High Interest Rates

Lori and Lisa explain the negative impact of rising interest rates on both the bond and the stock markets. They discuss the current rate environment, the relative attractiveness of stocks and bonds, and why the Federal Reserve is likely to keep rates higher for longer.

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Transcript

[00:00:00] Lisa: Welcome to nest egg podcast. This is Lisa James and I'm here with my partner, Lori Zager. We are part of 2x wealth group and we're a team at Inglesin Snyder, an independent registered investment advisor. 

[00:00:19] Lori: So today we're going to talk about a quarterly letter that we posted in conjunction with this podcast.

[00:00:25] Those of you that listen, know that we regularly blog and write. and, and do podcasts that are associated with them. And this podcast is associated with the third quarter letter that we recently wrote. And because it was a quarterly letter, this is really a market oriented podcast. Listen up, and we'll try not to make it too complicated or boring.

[00:00:46] You know I'm always going to put something saucy in there, so you'll have to listen.

[00:00:54] The S& P 500 peaked at the end of July. It was up 19. 5 percent by the 31st, surprising us and everyone. It was particularly remarkable given that it was up... Less than 1 percent on the Friday before Silicon Valley Bank failed in March. So the performance really came after Silicon Valley Bank failed and then the issues with First Republic.

[00:01:17] And I think that even surprised people more. So we kind of did a debrief and went back and said, Why did this happen? You know, why did these out, it outperformed so much? And why didn't we anticipate a run in the market? 

[00:01:30] Lisa: Um, I think the part of the reason is that not everybody anticipates. strength of the possible response to something like a bank failure.

[00:01:41] So one of the things that happens that sort of the average person doesn't know about is the federal reserve and the U S treasury come in with big guns to provide liquidity to the market around a bank failure, because the last thing you want is any kind of contagion where a run on one bank leads to runs on other banks.

[00:02:05] And it did happen. Yeah. And it did happen a little bit because, you know, it's spread from Silicon Valley Bank to First Republic. Yeah. So, so there were a few, so they wanted to make sure that this problem didn't expand. And so the details of what was done are the treasury infused 550 billion of liquidity into the market.

[00:02:29] And on top of that. The Federal Reserve set up a bank term funding program, which added 300 billion to the market. 

[00:02:37] Lori: And not to be outdone by the Federal Reserve, the administration said, Oh, we've got a problem with oil prices. We will drain the Strategic Petroleum Reserve. And those of you that know me personally, know that that has been a bugaboo of mine for some time.

[00:02:54] And although... You know, in the scheme of things is just maybe the straw that breaks the camel's back. It certainly was enough to help the supply and cause energy prices to come down a bit. And it took away any optionality and, you know, I've been worried. What do you mean by that? In other words, later on, they didn't have it in their quiver to use.

[00:03:17] They had, they had shot their wads, so to speak. Yeah, 

[00:03:22] Lisa: you said you were going to be saucy there. Okay, so anyway, I think, I think there are some really simple things happening here, which are a little supply and demand and. We all know what incredible cash infusions did to the market in 2020. In 2021, we saw the market just run away and had a tremendous rally despite, you know, the economy being slow and inflation being an issue.

[00:03:48] And once again, in 2023, when the government rushes to the rescue and puts a lot of money into the system. People tend to buy stocks. People use the money, they buy stocks, and the stock market goes up. And that's... There are all kinds of reasons 

[00:04:05] Lori: as to why. You know, we heard the power of artificial intelligence and the recognition of, you know, this new technology and the economies of scale with it.

[00:04:13] And, yes, we believe in artificial intelligence, and it's already being used all the time. Just Google anything, and that's artificial intelligence. But I think people were looking for reasons to explain why the market was up and looking for things to buy with all of this money sloshing around. Right. 

[00:04:33] Lisa: And then you 

[00:04:33] Lori: had a consumer that's been quite strong because the job market has been strong.

[00:04:38] And those of you that have read and listened to us know that we think that, you know, any type of a problem that we're going to have, and we believe you're going to have one. Uh, you will come through it with relatively low levels of unemployment just because we don't have enough people. 

[00:04:53] Lisa: Right, and you know, the thing is that about two thirds of the U.

[00:04:57] S. economy is based on consumer activity. So it actually is a pretty strong support system if people have jobs and they have money to spend. 

[00:05:07] Lori: The problem is that you're starting to see around the edges things kind of leak. You're seeing consumer delinquencies go up, you're seeing credit card balances go up.

