Hello and welcome to AssetMark's Mid Year 2025 Market Outlook. My name is Keith Stemple, I'm a Senior Regional Consultant here with AssetMark and I'll be hosting today's call featuring our Chief Market Strategist Kezia Samuel. Before doing so and passing it off to her, I thought I'd give a little bit of context for those that may not be as familiar with AssetMark and how we work with financial advisors. First of all, we've been around for 29 years, so actually next year will be our third decade in business. We manage about $150 billion for clients like yourselves all across the country. On behalf of financial advisors, we really specialize in working with financial advisors who recognize that their areas of value they can drive to client relationships are really centered around topics like financial planning, holistic wealth management, tax management strategies, insurance strategies, estate planning, guidance and the like. A key component I did not mention there that is still necessary in the client relationship is investment management and that is the void that we fill for financial advisors. Our team curates and vets a lineup of some of the most prestigious and largest money managers in the world alongside some very boutique and specialized managers that you may not recognize as much, but each fill a unique spot on our system and platform. We then marry together the advisors' in depth knowledge of your financial situation and your needs with our in depth knowledge of these money managers to create the right fit and customized portfolio for each individual client situation. That's just a little bit about how we work with advisors. I want to cover a couple of housekeeping items before we get started as well. First of all, on the left hand side of your screen there is a Q and A feature there. Please feel free to submit your questions. We will do our best to get through as many of those questions as possible. I'll be reviewing them as we go through the conversation today. The slides are also able to be downloaded on the left hand side so you can review those at your leisure. The recording of this call will also be sent out at 6:00 A.M. Pacific tomorrow morning. That said, we wanted to go through a little bit of the content for today's call and give you an idea about what we're going to cover. First of all, Kezia is going to cover markets and looking back at the last six months, quite an interesting time. We had a new administration come in. We've had tariffs and interest rates and inflation dominate the headlines. We've had a lot of talk about recession. We had a market downturn in the middle of the first half of the year. If you closed your eyes on January 1 and woke up on June 30, you would never know there was a market downturn because markets went ahead and recovered like they tend to do. Nonetheless, we had a lot going on in the first half of the year. Kezia is going to cover that for us. Given all those factors, we'll turn to the future and look at, you know, where are we in the economic cycle? Where may we be going given all these factors and all these different challenges in the world? Lastly, before Q and A, we will wind up talking about some ideas around investment strategies that you may want to consider as part of your portfolio. That's our agenda for today. We've got about 45 minutes. Again, we will get through as many of these questions as possible throughout Kezia's comments. First, we're going to have a couple of poll questions today. The first one should be on your screen now and it's asking you what is the best performing investment in the first half of 2025? It'll take a minute for the results to come up, but please go ahead and submit your answers. Just for some perspective, it's pretty interesting to think about international stocks. They have been absolutely dominated by U.S. stocks the past several years. There's been a lot of talk about if and when the cycle will reverse. It does tend to over time, but it is not in quite some time. Was this the time that international stocks began the reversal? Cash has been really interesting with the Federal Reserve raising interest rates. Many years ago, we didn't get paid anything to have cash in the bank. Suddenly, last several years we're getting 3%, 4%, 5%. Cash has been a lot more interesting. Gold tends to pop into the headlines every now and then as market turmoil affects it. Of course, lastly, U.S. stocks. A lot of different results there. Looking at the survey results, looks pretty split. I would say the majority, about 41% of you did say international stocks. Only 1% said cash, which is interesting. Between gold and U.S. stocks, it was about even, about 26% gold and 31% said U.S. stocks. A lot of mixed opinions there, Kezia. I think as we look forward to kind of understanding what has actually transpired in the first half of the year, we'll find some interesting comments here. With that, I want to turn it over to our Chief Market Strategist here at AssetMark, Kezia Samuel. Thank you, Keith. It's nice to see the audience that are taking a good guess at what performed best in the first half of this 2025 year. I also like the way Keith said it. If you had literally closed your eye from January 1 and decided that June 30 was the last time you're going to sort look at your paper statements, you would have missed an entirely wild ride in the markets in the first half of this 2025. Based on the answer, gold was the best performing investment amongst the list that was provided to you in the survey question. Let's dig in. Let's take a look on the left hand side starting with the table. We're going to focus in on the YTD, year to date, in regards to providing commentary on that. First, let's start with the equity side of things. You'll