All right. Hello, everybody and welcome to our very special webinar today. I'm Case Eichenberger, Head of Investment Strategy for Brinker Capital and Orion. Before we get started, I at least wanted to take a quick moment and give you some housekeeping items. In your console on the website you're viewing this webinar on, you will see a lot of different options, a lot of different links. You can always resize the windows to however you want to see them fit and enlarge and dismiss other items. You can definitely view today's slides. There is a link specifically for the slides that we'll be going over today, and you can download those as well as check out all of the the recent episodes of Rusty's 2 podcasts he's on and more importantly, chat in your questions, Please. We want to make this interactive at the very end. So as you think of your questions throughout the the presentation, please go ahead and chat them in and I will address those at the end and we will make sure Rusty can get to most all of them. If we don't get to all of them, of course we will follow up with you after that. So again, thanks for joining here today. Today's webinar, we're looking at the market outlook for the next 12 months and specifically we want to dive deeper into the top three concerns. Again, I'm Case Eicenberger, Head of Investment Strategy, the team that I'm on, the investment strategist. Those of you that may not know our team is really here to to be a personal resource for you, for you, the advisor. If you ever have any specific questions about strategies or want to go deeper into other areas of the strategies and maybe blend have it, you know the ideas on how to blend strategies together, our team can definitely help you out with that. Joining me today is of course, Orion's Chief Investment Officer of Wealth Management, Rusty Vanneman. Rusty joined Orion in 2012. I've known Rusty for for my whole career here, and he's been in the industry for a little over 30 years. He's the host of the very popular investment podcast Weighing the Risks and the Weighing Machine. Welcome, Rusty to the webinar. Thanks, Case. Absolutely. So in the agenda today, we're going to be talking a little bit about the the outlook and the top three concerns, but we're going to go deeper than that. We're going to get into really the the stock market barometer, which we talk a lot about here at Brinker and Orion and really talk about the factors that are driving the market. I'm kind of tuning out a lot of the noise you hear day-to-day, but just get into the specific factors that drive market returns over time. And then deeper from that we want to get into a little bit of the asset classes, stocks, bonds, international alternatives, whatever it may be. Rusty will dive much deeper into that, maybe see which ones are you know prone for a breakout we believe in the next 12 months and which ones you you may want to avoid. And then of course it at the very end, you know we want to get into why it's important to diversify more than ever. So, Rusty, without further ado, go ahead and take it away and get us into the outlook. Awesome. Thanks Case. Thanks for the intro and also thank you everybody for your time today. We know that time is precious. Hopefully over the course of this next 60 minutes is that we'll give you some ideas, some resources, some action items, make it all worthwhile. An executive summary of this whole presentation though of course we're going to give reasons to stay invested and stay diversified. So first of all, we're going to go into the three top concerns that we've been talking about and writing about and and and investment decision making around is, is there really three concerns. The first one of course the US stock market is concentrated and you can look at a lot of different charts of this. I'm sure everybody's seen a chart on this, whether you're looking at the Top Stock, the top five names, the top seven names, or the top ten names. However you slice it, the US stock market is extremely concentrated, the most it ever has been, or nearly so, depending on which metric you're looking at. This concentration is again, pretty rare, and it's only been higher a couple times in the history, and one was duringthe.com era and also during the nifty fifty time during back in the 1970s. Both of those times weren't necessarily great times for the overall market in the years that followed, and there were some great companies from the.com era. They're still around and also during the Nifty 50 era and a lot of the stocks did reach pretty high valuations and in many cases it took many years for them to actually recover those price size they set during either the.com or the Nifty 50 eras. This particular chart here is from a firm called Research Affiliates that also shows the fan mag stocks, which also have dominated the stock market. Of course, kind of looking at the the concentration of of large cap growth, particularly technology. Now one thing about when you get this kind of concentration is important to remember that top dogs usually don't stay on top for long. And this is a table looking at the top ten names in the global market at the beginning of each decade. And then we look at it what it look like 10 years later and top dogs usually don't stay on top for long. And you can see there's been most of the names where they turned over 10 years later. And even in the recent history between the year 2000 and the second quarter of this year, only one stock remained on the top ten list and that was Microsoft. It should be pointed out during those 20 plus years, Microsoft did underperform also for many years during that time frame as well. Now one more chart on the US stock market again is looking at again the Magnificent 7, which we've all talked about a lot as advisors and investors. Again, the Magnificent 7 has really dominated the overall stock market return here in the US this year. Depends what time you looked at it through the end of May, it was, it was most of the game in the stock market and it's since then we have seen a broadening out of the marketplace. So we've seen other segments outperforms and in recent months, however, the Magnificent 7 has really dominated action this year. I think there's some really interesting stats about the Magnificent 7. And again, the Magnificent 7 of course just kind of run into the list is Apple, Microsoft, Alphabet, otherwise Google, Amazon, meta, otherwise known as Facebook, NVIDIA and Tesla. And if you kind of look at just those seven names, you added them all up, there's only two stock markets that have a larger market cap and that has the USX, those Magnificent 7 in China. It's also