WEBVTT - Venezuela Regroups With New Leader 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.880 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.840 Business app. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.040 or watch us live on YouTube. 0:00:27.280 --> 0:00:29.680 We have Kevin Gordon and Lizzie Saunders together. 0:00:30.280 --> 0:00:32.479 I don't know they're in speaking to them. It's amazing 0:00:33.000 --> 0:00:34.559 as it works out, we'll get to that in a moment. 0:00:34.640 --> 0:00:36.400 Ready green in the screen. We welcome all of you 0:00:36.760 --> 0:00:41.879 across your America, across Charles Schwabs America as well on YouTube. 0:00:42.200 --> 0:00:46.120 Subscribe to Bloomberg Podcast. Did you have a YouTube brief? 0:00:46.320 --> 0:00:48.720 We've sort of all thesting in the night. I know, 0:00:48.960 --> 0:00:51.680 I know, it's pretty This internet thing's here to stay 0:00:51.680 --> 0:00:52.519 on it is. 0:00:53.240 --> 0:00:55.320 It's like this. It's not going away. 0:00:55.160 --> 0:00:57.600 Exactly, so we'll take it. People are good. 0:00:57.920 --> 0:00:58.200 Listen. 0:00:58.240 --> 0:01:00.760 Do you have an ETF you're bringing out to everybody 0:01:00.760 --> 0:01:06.840 else is flogging a new ETF? Okay, we're gonna get 0:01:06.840 --> 0:01:09.640 to Josh Swab here and you know, Paul your observation 0:01:09.800 --> 0:01:11.480 two days deep into the year. 0:01:11.800 --> 0:01:13.959 Yeah, I think people trying to digest some kind of 0:01:13.959 --> 0:01:16.039 what we learned over the weekend with some geopolitical risk, 0:01:16.120 --> 0:01:17.760 putting that on the front burner. But it seems like 0:01:17.760 --> 0:01:20.280 looking at the market action. You know, folks are looking 0:01:20.280 --> 0:01:21.920 past it a little bit at least at this point. 0:01:22.319 --> 0:01:23.760 And for somebody who's going down to a room in 0:01:23.800 --> 0:01:25.760 a few days, I'm paying attention to what's going on 0:01:25.800 --> 0:01:26.320 in Venezuela. 0:01:26.400 --> 0:01:28.840 Seriously, it's like closer than Cuba. 0:01:28.520 --> 0:01:31.400 To my cost airspace in the Caribbean Saturday. So people 0:01:31.440 --> 0:01:33.560 got stranded all through the Caribbean, not just okay, you 0:01:33.600 --> 0:01:34.280 see islands. 0:01:34.400 --> 0:01:35.360 So this is special. 0:01:35.440 --> 0:01:37.280 We've done this a few times during the year, and 0:01:37.400 --> 0:01:39.960 with this quality, we can do it. Liz Ane Saunders 0:01:40.000 --> 0:01:44.280 is definitive on Wall Street. Literally, her public service and 0:01:44.400 --> 0:01:49.040 allowing Americans to develop their fur own case is noted 0:01:49.400 --> 0:01:50.360 a few years. 0:01:50.120 --> 0:01:52.360 Ago she had to go out. She's on a college tour. 0:01:53.120 --> 0:01:56.600 You know, she's like, she's like talking to like, you know, 0:01:56.680 --> 0:01:58.280 people that actually went to class. 0:01:58.720 --> 0:02:01.600 You show up at Pepper and the thug. 0:02:01.440 --> 0:02:04.480 Walks in the room. How did you hire Kevin Gordon? 0:02:04.560 --> 0:02:08.480 Tell us about how you find someone that damn smart? 0:02:09.320 --> 0:02:10.160 That question. 0:02:10.600 --> 0:02:13.760 So SCHWAB has a huge conference every year called Impact. 0:02:14.320 --> 0:02:15.799 A lot of Bloomberg folks. 0:02:15.520 --> 0:02:18.079 Come out, Carol and Tim and they broadcast from there. 0:02:18.960 --> 0:02:23.360 Kevin's mom was in the business for thirty eight years. 0:02:23.400 --> 0:02:24.200 Thirty eight years. 