Weathering the Current Storm

Hey, good morning everybody and thank you for joining us for our webcast on Weathering The Storm, where we're gonna talk about first half performance of the markets. I'm Mark Gochnour, head of Global Client Services, joined today by Jake DeKinder, head of Client Communications. And Jake, I swear, every time we come to a webcast, we say the same thing. It just was a really interesting time period that we just went through. It's always an interesting time period in the world and in markets and you're right, every time we walk in the studio, there's a major event that's happened. There's new news that's come out. We know that markets process that almost instantaneously, but there's a lot to cover in the first half of 2022 and I think a lot of good stuff to get into. Well, quick reflection, I mean, I think about, you know, us, we come back to return to the office, early part of the year after all the Omicron type stuff. You got the horrific war going on there in Ukraine. We got inflation, we got interest rate stuff to talk about, supply chain, lockdowns in China, all this stuff, you know, just creates a lot of things in the market and we got some great questions that the listeners submitted that we'll dive into here just about, how do I think about my portfolio today? Should I be making changes to it? How do I think about what's coming down the pipeline and how it impacts my investments? Well, and you highlighted a lot of different events and one of the things we hear all the time is, oh, it's different this time and as we talk about it, it's always different out there. There's new events that take place. The world is very dynamic but as we'll highlight here, we'll show some data, we'll reinforce some key principles. Regardless of what's taking place in markets and what's taking place in the economy and the world as a whole. You can come back to some fundamental principles of investing to give yourself the best chance of success. All right, well I'll tell you what, let's show the agenda today. We'll dive into it and give you a feel of what's coming. Now, to do that, I'm gonna call this sort of setting the scene and what we saw the first half of this year. Now we look at the S&P 500, first half, that was down 20 percent. We look at what was going on with bonds and we're gonna talk about this using the Bloomberg US Aggregate. That was down 10 percent, and then we talk about inflation. And those new numbers just got released here this morning, 9.1 percent. We'll dive into that in quite a bit of detail here in a little bit. But Jake, it then raises the questions of, okay, are we headed for the recession? And that's our agenda today. We're gonna talk about stocks, we're gonna talk about bonds, which leads us to interest rates and inflation and wrap it up with the conversation on recessions. And you look at those things, those numbers we just looked at, many of our listeners today haven't been through that as part of their investment experience, particularly probably all those things coming together at the same time. Yeah again, interesting start to the year. You look at some of the absolute numbers that you saw in stocks, you saw in bonds you saw at the same time and you're right. A lot of our listeners, and I think a lot of investors around the world haven't necessarily experienced a quarter like we saw in Q2 or a first half of the year. So, there's a lot to unpack in this six months here. Oh, you're absolutely right. So, let me go ahead and set proper expectations for what we're gonna get into. We have a lot to unpack as Jake said, very meaty type conversation. So, we're gonna probably spend the whole hour diving into these things. We're gonna show you a bunch of numbers, but we are gonna send you as a follow up to this a link with quite a few of the different slides and numbers we're gonna show you today. We'll give you where you can access that on our website, mydimensional.com. And then we are recording this. So, we're gonna be posting this hopefully, say on Monday of next week in case you wanna share it with some friends, colleagues, or you want to go back and kinda see a certain section there that jumped out to you. So bear with us here, we're gonna come at you. But I think it's incredibly important to dive into the right context of what's been going on in the markets, but then really more importantly, what does that mean to us as investors on a go forward basis, perhaps as we think through the rest of the year. So Jake, let's dive into agenda item number one. Talk a little bit about the stock market. Yeah. And some of the articles that you're reading, you know, say hey it's been a very rough start to the year. We've got a quote here actually, that came from the Wall Street Journal, talking about the worst first half of the year in decades. And a lot of the articles are referencing that 1970 time period where we saw a drop more than 20% in that first half of the year. And definitely a rough start to 1970. But like you find with a lot of news articles, they tend to hype things up and sometimes only give you half the story. Cuz if you actually look at the second half of 1970, what you saw is that the market was up 29% in the second half and it was up kind of an uneventful 4% for the entire year. So, we're standing here in the middle of 2022. It's certainly not a prediction that we're gonna see some massive recovery in the stock market. But just remember, when you're reading some of these articles, sometimes you don't get the full story. If you look over a little bit longer time period, it's kinda like talking to your kids. You know, you talk to your kids and sometimes you only get half the story of what your brother did and what your sister did. Well your kids are still young, as they get older, you get maybe a quarter of the story at best probably. But you know, you go back to, I think it's a good reminder. You think through these headlines and you know there's gotta be a hook, right? And so, so much nowadays and particular social media, you gotta click on stuff. So there's gotta be the hook. And I think that message that hey, this is the worst six months we've had to start a year out, you know, in over 50 years, that's a hook. But if they phrased it the other way of, hey, 1970 was up 4% you think relatively flat year. But I love referencing that year because it brings up the point to discuss, which is, is a 20% decline unusual? Is a 30% increase unusual in any given year? Like how do we get our perspectives on a 20% decline? Yeah. Let's go in and let's talk a little bit about the stock market here to kick off, you know, Mark referenced there at the beginning, S and P down 20% to start the year. So, what we wanted to do was dive in and say, okay, let's go back and let's actually take a look at some of these calendar years over the last several decades and what do we see in terms of intra-year gains and intra-year decline. So, to explain what we're looking at is you're looking at calendar years right here and you're looking at the largest intra-year gain in that teal on the top part of the graph and the largest intra-year year decline on the bottom part of the graph. Now to be clear, that decline means if it's down 20%, that means I could have already been up 30% and I dropped 20% during the year, so I'm actually at 10%. That doesn't mean that I was down 20% at any point during the year in terms of my absolute return. But it's interesting because you think about this year and yeah, we saw a drop of 20%, you just happened to get that drop of 20% starting on January 1st. And it's not that unusual necessarily to see drops of 20%. In fact, if we go back to the chart there, you know, just over the last couple of years here, you can look at 2020 and we saw a drop of more than 20% during the course of the year. You go back to 2018, we saw a drop of 20% in that year. So just in the last couple of years, at some point during that calendar year you got a drop. Now, what do you also see in 2020 is you got a pretty big pop up during that year as well. And really what we want to do is kind of take a look at, does it have any impact on the returns for the entire year? And that's what you're looking at with these yellow dots here. So, you kind of scan that chart, you see that in any given year you may have a big up or you may have a big down, but just because you have a big down, it doesn't necessarily mean that that's how the year's gonna shake out for you in terms of your return for the calendar year. Yeah, no question. I love this chart cuz you just highlighting the fact that in every year you see orange there, you know there are drops from a peak at any given calendar year throughout the year. But I got a number for you here. You look at all those orange bars and this is going back to 1979, what's the average of all those declines going out through that year? So, on average it's about 14% that we've seen in all those years together. Right. Okay, so just on expectation, 