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Speaker 2: Okachonally. I don't know about you, but I do everything
Speaker 2: I can to avoid going to the pharmacy. The products
Speaker 2: are expensive, they're locked up, the line to pick up
Speaker 2: medications is long. Sometimes the pharmacy has even closed when
Speaker 2: I try to go, and overall I just find it
Speaker 2: an experience I want to avoid. Well, it turns out
Speaker 2: I'm not the only one. As Feoni Rutherford writes in
Speaker 2: the new issue of Bloomberg BusinessWeek, pharmacy profit margins are
Speaker 2: falling at the biggest chains, which includes CBS and Walgreens
Speaker 2: write a declared bankruptcy just a few months ago, and
Speaker 2: a key problem for drugstores is the front of the store,
Speaker 2: where competition and inflation are making it harder to turn
Speaker 2: a profit. Jim Ellis is at Bloomberg BusinessWeek Assistant Managing editor,
Speaker 2: and he edited Fiona's story, which is featured in the
Speaker 2: new issue of BusinessWeek magazine. It's available on newsstands, on
Speaker 2: the Bloomberg terminal and at bloomberg dot com slash At BusinessWeek,
Speaker 2: Jim joins us from New Jersey. So, Jim, you go
Speaker 2: to the pharmacy, everything's locked up, The line is long.
Speaker 2: It turns out you can get a lot of this
Speaker 2: stuff for cheaper when you order it from some of
Speaker 2: the biggest retailers online.
Speaker 3: That's become the big problems, so many of it. That's
Speaker 3: become a big problem for the drug store change simply
Speaker 3: because once upon a time people thought, oh, well, you know,
Speaker 3: I'm going to go and buy a lot of things
Speaker 3: as I walk through the store to the back to
Speaker 3: the pharmacy, and the business model for the pharmacies had
Speaker 3: been you put that, you know, the pharmacy in the
Speaker 3: back of the store. It makes people go through run
Speaker 3: the gauntlet through all the candy, school supplies, things like that,
Speaker 3: and they pick these things up, which is showed at
Speaker 3: a higher price than you get at other retailers, and
Speaker 3: then they'll also buy the drugs. That's been thrown sort
Speaker 3: of apart now because people have discovered that you can
Speaker 3: go to a Walmart, you can go to even Amazon's
Speaker 3: pharmacy business, you can find drugs other places. And so therefore,
Speaker 3: not only are the drug stores losing that business that
Speaker 3: comes from people picking up prescriptions, they're also losing the
Speaker 3: business of people buying basically overpriced retail items within their stores,
Speaker 3: and that's wrecking their financial model.
Speaker 4: If wrecking the financial model, and you could see that
Speaker 4: some people have already kind of thrown in a towel
Speaker 4: when it comes to that struggling financial model. Tim is
Speaker 4: waving his hand.
Speaker 2: Unless you need, unless you need talent on in the
Speaker 2: middle of the night for a crying toddler, like it's
Speaker 2: hard to find a reason Shanalie to step inside one
Speaker 2: of these I don't know.
Speaker 4: I live in New York City, so I like to
Speaker 4: step inside of it the rec and I don't is
Speaker 4: because my dog barks on the line a lot, so
Speaker 4: I don't like to take them in there. But Jim,
Speaker 4: what are the fixes here?
Speaker 3: Well, the fix the first fix is that they've got
Speaker 3: to come up with some way to make actually going
Speaker 3: to a pharmacy not such a hassle for a lot
Speaker 3: of customers. One of the things, particularly since COVID is
Speaker 3: a lot of people don't like the notion that, you know,
Speaker 3: they're understaffed many of the pharmacies because they've had shortages
Speaker 3: of pharmacists because it's been so difficult to work in
Speaker 3: a pharmacy since COVID. You know, a lot of people
Speaker 3: are confronted with lines, they're confronted with weights that they
Speaker 3: don't want to have, and it's sort of chaotic at
Speaker 3: the same time within a pharmacy, simply because the pharmacist
Speaker 3: now is not only preparing your drugs. They may be
Speaker 3: giving vaccinations, they may be doing health screenings. There's a
Speaker 3: lot of things depending on your state, that pharmacists are
Speaker 3: allowed to do now that they weren't allowed to do before,
Speaker 3: and that's more work with fewerformacists, and so it's become
Speaker 3: a less you know, it's not like going to the
Speaker 3: doctor where you sit up and talk to your pharmacist,
Speaker 3: and you know, nowadays that sort of jump in wait
Speaker 3: in line, wait, wait, wait, then finally you can get
Speaker 3: out and then have to walk back through that gauntlet
Speaker 3: of things you don't want to buy because they're overpriced.