0:02:24.520 --> 0:02:30.160 He's not in but on a firm platformed with us, 0:02:30.240 --> 0:02:33.680 and she brought Kevin to Impact when he was still 0:02:34.080 --> 0:02:39.680 Pepperdine and I met with him and I was had 0:02:39.800 --> 0:02:43.919 had conversations within Schwab about needing to build the bench 0:02:44.600 --> 0:02:46.600 and I met with him and I said, this is 0:02:46.639 --> 0:02:49.320 the guy the only rub is he still in college? 0:02:49.960 --> 0:02:50.640 Can we wait? 0:02:51.040 --> 0:02:52.600 And the answer was yes, we can wait. 0:02:52.639 --> 0:02:54.919 What was your first day Schwab, Like, you know, you're 0:02:55.000 --> 0:02:57.639 hired by it. You know she's thirty nine, but. 0:02:57.639 --> 0:03:01.400 She's a legendary was what was it like to. 0:03:01.360 --> 0:03:05.400 Be hired by liz Anne Sanders, who was iconic on 0:03:05.440 --> 0:03:06.919 Wall Street Week a few years ago? 0:03:07.040 --> 0:03:08.960 You know, I still pinched myself every day. It's a dream. 0:03:09.360 --> 0:03:10.200 We have a ton of fun. 0:03:10.320 --> 0:03:14.320 We work really hard, but it's from from day one, 0:03:14.360 --> 0:03:17.520 I mean, it's been this really fun, you know, just 0:03:17.600 --> 0:03:20.280 sort of grind and figuring out how to make sense 0:03:20.280 --> 0:03:22.079 of all this and and at the end of the day, 0:03:22.120 --> 0:03:23.920 it's you know, can be used to make sense of 0:03:23.919 --> 0:03:27.080 the ecomom. 0:03:25.760 --> 0:03:27.360 Lezanne sitting in your very seat. 0:03:27.400 --> 0:03:29.200 Earlier today, we had a Joan come in and he 0:03:29.240 --> 0:03:33.400 has a new ETF and it's basically hedging. You can 0:03:33.400 --> 0:03:36.040 take all your mag seven stuff, all your stuff that's 0:03:36.080 --> 0:03:39.280 just ripped, do an exchange, put it into this ETF 0:03:39.480 --> 0:03:39.960 and they're. 0:03:39.760 --> 0:03:40.920 Going to hedge it for you. 0:03:40.960 --> 0:03:43.440 Capture, you know, top yeat on the top, cover your 0:03:43.440 --> 0:03:44.160 bottom a little bit. 0:03:44.480 --> 0:03:45.200 I looked at Thomas. 0:03:45.440 --> 0:03:48.840 Is that representative how the market's thinking is our investors 0:03:48.840 --> 0:03:51.200 that you talked to, Are they concerned that we've gone 0:03:51.200 --> 0:03:53.480 too far, too fast and they'd like to hedge, or 0:03:53.480 --> 0:03:54.920 maybe they're asking me this should I get out? 0:03:55.400 --> 0:03:56.600 What are those conversations like? 0:03:56.680 --> 0:03:58.760 I would say that is a bit of the vibe. 0:03:59.200 --> 0:04:01.120 When I'm out on the road doing client events, I 0:04:01.200 --> 0:04:04.520 do get a lot of questions about how do I 0:04:04.600 --> 0:04:08.600 protect some of these gains or how do I mitigate 0:04:09.040 --> 0:04:12.120 what might have been a concentration that developed in their 0:04:12.120 --> 0:04:15.800 own portfolios in a way other than having to trim 0:04:15.880 --> 0:04:18.839 positions have the tax implications associated with it. Yeah, so 0:04:18.880 --> 0:04:23.240 there's a lot more generic lowercase H hedge in questions 0:04:23.279 --> 0:04:23.840 that we're getting. 0:04:24.040 --> 0:04:24.960 I mean, Kevin. 0:04:24.920 --> 0:04:28.120 Lizzie Saunders is too young to remember eighty seven or 0:04:28.200 --> 0:04:28.760 ninety eight. 0:04:30.400 --> 0:04:30.719 Seven. 0:04:31.440 --> 0:04:34.880 What does a young stud like you do about worrying 0:04:34.920 --> 0:04:38.760 about the thirty percent down event we can't see coming. 0:04:38.880 --> 0:04:41.160 Well, I think what's really interesting, I've spent a lot 0:04:41.160 --> 0:04:43.200 of time thinking about this in the post pandemic world, 0:04:43.279 --> 0:04:46.320 where you know, the gen z and the young, young 0:04:46.400 --> 0:04:50.400 millennial cohortive investors for the most part, actually has not 0:04:50.440 --> 0:04:52.880 really experienced what I think of as a real bear market. 