interesting as those seven stocks, the total market cap is greater than the third and fourth countries combined, Japan and India. So again, if the US stock market is clearly concentrated, the US stock market is also expensive. It's kind of related to some of these top names as well. And we're looking at something called the Schiller Cape ratio. And this is looking at earnings over the last 10 years. The idea kind of smooths out sort of evaluation metric. Again, it's looking over the last 10 years. The US market has only been more expensive twice in its history compared in terms of recent years Cape levels. And again, those times are in the late 1920s and also the late 1990s. Again, that wasn't necessarily a great time for the overall market. There were ways to diversify and still enhance returns, but for the overall market those were not necessarily great times. So despite valuations expanding this year, however I should point out that valuations appear to have peaked in sort of this grand cycle so far. Now one thing I want to talk about the stock market is it doesn't mean a bear market is imminent. I this we're going to take a little bit of time on this table because I think it is really important and really useful in a lot of ways. And we're looking at the Cape ratio and again we're looking at data from the Schiller website that goes back to 1871. And in this far left hand column we're looking at all with basically we're looking at total return. So that greater than 20%, that's greater than 20% return and then obviously a 10 to 20% return, a 5 to 10% return goes all the way down to a negative return, which is less than 0 of course. And then average return. As for the quintiles themselves, quintile #1 is the low valuations and as we go across to quintile #5, those are the highest valuations to be pointed out. Just to make the highest quintile valuation, you need APE of approximately 20 on the Cape, we're currently at like 30. And so a couple things to take away from this is that again, I love this table and I'm an analyst, so I can feast on it, is that if you look at the bottom row, the average return, you can see there's a clear connection between the level of valuations and the average return 12 months later. So a lot of times you hear the valuations do not matter in the one year time frame. That's not true actually. It is still a large determinant of what the expected average return is moving forward. This is just talking about the level of valuations. Of course there's the trend evaluations and there are other studies that show that the leading driver returns over one year time frame is that whether or not valuations are expanding or contracting and this year they've expanded, earnings have really run in place this year. So again, valuations clearly are important in the one year time frame when you look at both level and the trend. One of the things to talk about on this page again here is just because the market is expensive does not necessarily mean we have to have a bear market and that is the second to last row, the less than 0%. So you can see when valuations are low and the market is cheap, you still have a 20% chance of a negative return. And so that's probably the only significant number on that and all the other time frames is roughly 30% of the time. So again, if the market is expensive, it does not necessarily mean we have to bear market, but it does mean that probably expected returns should be ratcheted lower as well. One other point, I just wrote these numbers down right before the the webinar here as well. And when we look at, so we've been talking about the keep ratio here, but if we just look at the price earnings ratio, just looking at current forward next 12 month earnings, the S&P right now is at an 18.9 price earnings ratio. And again it because of the concentration numbers, if you look at in the equal weighted average of the S&P 500, the the price earnings ratio is 15.4. There's a 27% premium of the market capital of equal weight. That's one of the widest gaps we've seen if you just look at the top ten names, meanwhile those top ten names, only one of them has a price earnings ratio which is below 20, that's Facebook, otherwise meta. Only three of those names are below 25 and the average of the top ten names has a price earning ratio of 32 again. So that's well above what the average stock is in the S&P. The media meanwhile is 28. So again, the market is definitely expensive and particularly with the names that are dominating the market of Lake. Now another thing I think it's really important and it's the third concern and we've talked about this before and we've written about it is that volatility remain high. We're not just talking about market volatility, we're also talking about economic volatility and inflation. Volatility was pretty well behaved up until recently. Of course, the pandemic sort of messed up a lot of the inflation data. And so not has inflation been high, but the volatility is also been high. A couple things to take away is once volatility spikes historically is that it was two things to happen. One is that the absolute level of inflation tends to remain above average for a while. It tends to be a regime change. So inflation doesn't necessarily fall back towards the 2% like it usually does. There's a couple different studies within the industry, including one by Stratigus that looks at not only the US experience but the global experience. Once in flight, inflation tends to spike. Then you will have an 87% chance that you'll have additional ways of inflation moving forward. I like to say that if you have an 87% chance, that is like a football team being favored by two touchdowns. So again, a strong chance that we'll see higher inflation. But more importantly is that inflation volatility may remain high. Could this be like the 1970s where inflation is not only high, but we also have a lot of volatility? I think there are arguments for this whether or not we're the globalization trend has moved back the other way. We have deglobalization, there's a lot of reshoring going on and that all those people tends to be inflationary. There's demographic arguments for higher inflation. The energy markets, both old energy is that it's been under invested in, but also new energy and some of of the things that are happening within the new energy markets as well. All these can contribute to higher inflation moving forward. Besides just the historical precedent that usually inflation comes in waves. Now if we have inflation volatility, this means we'll likely have interest rate volatility and again interest rate volatility and all maturities has also increased. You