see that the S&P 500 remarkably has gone on to set new highs towards the end of the year after having dropped nearly 20% post the initial tariff announcements. Quite a big drop came back nearly 25% in a very short period of time and went on to set the new record highs. Behind the scenes, Keith, what's not seen on here in the S&P 500 is what took the rally up was a polar opposite image of what took the markets down in the first three months of this year. Technology stocks were the ire of the markets. They really fell. The Magnificent Seven that have been coined, stocks tied to AI, stocks like NVIDIA, Apple, Microsoft, really took it on the chin as they were priced for perfection. In the second quarter, those are the exact stocks that caused the S&P 500 to go on to set new record highs as corporations were quite resilient and earnings were strong. Having said that, it's not just these seven stocks or the technology sector. Retail investors also went shopping. We saw that in the first half of 2025 the highest buying amongst retail investors, $155 billion, went pouring into the U.S. stock market, thinking that it was an opportunity for long term investing. It didn't just stop there. In addition, companies look on the right hand side. Given tariffs, companies couldn't really spend money on buying equipment or hiring. They were trying to figure out what was happening, but instead they found that their stock prices were cheap and so they went off and bought their own stocks back. Look at the corporate buyback announcements for the first five months of this year, also setting new records relative to the same time period over the last 10 years. You had these stocks that were resilient with their earnings. You had retail investors shopping for sale and corporations shopping for their own stock as they sort of waited on tariff certainty. While the U.S. stock market sort of soared back, you see that international markets have beaten out the U.S. stock markets. If stocks were the winner in this first half, one loser in this same bunch has been the U.S. dollar. The U.S. dollar has had its worst first half start to 2025. What does it do to international markets as the dollar weakens? All these other currencies appreciate and that helps international investments look better as well. You can see international investments doing better, one from a weak dollar. Also, Keith, you mentioned 15 years in a row the U.S. stock markets have been beating. Finally, you had investors looking for sales. Despite the fact that these countries were at the heart or the ire of the tariffs because they were cheap and they were on deep discount and sale, investors wanted to sort of diversify their portfolio and their opportunities, also helping international investments. Bonds, switching gears to a different investment, did what they did best, provided income as well as provided ballast during that turbulence in the first half. Gold, you could see up 25%, has literally been the shining star on this stack here. What drove gold higher? Gold has an inverse relationship, for those that have joined us in the past, to the dollar. When the dollar weakens, gold becomes this other safe haven that investors are going sort of looking for within their portfolios. We also had lots of uncertainty from geopolitical risk as well as powerful uncertainty, all driving investors towards gold. The last thing is global central banks. Central banks around the globe have been buying up gold as again a way to diversify away from the U.S. dollar. We'll talk more about that. That's what took gold. I think the key point on this slide as I wrap up the markets is look at the Global 60/40. This is our proxy for a moderate risk diversified client. Because we don't just own stocks or just bonds, we likely own a blend. This is sort of that moderate risk example. I think after 2023 and 2024 where you could just close your eyes and not care and just the stock market just kept going up 20+%. 2025 first half is a reminder that for investors, diversification is sort of a critical component to having longevity within portfolios. That marks the first half of this year. Quite a remarkable turnaround, hopefully making sense of what's on your statements to date. That's great, Kezia. I know. Thanks for the comments. It really is amazing thinking about all the headwinds, and if you looked at the news every night and all the risks and uncertainty, geopolitical, domestic, whatever it might be, to see a moderate portfolio up in the high single digits, I mean those are really good returns despite everything going on. It just speaks to not only diversification but also sticking with your investments through various headline risks that are out there. I don't know how much of the $155 billion in consumer spending was on my doorstep, Kezia, but judging by the Amazon boxes that keep arriving, I can tell you we're trying to do our part to prop up the consumer economy here. That's amazing to see just the shift in where companies have made money in such a short period of time. Shifting gears, that's looking back at the markets for the first half of the year, right? We have all these conversations out there and the headline risk and all the real impact that those are having to the economy. Can you kind of take us forward now, Kezia, and let's look at what's going on in the economy from a policy perspective, from the consumer perspective. What should we expect going forward? Let's set the stage here. I know tariffs have taken up quite a lot of oxygen in the first half of this year, but we want to take a step back as we talk about all the different policies under the current administration and what the impact is. We've simplified this to our best extent on how they impact growth and how they