14 years just pretty much average of every year. Now, what about the year we're in now, so far we're down 20%. How unusual is that? And if you're to scan this chart, you'd notice there's about 10 years there where we hit 20% or more from the peak down there it was more than 20% and there's like three years that are sort of right on the edge. They don't count as part of that 10 cuz it's not quite a 20% decline. But again, 10 years that were more than a 20% drop, it's really not that unusual. It is. I mean look, you know, 10 years over the last 42, 43 years you see a drop of at least 20%. So, is it expected? No. Is it really abnormal of what we're seeing? Not necessarily. About a quarter of the years you see a decline, looking at calendar years, of at least 20%. And it's a great stat that you cited at of 14%, right? I mean you look at the average of all years, at some point during the year you're gonna have a decent draw down on average. Again, like I said before, you just happen to have had your drop starting on Jan 1 of this year. Yeah. Well listen, there's already some good questions coming in and and thanks to all of you in advance, that have submitted questions cuz we do have them here. And let me go ahead and read one. I thought that was just speaking to some of of the challenges we've had here the first half. Somebody wrote, I guess really more of a a comment, but person said, I never understood how or why I could do this. And I assume the reference there is investing in the market when you do have some of these swings year in and year out. And then a couple questions have come in just about, you know, so what do I do as an investor or should I be going to cash? And it raises some decisions investors do have to make there, meaning you do have these kind of swings, they're fairly normal, but what are you gonna do? You got two options, you stick with your plan or we go to cash. Now, what would be the outcome that we've seen historically to get a perspective on what if we just stick to our plan and say, yeah, market's down 20%, what does that look like on a go forward basis? Well, and that's what we wanted to do. We wanted to dive in and say all right, let's take all those times that we do see a decline of 20% and we actually take this data back a little bit further, we can take it back to the twenties. And as you look here, you know, every time you're down 20% or so, one year out, on average, you're up about 22%. That doesn't mean every single time but on average and we would expect that positive expected returns every single day in the markets. Three years out, it's actually 40 plus percent and five years out it's 70%. So again, look, we're standing here, we're not making a prediction of one year from today we're gonna be up 22%. That's not what we're saying. But you look at the aggregate data and every time you're down about 20, you see positive returns over these future periods on average. And I do love what you said about that question there. You know, I can't, I don't know why I could do this. I don't know why I can be invested in the market. Let's remember why we get a return as an investor. You bear uncertainty in some form. And listen, uncertainty's gonna come in a lot of different forms. It comes in drops of 20%, it comes in increases in volatility, it comes in uncertainty about inflation and recessions and we'll get into all of that as well. But fundamentally, that is why you get a return as an investor. You bear uncertainty in some form. Well, and again, thank you for the questions coming in. There's several here about what would your recommendation be for 77, I'm 82 years old, how do you think about that? I'm thinking about retiring in five to seven years. What kind of changes should I be making in my allocation? And I think a couple things jump out to me when we get these questions. One is that is the role of the advisor. I mean that's where you have there that person saying, okay, I know your situation and I know how aggressive we should be or perhaps shouldn't be relative to your tolerance for taking on this volatility. I know what you're needing over the next perhaps 10, 20, 30 years including retirement or your age. So, you can build a customized plan around that. But it still is a good question then Jake though about, we talked about this of saying, hey, what we've seen historically when you're down 20% you see some nice returns there. You know, if you had a hundred bucks five years later, on average it'd be about a dollar seventy there, we're looking at total returns. So, that's a pretty nice outcome there. But some people may struggle with, again, the emotional side of this and those variations in returns. So, we always ask what's the alternative to that then, you know, if I don't have the ability to stick with it and I go to cash, what do I have to accept as an investor if I make that decision? And what do we see historically, perhaps if you do get outta the market, what do you have to, you know, just accept or give up on? Yeah, let's take a look at that. So what we wanted to do was basically answer that question and say, all right, let's give you a return over, we'll look at 25 years here, you know, reasonable investment lifetime, a decent amount of time to be invested in the market. And over this period you would've gotten about a 9.8% return. You know, funny enough, if anybody ever asked you, the like what did the market do over some period or what's it gonna do going forward? Ten's always kind of the default answer. So that's actually what you got over the last 25 years or so. But what if you missed the best week? And what that's gonna do is it's gonna lower your return, obviously, down to about 9%. And I love this analysis Mark, because sometimes you see this analysis where they'll look over an 80 year period and they'll say, what if you missed the best five individual days in the market over 80 years? As I always say, nobody's that unlucky. No chance. You couldn't do that if you were trying to time the market. What this one does is consecutive days, consecutive trading days in the market. So, it could be Wednesday, Thursday, Friday, Monday, Tuesday, five days in a row, you missed the best week. It's obviously gonna lower you by about a percent, but let's put some dollars to it. Let's make it real. You coulda had a million bucks that turned into 10 million bucks over the period. You missed that best week and you turn your 10 and a half million into 8 million. You take that a little further and say, well what if you missed the best month, the best three months, the best six months? You know, you look at something like missing this best three month period right there and that's not that much time of being outta the market and quite frankly that's how people try to market time or that's how fear manifests itself in investors decisions of I can't take it, I'm really concerned, I'm pulling out of the market. Oh no, the market's running away from me. I want to figure out how to get back in. And that's also a challenge, right? It's always two decisions. When to get out, when to get back in. And as we said, the stress of being out of the market can be just as great as the stress of being in. And let me take this one step further, not just turning into dollars. Let's look at these time periods, right here. Look at this three month period. We just went through this a couple of years ago during that global pandemic and there's plenty of investors that were concerned and they couldn't take it and they got out and they turned 10 and a half million into 7 million. So, what we're going through right now of hey, I'm down 20%. Hey, I'm concerned about some of these things that are taking place around the world. Just remember markets can turn on a dime and you see positive returns come very, very quickly and they can come in large amounts. So again, not a prediction of what's gonna happen, just looking at historical events. Yeah, great comment there about the emotions of being in the market. It's hard to watch your stock part of the portfolio go down 20, but it's really hard to get out and then watch it back up and and miss that. I think what's so challenging about that too is so when do you get back in? And oftentimes you're with investors it's like, well I'll get back in when things have stabilized, when things are more certain. Well, what gets you more certain, right? The market market knows that. So you probably missed that increase there around that. Hey Jake, let's go back. I want to clarify a question that came in here. It was on the prior slide. I know you got a couple animations there if you don't mind. Yeah, no problem. Go back just real quick here cuz there may be some other questions around this. And it was looking at the 1, 3, 5 years we're just looking at there, the question was, you know, if you're down 20%, does that capture like really what happens, all the downside after that too? So, I'll explain it then you clarify it. This is saying for all that