can see this from Fed funds out to 20 year treasuries. If inflation remains volatile so will interest rates. It is interesting to note that inflation or I'm sorry interest rate volatility started to spike before inflation volatility again to the markets and if something out in advance. Now if we go actually one other comment on interest rates is that inflation rate, not only has it been the volatility has been higher, but again the absolute levels are a bit higher. So as we're recording this webinar, 10 year treasuries are knocking in the door of its highest level since 2007. Mortgage rates are knocking in the door of its highest rate since 2001 as well. Now if you have inflation volatility, you're likely going to have interest rate volatility. And for economic decision makers, with that kind of volatility, it's a little more difficult to sort of manage the finances and make economic decisions. And it's not a surprise that earnings volatility would also be higher. That said, we actually have seen a higher earnings volatility since 1990. When it comes to earnings volatility, stock price volatility, I think what comes first is which one's the chicken and which one's the egg. Nonetheless, there's a correlation between the two and you will likely also see higher stock market volatility. Now the last thing I want to bring in, it's, it's another twist on this whole volatility concept and it's work that came from a firm called a QR and they had a paper that came out this spring which I think was was really powerful short read called certainly uncertain. What they looked at in this case is what they considered sort of macro uncertainty and how they measured this is they looked at basically consensus forecast for various economic data points and looked at how the actual numbers came in. So what are the dispersion of the forecast and then how far was for the average forecast off what the actual release was. If you have wider dispersion of both of those measures, that meant that there was a lot more macro uncertainty. And if you have higher macro uncertainty, it does actually correlate with elevated volatility in the market as well. You tend to see equity market underperformance and also in terms of kind of their own recommendations and of course here we are talking about staying diversified as well. Again, they talk about how investors should broadly diversify portfolios. That is not only making an argument for poor fixed income but also for diversifying asset classes such as global credit alternatives and also real assets as well. So those are sort of the three concerns and really sort of the conclusion was obviously we think stay invested and though I think expectations need to be ratcheted down for the overall U.S. stock market but also to say diversified and we have a couple different one page resources of breaker capital and the first one is our breaker 5 factor stock market barometer. Many of you have probably have seen this, but I'll kind of kind of walk around, walk about how how to use this. And again, this is determined every month by our asset allocation committee. We can usually have a pretty good discussion with a lot of intellectual collisions and we're basically broken down into five factors. First of all, there's fundamentals which of course include earnings, but includes also looking at margins, basically how our company is making money. So we look at the fundamentals, We look at the valuations of how much do you pay for a dollar of that fundamental value, whether it's looking at earnings, revenues, dividends, cash flow and then interest rates, which have an impact on valuations as well. Those, those 3 variables is really the weighing machine in the marketplace that really determines the equity risk premium. If you move to shorter time frames, we'll look at policy because monetary and fiscal policy do impact interest rates, valuations and earnings. And the lastly, we'll look at behavioral considerations. We look at investor sentiment, we look at investor positioning and we basically look at price action in the market itself. Now to the far right and we basically brought all these talking points. Basically these are the conclusions from the asset allocation committee. And Bold Face is just giving some more explanation on the criteria that we're looking at for each of those five factors. And then we have the talking points underneath that which we change every month As for outlook on these five factors. So when it comes to earnings, it does appear that earnings are troughing, at least for now. However, we're not extremely optimistic on growth moving forward. We do obviously recognize the long and variable lags that do come from interest rates. So you add it all up, we are neutral on fundamentals. As for evaluations, we talked about that a little bit. So for the overall market, for the US market, again it is expensive by historical measures. That's not only an absolute sense but also relative to the size of the economy relative to other asset classes as well. We do not move it to the far left however because there are parts in the market which much more attractively price. We'll get into that a little bit more, but even in the US include small caps, include value oriented stocks, it also includes a non-us stocks. Next we do look at interest rates in the interest rate market is it tends to be mostly negative. Again, we have not only rates moving higher, which are much more competitive to the stock market, we have a yield curve which is inverted, which is tended to be a very powerful leading indicator of economic weakness as well. The offset to all this is that credit spread. So again, the yield you see on corporate bonds versus treasuries is still well behaved. And so that's the reason why interest rates is also not to the far left. As for policy, we have some pretty good debates internally on our own team in terms of what the policy environment looks like. On the plus side, it is the presidential election cycle, which is just that monetary and fiscal policy tends to be strong in the third year of the of the presidential electoral cycle. It also tends to be the best year for the stock market. And there's the that positive stock market performance does flow into the first part of the fourth year. The offset to this is of course the Fed. It continues to be hawkish, money supply continues to be quite low. Money supply growth tends to be quite low. So that is also on the negative side. So I think this sort of saving it a little bit right now is the market in terms of the the price action is still suggests we aren't a bullish trend for the overall market and this is a shorter term