impact inflation. If it's a green arrow, it's helping. If it's a red arrow, it's hurting that objective. If it's a sideways, it's a non-effect, so to speak. If you can take a step back and you can see as a whole the administration's policy is pro growth, but it's also pro inflation, given some of the policies that have come in. I think for most investors, what's happened here is what we're calling a sequencing aspect, meaning look at what we got. We got all of the three: trade, immigration, and basically those cuts and that fiscal side of things in the first part, and now in the second half we're getting sort of the tax cuts and the deregulation, which are often seen as pro growth, as you can see in the arrows here. I use this analogy and I'm going to use it again because sometimes when repeated, a goodie is still a goodie. Remember Mary Poppins who told us that a spoonful of sugar makes the medicine go down a lot easier. In the first half of this year, we got all the medicine and no sugar whatsoever. Now we may get a little bit of medicine in the second half as well as tariff negotiations continue through. We have an understanding of what the administration is looking to do with the tax bill that's just passed. We'll talk more about that as well as deregulation. Both of these are likely supportive of markets. Just kind of remember that generally speaking as a whole, it is pro growth for markets, but also pro inflation. We'll talk what that means. The sequencing aspect of it has been critical. The second half is likely a little bit smoother than hopefully the first half that we experienced. Let's dig into tariffs though. The first thing is that tariffs are not new. They've been in existence for a very, very long time. On the left-hand side, we try and give you some context for the average effective U.S. tariff rate from a very long period, as you can see. If you take your eye towards the end of the left-hand side chart, you'll see we started 2025 at an average effective tariff rate of 2.5% on Liberation Day. We've got a couple of dots on there. You could see if all the tariffs stated on Liberation Day stood, it would take the effective tariff rate to over 30%. This is one of the reasons why the markets got really nervous because companies cannot adapt instantaneously to shift their supply chains and sort of pay this 30% tariff. It will be quite onerous. The markets reacted precipitously based on that. Since then again, we're noticing deals getting done and we're also seeing, you know, the ability to adjust, likely that the initial stated rate is not likely to be implemented, somewhere in between. Our expectation is that the average tariff rate is going to be somewhere in the high teens. However, here's the kicker. For markets, we recognize that higher tariffs are likely in play. However, a steady but high tariff policy is manageable. Why is that? Because you look on the right hand side here. The U.S. economy as a whole is not a widget producing economy, perhaps one of the things that the tariffs are trying to address. Only 11% or so of the U.S. economy is dependent on exports. In comparison, countries like Canada, Mexico, as well as the Eurozone, have a much larger reliance. They're likely to come to the negotiating table or the world's Walmarts. We go off and buy people's stuff. I think this is where the markets have started to digest. Peak uncertainty is behind us. Just because we have higher tariff rates, it doesn't mean it's necessarily bad. We just need a steadier policy in regards to this and companies will adapt as we have seen them do so far this year. That takes us to tariffs have kind of done what I'm calling, created a weird environment in the sense that a lot of the data that we got is anomalous. What do I mean by this? Let's just take a look at the impact tariffs have had on the U.S. economy. On the left hand side is the U.S. Economic Report Card for the first three months of 2025 and you can see we've dissected it for you. Things that detracted from the economic scorecard and things that added to it on top. You'll notice the biggest detractor has been net exports. Companies, to avoid paying tariffs, went and imported a whole bunch of things in advance while not exporting enough. When we buy more stuff from other countries than sell, it hurts our economy. That is precisely again one of the objectives the tariffs are trying to resolve. You could see this weird behavior caused the economy to shrink by 0.5%. Take your eye to the right-hand side now. The second quarter, which we will know by the end of this month, is expected to rebound. Companies can't just keep buying stuff into infinity, and as that normalizes, we expect the second quarter economic growth to come somewhere in the plus 2.5% range or so, so it bounces back. If we take your eye to the far right-hand side, you'll see that the economy is expected to slow, and that's normal after having strong growth over the last few years. That's what we see, that we've had anomalous data points, but the economy is slowing, not necessarily stalling, given some of the uncertainty has been taken off. When I think about it, I've talked about this in the past, the U.S. economy is powered by the U.S. consumer. I think Keith mentioned he's doing his part by ordering Amazon packages. I do mine. Fridays are my Costco days. For those that have joined me in the past, I love sampling through the different aisles. I'm not sure Costco likes to hear me say this, but I do walk away with way more stuff than I often need. Regardless, the consumer is at the heart of the U.S. economic engine, and the consumer feels strong to spend when they have jobs. This is where we're starting to see so far, so good news. What we're seeing is that employers are not