0:04:52.960 --> 0:04:55.480 I mean, everything has been sort of conditioned on. As 0:04:55.520 --> 0:04:58.240 soon as you fall into bear market territory, there will 0:04:58.279 --> 0:05:00.760 be some sort of stimulus or eight that comes in 0:05:00.839 --> 0:05:03.120 right away, and then you get this launch. 0:05:02.839 --> 0:05:03.520 Off of the bottom. 0:05:03.520 --> 0:05:05.320 You had that in twenty twenty, you had that in 0:05:05.360 --> 0:05:08.240 twenty twenty five, even in twenty twenty two. Yes, the 0:05:08.240 --> 0:05:10.240 bear market was a little bit longer, but it wasn't 0:05:10.279 --> 0:05:12.480 that spirit. It was twenty five percent from peak to trough. 0:05:12.720 --> 0:05:15.200 So there has been this conditioning where you know it's 0:05:15.200 --> 0:05:17.720 by the dip and just keep holding on, and that's 0:05:17.760 --> 0:05:19.599 been that's been sort of the right call. But I 0:05:19.640 --> 0:05:22.400 think that you know, moving forward, especially if there is 0:05:22.440 --> 0:05:24.000 going to be a little bit of a broader rotation 0:05:24.080 --> 0:05:26.040 outside of the megacaps that is going to weigh a 0:05:26.040 --> 0:05:27.320 little bit more on index level. 0:05:27.560 --> 0:05:29.800 I'm going to give the younger crew major cred they're 0:05:29.839 --> 0:05:34.080 way more serious about starting retirement earlier. 0:05:34.560 --> 0:05:37.320 Yeah, we're just seventy four. 0:05:40.200 --> 0:05:42.520 Weren't even four one k is when I started working. 0:05:42.680 --> 0:05:45.280 But I was also getting pushed though into the market, 0:05:45.520 --> 0:05:47.200 whether they and I think there is a desire to 0:05:47.200 --> 0:05:49.440 do so, which is good, but especially when you go 0:05:49.520 --> 0:05:52.360 down the age spectrum, there is a sense that the 0:05:52.400 --> 0:05:55.200 so called American dream of housing is becoming sort of 0:05:55.200 --> 0:05:57.760 a lost opportunity. So it is pushing more people into 0:05:57.800 --> 0:05:59.599 the stock market for better or worse. 0:05:59.440 --> 0:06:04.240 But that traditional retirement, even social security may not be 0:06:04.279 --> 0:06:07.000 available now. I think one of the rubs right now 0:06:07.480 --> 0:06:11.960 is the gambling mentality. Yes, and that's something that we're 0:06:12.000 --> 0:06:15.159 at CHUAB very focused on. Is the differentiation between investing 0:06:15.160 --> 0:06:16.640 and gambling. One of the ways I think of it 0:06:16.680 --> 0:06:20.480 as investing as owning gambling is hoping and there is 0:06:20.560 --> 0:06:24.520 that blending of the trading and the gambling side. 0:06:24.520 --> 0:06:26.679 That is something that we worry a little bit about. 0:06:26.800 --> 0:06:28.799 So, Lizen, how do you set up the conversation here 0:06:28.920 --> 0:06:32.839 for just equity investors after we've had three years of 0:06:32.839 --> 0:06:35.560 double digit returns very rare. 0:06:35.600 --> 0:06:37.720 Do we have a fourth one here? But how do 0:06:37.720 --> 0:06:39.880 you set up that conversation for twenty twenty six. 0:06:40.120 --> 0:06:43.440 I think this could be a year where maybe index 0:06:43.600 --> 0:06:47.520 level gains are a bit more muted, but opportunity continuing 0:06:47.560 --> 0:06:51.240 to present itself outside of just the megacap names. So 0:06:51.720 --> 0:06:53.480 you know, one of the things that happened last year 0:06:54.240 --> 0:06:57.800 the market, you know, air quotes around the market is 0:06:57.839 --> 0:07:02.040 more than just a cohor like the Magnificent seven big 0:07:02.160 --> 0:07:05.200 drivers until the latter part of the year in performance, 0:07:05.680 --> 