Elections and How They Impact Your Money ft. Phil McInnis

Are markets more volatile in an election year? Does the person or party in the Oval Office have any effect on my returns? Our financial experts Adam Cox and Kyle Cipperley sit down with Phil McInnis, chief investment strategist at Avantis Investors®, to find out how elections impact your money.

You can find more episodes of Common Cents on the Prairie™ on Apple Podcasts, Spotify, YouTube, Amazon Music, and on our website.

Watch every episode on YouTube, and subscribe to First National Bank's channel!
Follow First National Bank on Facebook
Follow First National Bank on Instagram
Follow First National Bank on TikTok
Follow First National Bank on X (Twitter)

Transcript

0:00

- You may have noticed, we have an election coming around the corner. And to help us unpack that, I'm joined by my co-host, Kyle Cipperley from my team who leads our investment group. And we're going to talk about elections and how they impact your money.[upbeat music] Welcome to "Common Cents on the Prairie," a podcast dedicated to helping you demystify the sometimes complex topic of money. I'm Adam Cox, head of Wealth Management for The First National Bank in Sioux Falls. We're a community bank based out of South Dakota. In this podcast, we share expert insights from around the country and stories from our local community to arm you with the tools you need to make better financial decisions. Because the truth is, the more we talk about this stuff, the better off we're all going to be.[upbeat music] Today we're joined by Phil McInnis. Phil is the Chief Investment Strategist at Avantis Investors. In this role, Phil oversees all marketing content developments surrounding Avantis' investment approach and meets regularly with advisors and institutions to discuss various investment topics and explain Avantis' investment capabilities. Prior to Avantis Investors Establishment in 2019, Phil was a vice president and head of Portfolio Solutions at Dimensional Fund Advisors in Austin, Texas, where he oversaw a team charged with developing content to explain Dimensional's investment approach and helping clients on topics related to asset allocation, manager evaluation and risk budgeting. Prior to Dimensional, Phil was an investment consultant at Towers Watson, now Willis Towers Watson, working predominantly with, corporate and public define benefit and define contribution pension plans. Phil earned a bachelor of business administration in finance from Goizueta Business School at Emory University. He holds Series 7, 24 and 66 licenses. I hope you enjoy our episode with Phil McInnis. Phil, welcome to the show. Thanks so much for joining us.- Thanks so much for having me. Really excited to be here.- All right, awesome. So I get the honor of starting us off with the first question and you know, obviously we're here to talk about markets, and we're here to talk about elections. One of the things that we see in election year, election years are always a little interesting. One of the things we tend to see is volatility start to spike as we get closer to the election. Is that true? And if so, and the data is showing that, what do you think is causing that?- Yeah, that's a great question and it is supported in the data. So one proxy you can look at for volatility is an index that's called the VIX. And so the VIX has been around since 1990. So we've got elections from '92 through 2020 that we can look at and observe, what have we seen? And if you look over that full period, you see the VIX at around 19 and a half. So just to kind of level set there. As you look sort of entering into these election cycles and getting into the election month, it's exactly what you said. You see volatility start to pick up. And so in October of election years, you see it around 23 or so, 24, you see it really kind of stay there into November, into the election month. Start to taper off a little bit. And then as you get into sort of post inauguration, maybe normalize a little bit. So I'd say there's a couple elements to that. Number one, it's a reasonably small sample size that we're dealing with. If we look at the election years from, you know, from 1992 to to 2020. So it's not a massive sample and there's always going to be other things that can be at play. If you think about election year specifically, you think about 2008 was an election year. There was a lot of other things going on in the marketplace in the fall of 2008. So those things can impact this data and we need to be aware of that. But I think that generally what's going on is there's a little bit more uncertainty. Anytime you have, and especially maybe in a more closely contested election, there's the idea of, well, there's going to be change, there's going to be change of some sort. And when there's change, then anybody who is deciding where am I going to allocate my investments, my assets, how am I thinking about that? Anytime you have uncertainty enter into the picture, then you're going to see a little bit more volatility in those prices because people are going to be reforming their expectations as all this new information comes out and new polls come out and all that. And so you're going to see that reflected in the prices pretty quickly and that tends to lead to that additional volatility.- Sure.