[00:05:16] So, spending is still there, but when you look 

[00:05:20] Lisa: at the service. Yeah, the thing is that now they've spent a lot of the extra savings they had from all of those COVID funds that were distributed. So, that was holding up consumer spending quite a bit for a while. And we have one other negative turnaround, which is now people need to start paying back.

[00:05:37] They're student loans. So there was a moratorium for a couple years where student loan payments didn't need to be made and That also put more money in people's pockets and now those payments are required So we do think that consumer spending is going to slow somewhat going forward So 

[00:05:54] Lori: we wrote in this, our second quarter letter, we, it was called Trees Don't Grow to the Sky, which I got accused of being Wall Street y with a comment.

[00:06:04] Lisa: It actually isn't Wall Street. It's a crop reference.

[00:06:11] Lori: Exactly! But I said then is that a small number of technology stocks, seven, they're called the Magnificent Seven, had really been the big reason why the market had gone up. And when you, when you took those seven, a way that if you looked at the equal weighted S& P 500, it really hadn't done much of anything.

[00:06:28] And we said that one of two things in our podcast associated with that was going to happen. Either the market was all going to come down, or the market can hold up relatively okay, but our guess was the magnificent seven would underperform and other things would start to take 

[00:06:44] Lisa: over. Especially energy stocks.

[00:06:47] That's 

[00:06:48] Lori: been a big focus of ours. Back to that shooting their wand. It's really interesting to see what kind of what's happened. You know, the first part of the year, technology really did outperform communications and technology. And it's still this, this quarter is still up a little bit more. But in the third quarter, the S& P was down.

[00:07:08] The total return was down 3. 3 percent and energy was the best performing sector up 12. 2%. And it was one of the two sectors that were positive for the quarter. It was, there were only two that were positive. And by the end of the third quarter, the market was down about 6. 6 from the July highs, and it's still down from the July highs as we record this.

[00:07:29] It's up a little over 15. Lisa and I did something kind of interesting today. We just kind of went back and we said, okay, you know, if you look at these technology stocks that have gone up so much this year, If you look at an ETF of technology, or look at an ETF of semiconductors, or look at an ETF, which is a division of technology, a subset of technology, or you look at software stocks, you know, if you, instead of looking at them on a one year basis, what if you looked at them on a two year basis?

[00:07:58] Now, this is highly dependent on what day you look at this, because we've done this ad nauseum, and, uh, get sort of different results. But when Um, things are going so against you when you're invested in energy and it's underperforming in the first part of the year and technology is going crazy, you're like, wait a second, you know, and the temptation among some managers just to chase, as I said in a podcast, those that know you know me, no, I don't have a bit of FOMO in me, 

[00:08:28] Lisa: FOMO being fear of missing out.

[00:08:30] So I didn't 

[00:08:31] Lori: fear missing out. And when you look at these things on a two year basis, it's really interesting. What if we look, the, the technology stocks have been down about 11 percent on a two year basis. 

[00:08:42] Lisa: Well, since the beginning of 2022. Yeah. So if you took the downturn in 2022 and then looked at the recovery in 2023, over that time period from January of 2022 to today.

[00:08:56] Yeah, they're down about 11%. Today's October 16th. 

[00:09:00] Lori: And interestingly, financials, which have been just awful this year, and it's not been a group that we've been particularly in love with, they were down 10 percent on that basis. So they actually outperformed technology, which I think would surprise.

[00:09:15] Everyone, particularly, it, it 

[00:09:16] Lisa: did us. Well, um, not really, because, I mean, financials performed incredibly well in 2022 compared to technology stocks. Yeah, yeah, I mean, banks were done, banks were down about 10 or 11 percent, technology stocks were down like 35, so they really, they really outperformed in 2022.

[00:09:36] Non bank stocks 

[00:09:37] Lori: have done, we own a lot of non bank kind of stocks, and they actually are up, so. It's somewhat stock and group, subset group 

[00:09:45] Lisa: specifically. If you own the money center banks, you're not as bad. And Visa and Mastercard and companies like that, you're not nearly as bad off as if you owned all those regional banks.

[00:09:55] Because those were the banks that were really hurt after the failures that occurred earlier this year. And it makes sense that they'd 

[00:10:02] Lori: be hurt. I mean, their real source of making money is by borrowing short with their deposit. base and lending long. And so when you've got a yield curve that's inverted, by that I mean the short term rates are higher than their long term rates.