Speaker 3: So what they're trying to do is to figure out
Speaker 3: a way to get the pharmacy, you know, back up
Speaker 3: to the front of the store. Now that's like, that's
Speaker 3: heresy for a lot, you know, for people who work
Speaker 3: in this business for decades. But right now that's something
Speaker 3: that Walgreens is experimenting with, is you know, put in
Speaker 3: pharmacies at the front so you can come in and
Speaker 3: one of the things that people don't like about going
Speaker 3: to the pharmacy, which is waiting, a lot of that
Speaker 3: goes away simply because you come in and instead of
Speaker 3: waiting in line, you're using kiosks to put in your
Speaker 3: information and then you just so you can if you want,
Speaker 3: go back and wait in your car and they text
Speaker 3: you when your order is ready. You can shop the
Speaker 3: store if you choose to, but more importantly, you can
Speaker 3: go other places. You can walk around or just sit
Speaker 3: in your care and be more comfortable. That's very different.
Speaker 3: It also is a pretty big gamble simply because a
Speaker 3: lot of the business model counts on that mixture of
Speaker 3: both pharmacy revenue and that sort of high margin business
Speaker 3: of retail that they sell within a drug store.
Speaker 2: Jim, it's so hard to see to hear you say
Speaker 2: this and see how it competes with the upstarts that
Speaker 2: I think have taken over in a lot of the
Speaker 2: bigger cities. Look, they're not available everywhere in the US
Speaker 2: at this point, but the fact that there are apps
Speaker 2: that you can give a phone number to your doctor
Speaker 2: when you're at the doctor's office getting a prescription written,
Speaker 2: and then something pops up on the app and asks
Speaker 2: what time do you want this drug delivered today? Like
Speaker 2: that is just so much easier than this process.
Speaker 3: I mean, the convenience is something that you know that
Speaker 3: brick and mortar retailers, like a drug chain, you know,
Speaker 3: a drug store chain, they just have to deal with that.
Speaker 3: They are making deliveries available, depends on the market, but
Speaker 3: often the deliveries that they offer are not quite as
Speaker 3: good as some of these online only pharmacies. For example,
Speaker 3: in New York, you can get deliveries at you know,
Speaker 3: sort of CVS's, but often it's through a third party
Speaker 3: delivery service, and some people don't like that. And some
Speaker 3: people also get confused when they think of it as
Speaker 3: sort of, you know, should I be getting my drugs
Speaker 3: delivered by the same person that brings my pizza.
Speaker 2: It's not necessarily the same person, but hey, I order
Speaker 2: Peaza on Friday, so why.
Speaker 4: Not well, doesn't jim to that end. What are the
Speaker 4: risks here?
Speaker 3: Well, one big risk is that when you change a habit,
Speaker 3: when you try to change a habit that consumers have
Speaker 3: had for sixty seventy eighty years, you know that that
Speaker 3: will confuse them. That also can make them think, well,
Speaker 3: you know I've done this this way before. Well maybe
Speaker 3: if I'm going to have to do something different, maybe
Speaker 3: I will try something different. Maybe I'll try an online pharmacy.
Speaker 3: Maybe I will try some other place, you know, maybe
Speaker 3: I'll get my pharmacy needs done at a Walmart. Walmart's
Speaker 3: in very aggressive at expanding pharmacies in all of its
Speaker 3: major stores, and you know, they don't have the same potentially,
Speaker 3: they don't have the same hours that some drug store
Speaker 3: chains do. But especially since the since the pandemic, a
Speaker 3: lot of the hours that twenty four hour pharmacies had
Speaker 3: have been cut back. So that actually is something that
Speaker 3: now other types of retailers like a Walmart can compete on.