- Phil, you used the word uncertainty there and I think what we're seeing with our clients is they're feeling that and to try to alleviate some of that feeling of uncertainty, some of 'em are asking, and I think many more are thinking, is there something I should be doing with my investments leading up to the election? Should I like hide out in cash and then get back in when things are a little bit more certain? What does the research say about that?- Yeah, I think that that's a very natural feeling. I'll start off with that, right? It's natural of any time where you feel like this outcome is uncertain and therefore, as I think about what's safer for me, what's safer for my assets, that maybe I just can take it off the table, the proverbial table. And that way I have more certainty. The main issue with that, especially the idea of kind of taking it off the table is that's always, it's a multi-step decision, right? Because there's the taking it off and then there's also when do you put it back in?- Yeah, sure.- And there's a couple of other types of environments that we've seen and looked at in the past that are a little bit more episodic. If you think about the COVID downturn with volatility spiking there and people sort of fleeing stocks, you see massive inflows into money market funds. And then you see that those money market fund assets really staying there for a long time, staying there as the market recovered, right? Got back to where it was as the market continued to run and that cash that was on the sidelines and it felt better and it felt safer, all you were really doing in that instance is locking in that loss, right? Of volatility spike. You see the downturn, you're locking in that loss. And then it may again, it may actually feel better in the moment to have it there in something you perceive as safer. But if you start zooming out and you look back two years from now, three years from now, many of those instances, what it's going to feel like is regret, right? It's like, why did I do that? Why did I, and so if you look at election years specifically, since we have actually looked at this, if you, maybe let's take an exercise where we say, how about in election years I just put my portfolio in cash and outside of those years, I keep it invested because of this heightened volatility and uncertainty that we're speaking of. Well, what you generally see is if you leave it, let's say one alternative is to leave it in stocks throughout for the entire period. And we can look at this going back almost a hundred years in terms of that data. Let's leave it in stocks the whole time. Then let's have another strategy where in those election years, let's take it out. If we compare those two strategies, what do you see? You see a really significant drop in the returns for the strategy where you're taking it out. And that gets into the idea of the old adage time in the market versus timing the market. So that period where you're missing out, where you're not there has a really big impact. I saw a study recently, I think it might've been BlackRock, where they looked at specifically of sort of full-time or if I just have it in when there's a Democrat in the Oval Office or if I just have it in the market when there's a Republican in the Oval Office and there wasn't too much discrepancy between the just Republican or just Democrat, those were pretty darn close. The massive discrepancy was what if I have it in throughout. If I have it in throughout, right, sort of regardless of who's in office, that's where you see the massive difference. And that gets back to that point of the safest thing to do in terms of your long-term investment goals. If you've worked on an allocation, you've worked with folks like yourself, you know, advisors who understand what the client's goals are, what the risk tolerance that they have is, and you have an allocation that should work pretty well for them for the long term. Once you zero in on that, deviating from that greatly is probably going to feel, again, a lot more like regret. When we did that study, we had, again, we had one instance where we looked at let's just leave it all in stocks versus this get out of the market for the election years. There's another piece of that study we looked at where we said, well that basically says that 25% of the time you're in cash, right? Because the presidential election comes up every four years.- What if you had an allocation that just throughout the entire period maintained 75% in stocks and 25% in bonds or cash. So you're into the same sort of average allocation, but the path that you're getting to is different, right? The way you're getting there is different. What you see there is that the standard deviation is actually a fair bit lower. So the volatility is a fair bit lower in the constant allocation versus, again, the jumping in and out, the returns are pretty darn similar. So that I think also speaks to the idea of we all experience and react to volatility in very different ways. And that's one of the reasons that I think, you know, the role that you guys play is just so critical of having that understanding and being able to, you know, communicate on the terms that hopefully make sense for clients and what they're trying to achieve longer term. So we know when volatility is maybe likely to at least feel bad, not necessarily be detrimental to our goals, but feel bad. And how we can kind of communicate in a way where look, we're okay, we're okay. We plan for this because the other thing that is probably critical and we can talk more about this, a lot of the data that we look at, a lot of the studies that we see, everything's really focused on average returns. And average returns are really helpful to have an understanding of an expectation. But if we're investing, we got to be ready for that sort of range of outcomes, we got to be ready for when it doesn't look like the average. And there's plenty of that, there's plenty of that. There's one stat I like to throw out. If you think about the S&P 500, going back to as long as we have history there, right? So back to like the twenties, the 1920s. What is range for the average return of the S&P 500?