Good afternoon. Thank you for joining our webinar today. Today we have Tim Holland, Orion's Chief Investment Officer and Tom Wilson, our senior Vice President, head of Brinker Capital Wealth Advisory. Today with our commentary, we hope to bring you a better insight into our current market environment and then ultimately to help you lead a better client community. Communications, our presentation today is going to be recorded and you'll have access to our replay shortly after we conclude. If you do have questions to our speakers at any point, you can use the Q&A box down at the bottom of your screen. And at the end of our remarks, we'll go over your questions. With that, I'd like to turn it over to Tim. OK. Thank you. Megan, thank you all for taking the time to join us for today's webinar. We hope you're all well. Healthy, safe navigating what remains a very difficult environment for for all of us and I I'd like to spend the next 30 minutes or so talking about three things. Three topics that we think are very much top of mind for our clients as we move into year and and we list those on on the cover of the presentation. Hopefully everyone can see the cover slide 3P's right, politics, profits and peak. Hopefully in inflation because we like to think in threes and and what I'll do is I'll go through the presentation. It's really a combination of bullet points and narrative and then supporting economic data graphs and charts from sources like FactSet and the Federal Reserve. If anyone's interested in the presentation, we're more than happy to share it with you. Please reach out and we'll get it to you as soon as we possibly can. So just having a little bit of fun on this slide, you know it's not the two little pigs, it's it's the Three Little Pigs and we actually. You as a as as human beings like to think in patterns. There's a reason why, you know, thinking in threes works. It resonates with us. Great quote at the bottom from Aristotle, right everything that comes in threes is. Perfect. And he's pretty smart fella. So good. Good enough for Aristotle, good enough certainly for for me. So hopefully we're going to move on now to to politics. And politics is always a tricky subject to get into, given how. Typically, culturally, we remain divided as a country, but we think we need to weigh in, right? We have midterm elections that are less than. Or about a month away, right. And so we're going to start with politics and then we'll go profits and and look at inflation. So a couple of things as we get into October, you know it's it's hard to feel pretty constructive about the stock market right now considering what it's done year to date. But if we can get to Election Day and I'm sure we will, markets typically go up meaningfully into year end especially during the term years. It's a bit of a cliche, but we think markets do like gridlock, the idea that gridlock is good is a concept. Sort of got going about 30 years ago, and the Republicans took the house in 1994, and it's impossible to predict the outcome of the midterms. But most polling data seems to indicate some sort of divided dynamic in DC, with the Republicans taking the house, maybe the Senate as well, and obviously a Democrat in the White House with President Biden and so. We're gonna talk about the next couple of weeks and then what the markets might give us after the votes are counted but but if we can get to and through Election Day and we will historically that's been a pretty meaningful positive. So what to expect politics fascinating pastime. I'm a bit of a political junkie myself. RealClearPolitics is a great clearinghouse and and for polling data and coverage of of what's going on in our nation's capital and. From state to state. So right now we've got a 5050 Senate and the Republicans trailing by a little bit in the House. So they only need to win about a half dozen seats to take the house and obviously only need to pick up a seat or two to take take the Senate. In terms of the markets and the election cycle, you know, couple of things worth calling out, especially as we continue to go through a very tough 2022. Next year is a year three of the presidential cycle and you see on the left hand side of the screen hopefully that that is by far the best year for the markets going all the way back to the late 1940s regardless of what party holds the White House. The other thing that's interesting on the right hand side of the screen is that you've never seen a recession declared in year three of the presidential cycle. Some folks think we're already in recession. We haven't heard from the National Bureau of Economic Research on that just yet, but if we can get into 2023. Without a recession being declared, history tells us we won't go into recession next year, which is pretty interesting because a lot of folks in our business think we're due for one. Back to why. One can look at the calendar and look back at history and feel pretty good about getting to Election Day. If you look in the middle of the screen, six months after and 12 months after, you've never seen the S&P 500 be down. Going all the way back to the 1960s. Six months or 12 months after the midterm elections. You've never had a negative print and you've averaged 15% six months out and 1212 months out, you've you've seen over 16% from the market. And then finally thinking again about the markets and what might come next, if you look on the left hand side of this slide, you know, the most likely outcome seems to be say the Democrats hold the Senate, Republicans take the House, obviously have a Democrat in the White House with President Biden for another couple of years. You know that divided government has given you 14% per annum, and to the left of it is is 14% from a Republican Senate, Democratic House and Republican presidential winner. So we are most likely going to be looking at a construct in 2023 that, if history is any guide, has proven to be without a doubt from political perspective, the most favorable construct the markets have have known. OK, profits. Politics, profits, peak inflation. We're still thinking in threes. Ultimately as interesting and and I think as important as the election calendar is this is a big election that's coming up and and if we do get a bit of gridlock that means policy certainty which tends to if history is any guide create a sense of comfort on on Wall Street sort of folks know what the rule books are going to look like for the next couple of years. So politics is important because politics impacts policy but profits is is is among you know in our opinion that one of the two things that most matter to equity returns. Over time. And so the two big drivers of the market are interest rates and corporate profits earnings right at the company level and at the index level say the S&P 500 and those 500 companies and what they might be expected to earn in any particular quarter or or or year. And it's interesting that we're doing this webinar on October 10th because if memory serves, JP Morgan reports quarterly results on October 14th, so only a couple of days away and even though some companies have already reported that are part of the. And P500 for Q3, that's really the kickoff of Q3 earnings and as you can imagine given how unsettled the macro backdrop is, inflation, interest rates and and all of it, investors are going to be paying particularly close attention to corporate profits and and revenues looking back in Q3 and and even more importantly what management teams are saying about the path. Forward how they see the rest of the year and then 2023. So yeah, as we think about where we are today, you know interest rates matter and earnings matter low interest rates are better. They make future