Speaker 3: It used to be you could say, oh, my local
Speaker 3: CBS or my local right Aid is open twenty four hours.
Speaker 3: If I get sick in the middle of that, I
Speaker 3: can go there. I can't do that at my Walmart. Well, nowadays,
Speaker 3: a lot of pharmacies are actually, you know, closed after
Speaker 3: six pm on the weeks. A lot of pharmacies are
Speaker 3: not open at night, and so therefore it's not that
Speaker 3: different from an opening standpoint than you could do at
Speaker 3: a big box store.
Speaker 2: Jim Ellis really appreciate you joining us. Bloomberg BusinessWeek Assistant
Speaker 2: Managing Editor. He's the editor on Fiona Ruthaford's story, which
Speaker 2: is available the new issue of BusinessWeek magazine. It's on newstands,
Speaker 2: on the Bloomberg Terminal and at Bloomberg dot com slash
Speaker 2: of BusinessWeek.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: Well, we just spoke to our Real Economy team reporter
Speaker 2: Mark Niquette, about how different parts of the economy are
Speaker 2: informing voters, specifically how inflation under the Biden administration is
Speaker 2: overshadowing what has been the best time to find work
Speaker 2: in generations on inflation. We did get a bit of
Speaker 2: good news this week with the latest CPI figures. Core
Speaker 2: CPI snapped a streak of three above forecast readings, and
Speaker 2: the year over year measure cooled to the slowest pace
Speaker 2: in three years. So that's the data. But how are
Speaker 2: things playing out on the ground for customers, for businesses,
Speaker 2: for retailers. We have back with us for answers Katie Thomas,
Speaker 2: lead at the Carney Consumer Institute. The company looks at
Speaker 2: consumer behavior data and insights to give businesses an idea
Speaker 2: about how to engage customers. Katie joins us once again
Speaker 2: from Pittsburgh. So, Katie, in your most recent batch of research,
Speaker 2: what are you finding that customers are noticing when it
Speaker 2: comes to inflation. Are they noticing that it's easing, because,
Speaker 2: as we just discussed, that easing doesn't seem to be
Speaker 2: hitting voters and the polling just yet.
Speaker 5: Yeah, while they do comment. Your consumers are commenting about
Speaker 5: noticing price increases in certain key areas such as food
Speaker 5: and gas. That being said, I think we're still seeing
Speaker 5: a bit of a struggle to connect that directly to
Speaker 5: how they feel about the economy, and so we are
Speaker 5: seeing consumers just increasingly be cautious. I think that's what
Speaker 5: you saw in the retail sales numbers this week, which
Speaker 5: is I'm not overly concerned. I don't think we're doom
Speaker 5: and gloom, but we're seeing that slow down that we've
Speaker 5: been in anticipating that consumers have finally reached a point
Speaker 5: where they're perhaps really having to prioritize or pick and
Speaker 5: choose how they're spending. And one of the major numbers
Speaker 5: that I'm watching though, is personal job security. So you know,
Speaker 5: unemployment numbers are one measure, but it's really consumer spend
Speaker 5: is informed by how somebody individually feels about their job
Speaker 5: situation and how safe they are to either keep their
Speaker 5: job or find a new job if they need to.
Speaker 4: You know, it's interesting too, you know, when you're an investor,
Speaker 4: investors talk a lot about inflation slowing, inflation slowing, but
Speaker 4: really it's the pace of increases slowing and constant. Hunter
Speaker 4: over at Micropolicy Perspectives and made a great point this
Speaker 4: week that for many Americans, the price is just so
Speaker 4: much higher than it was years ago for many products, services, housing.
Speaker 4: How do you view that disconnect this idea that still
Speaker 4: people are living under the weight of these preennily higher prices. Really,
Speaker 4: even if inflation is slowing at the rate it's increasing.
Speaker 5: Right, I mean, I think you're seeing a couple of
Speaker 5: different factors feed in here. So some of the unfortunate
Speaker 5: news about consumers is you're seeing savings on a decline.
