Hi folks. Brett Girard here, Portfolio Manager at Liberty, coming to you with another Liberty market update. This one for the month of December 2020.

I’d just like to first take the opportunity and wish you and your families a very happy New Year. And with that, the disclaimer. Please give this a read.

***NOT SPOKEN***

The information presented herein is for informational purposes only and does not constitute financial, investment, tax, legal, or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this article should consult with his or her advisor. The information provided in this recording has been obtained from sources believed to be reliable and is believed to be accurate at the time of publishing, but we do not represent that it is accurate or complete and it should not be relied upon as such.

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Okay, so let’s turn our minds to December 2020 and more broadly the entire year. What we’ve put up here is, is we call it the snapshot of 2020, but it’s the four major indices—stock market indices—that we follow. So, the TSX, the S&P 500, the NASDAQ’s, and then the STOXX Europe 600, all down the left-hand side.

Those bars in the red represent the maximum drawdown over the course of the year. And that’s the peak to trough level, from—we’ll call it the highs of February through to the lows of March. And there you can see that across the board, 30 percent to 37 percent was the drawdown from peak to trough. So that’s quite significant, anything north of a 20 percent drop is a bear market. So, we were in a bear market across all four of the indexes presented.

Then on the green what you can see is the total return for the year. So, from the depths of March, back up to where these indices started the year, through to where they finished the year, is represented by the green. So here we can see the best performing name was the NASDAQ, up more than 46 percent from its initial value at the start of the year. The S&P 500 was up about 17 percent. TSX was up around 5 [percent]. And then the STOXX Europe 600 was up—actually down—about 2.3 percent.

So varying performance on the way up, although similar on the way down. And NASDAQ’s really the one that sticks out because of the significant return last year, but if you actually look at the course of the year—and we’ll do that next—you’ll see that the finish, into the end of 2020 through Q4, wasn’t that strong.

So here, just breaking down the specific performance of the NASDAQ, we can see that from the beginning of the year through to mid-February, NASDAQ was up about 9 percent. From there, it fell 30 percent and that was that drawdown from peak to trough. Then from the lows of March, it was up about 62 percent all the way through till about the second of September.

And that last little part that you can see right at the end before the sort of top is met in the month of September, the NASDAQ really went straight up. Almost asymptotic, and that is what we call a blow-off top. So, from there you can see that it fell back down into the month of September, and through to the end of the year, and then forward into the couple days into January 2021. We can see it’s only up 6 percent. Now, 6 percent in a normal year would be a great return, but we compare that to 62 percent in the prior two quarters, it seems like something’s up.

So, what’s the case? What’s going on?

Well, here you can see the big contributors to the NASDAQ performance is the FAANGM stock. So, this is your Facebook, your Apple, your Amazon, Netflix, Google, and Microsoft. And here—this really paints the story—that big black line across the solid, or the solid black line across the middle of the graph is zero. So, any color line above that is a return that’s positive, any color below that is a return that’s negative.

And here what you can see is of the FAANGM of those stocks, really only one name is positive over the last three and a bit months. So, this just gets back to the point that we’ve been talking about throughout the year, that it’s really important not to chase performance. And if you looked at the NASDAQ in Q2 or Q3 and said, “You know what? This is where I have to be,” and you ended up shifting your funds over there, you’d be subject to some underperformance and really some flat performance in Q4.

So, it’s important not to chase, it’s important to have a portfolio set up so that you can be diversified across a number of different sectors. If any one sector does well, you’ll benefit, if any one sector drags behind, in our view, that’s a buying opportunity.

Now let’s move on to 2021.

The bottom line here is that uncertainty is high. We’ve characterized with the two opposing arrows that there’s some positives and there’s some negatives on the horizon, and it’s yet to be seen how things are going to shake out going forward. So, headwinds to the market; things that might cause the market to lose value from where we are today. Number one, the increasing and continued COVID lockdowns. And number two, uncertainty around the timing and the quantum of fiscal and monetary stimulus. And then three and four together we’re increasingly seeing headlines around the weak U.S. dollar and inflation as something that might hurt stocks, in particular, going forward.

On the positive side, if we think about the impact that the vaccines could have in terms of reopening and getting a lot of those sectors that have been struggling, back on their feet. We’ve talked a little bit about the tech stocks, but we’ll have to see if the tech stocks can regain their footing into 2021 and continue to propel the market like they did last year.

