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Jennifer:  Good afternoon and welcome everyone. Thank you so much for joining us. Let me begin by introducing myself. My name is Jennifer. I’m the head of client experience here at Modera Wealth Management. We are so pleased to bring you this live webinar today, presented by George Padula and Megan Dwyer. For those of you who don’t know George, he is the chief investment officer here at Modera. He’s also a principal and wealth manager and Megan Dwyer is a financial advisor, and she’s also a member of our investment committee. They will be sharing their perspectives and insights on the economy and markets, and they also will be answering some of your questions directly toward the end of the presentation. So some quick housekeeping items before we begin, if you experienced any technical difficulties during the call, please contact our support team and their numbers are on the screen and their numbers are also in the email confirmation that was sent to you prior to the call. You can also use the Q and a chat box feature to send any questions for tech support or for George and Megan, to answer again towards the end of the presentation. And finally, we will be recording the webinar and have that available to you later on next week. So with that, we hope you enjoy this presentation. We’re going to start off with Megan and she’s going to get us started. Thanks so much.

Meghan: Thank you, Jennifer. Hi everyone. Thank you so much for listening in today. I’m excited to share with you some of the thoughts from Modera’s investment committee. So the last several months have been an emotional roller coaster. Like the people in this picture, we’ve all likely experienced many different emotions already on this wild ride that we call 2020. In fact, 2020 looks a lot like my two year old son laughing, one minute crying. The next both are wildly fluctuating, emotional seasaws, but yet the behaviors of both are actually normal and necessary for learning and growth. So what are we feeling? We felt elation or euphoria coming out of 2019 and an 11 year bull market picture. My four year old being handed, a big chocolate ice cream cone. The elation quickly turned to nervousness as we started this year at all-time highs, the ice cream, starting to melt a little bit.

Once the virus hit our homes, we felt fear and frustration as our concerns turned to our own health and those of our family, our jobs, our colleagues, and our finances by now the ice cream by now, the ice cream is melted so much. It’s fallen off its cone and into my kid’s lap, completely stayed in his tee shirt and his brand-new sneakers, but we can also feel optimistic that this pandemic could introduce new opportunities for innovation and advances in technology. So when and how will our next ice cream be different possibly this time, it’s a Sunday with some sprinkles. So we’ve received a number of questions from our colleagues and clients, many of which boil down to a few key themes, which we’re addressing today. The biggest question that we’ve been hearing is are we in a recession or next slide, please?

So technically, yes, a recession is defined as a decline in economic activity that lasts more than a few months, the national Bureau of economic research, or N B E R has said that the most, uh, that the most recent economic expansion peaked in February after a record 128 months. And we’ve been in a pandemic driven recession ever since the NBR did also note, however that the recession could be short-lived. The below chart shows the 13 recessions we’ve experienced since 1933 and their corresponding bear markets, a bear market being defined as a 20% market decline from the previous all time high based on the MBER data in the, in the five recession since 1980, the S and P 500 recovered four months prior to the end of the recession, the exception to that being the 2001 tech bubble, which took much longer to work itself out.

The NBR usually takes about eight months after a recession starts to announce that we’re in a recession and the stock market is a leading indicator of the five recessions since 1980, the S and P began its recovery on average six months before unemployment Pete. So this is not our first rodeo and I doubt it will be our last. We can’t wait for things to turn, to make investment decisions, and we can’t rely on what we see right in front of us. We must look ahead. It’s a lot like teaching my four year old to ride a bike, which we’re doing a lot these days. It requires you to look ahead and steer to look ahead to steer and maintain balance, but not look downward. So what will the recovery look like? Next slide, please. When we talk about economic recoveries, they’re usually described by their shape, the shape describes the trajectory of GDP employment and other key metrics tracking economic conditions.

The most common shapes that we see are V where the economy suffers a sharp, but brief period of economic decline with a clearly defined trough followed by a strong recovery. There’s also a U, which is longer than a V shape and has a less clearly defined trough in a w also known as a double dipper session. Um, this is where the economy falls into a recession recovers with the short period of growth, and then falls back into recession before finally recovering giving a, a down, up, down, up pattern, resembling a w we’ve also seen some more creative shapes like the Nike swoosh. Um, this is where there is a steep drop in a gradual recovery, meaning it takes much longer to return to pre-crisis growth levels or an inverted square root sign. Um, picture that one in your head where growth recovers, but then plateaus before reaching pre-crisis levels.