Speaker 5: So it's been there was some recovery after the high
Speaker 5: savings during the pandemic in early twenty twenty three. Now
Speaker 5: you're seeing that number a steady decline while seeing credit
Speaker 5: card delinquencies also tick up. So in some cases, unfortunately,
Speaker 5: folks probably are not you know, they're probably spending a
Speaker 5: little bit beyond their means, you know, beyond that, it's
Speaker 5: just about consumers really evaluating their discretionary spend and how
Speaker 5: they categorize spend themselves. So where are they prioritizing, where
Speaker 5: are they making trade offs? And how can they continue
Speaker 5: to kind of navigate this complicated environment.
Speaker 2: What about when it comes to what many would argue
Speaker 2: has historically been discretionary spending. I'm thinking of, Katie, something
Speaker 2: like travel, which you know, historically, if people don't have
Speaker 2: the money to travel, at least if they don't need
Speaker 2: to travel, they're not going to spend the money to
Speaker 2: do that. What are you learning sort of like the
Speaker 2: new normal when it comes to travel.
Speaker 5: Yeah, you know, I think we all have a bias
Speaker 5: to sometimes stick with the way we've defined things in
Speaker 5: the past consumer discretionary spend, consumer staples, and some version
Speaker 5: of needs versus wants. But we hear from consumers is
Speaker 5: that they tend to define things a little bit differently
Speaker 5: and they're able to really prioritize how they want to spend.
Speaker 5: Travel is a great example. So when we talk to consumers,
Speaker 5: twenty six percent of consumers told us they consider their
Speaker 5: annual vacation to be a must have spend and in
Speaker 5: order to enable that, that's actually where we're seeing men
Speaker 5: pull back in other areas. So perhaps it's food and
Speaker 5: they're willing to again make trade offs or even cut
Speaker 5: certain things from their typical grocery shop to really allow
Speaker 5: for that. Whereas certain items like food that feel like
Speaker 5: a staple. A lot of times there's things that they
Speaker 5: again can give up. Maybe it don't buy as many
Speaker 5: snacks this week, maybe I go out to restaurants one
Speaker 5: less a week. And so I really think sometimes it's
Speaker 5: about seeing that bigger picture of how a consumer understands
Speaker 5: just how discretionary versus must have something.
Speaker 4: Is I think we also have to differentiate types of
Speaker 4: consumers here, because you kind of hinted earlier about this
Speaker 4: idea that's some consumers are feeling stressed, and we saw
Speaker 4: retail earnings this week, we see more retail earnings next week,
Speaker 4: and you see upper to middle class customers trading downstill,
Speaker 4: so buying cheaper goods instead of more expensive ones. A
Speaker 4: lot of commentary around how lower end consumers are feeling stretched.
Speaker 4: Where are the biggest discrepancies as you see it, who
Speaker 4: is feeling the most pressure and will that pressure start
Speaker 4: to widen among more groups?
Speaker 5: Yeah, I think this is another area where we try
Speaker 5: to take a too pronged approach at it. So what
Speaker 5: is is the you know, obvious more traditional demographic income split,
Speaker 5: so looking at you know, high, medium, low income. But
Speaker 5: another question we asks is if they feel like they're
Speaker 5: living within their means or paycheck to paycheck. And what
Speaker 5: we found is folks that feel like they're living within
Speaker 5: their means, regardless of what income category they're in, are
Speaker 5: there's more commonality there and with the people that are
Speaker 5: living paycheck to paycheck. So I know, for instance, we
Speaker 5: saw Walmart's earnings release, I actually caught your segment on
Speaker 5: it yesterday, and I think the high income shoppers there
Speaker 5: is a great example of people.
Speaker 6: I think some of the stigma maybe even.
Speaker 5: Around shopping certain stores has just slowly gone away, and
Speaker 5: as we've had these continually tightening wallets, people simply want
Speaker 5: to know they're getting the best bang for their buck
Speaker 5: on the basics.
Speaker 2: Yeah, it look well. I was just going to say
Speaker 2: it's because we were talking about this in the newsroom
Speaker 2: yesterday after those numbers came out, and there were folks
Speaker 2: around my desk just talking about how the way that
Speaker 2: Walmart's in store offering has changed, especially when it comes
Speaker 2: to groceries in recent years. Just shows that it's really
Speaker 2: trying to go after so many different types of consumers
Speaker 2: right now.