time period, going back to 1926 when there was a drop of 20%, here's what the following one year looked like. So, it would've included whatever the market did up and down through that time period. But on average, on a one year was up 22%, up 70% over five years. It included everything that happened in that following five year period. Oh, you betcha. So, that's basically a 20% fall from a peak to some level. But remember, all of those times that it fell more than 20%, that's gonna be captured in there as well. So, look, there's times when it's gonna go down 20%. And guess what? You may go down another 5%, you may go down another 10%, but all of that's gonna be captured in that one, three and five year number looking forward. And again, what does it come back to? Every single day in the stock market you expect to earn a positive return. Nobody would stay invested in the stock market. Nobody goes and invests in the stock market or stays invested in saying, Hey you know what? I got a hundred bucks in and I'm pretty sure a year from now it's gonna be worth 90. You wouldn't do that, you would not invest. So, fundamental concept of every day you expect stocks to be positive and as the time period increases, meaning looking out, you see more positive returns than negative returns. Powerful comment. When the market up 20%, you still have a positive expected return that day, when it's down 20% you have a positive expected return that day. So James, thanks for that question. And other questions have come in here about the slides, will they be available? What we're going to do, at the end of this session, we're gonna take you out to our website, dimensional.com and show you where you can get access to these slides. Most of the slides we're showing you are available on our public site. So stay tuned for that. That's our hook to keep you on to the end of the webcast here. All right, so I think that was a nice wrap up there. I think on the stock part of it, again Jake, just about positive expect return. Anytime you're in, there's a positive expected return there and you have a decision to make. But getting outta the market can be just as challenging as getting in. And again, there's a couple other references here too. Hey specifically, you know, should I make a change? Here's how much I have in equities. Should we be adjusting that? I think that's a good conversation to have with your advisor. And you know, there may be a need or emotionally if you wanna dial that stock exposure down a little bit, that could be okay, but it's probably the right number for you going forward. It's not something you wanna probably change in another four months or something like that. You wanna always view, and you're right, conversations with advisors are incredibly valuable, they're incredibly valuable in positive times in the market, in negative times, in neutral times. You always wanna be having that conversation with your advisor. But it really comes back to is there something fundamentally that has changed with you or with your life or with your situation. And you're right, look, there's nothing wrong with periodically making a change, but you want to view that change as a much more permanent decision, not a six month change. Yeah, absolutely. So, we always talk about the odds of success outside of knowing the future, probably sticking into your plan, being in the market gives the best chance of earning market rates of return. That's right. How about bonds? Let's talk some bonds. Okay, so stocks are down 20% in the first half. Again, calendar type item. Bonds were down about 10%. Now, that's the US Ag. So that's kinda a market barometer for bonds. Clearly a lot of our clients are going to be owning shorter term bonds too. So, you know they were slightly down, not not 10% there. But it brings up the conversation then about, I think the significance of a drop there. We talked about what we're seeing first half, like is a 10% drop for six months unusual? What does that look like on a quarterly type basis? Like what's our perspective around what performance should be for bonds? Yeah, it's a good question there because you know, when people think about bonds, they definitely probably think about 'em as a more stable part of the portfolio. When you do see a drop in the value of your bonds it probably surprises investors maybe a little bit more than it does a drop in in their stock portion of their portfolio. So we wanted to ask the question, hey if we can go back, and we're gonna take data back to 1976 on this one, that's when we can take that US Aggregate Bond Index back to, we wanted to ask the question, if I look at all those quarters, you know, how often do I see a positive return or a negative return in those quarters? And this number really kind of jumped out to me, it jumped out to you and we were having a conversation, I was having a conversation with my wife Jade and she was absolutely shocked by this number. That about a quarter of the time that you look of these observations, calendar year quarters, you get actually a negative return. And we were gonna poll the audience on this, so I apologize going forward a little bit too much. But I have to believe that when people think about how often bonds were gonna be negative, they gotta be surprised by this 23%. For sure. And yeah, we're gonna do a poll there. We'll prep it for the, when we do the stock question. Yeah. Cuz we're gonna at the same thing on stock. What percentage of of stocks, we'll look at that in just a moment, perhaps negative over our calendar quarters. But, I love to reference to Jade because Jade's awesome, super smart, PhD in the business school at UT, professor, like she knows numbers, but even you and I were surprised by that 23%. You just, you have in your mindset that the bonds are pretty stable, every now and then maybe but a quarter of the time surprised us a little bit. But, let's take a look though of how significant those quarters can be. Yeah, they can. And actually it's interesting to highlight on here. So, if you look at this one right here, Q1 of 1980, that's actually when we saw the lowest quarterly return. So, this one quarter right here, this was lowest quarterly return of any quarter that we've seen, including what we just went through in terms of quarterly observations here. And in fact if you take a look at what that number was, negative 8.7% to kick off 1980. So, really rough year in the bond market as we look at that quarter. But, you fast forward one more quarter and you're up 18%. Interestingly enough, that lowest Q1, Q2 was the highest quarterly return we've seen in the bond market. Q3 was the second quarterly lowest and Q4 is plus 1.4 for the year. You get about 2.7%. So, kind of interesting when you have these big swings negative, big swings positive. It's kinda like what we saw of 1970, right? Big drop, big up, but for the year not that eventful. Another year people talk about in the bond market is 1994. Now, let me just read a couple of those numbers here because, Yeah. You know, they're not seeing that slide up on the screen there. So Jake you talked about 1980, so let me just read these numbers. Q1 was down 8.7 like you said. Interestingly, Q2 was up, I think, 18.8. Q3 down 6.6 and then Q4 was up a little bit. So, that overall year was positive 2.7%. So, you do have some pretty big swings here going back even in the bond market as well. And we had a question here too from Michael just about, yeah, but can you go back and look at bonds over a longer time period? You know, in this case we're looking at it from 1976, unfortunately we're limited by the data on that one. If we have the data going back further, we'd for sure be including that and showing that. But the US Ag goes back to 1976. So, thanks for the question on clarifying that one. So, let's go ahead and bring it up here. Those quarterly numbers now you were just looking at there. So there's that, that Q1 minus 8.7. Yep. Let's take a look at, we didn't have that up on the slide there, but it's kinda interesting when you look at, so there's that Q2, largest quarterly return that we had ever seen in the bond market in Q2 right after that big negative in Q1. And we referenced these earlier, we didn't see 'em on slide but let's go through there. So, you're big negative, big positive, big negative, reasonable positive, for the year 2.7%, kind of uneventful there. And as I was saying, you know you look at 1994, which is also a year that a lot of the fixed income traders and people that know the bond market will talk about, rough year in bonds. You actually kick off the year with two negative quarters and then you follow that by two positive quarters and you're down just a little bit for the year. So look, this is not to say that hey we're looking at 2022, we had some negative returns, it's all gonna be made up in the second half of the year. That is not, we're not making any prediction on that. But it's good to note that even when you have negative quarters, it