earnings worth more. They flatter equities relative to bonds and obviously greater earnings growth is better than earnings contraction. And what we've seen so far with rates going up, bond yields moving up, that's been a big headwind, but earnings have really hung in there considering how difficult the macro environment has has been and if you go all the way back three months ago. When we were knee deep in Q2 earnings season, a lot of folks who are pretty bearish on the market. Thought that earnings were going to disappoint terribly, not just Q2, but a lot of folks thought Q1 was going to be a bit of a bust and we didn't see that. And and the reason a lot of folks were so bearish in in the summertime when the S&P was about where it is today is because even though the markets trading at about 15 times next 12 months earnings, a lot of folks say well those earnings aren't going to come in. So the markets not offering much of a value right now and and what we saw for Q2 was earnings grow. Year on year for the S&P 500 about 6 1/2% and and really came in a lot stronger than people thought given the macro headwinds. And what we've seen year to date is companies beat both revenue and earnings expectations about in line with what history tells you they should. And as we think about the rest of the year, even though earnings estimates are coming down, the S&P 500 should still produce sort of mid to high single digit earnings growth and companies have been able to do that so far year today because they're passing on higher costs. To their customers especially for labor and and and and some important commodities. So. So corporate America has proven incredibly resilient you know in in a very very difficult environment again inflation, interest rates, the geopolitical construct ongoing supply chain issues still kind of working through those supply chain challenges post pandemic. And so again just going to call out a couple of graphs, a couple of charts that reinforce what has been so far. I think just you know incredibly impressive run of corporate performance and in a tough, tough environment. So the first would be a bankruptcy filings. If you look on the right hand side of the slide at historically low levels, companies went out and raised a lot of capital and the Fed took rates to to zero during the pandemic. And on the left hand side of the slide, the the light blue line is what? The S&P 500 companies should earn in total on the next 12 month basis. And so you're still seeing growth again not as great as last year. That's to be expected the law of large numbers after the bounce back from the pandemic. But corporate profits grew in the first quarter, grew in the second quarter. A lot of folks think they won't grow in the third quarter and again starting later this week we're going to get a look at JP Morgan and some other really important multinational companies. Companies have a lot of cash on their balance sheets. I talked earlier about companies taking advantage of interest rates going to 0 to refi their debt to term out their debt. So companies have almost $7 trillion in liquid. Assets and profit margins are at historically high levels. A lot of folks think that isn't sustainable. They should come in at some point, but so far not yet. And again, the performance by companies small, mid size and large publicly traded companies has just been incredible in in our opinion given the macro headwinds. So I talked earlier about the market through the worst of the summer, the S&P getting down to about 3536 hundred then bouncing above 4000 an ounce back to kind of where we were four months ago. And well no one likes down markets and and it's been a particularly tough tape as they say year to date and and and July and August were pretty good and boy September was really tough when the Fed came out met in September and and and revised their interest rate expectations higher and we'll talk about that in a second. But there is. An upside to to really tough tape and and it really comes back to valuation and sentiment. So if you look on the left hand side of the screen that's a slide that looks at the price earnings ratio for the S&P 500 which is the blue line. And the S&P 600 which is a small cap index akin to the Russell 2000 and what you see is that at least on a go forward basis the S&P 600 again small CAP companies are trading at a decade low multiple. Now again a lot of folks think those earnings won't come in and if they don't come in then that multiple isn't as depressed as it might appear. And the S&P 500 at about 15 times and change is back to its 10 year average now again if you want to be. Harris, on the market, you say, well, those aren't gonna come in. So the SP is not at 15 times, it's really at 18 or 19 times. We just don't know it yet. We'll know more in a couple of weeks time as companies report Q3 earnings. But so far again, companies have delivered incredible, incredible financial performance in a very tough macro environment. So like you, we will be paying very close attention to Q3 earnings and how they're coming in. And then the sentiment on the right hand side, there's lots of ways to measure investor sentiment, and it's something our investment team pays very close attention to. You could send them. It tends to be a great contrarian indicator, right? As Buffett has said, be bearish when you know, fearful when others are greedy and greedy when others are fearful. And so through the worst of the summer, the American Association of Individual Investor Sentiment Survey hit a level we didn't even see in the pandemic. And this slide on a graph on the right hand side of the slide is yet to be updated, but it's back down below where it was in the summertime. So sentiment is particularly bearish. I think the mid-september survey had 17% of respondents bullish and that's a level of despondency. We didn't see at the worst of the pandemic or the worst of the Great Recession 1213. Years ago, and if history is any guide, when sentiment is so bearish, forward returns have always been positive. So. Again, ultimately earnings matter and interest rates matter, we think more than anything else. But from a calendar perspective, from a seasonal perspective, from a midterm election perspective and a sentiment perspective, boy, all those things are telling you as tough as the tape is right now, going forward, 36912 months, things should look much better. And back to earnings performance relative to expectations. So companies tend to outperform wall streets expectations for profits sort of set the the the bar low and jump over it. And what we've seen year to date is about 76% of companies are beating earnings expectations, which is in line with them with numbers that go back four years. So companies are beating relative to expectations and in a way that's consistent with prior performance. OK. Peak inflation question mark maybe? This is the the big issue as as awful as things are in Eastern Europe and and the senseless invasion of Ukraine by Russia you know and and not to to diminish you know the terrible suffering that's going on over there. We think ultimately what's weighed on the market sentiment returns more than anything else is inflation and and the monetary policy response to historically high inflation so. As we sit here in early October, you know inflation may be off all time highs but still is exceptionally elevated, right. The Consumer Price index which will get this week for last month, the producer Price index which will get this week for last month and the feds preferred inflation gauge which is the personal consumption expenditures index or the PCE, you know. So all those numbers are still at or just off historically high levels and it was