Speaker 5: Absolutely you see it with some of their new Private
Speaker 5: Life launches, but they've also done more partnerships with direct
Speaker 5: to consumer brands over the years.
Speaker 6: They're not the only.
Speaker 5: Big box retailer doing it, but they are known for
Speaker 5: being willing to test and learn, but also if something
Speaker 5: doesn't work out, they kind of cut their losses and
Speaker 5: move on from it. So I think that you're seeing
Speaker 5: all these different types of retailers really try to adapt
Speaker 5: to the consumer and take all the data that they
Speaker 5: have and give the best experience possible. And I think
Speaker 5: even they're realizing certain things that perhaps we traditionally attributed
Speaker 5: to standard demographics, like income, that's not really the case.
Speaker 5: You know, everybody likes to get a deal, everyone likes
Speaker 5: the best bang for their buck, and so moving away
Speaker 5: from some of those preconceived notions has enabled a lot
Speaker 5: of success for retailers that understand their value proposition.
Speaker 2: Hey, before we let you go, Katie, I want to
Speaker 2: just get an idea of what's coming up next at
Speaker 2: the Carney Consumer Institute. I know you have a report
Speaker 2: coming out next week about innovation and it kind of
Speaker 2: shows the delta between how consumers see innovation versus how
Speaker 2: brands internally see innovation. Little bit about what to expect there.
Speaker 5: Yeah, well, oh well, you know, we all know innovation
Speaker 5: is actually like pretty ambiguous as it is. It can
Speaker 5: be described to be anything from like a simple line
Speaker 5: extension to some you know, massively disruptive category or technological advancement.
Speaker 5: But in reality, lately, what we hear a lot of
Speaker 5: is like consumers are increasingly demanding more specialized, more niche products.
Speaker 5: And when we found when we went to consumers, is
Speaker 5: that's not the case. So almost ninety percent of consumers
Speaker 5: told us there's either enough products in most categories or
Speaker 5: too many in some categories. So it's really about, i think,
Speaker 5: repositioning inflation to make sure we're doing it in the
Speaker 5: right way and not proliferating for innovation's sake, by just
Speaker 5: deepening some of those consumer feedback loops and really understanding
Speaker 5: when we want better when we do just want new
Speaker 5: or more options, and kind of really trying to delineate,
Speaker 5: you know, what's going to be most successful at any
Speaker 5: given time.
Speaker 2: Katie certainly look forward to seeing that report. Thank you
Speaker 2: as always for joining us us on Bloomberg Business Week.
Speaker 3: Mark a journal. How about you let me drive?
Speaker 2: Oh no, no, no, no, all right, please, I'll do travel.
Speaker 3: I want to drive.
Speaker 2: It's a good question.
Speaker 1: This is the drive to the clothes thing. Well by
Speaker 1: around on Bloomberg Radio.
Speaker 2: It is Bloomberg a Business Week, and believe it or not,
Speaker 2: we are only wow.
Speaker 1: Look at that is that right?
Speaker 2: Eighteen minutes from the close?
Speaker 1: Here?
Speaker 2: It's time fly when you have fun.
Speaker 4: Time does fly when you're having fun.
Speaker 2: Well, let's see what our drive to the closes, guest
Speaker 2: has to say about everything that happened over the last week.
Speaker 2: Danadoria is co chief investment Officer at Investment. It's a
Speaker 2: provider of technology to banks and rias, think wealth management
Speaker 2: software and consulting services to financial advisors. Dana joins us
Speaker 2: from Sylvania this afternoon. Dana, good to have you with us.
Speaker 2: I want to talk a little bit about the CPI
Speaker 2: report that we got earlier this week. Once again, I've
Speaker 2: said it many times before and I'll say it many
Speaker 2: times again, It's not the Fed's preferred method, preferred measure
Speaker 2: of inflation, but we still saw a pretty big market
Speaker 2: reaction to it. What did you make of that.
Speaker 6: I make of it that it's an overreaction. Thank you
Speaker 6: for having me.