And then the IPOs are the Initial Public Offerings, and the SPACs are the Special Purpose Acquisition Corporations. Those are really two mechanisms to take private companies public. And generally speaking, we saw a huge increase in both IPOs and SPACs through 2020—that’s a very positive sign for the markets because that means people are willing to take risk, and to go public with companies to try to get listed and have more liquidity for their shareholders.

The important thing I think for everyone to realize though, is that we’re not in a position to make a prediction, right? If we rewind to 12 months ago, I don’t think there’s anyone who could have accurately predicted the spread of COVID-19, the lockdown that followed, how the stock market reacted, or the fact that we had vaccines discovered in really less than 12 months before the pandemic became a big thing.

So, we don’t know what’s going to happen in 2021, and I don’t think anyone does. But, at the same time, it’s not about prediction, it’s about preparation. So, we have a plan to go forward. And the plan really revolves around protecting the downside and taking advantage of opportunities when they’re presented.

So really, if you think about the plan at a high level, it’s important for us to be balanced. And what that means is, you know, in the examples that we talked about we don’t want to have too many tech stocks—we don’t want to have too much of anything, right? If we start to get over our skis in any one direction, it exposes us and exposes the portfolio. So, we’re going to stay away from the flavor of the day, we’re going to continue to invest in high-quality free cash-flowing businesses, and we’ll be able to hold those for the long-term.

So from here, let’s just walk through a high-level depiction of the asset classes and how we think about all of those as components of your portfolio.

Outlined here you’ll see our four major asset classes that we invest in. So, we have equities, corporate bonds and preferred shares, inflation-protected bonds, and cash. Now, these four different asset classes act in concert together to, A. Preserve capital, and then B. Grow ahead of inflation over the long term. So, let’s take a look at each.

Starting with equities, it’s important when we think about equities or the stocks that we’re going to buy that we want to have varying inflation sensitivity across sectors. So, what that means is that we don’t want to have all of our eggs in one basket. If we’re in a deflationary environment, like we were in last year with falling prices and people hoarding cash, you want to be in technology. If we transition into an inflationary environment, with rising prices, then financials will be preferred because, generally speaking, interest rates are going to go up and financials will benefit from that.

We want to think about different geographies. So, there’s going to be a different level of economic activity in the U.S. versus Europe. In Europe, for example, last week there were mortgages in Denmark that were issued at zero percent for 20 years. So, Europe is still in a tough, low-growth environment. Still tons of opportunity there, but that’s the case. Whereas if you look at the U.S. and the trillions of fiscal stimulus that should be coming down the pipe in the next little bit, there’s likely going to be more growth in the U.S. and probably in North America.

And then really it comes back to what we always talk about—we want long-term, free-cash flow, and dividend growth. That’s going to remain the focus for our equities, that’s what we’re going to stick in through different market cycles, and we don’t really need to reposition the portfolio based on underlying economics. Because those companies that we want to buy—that have the free cash flow and the dividend growth characteristics—they continue to do so through most, if not all, economic environments.

Moving on, we have the corporate bonds and preferred shares. So, really here these types of securities are in your portfolio for the return that’s provided through the income. So, whether it’s quarterly, monthly, or annually, there’s going to be some dollars flowing into your accounts, and that return’s increasingly important as you get closer to or into retirement. But from a corporate bond perspective, we employ a ladder. So, what that means is we have some bonds that are very short-term, that are going to mature soon; some bonds that will mature in the medium term, so say five to 10 years; and even some long bonds that will mature sometime in the next 30 years.

And the idea there is bonds are primarily driven, excuse me, the pricing of bonds is primarily driven by interest rates. So, if interest rates rise, then we want to have bonds that are going to mature so we can reinvest that capital at higher rates of interest. If interest rates fall, then we want to have bonds that we won’t need to take back the capital, or it won’t mature for a long time, so that we can continue to have the rate of interest that we have.

And then from a preferred share perspective, the rate reset preferreds will do very well if we do happen to have rising interest rates. And what happens there is they have a mechanism where, every sort of five years, the value of the amount being paid out—that dividend or that coupon—will reset based on an underlying rate. So, if we see that the Bank of Canada and the Fed in the U.S. start to increase interest rates, then these preferred shares with a rate reset function are going to do quite well.

Beyond that, we have the inflation-protected bonds. And again, if inflation does become something that is an issue into 2021 or beyond, then we have the inflation-protected bonds in the portfolio, which will pay not only a coupon based off of a certain amount prescribed at the time of issuance but then also an additional amount based on inflation.