doesn't mean that your future quarters in a calendar year aren't going to be positive. We just don't know, ultimately, what's going to happen. Yeah, we don't know with that. And you know, there's a couple questions here about looking over time when you had high inflation and we're gonna dive into that. So, we'll get into inflation and how to think about that with interest rates too. But you know, 1980, it was a different time period. You look at the yields at that time there were like, 12 to 14%. So very different. But you're right, we just don't know what the second half is gonna look like other than we do see some of these price movements in bonds as well, but they tend to smooth out over time. And that's the other thing we want to keep in mind when we look at recent performance. Well and one of the points that we wanna make on this slide here is is that as investors, you know, it goes, goes back to the headlines. We tend to get caught up in the short term because that's what a lot of the headlines are written about. Hey, just what just took place yesterday, what just took place last week, the last quarter, the first half of the year. But as much as possible as an investor, when you can start to expand out beyond the short term and think more in the intermediate term, in the long term, you tend to find that those results look more in line with expectations. And as we said, the longer that time period goes out, you tend to see more positive returns in the stock market and more positive returns in the bond market. In fact, if we do that right here and we look on this chart, we had those quarterly returns in fixed income that we showed you. Let's take a look at what that looks like on an annual basis. And what you see is, is that looking, in terms of calendar years, since 76, you actually only see four calendar years where you had a negative return in the bond market as measured by this US Ag. Yep. And that raises the question then too about, you think about a year, it's much smoother on an annual basis, but then let's talk about going forward, how do we think about what bonds might be particular because of interest rates, right? And asks you to drive a lot of what bond prices do, whether interest rates go up or down or drives whether the capital appreciation of the bond goes up or down. So, let's take a look at interest rates here for a moment. And I wanna just raise the question here. When we talk about interest rates, what is the interest rate you're referring to? Because we hear a lot of the times, well interest rates have to be going up. Well, which interest rate are you talking about? Because most of the attention that's being discussed in headlines right now is what the Fed's gonna do. Well, what the Fed impacts is the fed fund rate. So, that's one rate and we're gonna look at that in just a moment. But I love what Gerard O'Reilly our CEO and CIO says is that, you know, if you look at the various maturities, types of bonds, globally, various credits, there's about probably over 500 various interest rates you can be thinking about. So, when we talk about interest rates going up, let's be very clear exactly what we're referring to. Now Jake, in this case, let's take a look at the fed funds rate. Okay, so that's again what the Fed is looking at and we see this going back, we just picked the century just to keep it smooth here over the last 20 plus years. You can go back, go to the Fed's website and get this all the way back there. You see it's ebbed and flowed quite a bit, started out fairly high, five to six and a half percent, big drop as we see there. Now, the question then is, what does that mean to perhaps other interest rates? And we're hearing about it, we just had a 75 basis point increase, three quarters of a percent in June. I think late July, we'll see what the Fed's gonna do again. Now, I think it raises is a great question of why do we think rates might be going up in this case the fed fund rate? Well, cuz they're telling us. That's right. Yeah. So if we all know, somewhere the impact of increasing interest rates is probably in the price today. You don't necessarily just say, you know what, we're gonna wait until the Fed makes a decision and then everything reacts. The markets are very forward looking in nature. So, let's do a compare and contrast here. So, we looking at the fed fed fund rate, which again is what we're talking about with the Fed, let's take a look at how might another interest rate look relative to these changes in the fed fund rate. So let's look at the 10 year Treasury. It's kind of a common bond that a lot of the market will look at. It's kinda used to evaluate mortgages and in other various tools here. So, let's take a look at that. What the fed fund rate would've looked like over time, or excuse me, the 10 year Treasury over time. And that's what we're seeing here in that yellow line. And I'll just highlight a couple things there. Jake, you see that massive drop in the early part of the chart there in the fed fund rate. You saw a little bit of a drop there in the 10 year and then it kinda just stabilized over time, came down, you see the fed fund rate went to almost zero, I think it was like eight basis points at that time. In the 10 year, treasury dropped a little bit, stayed relatively flat over that entire time. And then we get to the end of that graph, which is where we're at today and that's where we're talking about sort of this increase in interest rates that we're seeing. And in this case you did see an increase in the fed fund rate and we saw increase there in the 10 year Treasury. Now, let's highlight sort of the last, I'll say three or four weeks. So, let's go ahead. I wanted to give you some numbers here. And what we wanna do, and we're gonna throw a lot at you, but we wanna highlight how the markets anticipating a lot of this. You don't just wait until the Fed does something. Markets are always thinking through this stuff. So we're gonna give you some numbers. We're gonna talk about fed fund rate and the 10 year Treasury. So, to do that I'm going to give you the yields for those two, as of May 31st, so the end of May, the yield for the fed fund rate was 0.83 and the yield for the 10 year was 2.85. Okay, so that was the end of May and that did include an interest rate increase earlier in the year by the Fed on the fed fund rate. All right, now interestingly enough, let's just go to mid-June cuz that's right around to where the Fed increased rates another three quarters of a percent. June 14th, the 10 year was 3.49% yield. Now June 15th is when the Fed announced that 75 basis point increase. So the fed fund rate popped to 1.58. There's that 75 basis point increase. The 10 year went to 3.33 And then I'll give you one number here. And this is just July 5th, a couple weeks later the tenure was at 2.82%. So question, if I'll say in quotes, it's obvious rates have to be going up. Pretty interesting to see, actually decline there in the 10 year Treasury over that time period when the Fed increased interest rates. We've seen the 10 year Treasury went from was that about three and a half percent and went down to 2.8. Now, it's I think settled in around three or so, as of yesterday's. So, it's not always obvious that perhaps what the Fed does might impact all the other interest rates out there. Well it's a great example. You saw it on the chart. There's not a perfect correlation between fed funds rate and what's happening in the 10-year Treasury. And you just look at what we wrote up here. You know, you look at May 31st, right? You're sitting at 2.8 on a 10 year. Between May 31st and June 14th. What was the chatter? Okay, Fed's gonna raise rates. Are they gonna raise it 50 basis points? Are they gonna raise it 75? What's ultimately gonna happen? And what do you see here? That even before the official announcement on June 15th, the market's pricing in those expectations. And that's what the market's doing every single day. It's doing it in the stock market, it's doing it in the bond market. That's the way that markets work. And then what do you see? Well, you see that actually when the announcement comes out, you see a drop. Now why do you see a drop? Well one, that idea of an increase was already priced in. And let's remember there's a lot of different factors that are ultimately gonna affect that 10 year Treasury. Is the Fed one input into it. You betcha it is. Along with a hundred of other things that are taking place in the global economy, in the global bond market, in many different factors. And then you see it even start to come down more since then, to July 5th. So, just remember that when you read something about an increase in the fed funds rate, that means that yeah, that short term rate between banks and what the Fed set that's gone up, so many other factors are gonna affect market prices. And by the way, that yield on a 10 year Treasury, that is a market price that's influenced by many different things. Yep, many things. So, thanks