Hello, and thank you for joining us today. Today we are conducting our 2024 midyear review, also known as a halftime report. My name is Jeff Bridge, and I am a senior regional consultant for AssetMark. I am located in the Rocky Mountain region of the nation. And joining me today is Kezia Samuel. Kezia is a CFA, a CAIA. She is the Deputy Chief Investment Strategist and Vice President of our Investment Consulting division at AssetMark. And Kezia, thank you for joining. Happy to be here. Happy summer days. Yeah, absolutely. Why don't we get started? And before we do, just a couple of reminders. If you have any questions throughout this presentation, you can ask them below our screen, below our pictures. There's an area for Q&A where we appear. There will be a replay of this, so that will also occur. And without further ado, I guess, Kezia, you know, kind of interesting start to the year. First six months have been really strong, and it's coming off of a very strong 2023. And so, you're gonna talk to us today a little bit about, you know, what happened in the markets in the first half of the year. We're gonna look ahead and really talk about inflation. Inflation has been something that I think is affected most people on this call, if not everybody on this call, and where we are in the economy, and then obviously looking at investment opportunities for the rest of the year moving forward, as well as some of the investment risks that we might see. And so with that, Kezia, I thought maybe we would start with just kind of like looking at the market summary of what's happening, what happened over the last six months of this year. Thank you, and a happy Friday to all, and thank you for taking the time to join us. JB, thanks for hosting with me here today, and let's start with what has happened in the markets in the first six months of this year. So what you see on the screen are a variety of different investments, ranging from stocks, to bonds, to real estate, as well as a diversified portfolio. You'll notice that we've shown two colors here, what's happening in the last three months, the second quarter, as well as, again, the full year from January all the way through June of this year. Notice on the screen that it's been a strong start to the year. Global equities, as you see on the far left-hand side, up nearly 12% for the year. Commodities also up 5% as the economy has remained resilient and inflation remains still on the higher end, so commodities also doing well. This takes us to that globally diversified, moderate risk portfolio. We call it the 60/40, 60% in stocks and 40% in bonds, also up nearly 6% for the year. But anything with interest rate sensitivity, you can see on the far right-hand side, real estate, no surprise, as mortgage rates continues to be challenging to many, as well as, as interest rates have risen, given some of the surprising inflation data that came in in that first half of this year, bonds also remain on the negative side. So net-net, though, stocks having a really good start to the year, while interest rate investments having a challenging start. We're gonna do something interesting, though. So now let's take the global equities, which we know are made up of three regions: stocks in the U.S., stocks in Europe, and stocks in emerging countries like India and China. In these three regions, not shown on the screen, if you were to X-ray that global equity, the U.S. stock market leads the charge, and using the S&P 500 as a proxy, it's up 15.3%, followed by stocks in Europe, around 6%, and the same with emerging markets. So when you say, "Okay, it sounds like the U.S. equity markets are doing great," and in some ways, it has had stellar performance. But sometimes looking at the surface alone does not tell us the full picture. I want us to take our eye to the right-hand side, and here, what we've done is shown you by taking out the top five stocks in the S&P 500 that are tied to this one theme that has dominated the markets, and that is technology and artificial intelligence-related, productivity change. If you take those out, the impact on the markets is quite significant. In 2024, a continuing theme from 2022 onwards has been technology stocks that are tied to artificial intelligence, has really been the leaders of the market. So let's take a look here. In the second quarter, if you take out just five stocks that are tied to this theme, the stock return for the S&P 500 goes from + 4.3 to negative. For the year to date, and since this trend truly started back in November 2022, we see that the returns get cut by less than half. As these stocks have gotten bigger in size... and it is a reminder that even though the S&P 500 has 500 in the index name, not all stocks are equally weighted. As stocks become larger, they carry a bigger chunk of the index. And as a result, look in the left-hand side, the top 10 stocks, so looking now beyond the five and adding the next big five companies, these top 10 stocks make up nearly 37% of the index. In fact, breaching the last peak set in 2000 when we had the last tech bubble. So the first question many investors may ask is: Are we back in a technology bubble? No, today, we are in a quite different spot. These large technology companies are profitable... have large cash flows, meaning that they are generating earnings and profits. However, we do know that no trend persists in perpetuity. In fact, we have seen these stocks fall from glory just after the June time period ended. As the market reshapes and