These, excuse me, these securities are really important to maintaining your purchasing power. Inflation effectively means that products and services around us cost more. And if we have bonds that will increase in the payout as inflation happens it’s going to maintain your purchasing power, it’s going to mean that you will still have the ability to go out and purchase products or services.

And then last, but not least, we have cash. So, cash maintains value in a deflationary environment, so when the markets are falling, cash is a very helpful tool to have, because it doesn’t lose value. If there is inflation, cash is not going to have as much purchasing power, but at the end of the day we want to have some cash, and the amount of cash that we have will vary from time to time. We want to have it on our books because it dampens the volatility.

If we think back to that max drawdown—the maximum drawdown from those slides that we looked at earlier—having cash in your portfolio, limits the amount of drawdown that you have. And at the end of the day, if we can decrease the drops in the portfolio by holding cash, and then take advantage of buying opportunities like we did in September and October and November, then we can take that cash and put it to work for us when it makes sense.

So that’s kind of a high level of the different asset classes that we hold. The equities, the corporate bonds, the inflation-protected bonds, and the cash, and really I hope you can get an understanding that these all work in concert together. And it’s much like an orchestra in the sense that we have different sections that are going to do different things depending on what the underlying economic activity is. But it allows us the opportunity to not have to make big bets, number one. And then number two it means that we don’t have to go and change what’s going on in the portfolio. So, it’s not as though there’s inflation happening or there’s deflation happening and we need to go and sell everything and buy something else. That, you know, from a timing perspective becomes very difficult. And then also from a tax perspective, every time you sell something, you have to split your gains with the government.

So, what we’ve tried to do, is we’ve tried to set portfolios up that can maintain—broadly—the positions over the long term. We’ll always need to tweak it and monitor around the edge, but maintain the positions over the long term, and do well through most, if not all, economic environments.

So, thank you for much for your time. We really appreciate you turning, tuning into these videos. If you have any questions, please reach out to your portfolio manager, or you can send an email to the email listed there: Contact@libertyiim.com, and have a great day.

Hi folks. Brett Girard here, Portfolio Manager at Liberty, coming to you with another Liberty market update. This is for the month of November 2020.

It’s been a couple months since we’ve done one of these. We’ve been working on figuring out the right technology to use the videos and share with you, but I think we’ve landed on one now. It’s called Vidyard. Some technology out of Kitchener, so always nice to be using some Canadian content.

Let’s get started.

So first we’ll just get into a quick disclaimer.

***NOT SPOKEN***

The information presented herein is for informational purposes only and does not constitute financial, investment, tax, legal, or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this article should consult with his or her advisor. The information provided in this recording has been obtained from sources believed to be reliable and is believed to be accurate at the time of publishing, but we do not represent that it is accurate or complete and it should not be relied upon as such.

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We want to make sure that we keep the lawyers happy and you’re more than welcome to read this, but the high level here is this is for informational purposes only. This is not investment advice, and if you do have any questions, please consult a qualified professional. Myself and the rest of the portfolio managers at Liberty would be happy to answer any of the questions that you do have.

So, 2020 in a nutshell. This is from January 1^st through to November 30^th. And, it’s quite the year. We can see the purple lines of NASDAQ, so that’s out in front in the lead with about a 40 percent return year to date. Next is the S&P 500, that blue line, up about 12 [percent]. The TSX is the orange line there, and it’s actually positive for the year, which is great. Below that, you can see the Dow Jones which is sort of that darker orange. And then struggling to make a positive return for 2020 is the Euro Stock 600. Still down about 5 percent for the year.

If we go into the next slide which you can see is specifically the performance over the last month. So, you’ll recall, it feels like a million years ago, but it was just the beginning of this month that—or I guess the beginning of last month now that it’s December 1^st—the beginning of November when the election happened. And there’s still some items to be sorted out, but it looks like Joe Biden—who is the president-elect right now—will be the president in the oval office as of January. So, the market’s reacted positively to that.

And then also we had sort of the trifecta of vaccine information. So first it was Pfizer, then it was Moderna, and then AstraZeneca. All reported about 95 percent efficacies with their vaccines, so those have sort of been the wind in the sails of the market. And here, what you can see is actually the opposite of the year-to-date returns. The European numbers, the green index there, that’s actually done the best.

And this is something that, you know, it’s hard to do in the short term, but we really want our clients and our investors to think about this because we think about it all the time.

When something’s doing really well, there’s absolutely potential for momentum and for something to continue, but often times what we see in the market is the mean reversion.

