59.760 --> 0:13:05.000 you s has a June SP target of about thirty 0:13:05.000 --> 0:13:09.560 eight hundred, about six point five percent gain. I guess 0:13:09.600 --> 0:13:11.840 from you know, it's it's hard to say these days 0:13:11.880 --> 0:13:13.839 that that could be. We could be there by the 0:13:13.920 --> 0:13:18.680 end of the day, So you know, walk us through 0:13:18.720 --> 0:13:20.880 how we get there. Is it a slow grind higher 0:13:20.880 --> 0:13:23.560 do you think? Or are we gonna see uh some 0:13:23.640 --> 0:13:25.920 more about And the reason I ask is I keep 0:13:25.960 --> 0:13:29.080 my eye on the VIX, And I've noticed that twenty 0:13:29.160 --> 0:13:32.679 level on the VIX, which you know, two thousand nineteen 0:13:32.760 --> 0:13:36.280 was almost unspeakably high number. Um, it really seems to 0:13:36.360 --> 0:13:41.040 be the floor now, um for the VIX. I'm guessing 0:13:41.080 --> 0:13:44.760 there is people embracing this rally, embracing these new record highs, 0:13:44.760 --> 0:13:47.640 but certainly not doing it without a little bit of 0:13:47.640 --> 0:13:52.160 an insurance policy, uh, to to sort of accommodate to 0:13:52.200 --> 0:13:55.839 go along with it. What's your outlook for for violatility? 0:13:55.880 --> 0:13:57.760 Is it gonna be a rocky road to get to 0:13:57.840 --> 0:14:01.199 that thirty eight hundred target by the middle of next year? Uh? 0:14:01.480 --> 0:14:03.200 You know, it is going to be a nail biter. 0:14:03.280 --> 0:14:06.640 Do you think you know where we are expecting some volatility, 0:14:06.840 --> 0:14:09.760 namely around what's happening with the pandemic and to the 0:14:09.760 --> 0:14:12.520 extent there's a second we've we're not for seeing any 0:14:12.640 --> 0:14:16.800 national shutdowns, but certainly depending on the direction of the numbers, 0:14:16.840 --> 0:14:20.400 you know, regional shutdowns and pull backs, and believe that 0:14:20.480 --> 0:14:24.040 the market will be impacted by that and will experience 0:14:24.120 --> 0:14:27.840 volatility until that vaccine comes out, and then more short 0:14:27.960 --> 0:14:31.560 term to volatility around the stimulus package and whether it 0:14:31.560 --> 0:14:34.720 will pass before Congress goes on that Christmas break and 0:14:34.800 --> 0:14:37.000 I want to circle back. You made an interesting point 0:14:37.000 --> 0:14:39.480 earlier when we were talking about tech that you know, 0:14:39.520 --> 0:14:42.240 you're looking at the more cyclical areas of tech, and 0:14:42.240 --> 0:14:45.000 I was hoping you could elaborate a little bit on that. 0:14:45.040 --> 0:14:48.280 You know, what is considered a cyclical area within tech? 0:14:48.320 --> 0:14:50.880 Would you say, yeah, so we're looking at five G 0:14:51.920 --> 0:14:59.560 cyber security, a r VR, telesurgery, the idea of autonomous driving, 0:14:59.680 --> 0:15:04.760 those as more cyclical five G enebling technology themes. Yeah. 0:15:04.840 --> 0:15:08.160 Five G I think is is uh the big game 0:15:08.240 --> 0:15:11.440 changer obviously, And I it's interesting because I you know, 0:15:11.960 --> 0:15:13.320 I do think it will take a little while to 0:15:13.360 --> 0:15:16.200 see who the how the winners and losers shake out. 0:15:16.200 --> 0:15:19.360 But I mean, I guess there's there's enough known about Okay, 0:15:19.360 --> 0:15:21.800 this chip maker, that chip maker, you know, this this 0:15:21.920 --> 0:15:25.240 device maker, you know. It all boils down to me, 0:15:25.440 --> 0:15:27.880 you know, when we talk about this rotation and whether 0:15:27.920 --> 0:15:31.080 you consider it, consider it a value growth rotation or 0:15:31.600 --> 0:15:34.600 a size rotation or stay at home to to reopening 0:15:34.640 --> 0:15:38.360 whatever it is, it seems to me like it's it's 0:15:38.400 --> 0:15:40.400 bound to have an expiration date. It's hard for me 0:15:40.480 --> 0:15:42.840 to picture a market where tech is not the star 0:15:42.960 --> 0:15:46.360 of the show over the long term. You know, maybe 0:15:46.360 --> 0:15:49.200 we'll have value outperform even for all of the rest 0:15:49.240 --> 0:15:52.160 of the year, half and next year, but it's hard 0:15:52.160 --> 0:15:55.160 for me to ever see tech not being that that 0:15:55.440 --> 0:15:58.760 star of the equities show. After that, once life's back 0:15:58.800 --> 0:16:02.160 to normal, we kind of mean revert on valuations of 0:16:01.760 --> 0:16:05.520 the sectors that got hit the worst by COVID. I mean, 0:16:05.520 --> 0:16:07.640 it's not a safe assumption. Do you think, you know, 0:16:09.520 --> 0:16:12.960 we'll all end up sort of rotating back to tech eventually? Yeah? 0:16:13.000 --> 0:16:15.520 I think so. And I think that you know, almost 0:16:15.560 --> 0:16:18.360 all sectors have a tech component now right, We're talking 0:16:18.400 --> 0:16:23.480 about financial technology and fintech and contactless and mobile payments, 0:16:23.640 --> 0:16:27.720 health technology, green energy, and green tech. So I think, 0:16:28.240 --> 0:16:30.800 you know, through this next decade that becomes more and 0:16:30.840 --> 0:16:34.400 more of a reality as tech enters all the different sectors. 0:16:58.720 --> 0:17:00.760 You know what I was wondering, point if you could 0:17:00.840 --> 0:17:03.400 help me understand what's going on in the bond market 0:17:03.600 --> 0:17:07.280 at all. It feels like this reflation, this reopening trade, 0:17:07.320 --> 0:17:10.200 whatever you want to call it, has really been embraced 0:17:10.240 --> 0:17:13.639 by stock traders, but bond traders it feels like a 0:17:14.240 --> 0:17:18.040 really a pessimistic bunch. You know, the tenure treasury yield 0:17:18.359 --> 0:17:21.280 keeps testing one percent and it just keeps failing. It 0:17:21.359 --> 0:17:24.600 feels like, so, I mean, is that really just Fed 0:17:24.680 --> 0:17:27.679 expectations or I mean, is it safe to say that 0:17:27.720 --> 0:17:30.800 the bond market is a little more pessimistic. Yeah, I know, 0:17:31.160 --> 0:17:33.320 we're expecting that the FED is going to keep rates 0:17:33.920 --> 0:17:37.919 near zero through so we are expecting that low for 0:17:38.040 --> 0:17:41.880 longer interest rate. And what we're doing in our portfolios 0:17:41.960 --> 0:17:45.560 really is looking for you through dividend paying stocks like 0:17:45.640 --> 0:17:48.879 in the financial space for instance, or in healthcare, to 0:17:49.000 --> 0:17:52.840 try and increase that that yield in the portfolio. Oh 0:17:52.880 --> 0:17:56.600 that's interesting. So in general more risky allocation. Do you 0:17:56.640 --> 0:17:59.240 think if if you consider dividend stocks, maybe not as 0:17:59.320 --> 0:18:02.640 risky as as other equities, But is it an active 0:18:03.000 --> 0:18:07.320 reduction of sort of that theoretical sixty allocation? I mean, 0:18:07.520 --> 0:18:10.320 I'm sure you don't all allocate exactly to sixty forty, 0:18:10.359 --> 0:18:12.760 but but you know, using that as a baseline, is 0:18:12.800 --> 0:18:17.280 there kind of this this you know, different strategy now too, 0:18:18.280 --> 0:18:22.000 he's up on treasuries. I can't imagine anyone just holding 0:18:22.000 --> 0:18:24.000 onto a treasury right now. I'm just gonna throw that 0:18:24.040 --> 0:18:26.119 out there. I don't, I don't, I don't get it. 0:18:26.280 --> 0:18:29.639 So is you know, is we definitely think there's a 0:18:29.680 --> 0:18:32.600 place for them in within the portfolio for sure, but 0:18:32.760 --> 0:18:36.399 we for for fixed income. But yeah, I'm looking for yield. 0:18:36.480 --> 0:18:40.160 We're we're doing so often in with dividend paying stocks 0:18:40.640 --> 0:18:44.560 in those sectors interesting and I mean in terms of 0:18:44.600 --> 0:18:47.560 where to find safety. I mean you make the point 0:18:47.600 --> 0:18:50.560 that in looking for yield, maybe treasuries aren't the place. 0:18:50.680 --> 0:18:54.000 But I mean, especially the last few months, there's been 0:18:54.040 --> 0:18:57.080 a lot of back and forth on whether treasuries are 0:18:57.280 --> 0:19:00.640 serving their purpose within portfolios at all, whether they are 0:19:00.760 --> 0:19:03.720 still a good hedge for equity risk. I know there 0:19:03.720 --> 0:19:06.920 were a few instances in October or September, it's hard 0:19:06.920 --> 0:19:10.960 to remember where um, you know, treasury is really barely 0:19:11.040 --> 0:19:13.479 budged even when stocks were falling out of bed. I mean, 0:19:13.520 --> 0:19:17.119 do you is that still the buffer was? Yeah? I 0:19:17.520 --> 0:19:19.560 think so to some extent. Yeah, we like them in 0:19:19.560 --> 0:19:22.320 the portfolio for that reason. We also are using tips 0:19:22.560 --> 0:19:26.960 um corporate investment grade bonds and like I said, the 0:19:27.000 --> 0:19:29.840 dividend stocks as well. And then in terms of you know, 0:19:29.920 --> 0:19:32.800 safety and having that hedge, we also you know, like 0:19:32.880 --> 0:19:35.560 gold for that reason as well. All Right, safety is 0:19:35.600 --> 0:19:40.200 one thing, Katie, but what the people want is the crazy. 