evaluates, there are opportunities outside of these technology-related stocks. So that's what it means for us. As an investor, it is really important that we don't get caught up in the, you know, in these narrow names that drive the markets, and it's easy when you see big returns come from there to get swept up in that, trade, so to speak, and so it's important to keep that in mind. The other thing that I mentioned this is that as an investor, it's unlikely that you own just the S&P 500 through an index. You may own international stocks, you may own dividend payer stocks, you may own smaller company stocks, and all of these have not kept the same pace as you see with the S&P 500, and again, within the S&P 500 being a very narrow stock. Regardless, as we look backwards for the brief moment, it's been a very strong start to the year. But as an investor, it is an always a reminder that looking backwards only helps in understanding what's understatement, but investing is all about the future. And so hopefully, Jeff, we've gotten a, a good sense of where we stand in the first half of 2024. Got it. Yeah. Thanks, Kezia. We're going to enter into a poll, and the first poll question, there are going to be two questions here. Kezia talked a lot about the artificial intelligence and how those few companies are just dominating the index returns of the S&P 500. The question that we have from the poll perspective, and I am going to click into there, is: Will artificial intelligence be a boon for the U.S. economy? You can answer that as definitely, artificial intelligence will destroy us, or it kind of remains to be seen. We'd love to see what the audience is thinking here, and it takes about 15 or 20 seconds for things to kind of come up. But Kezia and I can see this real time, and it looks like right now, predominantly, still remains to be seen, is edging out, definitely. And there's four users that I don't know if it's cynical or desperation, but they feel it'll destroy us. So we'll give this another few seconds, but the numbers seem to be pretty consistent. About two-thirds of the folks believe that the artificial intelligence run and the dominance that they've established in the markets today are going it kind of remains to be seen if they'll continue. And then, you know, there's a lot of folks that about a third of them definitely think that the artificial intelligence is going to be a boon for the economy. Kezia, one question that I just saw pop up here, was more about a specific stock that we've all heard about, and we all associate with, with, AI, and that's NVIDIA. Yeah, NVIDIA is just one of those 10 stocks or five stocks that you mentioned. Is NVIDIA the driver of it all, or, you know, are these other companies like Google and Microsoft really getting into this game as well? That's a great question. So yes, NVIDIA, for those that are not familiar with what is the stock, they make those little chips that go into all of the artificial intelligence calculations, right? So the thing that actually decides, and you can code on top of it, that's what NVIDIA manufactures. They are certainly a leader in the artificial intelligence trade. But here's what the surprising part is, and I want to answer it from two perspectives. For many that are saying it still remains to be seen, here's an interesting factoid in that today, when you look at the S&P 500 companies, when they go and they talk about their earnings, you know, 15% of them talk about wanting to use artificial intelligence or mention it in their quarterly analyst call. But less than 5% actually implement artificial intelligence as part of their productivity change. So, you know, you're not necessarily wrong there. We're all in the same boat, waiting to see how exactly will it impact us, is not fully fleshed out just yet. We're very early, in fact, in the infancy stages. The second part is, are there other stocks? Here's the surprising news. Well, in order to power companies like NVIDIA producing chips, utility companies that historically have been super boring, Jeff, have actually also seen their prices rise and, you know, surprisingly, has been part of the AI trade, so to speak. So it's not just the direct beneficiaries like in NVIDIA, there are surrounding companies as well, that may not be as obvious to the consumer, that are also participating in this artificial intelligence-led market rally. That's interesting. So utilities could actually benefit because AI might make them much more efficient than they are today. That's correct. Got it. Okay, well, we're going to pivot here a little bit because one of the big areas of concern, of pain, I think we could say, in terms of investors, and related to a couple of questions that I've already seen around Fed, you know, cut rates, is, is this inflation and the Fed just focusing in on trying to get to 2% inflation. And so, would love to get some concepts about where we are in the process or in the cycle of inflation. And, you know, maybe you can kind of enlighten some of your research and findings on the inflation horizon. Let's kick in. You're absolutely right, and the inflation question has plagued us for a very long time. We know the latest inflation reading that has come in for June has been that the headline CPI, which measures broad, how we spend money, is at 3%. Now, when we say 3% for most investors, it really doesn't make sense, so we're going to try and dig into this detail in different ways. So the first part that we're going to do is think about how we spend