So, Europe’s, again, compared to the other industries, not had a great year, but in the past month has bounced back in a big way. So, this is, you know, when you’re thinking about allocating capital, “If you can go to where,” as Wayne Gretsky says, “the puck hasn’t been yet. We’ll go to where the puck’s going to go.” And sometimes there’s opportunity to have a little bit of a lift.

We actually—throughout the back half of October into November—were buying European equities. And we’ve continued to do that here and there in people’s portfolios. So, this is just an opportunity that the market gives from time to time, and we want to take advantage of it when it does come up.

On the next slide here, I just want to touch on real quick. With respect to the performance of the NASDAQ and in particular the S&P, it’s really dominated by tech. And here, what you can see is that not all things gold can stay.

So, in 2000 between Microsoft, GE, Cisco, Intel, and Walmart, that was the largest five stocks as a component of the S&P, represented about 18 percent of the index. And over that time, you can see that there’s sort of a downward trend up until about 2016, where those large companies lost the percent weighting that they did have.

Now, in 2016, trends started accelerating and it was the FAANG stocks that had sort of moved upward. Today we’re in around 20 percent of the S&P, now being dominated by Microsoft, Apple, Amazon, Alphabet, Facebook.

So, what happens is this kind of hides the actual performance of the market. When you have these five names that all, as a matter of fact, sort of benefited from the work-from-home trend, and did well this year, it looks like the overall market’s doing well. But if you drill down that’s not the case; there’s not as much breadth. At least there wasn’t until sort of the middle of October. We’re starting to see more breadth come into the market now, which means there’s more performance across sectors. So, utilities are okay, retail is coming back, consumer is doing alright, hospitality looks like it’s coming back. And all of this is on the backs of, you know, the hope that the vaccine is going to change things.

But just a word of advice or a word of caution, you know, when you’re investing in these big stocks—the biggest market cap stocks that are out there—there’s a million eyeballs on them at all points in time. And sure, you can ride the trend up, but as we’ve seen time and time again, the largest companies do not always remain, right?

If you think back to 2013, the largest company was Exxon Mobile. They’ve lost about two-thirds of their value since 2013 in the face of—let’s call it pressure—around fossil fuels as well as weak energy prices. So just keep that in the back of your mind if you have too much exposure to any of these big names, it’s probably something worth trimming back and thinking more about.

What we’re going to try and do with these videos is also answer questions that we are getting a lot from clients or specifically the clients are writing in about. So, if you do have any questions, please feel free to write in. We’ll keep your name anonymous, but often times if you’re thinking something, other people are as well.

So, one of the big things that we’ve heard a lot this year is, “How can the market be up when the economy is struggling so much?” And it makes sense to just sort of lay out—a fully functioning economy has three different components that all contribute to its strength.

So, first is the consumers, two-thirds of GDP is consumer spending. So it’s you and I out there, going to restaurants, traveling, spending on clothes—all those things that we normally do and may not have been able to do as much during COVID. And part of that is really a function of consumer confidence. So, if you and I are confident about our jobs and confident of our future, we’re willing to open up our wallets and spend money. If there’s not a lot of consumer confidence, then maybe people would be less inclined to spend. And that has significant flowthrough effects into the economy.

The next pillar is business. So, businesses, you know, they create the goods and services that are consumed by the individuals like ourselves, as well as other businesses both domestically and abroad. So, it’s an important component of GDP and then GNP, which is sort of looking at how a country is doing in terms of trade around the world.

And then the third pillar is government, right? Government’s supposed to be a redistribution mechanism where taking taxes from certain groups or certain companies, people, things like that, and then redistributing them to potential areas that need it more. They’re also intending to be, or intended to be a backstop for businesses and consumers in tough times.

So, when we think of the economy, like, yes, there’s definitely some struggles this year. The consumer is hurting. That’s sort of apparent if we look around and see the businesses that are shut down and things like that. From a—and this is a chart from the St. Louis Fed—here we can see unemployment. So, through coronavirus, we got up to about 15% unemployment in the U.S., it’s now down to seven and a half [percent]. Which is half as bad as it was in March, but still about double where we were from an unemployment perspective at the beginning of the year.

So, there’s a long way to go, and consumer again, and consumers are hurting from actual spending perspective, but then from a consumer confidence perspective. Because if your job is at risk, you might not be willing to spend and stimulate the economy.

Next, we can look at corporations. So here, we have the orange line, which is the most important, and this is corporate profits after tax. Here you can see if you look back in the financial crisis, there was a big drop at this—scale is not that strong—but in 1987 as well as 1974 there were drops. And obviously, here in COVID there is a big drop in corporate after-tax profits.

