Braun Wealth Management Group of Nest Capital, Fort Wayne IN

WEBVTT

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On behalf of Braun Wealth Management

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Group, we'd like to welcome you to

our ongoing series of conversations.

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And today Jeremy Swonger and myself will

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be speaking to you from our

porch with this warm fireplace.

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Given the season that we're in

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so basically, what we want to do tonight

is talk about where we are now and try to

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help you with some thoughts

in regards to your portfolios.

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So these numbers are, as of October 31,

Jeremy, the Standard & Poor's

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is down 17.7%. The Dow Jones average is

down 9.9%. Nasdaq is down 29.8%. The

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Russell mid cap is down 17.5. The Russell

small cap is down 16.9. The EAFE Index is

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down 23.2 and emerging

markets, 29.4 negative.

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To say the least, it's been a very

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challenging year, but we want

to interject some thoughts.

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And I had the opportunity to be at a

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conference in Colorado a couple of weeks

ago, and they had a business person

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talking about the impact psychologically

of losses versus gains.

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And, Jeremy, believe it or not, a loss is

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twice as negative impact

psychologically as a gain.

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But the question we've always asked

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between our clients and ourselves is the

stock market is not like a football game.

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It's not like a tennis match.

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The only time you register a gain or a

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loss is when you physically

sell, right, Jeremy?

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That's correct.

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And so markets will have movements over

time and they'll have a

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tendency to have large swings in

what I call a compressed timeframe.

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For example, last October, just recently,

the Dow Jones Industrial Average

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appreciated over 14%

in four weeks, which, by the way, takes us

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back to a record going

back to the mid 70s.

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Also, I was watching the Tampa Bay Bucks

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game last night against the Rams,

and Tom Brady, the quarterback, had 50

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passes, Jeremy, and you

played football at St.

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Francis, without a TD.

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But right at the end of the game,

he had 58 seconds and scored with a pass.

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So the entire game was no

progress, and all at the end.

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The question is, how does that happen?

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It just happens.

Right.

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So markets like last September, October,

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excuse me, appreciated 14.4%

for really no reasonable reason.

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It just happened.

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And so the reason why we talk about this

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all the time is that it's really about

your asset allocation, that you have

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stocks versus bonds versus cash, et

cetera, because that compression of time

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occurs quite often in the real estate

markets, stock markets and bond markets.

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So kind of trying to tie this in with

where the Federal Reserve is today.

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Inflation is the worst enemy

that we have right now.

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Absolutely.

It affects wealthy people, middle income

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people, low income people

the hardest, obviously.

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And so the Federal Reserve just raised

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rates again where their targets are now

3.75% to 4%, the highest since 2008.

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And basically what the Federal Reserve is

trying to do is to get traction where

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inflation starts to

accelerate on the downside.

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And if and when they get an acceleration

of that traction, economists will tell you

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that they'll probably announce a pause,

which would be great news for stocks and

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bonds and real estate markets

all at the same time.

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So where we're going with this

conversation this afternoon is that

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positioning for reward

is what it's all about.

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And then when the reward happens,

you partake into it.

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So it's all about your comfort level as a

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person in relative to

what you want to assume.

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And so Jeremy and I are going to share

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with you this nice chart,

and we kind of put this together and it

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kind of revolves around

the emotions of a typical investor.

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So, Jeremy, why don't you start

on the left hand side there?

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Yeah.

So these in common investor thoughts kind

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of the cycles that we see when

the market is moving up and down.

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So one of the most common ones we get as

the market has come down and moving back

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upward is people say, "I'm

not getting back in".

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They've seen the downward, they're

not comfortable yet, and reinvesting.

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So they wanted to say, I'm

going to wait and see.

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I'm just not comfortable quite yet.

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Then they go into, "this won't last".

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As the market begins to appreciate, then

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it evolves into,

"I should have bought months ago".

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So then there's a little bit of regret

that they weren't in the market

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at the time when the market

kept moving forward and upward.

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Then it goes as things really start

to get momentum, "I'm back in".

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But you notice they

missed a lot of the move.

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Absolutely.

They're catching it late, which moves

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into, "I think prices are

pausing before going back up".

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So they're telling themselves that the

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market is moving down, but

it's still strong.

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It'll go back up, then it's followed.

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As it continues acceleration

on the downside.

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Oh, "this is only temporary.

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Stocks always go up over

the long periods of time".

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And then as it continues to move down,

you see "is it too late to sell?".

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So we get sometimes those

phone calls of should I sell?

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What should I do now?

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And then when it accelerates towards the

bottom of the next cycle, "get me out".

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I don't care what the

price is, just get me out.

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And we've had some of

these this year already.

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Absolutely.

Yeah, we've fielded a few of those

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different phone calls, and that's why we

refer them back to their allocations,

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tell them to hold steady

and allow it to come back.

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And then maybe then look at

it at a time from a point of.

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Strength, and then it revolves to "I'm not

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going back in", which is

the other side as well.

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Yeah, we go full circle.

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So sometimes this could take a year, it

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could take two years, or

it's compressed in time.

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But the point of this conversation today

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is that we are living in very challenging

times, but we firmly believe that we're

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closer to the end of this than

at the beginning of this.

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And it's all about editing and making

small edits and not "get me out" or "I'm

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not going back in", or all of these

phrases you saw in this chart.

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So, to summarize, we're looking forward to

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the Federal Reserve to have a pause mode,

which would be good news, and who knows

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when that will physically happen, but it

indeed will happen, because the medicine

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that they're putting will indeed start

beating inflation on the downside.

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So we hope we've helped you

with this little conversation.

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If you have any questions,

feel free to call us direct,

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and we wish you the best of

holidays and the best of 2023.

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Thank you, everyone.