- Eight to 10%.- Yeah. 10, 11, 12% right? 10, 12% for stocks, right? It's so sort of in there. If we then break it out by calendar year, so look at the S&P return over each calendar year and how many, and let's for ease, let's say that the average is right about 12%. So how many years do we think over the last almost a hundred years has that S&P 500 return fallen within plus or minus, you know, a couple percent of that average?- You go ahead and look dumb.- I'll look dumb first. I'd say a handful.- A handful. No, you don't look dumb at all. That's exactly right. Slightly more than a handful of six, right? Six years.- Yeah.- And so that is always so telling to me, right? Because when you think back, you're like, wow. So almost every year it looks wildly different than that long-term average. And so you can, in the moment, in a specific point in time, we can look really smart, we can feel really good about it because we made the right decision over that one period. We can feel really stupid on the other side of it because we made the wrong decision now. But investing is a long-term endeavor. If you're signing up for taking on equity risk in a portfolio, you're hopefully doing it because it's a long-term goal that you're after. And you sort of recognize that capital markets, they do a good job of rewarding that patience over the long term. But what it takes is a little bit of grit. You got to be willing to stomach kind of the volatility and the pain that inevitably will rear its head every now and again.- Yeah.- So a few things I want to point out or unpack there. The first was how quickly he was willing to make me guess first and look dumb, potentially. That's interesting. His performance reviews are coming up. So that's noted. The second thing is, when we think about market timing, which is what we are really getting at here, is we think something is going to happen, good or bad, and we're going to time it. One thing, a lot of investors, and we talk about this a lot, a lot of investors don't think of the fact that that's two decisions. That's not only when do I get out based on what I perceive is going to happen next, but also when I get back in, and Kyle and I were just having this conversation the other day of how much money stays on the sideline and you were just talking about this, long after the bad thing that was feared happens because we do get scarred there. And then kind of the the third thing I would say is, and something, you know, again, Kyle and I talk a lot about as we do with the rest of the team, a large part of our job is keeping people in the seat because we know from data and data that you just shared, the times you get hurt on a rollercoaster is when you get off of it. So we're really tasked with trying to make sure that we can manage the behavior side of things, backing it up with data to make sure that people get the best possible outcomes.- I think that's exactly right. And I think that that perspective is super important because it's one of those too where I think having somebody to talk to about it, you know, who is sort of in your corner and hopefully, you know, pretty objective and unbiased of, hey, you know, we've done the work on this, we've looked at the research, we've looked at the data. It doesn't mean we know for certain what's going to happen over the next six months, over the next 12 months, right? If you look at, it's interesting, if you look at the, again, going back to the averages versus that full range of outcomes, you know, the average return for stocks in an election year is pretty darn close to the long term average.- Is it really?- It's pretty darn close. Not very different. But again, I always think about going back to when FDR was in office, right? And he was the last president to have more than two terms, right? And there was a lot going else going on in that timeframe too, in terms of the depression, World War II and other things. But his is interesting because there's the idea of well, you know, does who in office is, you know, what person in office is going to be much better for markets or much worse for markets and those things. And I think his is interesting because he was there. We've got four different times he was elected, right? So you got four different election years and four different full terms to look at and it's like a whipsaw, right? Because of all the other stuff that was going on. So in two of the terms, the year he's elected returns look great, and the other two, they look terrible, right? It's like up 30, down 30, you know, up 20, down. So there's a really wide range even with a single person, you know, a single candidate over multiple terms. So to me, it reinforces that idea of there's more going on there than just who's sitting in that chair that we have to think about. But we've got to be ready that when that volatility shows up, you have somebody to call, you have somebody to talk to and talk through it, hopefully a little bit less emotionally and a little bit more, hey, let's just think about we've planned for this. We're okay.