So that’s something to be aware of, and it’s really something that’s causing a concern in the market because what’s happening is corporate profits are dropping, but stock prices go higher. And what that means is valuations are becoming more and more rich, right? You’re having price to earnings multiples, and price to sales multiples grow, which as we know, again with that mean reversion, they cannot grow forever. So, we just need to be cognizant of what our dollars are being invested in, and what the underlying economics of those companies are like.

And so, you know, the consumer’s hurting, corporations are hurting, and how are we chugging along? How is the market doing what it’s doing?

Well, really here, this kind of is the one picture that speaks a thousand words. You can see the S&P index is that red line and then the blue line, which looks like it tracks very closely—and in our view’s not even a correlation, but actually a causation—it’s the central bank balance sheets from around the world. So here we’re plotting the dollars that the Fed in the U.S., the ECB in Europe, and the BOJ in Japan have injected into the market. And there’s a pretty close relationship between how the balance sheet has expanded, and how the stock market has gone up. This is something that we have to keep an eye on though because balance sheet expansion is not free. It comes at a cost as governments put more money in, they have to borrow more money. While interest rates are low, they can cover their borrowing costs just like you and I, but at some point, if interest rates do start to back up, then it’s going to be very significant costs on the backs of the governments, which is going to flow through and impact the social programs and other spending the governments can do.

So just an interesting chart. We’ll have to continue to keep our eye on this going forward. And you know, closer to home here in Canada, the Liberals unveiled a hundred-billion-dollar stimulus plan. It’s going to push 2020s deficit somewhere between 380 and 400 billion, and it puts our federal debt at more than 50 percent of GDP. So that’s a risky area. You know, you can understand the government’s position in the sense that they have to stimulate, and they have to get the country through this lockdown. We understand that, but we’re just saying that it’s not without consequence. When you stimulate this much and when you put all this money into the system, eventually you have to pay for it. You know, as David always says, “Debt doesn’t disappear.” And this is government debt which is going to have to get paid off either through higher taxes, through less social support, or some other mechanism that we’ll have to see what they come up with next.

So another question that we’ve been getting from the clients across the board is really, “What are you expecting in the stock market next month?” We’ve had sort of, you know, a really interesting 11 months, what’s the twelfth month of the year going to look like?

And from our perspective, you know, I think the thing to expect is volatility. And we’ve seen volatility throughout the year, but in particular, we’re going to see less liquidity, so less people are going to be trading as they start to go into the holiday season. Some people are going to take their gains and shut it down for the year. So, when you have less supply and less demand in the market, it can mean that prices can move more than they otherwise would.

We’ll probably see some rebalancing. So, what that means is that the stocks that have done really well, oftentimes from a risk perspective, investment managers will decrease the weightings of those. So stocks that have gone, you know, have had good years, will see some selling pressure as people try to take some of their gains. The flip side is we might see some tax-loss selling. So there, the stocks have done really bad, we might actually see even more pressure because people are saying, “Let me take this capital loss, and on Canada gains potentially some of my capital gains for the year.

One of the other trends that tends to happen in December is what’s called the “Santa Claus rally.” So, from our perspective, because you know we’re not trading the portfolio, this is really just window dressing. And with window dressing, what the portfolio manager is doing is they’re saying, “I didn’t hold a stock that’s done really well this year but let me put it into my portfolio so that when I report at the end of December, it looks like I’ve been smart, and I’ve been holding this company along the way.”

The other thing I think is that Congress is potentially going to pass some sort of stimulus bill before the end of the month. There seems like  some bipartisan conversation right now between the US between the Republicans and the Democrats, but the chances are it’s going to be more of a skinny bill which wouldn’t be as much stimulus as the Democrats potentially want. So that could have some impact in the market given the sort of correlation between government stimulus and what the S&P 500 has done.

At the end of the day, what we’re going to do is what we’ve been doing all year. We’re going to look for opportunities where there’s mispricing and potentially pull the trigger to increase our allocation to stocks that are trading, you know, below what we think is the fair value. But at the same time, we still want to hold a bunch of cash because getting into 2021—even if Joe Biden gets in—there’s still a lot of work, right? He’s not going to be able to flick a switch and change things dramatically, and the same goes for the vaccine. There will be vaccines coming, but it’s probably not going to be something that happens in the first quarter of the year. So, there is light at the end of the tunnel, but probably still some bumps along the way. And that’s why we wanted to have cash—to take advantage of any short-term opportunity.