for bearing with us on all those numbers. Appreciate you going through. But again, the key takeaway, the market's aware of what's coming down the pipe, they try to anticipate that the best they can. So everything we know today is in those prices already. We don't know Jake, what's gonna happen with interest rates. They may go up, may go down, may impact our buying prices. But that's what we're gonna see. The markets just, there's nothing that we notate that's not already in prices. Listen, trying to time stock markets of when to be in and when to be out, we showed you some of those numbers. Trying to predict what's gonna happen with interest rates, the level it's gonna go to, the speed at which it's gonna change, the direction that it's gonna go. It's really hard to do. You're probably better off putting together the long term game plan and sticking to it. All right, so let's bring it back then. We talked a little bit about stocks individually. We talked a little bit about bonds individually, but you know, how does that impact us, an investor? Most investors aren't all stocks probably, they're probably not all bonds, they have some sort of a mix. So, let's just think about that for a little bit here. Yeah, let's take a look. So, what we had earlier is we looked at fixed income quarterly returns. We actually wanted to ask the same question for equities. Let's look over that same period, let's look at the S and P 500 back to '76 and how many positive and how many negative returns do we get in terms of quarterly returns. And this is maybe where we can poll the audience. You know, we gave that number earlier of, hey, about a quarter of the time, 23% you saw negative quarters in bonds. I wonder what the audience would think in terms of negative quarters for stocks. All right, so those of you out there that are still listening, just shoot it in, whether you have the chance to submit questions. I'm just kinda curious what people are thinking. Go ahead and put a number in there. What percentage of calendar quarters do you think are negative returns? And so Jake and I'll chat for a minute and I'll kind of be monitoring this to see what people are submitting here. Cuz it'll be interesting to see on people's perspective how it compares to that 23% we saw in bonds. That's right. I do think that most people were probably surprised by the 23. We were certainly, we mentioned the conversation I had with my wife and she was certainly surprised by that. But we'll pull up this number here on the equity market returns. And I don't know if we're getting any submissions here Mark, on what people may think in terms of percentage. We got quite a few. I'll mention these. I love it. Okay, average amount, really fast. Go. 25, 34, 31, 33, 31 40. I'm gonna go. Looks like the average is coming in about a third. 33 to 35. About a third. Okay, well, well educated viewers for sure. About 27% of the time you see negative quarters in the stock market. But it is interesting when you say, Hey, what did I get in bonds? And maybe the way that people think about bonds, what did I get in stocks? And the way that people think about stocks there. I found these numbers very interesting, both the 23 and the 27. They surprised us as we looked at them. Okay, there's fantastic response to this. Here's what we're gonna do Jake, and maybe we even send it in our follow up email. We'll do the Wisdoms of the Crowd. Love it. We'll take the average of every input and see what it comes out to. Perfect. And we'll see how it is relative to, Now, that we gave the answer though, you can't take the responses that come in after. Yeah, yeah. Okay, no more submissions. Okay, so we showed here on hey we know what happened in fixed, we know what happened in equities. Let's also expand out our thinking on equities to look at annual returns. Again, that's one of the points we want to drive home on this webcast is yes, you want to know what's happening in the short term, you want to be aware of it, but as much as possible expand your perspective to longer time periods. And when you look at calendar year returns in the equity market, just like we did in the fixed income market, you actually only see eight calendar years that you've had negative since '76. So on expectation, you probably are lean, every year you think it's gonna be positive. And what does the data say? Actually, most years do turn out to be positive on a calendar year basis. Yeah. Hey, got trivia for you. You know, we talked about the worst quarter for bonds was that 8.7, calendar quarter. Right. Worst quarter, I'll throw this out to the audience, just think about it for a moment. Worst quarter, calendar quarter for stocks, when might that have been? Okay, fourth quarter of 1987 and this is the S and P 500, was down 22.6%. Now, does anybody remember what happened in the fourth quarter of 1987? Black Monday. Black Monday. October 19th. That day the market was down 23% one day. So, we've seen volatility in markets before. You know, you live through it as investors and again, it's tough sometimes to look at the historical data cuz you don't wanna read too much into looking forward. But you do look at what have long-term investors been through and all the different types of events and that's the type of stuff you gotta deal with if you want to capture the long term return of markets. Yep. Okay. Let's think about how those things interact together. Yeah, so we looked at, Stocks and bonds. Yeah, we looked at the negative fixed, we looked at the negative equity for quarters. What about when you put 'em both together? 9% of the time do you actually have it where they're both negative at the same time. And that's what you would expect from a diversified portfolio there. So kind of interesting. Now, let's take this a little bit further and let's actually start to think about what we just went through in terms of the last two quarters here. So, if we total up not just the quarterly, but let's look at the first half of the year cuz that's what we're talking about here. We cited these numbers earlier. You were down about 10 in change in your bonds, you were down 20 in your stocks at least using the proxies that we're using for stock and bond portfolios here. You know, you start to combine those together, which means that in a diversified allocation, a 50% stock of 50% bond, you were down 15 and change for the first half of the year. And by the way, looking on a calendar basis for this type of allocation, that's the lowest return we've ever seen, right? And by the way, that's always gonna pop up of the lowest, the fastest, all of that. But reality is, is that investors had to do endure kind of a tough first half of the year. But one of the things we've been talking about Mark, is expand your thinking from the short term, to the intermediate, to the long term. So, let's do that. Let's think about that 15%, that was on a six month basis. What did you get over the last 12 months, going back to July of last year? What did you get over the last 12 months in that? Well, obviously it's probably down cuz you had a big six month that was down as well. Well, let's keep down going down this path. What about three years? Well, actually over three years you were up about 5% annualized in this 50/50 allocation. Five years you were up six and a half or 6.3 and 10, you were up almost seven and a half in a 50/50 stock bond allocation. Now, you go out and you talk to many of the advisors we work with and financial planners and a lot of times they'll put together game plans, financial plans for the clients that they're working with. And you ask 'em a question, Hey, when you run your financial planning software 10 years ago, what would you have put in for a diversified 50/50 portfolio? What do you think you would've gotten? And the answer has come up many times. What? It's 5 to 6% oftentimes, maybe seven. Maybe seven. And you got seven and a half and you just lived through, we were coming off a US debt downgrade. We know we've had trouble with credit in European markets, we've lived through many different political events, we've lived through a global pandemic. We just went through a rough start to the year and you still got 7.4% in a 50/50. I think a lot of people, considering all of that would say, yeah, I would take it. And beyond I would take it, it probably kept people on track for their goals. And that's really what matters is, are you able to stay on track for your goals? Can you retire the way you want to? Can you send your kids to college? Can you do what you want from a charitable standpoint? And I gotta believe 7.4 and a 50/50 over the last 10 years, many people would've been on track for their goals. Yeah, totally agree with you. And you look at the short term performance like you see with that 15%. And and one thing to highlight, we should highlight for our listeners too like, that's just the S and P and the Ag. And many of our listeners probably have more of an orientation towards value type