indicator. This is the voting machine, not the weighing machine. But right now the trend in the market is still bullish when it comes to overall sentiment and positioning. You know, investors tend to be still overweight equities, at least individual investors. Professional investors have tended to be more bearish, but institutional investors seem to be increasing their equity allocations right now. So if you add it all up, our breaker 5 factor stock market, Brahmer, really no surprise from earlier comments, tends to be slightly defensive on the domestic stock market. So our next slide is something that we recently introduced and obviously it's we base it off of the stock market, Brahmer, which has again been very useful and popular for for many advisors and investors. And this is looking at when we break down the global markets and really six primary asset classes and it gets the same setup as the prior slides. We get the asset classes to the left and to the right. We have the talking points and against the factors that we look at for each of those asset classes. So first of all, domestic equity, we've already talked about it. So we are slightly defensive on it. But however, international equity, the relative valuations are much more attractive. I do have a slide later on that kind of tested that a little bit. So we tend to be mildly bullish on international equity. Core fixed income, again, interest rates have moved to much higher core fixed income. Is that arguably in the absolute sense the most attractive it's been in decades. Again, we talked about that a few moments ago. The next three are the diversifying asset classes, which again in this environment. We believe investors should give strong consideration to what how we define these is probably important. So when we define global credit, some of the sub asset classes that flow into that are non-us bonds, emerging market debt, high yield, both US and global high yield preferred and convertibles. Our discretionary portfolios tend to have about 7 1/2 to 10% in global credit. As for alternatives, there's a lot of that's a very large umbrella. We tend to prefer alternatives that tend to be lower correlation and lower volatility to diversify equity risk. Again a lot of things fall under alternatives. So this is not a comprehensive list but includes things such as event driven trend following relative value, multi strategy, a lot of things fall into alternative. Again, a discretionary portfolios tend to have about 5% plus and alternatives. And last is real assets. So again I think a lot of people conventionally see them simply as commodity plays, but real assets are we also classify as natural resource equities, which include both basic materials and energy. It also includes real estate investment trust, also include infrastructure and again of kind of a long term average on discretionary portfolios is about 7 1/2 to 10%. So when it comes to diversifying asset classes, we look at about 20 to 25% for a balanced moderate portfolio. The last thing I didn't point out is on court fixed income, the definition of that, that is domestic investment grade plus cash. So again making the argument about why to diversify and it isn't, this is going to be an argument about risk reduction. Again, diversification does always work. It's just that it's just a mathematical truth. I think a lot of people see diversification as way to the US stock market goes down. You diversify, you're not going to lose money. But actually what diversification does is it reduces volatility. We also think it can enhance returns and I do think there's plenty of opportunity in the marketplace and we'll walk through some of these slides as well. So first of all, this is a chart that comes from our monthly chart pack which we call starting points matter. And what we're looking at here is we basically take a composite of four valuation measures, so price, earnings, price, cash flow, price sales and price book. We equal weight it when I try to optimize or anything and we simply take the average of that going back to the beginning of the century. On this particular slide, we're looking at U.S. stocks versus non-us stocks and you can see sort of a cyclical relationship over time. It again it only goes back to the beginning of the century, but during that time frame the US has traded a 34% premium to non-us stocks. Obviously U.S. stocks that have been quite on a run lately, they're currently trading at a 69% premium. So again that's double the long term average. You can kind of also see it may be an inflection point that we had here over the last year plus where the trend in the kind of this higher valuation premium is sort of like stop running place. Is this an inflection point? It probably is in our opinion. Again, valuations are much, much lower for international stocks. You can actually see some international markets that have valuations in the single digits. I think when there's a list of like 60 some different markets and only a couple countries have actually a higher valuation right now than the US. So simply look into relative valuations here. One of the thing about this slide here is I should have mentioned of course that 34% premium, that's the yellow line, those Gray lines around it is one standard deviation around that long term average. And as you can see back in 08 through 2010, the US traded A slight discount to non-us stocks. We'll go through a couple of these slides, some some other opportunities and again using the same relative valuation set up, we can look at US small caps and again going back to the beginning of this century, small caps are basically traded at a 20% discount. It's actually 21% discount right now and they're currently trading at about a 50% discount, it's actually 49%. So anyway, small cap stocks are on sale again, it appears that they're trying to turn around as of a couple years ago as well. So we believe that small caps are a good way to diversify as well from some of the concentrated U.S. stocks that we're looking at next. We're looking at global value in terms of value versus growth. We actually kind of broaden this out to global because we think value seems to be a pretty decent proposition not only within the US but also in non-us stocks and value stocks are traded at 30% discount to the world market against value stocks. So they should be trading at a discount. The discount they get as narrow as 15% a little over 10 years ago. Like I said it'd be like 14 years ago now and now currently trading at a discount of about 40%. So value stocks have obviously kind of on a global perspective turned around a while ago. So not only do they have kind of an