really in our opinion the August CPI that came out proved a bit disappointing. Into this fed September meeting where they came out, raised rates 75 basis points again and laid out a pretty hawkish path through year end, 75 more in November, another 50 likely in December. That really pushed markets lower. That really undid all the the gains we saw in most of July and August. So inflation is elevated. That's the Fed's primary focus right now. We get it. But at least for now it's hard to ignore that there are lots of data points saying that inflation has peaked right commodity prices. Have come down dramatically and we'll take a look at those. Inflation expectations are well anchored as the Fed likes to to to think about them the the risk around inflation expectations as people start to expect high inflations, high inflation will persist. It becomes a self fulfilling dynamic and that's that's a dynamic that's hard to break. And so the Fed wants to see inflation expectations low even in the face of high inflation today and that's what you're saying. So the feds winning there from a credibility perspective, we think the marketplace is doing what the marketplace is always done. Bring on more supply to meet demand. And if you go back to July and August, those are pretty good months for risk assets because the CPI moved lower through June and July and people thought maybe we're on the other side of the inflation story. Bond yields came in, stocks caught a bit and then you had the August CPI and the September Fed meeting and that undid all that. But it's not just sort of the more volatile short-term inflation data points like commodities, but even some of the quote UN quote stickier inflation dynamics like rent prices, housing prices, wages are all moderating. So we think the Fed has already done a lot of work and and we're, we're, we'd like to see the Fed kind of slow down a tiny bit here. The strong jobs report last week means they most likely do 75 basis points again in November. But hopefully we'll see some read throughs around inflation. Between now and the December meeting that allows the Fed to to dial it back to 50 basis points come the last meeting of the year. Or maybe if we get a shockingly good inflation number, maybe even go 25. So let's look at some of those data points and visual form wages on the right hand side, wage growth is moderating 5% or so off its post pandemic highs. We still don't have enough available workers for for the jobs that are open, but the jobs that are open are coming down. And so you're starting to see supply demand match up a little bit, right. the Fed wants to soften the labor market, wants to soften housing once, to soften the economy without going so far that they put us into a meaningful recession and then you see. You see the CPI on the left hand side out of 40 year high, but again moderating month to month. But again that's September number caught people off guard and in a bad way. It was a bit hotter than expected. Inflation expectations are rolling over again, this is really important. You know as we think about the Fed today and the markets and where we are, we're going to hear a lot of talk of of the Fed breaking something right, creating some sort of crisis by raising rates too far too fast. We're going to hear about needing to see inflation expectations anchored. We're going to need to see a moderation or softening in the labor market, but inflation expectations are anchored. So I think that speaks to the feds credibility and you've seen commodity prices come in meaningfully. But not the labor market softening that we'd like to see. Not that we want to root for job losses or a spike in unemployment. But that's what the Fed's looking for. Softening in the labor market in the number of jobs available relative to the folks that are unemployed. Again, without going too far. Commodity prices, you know, wheat, crude oil, nickel, just about every soft and hard commodity is back below where it was pre Russia's invasion of Ukraine, which obviously put additional stress on supply chains and created concerns about supply. A shipping container costs are down dramatically. We all remember a year, year and a half ago. Those pictures are off the port of Long Beach in California. Just. Container ships backed up for as far as the eye could see. We're working through that. Global supply chain pressures have come in dramatically. The system is is has restarted and and is working and supply is catching up with demand. Now we think we're at peak inflation, past peak inflation again the August CPI number was a bit unsettling, but it's a lumpy data set. Whether or not and and I don't mean to be flip about this, whether or not the Fed really cares is another matter, right. You can make an argument that commodity prices have peaked, housing has peaked, wages have peaked, rental rates have peaked and and and that we're sort of on this path to declining inflation. Garnir and working our way back to the feds long term target of 2%. The Fed, though, is, I think so worried about its credibility, so worried about anchoring inflation expectations, that they're all in on the inflation fight, right? You go back to Jay Powell speech at Jackson Hole. And so you know the the Fed is going to raise rates in November. We'll raise rates in December, barring some exogenous shock to the system. They've already raised rates a lot this year, what, 75 basis points at the last three meetings, 50 before that and then 25 before that. And monetary policy will hear this. A lot works with the lag. So you could argue the Fed's done a lot. They're shrinking their balance sheet. They should slow down a little bit. I think the Fed is so worried about its credibility and inflation expectations, they're not going to slow down. Again, barring some some very clear data point around inflationary pressures, even if we think they they can make the case that they can moderate the pace of hikes a little bit. So the Fed's going to keep going at least through November it looks like it's going to be 75 and that may just end up being too much, right. There's a big lag effect of monetary policy and its impact on on the economy. So in terms of where we are right now, you know the most likely path forward with the Fed being as aggressive as it is is that the Fed goes too far too fast. The the the possibility of a policy mistake as they call it just continues to grow as long as the Fed remains that hawkish. And that means an economic hard landing, which means a meaningful recession becomes more likely, doesn't mean it's going to happen. But the the longer the Fed stays in that posture, the more likely it does happen. There is still the possibility. That, you know, inflation does continue to moderate the PC's at 4 point. 