Investment Haunts: Tricks, Treats, and Spooky Headlines in the Market

Well, good morning, and thanks so much for tuning into our special edition Halloween webcast. I'm Courtney Scott, and I'm joined by my colleague, Jake DeKinder. Court, as always, it's great to be here in studio with you, and fun to be here on Halloween. Yeah, our production team had fun with it today. We got a little spooky music and some orange lights. We always love a good theme, and the way we're gonna do it today is we're gonna talk about all of the investment haunts that are in the market, and you're gonna see a theme of fear and greed. As investors, we encounter both of those. And so what we're gonna do is categorize them in forms of trick or treats to go along with the theme. And we're gonna look at the last 12 months, really, all the events that took place, and put it into some context for investors. You were excited about this one, to do your trick or treat broadcast, but I think you're spot on with that. I mean, preying on those emotions of fear and greed, that's what the financial media does. We'll look at some headlines, we'll look at some things that are going on in the market, and I think one of the big things we want our viewers to walk away from is, is that it doesn't mean that you don't wanna stay up on what's going on in the world and what's going on in markets. A lot of the articles that you read, there's good data and information that's included in there, but you have to realize that the way that many times they get your attention is preying on those emotions. So you always wanna sort of approach the financial media with a high degree of skepticism. I think about it a little bit like a horror movie. We'll talk a little bit about that since it's Halloween. You know, you can watch a horror movie, and you can understand that it's entertainment, but it doesn't mean you have to rush right out and board up your windows and your doors, 'cause the goblins are gonna come in, right? And I think anytime you read some of the stuff in the press, you need to understand that a lot of it is just entertainment. That's right, but we're humans. We have emotions. And I know myself, I was talking with a friend about this "Blair Witch Project." That movie really got me. It had a very low production value. I knew it was completely fake, but the entire time I was watching that movie, I was incredibly stressed out, and I knew it wasn't real. But as a human, and as having these anxieties, you really fall into the trap. And not to say that all media is a trap, but like you said, it's important and healthy to have a certain amount of skepticism, because you wanna think about your long-term goal. You don't wanna miss out on future expected returns, and you really wanna think about your plan 10, 20, 30 years out. Also speaks to the role of financial advisor. Yep, absolutely. Yep. Alright, so it's not just us talking about this today. Luckily we have Isabelle Williams and Wes Crill both in studio as our subject matter experts. Thanks so much for joining us today on Halloween to talk about some of these investment trends and recent events that we've seen in financial news in the market. And why don't we go ahead and start with some recession headlines? It is impossible to listen or watch the news without hearing about what may be an impending recession. And it's scary, and investors are trying to make sense of, okay, if it happens, will it be like the last time, and when it does happen, how is that going to affect my portfolio? Will the markets tank? And understandably so, people are concerned about what could happen to their investment portfolio. Yeah, absolutely, I think if you're talking about all the things that are haunting investors in the media right now, that looming threat of a recession is certainly been the monster in the closet for the last year or so. We've been hearing repeated predictions from pundits, from even government officials, Fed officials warning of a looming recession. And that can obviously be very scary for investors, for most people. We've experienced a few recessions in our investing lifetime, and we certainly remember the pain of those in the moment. But I think it's very important when we're processing headlines like this to see exactly what you see on this chart here, which is that we've been hearing the same thing repeatedly for a while. And in fact, hardly a year goes by, even in the best of times, when you're not gonna hear somebody threatening a looming recession. It is just one of those things that we have to deal with. And these are usually claims that we don't need to give a ton of credibility to, because oftentimes, they don't pan out. And more importantly than these headlines that you see, if we actually look at returns in the market, you'll see that for the 16 recessions that we've had recently, or not recently, but in the last handful of decades, you'll see that by and large, three years after a recession, market returns were positive. And there's a couple of things I wanna take note of here for investors. One is that recessions are always called with the benefit of hindsight bias. You can't really call a recession officially in the moment. It's called of course by the NBER, and they're gonna use historical economic data and they're going to call a recession oftentimes after the recession has actually started, and the market has begun to recover. And what is really critical, I think as a takeaway here for investors, is that recessions are usually about looking back and commenting on the economic environment. Markets are forward-looking. So of all the things to worry about when you're worrying about a recession, your portfolio is probably one of the last things you should be worried about, because your portfolio is forward-looking if it's using current market price information. There are other things you may reasonably consider if you're worried about a recession. Maybe it's a good time to evaluate lifestyle creep. Work with your advisor to make sure that you have other plans in place in your holistic investment portfolio, your insurance that prepare you for all different market conditions. But your portfolio is going to already be in recovery most likely by the time you realize that it's a recession. So you really have to tune out the noise of those headlines that we're seeing. That's