Market Insights and Year-End Tactics for a Strong 2024

Are you ready to close out the year on a profitable note and hit the ground running in 2023? This episode's your golden opportunity! Our conversation navigates through the changing tides of the markets, considering the encouraging swing in the bond market and unyielding strength of the economy. We delve into the curious case of the elusive recession and analyze the role of COVID in driving global inflation trends. As we contemplate the idea of a 'return to normal', we share crucial insights on how this could impact your financial portfolios.

The second segment of this episode puts the spotlight on strategic tax planning for 2023, especially beneficial for those contending with hefty medical expenses this year. We discuss the merits of harnessing IRA distributions and making the transition to a Roth IRA. The potential for tax loss harvesting in the current market and opportunities for qualified charitable distributions and 529 plans funding for potential state tax benefits are also up for discussion. We alert you to the possibility of unexpected taxes from mutual funds and equip you with strategies to sidestep them. We wrap up this chapter by pondering over the impact of money migrating from mutual funds to ETFs on capital gains distributions.

The final leg of our talk today explores recent market trends and the promise of a year-end rally. We dissect the Federal Reserve's tightening cycle and potential rate cuts, with insights from none other than Mark Carney, who shares his experiences from steering two major central banks. We also weigh the effects of rate hikes on Main Street versus Wall Street. We end on an optimistic note, highlighting the extraordinary progress in vaccines that could revolutionize the prevention and treatment of various diseases. Please note that the podcast's availability, the disclaimer about our opinions, and the importance of considering risk and investment goals are covered towards the end. So, tune in and let's step into the future of investment together!

** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice.

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Transcript

Alan Eppers: 0:00

And now introducing Mr Keith Lanton.

Keith Lanton: 0:04

Good morning. Today is Monday, November 27th. Last Monday of the month of November Hope everyone had a fantastic Thanksgiving break and they need too much and didn't do too much. Shopping Friday was Black Friday, of course Leads to a busy weekend. Today is what's known as Cyber Monday and tomorrow is Giving Tuesday. So, as we approach the end of the year, today is the last conversation we're going to have in the month of November.

Keith Lanton: 0:36

We will take this time to focus on some year-end planning, especially as we approach the end of November, and some things that you may want to think about doing you can only do through the end of November, such as 30 days that you would require to avoid a wash sale rule. So we'll go through a whole checklist of what you may want to think about for year-end financial planning. This year, I think, is more ripe than many other years in the past to take advantage of opportunities to do planning, as we've seen some big moves in concentrated stocks and we've seen a lot of selling and losses in bonds over the last few years. So Brad's talked a lot about tax law selling in bonds and this year I think the opportunity is even more positive than it's been in the past. Also this year we've seen a lot of large capital gains distributions from mutual funds, even though the funds themselves may not have had stellar years, and we'll talk about why and what strategies you may want to employ to minimize the tax liability. There are opportunities, things that you can do this year, here and now, to position yourself favorably for April 15th of next year and that window is closing, so we will be talking about that. We'll also be talking about the financial markets, the overall market, what the backdrop looks like For the markets and what barons' take is on things going forward. And then we'll talk a little bit about what barons call the golden age of vaccines and some reasons to be optimistic about disease and disease prevention and some of the developments taking place within pharmaceutical companies both in the United States and abroad.

Keith Lanton: 2:14

I will be the person this morning talking about both the equity and fixed income markets. Brad this morning has some things that he's working on. Let's talk about where we are before we talk about some year end strategies. Here we are year end and we've seen the bond market finally just recently slip into positive territory as yields have come down, as inflation has come down, and we've had another good year in the equity markets, and that's predominantly because the much predicted pullback recession slow down that most major economists and Wall Street firms were predicting has not come to pass. And we can take a look now that the year is coming to a conclusion and look back and perhaps analyze why the very smart folks who had been calling for a recession, at least to this point, have not gotten it right. They've been pushing back their expectations and one day they may be right, but at least at this point good news is is that we've had inflation coming down and we've had jobs remain strong, we've had the economy remain strong, we've had the consumer remain strong and something we've talked a lot about.