6%, give or take, the Fed expects it to get the 4.3 by the end of the year. That's their preferred inflation gauge. They want to see it at 2% over the long term. So we could get some favorable data points between now and the November meeting and then obviously the December meeting. That makes the Fed feel a bit more comfortable that inflation is going very much in the right direction and and people will talk about a Fed pivot. We don't think the Fed is going to be cutting rates anytime soon considering where inflation is right now, but even a moderation of the pace of. Rate hikes, we think, would be a huge positive for investor sentiment. And so we're going to continue to watch all the major inflation gauges and we're going to look at labor supply in particular and pay attention to the yield curve in terms of where the economy is headed. So there's lots of different ways to think about the yield curve. The two year yield is above the 10 year yield. It's been that way for a while. Typically that is an indicator of a coming recession. But what you also see is that other parts of the curve invert as well, including the 10 year and the three month which is the graph that's up up in the middle center or center right. I guess on this slide and you haven't seen that and that's always inverted as well and for the time being the Fed funds rate. Isn't above the 10 year. And that's also always happened before a recession. So we don't think a recession is preordained. We don't think a soft landing is out of the question. But but the odds are getting a bit bit longer. So a few thoughts on the economy and the spirit of Full disclosure. I did not know who Cardi B was when the Financial Times picked up this tweet of hers about whether or not the powers that people are going to tell folks we were in a recession. Most folks define a recession AS2 consecutive quarters of negative GDP growth. We saw that in Q1 and Q2 slightly negative prints, but the official arbiter of the National Bureau of Economic Research, they are the official arbiter of the business cycle and they haven't come out and said we are in or we're in a recession. And as we sit here right now, which is a bit of a problem for the Fed, the Atlanta Feds GDP now estimate I believe is that 2.7, maybe 2.9% indicating that Q3 saw really strong economic growth, good for the economy, good for the American worker. Not so good for the Fed if you want to see inflation moderate. So in terms of the positives, what the economy and the markets have going for them in the year end, we know the challenges of the geopolitical construct, historically high inflation, a very hawkish fed, uncertainty around the policy and regulatory framework going into the election. The corporate sector still in very good shape against 7 trillion in cash on balance sheets, the consumers still in pretty good shape, the unemployment rates at 3 1/2%. If there is a recession, the odds are it will still be a mild. One, because it's hard to point out meaningful imbalance in the economy, a bit of a bubble that when that bubble pops you get a meaningful downturn like housing 13 years ago or say the stock market 22 years ago. Bond markets behave in itself and you know you could still see the economy grow this year even after a negative Q1Q2 GDP print. But again, somewhat ironically or somewhat very difficultly, the Fed needs to see more weakness in the economy before they can take. Their foot off the brake, or at least a meaningful drop in in near term inflation data. So the unemployment rate on the left hand side of the screen back down at 3 1/2% generational lows and retail sales are are meaningfully higher relative to where they were pre pandemic. I always say do not bet against the US consumer and because that in my opinion there's always a a losing bet. What the markets got going for it, we talked about pessimism sentiment being very low valuation. If you think earnings are going to hang in there, the markets probably 1516 times forward earnings. So again we're going to be paying close attention to Q3 earnings as they start to come out this week. Bond yields that we thought would stabilize around 3 1/2% or so, obviously they got above 4, but they're back below 4. So hopefully yields will continue to moderate. And again as awful as the situation is in Eastern Europe, we think it's really about the Fed and inflation and not so much the geopolitical dynamic. And if we can get to and through the election which we will, seasonality is in your favor and and the political calendars in your favor as well. So again, the US 10 year yield sub 4%, obviously a heck of a lot higher than it was at the worst of the pandemic, but not all that high relative to history. And if you look at the graph on the right hand side of the slide, September is by far the worst month historically for the S&P 500 and we're past that now. In terms of positioning our discretionary portfolios, you know we're big believers in broad diversification, thoughtfully constructed multi asset class portfolios designed to produce a particular outcome designed to mitigate volatility, designed to keep the end client where they should be which is most likely in their seat. Taking a long term view of things that dynamic takes on even greater importance today given how unsettled the macro and and the inflation backdrops are. the US is by far the best house in a really tough neighborhood. So if you think about the. The strength of the dollar, our energy profile, how healthy on a relative basis our economy is with the unemployment rate at 3 1/2%. Once the dollar starts to to roll over, once inflation starts to moderate around the world, the rest of the world should start to catch a bit. But it's been a really tough time especially for Western Europe given its dependency on on Russia, for natural gas, for for energy and and trying to extricate itself from those those relationships. We like value over growth value tends to do better in a rising bond yield environment and and and we're most likely going to stay with that position until we get a better sense of the Fed is is closer to finished than not on the interest rate and the things and within fixed income you know we want to take credit not interest rate risk because again we think yields may have peaked but we're not we're not sure and that's something we're paying close attention to and and those uncorrelated strategies those absolute return strategies cannot. Had a lot of value during these difficult periods. And then finally, a few more slides before I turn it over to my colleague and my friend Tom Wilson to talk about, you know, the importance of engaging clients in these difficult times. We built a presentation through the worst of the summer and entitled it in case of emergency break glass and and the idea is again no one likes down markets, no one likes the S&P off 2425%. In our experience it's one thing if the markets off five or ten 12:15 not pleasant but but but not that unusual. It's when the market starts to go down 15 to 20% that the press seems to call out those voices that tell you essentially you know you ain't seen nothing yet right the markets about to fall out of bed, the economy is going to collapse. So all we did was. With this slide, go back to maybe the most famous contrarian indicator of all time, which is a 1979 business week cover story calling for the death of equities. And then Fast forward to the worst of the Great Recession, you know the March of 09 when the markets bottom when some very smart people were saying the markets were going to go down another 2030% and then called out with all due respect to these folks, some very bearish frightening market calls that just haven't come to pass. They're all smarter than me, they're all better known. Than me. But we have found when when things get unsettled the way they are right now, the press really does tend to amplify those super bearish voices and those are probably the last voices we want our clients to hear considering where we are or or where we should be hopefully from a sentiment and a seasonality and evaluation perspective. And I'll leave, I'll, I'll leave you all with this slide again before pivoting to to Tom's great quote from again arguably the greatest investor of of of the last 70 years, right, never Bet against America that is as true today as it was in 1789 during the Civil War in the depths of the depression. So again taking the long term view, putting volatility in perspective investing and broadly diversified portfolios can all help us keep our clients where they should be, right? Focus on the long term, focus on their goals, focus on what they want that capital to achieve for them over time. And