[00:10:18] By what I just said, they're borrowing at higher rates and lending at lower rates. Well, no, but the 

[00:10:23] Lisa: problem is actually slightly different because they don't borrow at the higher rates because those regional banks... Pay well below market rates for their deposits and what occurred is a, is a well known term called disintermediation, which is that people who had deposits at their bank that were earning half a percent or one percent, you know, when they started realizing they could get four and a half, five, five and a half percent in a money market fund.

[00:10:48] They took their money out of the bank and put it in a money market fund. And, and that is what is really harmful for banks because then they have to sell their longer term bond holdings that they own. And all of those are losing, they're all losing money, you know, because the, if the bond yields go up, bond prices go down and bond yields have gone up a lot over the past year.

[00:11:12] So if they have to sell those bonds, they lose a lot of money. And, and so this is, you know, a very bad situation for regional banks. Because regional banks don't 

[00:11:20] Lori: have other ways to make their money. That's, that's what I was trying to explain. It's something called net interest income. And basically what they do is they usually, as I said, borrow on the, on the short end or fund their, their growth on the short end and, and, and.

[00:11:37] grow by making loans on the long end. But as Lisa says, they haven't been able to do that for a number of reasons, but one of them is because of people taking their money. Another one is they just lose money doing it, so they're not going to do it for that reason either. So the regional banks are in a little bit of a problem.

[00:11:57] It's even more acute than that. Some of them have got floating debt that's coming due, so... That's that's a little bit of a problem if they've got to refinance their debt at higher rates. That's also a problem So something that we have attempted 

[00:12:12] Lisa: to clear. So yes, generally we avoid regional banks And don't try and play in in a rebound scenario because we don't really think it's rebounding anytime soon We looked at energy on 

[00:12:24] Lori: a two year basis and although energy hasn't done that.

[00:12:27] Well this year It's up. It was up It did really quite well last year was the only sector that really did well. And you know, , when you go down 10%, you have to go up more than 10% to get back to even. 

[00:12:43] Lisa: So, um, an easy way to understand that is if if you had a hundred dollars and you lost 50%, you'd have $50.

[00:12:51] And if you want your $50 to go back to a hundred dollars, it needs to go up a hundred percent right? Because. It's the math is not equal on each side of that equation. So if you only went up 50 percent from 50, you'd have 75. And that would not get you back to where you started. So whenever you look at the market and it's down X one year and up X the next year, if those numbers are the same, you're really not back to where you started.

[00:13:18] And that's 

[00:13:19] Lori: what really happened with the technology stocks. They're kind of up as much as they were down last year, but that doesn't help. Yeah. It doesn't make you 

[00:13:26] Lisa: whole. It wasn't enough to make you whole. Yeah. Yeah. Exactly. We wanted to go into, um, some of the reasons that the market turned negative in the third quarter and it, it's kind of related to what we were talking about with the banks.

[00:13:41] I mean, there's a higher interest rate problem that doesn't only affect banks, it affects stocks. So during the quarter, the third quarter, the benchmark for looking at treasury yields is the 10 year treasury. It's the most liquid traded treasury instrument. You know, it's a benchmark for mortgages and all kinds of loans.

[00:14:02] So if you look at that, the yield on the 10 year treasury increased from 3. 8%. to 4. 6 percent in the quarter. And even though that doesn't sound like a big number, it actually is a big number in the bond market. And it causes dollar prices of bonds to fall. And actually, during the third quarter, we now, we, we now have a negative total return for the U.

[00:14:30] S. Aggregate Bond Index. And that's an index that almost everyone who's like a, You know, 30, what have you, portfolio, a lot of people are invested in the U. S. Aggregate Bond Index. And so now we've had two years in a row where that performance has been negative. And this is a really new thing for people.

[00:14:50] And I think a lot of people felt like last year was anomaly. And what we're seeing is, in fact, this problem is continuing and there's a really good reason for it. And that is that the U. S. deficit has really grown. The U. S. federal debt has really grown, mostly because of what happened during the COVID crisis and the amount of money that was actually just Put in the mail and also the amount of money that the Federal Reserve put into the system.

[00:15:22] What happens when the government has to issue more bonds is there's a lot more supply of exactly the same thing. It's not like they issue a different kind of tenure note, they just issue more of it. And, and what happens is if you have a lot more than what your typical buyers are, you have to go find More buyers, and a lot of times those additional buyers want a higher yield, and so that is a part of the reason why interest rates have risen.