money. Inflation measures how we spend our money across two key areas: the stuff we buy and how we live. So take a look at these two lines here. The stuff we buy is shown by the dark blue line, goods. And in this instance, you'll see it's actually fallen below the zero line. So think about, remember... In fact, I was unfortunate enough to go buy a car during the COVID era because my, you know, 15-year Volvo was sort of coming to the very end of its life cycle. And I remember it was, "If you don't want to buy it, there's 15 other people behind you." No longer does that scenario exist today. So the prices of washing machine, you know, dishwashers, fridges, as well as cars, used cars, as well as new ones, have fallen as the supply chain disruption has untangled itself to some parts. We're seeing, in fact, disinflationary, meaning prices have fallen in that area. But in contrast, look at the services, how we like to live. It has come down, but it is moderately falling. It's not seeing the same decline that we saw in the prices of goods. Here, one of the key reasons has been shelter. Think about the biggest spend we have in our day-to-day living is where we live. When we think about shelter, shelter has been reluctant in falling, and we see some relief on this front. In fact, let me take one step further. We've seen prices of stuff we buy fall, but on the other hand, as I mentioned, services side of things isn't really seeing the relief so far. Here's the look-ahead picture and why we are hopeful that gone are the days of 9% inflation. We don't think we are in for that. We think that inflation is going to head lower, but it's not going to be a straight line, and here's why. Let's take a look on the left-hand side, where we look at the cost of shipping these goods from different parts of the world. You can see, as a result of the Red Sea attacks, which as part of the geopolitical conflicts that we've experienced, it rose initially, and then we saw it retreat when we thought there might be some hope for some relief in the Middle East conflict, and then has risen since then again. As these ebb and flow, this impacts the cost of goods because shipping costs get baked into that. So, one of these things we see, that relief we've seen in the prices of goods could potentially unwind as shipping costs get baked into future prices. On the other hand, why we think inflation is not going back to 9%, and in fact, is headed closer to the Fed's 2%, is what is coming our way, and that is within shelter. Shelter is 30% of total inflation. Again, no surprise, the biggest cost we pay in our day-to-day cost of living is where we live. And the, how the Fed measures inflation in regards to shelter is a little convoluted. Not, you know, enough time to cover on this call, but here's one way of seeing why we think relief is ahead on our way. Look at the right-hand side, which shows the price at the number of apartments coming onto the marketplace, and you can see construction ramped up and is now starting to soften, but we know that construction for apartments don't happen overnight. They take, on average, 18-24 months to construct, and we think all of the supply, as it comes into the marketplace, should give us some relief in regards to how shelter inflation is measured. In fact, the Zillow Rental Index, which is a preview of how rental measures often show up in the inflation index, has already shown signs of softening. Both Jeff and I live in Denver, Colorado, and I don't know about you, Jeff, but as I drive through downtown, there's buildings galore being built. And so we think that this part of inflation should give us some relief in the latter part of 2024 to the early parts of 2025. So on overall inflation, we think that the worst is behind us. However, the path to 2%, as again, remembering how we drive up to the mountains, it's never a straight line. It's going to be a little bit of an up, a little bit of a down, a little bit of a sideways. So that's where we see the broad headline on inflation story. All right. Kezia, so when we look at when inflation kind of started to take off was around 2021, and it seems like, you know... or I think the data says that, you know, when we kind of look at core prices and, you know, food and shelter, we're looking at a 20% increase. So if we were spending $150 a week at the grocery store, now we're spending $180. Is that sound about right? That when we started down this road, you know, we were kind of averaging 2% a year. So if we look at a course of three years, you know, prices were 6% higher... Over the course of the last three years, we've seen prices go up in excess of about 20% on average, depending on where you are in the country. You know, this, this discussion on inflation is often infuriating, right? As I think about talking with clients all around the country, and what I'm reminded of is that how we in the markets and economists apply the lens of inflation is not how we all feel about inflation. So here's why inflation has been so painful. So on this line here, it goes right to the heart of what you just said, Jeff, which is if you look at, if you priced a dollar out for a variety of things across food, energy, inflation, and then wages. I'm gonna ask you to follow the dark green line. You will see that if you plotted growth of a dollar from 2019 to where we are, wages have lagged everything. Prices of food have gone up, prices of energy have gone up, inflation has gone up. Guess what we're making and keeping at the end is actually