on the left hand side of the slide, we just lay out GDP plotted in a linear fashion going back to that business week cover story and you know we all participate in and help create the world's largest and most dynamic. And most important economy and over the last 40 plus years we've only been in recession about 10% of the time. And on the right hand side of the slide looking at the S&P 500 over the same stretch, you know recessions come and go. Those are those vertical bars. We could be in one. Right now we don't think we are giving out strongly consumers, but over those last 40 years or so think about the challenges, the headwinds, what this country and what the stock market had to confront and what you realize is over 40 plus years you get 10% per annum from the S&P 500. Average intra year drawdown is about 15%. We're obviously past that this year. It's a very unsettled, unpleasant tape for sure. We're not minimizing that, but a bit of perspective might come in handy. So with that said, I'd like to turn the presentation over to my friend and my colleague, Tom Wilson. Tom. Alright. Hey Tim, that was fantastic. Can you hear me? Yes. Alright, super. Yeah. Hey, fantastic job. You clearly ate your wheaties this morning and you set a very high bar for me here this afternoon. Again, my name's Tom Wilson. I head up our wealth advisory team and wealth advisory works with financial advisors who have clients that have investable assets of a million or or more. For the last five years, wealth advisory has had an average annual retention rate of 95% or better for each of the last five years. So it's with this background that we're reaching out to you this afternoon to talk about some ideas about how you can engage clients during this down market. As Tim was just as Tim was just discussing it's it's you know a bit scary out there with the markets being down right now. But there is no better time for us to be reaching out to clients to talk about the markets and talk about the portfolios and and Tim just gave us a whole lot of. Information to share with folks. Now as we're engaging with clients and with prospects, there's really 4 main points I'd like to draw your attention to. And and 1st is maybe a little bit obvious, but it's you. You gotta make the contact you gotta do. It doesn't matter if it's e-mail. A phone call in person visits, they're all great ways to reach out and and talk to your clients about what's happening. We've done research on this subject here at the firm. And what we did actually is we took a look at 2 separate groups of of clients, those that had high engagement and those that had lower engagement over a specified period of time. And what we found was those that had higher engagement that was the most highest group that would stick with the advisor. During whatever time period there there was and what was interesting it had less to do with performance because we looked at that as well, but retention was much more directly correlated to contact. So it's really, really important to go out there and and do that right now particularly during these these down market time periods. But as you make contact with your clients, we we encourage all advisors to to sort of do a temperature check, particularly if it's a client that maybe haven't spoken with for some time. Maybe you haven't heard from either and that they haven't expressed concern because what you don't want to do is sort of dial up and and say something like hey I'm I'm sure you're concerned about Russia, Ukraine conflict really high levels of inflation and the upcoming politics only to have the the clients say something like well I I wasn't worried but but now I am. So sort of take that temperature as you launch into your conversations with clients what we found a very effective way to do this and I spoke about this once at a. Previous call and advisory team on the West Coast, they'll sort of throw off a client's conversation with asking the client simply on a scale of 1 to 10 with one being you have no concerns and 10 being you have a tremendous amount of concern. How do you feel about the markets and what's happening right now? And that's a really quick and effective way to get feedback from your client based on their answer will then help help you to determine what direction you want to take that that conversation with. And then the third item here is stick to the plan. Now this may seem a little bit old, a little bit mundane. You know, we all know that investors who stick to their plans consistently get better returns and those that that do not, however, you know, saying that to the end client. Could be a little bit new to them, refreshing, insightful to them. So just don't gloss over that concept for that nervous a client who is suggesting to to zigger zag significantly deviate from their long term plan, reminding that you did create a plan and it's really important to stick to it as well. And I have some data on that that we're going to share in a little bit. And then the 4th item is, is speaking to prospects. There is no better time to solicit new business than during. A market downturn for starters for those clients that had large embedded capital gains and perhaps that was a sticking point for them moving forward in the past. Well given what the markets have done those unrealized gains are certainly a little bit smaller today also simply some prospects for mailing be weren't so willing to listen to you before with the markets being down might be a little bit more receptive and an idea that we've gotten from a very successful advisory team in in Texas. As they're reaching out to their clients and having those conversations, they typically end that call with something along the lines of, hey, is there anybody that, you know, a family member or a friend who might appreciate a phone call like this right now it's a very soft way to get an introduction and you know, worst case scenario they they say no, but you certainly come across as being friendly and helpful and nice and being willing to reach out to their family members and friends to maybe. Offer them a little bit of support, but more often than not, with the markets making the news like they have been, they're gonna know somebody within their circle that has expressed some concerns and it could result in an opportunity for you to have a a nice conversation with them. Going to get into a little bit of data here about the perceptions surrounding around investment performance and you know a couple of items to to think about here. One is that there's something referred to as the prospect theory which. Basically states that investors who lose X amount of dollars compared to gaining that same amount will feel two times more pain in losing the dollars than they do in making that same amount. And as a result of that it, it, it skews the way that we think about the market, it skews the way that sometimes we approach asset allocation as well. So it's something for us to be very, very, you know, mindful of and when you look at the chart there on the right hand side stock market performance. What it really tells you is that those folks were constantly checking out their portfolio values whether it's daily or weekly. It it causes them to have a more negative perception of what's actually taking place with their portfolios over time, which we all know that over longer periods of time while the markets go up more than they do go down. And that bears out with the chart at the bottom of the screen, you know starting on the left hand side since 1927, you know any particular day was a 52%. Cancer, it's up 48% chance that it's down. OK, those aren't really great odds per se, but if you go out to monthly or quarterly 75% of the time