necessarily firing people, but they're also hiring fewer jobs. Let's take a look on the left-hand side. On the left-hand side, you will see there are two lines in here. The dark blue line is the number of open jobs, and you'll see those have fallen. Gone are the COVID days where employers were searching for employees. That doesn't exist as much anymore. The light blue line is companies firing, and you're starting to see that is rising, but it is well within the normal ranges. We're not necessarily seeing companies doing mass layoffs. Nationally, there are sectors that are being impacted, but not nationally. What this is telling me is that if a company has found a good employee, then they're trying to keep them because they know it takes a long time to find a good person and train them. That's what the left-hand side chart tells me. Now, when I take a look at the right-hand side, employers are also in the benefit in that. Remember the great resignation days when you could quit and find 20 jobs at your doorsteps and demand a 40% raise? Doesn't exist. I can see that because look on the light blue line, which tracks the national wages, and the national wages are rising above inflation. That's a good sign, but it is declining. You can see that light blue line on the far end starting to trail. You're also creating an environment as the job market is sort of what I'm calling as as good as it gets. The number of people that are going without getting a pay increase, the dark blue line on the right-hand side, is also rising. It tells me that the economy from a labor market perspective is relatively robust, not hiring as much, but also not giving out as much wage increases as years past, keeping the job market fairly stable. Hopefully painting a picture, Keith, on what's happened, especially regarding tariffs, the economy and the consumption side of things remains resilient to date. Yeah, that's great to see, Kezia, to kind of weed through the noise out there and get down to some facts. One thing, if I flash back one slide, I just wanted to point out we're talking about growth. You know, it wasn't that long ago that there was a lot of fear in the news in the market around us going into recession, right, driven by the tariffs and the big drop off in growth. Clearly, that's always a risk out there, but it seems like we might have potentially skirted that. We are seeing a slowdown in growth. What's interesting when I see this chart on the right here is we always talk about the market being a forward forecasting machine. It's anticipating what's going to happen. I see that blue dot on the right representing positive but much slower growth than we've seen in years past. It very well might have been the volatility we saw in the first quarter was the market forecasting that slowdown in growth. Growth. Right. Now that we've kind of come through that and accepted it with these more steady policy measures, we can get on to hopefully a smoother second half. Is that a fair statement? It is a fair statement. We often tend to conflate the stock market and the economy as one and the same. The markets are comfortable that even if the economy is slowing, a steady policy that sort of pushes out the recession probability was one of the reasons they reacted so positively. It is a nice connection there, Keith, because sometimes we tend to think of them as one and the same, but they take their cues from each other just on a lagged basis. Great point on that front. Thank you, Casey. I appreciate that. Looking at tariffs, the economy, jobs, everything looks like it's stabilizing. We're on somewhat firm footing here. If we transition the conversation now into the consumer, we had a question come in about the big beautiful tax bill and the impact that that may have to the economy, inflation, and those kind of topics. Can you provide some comments around that? Let's dig into that. Let me start with the inflation side of things. On inflation, you can see this is one inflation reading old. The latest inflation number we got was 2.7%. What we see here is that we've sort of given you an X-ray. We do this in the past as well. We do an X-ray on how inflation is being calculated. The latest reading shows that prices of goods are starting to tick up based on some of the tariffs. The key question is, if more tariffs are coming or the effective tariff rate is going to go higher, are we really worried about inflation going back to 9% as you can see on the chart on the left-hand side? Not quite. What I want to do is I want us to all become economists. For a quick segment here, bear with me because I want us to learn how do they get to this inflation number? How do you calculate it? Let's look on the right-hand side and what we've done in these boxes is giving you the different components of inflation. The bigger the chunk in the box, the bigger the component of inflation. You can see 35% of how the inflation number is calculated is shelter, no surprise. I mean, if you look at your own balance sheets, the biggest expense you will have is either your mortgage or your rent that you pay. That makes sense on the far right-hand side, and a cluster of things like apparel, general goods. That part is being tariffs. I want to talk about the push and pull on inflation. What we have seen, depending on where you are nationally, home prices don't necessarily have fallen per se, but the price appreciation has stalled. Plus, you're starting to see inventory not only across rental but also homes listed on Zillow as an example or Realtor start to rise. What we've seen is the price appreciation for shelter has kind of gone sideways, and that's creating some offset, meaning it's helping inflation come down relative to the goods side of the equation, which is a