- One of the things you talked about there that I'd like to maybe discuss a little bit more is policies. So this is the time of year when everyone is campaigning and they're talking about the proposed policies. As investors, markets soak all that data in, soak all that information in. What do the impacts of proposed policies have on markets, if any, during election years?- Yeah, so there's a couple ways that I think about that. Number one, you use the right term there, I think soaking it in, right? The market soaking it in because it's new information in some cases. And this election cycle has been, each one is unique, but this one has had its own sort of idiosyncrasies, right? Of you have who is the purported nominee in Biden for a really long time and then all of a sudden there's a change that happened very late. You have unfortunately, you know, an attempted assassination there. You have some things that are very severe in the moment. I say that just because even with the, a difference in candidates, there can be different proposed policies if we were thinking about in June versus if we're thinking about in August, right?- Sure.- One thing to think about, it's simple enough or probably seem simple enough to take and extract a single piece of policy and then say, okay, I can understand and get a pretty good grasp of how I think this is going to impact the economy or the stock market or what have you. And take an example of trade, right? Of how open are we going to be or how closed off are we going to be in terms of taxing foreign goods coming in, right? So you think about the proposed Trump policy of significantly more tariffs for some countries, but really across the board, an increase in tariffs for imported goods. So as I think about that and you say, okay, so those prices of those goods that we're importing are going to be higher. And so if you have a domestic company, U.S. based company that is serving, you know, U.S. customers who has competitors from the EU or wherever else, all of a sudden they're going to have a bit of a leg up, right? That their prices are going to look more attractive since they aren't subject to that tariff. And so you can make a reasonable conclusion that, well then I'd expect those companies to do better. They're going to do better on average. There's two things that I think we really have to revisit or make sure we're cognizant of as we're thinking through that and how simple that seems. Number one, we export a lot, right? So if we have a stricter trade policy and increase tariffs on foreign goods, you would expect a lot of our trade partners to respond in kind. And so, you know, there's plenty of US-based companies that generate quite a bit of their revenues from outside the United States. So as I, as you sort of zoom out again and not think about there's this one specific piece of policy, and here's a few companies that I absolutely expect to benefit as you sort of zoom out again, there's the idea of, well, that on average, that's probably going to make them less competitive in those other markets where all of a sudden the tars are going to be, so maybe on balance is a little bit flatter. Hard to know exactly, right? But the other piece that's probably more critical for the conversation that we're having is this idea of everybody has that information. Everybody has the proposed policies of Harris, of Trump, right? Those are laid out. Sometimes they're not as easy to find, but those are laid out reasonably clearly as far as what they would plan to do, would like to do. A lot of those require more action than just them, right? So some of those can be more executive orders, but a lot of things are going to require legislative action. So it goes even beyond who's in the Oval Office. You have to think about who controls the House, who controls the Senate. There was an interesting study that I saw from Vanguard where they looked back to '73, so you've got 25 different congressional terms there. And they looked at, okay, well Democrats are controlling both, Republicans are controlling both, and then you've got mixed. And they looked at market returns, so they're using the S&P 500, a large cap index. So they looked at market returns and then they looked at the amount of legislation passed in each congressional term and they said, well, what's the correlation? What's the relationship there with kind of the idea of, well, if I've got maybe a completely controlled House and Senate democrats that they can get a lot of their policy advanced or vice versa with Republicans. And what does that do? Maybe that has an impact, positive or negative on markets. The correlation or the relationship between the amount of legislation passed and those average returns, care to take a guess on what it was, what they found?- Zero.- [Phil] Zero is a pretty good guess.- Handful, whatever the vague term is I'm supposed to say.