not keeping up. Now, recently, wages have kept up, but it's not been enough to keep up with what has happened in the past. So how we feel about inflation is truly... Here's why, and we can see this in the data point. But here's the difference, right? The difference is that how capital markets or the stock markets or the bond markets, when they look for inflation, they're looking for the direction of inflation. They're not necessarily looking at how painful it feels for all of us as investors. As long as directionally inflation is headed lower, that should be a boon for stocks because the cost of running business is lower, and similarly, it should be a boon for bonds because, you know, interest rates aren't rising as fast. There's a difference, and this is why it's important, as an investor, we separate the impact of inflation on our day-to-day lives with how it impacts our investments and our portfolio. So hopefully giving you some color into why has it felt so painful and why are the markets marching forward all at the same time. So, Kezia, I'm just looking at a couple of questions here about interest rates, and there seems to be an overwhelming assumption in the market, or not in the market as much as in society, that, oh, interest rates are gonna come back down at some point, even though they're actually at kind of historical averages or even just below historical averages. Has the market priced in an interest rate cut? And is the relief that we're going to start to feel, or hopefully start to feel, you know, with whatever it is, insurance, home, medical, food, just because we expect wages to start to catch up now? So it's gonna be a two-front story. Prices are declining, so normalizing, as well as wages have risen, but rising at a much slower pace than over the last year. So it's a combination of the two, which is why the markets have marched forward. Let me answer the second part, which is, I think, a really important part to connect the story, what happens from inflation to interest rates. Right now, the markets have priced in. Given we've seen strong economic growth and inflation softening, the potential for the Fed to start cutting interest rates in September by a quarter percentage point is now baked in as the given. So markets expect that the Fed is gonna start cutting interest rates by a quarter percentage point starting September, with the potential for another interest rate cut in December. Remember, the Fed only meets nine times a year, and so they've got limited windows in how many more interest rate cuts they can do for the remainder of 2024. But that's where we stand so far. Well, unless we see the change in trajectory in regards to inflation coming in the opposite direction, and so far it's showing us that, look, we did see some blips earlier this year, but that was a one-off. Generally, the direction is lower, which should enable the Fed to start cutting rates. But I'm gonna end with this: I don't think we're ever going back to zero percent on interest rates, right? There are a variety of different facets, and as you pointed out, Jeff, if we look at the yield on the 10-year bonds, what they pay you, it's now finally lining up with historical averages. For those that bought a mortgage, if you were lucky enough, if you had a mortgage back in the 1980s, you're like, "Oh my God, remember when my mortgage was 17% or 18%?" I don't think we're headed in that direction either, but I don't think we're gonna get the 2021 2% or 3% 30-year mortgages either. We're likely going to sit somewhere right in between as these things normalize. Great. All right, well then, you know, you spoke about the impact to the economy, and so maybe we should shift over to the economy now. And you know, from a perspective, we saw GDP come in pretty healthy just this week. I think it met expectations. And so from an economic position, knowing that we've gone through this inflation, that you know, the consumer is a little bit challenged right now because their wages haven't caught up to prices, and our economy is 70% consumer-driven, what are some of the observations that you have in the economy, whether they're challenging or you know, they look opportunistic? ...Yeah, let's, let's start there. So let's start with what we see as a big tailwind in the long term. And here, what we're showing you on the map of the U.S. across all these different colored dots, are infrastructure and manufacturing, sort of a rebirth, a renaissance, to bring supply chain onshoring back to the U.S. What are we looking at here? All these different colored dots you can see tie up with battery production for electric vehicles, to AI-driven chip manufacturing onshore, as well as some bioengineering and that healthcare innovation side of things as well. The CHIPS Act and the Inflation Reduction Act, all aimed at bringing back manufacturing onshore so that we are not, in the U.S., tied to that supply chain disruption of needing critical infrastructure that is a part of everything that we use in our day-to-day living. Even our washing machines have smart chips in them. So we wanted to make sure that we're no longer reliant all on third-party sources and to bring some of that back in. It's spending roughly $500 billion, Jeff. Add to that $900 billion of private sector spending that is happening across these different variety of regions. This essentially is creating a boon in spending that is driving economic growth. I'm always reminded as an investor myself of why stock markets rise. They're not