As always, thank you very much for tuning in. We really appreciate you taking the time to do so, and if you have any questions, please reach out to myself, David, or Annie. Take care, bye-bye.

[Text Intro]

ANDREW BELL: Hi there. Welcome to Market Call. It’s going to Brett Girard of Liberty International Investment Management. He’ll take your questions on global stocks. 1-855-326-6266. Email us: marketcall@bnnbloomberg.ca – Just remember, the topic is Global Stocks Today. Always love that. Takes us around the world, talk about companies sometimes that you never really hear much about. Let’s check in on the markets though, before we get going with Brett Girard.

We have seen southern Nasdaq down a bit earlier. As of this morning, it was down around 5% already in September. Now the Nasdaq in later trading did turn up a bit. We sold up around 13 points. S&P 500 up around 18 points, last time I looked. The TSX 300 rallying a bit as well, around 35 points. So we have seen something of a turnaround in the Nasdaq and a generally positive tone for the other big industries.

We are joined now by Brett Girard of Liberty International. Brett, it’s great to talk to you. Global stocks obviously trading on the mana of—mana from heaven of low-interest rates. A sugar high depending on how you want to look at it. Are we headed for a fall, ultimately? Is this just an artificially inflated market?

BRETT GIRARD: Yeah, thanks for having me back, Andy. So, I think it’s important for us to not just look at today, but let’s look at the whole year, right? Let’s rewind back eight and half months, and if we go back to January, we started off the year quite strong. Between January and the middle of February, we were up about 5%. COVID was something that was happening in China and wasn’t really a North American or European issue. But then from there, it obviously did spread. And that brought the market down by about 35%, and that’s the fastest drop that we’ve seen on record in the shortest amount of time.

But from there, the central government, or the central banks and the governments around the world, they stepped up, and—through a very coordinated fashion with both monetary and fiscal policy—they moved a ton of stimulus into the market. And that brought us from our March 23 lows up 61% to the beginning of September to the beginning of this month.

Now since then, as you sort of said, we’ve started to teeter, and maybe a little bit of wind has come out of our sails. But we’re still, y’know, we’ve fallen 5% since the beginning of September, but if you look over the course of the whole year, we’re up about 7% when we look at the S&P from when we started.

So that’s where we are, but I think it’s important for investors to remember that we’re by no means out of the woods, right? If you think about what’s still in front of us and the headwind we still have to deal with—there’s no vaccine, right? We have a lot of noise and a lot of this and that, but nothing clear in terms of something that people can take to prevent this from happening. And at the same measure, y’know, no real treatment. There’s no clear communication from the governments in terms of what stimulus is going to look like over the long term, in terms of how much and how long, uh, it’s going to last for.

And then politically, you know, more broadly, we have the threat of an election here in Canada. In the US, we have an election that’s now less than 50 days away and is going to be potentially hotly contested. And then, within the stock market, valuations are quite high. Y’know, especially in certain sectors—and I’m sure we’ll get into that today—but then, just to top it all off (as if that wasn’t enough), we’re seeing instances of rampant speculation in certain pockets of the market. So there’s, y’know, as investors out there, you should be happy if you’re even or if you’re up a little bit this year. But like I said, we’re not out of the woods, and the next 6 to 18 months are going to be very critical for preserving capital. That’s really what people at home should have on their minds.

And from our perspective, there’s kind of three things to think about in terms of preserving capital. So one, y’know, forward returns are really a function of what you pay. So if you’re paying and you’re getting in at an all-time high, or you’re getting it in at a high price, that’s going to impact the returns that you can have over a period of time.

The second thing is that I think investors need to try to use time to their advantage. So if you’re in and out of the market trying to day trade, or use options that have a close expiration, time is working against you. If you’re trying to invest in a company and hold that company for a long period of time, then time and compounding are going to work with you.

And the last thing that I would just say is, y’know, it’s great to sort of watch the market go higher and higher. But if things do come off—and we’ve seen volatility throughout this year—if you don’t have cash that you’re sitting on, you can’t take advantage of these opportunities, right? So I would encourage people at home to have some cash on the sidelines so that if we do get a bigger blowup in September or October—y’know, any time in really like I said, the next 6 to 18 months—then they have the funds to take advantage of that. And the other thing with that cash is you should have a wishlist, right? You should think about these are the 5 or 10 companies I wanna buy, and when the price gets attractive, that’s when I’ll buy them. Not today at all-time highs.

ANDREW BELL: Mmhm. We’ll take a break. Brett Girard is taking your questions on global equities: 1-855-326-6266.