0:07:08.840 but a lot of churn in rotation under the surface, 0:07:09.360 --> 0:07:12.640 sub level bear markets in terms of maximum drawn down 0:07:12.640 --> 0:07:14.840 on a rotational basis, And I think that was one 0:07:14.880 --> 0:07:18.680 of the setups for this more recent environment of broader 0:07:18.720 --> 0:07:21.760 participation action down the cap spectrum. And I think that 0:07:21.840 --> 0:07:24.360 has legs, maybe not in a linear fashion, but has 0:07:24.440 --> 0:07:25.280 legs this year. 0:07:25.320 --> 0:07:28.840 Across the nation from Pepper into the University of Delaware. 0:07:29.040 --> 0:07:32.679 Charles Schwab is with us today, Lizzane Saunders in Kevin Gordon, 0:07:32.800 --> 0:07:36.200 Decades of excellence from Lizanne Sounders Kevin Gordon. You know, 0:07:36.680 --> 0:07:38.680 there's a lot of work from home going on. I 0:07:40.360 --> 0:07:42.320 did that, and so we welcome all of you on YouTube. 0:07:42.400 --> 0:07:49.640 Subscribe to Bloomberg Podcast. We're thunderstruck by our digital exercise. 0:07:49.720 --> 0:07:52.400 What are you doing to do the message digitally? 0:07:53.080 --> 0:07:55.920 I mean, we've got a really strong presence on YouTube, 0:07:55.960 --> 0:07:58.520 and I think it's sort of an underappreciated, maybe underplayed, 0:07:59.240 --> 0:08:02.520 unknown undernown aspect of of Schwab's digital for print. But 0:08:02.560 --> 0:08:05.240 you know, also it was in social media, you know, 0:08:05.360 --> 0:08:07.680 Lizanna and I not to I guess, you know, I 0:08:07.720 --> 0:08:09.520 don't know toot our own horns too much, but we 0:08:09.640 --> 0:08:13.040 try to be as active as possible across formerly Twitter, 0:08:13.240 --> 0:08:14.200 x LinkedIn. 0:08:14.520 --> 0:08:16.760 Do you, Kevin? Do you make all the charts? Not 0:08:16.880 --> 0:08:17.360 all of them? 0:08:17.840 --> 0:08:20.000 Not all of them, But you don't want me making 0:08:20.040 --> 0:08:26.480 my own shots. Honestly, it's crayons and construction figures. 0:08:26.800 --> 0:08:28.360 But it's been a good way to interact with people. 0:08:28.360 --> 0:08:31.000 And I think that, you know, the more so these days. 0:08:31.320 --> 0:08:33.760 Everybody wants those kind of shorter form quick takes, but 0:08:34.160 --> 0:08:36.000 things that are meaningful to you don't want, you know, 0:08:36.440 --> 0:08:37.280 meetingless stuff. 0:08:37.559 --> 0:08:39.720 Hey, Kevin, we were all patting ourselves on the back 0:08:39.760 --> 0:08:42.240 because the US had a pretty good twenty twenty five 0:08:42.280 --> 0:08:44.360 in terms of equity return. Now where you go outside 0:08:44.360 --> 0:08:47.840 the US even better, what are those conversations you have 0:08:47.880 --> 0:08:50.400 with your clients, because quite frankly, I've never really thought 0:08:50.400 --> 0:08:53.600 about investing outside of the US and my career. 0:08:53.640 --> 0:08:55.600 I'm sure some of my mutual fund somewhere have got 0:08:55.640 --> 0:08:57.559 me there. But are you having more and more of 0:08:57.559 --> 0:08:58.080 those conversation? 0:08:58.080 --> 0:09:01.040 You know, I'm just now reads starting to get and 0:09:01.080 --> 0:09:03.680 I think probably the same for Lazan, and we rarely 0:09:03.720 --> 0:09:05.240 speak at the same events. We're really kind of a 0:09:05.280 --> 0:09:08.160 divide and conquered crew when we travel, so you know, 0:09:08.240 --> 0:09:11.079 I'm just starting now to get questions about, hey, should 0:09:11.080 --> 0:09:13.040 I consider this? What is the opportunity to look like? 0:09:13.080 --> 0:09:14.120 And that tends to happen. 