As you can see from the below charts, we’re already starting to see some shapes emerge in the data. The top chart tracks, the all country world index, which is representative of all global stocks. You can see a dramatic drop in a slower and more gradual climb back up, starting to look more like that U but I described previously the bottom left chart shows TSA checkpoint travel numbers at U S airports from March 16th to June 17th. After bottoming out in mid-April travel numbers have risen steadily. The current numbers are double what they were back in April, but this is also a sign of the long road that we have the bottom right chart shows personal gasoline consumption. As you can see fuel demand decreased significantly and March and April when quarantines were first imposed as economies reopen people return to work, and we start taking those much needed summer road trips. We’re starting to see a bit more of an uptick next. I’m going to hand it over to George to talk about a little bit more about rebalancing in client portfolios.

George: Thank you, Megan. Welcome everyone. I appreciate everyone taking the time today. So, uh, wanted to talk a little bit about kind of rebalancing and portfolio management within the context of this kind of volatile period that we’ve been having. And some folks have been asking us, uh, both, uh, before this, uh, uh, call here today and during our client meetings, you know, what steps are we taking within the portfolio? What should be done, you know, with this volatile time period, and what really are we thinking about, how do we approach a volatility? And I think the first thing that we need to really think about is, you know, you have to be disciplined, you have to have a process and, you know, we’ve got a great team, our investment committee members, Ryan, Megan, Tom, Karen, Peter, myself, you know, we’ve been meeting very regularly. We’ve been talking with our research sources and vendors and really, you know, honing in on our discipline and our process.

And there are some pretty, you know, pretty solid evidence-based approaches that we take. And we focus on quality. We focus on diversification, we try within the financial planning, uh, models that we use, you know, to focus on your goals. It’s a reason sound investment process, and it takes time. Right? And so Megan mentioned at the very beginning about, uh, you know, the roller coaster, right? And as a roller coaster of emotions and, you know, the dips and the dips and swings, you know, I love roller coasters. Uh, you know, my family and I, uh, we’ve been on some of the best roller coasters around the country. Absolutely love it. But you know, when you get to the top of that Hill and you’re seeing you’re

And then you get the second a curve there. Now that’s what we’ve been seeing. It’s inhalation, as Megan said, it’s, it’s a little bit of fear. It’s exhilarating, but you know what, when it’s your portfolio and it’s your investments, and it’s our process, we do have to take the step back and we have to take that emotion out of the process because it’s very, very difficult when everything is going up and down to really separate out what it is I need to accomplish and how it is I want to accomplish it. You know, timing the market, almost impossible to do. And I think about timing the market in this way. If you think about the windshield wipers on your car, they’re going back and forth, back and forth. You can’t do back to stocks back to bonds, back to cash, back to stocks. It just doesn’t work that way.

You’d be disciplined, be diversified throughout, and we’re never going to be able to time the bottom of the market. We’re never going to be able to time the top of the market. It’s, it’s very, very difficult, but if we have a reason strategy for doing so, it was, you know, it’s going to maintain the structure of the risk within the portfolio for you. It’ll prevent you from being too, uh, too exposed to too many risky assets. Uh, you know, there’s always a possibility that, you know, returns can be enhanced, uh, as prices are rebounding. And again, it’s removing that emotion, it’s allowing an objective thought process to occur. So the chart that you’re seeing here is the S and P 500 a year to date, uh, through, uh, through mid June. And we highlighted two particular areas that we did our rebalancing. So we did, and we, you know, our, our portfolio management team, you know, the trading group, you know, Tana and Tom and Pete, you know, just incredible amounts of work, making sure that we’re doing the right thing and in the right, in the right manner for all of you.

