Braun Wealth Management Group of Nest Capital, Fort Wayne IN

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Welcome to our video today here

on climate change in the market.

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I'm Jeremy Swonger, financial advisor

here at Braun Wealth Management Group.

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And today I'm joined by Byron

Braun, President of Braun Wealth

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Management. Byron, thank you for joining

us today and sharing your insights.

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Thank you Jeremy, Great.

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Today what we want to do is address

any of the concerns that we're having

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currently in the financial market

and starting off with, Byron,

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can give you us an insight on the shift

from COVID being locked down

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to now, COVID acting more flulike, kind

of what impact that has on us as people.

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Okay.

Well, first of all, it's huge because our

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society was locked down

for over two years.

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So when COVID is now flu

like various things happen.

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But the biggest one is that people

want to become normal again.

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So they want to go to movies, they want to

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go to sporting events, they want to go

to conferences, things of that nature.

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They want to work on

their projects outside.

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Also, too, the other thing that it does,

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it frees up what we call the

delivery systems in our society.

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And that could be shipping, air cargo,

freight, et cetera.

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For example, you don't see the five mile,

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ten mile, 20 mile ships offshore

waiting to get into the ports.

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The other thing that it does is it allows

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corporations that are in

manufacturing of fertilizers or plastics

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or any kind of items that

we use as a society.

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It allows them to get their

production levels higher.

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So net, net, you have more items being

produced, which increases supply.

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And at the same time, on a global basis,

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the free flow of goods is

opening up slowly but surely.

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This could take six to twelve months,

but we will get there eventually.

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Okay.

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And so you mentioned some of the

things it has with the economy.

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Can you talk a little bit further with the

impact of opening backup and how it has

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effects on the market, mainly with

inflation involved with that?

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Well, if you have a freer flow of goods

and you have more goods being produced,

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it's the old supply and demand

formula that we learned in College.

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So if you have ten apples for sale and it

takes a week for those apples to get to

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market, and now today I have 20 apples for

sale and it takes me half the time to get

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to market, eventually those

apples will fall in price.

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Thus, we as a society will

help and be benefited from it.

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We've seen little evidence

now of inflation dropping.

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It's only two tenths of a point,

but it's going in the right direction.

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And hopefully once we get a trend line

and again, that could take six months to

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twelve months, markets will

perceive that and like it.

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All right.

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And then doing this in order to help stave

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off inflation, the Federal Reserve has

started to increase the Fed funds rates.

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Can you tell us if that's good or

bad or how that impacts things?

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Okay.

I'm going to try to put that as good.

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If you're not borrowing bad, if you're

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borrowing, okay, but net, net, the Federal

Reserve probably waited too long to do

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this, but I'm going to give them a

pass because COVID was prevalent.

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But they raised Federal Reserve rates a

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quarter point already,

followed by half a point.

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And so basically, the Federal Reserve

is what we call normalizing it.

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Their target is probably going to be in

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that two and a half range,

which means over the next six to ten

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months we're going to have several

increases of one half of 1%.

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And what that will do is we'll bring the

Fed funds rate into that 2-2.25%

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range, and it's already had an impact on

SBA loans, installment loans, for

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example, you don't see the

0% specials on cars anymore.

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Most of them are 2.

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99%.

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And it also has an impact on mortgage

rates, which have gone from like three and

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a quarter to about five and a

half, five to five eights already.

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And then obviously, a little bit earlier

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this year, we saw the start of

the human tragedy in the Ukraine.

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Can you talk about how the Ukraine war

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kind of impacts the markets

and how we see them?

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Well, first of all, it's a tragedy.

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It's very Hitler like.

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It's sad.

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But markets perceive wars or conflicts as

they will end sooner or later.

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We may not like the ending.

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We may not like the resolution.

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We may not like how it ends.

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But once it gets closer to an end,

that cloud slowly moves away.

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We're kind of in this acceptance mode

right now as far as financial markets are

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concerned, where unfortunately, we've

accepted it,

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moving into the end phase, and who

knows where the end phase will be.

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But anytime there's a cloud out there,

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markets pull their horns in, as we've

been seeing the last three to five weeks.

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Right now with the current climate that

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we're in, what type of advice do you

have for investors or our clients?

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I have been in this industry now 40 years,

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and the analogy I like to use is you

don't want to over steer your portfolio.

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Over steering, in an ice storm will cause

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you to spin and go in a

ditch and have an accident.

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So reevaluate your objectives,

revisit your allocation.

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And if you want to be more growth driven

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and take advantage of this, you would edit

it up as far as equities are concerned, or

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if you're a little cautious,

you would edit it down.

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But you're going to see on the screen in a

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little bit this chart from Wells

Fargo Investment Institute.

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And if you look

on my left side where it says market

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downturns, the downturns since 1928 have

been classified in four different

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categories, 5% or more, 10% or

more, 15% or more or 20% or more.

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So right now we're in that 15% or more

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range, which means the average downturn

was 28.2% and it lasted 6.2 months.

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So if you made an edit in six months

it moves you may regret that edit.

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If you go to the other side and this is

more important

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if you have been fully invested for the

past 30 years or the past 20 years or the

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past 10 years and you remain fully

invested if you had a million dollars

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invested, for example, after ten

years it'd been worth 3.2 million.

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If you missed only ten days

out of those ten years your portfolio will

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be less than 1.8 million

or a lost opportunity of 44%.

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So staying invested

usually is the template.

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That's why we always encourage allocation,

its really what it's all about.

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Allocation dictates your success

and failure and your experience.

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Yeah, those are pretty staggering

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statistics when you look at not

being invested in the market.

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Ten days.

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Ten days out of thousands of days.

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Yeah.

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Quick Closing, is there anything else

that you would like to share with us?

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Yeah I just want to thank all of our

clients for their confidence and trust.

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We will help you navigate through this.

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This will probably last six months or more

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so you don't want to get accustomed to it

but when it does turn the signs to look

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for are an easing of inflation

the signs that the federal reserve may be

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slowing their pace and possibly resolution

overseas with the war.

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So those signs will soon to appear over

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the next six to twelve months and

we're here to help you with it.

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Well, thank you today, Byron, and thank

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everyone for watching our video here

on climate change in the market.

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We do plan on bringing additional videos

like this in the future so we hope you

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have a chance to take a look at those and

we hope you have a great summer and hope

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that you get out and have some great

incredible experiences so thank you.