Keith Lanton: 3:20

So over the weekend there was an interview with Jan Jan Hatzis, who is the top economist at Goldman Sachs, and he was giving his thought process again Monday morning quarterback, so to speak process and why we have not seen a recession here in the United States that was predicted and why we seem to be sticking the soft landing, and why he thinks now that in 2024 we will achieve a soft landing. He says that, as we've seen, we already have proof of concept that significant disinflation can be achieved without a substantial weakening of the labor market. That's not something that folks were saying, you know, just six months ago. And he goes on to say and, furthermore, in large part due to rent, which is creating a situation where rent has been coming down and rent is a lagging indicator, a lag statistic. So the expectation is is that the rent component of CPI will continue to come down. So markets have baked into the cake, so to speak, the probability that rent will continue to decline and the big component of CPI. So he's saying that there's a good chance that CPI will continue to look good in through 2024. And how CPI looks as important, because that's something that the Federal Reserve is carefully using as a metric in terms of what they're going to do about interest rates and interest rate policy.

Keith Lanton: 4:42

The dominant story, he says, in the last several years has been the COVID cycle. There's been a lot of talk about excessive fiscal policy or central banks asleep at the switch and whatever else you may want to ascribe to the inflation that we hear in the United States and throughout the world experience. And so he goes on to say the overwhelming story is that COVID's fingerprints are seen everywhere across the economy and across the world. And he says it's this fading of the COVID shock. That explains the initial inflation surge and the broader settling down of activity in something that resembles normality, and normality is an important concept. Barron actually talks about a return to normal, and we'll talk about that and why you may want to think about what a return to normal means for your portfolio. Back to this return to normality here and why that is important in terms of inflation and in terms of whether or not we'll see a hard landing. What's interesting, he says, is the extent to which there has been global inflation as a result of COVID and now there is global disinflation as a result of moving past COVID and the supply chain shocks that we all experienced Not to say that they're over, but they are diminishing and continuing to get better. In fact, this morning the Biden administration came out with some new proclamations regarding improving the supply chain, specifically for medicines, and getting those two folks as quickly as possible to make sure that we don't have a shortage.

Keith Lanton: 6:11

There's a wide swath of countries with very different policy responses to the pandemic. All saw big inflation, inflation spike, and now they're all seeing a significant improvement in the inflation picture. The one thing all these countries have is all experienced in huge disruptions thanks to the pandemic, and all of these countries have had a fading of those disruptions over time. He goes on to say the other key takeaway and it's a related one is that history hasn't been a particularly useful guide. At the peak of inflation, there were all these predictions about needing a deep recession to cool inflation, and those predictions have not panned out. Those views were formed based on past patterns of historical inflations and recessions, but those turned out to be not useful guides because those episodes weren't the result of global pandemics and the aftershocks thereof.

Keith Lanton: 7:06

One problem in general with reasoning from history is that we just don't have that many episodes to draw from, and that was the point recently that Chicago Fed president Austin Goolsby made as well. People are drawing from a shallow well of historical examples and each one is kind of different, and there aren't that many patterns that are frequent enough to approach a statistically robust history of patterns that would be indicative of what we experienced during COVID. So the one thing we have right now which is shown in practice is that you can have significant disinflation without a weakening of the labor market, and Goldman's economist John Hatzis is saying he expects that to continue in 2024, basically saying that the inflation that we experienced was unique as a result of the pandemic, and perhaps many economists incorrectly assume that past cycles, where you needed to break inflation by breaking the economy in terms of increasing joblessness and slowing the economy down, may not have been the correct model for this crisis and therefore this crisis is active differently. We're seeing that now and hopefully we will see this soft landing in 2024. And perhaps this is some explanation as to why what many had said would happen and many of us had Built into our assumptions of the future, of what may happen, based on those past past examples, we may want to revisit our thinking as we approach your end and how we approach our portfolios, which is a great transition into into what to do now that we are here at the end of 2023 with our investments, and how we might may want to think about going forward into 2024. So some thoughts on what actions we can take now that will have a meaningful impact in 2024, come April 15. And if we don't take these actions will probably look back and say we shouldn't have been so lazy come the end of 2023.