absolute argument in terms of valuations but also relative argument. Next, let's look at real assets. And again, we'll look at natural resource equities. We can look at energy stocks. We can look at basic material stocks. Let's look at basic materials here. So these are generally like commodity producers. And how do their valuations look as well. And since the beginning of the century, they tended to trade at about a 5% discount and 94%. Again, you can see a lot of cyclicality to these relative valuations. They're currently trading at nearly a 30% discount. So again, real assets as expressed by natural resource stocks also appear to be on sale. So kind of wrapping this all up, we think that the overall U.S. stock market is concentrated and it is expensive and we also expect that economic volatility will remain high. So in combination this does suggest the US stock market is likely to produce below average albeit positive returns. So to mitigate risk and also to potentially enhance returns, we do believe investors should broadly diversify and for equity investors that means diversifying into non-us stocks. It also means into value stocks, small cap and also real asset stocks such as natural resource equities. For multi asset portfolios, we do believe that increased exposure to diversifying asset classes such as global fixed income, credit alternatives and real assets also has merit. So before we get to the questions, I do want to say that again we have a lot of resources here and I kind of want to just walk through what some of our our various resources are right now. I can help and talk about markets and strategies as well. So we do have a weekly newsletter, We do call weekly wire. It's usually published towards the tail in a Monday, if not Tuesday morning. We do have a blog that also is published on Tuesdays. There is a version of that, a draft of it that comes out Monday mornings called the Bullets. And then we also have a weekly video which is approximately 3 to 4 minutes long and it's called Monday Musings. We've already talked about the stock market and asset class parameters. Again, if you have a copy of this presentation, you just click on all these links. We do have the monthly chart pack. Again, that is the starting points matter which are referred to. We do have two different podcasts. We do have the weekly weighing machine where we usually bring in a guest and we talk about markets. We usually try to make them more of an Evergreen philosophical type interview. So it actually is still relevant, hopefully even a year from now. I do want to put out an early plug right now, and we're recording this on Monday, but tomorrow's publication, we usually bring an outside guest, but our guest tomorrow is Orion's chief behavioral officer, doctor, doctor Daniel Crosby. I think it's pretty fun format. We talked about what's on his bookshelf. It was a pretty entertaining interview. Check that out. And then we also do a monthly weighing the Risk podcast. I just actually recorded this month's just hours before this, and this usually had a top of mind concern for financial advisors and investors. We kind of walk through some of those concerns. There's usually 5 questions we asked, just sort of basic talking points that advisors can use with investors. And then we sort of walked through a couple different scenarios of how this top of my concern can play out. It we have a base case, we have a good case scenario and we also have a bad case scenario. We usually have a little creative tension that goes on during that conversation as well. So it's fun. There's a monthly commentary we publish every month. And then we also have a quarterly reference guide as well. So case I, I kind of want to take us to a 30 past that was a little bit faster. We left lots of room for Q&A, lots of room for Q&A. I think we got a lot of really good questions here. I'm going to paraphrase some of them, but before we get to that one more resource again I wanted to make sure everybody has a note on you can chat your questions in here and we will get to them. But also just know that the investment team, broader investment team Rusty and I sit on are are definitely here to serve you the advisor and and serve your clients. Again, any questions on strategies or attribution on the strategies or how you blend strategies together because you know there are a lot of a lot of great strategists out there on the platform. We can help you out with that as well as as your sales individual also in your territory. So with that, Rusty, nice work. Yeah, 30 minutes, I think that was right around the sweet spot. A lot of intriguing comments and I think a lot of good questions here that were brought up that I'd love to get into now. So this 1/20/24 as we know is an election year, but if you just paid attention it is you know how should clients. The question is how should clients be positioned with typically the volatility that may pick up usually does pick up within an election year. I know you talked about volatility along various asset classes increasing. What are your thoughts on that? Well, again, going back to the presidential election cycle, when it turns to how the market performs during this time, it's usually a pretty decent time for the stock market. And again, usually the backdrop is fiscal monetary policy tends to be pretty positive. I think it's something that's really fascinating. Since World War 2, we've never had a recession in the third year of the presidential cycle and in the fourth year it's also very rare. So I think just terms of the kind of the macro consideration it's I don't think the election is a reason to not be invested. Again, if somebody's concerned about volatility, it's it's another road to more diversification as well. We've also seen a lot of studies and both of us have dealt with this over decades of working with investors is that a lot of times you know investors who have a strong view either on the service side or liberal side, if they have a strong view is that they get out of the market because of those views that actually compromises their performance over time. So despite the fact we have an election and of course there could be some policy considerations that come out of it, we'll have to consider, it is not typically a reason to get out of the market. It's also typically not a reason that the economy is going to fall apart either. Excellent, excellent. You know you talked and this question comes from from an advisor out there, you talked a lot about diversifying into small caps on sale, good dividends, right. Typically they tend to own more of the the bank sector than an energy sector than large caps do. So