So the first rebalancing we did right about, uh, March 11th, 12th, the second rebalancing, right about April per second, we highlighted the bottom of the market there March 23rd. We basically book-ended it, we came pretty darn close to the bottom of the market, but, you know, we’re, we’re, we’re not necessarily trying to time the bottom of the market, but our, our process of, you know, looking at valuations, looking at the thresholds, making sure that we are, uh, are adjusting the portfolio, given where we have, uh, you know, the outlook and given the research that we’ve been doing, you know, we did rebalancing their, you know, second week of March and we did it right at the beginning of April. So what did we end up doing? Well, let me take a step back, you know, you know, buying in or buying Reba assets when they’re going down.

Right? So rebalancing is the process of buying things that are lower in price and selling things that are moved up in price. Right. But likewise, it can also mean, you know, what things have gone up in value and we’re looking to sell things that, uh, and, and rebalanced back to target. So, you know, we’ve seen this, this spring, you know, we saw it and did it in 2008, 2009, back in 2011, uh, and 15 high yield bond spiked, you know, international equity, Sid extremes. We see even start in early 2019 and late 2018. So what did we do this time? Well, first thing on the fixed income side, because of the pandemic, because of interest rates coming down and really because of this recessionary period, we’re not seeing inflation kind of coming out in the forecast. We had inflation protected securities, a high quality bond fund in the portfolios.

So we pared back on that sold out of that, made a substitution for a us treasury, uh, fund in there, very high quality, a little bit better yield, a lower duration, meaning it’s a little bit shorter maturity to keep stability within the fixed income part of the portfolio. On the equity side, we were rebalancing trying to turn tax losses into tax, uh, opportunities, you know, banking, some of those, but we were buying back into us equities, especially large cap. We added in a dividend appreciation fund. A lot of what happened in the first quarter, you saw some really high quality blue chip companies getting sold off and, you know, for various reasons, you know, liquidity reasons. And so we saw an opportunity to be able to buy good quality companies with growing dividends and high quality dividends at reasonable prices. We did a little bit of a shift from international into us, again, because of recovery.

Also looking at the, uh, the strength of the dollar dollar, probably gonna weaken a little bit and, you know, again, a little bit better opportunities, um, in the U S there, one of the things about dividends and dividend growth is if you’re going to see more volatility, those dividends are allowing you to get paid while you wait for the market to recover. Uh, so you know, the whole idea of, you know, adding some stability, uh, you know, into that side of the portfolio, we maintained our credit exposure on the fixed income meaning we kept our, uh, corporate bond market, uh, funds. We kept our municipal bond market funds. Uh, we kept our real estate, which has some great yield, uh, and that’s a global focus, uh, you know, foreign bonds, which are hedged back to U S dollar. Uh, we maintained, you know, some really solid opportunities there as well.

And know the whole idea is really trying to make sure that we have an appropriate mix of assets throughout the whole, uh, you know, sequence of, uh, of the investment process. If you could turn to the next slide, please. I think, you know, one of the things when we think about process, right, and you have to think about long term long-term can mean any number of things, right? Long-term Megan’s two kids or who are two and four are probably next, next minute or next day, right? Long-term for some of us, others are yours years or even decades. There’s always reasons to sell. There are always reasons to buy. There are always crises. There are always things that are going on. I started out in financial services and in 1988, and other than the, uh, you know, the crash of 87, I’ve been in, uh, you know, I’ve been experienced and have experienced, you know, uh, several recessions, um, tech crash, the crash of 80, uh, of, um, 92, uh, and, you know, just await, I’ve seen a lot.

And what we’ve learned from that in our investment committee is not so much that every crisis changes completely differently, but every crisis we can learn from it. Right? So this slide here tends to show, yeah, what’s happened in stocks and the vertical columns, those gray areas, those are recessions. And this chart goes from 1900 to the end of 2019 a little bit here in 2020. And you can see, we had, uh, you know, world war one, we had the great depression. We had the new deal volatility coming into world war two, 1970s. We had a bull market. Prior to that, you had stagflation, someone asked about, uh, you know, lower interest rates, high inflation. We had the tech crash, we had a financial crisis in 2008 throughout this kind of longterm perspective. There are many times in which to buy and to sell. And no one is saying that you should, again, try to time the market, but again, have that longterm perspective, be able to think about what it is you want to accomplish.