[Adam laughing]- [Phil] Yeah. Negative 0.16 was the actual number. But for all intents and purposes, I think zero is a great way to describe it, right? Very little correlation. And so what that means, right, again, this is not to say we can't have kind of have blinders on and be so naive to think that policy decisions don't have an impact on the economy and don't have an impact on, you know, markets. The idea that if you have a significant increase or decrease in the corporate tax rate, that is going to have an impact on things. There's no doubt about it. But to know, you know, that exactly how that's going to play out, and then the idea that you, Mr. And Mrs. Investor has a lot more information about that than everybody else, and that it's not being formulated into the expectations that people are having and setting today as they decide how much they're willing to pay for individual companies or how much they're willing to have in stocks relative to bonds and other things. It's hard to feel like you've got an information advantage based on what one your view and what one of those policies and their impacts are going to be.- Yeah, I think that's so true. And one of the, you've got a really cool chart, we'll show our viewers, but it goes back a hundred years and it shows that all but three of the last, you know, a hundred years the presidential terms have a positive return in the stock market, which I think would be surprising for a lot of people. What does that say about presidents perhaps getting too much blame or credit, but also the resiliency of the capitalist system that we have here in this country?- Yeah, I think resiliency is a great term and I think candidates are probably pretty quick to take credit when it's good and pretty quick to shed blame when it's not so good, right? That's really natural. I've got some recency bias here of kind of thinking back over the last few terms where we've had, and you've looked at market returns, you look at economic performance and there's this idea of, well, if things are going good, it's because of my policy that I've enacted in my term, and if things are going bad, it's not me and it's not my policy. It's the after effects of the policy of the last person who held the office. Right?- Yep.- So they kind of jump back and forth on both sides of the fence. And that's where I think it's important where you're exactly hitting the right area there of they probably get too much credit and maybe take too much blame from the general public, or at least maybe they take too much credit themselves and put too much blame on the last candidate themselves then what's really actually going on. And so the the idea of look what we're thinking about and what we're banking on as we're investing in markets, investing in stocks in a capitalist society, what are we really looking for? What we're really looking for is we're hoping for a positive expect to return on our capital. And I would argue that every day as stock prices are being reset, they're being reset with that in mind. If there's a positive expect to return on that capital invested, otherwise people wouldn't have the money there, right? If it was a negative expect to return, who's going to keep their money there? But the other piece of it that I think is important as we think about that investor experience is look, the capitalist society, you're basically saying that innovation will win over time, right? There's going to be new ideas, there's going to be new services, there's going to be new goods. And if I'm taking a pretty diversified approach to investing, then that's really the only risk that I'm taking on is that idea of does innovation pay off over time? And that's something that I think hopefully most people can feel good about, that we're going to continue to do better. We're going to continue to find new cooler ways to do things and that that's going to have a positive impact on folks' portfolios.- I've observed that markets can find ways to make money in any environment, but they do really, really appreciate certainty. So, I mean, you think about the elections, you think about big world events, whenever there's uncertainty, I feel like you see that reflected in prices because they don't know what's coming around the corner. Companies feel that way and investors individually feel that way as well. And we see that in some of our conversations. But we do have, when we more certainty, I think we can make plans and it's the same way with an individual versus a business. When you have certainty, at least some reasonable amount of certainty of what's coming around the corner, you can begin to make plans in any environment.- I think that's right. And I think you're hitting on something that is probably quite relatable, hopefully, for most listeners, because I think about, we were talking about the corporate tax rate, right? And if you have stability in the corporate tax rate, then those companies can have a little bit more stability and foresight in how they're planning. If there's a lot of uncertainty around that, it's moving around a lot, that's going to be harder for them. Because they're, you know, companies are thinking about very long-term projects that they're investing in. You can kind of draw a comparison to capital gains rate. Right, if there's a big change or there's a lot of uncertainty in what capital gains tax rates are going to be, income tax rates are going to be, I'd imagine that it makes your job a lot harder in planning, right? Of