can you maybe one of the questions, can you comment on the impact regional banks had on Russell 2000 which of course is a small caps obviously it had a big impact, they are very undervalued right now. So that is part of the price, it's you know it's baked in there, but any more thoughts on the banking issues or thoughts on the asset class in general? Well, simply from a market perspective, we did see small caps underperformed this year and that was a leading contributor to that underperformance. Well, there's two factors, one that is a factor why small caps underperform but also the large cap needs did very well because of the enthusiasm over artificial intelligence as well. So that definitely created that relative performance gap. But As for the regional bank influence, it's you know the the how much of that has already been baked in the price. We think a lot of that has been baked in the price then we some think that value of stocks and that includes the financial sector all this people look more attractive than they don't excellent and as you mentioned in that first couple slides evaluations they do matter. I think I think we kind of forget that sometimes here even in the short term which I think is a it's excellent reminder that a lot of that is already quote UN quote priced in but but but anybody's guess just stay diversified there. Now you know we mentioned international stocks and this is a really good question. I'm interested to see your thoughts on this because the question is the US dollar, you know what do you see happening? It's kind of muddled around this year, right, hasn't maybe up a little bit last year of course it took a nose die towards the end. Do you have any outlook on the dollar specifically international stocks in general and also does that is there a, is there a case that we could use this reserve currency that we have of the dollar? Very good question because the dollar is often one of the leading drivers of whether or not non-us stocks outperformer or vice versa. So if the dollar is getting stronger, usually the US outperforms non-us and vice versa in terms of kind of the conclusions from the *** allocation committee and and basically all the work, the research that we do and obviously we get a lot of research as well. It's not going to sound very decisive, but we don't have a strong view whether being bullish or bearish on the dollar itself. We do have a high conviction view that relative valuations are much more attractive for international. So we tend to tell our portfolios in that direction. But As for the outlook on the dollar itself, it's decisively neutral. I'm sure that's unsatisfying to many, but there's a lot of arguments going both ways. And Needless to say, we have really good arguments internally on the same topic. Yeah, currencies are so interesting. I mean, it's definitely an extra diversifier, I think as we talked a lot about here. But you know, I think it's just one thing people kind of forget about that When you buy, you know, international stocks, you first have to convert your dollars into the local currency unless you're doing some sort of hedging, which typically we found does not add a lot of value and it costs a little bit extra on the margins. Let's switch gears to bonds. We still have a lot more questions. So I hope you're sticking around. These are, these are really, really good ones, you know, kind of the bond asset class, you know more, you know bonds as we used to come with concerns about inflation and interest rates. What fixed income or bond investment strategies do you think will be most effective in the next 12 months and why, you know, is there still a spot for traditional fixed income? Again, it's if people were all fly on a wall in the asset allocation committees, it's there's different people who feel more strongly about different areas. I think you can make a good case for both investment grade and high yield in this environment. So investment grade is in terms of the absolute level of interest rates, again, they're the best they've been in 1520 years. And so it depends how you're using a fixed income is that if if you're buying it to maturity, this is again the best it's been a long time. It's also a lot more competitive versus the stock market if you're comparing earnings yields to fixed income as well. Global credit is also very interesting and global credit is interesting. Again you know some of us ask classes have high expected returns whether you're looking at high yield. Of course high yield spreads tend to be below average which means there tend to be a little more expensive than long term averages. So you can argue there's some vulnerability there, but high yield tends to be attractive. Emerging market debt also on the margin tends to be attractive as well. So fixed income does look better. I guess the only other thing you could say of course is which way our rates still going to go and again a lot of good conversation on that as well. The trend is still towards higher rates. So if using price action is kind of the the final vote in terms of the voting machine, if there's still pressure for interest rates to go higher, therefore we do prefer the duration to be below benchmark weight. Yeah, I mean that yield curve still inverted, right, short term rates a lot higher than the long term if you just look at the 10 year for example. So something's got to give there. Will short term come down or long term come up? And I think you know that's where the diversifiers really make a difference in your portfolio. As we saw last year, we got time for a few more here. I think Rusty, you got, you still got some time right. We got some good. I got plenty. I got 24 minutes of people want to take it. And I do see some fun questions in there too. Let's see which ones you take here. I got. It's a good one. This one's very interesting actually. I think we've thought about it a lot. I'm going to try to paraphrase it a little bit, but let's just say you know, we talked a lot about valuations and if they come up, the trend comes up towards their mean. Meaning, you know, do value stocks come up compared to growth growth stocks come down or does large come down compared to international? You know, whatever it may be, how does that happen? Is it more like of a slow general realization of compressing towards that mean, meaning does it just take earnings for that to happen with a higher interest rate cycle or in or could the alternative be more of a recession of a reset of valuations somewhat similar to what we saw last year right, where growth stocks had somewhat of a reset or some combination of the two Or third option that maybe you know