And we take, and we do take that into consideration as we kind of think about how we, how we approach our investment portfolio in our management of the portfolio, but diversification is really important. And if you could turn to the next slide, please, I think this will next piece will kind of illustrate that even a little bit further for you. So another question we had, uh, from, uh, one of, uh, one of you or were attending today is, you know, us equities have done so well, why should we be in anything else? You know, Tech’s done really well. In fact, text has done tremendously well in this market. What’s going to happen with international. Why should I be in anything different? Well, the reasoning is we don’t, nothing will perform best forever, right? Diversification matters because really you want to be able to smooth out returns.

You want to protect them the downside. If you think about, you know, being, you know, playing baseball, which hopefully is going to come back at some point this year, you know, it’s it, it’s trying not to strike out. You may not hit a home run, but you want to hit singles and doubles, right? That’s about diversification. So what we did here with this chart is we took some equity returns and we took a bond market return equity indexes in bond market. So in the gray box, those are emerging markets international, the orange box, us small cap, large box, the yellow box, us large cap, the green international developed markets and the blue are bonds. And so you may have seen a chart that looks so multicolored, maybe like a quilt or a bunch of Skittles together, and those are annual returns and you can allocate them, or you can separate them out large best to worst.

We did. It’s the same thing here, but we did it in three year chunks. So the far left three years of 96, 97, 98, then the next one over 99 to 2001. And then we simply took the three year annualized average return for each of these indexes. And then we just sorted the best to worst. So 96 to 98, you have us large cap equities, basically S and P 500 up 28% annually. It’s an incredible amount more than three times. The next one, which was you international developed markets then followed by the bond market. And at the very bottom you have emerging markets, right? So you look at those three years, many people maybe investing in the rear view mirror instead of looking out through the windshield. So, you know what? I only want to be in U S markets. Well, the next three year period, what does the best us small cap?

Right? So that’s right around that tech crash, large cap stocks, three years down, 1% bonds actually are up 6% annualized. So then let’s look at the next six years, 2002 period, that 2005 period emerging markets up almost 23% a year, and then up another for the next three year period, up 36%. Just about right. So 23 years, 22, 22, 22, then three more years, right. Far, far greater than the next one, which is international. And then you have us at about 3.6 and then 8.6, right? Bonds are hanging out towards the bottom again, less volatility. So at the end of 2007, what do you think we heard? Why should, why do we not have much international equities? International is about right now about 45% of the, uh, of the market cap in, uh, in, uh, equities, uh, U S is about 55%, our typical range, uh, because we, you know, we buy our, uh, you know, our bread and milk and groceries here in the United States.

Our typical range, we want to be a little bit more dollar focused is about 60, 65% us. Um, overall about 35, 40% international. If you go back to the 1980s, early nineties, it actually flipped the international markets where anywhere from 60 to 70% of the market cap in U S was about 30 or 40%. So we’ve seen a big, uh, movement in the U S markets. And again, things don’t stay the same. And again, we continue on from left to, right. You can see 2000, 11 period, three years, 2014 to 16, 2017 to 19, you know, there’s that, you know, us equities are just doing gangbusters, right? But look at that tech currently, uh, the financial crisis right there in the middle 2008 to 2010, for three years, bonds, right? Bonds at very low, low risk or low risk, uh, you know, interest rates had gone down who wants to own bonds because interest rates are gonna go up on prices, go down, right?

Bonds were averaging almost 6% a year. Then us small cap that to large cap stocks, almost negative three and international developed negative seven. Alright, so again, the whole idea is why would we want to just focus in on one asset class? We want to own the market and our portfolios are set up that way, right? Our portfolios and your portfolios are set up according to risk tolerances. We have large cap, mid cap, small cap, quite frankly, out of the, in this, uh, recovery since March 23rd, small cap and value has really done quite well. They’ve had a tough time. The last several years, we’ve seen a nice rebound in small cap and value. On the international side, we have large cap, we have small cap. We have emerging markets. Our real estate fund is global, about 60% us, about 40% international. And then we not only do diversification on the equity side, but we also do it in the fixed income side, treasuries, corporates, convertibles, foreign bonds.