Keith Lanton: 9:06

So one thing you may want to do is take a look at your W2, your take a look at your check stub and see how much has been withheld for various taxes and make sure that you have appropriated enough income for your tax withholding. You still have a chance to make some catch up Contributions to your taxes, so to speak, and you may want to consider that if you've been under withholding and don't want to have a surprise come next year when you have to pay your taxes. You also may have some opportunities to manage your tax bracket. You may have some opportunities to limit how much income you do recognize in 2000 and 23 with respect to recognizing gains or perhaps recognizing losses, and you want to think about whether or not some actions that you take now might push you into a higher bracket. Or you might have some actions you could take, maybe by contributing more to retirement accounts or perhaps contributing more to charity, that might lower you into a lower tax bracket. Speaking of your investment portfolio recognizing capital gains, capital losses, to go through your portfolio and maximize your opportunity to have less taxable income.

Keith Lanton: 10:15

Review strategies to avoid wash sale rules. Wash sale rules say that if you sell a stock today, you cannot buy back a similarly identical security for 30 plus days. So during the course of the year you thought. You thought it took a tax loss. You sold security act and you just had to buy it back in 28 days and when you sold it initially had a big loss. But the stock went down even more. It started to go up and you bought it back. Well, that's a wash sale. You bought it back before 30 days. Therefore, you are not entitled to that loss. You want to take a look at that and see how that factors into your overall planning.

Keith Lanton: 10:50

Speaking of wash sales right now it's November 27th. If you have a position that you do have a tax loss on, but you perhaps want to hold on to that position, you think it's still a good stock or bond. What you could potentially do is double up on that position now and then sell the initial lot before the end of the year, because today is November 27th. If you wait 31 more days from today, you have until December 28th, so there's still time if you do want to double up. Obviously, you're doubling up your risk in the interim, but if you feel that the risk reward is appropriate, that may be a strategy you may want to consider as you go into your end. You may want to look at or talk with your financial advisor about rebalancing your portfolio. Once you want your portfolio to look like going forward, we'll talk about how a lot of portfolios perhaps have got out of alignment as a result of market activity this year.

Keith Lanton: 11:40

Retirement planning ways to reduce taxable income may want to fund your retirement accounts whether that's a 401k, whether that's an IRA, roth account, solo case setting up retirement accounts lots of opportunities to potentially reduce your taxes. You may want to contribute to a health savings account if you're eligible to contribute. You've got till December 31st to get those accounts fully funded. You may want to fund Roth accounts for your children. If your children had W2 income in the year, then they can contribute to Roth accounts up to their W2 income or up to the max allowed for a Roth investment. You may want to take a look at your IRA accounts and, depending on your tax situation, think about whether or not it makes sense this year to convert to a Roth account. Also great time to review the beneficiary designations on your accounts and make sure that folks that you want to get the money if anything were to happen to you, are the ones who would actually receive those funds. You may want to make sure that, if you're of eligible age, that you make sure that you take the appropriate distributions from your retirement accounts before your end, and for those who are participating in social security and medical care, you may want to review your benefit elections there. For Medicare, make sure you take a look at, make sure you're choosing to enroll in the appropriate Medicare gap or Medicare Advantage plan, if appropriate, during the Medicare window.

Keith Lanton: 13:20

When it comes to wealth transfer and legacy planning, this month is a good time to think about whether or not you should be making any annual gifts. If you have children in college or going to college, thinking about funding your 529 plans. If you are perhaps charitably inclined, one charitable consideration would be to elect a qualified charitable distribution directly from your IRA. We'll talk a little bit more about that and, as we approach herein, you may want to think about conducting a family meeting to discuss your overall family finances, to discuss the family mission, to discuss what it is that the family is doing on a holistic basis to preserve and to transfer wealth within the family, and to make sure that everybody's on the same page and understand what the plan is and what the expectations are, so that everybody is rowing in the same direction.