0:19:40.240 --> 0:19:43.000 It's not the safest thing I heard in markets this week. 0:19:43.480 --> 0:19:47.080 Stand clear of the craziest things we saw in markets 0:19:47.119 --> 0:19:50.560 this week. So let's start with you. I wanna, I 0:19:50.640 --> 0:19:54.360 want to see how your crazy thing game is. Okay, 0:19:54.520 --> 0:19:57.160 time to shine. Well. I know that you checked in 0:19:57.320 --> 0:19:59.800 on Bill Gross and his fight with his neighbor a 0:19:59.840 --> 0:20:03.000 few weeks ago, but now it's being tried in the 0:20:03.040 --> 0:20:04.399 court of law, so I want to bring you a 0:20:04.400 --> 0:20:06.640 few updates. And of course this is connected to markets 0:20:06.680 --> 0:20:10.680 because Bill Gross was the bond King, but his neighbor 0:20:10.720 --> 0:20:14.119 and again they're in a fight over his sculpture outside 0:20:14.119 --> 0:20:18.040 Bill Gross's house. Bill Gross blasted the Giligan Island scheme. 0:20:18.119 --> 0:20:21.560 It sounds very very dramatic, very fun um. But it's 0:20:21.880 --> 0:20:26.320 a glass sculpture that that mysteriously keeps breaking and uh, 0:20:27.160 --> 0:20:31.440 you know, I usually it's nice looking. I could understand 0:20:31.520 --> 0:20:33.680 how maybe you don't want it on your property line. 0:20:33.720 --> 0:20:35.560 I'm not sure what the exact spot is, but it 0:20:35.560 --> 0:20:38.240 looks pretty nice from what I saw on the internet. Yeah, 0:20:38.320 --> 0:20:40.320 well you had to put up a giant net around it. Too, 0:20:40.359 --> 0:20:43.320 which I don't think the neighbor appreciated blocking his view 0:20:43.320 --> 0:20:46.840 of the Pacific. So true, But yeah, catch us up 0:20:46.880 --> 0:20:49.320 on the court drama. This is this is like a 0:20:49.400 --> 0:20:52.760 courtroom drama here. I love it. Well. The neighbor testified 0:20:52.800 --> 0:20:55.600 in court this week that Bill Gross is an angry 0:20:55.640 --> 0:20:59.119 billionaire with a short fuse, and that's the money manager 0:20:59.359 --> 0:21:02.919 actually offered his condolences. Bill Gross offered his condolences to 0:21:02.920 --> 0:21:06.840 the neighbor when he moved in. But the angry billionaire things. 0:21:06.880 --> 0:21:08.880 I don't know if it's the best put down I've 0:21:08.880 --> 0:21:11.280 ever heard, because I would love to be any type 0:21:11.280 --> 0:21:15.680 of billionaire, truly angry or not. Right, right, you think 0:21:15.720 --> 0:21:19.119 the anger level would subside a little bit as you 0:21:19.160 --> 0:21:21.280 became a billionaire, But I guess I guess maybe not. 0:21:21.400 --> 0:21:24.679 So Hey, Bill Gross is still living his life the 0:21:24.680 --> 0:21:26.680 white Bill Gross. He's fit. I'm a I'm all flu 0:21:27.320 --> 0:21:29.159 but I we'll have to keep checking back on this 0:21:29.200 --> 0:21:33.760 story as it progressive. One of my favorites for the year. Alright, Jaqueline, 0:21:33.760 --> 0:21:36.480 no pressure on you, but I'm sure they warned you 0:21:36.600 --> 0:21:39.480 of our gimmick here, and hopefully you can't prepare it. Okay, Yes, 0:21:39.520 --> 0:21:41.919 I did, and it's a different type of crazy, I 0:21:41.920 --> 0:21:44.760 would say. So my craziest thing this week was seeing 0:21:44.800 --> 0:21:47.280 that the TAO was up over eleven point eight four 0:21:47.359 --> 0:21:52.240 percent in November, the best one month performance since January seven. 0:21:52.840 --> 0:21:55.320 It is pretty crazy. Some sometimes the crazy this year, 0:21:55.359 --> 0:21:57.439 the craziest things are the things staring You're right at 0:21:57.440 --> 0:22:01.000 the in the face, which is totally true. Eleven in 0:22:01.000 --> 0:22:04.440 a month, I mean. And of course, once you hear 0:22:04.480 --> 0:22:08.320 that seven comparison, uh, people may take that a little 0:22:08.320 --> 0:22:15.840 bit too far. I wasn't alive, so that's pretty oh man, 0:22:16.760 --> 0:22:21.560 what the heck? All right, Well, I was an awkward teenager, 0:22:21.680 --> 0:22:28.000 so we're equal, I guess. But all right, and I 0:22:28.040 --> 0:22:31.240 was an awkward teenager in the suburbs of Philadelphia, which 0:22:31.280 --> 0:22:34.640