[00:15:52] And there's another reason that Lori loves to talk about, which is the actions of foreign investors. 

[00:15:57] Lori: Well, foreigner foreigners have not been buying our our bonds. They've been buying gold Instead of buying our bonds, we could always count on basically people wanting to buy our bonds because we were the reserve currency of the world.

[00:16:11] They had to transact things like oil in dollars, and so they've always had dollars while they're finding ways not to transact. Uh, in dollars. And they are no longer buying dollars. In fact, they're selling dollars. But there's, I guess I want to say there's different reasons interest rates can go up. And depending on what those reasons are, it affects the stock market slightly differently.

[00:16:34] And by that I mean, interest rates can go up because inflation is higher. And that actually can have a positive effect on the, on the stock market. 

[00:16:45] Lisa: Although it didn't last year. You're 

[00:16:46] Lori: right. It depends on how long. Yeah. Go back and look. If people become afraid that, and they want to do something with their money, they will, the stock market usually, usually will react for some time positively to higher inflation and then, and commodities in particular.

[00:17:05] If interest rates are going up because of a supply demand reason, that's, that's more 

[00:17:10] Lisa: problematic. And also, it's not just supply and demand in the sense that there are political issues now affecting who's buying our bonds. Like, the foreign buyers aren't always not buying bonds because there's something else they want to do.

[00:17:24] China actively does not want to buy U. S. bonds and wants to own less of them. I mean, they've been selling U. S. bonds because, you know, they're trying to move away from The United States being the center of power and also we have a trade war and the less that we buy from them, the less they need to buy our bonds because they don't have dollars.

[00:17:43] Lori: And unlike the Japanese who fund their own deficits with their own people, buy their bonds, not everyone in the United States wants to buy our bonds for a host of different reasons. They may not want to buy their bond, our bonds because. They think interest rates are going up, or because they're worried about inflation, or, you know, 

[00:18:05] Lisa: there's, you know...

[00:18:06] Or they'd rather buy real estate? Right. You know, or they'd rather buy stocks? So people are always kind of looking at what is the relative value of buying bonds versus buying equities. And so we wanted to talk about a concept that people use in order to make that decision. It's not a perfect equation, but it is an interesting thing to look at.

[00:18:32] The equity risk premium. The 

[00:18:34] Lori: equity risk premium is, looks at the earnings yield. On the S and P 

[00:18:40] Lisa: 500 and explain what that earnings yield is. It basically 

[00:18:43] Lori: is the earnings of the S and P 500 divided by the price of the S and P 500. And you subtract from that, what a 10 year bond yield is. And that is called the equity risk premium.

[00:18:58] And so in other words, you want to be paid more than you get paid in a bond to take the risk of owning stocks. And if the equity risk premium isn't high enough, you might say, I want to own bonds because I'm not being paid to take the 

[00:19:15] Lisa: risk of owning equity. Right, so somebody might say, Wow, I can buy some corporate bonds and I can earn five and a half percent.

[00:19:22] And, you know, that wouldn't be high risk, you know, high yield bonds, just, you know, regular investment grade bonds. I might want to do that because I'll get my five and a half percent. And I don't have to worry about it. Whereas if you buy an equity, you know, the price could go up or it could go down and you need to be compensated.

[00:19:41] You need to be compensated for that variability. 

[00:19:45] Lori: So recently, at least in the quarter, it looked like the equity risk premium, at one point, I think it was, it was, there really wasn't any. You weren't getting paid anything to hold stocks. So that caused people to go more into bonds. And the question is, is that a good decision?

[00:20:04] Well, it's unclear. How long are the bonds? Are we going to have inflation or not have inflation? I think everybody in the world that ever has heard me or knows me knows what I think. Um, but anyway. 

[00:20:15] Lisa: Um, well, I just, actually what matters is not whether we have inflation, but whether the inflation level is higher than what people expect today.

[00:20:22] Because bonds have a real yield, which is the yield of the 10 year minus in the amount of inflation expectation. It's not just 

[00:20:32] Lori: where current yields are. It is, it's. Layered on top of that where they expect them to be in the 

[00:20:39] Lisa: future, right? And so and so basically what happens is if you buy a bond today based on a certain assumption of Inflation and inflation is what you think I think inflation expectations now are 2.