securities, Completely. Which perform much better this year, shorter term bonds. So, probably have much better performance other than the 15, we're just using broad market. Just using them as examples. Yep. And again, short term, I gotta give Anita some credit, she called out Black Monday to the question we asked there. But going longer term, going back to everything you described in the last 10 years, I think most investors would say, knowing that sign me up for 7.4% any day. Cuz for most investors out there that will probably keep them on their goals cuz what is that doubling of your assets over about a 10 year time period, so. Doubling over your, I mean you think about that, right? I was sitting back in 2012 and I had a million bucks, my million bucks just turned into 2 million bucks. Yep. Yep. Okay. Okay, good. There's some conversations about inflation out there. Let's talk some inflation. Questions coming on it. We just got it this morning, 9.1% month to month. Well, it's a year over year increase, but relative to last month it was 8.6, so it's up to 9.1 now. And I think it raises a really good question, which, two questions. The first being, okay, we're at 9.1, what's the expectation going forward for inflation? Second question, what does that mean for me as investor? How is that going to impact my investments as a long-term investor? Yeah, you're right on that. I mean, look, the reality is is we're all feeling inflation right now. I mean, you go to the grocery store, you go and you fill, you know, your car up with gas and we're dealing with that. In fact, someone here at Dimensional grabbed this picture here, which I thought was just absolutely perfect for describing kind of what everybody's feeling around inflation. And I literally filled my car up this week and I was feeling that it cost an arm and a leg to fill that up. You can trade your soul for supreme and then of course if you want diesel, you can give away one or two of your kids. Which, I'm fine with that. It depends on maybe how they're behaving at the time. But you know, all kidding aside, I mean this is what we're ultimately feeling right now and we know we just got the the 9.1 number that came in. So, as consumers and as people operating within the economy, were dealing with it. As investors, what we want to think about is what is it on a forward looking basis? What are the expectations that are ultimately baked into it? So, here's what we got in terms of year over year 9.1. And what I wanna show on this next chart here on this next bar that I'm gonna put up is what's the inflation expectation looking out one year? Now, let's explain what we mean by that inflation expectation. What that is is that's the difference between a TIPS bond with the government and that's a Treasury Inflation Protected Security, which means I can loan money to the government and any changes in unexpected inflation that come up, I'm actually compensated for as an investor. So, it's the yield on that TIPS minus the yield on a nominal, just a regular bond from the government. And that difference between the yield is the expectation that the market's telling us going forward. So, even though we have this 9.1% year over year, we just dealt with that, that's that's the past 12 months. Looking forward, over the next year, the market's saying on expectation, we actually think that inflation's gonna come down. And if you take and you move that all the way out out to a 30 year, interestingly enough, you start to see that pretty much decrease all the way out to 30 years. So again, we're dealing with the 9.9 in terms of that's what we're experiencing right now. But as an investor, what I want to know is what's the market pricing going forward? And at least looking at this, and this is as of this morning, the market's pricing that looking forward, they expect the market expects inflation to come down. Yeah. In in about a year. I think those are striking numbers and good perspective to keep in mind. I think the other thing to keep in mind there is as new information is released, those numbers are constantly being updated and revised. And you got a great example of that. Looking at it again, using a one year number. So, explain a little bit what we're looking at here because it's a very powerful slide in terms of how markets are absorbing that information. Yeah, so what you're looking at here is this is that one year break even inflation rate, which is that first blue bar that we put up on the previous slide. And because it's a market rate, it's going to change through time. It's being priced every single day by market participants. And what do we know about market prices? They're changing every day based on new information as it comes out. So, if we go back to January of 2021, we can kind of see a little bit of spike up there and then it kind of goes along flat and then we hit this 2022 period and new information starts to come out. Some of the information may be, hey, all of this talk about supply chains that we thought was maybe gonna clear up, maybe it's not. We had some events, some tragic events over in Europe and in Ukraine, which affected energy prices, which affected food prices, which affected global trade and many other things that were going on. So, what do you see the market starts pricing in an increase in inflation expectations looking forward. It peaked back here on March 25th. Now, interestingly enough, it has started to come back down. Now, why exactly it has to come back down. Many different factors are gonna impact that. Maybe it's perspective on supply chains, maybe it's perspective on en energy prices. Maybe it's concerned about decrease in economic activity, who knows what it is. But what I can do is I can look to the market for information about in aggregate, what do we think inflation's gonna be going forward? I find this chart absolutely fascinating and just look every single day that thing's being priced. Yep, absolutely. And I wanna take a look too then, how does it impact us as an investor in terms of our actual returns. So, let's start with stocks around that and take a look at does inflation impact what we're seeing year to year in the stock market? So, what we're looking at on this chart is the bars are the return of the S and P 500, but I wanna clarify, it's the real return. So it's the return minus inflation. It's effectively saying how much the stock market in any calendar year is outperforming inflation. And then those little yellows, we like to call 'em lollipops, that is what inflation is for that particular year. So, you just kinda scan that page and say, you know, there's no real relationship between what is inflation is doing and the returns of the stock market in any given year. Now, the challenge though on this chart with where we are today is, outside of last year, I think the highest number of inflation got was 4%. Okay, well inflation's not 4%. So, let's go back in time to another time period where we did see inflation be much higher than where we are today. And so now we're going back 30 years prior. So, now we're looking at 1960 through 1990 and you scan that, you said again, at a high level, do you see a relationship necessarily between inflation and what the market's doing any given year? And I wanna focus your intention on that period right in the middle, which is where we have seen much higher inflation. And not just any given year, little bit of persistence perhaps over a year to three years with higher than average inflation. But let's go back to that '73, '74 year on that chart again. And we did have a time period there where we did see inflation go up. It's pushing a little bit over 10%, I think it was 12.3% that year if I remember correctly. And you had a pretty rough time in the market. There's all kinds of things, I think some people probably remember sitting in gas lines, oil embargo, all kinds of things happening there. But look at the next year, you see pretty high inflation over a year or two and you see very good returns in the market and you kind of can see that continues. So again, as much as we want to try to simplify the world to say, Hey, this means that for our returns. Inflation will mean this impact on stocks, interest will mean this impact on stocks, all of that's embedded into our stock prices. And again, there's a forward looking nature to that. So I just wanted to highlight that. You can't just say this is gonna mean this to our stock portfolio. But it does bring up, I think your question though of how do you address inflation because it is incredibly important, has a huge impact on our purchasing power. And so there's really two ways to think about it, right? How do I outperform inflation over time? And then maybe should I hedge certain aspects of inflation? The unexpected aspect of inflation. Yeah, that's really what you want to do with inflation. I mean look, we're staring some high inflation and it's staring us in the face right now. So what do we do as investors? Get really