and a calendar year the markets up. So as you get longer periods of time, time diversifies risk away and that's why it's really important for us to think about the long term investment aspects of investing in a plan and that's going to lead to better outcomes over time for for clients. Through the course of time there's always an excuse about why you shouldn't be in the market or why you should sell everything and you've probably seen, you know, different charts like this but before overtime, but you know if you had followed those sort of screaming ideas for any particular year of why you should get out of the market, well you would have significantly over time missed out on tremendous opportunities to compound wealth over time. So you know more recently here you see in 2022 you know highest high inflation. As a reason to keep out of the markets, well. We've had inflation before and just because you have higher inflation it doesn't necessarily mean that the stock market you know can't go up overtime. So it's very important for us to remember that as as investors now we we've shown similar slides to this in the past and I just have a couple more slides to go into before we get to the the Q&A section which by the way is a friendly reminder. If you have questions you just click on the little icon in the lower right and feel free to start typing those out right now. You don't have to wait till the very end to ask your question, but the idea here is that it's more important to have time in the market than trying to time the market. And in this particular graph that we're showing today, we're looking at a 15 year time period going from O 6 to end of O 6 into 2021. And you know we we picked this time period because O seven, O 8 were really, really bad returns from the market. It would have been tempting to get out of the market then however, if you state investment. For that whole time period you had $10,000. As you see you end up with $45,000 at the end of 21 and that equates to a return of about 10.7%. But had you just missed out on the 10 best days, that dollar amount of 45,000 falls all the way down to 21,000, more specifically 2920 thousand $929. And if you missed out on the 30 best days during a 15 year time period, well unfortunately you'd actually have a negative return. And the tricky part? Is day-to-day, no one out there knows which is going to be some of those best days and quite frankly what you find is that some of the best single days come after some of the best sort of part of me, some of the worst days in the in the market. So it's very important that clients stay fully invested and diversified during these more volatile time periods. Well, I apologize advance too far. Now this is a slide that comes from Doctor Daniel Crosby. He's the chief behavioral finance officer here at Orion. And what Daniel explained to me once was that there's basically 98 different tendencies that influence our thought process or decision making process. And you can actually though kind of boil them down to four main categories, which are ego, emotion, conservation and attention. So I'm going to talk about these in a little bit of detail here. So ego is the concept that we all feel very confident in ourselves and quite frankly in some ways think that we are better at most things that we do compared to everyone else. And this is your classic if you get 100 people together and you ask them to raise their hand if they think they are an above average driver, 90 people in that room are going to raise their hand, which statistically shouldn't happen should you have, you should have about 50. People raise their hand well. It's that ego that influences or decision or are thought about ourselves and kind of makes us think, well, that's somebody else that it could happen to. But I'm a much smarter individual. That won't happen to me. So it relates to investing. It causes the investors to think that maybe, well, they could do something different that others haven't maybe necessarily thought of. Emotion is the concept that it clouds our judgment. We get all really worried and it causes us to make. Decisions that are based on emotion as opposed to logic. And as we all would suspect those decisions that are based on logic typically have better outcomes overtime. So we want to try to avoid making emotional decisions conservation we we touched on this a little bit before it's very similar to the prospect theory which is that we are embedded the way we're wired to typically really despise losses more than we enjoy gains and the. Psychologists that have tried to measure this it's about a 2 to one ratio. So meaning if you if you lost $10,000 you would feel twice as bad, then you would. They've had you made 10,000. Megan did we lose Tom? It looks like we lost Tom. OK, are we still on? We are still on. How about we wait for Tom to get back on and we can kind of quickly go into some questions. That would be great. We appreciate everyone's patience. Sorry for the. Technical challenges. The good news is you'll have access to these slides in our follow-up, so you'll be able to see the one to two slides right after Tom was almost done talking. So with that and we got a few questions around raising inflation. So I'm going to kind of group those together and we can go through those. With inflation rising and oil supplies possibly being again reduced by the Saudis, do you think the Fed will continue to raise rates and push them up until we are in a recession? They're gonna continue to, I think you're right. They're gonna continue to raise rates. Whether or not they push us into recession time, time will tell. Again, they meet early November, then they meet in December. So we have two meetings left. They've they've sort of forecasted another 125 basis points at the September meeting when they updated the dot plot, the statement of economic projections. Which again is what I think really we think really knock the markets lower. Because right now you can justify going 75, going 50 because inflation is high. But again, all this works with a big lag. So they bar in exogenous, an exogenous shock. We'll raise 75 basis points in early November, but we'll get a couple of looks at the CPI and the PPI between now and December, including again this week for for for September's data points. So I'm hopeful again they will be able to credibly say, you know. We're not doing 75 in December. We can do 50 and who knows, maybe even 25, but that doesn't seem to be the case. Case today. You know I I think you know it's hard to see a the economy going into a meaningful recession right now given how strong the labor market is though that's a bit backward looking again ironically you want to see more labor market weakness and you're getting today that will feel make the Fed feel better that they're being successful and oil has bumped a little bit with the announced production cut by OPEC plus 2,000,000 barrels a day give or take still well off. Off its post invasion high of earlier this year, I think it was 120, three $127.00. So we do think commodities will continue to go in the right direction. Supply is going to continue to catch up with demand. It really is the labor market that's the the, the big, the big challenge and and we just haven't seen enough weakness there yet. All right. Tom back. Tom, we just got into some questions now going through a few of our questions coming in. Did you want to finish up your quick thoughts? About that. Sorry, some things you can't control somehow. The screen, you know, we've done a bunch of these, but the screen froze up. I think I froze on the conservation spot. Would you like me to kick back in there? Sure. Go for it. All right, super, super. So what I was saying