[00:20:54] 9 percent or so Yeah, so if inflation ends up being 3 percent over the time period That you own your bond, then, you know, you're getting a real return. If your bond yielded 4. 6%, you get a real return of 1. 6%. So if everything works out, that's what you get. If in fact, inflation. Falls during that time period, your actualized real yield would be higher.

[00:21:21] If your inflation actually goes up during that period, then your real return would be lower. And so, you know, these things are always unknown. People just make projections based on their own expectations. So, it's not as though we think you're buying a bond today because you think inflation is going to change.

[00:21:42] You buy it based on, I think this is going to be the average. Which is around three. Now, if you're wrong, the average is around four or five. It wasn't such a good investment. If you're wrong and the average was around two, then that was a good investment. So, and that's really what people think about.

[00:22:01] Lori: Delusion, as I like to call it, that if they put a thousand dollars in a bond and they hold it for ten years and they get a thousand dollars back, that they haven't lost any money, but that's just a bunch of you know what. Pooey. It's pooey, is right. Pooey. It's, it's, it's, it's baloney because if, if you could take that thousand dollars and buy a horse today, And, 

[00:22:26] Lisa: you know, a horse would be 10 years older.

[00:22:27] I don't think that's a good analogy. You need to buy something that doesn't depreciate your age. 

[00:22:34] Lori: You're worried that the horse is going to be dead by the end of the year. Exactly. Okay, we're not going to buy a horse. No. If you start, you know, start with a thousand and end with a thousand. It, it 

[00:22:45] Lisa: doesn't matter.

[00:22:46] Well, first of all, your thousand dollars isn't worth a thousand anymore because there was inflation over the entire time period. that's 

[00:22:51] Lori: what we're trying to make. But there is inflation, and so as a result, it's going to buy less. And so you have lost purchasing power. Yeah. Even though you have all of your money back.

[00:23:03] Right. 

[00:23:04] Lisa: Plus your investment return. Right. What you're doing is you're hoping your investment return, which is the coupon that is being paid, is going to keep up with inflation over that time period. And that's 

[00:23:13] Lori: not historically been the 

[00:23:14] Lisa: case. It depends. In inflationary environments, you don't have that. Oh, in inflation.

[00:23:17] No, no, no. But like over the last 20 years, it's worked out pretty well. Over the last 40 years, it has worked out. Yeah, yeah. But now we're in a slightly different environment. 

[00:23:25] Lori: Well, that's what we are. And we have good company on that one. Everyone is very anxious for the Federal Reserve to be done with hiking interest rates, because I think a little, I think some of this hope is misguided, to be quite 

[00:23:39] Lisa: honest.

[00:23:39] It's completely misguided. Listen to what the Fed says, that's what, that's what I say. People like to say, oh, I know what the Fed's going to do, even though they're not saying it, and they've been wrong for an entire year. But I 

[00:23:51] Lori: think also the Fed is, is, you know, the Fed The Fed sees the inflation problems that we see that cannot be, that they can't control.

[00:24:01] And so they're trying to do what they can do. You know, it's like you tell your kids. You know, you be a good person, you know, let the other person take care of themselves. It's kind of, the Fed can only take care of trying to slow the economy. What they can't do, is they can't do anything about energy prices.

[00:24:20] We have our administration to... 

[00:24:24] Lisa: Well, we have the world to thank for that too, you know. Well, now, now is what we're talking about. Now we have Saudi Arabia and Iran and lots of people to thank for energy prices, right? And our policy. 

[00:24:41] Lori: But anyway, we won't go into that. And no, I guess I'm a climate change person.

[00:24:45] I don't, I do believe in climate 

[00:24:47] Lisa: change. Yes, and we believe in solar energy and electric cars, too. So I 

[00:24:52] Lori: just, I want to be clear, but I, you know, I also believe in facts. The other thing that's a problem is, you know, We are not reproducing ourselves. The developed world is not reproducing ourselves. And as a result, you have relatively high levels of employment.

[00:25:07] That's good for society, but it was also causing some weight pressures because we don't have enough people and you're seeing it in all kinds of things. Uh, UPS just paid a huge amount, a huge increase to their workers. Um, there's been strikes at GM and Ford, um, and you're just seeing increases 

[00:25:27] Lisa: all over the place.

[00:25:28] And. That's one of the things that tends to worry policymakers because the main concern is that if your unions are stronger and even if wages have gone up, if they think that inflation is going up more, they keep coming back and saying, well, we need to plan for the inflation that's going to happen. And it causes.