much smaller basket. Together, it's roughly 15% that may get impacted by tariffs. We'll start to see some price rise. You're kind of getting shelter helping, goods rising. Net, net, we may see inflation become sticky and or rise depending on the end tariff numbers. You start seeing these push and pull effects. What does this mean from interest rates? If inflation does rise or ticks up a little bit, then you're going to see the Fed delay interest rate cuts and or have fewer interest rate cuts. That's the key message here. One on inflation. Inflation, we will see some potential impacts on how tariffs end up. Remember, you're having a big help coming from some of the inflation from shelter given adjustments in the home prices we're starting to see, but net net expect fewer interest rate cuts from the Federal Reserve or even delayed interest rate cuts. We're not talking about interest rate hikes, but definitely a slower amount as we already have seen in 2025. All right, that takes our inflation side of the story. Let's talk about the big beautiful bill. As a question came through, I want to set the stage on how was the big beautiful bill started. On the left-hand side is the state of the U.S. economy as a whole. In red is all the areas we spend. The green are revenues we bring. You will find that there is a gap and that is the deficit, roughly $1.9 trillion, meaning we spend more than we actually bring in sources of revenue. That was the backdrop at which the bill got passed, which has caused ramifications in the marketplace. What's in the bill, by the way, if that was our personal report card, you and I would get a giant F. Nonetheless, that's the state of the U.S. economy. We're starting from what's in the bill. Let's talk about that. I'm going to talk about the taxes aspect given that that is the most pertinent to the markets that we're speaking of. One, it permanently extends the tax bill from 2017. The 2017 tax cuts are made permanent. It also gives some tax breaks that are temporary, so things like no tax on tips for certain income cohort. Same thing with no tax on overtime, some deductions for Social Security. All of those are temporary through 2028. What does this mean for the markets? One, it takes away tax policy uncertainty. One thing, markets don't like uncertainty. Regardless of how it got passed, the fact that that's been now addressed is a good thing for markets, that's one. The second is it also takes away the debt ceiling drama. We have been through this in the last few times where we see that the debt ceiling debate heats up and makes markets nervous. That's been addressed. The debt ceiling has been raised as part of the bill that got passed. That's the second one. The third is the way the stimulus is being done. These tax cuts that are being passed are coming at us first. They've been front loaded. All the tax cuts and the boom to the economy is front loaded. The spending cuts, whether it's on Medicare, whether it's on some of the other food assistance, that's rear ended. Because the tax cuts are front loaded and the spending cuts are rear ended, it is a boon to the markets, which is why again the stock markets have reacted positively. The counter effect of it is that it has raised our deficits. You can see on the right hand side there are three numbers we're watching for. $3.3 trillion is the deficit that would get raised as a result over the next 10 years, $4 trillion if you add interest on our debt, and then $5 trillion if you get to making all the tax cuts permanent. That's what we see here. What we want to talk about is what does that mean for the bond markets? That means that interest rates aren't going to drop as much as we want as we've seen during years past. Why? As a simple question, given that we have $36 trillion of debt outstanding and our deficits are rising, investors are going to demand a higher interest rate and that's likely going to keep a floor on how low interest rates can go. Those are the key things that we're watching for. The passing of the tax bill takes away some of that uncertainty. It pushes forward the stimulus helping stocks, but it also increases the deficit potential, thus creating a floor on how low interest rates can go. Hopefully made sense across a key set of topics there. I'll let you sort of summarize us on our conversation so far, Keith, before we sort of pivot into idea segment. Great, Kezia, great job. We've had some questions come in here that I'll kind of consolidate and we'll get to those here in a few minutes. Just to summarize AssetMark's view overall, as we talked about, growth is definitely still happening. It's just slowing. We are seeing jobs slowing, that wage growth that Kezia talked about, we are seeing some of the sentiment dropping and manufacturing trade slowing due to the environment there, but still within a range that we would call neutral. For now, growth slowing but still continuing. Inflation, as Kezia talked about, has been sticky, but it's come way off the highs of a couple of years ago. The market has digested that quite a bit. We are seeing inflation kind of sticky but gradually beginning to slow. That will just have an impact on, like you said, how and when rates can be cut and when they are cut, to what extent can they be cut? Pivoting from the economy a little bit, we wanted to have a little fun here and have a second poll question, if you wouldn't mind entertaining us and submitting your answer here as we get into investment strategies. The analogy we're making here is what kind of summer vacation do you like relative to your investment? If your summer holiday plans could dictate your investment strategy, which vacation vibe would you choose? Beach relaxation, which would be the equivalent of low risk investments