What’s really unique, uh, about this recession. And Megan showed you all of those different recessions. And this is the first recession. If you read through that, you know, the first recession that’s really pandemic driven, you know, we’ve had other event driven recessions, but this is the first one that’s really been health driven. Um, we’ve had slow economic slowdowns because of health reasons, the first real, real recession, uh, that the bond market was just as volatile as the equity market. In fact, probably even more so, you know, the fed had to step in, provide liquidity, provide stability to the bond market. There was, uh, a very large, uh, and, and continued to be, you know, uh, you know, uh, flight to quality. But when you kind of look out worries about defaults and bankruptcies, but when you look out there, so really some tremendous opportunities in the fixed income markets and, uh, your credit tends to lead the way.

And you really want to make sure that you have stability in the credit markets. You want to have that, uh, you know, that liquidity there, uh, on the bond market. And w you know, that’s got to settle down and start to build that foundation for us equities. So, you know, behind the scenes, and, you know, you think about this chart here, it’s almost looks like bricks, maybe Lego blocks, right. You’re building up bricks. And we think about kind of building the foundation of financial portfolios. You’ve got, you know, we’ve had some real, no tough times here recently, you know, with the front, you know, with economic, uh, support and stability. But if you create a nice foundation, you create the stability within the portfolio. You’re going to start to kind of build it up and build it up. And, you know, chairman Powell said, uh, not that long ago, I forget if it was in one of his testimonies, this is fed chairman call because either in his testimony to Congress or, um, on 60 minutes, he says, you know, it’s going to be a, it’s gonna be a long road.

It’s going to be, uh, a lot of work here, but, you know, he can see glimmers of hope. He can see glimmers of stability, and, you know, we’re going to see some innovation. Uh, you know, in fact, you know, he says, you know, he can, they saw within the fed some steady progress. And Megan mentioned about how the us markets and the stock markets tend to be leading indicators. And another question that people were asking was, uh, you know, how can there be this bifurcation of such poor economic news with such a strong, uh, equity, uh, performance? And it’s really because, you know, we’re looking ahead, we are trying to make sure that we are looking forward. And I think if we go to the next slide, we’ll have kind of an illustration of what that talks about. So, yeah, we’ve got a few artists here in the firm.

Uh, I guess we’re, we’re, uh, we, we’ve got a lot of different skills. I’m not the artist, trust me, I couldn’t do this, but, you know, when you think about, um, you know, when you’re looking forward, you can either have a, a magnifying glass, or you can have binoculars, a magnifying glass is gonna make things pity, you know, bring things right in front, you, right. Those short term, declines of volatility, that emotional roller coaster that Megan talked about. Right. But you can’t get a lot of movement out of them out of, uh, out of a magnifying glass. It’s not going to help you get down the road, but yet if you have some binoculars and you’re able to see ahead and you’re able to look forward, you’re able to look for those opportunities and have perspective. I think it makes a big difference. Right? And that’s what really, what we’re thinking about.

I mentioned it right at the beginning, you know, we use an evidence based approach in how we think about portfolio management. Uh, you know, we are thinking about risk and opportunities. You know, our goal is to make sure that we are creating good longterm high quality portfolios, but in terms of that, it really has to be a part of your overall financial plan. You have to be thinking about things independently and objectively. And that’s really where, you know, the work that we do setting up that foundation of financial planning, building upon that with high quality investments, um, and diversification and good sound investment principles, we might not, uh, we might not hit the bottom of the market every time we might not hit the top of the market every time. You know, we want to be, you know, at bat, we want to be able to have things moving forward and making sure that we’re, we’re working for you, uh, you know, appropriately going forward. I think, uh, I’m going to turn it back to Jennifer now, because I think we have some additional questions coming in.

Jennifer: Great. Thank you both so much. That was really helpful. And I love how you provided both, um, kind of our long held principles and insights into that, but also some insights into what’s happening right now in the economy and in the markets. So, um, right now we’re going to do a lightning round of questions that were submitted prior, as well as some that are in the chat box. So, um, how this is going to work is I’m going to just kind of lob some questions over to you that we’ve received. Um, and we’ll just take it from there. Um, so one of the first questions for you received, um, is what changes has Modera made to its allocation, if any, and do you expect to make additional changes? And I I’ll give that one to George to start with.