0:09:14.480 --> 0:09:17.360 You get the big swings in performance first in favor 0:09:17.400 --> 0:09:20.000 of a certain asset class, whether it is international, and 0:09:20.040 --> 0:09:22.760 then the you know, the performance chasing tends to kick 0:09:22.760 --> 0:09:24.760 in and then the flows start to move in that direction. 0:09:24.840 --> 0:09:27.000 So we found that it tends to work in. 0:09:26.760 --> 0:09:29.079 Maybe three year, you know, with a three year lag 0:09:29.360 --> 0:09:31.559 where it starts to kick in three years after international 0:09:31.640 --> 0:09:34.439 starts to outperform. It's not always the you know, textbook case, 0:09:34.480 --> 0:09:37.480 but I have been starting to get more questions about that, 0:09:37.559 --> 0:09:39.640 especially because you know Lazan mentioned earlier. 0:09:40.040 --> 0:09:41.200 There is a little bit more of. 0:09:41.240 --> 0:09:45.000 A concern now about concentration in portfolios, specifically with tech 0:09:45.040 --> 0:09:47.680 and tech like parts of the market, just by virtue 0:09:47.720 --> 0:09:49.800 of their size over the past ten years. If you 0:09:49.920 --> 0:09:52.320 sort of set it and forget a portfolio, you know 0:09:52.440 --> 0:09:55.600 ten years ago and didn't do much tech, and those 0:09:55.640 --> 0:09:57.920 parts of your portfolio have grown to an immense portion. 0:09:58.080 --> 0:10:00.120 So there has been more of a concern about how 0:10:00.160 --> 0:10:02.040 do I trim that and add into to what might 0:10:02.080 --> 0:10:02.600 work better. 0:10:02.720 --> 0:10:07.199 We've been joking that recommending international diversification has been about 0:10:07.200 --> 0:10:09.840 constantly saying I'm sorry, and now it's your welcome. 0:10:10.559 --> 0:10:10.959 Exactly. 0:10:12.600 --> 0:10:15.080 Europe Asia just extraordinary in particularly. 0:10:15.480 --> 0:10:17.360 Does it have legs or is it just a dollar 0:10:17.440 --> 0:10:20.839 dynamic where they requirement of a week now. 0:10:21.000 --> 0:10:22.840 Well maybe yes to both of those. 0:10:23.280 --> 0:10:26.480 I think there's the currency dynamic and that will probably 0:10:26.559 --> 0:10:30.240 be a function or it will dry volatility in swings, 0:10:30.280 --> 0:10:32.880 so I don't I think the international app performance is 0:10:32.880 --> 0:10:36.320 probably not linear in nature, but for the most part, 0:10:36.360 --> 0:10:36.760 I think. 0:10:36.640 --> 0:10:38.559 It has legs. If you look at the. 0:10:38.600 --> 0:10:44.160 Traditional fundamentals of the trajectory of earnings that represents a support. 0:10:44.960 --> 0:10:49.160 A lot of at least developed economies don't have the 0:10:49.240 --> 0:10:52.600 same inflation problem with which the US is still dealing, 0:10:52.679 --> 0:10:55.080 so it means a different monetary policy backdrop. 0:10:55.520 --> 0:11:00.560 WELLZ, I have family members who have been hoping and 0:11:00.720 --> 0:11:04.520 enjoying losing money, most of it are on bitdog. 0:11:04.120 --> 0:11:06.199 And all these are the young tucks. You know, they 0:11:06.200 --> 0:11:06.600 don't talk. 0:11:06.640 --> 0:11:08.600 They're not in the triple leverage all cash. 0:11:08.880 --> 0:11:11.200 No, their parents are, but you know they go through 0:11:11.240 --> 0:11:12.960 that bill to talk to me when they've lost that 0:11:13.080 --> 0:11:18.400 much money. How does someone who lost it hoping rebuild? 0:11:18.520 --> 0:11:20.120 How do they become an adult? 0:11:21.120 --> 0:11:21.360 Boy? 0:11:21.400 --> 0:11:23.360 That's a good question. You know. 0:11:23.640 --> 0:11:26.880 Sometimes the answers to questions like that are really boring. 0:11:27.920 --> 0:11:28.800 Which is boring. 0:11:31.960 --> 0:11:35.560 Investing should never be about a moment in time, get in, 0:11:35.640 --> 0:11:36.040 get out. 0:11:36.160 --> 0:11:38.160 Neither of those are investing strategies. 