and chilling, adventure seeking, which would be high risk stocks for that adrenaline rush, or the foodies that like a little bit of everything. While we're waiting for your answers to come in, I'll give you a little bit of context here. I have two teenagers and a one year old, so that's a story for another webinar. We decided instead of having a nice relaxing beach vacation, we would take the whole family camping. We went up to a lake in California here with no reception, no WiFi. You can imagine what that did to the two teenagers, it took them about 48 hours to kind of detox and get used to that. Then we have a one year old crawling on the ground, putting sticks in his mouth and all that. Yes, we had a great time. I'm looking at these options here, Kezia. I'm going to go for option four. You know, none of the above. It was a little bit of everything. We're definitely due for a beach vacation here soon. That was my experience. Overall, the majority of us, 56%, are foodies. Like a little bit of this, a little bit of that, a little adventure, a little relaxation. Next up was those that just want to chill on the beach. Lastly was the ones that just want pure high adrenaline adventure seeking. There's your answer, Kezia. Got it. Where did you go camping, Keith? Just out of curiosity. About two hours northwest of Yosemite, a little lake about 1,000 ft elevation. Yeah. We got up there and had a wonderful time, but definitely no relaxation. Pivoting our conversation a little bit into some ideas to get people to think about, there's been a lot of topics around different investment strategies. We've had a couple of questions come in on crypto and gold, so maybe you can incorporate those into your conversation as well. Let's talk about some of the trends that are out there, AI being one of the most prominent ones. Indeed. I'm going to start with what excites us about investing. By the way, on that question, I personally am a foodie myself. I've got a little slogan on my car that says we'll travel for food happily. I agree with all of you out there, but let's talk about what makes us as investors happy. I think one of the things that took a bit of a breather in the first three months has been this whole talk of technology because of what we saw those stocks do quite rapidly after two strong years in 2023 and 2024. The underlying trend did not change. Just for kicks, on the left-hand side, we showed a variety of different technologies and how long each of them took to get to 1 million users with the 4T to TiVo. I don't know who had the TiVo here. I did. It was kind of fun. It would talk and then look at the iPhone and now look at ChatGPT. ChatGPT got to a million users in five days. The speed at which technology is advancing in all of our day-to-day lives is clearly happening much faster. The impact of this for investors has just begun. Look on the right-hand side, we take a look at companies who are talking about using artificial intelligence in some way to improve productivity. It's risen sharply, but only 9% of companies have reported to use artificial intelligence in their direct businesses today. We expect this line to continue exceeding and this will have ramifications not just for those AI stocks that have come to be known in the centerfold, but it'll have impacts on changes to financing, changes to data centers, changes to powering these data centers to power the learning that's happening from these AIs. It is multifold ramifications which kind of tells us that this big trend, this mega trend is likely on the early onset stages, creating a very exciting opportunity for many investors who are currently in the marketplace. Now, having said that, this kind of has a two-sided coin. As with all things, one of the things, and this is a busy, complex chart, so let me just set the stage there. One thing that you want to talk about is that in the U.S. we think of the S&P 500 as that bogey or a proxy for the stock market. We think of 500 stocks. Oh, I own 500 stocks, but not quite. While the name says S&P 500, it is not 500 stocks equally owned. As technology has come to dominate the markets, especially in the U.S., the top 10 stocks that are all tied to this now make up 40% of the S&P 500. Really created a concentrated investment opportunity in the U.S. Now these stocks have also seen their prices soar as we have all enjoyed watching our statements. It's made them expensive, right? I like shopping. We know that when you go to a store, the stuff on sale is never in the front of the store. It's always at the back of the store. You have to go towards the back to find those opportunities. We're seeing the same here. From an investor's perspective, being mindful that while the opportunity that these stocks are necessarily cheap. How do I see that? Now let's take real eye to the left hand side. There are two monikers here. There's the dot as well as the triangle. What it tells us is on either end of the spectrum, as it moves out, it's becoming more expensive. It is also showing you the rate at which these companies are profitable. Ideally, you want to find something cheap but highly profitable. We know that doesn't exist because you have to pay a premium for it. Look at both the U.S. stocks and the technology sector. Both of them are expensive as well as profitable relative to their history. That's good. We recognize that they're not cheap. Look at international markets, they're not cheap per se, but they are cheaper than the U.S. and they also just own different types of stocks. Our key message here is even within the U.S. you want to be diversified given the concentration that exists in key portions of your portfolio. We also have a tailwind. We talked about international investments having a good first