00:00Jose Minaya of BNY Investments and Wealth writing this,
00:03Volatility is here to stay, stay invested, and look for the right diversification.
00:08Jose joins us now for more. Jose, good morning.
00:10Hey, good morning.
00:11Just want to pick up on that first line, volatility is here to stay. Why is that?
00:15Look, I think volatility, clearly, we're at an all-time higher peak in terms of the noise in the markets.
00:20If you just think about back to the beginning of the year,
00:23our team kind of added around 26, 27 different policy changes or news cycles that really kind of impacted or jolted the markets,
00:32yet the markets have kind of powered through that, right?
00:35I think I was on one of your shows earlier in the year saying around, hey, you should not be risk-off.
00:41This was like right after Liberation Day because of what we're seeing in the fundamentals and trying to look past this noise.
00:48Seeing a White House and administration, there's a little bit around the carrot and the stick, right?
00:51We saw a lot of the stick at the beginning of the year.
00:53Now you're seeing more of the carrot, and again, the markets are responding to that.
00:57So it's less about today when we talk to our clients around, hey, what should you be invested in or not?
01:03It's more about what are the solutions you're looking for.
01:07You're seeing more and more of that in the industry, whether it's technology with kind of SMA capabilities,
01:12what you're doing with model portfolios, which we do in B&Y Advisors.
01:16Across the board, it is about staying invested through these times,
01:20but kind of understanding what outcomes you're looking to get.
01:23Well, let's run with that.
01:24Stay invested, long-term time horizon.
01:26Got it.
01:27What are these strategic anchors you're offering people to get them comfortable with doing just that?
01:31Well, I think, again, it depends on their needs and outcomes.
01:34In some cases, it might be, hey, they're looking for income, right?
01:37Like, we create a lot of what we call, like, you know, bond portfolio in a box or personal bond portfolios with our Insight investment platform,
01:44where it's like we're getting very customized in how we deal with our clients.
01:48It might depend on when are you looking to retire.
01:50Is there a wedding?
01:51Is there educational needs in these things?
01:53So you might need principal protection.
01:55I've got a new niece on the way.
01:57In that case, I'd be like, hey, you should just go long, long equities.
02:00So, again, we could spend a lot of time thinking about the noise, the volatilities out there.
02:05If you look at it, it hasn't paid off to just say I'm going to stay off the markets.
02:08And there's still a lot of cash out there.
02:10But, again, that idea of I'm going to stay invested, but am I really focused on my solutions and my outcomes versus call it a 60-40 type of portfolio?
02:18Congratulations on your incoming niece and going all equities in response.
02:24I am curious, though.
02:25For her.
02:25For her, yeah.
02:26For her.
02:27For the niece, not necessarily the parents.
02:29But I am curious about how much going forward the ballast for income comes from the same place.
02:35You said not necessarily a 60-40 portfolio.
02:37Let's say someone is conservative and looking for income.
02:39Does it still come from U.S. treasuries?
02:42Does it still come from credit?
02:44Or do you have to look elsewhere for that type of ballast?
02:47No, I think the markets are becoming a lot more efficient, and they are looking elsewhere across the board.
02:52Again, we've seen the advent of private credit.
02:55It kind of plays a big part of this.
02:56You saw with the Secure Income Act where now annuities and guaranteed income contracts are being allowed to be used in 401K portfolios.
03:06I think these are all important legislations that are all kind of recognizing the incredible crisis we have from a retirement perspective, not just near globally, but definitely in this country.
03:16So you need to kind of look more broadly.
03:18There's a little bit of skepticism in younger generations, it seems.
03:22There's this concern that maybe the same kind of gains that the older generation saw in their portfolios are not going to subsist in their generation.
03:33Do you think that it will?
03:33Do you think that the returns will be the same in the next 10 years that it has been for the past 30 years for a generation that has gotten wealthy off stock market returns?
03:42You know, I don't, and what I mean by that is if you look back over the last 20 years, you would have been, for all this discussion around different investments, hedge funds, private equity,
03:52at the end of the day you would have been just fine doing a very low fee kind of like passive equity funding, you would have been just fine.
03:58I don't think that's the case in the next 10 to 20 years.
04:01It's just a lot more volatility.
04:03There's a lot more volatility out there.
04:05I think returns are going to be more measured, yet it's, again, finding your spots.
04:10Again, it's not about anymore, can I find the strategy that just I can sit back and it's just going to grow 15%, 20%.
04:16It's being able to do the work around how you diversify your portfolio.
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