Chasing Stocks As Damaging As Selling At Bottom: Wilson

Doing great. It's a bull market. You know, summer has been pretty good to me.

No. I think we probably were the first ones to talk about this earnings recovery. And even we underestimated the strength of it. So yes, we did underestimate the power of it. But directionally I think we're right on that. I think what we've been surprised is probably the durability of the AI capex and just how much that has accelerated and how much, quite frankly, how much the market has been willing to absorb.

Well, the really challenging thing of 2022 is, you know, for retirees was that stocks and bonds went down for the first time in really our lifetime. So there was no hedge. So even though the decline in equities wasn't as severe as it was in '08 or in '01 or '02, your 60/40 portfolio was down the same. So that was a change in that. I think that was one of the things that made investors apprehensive to step in. It was like, Holy smokes, I'm getting hit on both my defensive stuff and my offensive part of my portfolio. So I think people froze up. Now our job is to remind people that there's value at some point. And I would say we navigated the 2021 top extremely well and the '22 downturn. We probably overstayed our welcome a bit in '23, got back on board in '24 under the end of the story that we're telling now. But like I mean, as a person who has their money in the market for retirement or long term investor, you really should avoid being shaken out on both the top and the bottom. In other words, chasing stocks is as damaging as selling stocks at the bottom, in my view. So that's why we like dollar cost averaging. That's what we do like, still like diversified portfolios. '22 is a challenge on that. It ended up working out for folks who stayed fully invested. And for those who stayed fully invested, their faith in equities has been restored. Maybe for bonds, not as much.

Yeah. Well, what I would say is that these asset classes are now more closely correlated. So they're just not going to offer that natural diversification benefit that they have historically. So that means you need to do other things. So there are other types of investments you were mentioning earlier like gold or maybe even Bitcoin or some of these things that can defend against inflation. So we've been a very big advocate of gold, not so much as a yielding instrument but as a defensive asset. It doesn't mean you abandon fixed income, but it does mean you reduce your duration. So there are things you can do within your fixed income portfolio to make it more valuable, still provide some diversification benefit without taking too much risk.