Keith Lanton: 14:14

Other considerations if you've had a high medical expense this year considering and you may want to consider an IRA distribution that's above the required minimum to fully utilize the lower income tax bracket that deducting all those expenses will likely put you in, and if you don't need the funds but you've got all these medical expenses, then you might want to think to yourself hey, this is a good year to recognize extra income. Perhaps it makes sense, because I have all these medical expenses, to convert my IRA into a Roth IRA and be able to use up some of those tax losses or expenses that I'm entitled to write off that I wouldn't be able to otherwise for my medical expenses. Now, brad's talked a lot about it and reemphasize this is a year where there's been continued carnage and fixed income in bonds, meaning many bonds are still down for the year, so excellent opportunity to do some tax loss harvesting because of those recent losses In terms of gifting for clients who are in the age range for required minimum distributions. Making a qualified charitable distribution I said I'd get a little bit more into detail on this Also be known as by the acronym of a QCD, can be wise. Qualified charitable distributions allow individuals who are 70 and a half or older to donate up to $100,000 from an IRA directly to a charity reducing taxable income. Also, beginning this year, individuals over age 70 and a half can fund a charitable remainder trust with a one-time $50,000 contribution from an IRA. The biggest benefit is that you're not paying income tax on the distribution while you're still fulfilling the annual distribution requirement. That's huge and you're also satisfying a charitable commitment.

Keith Lanton: 16:01

Talking about 529 plans, thinking about funding those 529 plans, make sure you take a look at your individual state and see if your state offers a tax benefit from your state income taxes if you are to contribute to your 529 plan. Also take a look at how your state is structuring those benefits. Some states offer a benefit and some states, if they offer those benefits, offer it to each spouse. So, for example, if your state allows you to take $2,000 off of your state income taxes if you make a 529 contribution, your state may also allow your spouse to take a $2,000 contribution, even if you're filing your taxes jointly. If you make that contribution $4,000 just in one of the spouse's names, you're only entitled to a $2,000 distribution. But if you create two separate 529 accounts, one with the mom as the owner and the other with the dad, then you can take advantage of the full $4,000 deduction from your state income taxes. Also, if you own your own business, the only employees are you and your spouse. Could just be you, could just be your spouse but you can't have employees outside of the husband and wife. Well then, you can create what's known as a solo K, a UNI-K or an individual 401K all the same lingo for the same thing. This is for 1099 sole proprietors. You'll be able to take advantage of the 2023 contribution limits, which are $66,000, plus a $7,500 catch-up. If you're over age 50 and you get to these limits by contributing is both the employee and Employer. You put this all together and you looking at a potential deduction off of your taxes of 73,500 dollars. So very powerful tool if you are Self-employed, or self-employed with just you and your spouse.

Keith Lanton: 17:54

Okay, thinking about your end, thinking about some of your Individual holdings. One of the holdings that you may want to think about, that might be a legacy holding, are your mutual funds, and this year, some of your mutual funds could be delivering an unexpected tax. It so, again, we've got to be mindful of this and we have to prepare for it. So, for example, you may have purchased the JP Morgan tax-aware equity fund. This is just an example. The name here implies that tax-aware that going forward, you probably won't be experiencing a lot of capital gains distributions, because this is a fund that's going to be very mindful of Limiting capital gains distributions, given its name the JP Morgan tax-aware fund Saley. That's not the case this year. This fund is going to announce a capital gain distribution of approximately 21% of its value, and this is immaterial whether or not you personally have a 21% gain in this fund if you own this fund. So, thinking about this mutual fund, if you invested a hundred thousand dollars Two weeks ago and this one's going to declare a 21% gain, you are going to, on your taxes, get the 1099 that says that you owe $21,000 in taxes because you own this fund.

Keith Lanton: 19:08

This, this large capital gain. And this isn't the only example. Morningstar recently found that over 200 funds have announced capital. This gains distributions of more than 4%. So we need to think about a if there's anything we can do to avoid this. So, for example, if you bought this fund recently, perhaps you want to exchange out of it or sell it and and therefore Avoid this capital gain before the record date. This is something you can do by speaking with your advisor. If you really like the fund, Well, what you could do is perhaps exchange out of it or or or move out of it and into a similar ETF and talking about that wash Sale rule by buy it back 31 days later. But these are the strategies that you need to employ now in order to avoid taking these large Capital gains distributions that these funds are going to declare.