necessarily rising for what is ahead of us tomorrow or the next six months even, but for structurally changing environments that can propel economic growth higher than where we are today. And if you think about the impact of onshoring across all of these different areas, not only is the expectation that artificial intelligence is gonna make us more productive, but now we have healthcare innovation across GLP-1 drugs that's making us healthier and living longer as well. So add these two things together, a productive workforce and a workforce that lives longer. That should propel the U.S. economic growth to higher looking ahead. Now, when we talk about spending in the U.S., especially government spending, it certainly pulls a string on a very deep question regarding our debt. And let's just talk about this because it's important. On the left-hand side, we take a look at the debt as a percentage of our U.S. economy or GDP. Now, my dad taught me Finance Lesson 101, dollar in should be greater than dollars out, right? That's sort of the basic lesson in how we should practice sound investing using our own balance sheets. Now, the U.S. government has breached that by spades. Take a look at the dotted line on the left-hand side chart. Today, our debt to GDP is right at 100%, and it's expected over the next decade, by 2034, for it to rise to 116%. If we continue some of the policies that are in place today, that could potentially rise even further based on CBO's projections. Now, the question that often we should be thinking about, yes, this is problematic in the long run. But I ask a very simple question about why are markets looking past this data? Why are markets not necessarily reacting and, you know, cratering as one would expect, if this is really bad for the U.S. economy? That's for one specific reason. Now, this is not shown on this chart, and that is: Can the U.S. government make good on our interest payment? Just as all of us, when we go and apply for a loan or a mortgage, what they run to see is, can you make those monthly payments, and can you support that? That, that's the evaluation that we apply. And in this instance, today, despite having this burgeoning debt, the net interest as a percentage of our total economy is actually smaller than when we were back in the nineties when our total debt was much smaller. Why would that be the case? One of the reasons is that the debt that was issued was not all issued after interest rates went up. Much of it was done when interest rates were at near zero. So it is important that we think about the context of, yes, this needs to be addressed. Unless we do so for the long run, this will be a headwind for our economy going forward. But in the near term, and even in the intermediate term, one of the reasons why the markets look past this is the ability for the U.S. economy to make good on our overall interest costs. The other question that often comes up is concerns that a foreign nation may abandon the U.S. debt and thus cause the U.S. economy to crater. So I wanted to show who owns our debt. Look in the pie chart on the right-hand side. Nearly 77% of all U.S. debt is internally owned. Domestic investors, like all of us, pension funds, as examples, own this debt, and 23% is owned externally. So we don't see the ability of a foreign actor to entirely derail the U.S. economy. Again, one of the reasons why the capital markets have remained stable, it is very important that we not mistake this conversation for this is not an issue. This must be addressed in the long run, and there's a variety of different ways on how to address it, but I just don't want it to be mistaken as we're condoning the debt to GDP. This is a problem, and it should be addressed in the long run, but just giving some context as to why the markets have behaved the way they have, regardless of this being as the backdrop that we're facing today. ... And so, Kezia, you alluded to that there are ways to, address this, but, you know, what needs to happen in order to rein it in? I think that the people on this call, they're probably fairly successful in their investment experience, which means that they probably had the same kind of lessons that you had growing up is, you know, don't borrow what you can't pay. Yet it feels like, you know, that's exactly what we're doing, and I know we've been in this situation before, and we've been able to rein it in, but what does need to happen in order to rein this in? I think it would just make this, you know, the U.S. citizens feel better about knowing that we weren't on this trajectory that it looks like we're on. Yeah. I'm not sure it'll make us feel better, but here's why. Here's what we're looking at. First, we have been here, sadly. These are lessons we have previously engaged in and may have not learned adequately. Let's look back to the 1990s, when the interest cost on our debt was, in fact, larger, as I mentioned, and the decades after was actually a fairly strong decade for the U.S. economy. So there's three ways of addressing this conundrum. We grow our economy faster, and if you truly think artificial intelligence, or AI, is at the precipice of the infancy stages, helping us become more productive as a nation, you can grow the economy faster to get more revenues, you know, to get bigger revenues. That's part one. Part two is you do the basics. You do some, you know, tightening of the belt, some austerity measures, and pulling back spending that currently is in play. So that's part two that needs to likely