what budget are clients going to be able to have and how do they think, you know, how do you think about spending your retirement, those things. So I think there's that piece of what investors feel around that uncertainty is similar to probably what the corporations feel and what, you know, maybe institutional investors feel and all that and contributes to that higher level of volatility. But you go back to this idea of what we've got to plan, right? Hopefully we've got a plan, it might widen, you know, the range of outcomes a little bit, but they're pretty wide to begin with over short terms as we think about that longer term horizon, right? Moving out, that's where hopefully it's narrowing again back to that longer term average that we can feel good about and have a plan that gives us a good chance for success.- Kyle, do you have any more questions for Phil?- Nope. I think we got everything I wanted to cover.- All right, so last question for you Phil, and thank you so much for joining us. You've been very generous with your time, is instead of election results, because those are inherently unpredictable, what should investors focus on instead?- That's a great question. I think about a couple of things. One, for me, costs is something that you can have a ton of control over. So the idea of as you're evaluating different kind of, you know, investment propositions or investment offerings, you know, look at the expense ratio of the strategies. If it's super, super high, that doesn't mean out of hand that it's a bad investment strategy. What does it mean? It means that there's a higher hurdle that that manager has to overcome each and every year for you to have a better outcome, right? So because net of fee returns are, the manager, what the manager's able to achieve in their allocation, right? With their portfolio, whatever else, minus the fees that they take. And if that fee is, you know, really, really high, then that means they've got to overcome it each and every year so that you get that positive net return benefit, right? So cost low. If you look at any study on how managers do overtime, investment managers do over time or mutual funds or ETFs do over time relative to benchmarks, one of the largest predictors of success is low fees, right? So that's one thing that I think is always important to keep an eye on. I think diversification, right? I think it's Merton Miller who's got the quote of,"Diversification's your buddy" and I think that's a good way of saying a good way of thinking about it. Just as if we were to think about the average return of large cap stocks over the full sample period. But then we look at each individual year, you see a wide range of outcomes. If you think about the market return, well if we dig in and each year on sectors, there's going to be a very wide dispersion in many years of the best sector return and the worst sector return. If we think about countries, there's going to be big dispersion in the best country return and the worst country return. If you go individual companies, even bigger dispersion of best return and worst return, right? So the more that you concentrate your investment into a few companies, a single sector, you know, a single country, the more that you concentrate, what you're doing is you are increasing the reliance of your portfolio return on however that one thing does. And again, you can look like a genius at times, but you can also probably feel like, you know, a not so smart person a lot of the time too. And the reality is, as you think about, you know, a financial plan and long term trying to have something that works pretty well for you, you don't need to have a high level of concentration to do pretty well. That's what these market returns that we see over long term are telling you, that if you have low costs, you keep diversification pretty broad, you maintain an awareness of valuations. I would say valuations are super important. When you think about, you know, deploying capital, they're going to have a lot of information about long-term expect returns. Those are the things that I would definitely keep more in mind. And then having relationships with folks like you, you know, that's the other thing because we always say, you know, at Avantis we talk a lot about we feel like it's so critical the relationship that we have with advisors like yourself because we can't know the client circumstances nearly into any level of detail as what you do. And so we feel like we've got really good investment strategies that can be a really nice engine and help in somebody's financial plan. I don't know what the best analogy is. You know, it's sort of like, I don't know, maybe we've got a really good engine, right? We've got a really, really high powered engine that we feel like you, well if you don't know how to drive the car, you know the engine's not going to do you much good. And so your guidance on where are we trying to go? What's the destination? What's the best path to get there? What are the bumps and stuff we're going to hit along the way? You know, that's really important to that overall journey. The engine matters for sure, but the total package is really what I think people should try to keep sight of.