about all the above. No, it could be, it could be any of those. I think there was a keyword said in there and it's, it's a word I think that's really, really important is I think normalization and again the pandemic really caused a lot of volatility, you know a lot of weird economic data points and I think we're going to see a lot of volatility still from that. It's sort of the aftershocks that come from the shock of the pandemic itself. So I think there will be normalization. Interest rates they they've moved up really, really fast. It's not normal, they've moved that fast but interest rates are kind of getting more normal. I mean there should be a positive real yield. We're kind of seeing that. We're talking about economic labor data right now which is softening or weakening and some of the headlines are pretty ominous. But the reality is the labor market is still near multi decade lows. The unemployment rate going back to the 50s or 60s depending how you're slicing it. So you're seeing some normalization there as well. So I think normalization is sort of the keyword. I do think interest rates is kind of the story though and there tends to be a positive correlation between interest rates and what happens in the marketplace. We, you kind of touched up on it earlier, is that all of us being equal and we have not seen that this year, is that generally speaking when interest rates are moving higher, you will see value stocks and outperformed. Are interest rates moving higher because economic growth is higher than expected, which we should have seen so far or is inflation remaining some really higher than people said? Again, we've seen that so far this year, buy stocks tend to outperform in that environment. Of course, we had the dominant narrative earlier this year over the enthusiasm over artificial intelligence. So I think that's sort of a counter trend to perhaps the bigger trend which we've seen inflection point that we probably did see when things started to normalize again last year. So I think in terms of reversion to the mean, I think that there's long and variable lags, right and between policy and also enthusiasm, you know doesn't it isn't maintained for a long time. So I don't think that we'll get reversion back towards kind of back to normal relationships over time and interest rates will be a big driver of that. Yeah, great, great answer. Still still a lot to be seen on that. I think this next question does factor into some of what you're talking about. Let's go, let's maybe go higher level of macro. You talked about unemployment rate, GDP picking up, right. GDP kind of tends to be the third thing that that bottoms after earnings after the market. You know, usually that's how it happens. But this is an interesting thought provoking question because as we entered this year, if we all remembered, you saw a lot of Wall Street strategists and economists that were very negative on the market. They're the most bears they've been. Recession was happening. We saw investor sentiment record low bowls for a very, very long time. Now we kind of flipped around, right? Bulls are back almost in majority. Everybody's saying recession, it's not gonna hit. Is there any, can we still be worried about this going forward? You mentioned unemployment high, but unemployment claims are kind of moving higher. What are your thoughts maybe going forward on that yield curve still inverted? Well, the yield curve being inverted is a concern and the asset Allocation Committee unequivocally is concerned about it because in terms of being a leading indicator, it's had a pretty good track record, a pretty good batting average. It does flow into the compositive leading indicators. That's the number that comes out this week. That has also been suggesting economic weakness moving forward. It's it's still a concern and but I I it's how much of this economic debt is so weird, how much of this market reaction is still in the process of normalizing as well. It's it's a good question where it is, it is all going to end up. But I do think the key point is when it comes to interest rates and sort of the policy from the Federal Reserve and just the higher interest rates. The key thing to remember is that as Milton Friedman said, there are long and variable lags with a lot of this policy. So GDP in the third quarter is indeed going to be probably the best quarter for GDP growth since 2017. How much of this is related to summer vacations, how much is related to concerts? You know there there's an economic impact from all the concerts and all the money that people spent. So I think that and also cash, a lot of the pandemic cash has also been spent as well. We're having a going to have a strong third quarter. There is positive economic momentum. I think that needs to be appreciated and respected. I do think those numbers will moderate in the quarters ahead due to some of these long and variable acts. I also think this flows in the Federal Reserve policy. We are recording this a couple days before the Federal Reserve makes a decision on rates. They'll probably hold Pat. It's it's a very strong guess that they will, will they raise rates later this year. And I think you have to trust the Fed for what they're saying it is that they are going to be data dependent and look at the inflation markets and the labor markets. Inflation is likely to uptick and obviously we have energy prices moving higher, but also the year ago numbers are scrolling off. So the year over year comparison is going to be harder. So it's more likely than not that inflation will uptick. Also when it comes to labor market, again it's it is softening a little bit, but I I think softening is almost too strong or I still think it's a normalization. I think it 1 great data series and you know people can still say this, this data series is flawed in some ways. But if you look at the JOLTS index and how many people are looking for a job versus how many people are unemployed, it's still at 1 1/2 times numbers clearly off the high as we've seen in recent years. But 1 1/2 times, if it wasn't for just the recent blip is the highest it's ever been. So I would imagine that GDP in the third quarter will not be repeated for a while as the interest rates bite a little bit. But one last comment, so it's basically saying that I I don't think that recession is imminent. However, as investors and how we build portfolios is that I think you always have to expect recessions are going to occur and you always have to expect that bear markets are going to occur and you can expect the volatility is going to occur. So need to build resilient multi asset portfolios that you can hold