0:11:38.760 --> 0:11:42.840 So where a strategy needs to be employed for somebody 0:11:42.880 --> 0:11:47.040 that maybe made that mistake and got out is don't 0:11:47.080 --> 0:11:50.520 try to time the get back in. Do it slowly, 0:11:51.240 --> 0:11:54.000 develop a process over time dollar cost averaging. Again, the 0:11:54.000 --> 0:11:58.040 stuff that is fairly boring to talk about. I also 0:11:58.160 --> 0:12:01.160 use the analogy of a jigsaw puzzle, which I love 0:12:01.240 --> 0:12:04.079 doing jigsaw puzzles, and you know, sort of pose the 0:12:04.160 --> 0:12:06.719 question what's the most important piece and usually people will 0:12:06.720 --> 0:12:08.640 say the last one, or the corner or any of 0:12:08.679 --> 0:12:11.440 the side pieces, and we often say it's the picture 0:12:11.480 --> 0:12:14.760 on the box. Try doing a complicated jigsaw puzzle without 0:12:14.760 --> 0:12:15.559 the picture on the box. 0:12:15.600 --> 0:12:16.240 That's the plan. 0:12:16.360 --> 0:12:18.959 So the first thing is actually have a plan. Too 0:12:19.000 --> 0:12:23.000 many investors and not just young investors, but they're just 0:12:23.080 --> 0:12:27.240 sort of winging it, and have that actual plan and 0:12:27.480 --> 0:12:30.440 use that as the base for Okay, how do I 0:12:30.480 --> 0:12:31.480 get re engaged? 0:12:31.800 --> 0:12:33.679 And at a lot of I'm just going to use 0:12:33.720 --> 0:12:39.080 my household. For young adults, it's all online, a lot 0:12:39.080 --> 0:12:41.040 of digital and I'm like, who are you talking to? 0:12:41.360 --> 0:12:45.760 Who's giving you advice about allocation and things like Well, Matt, 0:12:45.800 --> 0:12:48.079 I think that matters a lot more in the context 0:12:48.080 --> 0:12:51.520 of I mean, the macro environment today is I mean, 0:12:51.559 --> 0:12:53.000 it's quite precarious. 0:12:53.040 --> 0:12:55.040 It's unique relative to history. I mean, you look at 0:12:55.120 --> 0:12:57.160 just this year in many ways, I think of it 0:12:57.160 --> 0:12:59.000 as being the year of the courts, not just from 0:12:59.000 --> 0:13:01.480 a tariff standpoint, but also from Alisa Cook, you know, 0:13:01.480 --> 0:13:04.360 a fed independence and the integrity of the fed in 0:13:04.400 --> 0:13:06.920 the structural you know, soundness of it moving forward in 0:13:07.000 --> 0:13:10.040 terms of making policy. All of that has carries a 0:13:10.040 --> 0:13:12.280 lot of macro risks with it. But to hedge against 0:13:12.280 --> 0:13:15.240 that are to guard against that, you do need some 0:13:15.320 --> 0:13:17.600 extent somebody to talk to or at the very least, 0:13:17.600 --> 0:13:20.040 to Zant's point, having a plan to help safeguard against. 0:13:20.120 --> 0:13:22.120 Especially with what's happened over the weekend. I mean so 0:13:22.120 --> 0:13:24.240 many questions, you know, I was sort of fielding a 0:13:24.240 --> 0:13:26.640 ton from friends and family over the weekend about what 0:13:26.640 --> 0:13:29.240 does this mean for portfolios? But you know, often you 0:13:29.320 --> 0:13:32.120 get those kind of more panicky questions when it's somebody 0:13:32.120 --> 0:13:34.520 who hasn't done something, you know, the sort of prep 0:13:34.559 --> 0:13:36.960 work not to criticize. But that's why it matters a lot. 0:13:37.000 --> 0:13:38.880 O wise one, did you know where Keana was in 0:13:38.960 --> 0:13:39.360 the map? 0:13:40.000 --> 0:13:42.959 Well, yes, but only because I did so, only because 0:13:43.000 --> 0:13:44.880 I like I like geography, and I'm a little obsessed, 0:13:44.840 --> 0:13:45.240 so well I. 0:13:45.280 --> 0:13:47.400 Like it too when I thought it was western Colombia, 0:13:47.480 --> 0:13:49.120 which shows you what I know. 0:13:49.200 --> 0:13:51.199 Lizzie and Sunder is Kevin Gordon with this, This is a. 0:13:51.160 --> 0:13:54.920 Special moment there with Charles Schwab where the equity franchise 0:13:54.960 --> 0:13:57.120 has been noted. This is out on the Left coast 0:13:57.200 --> 0:14:01.040 decades and decades ago, long before Lizzie got there, And 0:14:01.080 --> 0:14:03.360 it was Charles Schwab up in San Francisco building. 