George: Okay. Uh, thanks, Jennifer. So, uh, what changes? So, uh, on one of the slides before I talked about rebalancing and mentioned a few of the changes that we’ve done or updates to the portfolios, uh, you know, as I mentioned, you know, we switched out of one of our, uh, our fixed income funds, uh, the tips fund added in a short term, treasury, uh, you know, maintaining quality and yield a little bit shorter duration. They’re really providing some stability to fixed income, uh, within the U S market. Again, we added in some more dividend growth, uh, and we did a tilt towards us, uh, versus international, but again, we’re owning everything. We want to own all the sectors, uh, our rebalancing, uh, we, um, we bought into equities and risk assets, uh, in the March, April timeframe, you know, with the rebound here in the markets, uh, since March 23rd, equities are up roughly 36%, I think as of today, interestingly enough, if, you know, if we were to annualize this number right now, if we were to stop the year right now, the plus 36% would be about one of the, I think it was fourth or fifth, best return since 1945.

And then one of the top 10 since 1928. So it’s been a pretty remarkable run up. And what that means is that we’re actually seeing some opportunities where we can pair back on equities there, uh, the team, I mentioned our portfolio management team, Tana, and Tom and Pete, you know, it’s just, don’t push a button. They, they put a lot of research and a lot of effort into this in terms of tax loss, harvesting, making sure we’re not violating any wash sale rules and, uh, making sure that our asset location is appropriate for everyone. So those are the changes that we’ve been doing.

Jennifer: All right. Good. Thank you. Um, so second question. I’ll um, have Megan answered this, um, what will the growth industries be in the short term, in your opinion, as a result of COVID and, um, what industries do you think may falter?

Meghan: Ooh, good question. Um, so I’m going to preface this with a disclaimer that you need exposure to all industries. Um, we’re not, we don’t advocate in any way trying to, to, um, make a bet on a particular sector or particular industry. Um, so history has told us different things in 2001, banks did really well in 2008, they did terrible. And in 2020 now they’re kind of middle of the road somewhere, um, in to the, um, at telecom communications and tech in 2001 were horrible. They were average in 2008 and they’re doing pretty well right now, relatively speaking. So, um, some of the trends, I guess, that we’re, that we’re seeing are in uptick right now in e-commerce, um, cleaning services, delivery services, grocery and liquor stores, right. Home improvement, cause everybody’s home looking around their house and, and wanting to do, um, projects to their home, uh, health and fitness, I think.

So think Peloton and their apps and, and, um, even meal prep services like blue apron. And, um, I was just reading about, um, something called the lipstick effect. So affordable luxury beauty items. Um, this is when people are buying, um, they’re spending money, small indulgences during recessions and economic downturns. Um, and the lipstick effect is that those companies that are, um, the produce, the produce that, um, those products will be more resilient during an economic downturn and then the industries that will falter. And again, we’re no, we don’t, we don’t take any sector beds, but, um, but we certainly see that there is, um, that there’s been a struggle in retail, in travel and hospitality, including airlines, restaurants, and entertainment. So, and no one’s going to concerts or theaters or shows anymore.

Jennifer: Alright great. And I can relate to that home improvement. We’re actually redoing our kitchen, which was not on the plan originally, but after being, uh, you know, home for a long time, we started to see how much paint was actually peeling. Um, and actually it just didn’t really, I, I saw it at the Peloton bike. There’s like a 12 week wait, where to get that. So, yeah. All right. Good insight. So, um, the next question, uh, for George is, will the U S experience negative interest rates? Do you think?

George: Hmm that’s that question has been around in the press for awhile. Uh, the easy answer. No.

Now let’s go for a little bit longer answer. So why don’t we think that, uh, there’ll be negative interest rates, quite frankly, a fed chairman Powell several times has stated negative interest rates are not part of the federal reserves, a strategy right now, right? Further fed governors have said the same thing. And in fact, even beyond the right now, there, there are so many other, uh, strategies and stimulus, uh, levers that they can call that negative interest rates are really not top of top of the list right now. They’re not even on the middle of the list. That is a very, very, um, uh, dramatic move. And look, if the federal reserve governors and the fed chairman are saying, they are not expecting negative interest rates, I’m not going to counter them. They have a lot more information than I do. There is some implications for lower interest rates.