- That's great. We couldn't end any better than that. Phil, thanks so much for joining us. We really appreciate it and thank you so much for not only giving us some actionable ideas around elections, but also that longer term perspective as well. Because that's one thing that we talk a lot about here is, you know, the longer term perspective that you have, the smoother your expected returns are, and to tune out some of that short-term noise. And we're certainly hear a lot of short-term noise right now as we get closer to elections. So thank you so much for your perspective.- Absolutely. Thanks so much guys.- All right, thanks Phil.- [Phil] Thank you.- Alright, Kyle, we've cut with Phil. That was a great conversation? What were your big takeaways?- Well, my big takeaway is that, you know, if you're like me, you've got, you've noticed there's an election this year and you've got your friends sending in memes, links to social media.- You have those friends too?- Yeah. A couple.[Adam laughing] And it can, it just, you can't avoid it, the election. And I think it's natural to feel like Jesus feels really important. Anytime something feels really important in the world, then you start thinking about your money. Should I be doing something with my money? During an election, I think what I heard today from Phil is, although it can be tempting, the answer is to almost pretend like it's not happening.- Yeah.- To just stay invested, stay with your plan that you've worked on and just avoid the temptation to touch your money. To just ride it out, accept that there might be some volatility, but that eventually the election will be over and we'll forget about it and we'll move on. And then the answer is just to do nothing.- Yeah. I think that's great. And the other thing I would add too, as we're finishing the conversation, he's talking about costs, fees, expense ratios, things like that. And so while I agree, we obviously can't control the outcome of an election besides voting, which we encourage you to do. We can control how much we pay for things. So we think a lot here about how things cost. And it's not just because we're thrifty, some might use other words to describe us, but we know that that impacts client portfolios in a very, very big way.- [Kyle] Right.- How much it costs to buy a certain mutual fund or a certain investment product is a huge, huge determinant on how much money that investor is going to have at the end of the day.- Correct.- And so we work very, very hard to keep those costs as low as humanly possible because we know the positive impact that has on client portfolio. So it was great to hear Phil say that as well.- Absolutely. Yeah, we spent a lot of time here thinking about costs, but also taxes.- [Adam] Yeah. Trying to make sure that we're not doing a lot of trading, you know, turning portfolios over because those are the two things we can control.- Yeah.- Minimizing taxes and minimizing costs.- Yeah. I also really like the long term perspective that Phil was hitting on it, you know, in the short term volatility doesn't feel great, but as you look out and you zoom out, you see like, gosh, things kind of look like they just are flat and steady waters, but we know that there's a lot of chop in the meantime. And the best thing we can do is just understand that it's going to happen, whether it's an election or a pandemic or an economic downturn, like the best thing to do is expect those things are going to happen. Have a portfolio that anticipates those things are going to happen and know what is going to be comfortable to you to be able to ride those things out so you don't feel like you've got to go to cash and then avoid a situation where you've lost out a lot of money.- Absolutely. Absolutely. Yeah, we spend a lot of time with our clients planning for cash needs. That's because we want to make sure that any money that we know you're going to need in the next year or so, we've got invested safely.- Yep.- In cash and money market and things like that, bonds. And then the longer term money's for stocks. And that's because anything can happen in the stock market. We know that, we've lived through that. Volatility's not something that should be avoided. It should just be expected as you're saying. And so that, just that mentality of, you know, it's the volatility's not to be avoided, but to be expected I think really helps calm people down a little bit to know that, you know, you don't get 10 plus percent returns like Phil was talking about today, because things are risk free. You get it because that's the price of admission. Volatility is the price of admission to those high returns.- Yep.- Okay. Well that's it. First go around in the co-host chair.- Yep.- How'd that feel?- It was good. It's a comfortable chair. Hopefully I'm not going to get a pink slip after this.- No, I'll stop sending you memes.- Okay. Sounds good.- Sounds good. Thanks for joining me. I hope you found this helpful. If you did, please subscribe and share with your family or friends. If you have a topic you want us to cover in future episodes, send us a note through our website and if you're at the point where you want an expert opinion on your finances, reach out and we'd be happy to start a conversation. And remember any comments, insights, or strategies discussed on this podcast are intended to be general in nature and therefore may not be suitable for you and your situation, whatever that may be. Before acting on anything we discuss, please consult with your attorney, CPA and/or your financial advisor.