a really good perspective. It's not something you would initially think looking at your portfolio that, okay, this is forward-looking. So this really isn't pertinent to what's happening right now in my investments, because it is already priced in. And the way I look at this is a lot of investors try to use recessions as a way to time their portfolio, or go in and out of certain investments. But when I see this, looking at all of this data, I feel like I couldn't time this if my life depended on it. It can be really hard and very stressful if you try to make movements based on a recessionary period. Absolutely, I think that's a great point, and because not only is it incredibly hard to try to time a recession by getting out of the market at the right time to avoid the worst, it's actually even harder to try to time a recession for when to come back into the market. And that may actually be the bigger deal in an investor's long-term experience. Even if you got incredibly lucky and missed a bad day or two in the market, if you also missed the best few days in the market, your long-term return experience might be worse than if you had just stayed along for the whole ride. And so it's trying to accomplish both those aspects of a timing strategy, really not something that any investor is capable of reliably doing. One thing to note here, for anyone who's not already convinced, if you look at this data, so 13 out of the 16 observations for these returns during recessions were positive. If I look at just every three year period on a rolling basis in the history of the US market, the frequency of positive outcomes over those rolling three year periods, 84%. You're basically getting an average kind of outcome here looking across all of these recessions. It's good points that you make. I mean, just go back to 2020, right? I mean, how fast was the downfall? How fast was the recovery, two-month recession that we looked at right then? And to your point, trying to time that of when to get out and when to get back in, almost impossible, and great point there, Wes, in terms of looking at sort of all of the periods, and then looking at recessions. You just can't time this stuff. And I look right here, I mean, investing's about putting the odds in your favor. I look at a chart like this and I see a lot more that end up above the line than below the line. Hey Wes, let's come to you. Let's talk about another topic, AI, super popular right now. Lot of chatter about that, lot of articles written about it. I think there was a report around looking at earnings calls, and how often it was cited in public company earnings calls compared to last year. And it's just off the charts. Yeah, it was more in the first two quarters of this year than all the last two years, which was kind of funny. You mentioned chatter, and I think that's an appropriate place to start with AI, because a lot of people have started to take notice of artificial intelligence because of ChatGPT. For many of us, our experiences with AI probably go back much further. Mine actually started off in the nineties, if you can believe it. It was when I was using Microsoft Word back then, and I found that if I started typing in Microsoft Word, "Dear so-and-so," followed by a comma, this enterprising paperclip named Clippy would pop up, and say, "It looks like you're trying to write a letter. Would you like some assistance with the formatting?" And that's a, you know, admittedly crude version of AI. What it's doing there is recognizing a pattern. I'm starting off with what looks like a letter, and then based on that, it is offering guidance or suggestions. So that's kind of the idea behind many uses of AI. You know, we have many other experiences on a daily basis in our lives. If you get in your car first thing in the morning on your way to work, you might notice a message pops up on your phone, telling you how long it's going to take to get to work on that particular day. Again, it's following patterns, and then making suggestions based on its model. And I think that's a helpful place to think about what the applicability would be in investing. There's really two avenues through which people have asked about this. The first is, can we use AI tools to pick securities, to find underpriced stocks, or you know, find information that's not currently reflected in market prices. And clearly, that's going to be a big uphill climb with the amount of trading that happens, the amount of information that gets into market prices. But there is a pretty good example of a type of strategy that is trying to do just that. Many of you might remember the Watson supercomputer that famously dethroned Ken Jennings on "Jeopardy!" back in the day. This is back in 2006. You might think, okay, well, that's at the top of the intellectual mountain. Where do you go from here? Well, the answer, of course, was gonna be stock picking. So there is an ETF based on predictions from the Watson supercomputer that selects stocks. It was launched back in 2017. And you can see the performance on the chart here. The Watson ETF has not only underperformed the technology sector as a whole, but it's underperformed the overall stock market. You can see delivering a cumulative return of about half what the Russell 3000 has managed. So the best brain power out there in terms of trying to select stocks to try and find a subset of information in the market has not yet acted on, has been unsuccessful at doing so. Another side of the story when it comes to the applicability of AI and investing is, okay, this looks like it's gonna be the next big thing. And I think what we've seen in, you know, recent days with the presidential orders where this seems to be the next big development in terms of the world, I don't think it's an overstatement to say it's probably gonna change many of the aspects of our daily lives. That doesn't mean every single company that has attached itself to the notion of artificial intelligence is going to be a success story. You can go back to the late nineties when everyone knew the next big thing was e-commerce. Many companies were launched back then. We all remember the pets.com, the sock puppet in the Super Bowl ads. So we are familiar with the concept that there might be losers in addition to the winners when it comes to these sea change events. So when we look at