clear on your goals. And there's a subset of investors that they do need to perfectly hedge unexpected inflation. They may have more immediate liabilities that are sitting out there, they're sensitive to inflation and therefore any changes in inflation, that unexpected component, they have to be compensated for. Great. There's awesome ways to do that. Treasury Inflation Protected Securities, we mentioned those, as whether other strategies such as real return, awesome opportunity to connect with your advisor if that's one of your goals. When you talk with investors though, a lot of 'em aren't necessarily trying to perfectly hedge inflation. They're trying to outpace inflation. So, let's examine that and let's stick with some of those high inflation periods. Cuz by the way, you don't get questions on inflation. We don't get questions on inflation when it's low. Advisors don't get it. And investors are not concerned when it's low, it's when it's high. So, what we did is say, hey, let's look at US inflation and let's look at above median years here. So, some of those high inflation years, many of which Mark cited here in that previous chart. And what we wanted to do was say, okay, so how do different asset classes perform in high inflation years? And let's first take a look at Treasury Bills. Now you see a negative return there. That is not saying that they had a negative absolute return. That is saying that after accounting for inflation, they failed to keep pace with inflation. You lost purchasing power being in something like a Treasury Bill, short term loans to the government, kind of a cash alternative. What about bonds? Cuz we hear that bonds are gonna get hammered in high inflation years. Well, what does the data tell you? Actually, government bonds and corporate bonds outperform. Remember, this is return above and beyond inflation. So, huge return above inflation. No, but positive. What about stocks? One thing we know is, is that if your goal is to outpace inflation, stocks are a great way to do it. At least historically we've seen that they've done well even in high inflation years. And you can look at the subset of stocks, some large cap growth and some small cap value. The reason that I like thinking about it this way is look, inflation, I think on the surface can be a little bit scary. We're dealing with it. As an investor, just get clear on your goals and you have the tools to accomplish it. I mean we talk about all the time, I love to work around the house, Mark and I go out to my tool bench and when I can find the exact tool to accomplish the job, I literally get a smile on my face and I think about inflation that same way. Yeah, it's a little bit scary. Yeah, it's expensive day to day. But as an investor, if I get clear on my goals, I know what tool to use. Yeah, well I don't like doing any of that stuff and I'm no good at it. So, I hired out and that puts a smile on my face, which. Outsourcing. Oh really? Yeah, outsourcing. It brings in the role of the advisor. That's a good point. Around, you know, the customized needs of the investors. Some may need to do that hedging, get with the advisor, they can work, because there really is an individual scenario. Some questions, let me just step back, a couple questions on will these slides be sent out. We're gonna get a reference on our website where pretty much everything we're showing you here is accessible on our public website. A great comment here about '73, '74, they referenced that they remember their dad getting a second job for some additional income. So tough time periods. For sure. For back then. Jake, we got a little bit of time here, so let's keep going and talking about recessions, which is really bringing it all together. We talked about where we've seen it with markets, historical perspective, how to think about it going forward. Same thing with bonds, a little bit of inflation. But does that lead us to this question? Are we going into a recession? And if so, what does that mean for us as investors on our portfolio? So let's address recessions here very quickly and I got some numbers to do that. Let me set the stage here with the slide we're looking at. So, what we are looking at here is the growth of a dollar. Going back to a last recession we had, it was, I think it was two ago, it was during that time period, I always call it 2008, 2009. But that time period where we had the GFC or the Global Financial Crisis and we're looking at the growth of a dollar of an investment in stocks. Now, I wanna bring some dates here into play here, okay. This is was a recessionary time period. Now, let me tell you the date when it was announced that we are in a recession. Official announcement. When it was announced? Yes. It was announced December 1st. Let's just call it December, 2008. So, that's gonna be about right here and that's announced. Okay. We were told we were in a recession. Yep. And then when did it end? When did they tell us it was over? September, 2010. September, 2010. So kind of all the way right out here. Okay. All right. So, I'm going to ask a question, rhetorically before I give you the rest of the data, which is what happens when we go into a recession? Do you wait and wait and wait and then once the NBR says, okay, we know when we started a recession and then prices drop or do the market say, Hmm, we're aware of everything going on out there, we're reflecting what we think is gonna be impacting, ultimately corporate profits and that's gonna impact prices of those securities. So, do you wait till you're told your inflation or do markets already work towards that in advance? I mean markets, we saw it with the interest rate example that we did earlier. We've hammered it home repeatedly in webcast. Markets are constantly incorporating information. Yeah. They're not waiting around for an official announcement of, oh yep, we're in or we're out of a recession. So let's go back to our chart there again, I just told you when it was announced, December, 2008, we were told we're in a recession. When did it start? December of '07. That was effectively when they came back and said, hey, here's when it actually started. Okay, well by the time they told us we were in one, what happened to prices? They were down, they moved well in advance of when we were being told we were in a recession. And let's just highlight the point with another slide here. Okay, let's go back to the recession two years ago, back in 2020. So we're looking at a similar type chart here. Here's the performance of the market during that year. Now, during that time period, it was announced, we're in a recession in June of 2020 and they told us it ended in July of 2021. Now, the actual start date, when they told us they announced, I don't even have July of 2021 on this chart. You can draw on the wall. That's right. Over there. Yeah. It was February of 20 is when it started. Yep. So again, I think our folks get the point, but I love this chart because I think it's so incredibly valuable tool visually to see how the market is anticipating all of this looking forward. So, I know there's so much talk about are we going to be in a recession? Are we not gonna be in a recession? How is that gonna impact our portfolio? I don't know, but the market's aware of this stuff. So, it doesn't just mean once it's said we're in one that somehow prices are gonna drop 20%. We know the challenges we have and that's in prices today. Well look at the, I mean go back to this chart right here and look when you're actually in and look at what's happening to markets, right? Constantly incorporating information. We remember what was taking place in February and March of 2020. And let's also remember, this was a very, very short recession. You know the kind of the technical definition is, is that you get two quarters of negative GDP growths. That's one input. Let's remember that it's a group of economists getting together, taking in many different factors there. And so many times what you see is, is that when you are actually in the recession or when you're officially, you may already be out of that recession when it officially gets announced. Markets are instantly incorporating that into it and in a very short recession, you saw that markets were pricing that stuff in almost instantly. So right now, are we in one? Are we out of one? We don't know. But maybe part of the reason that we're seeing a drop in the price of the markets is it's incorporating the possibility that we may be going into one or you know what? We may already be in one. All right, so let's go some resources. I mentioned that earlier, we're gonna highlight some things on our website, dimensional.com. Now, we're gonna start with the first one, which there's a fantastic interactive chart on the website. Jake will go there, we'll highlight it in just a minute. And it goes through all the recessions that we've seen historically. And it's gonna highlight just a whole bunch of economic numbers around the respective