Speaker 7: Yeah, No, Look, I think the market has you know,
Speaker 7: kind of overshot most of these reports that have come out,
Speaker 7: and you know, assuming right that the reaction is really
Speaker 7: confined to that report, you know, I mean, look, we
Speaker 7: started the year at the expectation of six rate cuts.
Speaker 6: We're living in this world of bad news is good news.
Speaker 6: So you know the fact that not only do.
Speaker 7: We see some indicators in growth kind of you know,
Speaker 7: maybe plateauing a bit and a little bit more muted,
Speaker 7: something like having inflation come in you know, this report
Speaker 7: inflation and particularly core inflation coming in better, right, not fantastic,
Speaker 7: I don't think, you know, in line with what would
Speaker 7: rationalize rate cuts, but enough that the market can latch
Speaker 7: onto it and say, look, maybe it's two, it's not
Speaker 7: just one.
Speaker 6: Maybe it's September, it's not November.
Speaker 4: So you were kind of talking here about this idea
Speaker 4: of bad news as good news, and I want to
Speaker 4: ask you a question that I don't think we ask
Speaker 4: people enough, which is when bad news starts to hit
Speaker 4: the table a little more. Yes, in the early terms,
Speaker 4: we have seen the market really react well to it
Speaker 4: because of the idea of rate cuts. But how much
Speaker 4: of that is already priced in? When will bad news
Speaker 4: just start to feel like bad news?
Speaker 6: It's such a good question.
Speaker 7: I do think that we've had a pretty poor scenario
Speaker 7: price in, particularly for areas of the market that we
Speaker 7: don't talk about as much, like small caps.
Speaker 6: So obviously we have a market. You know, there's more than.
Speaker 7: Enough discussion around the fact that we have a very
Speaker 7: concentrated mark get you know, dominated by the top several stocks,
Speaker 7: and you can you know, cut that line Barbie like,
Speaker 7: but when you look at something like small caps, which
Speaker 7: are you know, more interest rates sensitive, they are needing.
Speaker 6: To go back to capital markets more frequently.
Speaker 7: We have corporate debt rolling over this year, and it
Speaker 7: really does matter to those corporate teams, you know, how
Speaker 7: quickly that rate cut proms. So it's understandable that there's
Speaker 7: a higher beta at interest rates there. But I think
Speaker 7: that you know, you've seen those areas of the market
Speaker 7: certainly struggle with respect to you know, the larger and
Speaker 7: this is the larger stocks, and this has been going
Speaker 7: on for a while, so I do think there's sort
Speaker 7: of a pretty negative outlook priced into that already. And
Speaker 7: that's one of the reasons that you know, any sign
Speaker 7: that there might be another rate cut or that it
Speaker 7: might come faster can have a nice bump, a nice
Speaker 7: impact on stocks.
Speaker 6: Like that because they are you know, kind of more
Speaker 6: maybe prepped for the worst.
Speaker 2: Danni, what are you seeing now on the platform when
Speaker 2: it comes to cash? And the reason I ask is
Speaker 2: because we're still waiting for that cash on the sidelines
Speaker 2: to go somewhere.
Speaker 6: And yeah, I'm.
Speaker 2: Wondering what you're seeing in terms of cash and if
Speaker 2: you started to see allocations change from those folks who say, okay,
Speaker 2: well we do know rates are going to go down
Speaker 2: at some point, so we want to get ahead of
Speaker 2: that and deploy this cash. Now what are you seeing?
Speaker 6: Yeah, cash is high.
Speaker 7: You know, we've seen cash and short term instruments in general,
Speaker 7: which you know that.
Speaker 6: I mean the short term instruments.
Speaker 7: Are part of asset allocation, right, so you know, so
Speaker 7: if you think about how money gets deployed on our platform,
Speaker 7: a lot of it is deployed by independent financial advisors
Speaker 7: or by financial advisors that are connected with broker dealers.
Speaker 7: And then you also, of course that I would say
Speaker 7: is differentiated from money manager's asset managers broadly distributed, where
Speaker 7: an advisor may be outsourcing those that decision making to
Speaker 7: the money managers.
Speaker 6: So to an extent, some of it is some of
Speaker 6: what you see is client.