Keith Lanton: 19:59

Why is it that mutual funds this year, in a year where gains were very concentrated, are Experiencing these large capital gains distributions? And it's because there is a significant amount of money moving out of mutual funds and into ETFs. So mutual funds still have a 19 trillion dollar footprint, but investors are Moving more money out of mutual funds and moving funds into ETFs. So take, for example, this JP Morgan fund this year, about the 50% of its assets have left the fund. So what happens is the fund manager is having to sell securities. If the securities the fund manager is having to sell have a Large gain, the fund manager has very limited choice. If all the positions that he or she holds are gains and therefore, as a result of these distribution requests from folks who are redeeming their shares. They must sell these appreciated securities and they pass those on to you, the investor.

Keith Lanton: 20:54

So if you do own mutual funds in a taxable account, take a look at what those distributions may or may not be and Take the appropriate action around those potential gains that you may experience. You may be able to take additional losses. You may be able to sell bonds we just talked about the selling of bonds and buy back a similar bond and offset those gains. There's lots of strategies you may be able to employ, but if you do, are unaware and get blindsided, you will have missed a golden opportunity to reduce your exposure. All right, so now we've got all these thoughts and plans about what we can do to minimize our taxes and set ourselves up for a Great 2024 and as we think about that, we're going to start this morning by talking about what is taking place in financial markets this morning.

Keith Lanton: 21:38

Right now, futures are pretty muted after the Thanksgiving break that we all experienced in the significant run-up that preceded this. So this morning we're looking at Dow futures are down now about 50 points. S&p futures are down seven. Nasdaq futures trading lower by about 19 points. This current disposition puts the cash market on track for a modestly lower start at the opening bell, coming off of four consecutive weeks of gains. It won't be regarded as surprising, simply because the extent of the gains since late October has fostered a sense that the market is due for a period of consolidation. However, the resistance to selling efforts and the additional gains that continue to be achieved have also created some seasonal Momentum and a fear of missing out on further gains that have continued to provide support to the market.

Keith Lanton: 22:28

The corporate news flow coming off the weekend is limited, but that will change as the week progresses. For now, most the attention is on retail sales activity during black Friday, small business Saturday and now cyber Monday. In other developments, israel and Hamas followed through with hostage prisoner releases over the weekend and Perhaps the largest economic news driving markets today is that China reported a 7.8% year to date decline in industrial profits in October. When that came out, that the tilted futures a little bit more negative in the overnight session. Today's loan economic release is the October new home sales report. We're expecting that to come in at about 720,000.

Keith Lanton: 23:07

Overseas markets in the Asia Pacific region began the week on a lower note, while India's Sensex was closed for the holiday. Most European markets are in the red down about two tenths of one percent. The exception is Spain which is up three tenths of one percent. Some other general news this morning Israel and Hamas, I mentioned looking to extend that pause. Mastercard reporting that Black Friday sales were up two and a half percent year over year. I mentioned earlier that President Biden this morning announced some new actions to strengthen America's supply chains and lower costs for families. New York Times is reporting that the data from China indicates that respiratory cases are from known viruses, not a new novel pathogen has some had feared. Some of the kids were getting sick in China. Bloomberg reporting that House Intelligence Committee Chairman Mike Turner saying that Ukraine and Israel aid are unlikely to be passed before the end of this year. President Biden is not going to be attending the COP28 climate summit in Dubai.

Keith Lanton: 24:10

Reuters is reporting that Beijing has advised large shareholders to refrain from selling commodities. Gold this morning up about $10 an ounce, holding over $2,000 an ounce. Gold has been quietly appreciating the last month or two and silver has as well. Silver making a bigger move this morning, up almost 2%. Up $0.42 this morning to $24.76 an ounce. Oil, down this morning about $0.90 a barrel at $0.74.62.

Keith Lanton: 24:40

Some individual companies in the news crowned, castle Symbol, cck. This is a company that operates cell phone towers and fiber optic networks. Elliott management has taken a stake in the company and says that they feel that there are measures that can be taken to enhance shareholder value. This stock has fallen significantly over the last year. Crown Castle is up about 4% this morning on that news. Other companies in the news Octa Symbol, okta is down this morning on a downgrade from Jeffries Keva. Teva upgraded to buy from neutral at UBS. It's up about 2%. Mondeli Symbol, mdlz up about 1%, upgraded this morning at RBC. Capital Markets and Footlock are down about 4%, downgraded to sell from neutral at City Group.