0:14:03.400 --> 0:14:04.520 Remember how original it was. 0:14:04.679 --> 0:14:04.880 Yep. 0:14:04.960 --> 0:14:07.760 It was like, you're kidding these and they're in San Francisco, 0:14:08.080 --> 0:14:08.960 they're not for real. 0:14:09.240 --> 0:14:12.000 And down in La was Capitol Group with Robert Kirby 0:14:12.080 --> 0:14:14.880 and John Lovelace and all that, and they'd put out 0:14:14.920 --> 0:14:20.600 these studies which said, if you miss the ten biggest days. Ready, folks, 0:14:20.920 --> 0:14:24.880 the jargon Gordon jargon has five hundred beeps. You give 0:14:24.960 --> 0:14:29.160 up five percentage points of performance by missing the ten 0:14:29.240 --> 0:14:30.360 biggest days in the year. 0:14:30.640 --> 0:14:34.320 Kevin Gordon discuss, Yes, And actually a lot of those 0:14:34.480 --> 0:14:38.880 biggest days come in pretty significant volatility moments when you're 0:14:38.880 --> 0:14:41.800 in bear markets, and it happens, you know, when you 0:14:41.880 --> 0:14:44.640 kind of feel that panic settle in and it's, oh 0:14:44.640 --> 0:14:47.120 my gosh, we're down x percent from the top. Should 0:14:47.120 --> 0:14:49.240 I just get out and sell everything? And that's when 0:14:49.520 --> 0:14:51.080 you tend to give up a lot of that future 0:14:51.120 --> 0:14:53.640 return because you get these what Zanletes to call rip 0:14:53.680 --> 0:14:56.200 your face off rallies. Sometimes in the middle of these 0:14:56.240 --> 0:14:58.800 bear market moments, and it happened in April last year. 0:14:59.000 --> 0:15:00.480 And not only that, but some of the the biggest 0:15:00.520 --> 0:15:03.840 single updates immediately followed some of the single biggest down days. 0:15:04.000 --> 0:15:07.400 The rebound right, And what's important your folks, I got 0:15:07.400 --> 0:15:10.520 to know. I'm talking to Kevin Court Luzanne. I speak English. 0:15:10.920 --> 0:15:14.400 It's a four box solution. You mentioned one of the boxes, 0:15:14.720 --> 0:15:17.120 which is you're out of the market, You've got to 0:15:17.160 --> 0:15:20.360 get back in. The hard part is getting back in. 0:15:20.680 --> 0:15:24.400 It's nons a some wildly log normal. 0:15:24.680 --> 0:15:27.640 But I'll say again, neither get in nor get out, 0:15:27.680 --> 0:15:30.360 if it's all or nothing is an investing strategy. That's 0:15:30.440 --> 0:15:32.640 just gambling on moments in time, and I think that's 0:15:32.680 --> 0:15:34.320 one of the mistakes that investors make. 0:15:34.600 --> 0:15:37.640 Louzanne, I'm going on forty years in this business. Coming 0:15:37.680 --> 0:15:38.120 up in June. 0:15:38.440 --> 0:15:41.360 One of the biggest developments for me has been ETFs. 0:15:43.240 --> 0:15:45.760 I mean, the money flowing into those is just extraordinary. 0:15:45.760 --> 0:15:47.800 How does that factor into your discussion with plans? 0:15:47.840 --> 0:15:47.920 Oh? 0:15:48.000 --> 0:15:49.840 Yeah, And I think you know, we do a lot 0:15:49.840 --> 0:15:52.920 of work on investor sentiment and that in the buckets 0:15:52.960 --> 0:15:56.320 of attitudinal measures of sentiments. Some of the traditional indicators 0:15:56.360 --> 0:16:00.360 like aaii market Association and investors intelligence ones I've been 0:16:00.360 --> 0:16:04.480 following since I started forty years ago in this business. 