investment strategies that are themed around the idea of artificial intelligence companies, and you know, that's what we have here in our next chart, showing the performance of these funds that are focused on artificial intelligence stocks. We've seen that by and large, they have underperformed the market. And again, not only have they underperformed the market in aggregate, as you can see in the orange line there for the AI funds, most of these companies, that would be the key holdings in these artificial intelligence-themed funds would be technology companies. Technology has outperformed the market. That should have been a tailwind to these types of strategies. And you can see that by and large, they've not been able to outperform. So again, I go back to this notion, I think this was a great quote from David Booth where he talked about his AI is the aggregate intelligence of the market. AI tools are great. They can probably help us a lot in terms of our day-to-day communications and activities. But if they are only identifying a subset of what the market already knows, probably not gonna give you an edge in terms of outperforming markets. You also think about any new technology that's gonna come out. I mean, citing the earnings calls, thinking about what company's doing. Everybody's looking at how they use AI, the way that you benefit from it, it really is, you go out and you buy 'em all, right? And that's with any new technology that's ultimately gonna roll out there. I think that's so important for everyone when they hear these new interesting fads. And I think it's reasonable for people to be excited about AI. We're all excited about AI to some extent, but that doesn't mean you need to go and select stocks around AI. When you're holding a globally diversified portfolio, you're actually investing in thousands of companies that are looking at how they can use AI, and you don't know who's gonna do it the best. And that way you have exposure to all of them. It's spot on. I mean, one of the things I think about is, go back to the barcode reader, right? Was it just the company that invented barcode readers, or was it everybody that figured out how they incorporated it into their business to make their operations more efficient? Great stuff there on AI. Isabelle, I wanna come to you. You know, we talked a little bit about the fear piece around recessions. We went to some greed piece on AI. I'm gonna come back to fear with you. Well, concentration, and what we see at the top of the market is, we're reading articles about, hey, it's different this time of this concentration at the top of the market. What's your take on that? Yeah, so that's absolutely been a topic that's coming up more, and astute observers may have noticed that that technology index line behind me is also quite high. And these are not unrelated stories, right? We're talking about a couple of very dominant tech names. These are the household names, you all know them. We keep cycling through acronyms. We've gone with FAANG, FANMAG, now, I think we're calling them the Magnificent Seven. But we're really seeing that the US stock market is increasingly dominated by these very large companies who have had tremendous performance year to date after a very disappointing year last year. And so they're a dominant story, absolutely. And this is something that can frankly play some tricks in different types of portfolios. Particularly in my mind, if you are using an index-based approach, this can wreck some havoc on index-based rules. I think most people think index fund, it's broadly diversified. Companies may be held at a very small weight. If I'm buying a small cap index, I'm getting small companies. If I'm buying a large cap index, I'm getting large companies. But this dynamic where we see these top seven or so names, these top 10 names holding a ton of market share, this is creating some tricky situations in indices. What you're looking at on this current graphic is actually a very cool Jack-o-lantern. And shout out to our designer who works on these. I think Bloomberg liked this so much, it's actually on Bloomberg's website today, in fact. You're gonna see one more special from the design team today on this theme as well. But what you're looking at with this graphic is that for the Russell 2000 index, which I would expect as an investor probably has small cap names, we're actually increasingly seeing this complicated size dynamic play out, where a lot of names that should be in those top 1000 are actually coming through in the Russell 2000. And so again, is this what investors expect? Probably not. You have to take a step back, and decide what that means for you. But there's this tricky dynamic that's happening in index funds today and indexes, because of these size dynamics we see playing out. And in fact, if we look at our other spooky chart that we've prepared, you see this story come across really clearly in the S&P 500. Now that's a lot of doom and gloom I just gave. What this shows is that the, you've seen the top 10 names in the S&P 500 creeping up to now over 30% of that index. This might sound scary, and it's something to certainly be aware of, and it's a reason not to put any ask, not to put things in an, not to go with indexes and expect that they'll always look and feel the same over time. But it isn't the first time we've seen large stocks come to dominate the market. This is a story that's played out a couple of times over history. It isn't a reason to panic by any means, but it's something to be aware of when you have the US stock market being so dominated by a handful of names. We saw it play out positively in some ways this year with very positive returns so far, though on any given day, if one name is down, one of those big names is down a lot, that will impact your portfolio quite a bit. But we saw the inverse of that last year with these big companies having really poor performance, and dragging down many people's overall return experience. It's a really good point there. Hey, I just want you to expand quickly on this, 'cause this chart right here, we're looking back to 2016, and you said, hey, if we look historically, we've kind of seen this stuff, in terms of concentration, ebb and flow, a little bit of perspective you can give on that? Yeah, you know, it's changed over time, what types of companies are