happen with the first part, growing the economy and cutting spending. And last but not least, all of you successful folks that have joined us should anticipate that at some point taxes are likely to go up. I've not seen a third answer that tells us how do we, how do we make this math equation work, but those are three ways that are likely going to come our way as a combination, not just one or the other. Got it. So then how does the consumer kind of fit into all of this? You know, what does their debt look like, and how has that been transpiring? Yeah. So if the government continues to spend, I think we're starting to see a slightly different picture on the consumer side. And Jeff, you mentioned this earlier. The U.S. economy is driven by 75%, roughly, through all of us acting as consumers and spending. I've... If you've heard me before, you've heard me say this, my favorite Friday night thing to do is go to Target and roam the aisles looking for stuff that I need. That's what I tell... I I tell my husband that it's not stuff I need. And as a consumer, we are starting to see a slightly different picture. So let's take a look on the left-hand side. During the pandemic, this chart here tracks the excess savings. During the pandemic, we, as consumers, trapped at home, couldn't really spend it. You know, we, essentially amassed $2 trillion of excess savings, so this is beyond what you would normally save. Since then, as inflation and cost of goods has risen and how we like to experience things, all of those prices have risen. That excess savings has truly been peeled back. So you can see we've headed into the negative for excess savings. On the right-hand side, add to this, so not only are the consumers strapped of savings, we're starting to see 90-day delinquencies across more, credit card, auto loans, and other rise. What we're not seeing 90-day delinquencies rise is across key indicators like mortgages, which is a bigger piece of, the average consumer's total debt. So what this tells me, and what we've seen this, if not shown on the slide here, is that this is happening, the delinquency specifically, is happening at the bottom end of the income cohort. We know that if you're already living paycheck to paycheck, the ability to pay for things as prices have risen has really become harder. And so we were starting to see delinquencies in that bottom end of the income cohort rise. This bottom end of the income cohort, in fact, though, only does 10% of consumer spending. So it is very important that we are starting to see this rise, but it is not equally spread. It is only at the bottom end, and so now it bears watching on... The economy so far has been surprisingly resilient, and here's why: because the consumer has continued to spend. As the bottom end starts to pull back, we should expect the economy to slow, which is exactly what the Fed wanted. This idea of a soft landing, the ability for the economy to skirt a recession while bringing inflation down, seems plausible in the near term, right? This is telling us that this is sort of a Goldilocks scenario, but we'll wait to see if this trend gets worse in the future. So far, so good, Jeff. All right. Well, we have about 10 minutes left or so, and kind of wanted to talk about... Oh, actually, thank you. We have a poll question, and hey, Kezia, there's a little something coming up in November that I've heard a little bit about on the news and stuff, and that is the election. And so, we have a poll that says that's asking the question to the folks out there, and we'd love to hear what you think, is: What kind of impact do you think the 2024 presidential election will have on the stock market? Do you think it'll have a negative impact, a neutral impact, or a positive impact?... and, we'll give this about 10 or 15 seconds, but right now, early scenario here is, just a few folks, Kezia, think that it's a negative impact, less than 10%. I don't know if that's because the people are asking how much worse can it get? A greater than a majority, think about 60, about 55, 60%, think that the election is gonna have a neutral impact, and, about 32, about a third believe it's gonna have a positive. And looks like these numbers are pretty steady here, so where it looks like we're ending up... Oh, no, we've got a big surge in negative. About 14% or 15% now believe it's gonna have a negative impact, and about 50% believe it's neutral, and about a third still believe that it's going to be a positive impact. So, you know, there is this election coming up, and I've seen a lot of data out there, and I know that you're gonna cover the election as part of the investment opportunities and risks that we're looking at. So, maybe we could take a look at, and you can talk to us about what AssetMark is looking at, and, you know, what Kezia is thinking about the opportunities and risks that are out there. Let's do that. So I'm glad that neutral to positive is sort of the larger cohort, but let's take a look at what data tells us. I'm gonna start with a slightly different topic. Election will come up, and we'll conclude with that. I wanna start with this idea on, you know, we heard investors ask about very specific stock names because we've seen an outsized return on them. I wanna look at what the impact is when we have such a narrow group of stocks. We're calling it the concentrate on the concentration, right? It's important to know what you own. So here we look on the chart, going back to 1927, all the way back to 2023. What happens to stocks