0:16:05.400 --> 0:16:09.680 But there's the behavioral side of investor sentiment, and one 0:16:10.040 --> 0:16:13.640 key metric associated with that fun flows. When I started 0:16:13.640 --> 0:16:16.480 in the business, it was all about mutual fund flows. 0:16:16.520 --> 0:16:18.359 Traditional mutual fund flows. 0:16:18.360 --> 0:16:22.400 Now completely served in terms of what's going on with ETFs, 0:16:22.440 --> 0:16:25.640 and it is a really valuable way to kind of 0:16:25.680 --> 0:16:29.560 proxy the behavioral measure of investor sentiment. 0:16:29.920 --> 0:16:33.040 Two thousand and four, you were like twenty seven years 0:16:33.080 --> 0:16:34.360 old or something like that. 0:16:34.640 --> 0:16:35.160 I have a. 0:16:35.080 --> 0:16:38.440 Photo which is proved forty years old, Elizabeth Saunders at 0:16:38.480 --> 0:16:41.880 the table with the bush, the younger in the fiscal policy. 0:16:42.240 --> 0:16:47.280 Our fiscal policy now is way more moldy than it 0:16:47.400 --> 0:16:47.880 was in. 0:16:47.720 --> 0:16:50.880 Two thousand and four? What should investors do? Should they 0:16:50.960 --> 0:16:51.640 worry about that? 0:16:52.200 --> 0:16:55.640 So we get this question all the time. The number 0:16:55.640 --> 0:16:57.880 one theme of questions that I get at client events 0:16:57.960 --> 0:17:02.040 is around deficits, and. 0:17:00.840 --> 0:17:02.920 And often it's followed. 0:17:02.560 --> 0:17:05.520 By sort of an addendum to the question, what's the 0:17:05.560 --> 0:17:09.520 tipping point? Is there going to be some sort of crescendo? 0:17:09.760 --> 0:17:12.520 Is the dollar going to lose its reserve currency sets? 0:17:12.520 --> 0:17:15.439 Are we going to default on our debt is China 0:17:15.480 --> 0:17:17.359 literally or figurally going to wake up one day and 0:17:17.400 --> 0:17:21.080 decide to dump all all treasuries, and we don't have 0:17:21.160 --> 0:17:24.560 those sort of draconian worries. There's no replacement for the dollars, 0:17:24.600 --> 0:17:27.560 the world's reserve currency. We are not going to default 0:17:28.000 --> 0:17:32.240 on our debt. China dumping treasuries on mass, they'd be 0:17:32.280 --> 0:17:34.880 aiming the guns squarely at their own economic foot. Now 0:17:34.960 --> 0:17:38.639 they've been diversifying away from such a heavy weight in 0:17:38.760 --> 0:17:40.879 dollar denominated securities, but that's been. 0:17:40.760 --> 0:17:44.200 A ten year process. That's not a recent thing. 0:17:44.840 --> 0:17:48.280 The biggest implication of a hind rising burden of debt, 0:17:48.520 --> 0:17:51.919 in addition to the interest costs associated with that, is 0:17:51.960 --> 0:17:54.480 it acts as a bit of a wet blanket on growth. 0:17:54.800 --> 0:17:59.600 It constrains growth. And that's not a new phenomenon. That's 0:17:59.640 --> 0:18:02.359 not a respective phenomenon. That's a phenomenon we've been living 0:18:02.359 --> 0:18:05.680 with for quite some time, as are other countries that 0:18:06.200 --> 0:18:07.439 experience that same groom. 0:18:07.480 --> 0:18:08.159 This has been wonderful. 0:18:08.160 --> 0:18:11.879 Elizabeth Saunders, Kevin Gordon, thank you always and forever with 0:18:12.080 --> 0:18:16.000 shab stay with us. More from Bloomberg Surveillance coming up 0:18:16.200 --> 0:18:16.760 after this. 0:18:24.040 --> 0:18:27.639 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:18:27.680 --> 0:18:30.840 weekday afternoons from seven to ten am Eastern. Listen on 0:18:30.920 --> 0:18:34.600 Applecarplay and Android Otto with the Bloomberg Business app, or 0:18:34.760 --> 0:18:36.240 watch us live on YouTube. 0:18:36.440 --> 0:18:41.600