[00:25:53] What's called a wage price spiral, which is what you don't want to have happen because ultimately those wage increases Don't really help the workers if they're actually pressuring prices higher by virtue of their higher wages. It, like, becomes this terrible treadmill where your purchasing power doesn't actually improve, but prices keep rising.

[00:26:17] And so, you know, the Fed is very conscious of things like that. And, you know, one of the real, real issues here is the Federal Reserve has two mandates. They have to try and keep inflation under control, but they also have a mandate to keep employment up. So this whole time period that the Fed has been raising rates and talking to the markets, they're, they're really trying to kind of thread a needle where they slow the economy without creating a deep recession, without creating a lot of unemployment.

[00:26:50] In order to tame... Inflation and not hurt workers and, you know, that takes a while to play out. And so we don't really, especially given the demographic 

[00:27:01] Lori: challenges that they have, 

[00:27:03] Lisa: right? So, so, so that's why they're higher for longer. They don't want to keep ratcheting rates up and throw us into a really severe recession, but they also don't want to backtrack right now because it's unclear that inflation has really been tamed and they actually haven't quite achieved their targets anyway.

[00:27:21] And, and we have a great chart if, uh, you want to look at the associated blog, which is our. Our third quarter letter, which shows that inflation has tended to come in waves, and the Federal Reserve has looked back to the 1970s quite often to see that, you know, that period had a lot of inflation and people thought that it was beat, and a Federal Reserve chair during that period cut rates and inflation came raging back, and our Federal Reserve Chairman Powell has no desire to do the same thing.

[00:27:55] Lori: So, other things that the Fed can't control is geopolitical risk, which we, which is just, I don't know what to say other than sad and unfortunate, but the Fed can't control it, and that coupled with the higher debt levels that we have in the United States, probably, you know, cause a great deal of concern for the Fed.

[00:28:16] Markets don't move in straight lines. We are continuing to be cautious. Interest rates are still restrictive. Equity valuations are not cheap. We talked about the equity risk premium today. Geopolitical risks are increasing. And the Fed tightening is taking longer to slow the economy than usual, but we think most of the negative effects are still ahead.

[00:28:40] Lisa: We've said before that if we do have a recession, um, we think it will be different. Really mostly because of the population and worker issues. I mean, we have a lot of things going on at the same time where we're limiting immigration. Our birth rates are lower, the economy is still growing. So we do have more jobs.

[00:29:03] And, and as long as that's true, uh, even if you have a slow down, it's likely that a fair number of workers will remain employed. And part of that dates back to the. Pandemic where it was such a problem for especially restaurants and retail stores to get workers that when they have workers that are good, they're going to hang on to them.

[00:29:28] And I think in the past, people just said, Okay, I'm laying off 25 percent of my workforce and that's it. And because they always knew they could get back in and hire people. I think that process has really changed. And, um, and I think that creates a little bit more job stability and that That means that unemployment is less likely to ratchet up really dramatically.

[00:29:51] Lori: Lastly, I'm going to quote two people that I admire a lot. One is Jamie Dimon, who is the CEO of JP Morgan. And he said in his recent earnings call that this may be the most dangerous time the world has seen for decades. He talked about we have a war in Ukraine, a war in Israel, and paralysis in our own government.

[00:30:14] And then I read an article penned by a gentleman by the name of Howard Marks, which will be less familiar to you. He is a very famous investor. And he says, we've now come to an end of a 15 year low period in interest rates, investors who life expectancy is likely to be longer. 

[00:30:33] Lisa: And he's referring to Ozempic there, because he thinks these weight loss and diabetes drugs will actually help people tremendously with kidney ailments, that these, these drugs may actually help extend, extend life expectancy for people.

[00:30:50] Lori: You know, so these investors that are going to be around longer are just beginning to realize what that means for returns and asset allocations. And he says returns will likely be lower and asset allocations will need to change. We agree with that. We are not as old as Mr. Marks, but we have been around longer than most investment advisors.

[00:31:09] And so... We don't believe that this is a blip in interest rates. I think his comment about a sea change is right on. Things have really changed. That's it for today. 

[00:31:26] Lisa: I'd just like to remind you all that if you want to visit our website It is two x wealth.ingles.net and uh, we have all of our blogs and podcasts on there.

[00:31:37] If you wanna look around and you can quarterly letters too and quarterly letters. You can look around and see other things you might wanna read or, or listen to. Until next time.