here was that the, the, the issue of these four behavioral biases with with conservation is that it causes us to be more conservative than we should be. And we touched on this a little bit earlier with the prospect theory, which is the idea that you know, basically losses hurt us more emotionally than do gains. So if you were to lose $10,000 the way you feel about that. These two times worse than had you gained $10,000. So as a result of this bias that's embedded at all of us, it tends to be tends us to cause us to be a little bit more conservative than we should be and that influences our asset allocation decisions. Then the last item here is the concept of attention. And I thought it was very interesting when Tim earlier was going through his slides, he talked about those, those voices that tend to be called out when the markets are down more than than 15%. Well, attention is really the concept that whoever speaks the loudest and was the last one to talk is the one that we tend to remember in our in our minds. And so that influences the way that we think as investors. And one of the things that I like to do is when clients call me who are very concerned about the markets is I try to think about their concerns in these four boxes. So you know the the ego concern would be something along the lines if you hear it a client saying. Well you know I I just don't think these experts you know get it and here's what I wanna do with with my with my money it's so obvious that then you know that that's the bias that they're they're sort of speaking to emotion would be someone who calls somebody saying I'm really worried I can't sleep at night with what's happening with the markets conservation would be along the lines of asking you questions about OK I started the year at at this amount but I'm down to this lower dollar amount boy that you know boy that really hurts. And then attention would be a good example. It might be, hey, I was just listening on CNBC and this person says XY or or or Z. So I think an understanding, you know, you know, people's comments or clients comments to you and trying to put them into one of these four buckets will help us all to really try to make those investors understand, you know, the logic behind what they're speaking to, but then also hopefully help them to make better decisions as it relates to their. Under their assets and you know and wealth advisory we work with a lot of individual clients and this is really my my last slide here that I wanted to discuss and we'll bring back Megan and Tim for for questions. And you know why we work with individuals, we work with a lot of institutions as well and and quite frankly you really rarely get. Phone calls from institutions worried about the market? That's because they have an investment policy statement, and that investment policy statement guides all of the investment decisions that they make well. As a result of that they're less likely to to zig and make short term trades within their portfolios. So what we're looking at here on this chart, it's a great chart, it goes back 20 years and it looks at the average returns that you, you would have received each year in all these different areas. And then it highlights what the average annual investor, excuse me, what the average return was for the average individual investor left to their own devices that they generated. During this time period, and you could see here it's, it's really off, off pace compared to everything else that's out there. In fact, it feels like you'd almost have to work to get a return that was this low. Well, it's because of those emotional biases influencing their investment decisions that cause them to get a return that has, you know, during this time period, this this low and that contrasts with institutions during this same time period where their average annual return. Is somewhere between 5.5 to 6.8%, depending on the size of the of the institution. So because of that discipline and that adherence to an investment policy statement, this really has allowed institutions to pretty consistently generate better returns than individuals. It's, you know, a lot of people think, well, geez, institutions are smarter than individuals, that's why they get better returns. That may not necessarily be the case. It's really the discipline that they follow, so. Bringing it back to what we discussed at the start of this section of the presentation, you know, sticking to the plan is really important message to get to your clients who are nervous because typically that does result in better outcomes over time. So thank you so much. Sorry for that technical difficulty and let's bring Megan and and Tim back. Awesome. Thanks, Tom. Going back into a few of our our sector related questions, I think we had a few come in around looking for better insight into our our energy market and what degree it could be causing inflation if we want to go back into that one. Tom, do you wanna go do me to go actually Tim, why don't you start off because I unfortunately I couldn't hear it sounds like you may have answered another inflation question earlier and then I can I can add a little more color to it then. Yeah, no, just interest in the energy dynamic and what that might mean for inflation broadly. Speaking. You know, and at a high level and this probably sounds a bit academic. Right. Oil had one call at one 25130 West TX was well above that and 07 going into the 0809 downturn and obviously oil and and higher energy prices were a big part of the problem in the 1970s. During that first guy Questionary period that some of us lived for, some of us remember. Stress is much less energy dependent in terms of each dollar of TDP than it was 15 years ago, and clearly 45 years ago or so. You know, obviously higher energy prices hurt most at the pump because it's a particularly meaningful burden for folks who spend a disproportionate amount of their income on the day-to-day sense, essential gasoline and and grocery prices. So energy prices are all are off their highs. Just about anything in the energy complex is off. It's a recent high. You know even with the OPEC plus $2,000,000 barrel a day reduction though it's more like $1,000,000 a million barrel debt number in our reading of of of the announcement you know energy prices shouldn't be going back to where they were right. Production has picked up supply chains have improved US exporting and tremendous amount of natural gas to northern Europe and northern European countries are restarting power plants that are coal-fired and and. For embracing nuclear. So that sort of peaking knock on wood and rolling over commodity prices on balance at least across energy complex. But we've seen it again soft commodities as well should start to bleed into broader inflation gauges as well. There's just a bit of a bit of a lag. So we do think we've seen the work for energy prices. Nothing goes in a straight line down or up but but we do think we've seen those those. In the river here. And Tim, I'll just jump on that. I apologize if you stated this in in the your, your earlier answer about inflation, but your your comment about energy just not being as significant today as it was in the 1970s. One way to think about that too is when you look at the S&P 500, the makeup of the S&P 500 back in the 1970s the energy sector was actually at 1.20% plus of the S&P 500. More recently we actually saw the S&P 500. Segment get down to be 2% of the SP500. I believe today we're closer to four and a half 5%. So the the point here is that as we sort of think about energy being less important to our economy than it was back in the 1970s, you can sort of see that reflected in the market capitalization of energy, of energy