Keith Lanton: 25:27

And an interesting statistic this Black Friday Wall Street Journal reporting that Amazon's delivery business is now larger than UPS and FedEx. Quite an amazing statistic in such a short period of time that Amazon has been able to build up such a vast delivery network. Other events to look forward to this week I mentioned new home sales coming out this morning. Tomorrow we get the Case Schiller National Home Price Index for September Looking for that to jump about 4.2% year over year. Thursday sales force announcing third quarter results after the close. Also on Thursday, the Bureau of Labor Statistics releases the core personal consumption expenditure price index, known as the PCE. This is a gauge that Federal Reserve says is their preferred inflation measure. The expectation is for an increase of 3.5% year over year, which would be a decline from September's rate of 3.7%. So just a few more minutes just to talk about financial markets. Brad won't be joining us.

Keith Lanton: 26:35

The market last week we saw the Dow up about 1.3%, the S&P was up about 1%, nasdaq also up almost 1%. In a stretch of holiday short trading, the stock market does seem to have some real momentum behind it. Barron says, momentum that could turn a Thanksgiving up, turn into a full blown year end rally. They say part of this is just simple seasonality. Since 1950, the S&P has risen 70% of the time from Thanksgiving through New Year's Eve, for an average gain of 1.7%. Even better news is the momentum is even greater when the market has a strong run heading into Turkey Day, with the S&P up 8.1% in the month leading up to the holiday, which is its best stretch since 1999. Well, when the market had momentum going into Turkey Day, well, the index went on to gain another 3.7% through year end. Markets also are pending their expectations and perhaps this rally on the fact that they are starting to reconsider the Fed's tightening cycle. The Fed last race rates in July and markets are coming around to the idea that that was the last increase of this rate hiking campaign. That has generally been good news for the S&P 500, which has gained 17% on average in the year after the last increase in cycles, with the S&P 500 mostly unchanged since the Fed's last rate hike in July. It suggests that perhaps the market has some making up to do, perhaps putting a damper on some of those thoughts and expectations.

Keith Lanton: 28:10

Barron had an interview with Mark Carney and he is the only person, at least in recent history, to run two central banks. He ran the Canadian central bank and the Bank of England, so two major economies, one on each side of the Atlantic. So Barron asked him what his thoughts were about interest rate policy going forward and he said that the Federal Reserve bias he believes remains to tighten first and to loosen second. In other words, the Fed is more likely to look for science to tighten than they are to loosen at this point. He does acknowledge that rates have reached a level where they're starting to do their job, but he feels, the Federal Reserve and himself both feel he thinks that they're going to need to stay higher for longer in order for these high rates to do what the Fed intended them to do when they raise these rates. So Mr Carney, while not necessarily expecting any more interest rate increases, does expect the Federal Reserve to have a bias toward remaining elevated in terms of rates and having a bias towards knocking inflation down versus a bias towards stimulating the economy. So Wall Street has the potential to be disappointed in anticipating rate cuts.

Keith Lanton: 29:28

In the economy section of Barron's, they talked about the fact that rate hikes have not had the effect, at least to this point, of really knocking Main Street. And they have had a effect on Wall Street as concerns about higher rates of certainly at times had a meaningful impact on markets and may continue to, as we just mentioned based on comments from Mr Carney. But nevertheless, the reasons behind the fact that Main Street has been able to whether the rate hike storm has to do with some unique factors here in the United States. One of those primary factors is that we here in the United States have an economy, specifically a housing economy, that is largely built on fixed rate mortgages as opposed to adjustable rate mortgages and most of us and I think we talked about this see the last week of the week before, but 60% of homes in America have a mortgage. That means that 40% don't even have a mortgage and 90% of those homes that have a mortgage have locked in rates below 4% or better. This is in stark contrast to places like the UK, canada, australia and New Zealand, so we are more immune to the effects here of the rising rates than perhaps some of our friends overseas, who are more tied to rising interest rates in terms of their servicing of their debt and therefore the US is perhaps better situated to withstand or the US consumers better situated to withstand the effects of rising rates than some of our overseas friends.