Speaker 7: Directed decisions for that particular client, that particular account, and
Speaker 7: then some of it is acid allocation decisions that are
Speaker 7: lead cascading out from a series of models. Having said that,
Speaker 7: you know, cash short term instruments are high. Obviously you're
Speaker 7: getting a return there that you haven't gotten in a
Speaker 7: long time. So it's understandable that you know, people are
Speaker 7: kind of parked there and earning these higher rates. I
Speaker 7: think as part of you know, if that cash, if
Speaker 7: that short term instrument is part of that overall acid allocation.
Speaker 6: Decision, it can make sense.
Speaker 7: I think where it's it begins to become a struggle,
Speaker 7: as if it's money sitting on the sidelines. Money that's
Speaker 7: you know, maybe longer term money that typically that client,
Speaker 7: that investor has a risk tolerance, that is that would
Speaker 7: allow for it to be taking some equity market risk.
Speaker 7: If you look at that kind of money where maybe
Speaker 7: they pulled it out of the market from a timing
Speaker 7: perspective and now it's just sitting there. The problem there,
Speaker 7: of course, is that you know, fear of losing out.
Speaker 7: You're definitely losing out right if you look at what
Speaker 7: equities have been doing over the course of the last year.
Speaker 6: If that money really.
Speaker 7: Was better situated in a sixty forty, you've given up
Speaker 7: a lot of returns sitting in cash.
Speaker 4: Well, it's interesting too, you have to wonder what things
Speaker 4: look like not just now, but six months from now.
Speaker 4: If you're worried about the volatility, how do you how
Speaker 4: do you play the market right? Now perhaps people are
Speaker 4: sitting in cash just because they're scared.
Speaker 7: Yeah, no, you're absolutely right, I mean, and that's a
Speaker 7: typical thing, right that. It's why the adage is always
Speaker 7: you know, it's not even just timing getting out, but
Speaker 7: it's time and getting back in and what happens, you know,
Speaker 7: And so often we see that people miss out on
Speaker 7: the opportunities because they're sitting there for understandable reasons. They're
Speaker 7: kind of waiting for a shakeout that may or may
Speaker 7: not materialize, but the timing of that shakeout is difficult.
Speaker 6: So what I would say is.
Speaker 7: If you're in that camp, you want to deploy money
Speaker 7: in the market, but you want something a little bit
Speaker 7: more protective, there are some strategies that you know, Number one,
Speaker 7: you can go out a little bit on the curve
Speaker 7: on fixed income.
Speaker 6: You can have you know, as opposed to just cash.
Speaker 7: You can be taking some interest rate risks, some credit risk,
Speaker 7: and still you're sitting in a fixed income investment.
Speaker 6: And then of course, if you are putting money into equities,
Speaker 6: but you're trying to head.
Speaker 7: Your bets a little bit around, maybe some of the
Speaker 7: you know, very risk on quality.
Speaker 6: You know, fundamental indicators like quality. Technical indicators like low.
Speaker 7: Volatility, minimum variance, portfolios are a nice place to be
Speaker 7: traditionally have delivered higher return per unit of risk over time,
Speaker 7: have outperformed over time.
Speaker 6: So those are typical places I talked to about.
Speaker 7: And I and a lot of the folks I talked
Speaker 7: to in the industry point out that if you have
Speaker 7: small caps, which I've long stated, and you know, this
Speaker 7: is a longer term play, right, this is not we're
Speaker 7: going to talk in a quarter and it materialized, but
Speaker 7: you know, longer term, small caps are a nice place
Speaker 7: to be, particularly small value, because they tend to outperform
Speaker 7: inflation over time. They tend to outperform in general over time.
Speaker 7: You have to have the stomach and the timeframe. But
Speaker 7: if you like having some diverse pations, small caps small
Speaker 7: cap quality is a place that folks are looking so like,
Speaker 7: you know, six hundred right, as opposed to.
Speaker 2: Yeah, Dana, I'll always love it when you join us,
Speaker 2: Thank you so much. That's Dana Dioria, co chief investment
Speaker 2: Officer over at investmentt They've got a unique view into
Speaker 2: what clients are doing because they provide tech to banks
Speaker 2: and rias like wealth manager and software. They do consulting services,
Speaker 2: also to financial advisors.
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