half of this year. One of the reasons has been look on the right hand side, the blue line tracks the dollar. When the dollar rises in green, you'll see the S&P 500 or the U.S. stock markets outperform, meaning they beat out their international peers. When the dollar weakens in red, international stocks, especially those in Europe, have a fighting chance and they do tend to do well. As the dollar in our view, given some of the deficit concerns we talked about, is likely to remain weak, we don't think a repeat of the first half is likely, but that should also create a tailwind. The key message here is us. While we like technology, it is concentrated and expensive. Think about diversifying within the U.S. but also using the weaker dollar as tailwind to diversify into international markets as well. For what we like in stocks, you know, they are also volatile and you want to balance out that volatility with fixed income as the income as well as the ballast in the portfolio. What kind of bonds do we like here? On the left hand side, I'm going to take your eye to the golden triangle, which is the aggregate index. It may not be a common household name, but think of this as the S&P 500 equivalent in the fixed income space. It's sort of a broad fixed income index. If you take your eye to the left of it, the first blue area we've shaded shows that you get the same interest rate or yield while reducing your risk. If you kind of move to the left hand side, you sort of get the same benefits by becoming, you don't have to buy a 30 year bond today. You can kind of keep it between that short to what we're calling as medium or intermediate term. We've also highlighted something else this time around. I keep you live in the lovely state of California, but we know taxes are quite high in states like California. New York and municipalities have had, in fact they're the only bond investment with a negative return for the first half of this year. Things, weird things happen. As an example, municipalities were worried that their tax exempt status was going to be taken away, and so they went and issued a whole bunch of debt in advance of that tax bill coming. Now the tax bill has put that clarity into perspective, but nonetheless that caused some upheaval causing municipal bonds to have negative returns. Having said that, look at the state of municipalities on the right hand side relative to all the debt that's been issued. Their economies, the local economies, are in a much healthier state relative to the federal government's sort of state of balance sheet, so to speak. You could see if you are in a high tax bracket in a high tax state, then using municipalities as a way to also diversify could be an interesting opportunity. That takes me to gold. I know we've gotten a few questions around gold, so let's just talk about it now. We do think that gold has a place in the portfolio given that we don't think uncertainty is completely behind us. We continue to have geopolitical risks, but we're also seeing demand from central banks of wanting to not just hold the dollar as their key reserve currency, so to speak, they want to have some gold to balance it out. When asked on a survey, do you plan to add gold, the darkest blue bar is a resounding yes. You can see that sort of creates demand. Now, when I say this, I often get the investors going, aha. Found my investment. Not quite. When I know that Costco starts to sell gold there, we're sort of tapped into some bigger theme. I just want to be mindful of where does gold fit into the portfolio. Look on the right hand side. If you span out and take a really long term look at gold's return in dark blue and the risk it carries in light blue in the bars, you will find that gold's return is just above bonds in the long run, but with two and a half times the volatility. You want to be thoughtful around. Gold is not necessarily a savior for all problems. We want to be thoughtful around why we're adding it. We like it for diversification, but it doesn't solve all problems given the volatility it carries. This may be my all time favorite slide before we go to a recap, which is nobody likes the months of April when we open our statement and find that we've lost money, but volatility and corrections are sadly the course of how we should invest for the healthy long term basis. This chart here looks at the S&P 500, where it ends each calendar year in the dark blue bars. Fortunately, there's more bars facing north. That tells me that we have more good years than we have bad. It also tracks in a red dot spots intra-year drops in the market. On average, historically looking at a very long time period here, the market drops around 14% each year and still ends in the positive. This year we dropped to 19%, so we got a little bit extra. Nonetheless, without volatility, you will have asset bubbles. I'm going to say it again. Without volatility, without corrections, you would have asset bubbles, which is not healthy for a good functioning market over the long run. Despite the fact that the first half was tumultuous, it gave opportunities for those that have the ability to add risk for the long run. Just a different way of looking at it. All right, Keith, hopefully I'm going to pass it over to you to wrap us up and see if there's additional questions we can take on. You did a great job, Kezia. There are some questions. Gosh, couple of slides. I just want to recap really quick. This one, I agree. One of my favorites out there. Download this slide, look at it on your own time. Look at the red dots. Despite those red dots being severe in some cases, most of the calendar years end up positive. It is one of those things this year, as I said in the beginning, close your eyes, wake up six months later, and