Keith Lanton: 31:02

Finally, I talked about markets now returning to quote-unquote normal after COVID and Barron suggesting that markets may return even more to normal as 2024 progresses, 2023, while COVID faded into the rearview mirror. We did certainly have some unusual effects in the sense that a handful of stocks known as the Magnificent 7 Apple, meta, not Facebook anymore Amazon, netflix, google, tesla handful of stock, microsoft providing the outsized performance or returns in the markets this year, and Barron suggests that as we return to normal, perhaps, as interest rates settle in that we may see a widening or broadening out of participation in markets and we may see some of the High flyers that we just discussed take a breather, not necessarily drop in value, but perhaps not generate those eye-popping returns we experienced this year, and therefore this is a time of year where we want to think about, perhaps, whether or not we've become overly concentrated in some of these high flying stocks. These high flying stocks perhaps have become an asset class unto themselves and we may want to think about the diversification. Just to put a number on the extent of the concentration, the Magnificent 7 stocks between January 1st and October 31st have returned 53% compared with 1.2% for the other 493 stocks in the SNP 500. So Some broadening out, maybe healthy and maybe something that you may want to take a look at as we approach year-end. Another thought in terms of your year-end planning and finally, leave you with the thought what I think is Up, you know optimistic news about, about humans and health and longevity.

Keith Lanton: 32:55

Barons ran a feature story, a Title the golden age of vaccines. Is here what it means for you. There are 258 vaccines in development as of 2020 and a recent study found that 406 billion in direct medical costs were saved due to routine child vaccination of US children born between 1994 and 2018, and pharmaceutical companies aren't resting on their laurels. They are currently developing everything from personalized cancer vaccines to vaccines that prevent developing world diseases like malaria or tuberculosis. Scientists are even testing vaccines to prevent a virus be believed to cause multiple sclerosis in some people. Someday, vaccines could treat acne, protect against peanut allergies and even prevent heart disease or help treat Alzheimer's disease.

Keith Lanton: 33:45

Consider cancer, which is a hotspot in vaccine research. Preventative vaccines against hepatitis V B and HPV virus, which were approved in 1981 and 2006 Respectively, have reduced rates of liver and cervical cancer. Vaccines have traditionally been used to prevent infectious diseases, but scientists have been researching therapeutic vaccines to treat people who are already sick, including cancer patients. Last year, moderna MRNA and Merck MRK conducted a trial in which personalized vaccines that use genetic sequencing To target specific mutations in each patient's cancer cell help flash the recurrence rate for metastatic melanoma. The two pharmaceutical companies plan to try the same approach on lung cancer and other carcinomas.

Keith Lanton: 34:31

One of the most powerful things in human health is the human immune system, says a murder Moderna president, stephen Hoge, himself a physician. He says we now understand cancer as a disease that emerges later in life, principally not because of mutations, but because the immune system gets less effective in controlling it. The wave of new vaccines is part of a sea change in medicine. Vaccines use the body's own Immunological response to fight off disease. They tend to have fewer side effects than drugs, despite the recent surge in vaccine hesitancy among the new, among the new ways of Solving for many of these diseases and drug companies are spending big on vaccine development. New technologies have made it possible for them to develop vaccines more quickly and more Cheaply in the past, and if you're looking for specific companies that are focused and in plea Driven to succeed in vaccine development, those would be companies like Sonofi, sny, glaxo, smith, client Gsk, pfizer, pfe, moderna, mrna, biontechs, bntx and Merck MRK, to name a few that were mentioned in this article. That's everything I've got.

Alan Eppers: 35:49

Thank you for listening to mr Keith Lanton. This podcast is available on most platforms, including Apple Podcast, Spotify and Pandora. For more information, please visit our website at www. heroldlantern. com.

Sophie Cohen: 36:07

Opinions expressed herein are subject to change and not necessarily the opinion of the firm. Past performance is no guarantee of future results. The information presented herein is for informational purposes only and is not intended to provide personal investment advice. It is important that you consider your tolerance for risk and investment goals when making investment decisions. Investing in securities does involve risk and the potential of losing money. The material does not constitute research, investment advice or trade recommendations.