recession. Here's what the market did, here's what GDP growth was, here's what inflation was, unemployment. And it's really interesting to go through and just kind of click on it and get a sense for what was going on in those respective recessions because it's not rinse and repeat. Each one is unique and different in that particular time period. So, we're gonna highlight that interactive chart and then we're gonna highlight a couple of the other slides that we used today so you know where to go be able to get these. So Jake, we all set on the website? All set to go here. Okay, so let's highlight, Yeah. Let's start with perhaps that recession one. Certainly. And so what we're looking at here is this is the public website that everybody has access to, whether that be a financial professional, individual investor, whoever's tuning into our broadcast. You can go to us.dimensional.com and go to this Insights tab, right here. And when you go to Insights, you can see right over here on the right hand side, this perspective, Market Returns Through a Century of Recessions. This is a great interactive chart that the team here at Dimensional has put together. And what it's gonna do is it's gonna take a look at different recessions over the last century or so. And it's interesting to note that if you look at the last 100 years or so, we've actually been through quite a few recessions as investors. It's maybe not as uncommon as people think. It's painful when you're going through it, but we've been through plenty of these things in the last century or so. And I love going to this chart here because what you can do is you can go back and you can look at individual recessions here. So we can take a look back here at the one, let's go right here, hang on one sec. And we'll take a look at Great Depression and what we see in terms of some data there. And you're gonna get awesome numbers in terms of what was industrial production. What was inflation? What was unemployment? How long did it last for? What's the market downturn, peak to trough? And Mark, you brought up a great point earlier, which is that each one of these is going to look a little bit different. The cause of it can be different. What inflation is during it can be different. What GDP contraction is, how long it can last for, the market peak to trough. It's really interesting when you go in and break those down, that there isn't this cookie cutter recession of what we go through. Yep. So spend a little time on that, check him out. Let me highlight the 1991, Jake, I think that's the Gulf War one. You got that pulled up there. And again, you look at that area in green. So that is the actual time period of the recession. Now, I wanna highlight one thing here. That's when it officially started and ended. But remember, for me, the real issue is when were we told about the recession. So, you look at that time period that on that 1990, it was announced that we're in a recession in April of 1991, which was after the recession was over, officially, right? So again, that point about markets anticipating a lot of these kind of things. So, just great examples all throughout there. Very fun chart to flip through and kind of get perspective on what we've seen in various recessions. Well for sure. And we just showed earlier in terms of that peak to trough in the stock market. I mean, look what's happening there, right? That recession's officially kicked, hasn't been announced, but it's happening and that market's starting to price it in. That's a great chart, great interactive piece that everybody's got access to. All right, let's highlight a couple other pieces here as we round out the day. Yeah. Let's go back to the Insights tab. Again, everybody's got access to this, but I'd highly encourage you all to follow the links that we'll send out afterwards. And great resources from Dimensional here that are gonna give perspective on many things that are happening in the world. You know, you see that one right there. The third one, in terms of what happened when you fail at market timing, that's some of that data that we showed in terms of missing the best week, missing the best month, really good one there. Are we headed for a recession? That's gonna have some additional data of what we just highlighted and giving perspective that markets are really forward looking. David Booth's got a great piece, "What's Your Plan for the Bear Market?" Anytime you get a chance to read a Booth piece, I would highly recommend it. Some more stuff down here on, is There a Light at the Inflation Tunnel? We got some stuff on FANG stocks, which by the way, will probably come back in a future webcast. And then this history shows that stocks can add up after big declines. Mark, that's some of those numbers we showed of after declines of 10, the 20% we showed and others, what do you see one, three and five years out? Yeah. So fantastic resources. Be sure to check them out. We'll be sending you the links after this webcast so you can have easy access to 'em. Okay, Jake, we got a minute and a half left and so we're gonna use all of it here. And let's just go back. We always talked about, so what do we wanna keep in mind is investors, what gives us the best chance of success over time? If we knew the future, we'd be trading like crazy knowing what's coming. Nobody does. So what do you do that gives you the best chance? Let's just walk through some of these. Yeah, let's just hit a couple of these quickly and we'd love to really focus on this point of, it's always different. We talked about how, hey, the cause of the recession, the data points within recession are always different. The global events that are taking place. I don't think anybody expected a global pandemic. That was different, right? Do you expect these downturns that we got in the first half of the year? I don't know. Maybe, maybe not. But remember, it's always gonna be different but you can come back to some fundamental principles of investing. Yep. And we got some questions coming in too, in advance, even today of, well what's Dimensional doing differently in this environment that we're in? How are we gonna think about the war going on? And it goes back to those fundamental principles of do we know anything that nobody else knows? Do we know the future? No. So, what are we gonna do to manage our shareholders money in the most efficient way possible? And we're gonna stick to what we do, we're gonna stick to the strategies and make sure we implement them and manage them very flexibly every single day. So, that's what we're gonna do. And our systems are built for volatility. They're built for time periods when prices go up and down very, very quickly, that's when, quite honestly, we're at the best relative to others out there. So, it's always different for us too, but we stick to what we're gonna do in our portfolios. That's right. You know, another thing to remember is, that uncertainty and returns are related. It's not pleasant to have a market drop. It's not pleasant to not necessarily know when inflation's gonna be. Is a recession coming? What's gonna happen in the bond market? Remember why you get a return as an investor. You bear uncertainty in some form. But also remember that expected returns and realize returns can look very different. We expect every day and every single year to get positive returns in the stock market and the bond market. Reality is, is it doesn't always shake out that way, but as that time period extends, you start to see those positive returns line up a little bit more with expectations. This one I think is so true. I think most investment questions are market timing questions. I'm concerned about a 20% drop. I'm concerned about inflation. I'm concerned about recessions. The question is how do I get the good and how do I avoid the bad? If it was that easy, everybody would be doing it. And kind of a summary one here to drive home the point of you're probably better off having a logical approach. Look at the evidence, stay diversified and focus on the long term. Yep. Okay, great summary. Everybody, just thank you so much for tuning in. Hopefully, they gave you some helpful perspectives on what we've been through and how to think about things going forward. Be on the lookout for that email that will have those links to those pieces that Jake just highlighted. And Jake and I are gonna come back, I believe it's August 24th. If you'll have us, we'll come back. We got some questions around crypto we're gonna address, talk a little bit about technology, some of the things we're seeing with FANG, and then also talk about investing outside of the US. How should we be thinking about what we're seeing in markets and developed and emerging markets as well. So, be on the lookout for that coming on August 24th. With that everybody, thank you so much for tuning in here. I hope you all have a cooler rest of the summer than we're having here in Austin, Texas. But have a great rest of the day. Great summer. Thanks.