all of a sudden you did not realize there was an 18.9% correction. You realize now the market's up 5.5%. Tough to do when everything's at our fingertips every day, but really important to do to make money over the long term. You touched on AI stocks, which has been a topic of questions here. You touched on gold. We talked about crypto. It is really important to understand that, number one, many of our investment strategies on our platform do have the ability to include exposures to these different investments and assets. Some are currently, some may or have in the past. It is important to include them in the context of your portfolio and your risk profile. It is really important to be talking to your advisor about your goals and risk tolerance and all that to just see how those can be incorporated in, in an intelligent, diversified, and thoughtful way. They grab the headlines, but they may not be appropriate for all of us, for different portions of our portfolio. As far as our summary of the outlook here again, growth with ongoing policy uncertainty. We do expect the economy to slow. That can still trigger some volatility. Getting some clarity I think has really helped things, from what Kezia was saying. On the inflation front, tariffs could temporarily reverse the progress that we're hoping for with faster rate cuts. It may delay the rate cutting cycle. It may also minimize the depth of the rate cutting cycle as well. More to come on that as things transpire, and our suggestion overall is always to stay fully invested. U.S. equity valuations, as Kezia talked about, have increased. Thinking about expanding our diversification while staying invested could be a conversation to have with your advisor. On the fixed income front in the high tax states, California, New York, and others, look to your municipal bond opportunities. We have individual bond managers that can do a great job for high income, high tax bracket people in those states. Other than that, short- to intermediate-term is the place to be. As Casey showed there, you're getting comparable return to the bond market with a lot less risk. Overall, just risk management strategies. There are a lot of strategies that our advisors utilize on our platform. They just help to kind of control risk and smooth out some of these rides. It's important to consider where those might play a role in your portfolio. Kezia, turning to a couple questions here, there was one back to a slide in the very beginning that talked about the share buybacks from S&P 500 companies. The question was what does the surge in buybacks tell us about the future of the stock market? It does tell us that some of it has been front loaded. Remember I stated that part of the reasons why we think share buybacks have risen is the deregulation that's coming. Also, the second part is as a company, if I can't spend buying the equipment that I thought I needed because I'm waiting for tariffs to be set and I have cash at hand, part of that reason is also sort of spending that cash elsewhere. If you could buy your stock price at a 20% discount or a 25% discount, why not? It kind of is a combination of those things now. It's a good sign that buybacks are back. Companies can return money to you either through dividends, buying back their own shares, and or investing. You're likely going to see a pivot more into capital spending as we call it, meaning buying that equipment, less so on the share buyback. Earnings are strong. As long as I can make money, then I can see price return come to us in different forms. Maybe not continue at the same strength in the first five months given the anomalous situation that took place. Nonetheless, it doesn't mean that the company's ability to earn higher profits doesn't exist. We kind of did see a counterbalancing act in the second half of this year. Got it. We have time for one more question, and the rest of these we apologize. We are a little bit late on time, so we will get back to you. You talked about large companies. This question is relating to smaller companies. The question is, the comments about the impact of tariffs and companies being able to adapt and rebound seem focused more on the larger companies. Smaller businesses, entrepreneurs, they don't have the flexibility and resources to adapt as quickly. What are your thoughts on that? Great observation. Which is exactly the reason why if you look at smaller companies as represented by the 2,000 small companies, they have struggled. They are just pressing into the positive territory this year and have trailed the larger S&P 500 companies. We also see that the S&P 500 companies are much more technology heavy, very cash flow rich in a very different state than the smaller companies. Here you want to be very selective. You want to know exactly which segment or sector the small companies are focused in on. The markets, as you have pointed out, have not rewarded the smaller companies. Given this, uncertainty takes a bigger bite out of their day-to-day business and as such the returns have paled in comparison to some of the large, especially technology-focused companies. Selectivity will matter here. We have some exposure to small as a diversification, but being very selective matters greatly here. It's funny how the market just figures that out for us. Doesn't it? Kezia, thank you for your comments. Thank you to everybody that joined us today. Again, there are some questions we did not get to, so we will follow up with your financial advisors on those. Thank you for your time and attention. The recording will be sent out tomorrow morning at 6:00 A.M. The slides are still available for download on the left hand side of the screen, and we will see you next time. Thank you so much. Thank you. Take care.