00:00 Speaker A
Stocks turning negative today as investors process the latest comments from Federal Reserve chairman J. Powell amid tariff uncertainty. In an environment where investors are concerned about possible inflation or even a potential recession, is now the time to change your investment strategy or should you stay the course? For this, I’m going to bring in Lee Baker, Claire’s financial advisor founder for this week’s FFA Corner brought to you by Capital Group. Thank you so much for being here this morning, Lee. So I get it. We keep hearing about people nearing retirement, they’re changing up their strategies here, but what about those folks who do have a longer-term investment horizon? Are you hearing about them selling out of their stock allocations at all right now or are those more long-term investors staying the course?
00:55 Lee Baker
Not a lot. Yeah, I’m not hearing a lot of the the people that have a while to go before they need those funds selling out. Uh, we’ve gotten a few of those phone calls, uh, but that’s been balanced against some of those phone calls that came in and said, hey, listen, is this perhaps like back in 2020 with COVID and do you see any opportunities so far, uh, like you saw in in COVID back in 2020? Now, the answer to that question is no, I’m not comfortable with any, uh, opportunities yet that jump out at me and say, yeah, listen, let’s let’s grab, uh, a bucket of whatever, uh, stock. Uh, but there’s there’s balance there between people that are saying, hey, now, is this a good time to buy? Uh, but just a handful of people saying, you know, listen, let’s reallocate because this is making me too nervous.
02:32 Speaker A
So then where where is that opportunity for those investors who are maybe looking to deploy capital in this moment? Are you thinking that there is opportunity still in the United States or should they be looking more global?
02:48 Lee Baker
I’m thinking looking more global, uh, and I’ve been thinking that for a while which has only been accelerated by, uh, everything that we’ve seen in the last few weeks. Uh, the international markets trailed the US as we’re coming out of COVID and when we look at overall valuations, uh, the relative value here in the United States versus a number of areas abroad, uh, the international market looks much more appealing to me over the long term.
03:28 Speaker A
And I want to bring in Stuart Kaiser with City. So do you have a question?
03:34 Stuart Kaiser
Hey Lee, you know, if if you’re one of these folks that actually got a tax refund, you know, this month and you want to keep your money in the US, I mean, are you telling folks to put that in bonds or maybe buy a really safe stock? Like how are you recommending new money get allocated at this point?
04:11 Lee Baker
Yeah, with some of the new money, we’re looking at a couple of things. So you mentioned bonds. Uh, because of the potential impact and in my opinion, the likelihood of an increase in inflation, we’ve been looking at tips and and shifting the fixed income allocation in a lot of our client portfolios towards, uh, tips ETFs. Uh, so that’s one area that we think in the grand scheme of things is relatively safe. The other thing that we’ve been making more allocations to are a variety of what are called buffered ETFs, uh, where we’re having the conversation with some clients and saying, listen, I don’t believe in getting in and out of the market. There is no market timing hall of fame. Nobody gets it right, including myself. But if you’re willing to give up some of the upside, if the market turns around from where we are now, in order to have that floor and cut off any potential losses over the next six to maybe 12 months, that’s an opportunity as well where we’re looking to deploy some capital.
05:44 Stuart Kaiser
And how would gold fit into that that, uh, that math for you?
05:55 Lee Baker
Uh, so gold is one of those things that we think, hey, listen, gold and other natural resources, so don’t want to forget about copper, silver and all the rest. Gold absolutely fits in there. Now gold gets all the attention. Uh, in my opinion, it’s a part of the fear trade. People for eons have considered it a store of value and we’ve continued to see some run-up in gold. The thing that you have to remember, uh, with gold, particularly if we’re looking at it from a physical standpoint is, hey, listen, you can run into your local Costco and and get a nice ingot and that’s fun, but what are you going to do when it’s time to sell it and you need to deploy that capital? You need to spend those dollars. Uh, so perhaps consider a gold ETF, uh, in small measure. It’s not something that I suggest making a a wholesale shift into.
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