names. Alright, we have a good one here. We're looking for a little bit more of our thoughts on our housing market and risks and opportunities related to it. Yeah. So we all remember 0809 and the Great Recession and and and the housing downturn that was part and parcel that though again energy prices again I think West TX hit 150 going into that as well. So prices at the pump were an issue. Two for the consumer and lots of questions about housing with mortgage rates I, I you know north of a 16 year high I believe sort of 7% or so on the 30 year fixed. So obviously housing costs are up because borrowing costs are up which means affordability is down and you're starting to see prices moderate and it's the most important asset class for most Americans, the House, the the home housing and it's a very levered and interest rate sensitive asset class. So. You're already seeing softness there was another question around rents as well. You're even seeing rent rents moderate. As well. And again that works with the real lag. It's gonna take a little bit longer to see a housing and and shelter costs really show up in the PC, but it it's come in for sure and so the Fed wants to see some weakness in housing, you're getting it. Then the big question is do we get an O8O9 dynamic? Again, the reason why we don't think that's in the cards is just from a supply perspective, affordability is down, barring costs are up, but you could just argue that, you know? Again, we never built enough homes following the Great Recession to the point where we don't have a supply overhang. And that's really what got you O 809. That along with some very silly underwriting practices at the big banks, right. The ninja loans, no income, no job and and and the banks learn their lessons after the Great Recession. So we're looking for moderation and weakness in housing. the Fed needs to see it again. We don't root for for, for for for a weaker housing market, but we need to see it. But we don't think we're setting ourselves up for anything. Can to 08 and and 09 we just don't have as far as we can tell the supply overhang that we had 14 years ago. Tim, that was a really thorough answer. I don't. I don't really have much to add to that. Ohh. Thanks. Alright, here's one. How will we know it's time to shift back to growth from value? Time you want to take that one? Yeah, I'll, I'll jump on that. And you know as a as a general rule of thumb, right, when interest rates are going up, it creates a bit of a headwind for growth oriented securities. And one way I like to think about that is, you know what, what is a stock and in theory a stock is future cash flows that are discounted back at some rate. So when that rate goes up, your net present value of what your equity is worth today goes down, which is just all fancy. Talk for as interest rates go up, PE multiples contract, so as long as rates keep going up we're going to continue to favor value over more growth oriented securities. So for the year value stocks are down about 16%, large cap value that is while large cap growth is down about 30%. So directionally we've been, we've been correct on that this year now when the Federal Reserve comes out. And makes that statement at some point they will begin to that that pivot if you will, where they're gonna be saying that, you know, we've got our dual objective of trying to do, you know keep prices under control. But at the same time we're looking at employment and they're going to make some sort of comment about the risk being close to the equal. Not that you ever get a a green flag to say, OK, that's your signal, but I think a lot of investors are looking for that type of comment or. Leading up to that type of comment which will then perhaps get investors thinking about moving a little bit away from value into into growth IE that creates a better scenario for for growth going forward should rates not continue to go up and even better potentially rates going you know going down at some point in the future. Great. I'm going to do one more. We're running out of time, but I think this is an important question for us to go over. How should we best position our clients portfolios if we may be entering into a recession? Tim, you want me to start and you wanna yeah add Keller, yeah why don't you go first time and and if I have anything that I'll I'll, I'll go next. Alright. So as we as we sort of think about going into recession a good rule of thumb is that you'd want to favor high quality names. These would typically be large cap and you know and and dividend payers, these are companies that traditionally are sturdier, have better cash flow, less debt. And those will tend to do better during a market contraction. You know you then the opposite is true then you you want to avoid. Typically those names that have negative earnings don't have positive cash flow or not paying dividends because those are the names that tend to get beat up more because there's more threat of of bankruptcy and those type of situations or you know materially underperforming their their you know results. So general thumb you want to kind of lean into quality. As a slowdown in the economy occurs, Tim, and then I would just add from a fixed income perspective, if if the catalyst for the recession is a fed that goes too far too fast and the Fed's not done just yet. You know, you want to stay sort of short duration, you don't want to reach for yield if they're going to continue to move interest rates up. But at some point it's going to become apparent that we are in a recession and barring a recession with high inflation, which is stagflation. Again sort of akin to the 70s. Well then the Fed is going to have to start to pivot and focus more on full employment because the recession should kill off inflation. You saw that in the 70s even even though that was a very sort of volatile decade for for interest rates and and equity. So as you get closer to what is going to be or will become the recession, you also need to start thinking about, OK, it makes sense to go out on the curve a little bit and buy longer dated bonds, bond yields at peak because the Fed's going to start cutting. As the Fed starts to cut and and push the short end of the curve lower, you know anything with that that little more of an elevated yield, a higher yield is going to be worth a lot more so that you don't want to do that into the recession. But if we're, if that's where we're going and we're getting close to it that that's how you want to think about the fixed income position and as you kind of go through that process. Hey Tim, as you answered that question, it made me realize that you know I I interpreted that question as if somebody was like a 6040 investor and what they should do. But you know this might be a scenario where maybe it's somebody that's sitting in cash and thinking about how I could maybe take advantage of something you know markets being down like they are right now. So that concept of made me leaning into high quality names on the fixed income or the equity side might not be such a bad idea for those investors that are looking to maybe increase their their equity. Applications, no. It makes a ton of sense. And with the markets off 2324%. Unless we're going into a meaningful credit crisis or just a very, very severe recession, one would think most of the. Most of that down, down move is priced in. Great. Thank you both for answering a few of our questions. If we didn't have time to follow up with your questions afterwards, one of us will reach out and you'll have access to our replay shortly after we conclude. And look for us coming in the next few months to get another update with Tim and Tom. Thank you. Thank you. Thank you. _1732325056676