And he has said, look, we’re not going to raise interest rates for a long period of time. So what does that mean? We need to think about how we can get income. I mentioned, you know, getting paid to wait, right? So treasury rates are low. You think about the financial planning, take a look at your mortgage rates. And maybe we want to think about rebalance refinancing, but that’s really where a corporate bonds, municipal bonds, high quality corporate bonds, convertible bonds, real estate, dividend growth. Those are all paying you, uh, paying a dividend, paying you income while you wait. So, uh, I think negative interest rates is a great, uh, great thought, uh, in terms of, uh, it gets a lot of press and a lot of headline, but I don’t really see it as part of what we’re going to be experiencing here in this, uh, in this recovery, uh, anytime soon. So yeah, never say never. And, you know,

Jennifer: Um, alright, so this question, I will be a familiar I’m I’m sure. So this question is, um, if we expect to see more volatility in the fall or in the future with a potential second wave of the virus and an upcoming election, should I go to cash?

Meghan: I can take this one. So, um, we do not market time. Um, and we do not take a short term approach in CLA with client portfolios. We, if you’ve been with us for a while, you know, our strategy, the way that we work with you is, is a longterm relationship. Um, the thing is with going to cache it’s, it’s not just one decision to do that. It’s the decision of when to get out, it’s the decision of when to get back in, and then also what you’re going to get back into when you buy back in. So it’s not, it’s not black or white, it’s not really easy. Um, and if you are concerned about risk, you can talk with your portfolio or your, your, uh, financial advisor. And we can, we can certainly talk about pulling some pulling back out of equities, but having cash on hand, it should already be part of your financial plan. Um, we don’t want to be forced to sell things when the market turns down, and this is all part of a part of our overall rebalancing strategy. So, um, I don’t know, George, anything you wanted to add to that, but, um,

George: Yeah, right. So I would, I would agree, Megan, in terms of, you know, when you are, when you’re thinking about going to cash, hitting the button, and you were, you were eliminating every other opportunity or, you know, the infinite number of opportunities for return, right? You were making a binary decision and that’s what you’re doing. Uh, when we think about rebalancing and our asset allocation, if someone has a 50, 50 are our portfolio systems are set up to allow for some flexibility, right? So that 50 50 can go down to, I think about 50, 50, 50% equity, 50% bonds just in the general realm. You know, it can go down to 40%. You can go up to 60%, right? If you’re not feeling comfortable with what’s going on in the market. And we think about cash as part of a, you know, part of your overall financial planning, everyone should have some cash and cash liquidity there.

Uh, but there’s, you know, talk to your wealth manager, talk to your advisor about, you know, what maybe I should, instead of going from 50 50, maybe it should be more of a 40, 60, or maybe other people are saying, you know what? I want to take the opportunity. I want to increase my cash, my, uh, my equity allocation, but you’re making that decision of going to cash alone is, is really, really a tough one. Um, and it’s, it’s, it’s not something we advocate it’s really, you know, you, you are eliminating a lot of opportunities for recovery in that regard, but let me, let me talk about this too, because it is an emotional, you know, Megan mentioned it, you know, there is a lot of emotion around the what’s going on right now. There is a, there are a lot of headlines it’s, you know, it’s very, very difficult to be able to handle the day to day, minute by minute.

I mean, Megan talked about, you know, what industries are going to do well, and which ones are going to falter. How many of us have, uh, I, I iPhone watches or Apple watches, right? Every minute, every second, you get the watch, you know, pinging on your, on your wrist. We weren’t seeing that 10 years ago, quite frankly, if we had to go through this webinar 10 years ago, or 20 years ago, the technology just wasn’t even there. Right? So we don’t know where things are going to be. And there isn’t just an immense amount of opportunity and, uh, and, and growth that can come from this. And I think about the innovation and the technology from, you know, from the health sector as well, kind of going forward. So going to cash is a really tough one. It’s worth the discussion. If you really feeling that kind of risk tolerance to have you got to have that discussion and just don’t go in alone. And that’s really where we come in is as part of your, as part of your financial team.

Jennifer: Yeah. Really good reminders. Um, all right. Switching gears a little bit. Um, what are your thoughts on real estate investing as a result of the pandemic?