confidently over time to kind of weather those storms because those storms will always happen. A recession is coming. A bear market is coming. We don't know exactly when, but we know it's coming. And I think portfolios need to be built to some extent to handle all environments that that's a great point. You can't, you can't predict recessions. I mean, the leading smartest people in the world cannot do it, right. So it's very hard to do. And we know that the stock market is not the economy and the economy is not the stock market, right. Stock market's going to typically precede this. So by the time we even get around to calling a recession, markets are usually going higher. So it's, it's very, it's a very hard question to answer. I appreciate you kind of taking us down a lot of different areas there, especially the Taylor Swift effect, right of concerts in different countries of increasing the GDP short term for that that was that was an interesting tidbit on there. OK. So that last question, I think we get this, this has to do a little more strategy. I guess we get this quite, I hear it quite often, right. And in in the in the realm where you have a lot of strategies on a platform or just any type of platform or any type of salesperson you're talking to. You know, the investors always asking like what makes your strategies different from the rest, right. You know how how do you differentiate what you're doing compared to what maybe passive strategy does? Can you maybe go into, I know we talked about that a little bit, but can you dive deeper into us for that juicy question? I actually do see another question on here too. So I take a step back and I just want to put in a plug for Case and his team, Case and his team. Again there there is a resource to talk about all the strategies that we offer to run including breaker capital, talk about strategies, also talk about markets to make sure that people are confident when they turn around, talk to investors about it. So when it comes to breaker capital, breaker capital in terms of the proprietary portfolios are different in terms of a lot of the multi asset portfolios out there. One thing that we sort of hinted upon is the diversifying asset classes. So for a moderate, you know conventional 6040 portfolio, proprietary portfolio is a breaker. Capital will be a little bit different than your your typical asset allocation portfolio. Another thing about the proprietary portfolios is that they tend to be more risk stable. So for instance, a lot of people are building portfolios of course around the Orion risk score, what strategies tend to be the most stable around those risk scores. And again those are the proprietary portfolios from breaking capital. As for Orion portfolio solutions, again it's we obviously have all kinds of different portfolios. We obviously categorize everything's in the three different mandates as well. We also do have kind of an easy button portfolio called market cycle advised mandates and how how does everything that we're talking about flow into those portfolios. I want to point out those portfolios are really built around really the popular exposures on the OPS platform. And in terms of some of the views that we talked about from the asset allocation committee, it's officially not linked in this case. The asset allocation committee is really flowing mostly in the Brinker capital side. But in terms of those mandates, they do tend to have a slightly higher exposure to international than the average dollar invested on the platform. And also they do tend to have value tilts again that it tends to be where most investors are going and that's how those portfolios are built. So I just packed a whole bunch into that. But I think we did answer a few questions there. And I do want to point out, we do have a question about movies too. You would in that one. So there's a question, yeah, I, well, there's a question about the movie Dumb Money Out. Have you seen it yet? And of course, what was your experience over GameStop yourself? You've talked a lot of advisors and investors during that time frame, right. I mean when you get those questions about from like your Uber driver of giving you investment advice, that's that's time when you might want to take a step back and kind of realize where the market is. I mean I I think we've talked a lot about that GameStop, it did get a lot of people interested in the markets which hopefully they viewed that as a good thing as long as they're investing instead of gambling. We also see a lot of people doing a lot more options Right now is is, is some form of a gambling. So I hope you know people aren't doing it that way and they're using advisor of course. So I mean that that was that was a weird time and it was weird enough that they made a movie out of it. I don't think that movies in our theaters yet though. Have you noticed it Rusty? I don't know I've only, I've only seen the trailers for it. But I think you hit in the head regarding GameStop that was a really interesting time. It did bring new investors into the marketplace and it did give opportunities to help people invest and diversify their portfolios as well. I have not seen the movie yet so I can't speak to it. It's it's probably going to be a lot like, Oh my gosh, what was the movie about 2008? Michael Lewis's movie, The Big Short. Yeah, yeah, the Big Short was highly entertaining. Maybe some of the conclusions I thought were a little erroneous myself, but so I have not seen this movie yet but it should be pretty interesting in the end though regarding GameStop, all those meme stocks is I like to say the wing machine does win in the end. As we talked about our five factors, we you know valuations fundamentals and how interest rates impact all that. The markets usually come back to that in the short term of course you know policy and and and short term price action and sentiment of position, you can obviously impact the markets. But again the weighing machine wins in the end absolutely. Yeah, I guess I guess that's it. I think we hit all the questions that was some very last words of wisdom. Anything else you'd like to to mention out there? I think we covered mostly everything though. Again, thank you everybody for your time today. Again, as I said, time is precious and hopefully we gave you some resources. And also please reach out to Case and his team. Again, they're outstanding working with advisors and investors. Again, understanding what's going on in the market, understanding our strategies, understanding how strategies, playing with other strategies. So again, I hope we're a great resource and and thank you for your time. _1732303673021