as they come, they become bigger, and they become part of the top 10 stocks in the S&P 500 index? You can see on the left-hand side, they have a great ride on the way up. What happens after, though, is not always as pleasant as the ride up. Now, that doesn't mean that these stocks that have seen these big rises, their returns, it's game over for them, but it tells me that no trend persists in perpetuity. We've seen this playbook happen over and over again, and so it is really important. This is the great part about capitalistic societies. If you're a great company, people wanna copy your ideas, and so it's just really important that we not necessarily chase today's winners and be aware of where the opportunities lie in the future. We also wanna take a look at what has happened over the last 15 years as the U.S. stock market has continued to trounce the international markets. So on the left-hand side, as the U.S. stock markets have beaten out its international counterparts, in the global stock market makeup, you can see here, the U.S. now makes up nearly 65%. And as the U.S. stocks have grown, as that's been the best market, the remainder of the stock markets across, outside, have actually fallen in their size. And so you may look at this and go: Well, why do I ever need to invest outside the U.S.? And now on the right-hand side, here's why. Because opportunities exist, they may just not be as obvious to the investor who's simply looking at index returns. So let's take a look on the right-hand side. We know that if you've followed Fox Business or CNBC or whatever your source is, the Magnificent Seven stocks that were tied to technology and artificial intelligence has sort of come up frequently. Now, there's an equivalent basket of stocks that externally, that are not U.S. companies, and we just wanted to show you, if you tracked the investment performance of both of these baskets, both in the U.S. and outside, you'll see that the stocks outside have actually done better. That tells me that there are opportunities and that it is really important we not abandon diversification in a time period like this. But let me get to your question on the election, and these are gonna be our final slides, Jeff. So on the election front, what we're looking at here are some key policies that are going to be different under both the Democrat as well as Republican mandates. And on the top, we show what it does since 1950s. That's very time-specific. Since 1950s, how does the economy, as represented by GDP, perform under both Republican and Democratic presidencies? And then how does inflation, as measured by CPI, react? And what it tells me is, okay, so it looks like, maybe in, the economy is a little better, but it's very time-specific, and inflation kinda averages out. To me, the important part is, as an investor, as portfolio managers that are looking at the same landscape, are looking at what the policy impacts could be, and we're just highlighting two, two areas that are likely differentiated and could impact different parts of the markets. One is on taxes. TCJA, or the tax cuts that were implemented during the Trump era, are coming up for, you know, expiration in 2025. Surprisingly, many think that under the Democratic stance, it's going to be entirely eliminated. It's quite popular, and I don't think it's likely to be fully eliminated. It's likely to be partially undone under the Democratic side and fully kept under the Republican side, which will impact our debt and deficits. So just kind of looking at it from that perspective. Under the next thing is on regulations, and regulations impact companies directly. And the two areas that potentially could see impact is around financial companies as well as traditional energy companies. One, under the Republican side, seeing softer regulations, and on the other side, seeing higher regulations. So you may see sector differences. The reason we highlight this is not to sort of go in and trade on these news, but knowing that these are the types of data that many of the portfolio managers are evaluating on a day-to-day basis and already positioning the portfolios in advance of us as end investors being informed. But we always wanna sit there and figure out, "Okay, what's the trade that I need to make?" But I find that a simpler solution is more important, and part of that is that many of us answer that elections' impact on the markets tend to be neutral, to possibly positive. But if you were to take a step back, and what I'm about to show you is not a mathematical error. This is the power of compounding done through the lens of both Republican and Democratic time periods. So here's the S&P 500. If you put $1,000 in, if you were lucky enough to invest it back in 1933, you would have seen the power of compounding grow that investment all the way to $21 million. And Jeff, that is not an error. That is simply the power of investments and the U.S. economy, which has shown resiliency and growth through both lenses, and companies being resilient. I ask the simple question: Is Ford gonna stop making cars? Is Kimberly-Clark gonna stop making toilet paper? These companies are better prepared at navigating policy and political changes, and it is important that as investors, we separate our emotions from how we invest. Hopefully giving some context, Jeff, I'll pass the buck back to you. Yeah, absolutely. Thanks, Kezia. I just wish Grandma Bridge invested $1,000 back in 1933 into the S&P, but appreciate it. So I want to address a couple of