George: Yeah. So let me, let me take that as if I may, Megan, and you can jump in too, as part of our, uh, you know, our, our, our portfolios, we do on real estate. As I said, we use a global real estate fund. It’s about 60% us, about 40% international. And within that, it has, uh, commercial real estate industrial real estate. Uh, it has, uh, some residential apartment buildings, um, manufacturing. So, you know, housing has actually been doing quite well because people, interest rates are low mortgage rates are low. Housing has been fairly strong. Housing starts have been picking back up. Uh, you know, people are talking about commercial real estate, uh, being negative. You never know what’s going to happen in the commercial real estate market. You know, if you’ve been to our office, if anyone’s been to our office in, uh, in Boston, right across the street, uh, you know, we’re at the corner of clarinet and Boylston, there’s a big office building 500 Boylston.

And when I started out and my wife worked in that building, uh, mass financial services was there, Houghton Mifflin was there. Uh, Keystone investments was there and a number of other law firms were there. Now the two biggest tenants in that building are Wayfair and DraftKings, the online vetting, uh, sports betting company, all the others are not there anymore. So there’s where there’s, there are always some opportunities you think about Amazon and FedEx and ups. Uh, they’re going to need warehouse space. So you’re starting to see some warehouse space, uh, pickup, uh, the, you know, the trend may be for manufacturing coming back into the United States to enhance our supply chains. And so manufacturing factory, we may see a pickup in that. So again, it’s hard to just kind of put the blanket real estate, won’t do well, uh, into kind of that bucket. So, uh, you know, we do, you really do want to have some real estate in your portfolio and we take a global approach and a diversified approach. Uh, Megan, your thoughts on that, or

Meghan: You said it perfectly everything I was thinking,

Jennifer: Well, maybe you can take this question. Um, we only have a few more minutes, so we’ll probably just get to a couple more, um, will there be additional fiscal stimulus, do you think? And what are your thoughts on that? If yes, yes or no. So, um,

Meghan: And the expectation is that there probably will be more stimulus, although we don’t know what that’s going to be. There’s a lot of levers that could be pulled, um, could be tax cuts or, um, there’s, there’s a lot of different options, but yeah.

I think that it’s probably necessary to infuse a little bit more cash into the, um, into the economy in order to come out of this crisis healthy and everybody ready to get back to work on the other side of it.

Jennifer: Um, easier question now. Um, what do you both I’ll do both of you, what do you both read and watch to stay informed?

George: Megan I’ll defer to you?

Meghan: Well, I don’t really watch much other than Sesame street these days, but when I have the time I read the Wall Street Journal or the New York Times.

George: Okay. And Sesame, Street’s not bad. Right. Excellent. Uh, everything I learned everything I learned, I learned in kindergarten. Right. Uh, I read Barron’s a lot barons if you, you know, if you don’t have a lot of time Barron’s or she comes on Saturdays, uh, is just a fantastic summary of what’s going on. Um, in the, in, in the economy and global markets, uh, read the wall street journal as well. I follow, uh, uh, some, some of our research analysts that are out there from state street and BlackRock. I follow a couple of, uh, folks, uh, Scott Grannis, who’s a retired economist and he writes from his porch overlooking the Pacific ocean. Uh, and, uh, Brian Westberry is another one who has another economist for first trust, who have I followed him for about 20 years. So, uh, I find he’s, he writes very clearly and succinctly on, uh, on some topics. So yeah, I’ll, I’ll read anything, uh, and, uh, just to try to try to figure out some different insights, uh, and sometimes what do I watch, um, you know, it’s hard not to watch, uh, sports, uh, even on reruns. It’s, it’s always great to watch the Patriots continue to win Superbowls even in reruns. So.

Jennifer: Yeah. Yeah. Alright, good. Um, we have a lot of questions still to be answered, but, um, we are at a time. Um, so just as a reminder, if we did not get to your questions today, um, we will have someone on the team either get back to you. And if you wrote anonymously, um, we will do a fall, some kind of follow up to the entire, um, client, um, group. So, um, thank you, Megan and George, for those insights on, um, the markets and the economy and what’s happening. Um, I’m hope that everyone found that extremely beneficial. I did. Um, again, we also will be having a recording for you sometime next week. Uh, we thank you again for joining us today and have a great evening.

Thank you. Thank you.