All right, so you're a customer at a brokerage firm,
an investment bank and you're nervous and you're calling a
lot.
That typically happens when we're in the middle of a
free fall.
Maybe less so right now,
but who better to ask than the Edward Jones CEO,
Penny Pennington back with us.
Penny, always good to have you.
What are you hearing from your customers?
What are they saying? I'm sure sometimes there's a lot
of hand holding and just sort of guiding people through
it.
But what do you, what do you been noticing?
Absolutely Neil, great to be with you again.
Well, what's going on right now is the market looking
for certainty and our clients working with our financial advisors
to ask questions about their financial plan to make sure
that they are still on track to achieve their short
and medium and long term goals.
Like things that you've been talking about purchasing their first
home or maybe moving across the country to be closer
to loved ones or closer to their grandkids with
which is my life right now.
Also thinking about those experiences like going to Disney World
and taking their kids and grandkids on and having those
experiences.
So on Monday we would have had a lot of
conversations with our clients to say,
yes, you are still on track
and let's look for the opportunities.
You know, the, the market helped,
helped a lot of investors rebalance their portfolios on on
Friday and Monday.
And we'd rather our clients
do that according to their schedule rather than the
market's schedule. And so this was a this was an
opportunity during times of volatility to really take a step
back to focus on the medium and long term,
to make sure that the portfolio is well balanced and
to look for those opportunities at the same time,
you know, no one has a crystal ball and can
tell exactly where the markets go,
but they don't necessarily follow the exact same pattern,
but they usually have the same bumpy trajectory after the
freefall.
Nothing like, and I know a lot of people were
trying to sort of conflate the last big financial meltdown
with what was going on here.
I'd always like to point out that at that time
we were losing hundreds of thousands of jobs every single
month this go round,
where we reacted to a report that showed
114,000 more jobs in the month.
It was deemed disappointing, but it was not a collapse
in employment.
So what is your view and what do you tell
your customers about where this economy is now,
where these markets are now?
Yeah,
one of our best financial advisors says a good plan
is better than a bad prediction.
And so I'm not going to make a prediction here.
However, this economy is, is a strong economy.
We're in this world of bad news is bad news
and good news is bad news.
Don't forget, just a few weeks ago,
we saw an inflation report that was lower than what
was expected.
And that's what people were looking for.
We're actually can see seeing consumer demand soften,
which means inflation is coming down.
We're seeing services inflation beginning to pull back.
So all of that says that the the economy is
resolving toward a softer economy,
a softer labor market, but the fundamentals are still very
strong.
And I think we should also not forget that the
promise of AI and technology is going to enable our
economy to be even more productive and innovative.
I think there's great promise there.
There's one other thing that I,
I want to say about the,
the volatility that we should be expecting right now given
inflation, interest rates and a coming election.
You know, it's very interesting that in election years it
is more likely that the market is going to be
up and up more in an election year than in
a non election year. That's generally going to happen after
the election occurs
because there's certainty then. So what we say is don't
play politics with your portfolio.
Stay stay focused on your medium and long term goals.
Make sure you're looking for opportunities.
If you've got questions, talk to your financial advisor about
that.
Those questions are, are, are real and they,
what, what's happening in the marketplace right now is affecting
real investors and their plans.
We're here to help. And,
and, and it depends on their,
their, their age as well,
right? Depending. I mean, obviously the younger you are,
you have more time to sort of adjust to this
and,
and, and, and sort things out.
And longer term, the market is always,
I think 80% of the time is,
is, is, is friendly to you.
In other words, 80% of the time going up,
20% of time going down,
but that is over, you know,
more than a century now.
And then then there are periods where you lock in
to a series of sell offs because some sectors got
rich.
You mentioned AIA, lot of the key AI players are
coming back,
but but many of them are already in and out
of 15 to
20% corrections from their highs.
Obviously anything more than 20%
puts it in a bear market.
So the reason why I'm mentioning it is that even
some of the promising investments are are taking it on
the chin.
Now again, it gets back to how you advise a
younger investor versus an older investor.
The older investor who might be looking at retirement pretty
soon is looking at this and freaking out,
right?
Typically a younger investor, you said it has has more
time,
but that's kind of a rule of thumb with each
of the clients that we work with,
each of the families that we're engaged with.
We talked to them about their goals,
their short, medium and long term goals.
We also talked about their tolerance for risk.
And you know that that's a that's an abstract phrase.
What it really means is how are you going to
feel when we hit a bumpy point in the market?
Are you going to want
to to retreat or are you going to feel more
comfortable continuing to engage even in a volatile market?
That's a family by But when you say engaged penny
in a volatile market,
But when when you say engaged in a in a
volatile market,
I didn't mean to jump in here,
but it does that mean engage but in more conservative
investments of dividend paying stocks,
utilities, that sort of thing.
Maybe don't go to the,
you know, the, the big sexy Fast Market names.
If it if it makes you lose sleep,
How do you you obviously you want you can't get
inside every
investor's head. But isn't that what's going on right now
among a lot of investors?
What do I have the stomach for?
Absolutely. You're absolutely right. Now fundamentally though,
every investor needs to be well diversified according to their
tolerance for risk and and volatility.
But you need it. You need in your portfolio something
that you're always going to be a little bit mad
at.
Not everything in your portfolio should be making you supremely
happy because you never know when that sector is going
to turn or when that asset class is going to
shift. That's why diversification is so important and why it's
so important not to lose focus,
not to panic at times like this.
Just think, Neil, if, if,
if investors had been out of the market the last
two days because they got afraid on Friday and Monday,
that would be a real shame.
And this is, this is where real good financial advice
comes in,
helping people take the emotion out of these decisions and
remain focused on their goals.
I know you avoid investment advice or where the markets
are going to go and you're,
you're wise to stick to that because even the brightest
minds I know don't know.
So, so I, I'd like to get your sense,
having gone through a couple of other down cycles,
what's a lesson we learn the stick through it.
Rejigger your portfolio a little bit if you're nervous about
it.
What
it it's a boring answer,
Neil. It, it is the way it is always been.
As an investor, focus on your goals.
Get real clear about the possibility that you're looking for
in your life.
Work with a financial advisor to scenario.
Plan against that. What might happen,
What might happen if something shifts in the market?
But what might happen if something shifts in my life?
Have a couple of scenarios in mind.
Make sure that you have a well balanced portfolio according
to your stomach for volatility.
And then continue to stay engaged with your family and
the goals that you're that you're trying to achieve together
and your financial advisor to help you stay on track.
It's as simple and as boring as that.
No, it's very good advice,
Penny. What I try to tell my family when my
sons start calling,
asking how are investments? Dad,
I always like to reframe and say,
well, your mother's investments and and mine are doing quite
fine and I'd like to reposition that because there's no
Gimme that they're getting anything.
So I think this tough love approach can can be
very beneficial in the market downdraft.
Penny, terrific job. Great catching up with you.
And some very sage advice on just stepping back and
looking at the big picture.
We always appreciate that.