questions, but in summary, I think the key takeaway is, hey, inflation is moving in the right direction, and that is that it's slowing down, and we're expecting and are starting to see wages come up. So any of those of you that are feeling a little bit of a bite, hopefully we've got better times. We believe that there are some long-term tailwinds of AI, and given the poll, I think that everybody is excited but guarded about artificial intelligence and potentially springboarding us into a growth scenario that will help manage the debt ratios that we look like. Finally, the elections bring noise, but the markets really don't care if it's, you know, Republican, Democrat. What they care about is knowing what it is. And so our advice and our guidance is to stay focused, stay invested, and tune in, tune out the news. As you can hear in the background, my dog is very much in accordance with that. Couple of questions that came across here, and we can't address all of them, but the... One of the questions that we saw in the currency exchange, or I'm sorry, not the currency exchange, but the debt slide, we saw a steep decline in student loans, and obviously, that's the debt forgiveness that's been going on recently. Do we see that continuing? Do we see that stopping at some point, Kezia? Have you heard anything? Yeah, that, that is absolutely right. The reason it's fallen has been part of the debt forgiveness plan. All of this is likely either going to be headed into the courts and/or going to be repealed in some form or fashion. And so a lot of things in flux here. Depending on how the election outcomes end up, that area is very much in flux, but that's what's driving it. Okay, and then another question- No clear answers just yet. Oh, great. Two more questions. One is around the Fed cutting rates and had a few questions about: Is this politically charged, or is this separated from the politics and the noise that we're hearing? Yeah. It sometimes feels like it's politically charged, but the Fed is truly meant to be an independent body. So those two are two distinct venues that are not meant to collide, and the Fed is trying its best to ensure that it is data-driven in how those decisions are being made. Right, so if unemployment, we have started to see it creep up and inflation is coming down, those are going to be its two mandate. Remember, the Fed has two jobs: full employment, to get as many people into the workforce working, and two, to keep prices in check. That is what's going to drive the decision on whether a rate cut happens or not, not necessarily who is going to be in the presidential seat going forward. So follow those two headlines. What happens with jobs, and where is inflation going? If you see unemployment tick up and inflation come down, it's exactly the time when the Fed starts to think about interest rate cuts to avoid the economy going into a recession. So it's meant to be entirely independent. Great. And then the last question, and we get this all the time, it feels like, but at various times of stress in the markets, but gold and silver and where do those play a role in portfolios? And is that a likely hedge to more inflation moving forward? So if you could just give a few thoughts around gold and silver. Yeah. We've seen both gold and, in fact, silver not only set new records, but, one of the best-performing investments here in 2024 and over the last few years. So what's driving this? Part of this is inflationary, right? So if inflation rises, part of this is as our debt grows, the concern about a weaker U.S. dollar comes into play, and gold and silver act as a diversifier in that metric. So we have seen investors- You know, when I hear headlines about investors going and buying gold bars at Costco, it tells me that some of this is connected to that. Now, having said that, gold is not a, a panacea. It doesn't solve for every issue out there, and some things to keep in mind: one, it costs money to store gold; two, it doesn't pay a dividend; and three, gold has seen a very mixed relationship with the inflation. Unless we've had hyperinflation, gold has sort of done okay and sometimes done poorly. In fact, in the early parts of the inflationary cycle, 2021, we did not see gold do well. And so it is very important to know why you use gold. Gold is a great component of the overall portfolio for diversification, but it is not necessarily a replacement for the rest of your portfolio needs. Another reason why gold has been going higher, Jeff, has been because many countries, such as China and Turkey, are trying to diversify away from the U.S. dollar. Naturally, they don't want to be entirely dependent on the U.S. With tariffs potentially in the news coming up, they're trying to, in their reserves, add to more gold instead of dollars. There's a whole host of events that are driving this, but it is important that we ensure that we're thinking of gold in the right way. Great diversifier for a small portion, but knowing that it's not necessarily the best investment across, you know, the other opportunities that are available as well. Well, Kezia, as always, thank you for taking some complex ideas and situations and making them a little bit more palatable for all of us. With that said, I just want to thank everybody that was on the call today. Thank you for the business, and thank you for putting your financial confidence in your advisors and your financial planners. And with this, we'll sign out and wish everybody continued financial success. Take care.