dominant, and I think right now, obviously we're seeing this play out with the tech sector, but if we go back to the beginning of the investment experience, we've seen industry titans come up and dominate, and be large players. And oftentimes what we've seen, and we have some great resources that illustrate this. What we see is once a name has come to be that dominant in that top 10, they often will have disappointing returns going forward. So, and that's not altogether surprising, sustaining the level of performance that it takes to bring you into the top 10, especially when the top 10 are so large, isn't something that you would necessarily expect to persist. Yeah, and I think also too, just the percentage there, I mean we're looking here from 20% up to above 30, but again, we've seen it high teens, we've seen it in the twenties, we've seen it up to the thirties. It just kind of ebbs and flows. It ebbs and flows. And what the industry is is also gonna change over time. Absolutely, so it's 30% high, it's getting high, but it's not unprecedented to some extent. Good, alright, let's keep moving along in this section. We were getting ready for the broadcast here. I do like what you came up with in terms of indexing gone active. Indexing gone active. And I like that, I like that terminology there, as we certainly talk about this section here. Walk us through this chart right here, and what we're taking a look at here, Isabelle. Yeah, well, I'm gonna let Wes tell you a little bit about this, 'cause this is one of his favorites. But I've talked a little bit about how indices may have some tricks up their sleeve in terms of not being exactly what you would expect in name, but index tracking funds can also behave in some unexpected ways, and aren't necessarily as passive in reality as people might think. Yeah, it's, you know, I love a scary theme, and the index boogeyman, for the longest time, has been when people look at the percentage of mutual fund and ETF assets, especially in the equity space. You know, there are actually over 50% now that are considered index strategies, and that's led a lot of people to question, has the market gotten more passive? And you know, as Isabelle's pointed out, even these index strategies are not always passive. That's the reason why you see that drift in style from a couple of slides ago, those craggy teeth on the Jack-o-lantern, but even the way they're used is not always passive. I think it's important for people to see, if I look at a chart of trade volume, so this chart is showing the top 10 highest trade volume securities from this year in the US, and you can see that among the top ten, three of 'em are ETFs, and those are index ETFs. So this is an important, you know, thing for people to realize is that just because something is tagged as an index type of strategy doesn't mean it's always gonna be used passively. If you have something like the S&P 500 ETF that has enormous amounts of trade volume, it stands the reason that not all of the trades that are occurring with that ETF are merely to set up long-term buy and hold positions. They could be used to reflect changes in sentiment, changes in expectations for the future. If I'm an investor who has a more bearish view on the market than the average investor, then maybe I would sell my S&P 500 ETF. If I had a more bullish view on the market, I might do the opposite, so this is another avenue through which information could get into market prices. But I think it is important when you hear the scary stories around, "Well, there's more and more assets that are going into index funds," It doesn't mean the market itself is working any less hard to find information, to act on information incorporated into market prices. I think there's another maybe secondary lesson, though, that we can take from this, Wes, which is that we talk a lot about the benefits of a long-term patient investment approach. We talked about it at the beginning with recessions, this idea that if you buy and hold and ride out some of the ups and downs, you'll have a good long-term investment experience. That notion is really, I think is associated with passive-type philosophy, passive investment philosophy of trusting the market to drive higher returns for you over time. And we've seen this narrative become in the industry that indexes, index funds, index ETFs, are passive vehicles. But you'll notice here these aren't getting traded, like they're being used for long-term investing or patients. Certainly when you see some of these index funds being advertised on Super Bowl commercials and with some of the framing that they're using, they're probably not really trying to appeal to that patient long-term investment strategy that we know is what improves the odds of success for any investor. So there's this specter that indexing is taking over, but it's really far more complicated than that Specter. That was a good one. Thank you. Would you say this is passive-aggressive, then? It's pretty passive-aggressive if you ask me. Yeah, sure. I like all of these new terms and vocabulary words you're using today. I was gonna use an acronym called FOMO, and not as technical, but I think a lot of it goes back to the fear and greed, and people get worried that, "Hey, I need to be looking at these index funds more closely. I need to be looking at these concentrated stocks. I'm not invested in them, I wanna invest in them." But then by then, the price has gone up, and maybe they're not seeking as much of a return as they could have gotten before. But oh, by the way, if you're in a globally diversified portfolio, you would've already been invested in them from the beginning, and seeking those returns over the long term. Yeah, generally FOMO is a really bad investment strategy. We'll leave it as a fashion option, all those other ways you might incorporate FOMO into your life. We could debate that somewhere else, but it really isn't a good investment philosophy, because by the time you're worried about missing out, the market's probably moved ahead, because it's so forward-looking, and FOMO is pretty backward-looking. Yeah, well, speaking of FOMO and fashion options, we're gonna shift now to trendy investments, and Wes, I'm gonna go to you for this segment, but we had a lot of options when it came to investment trends. We decided to focus on thematic funds. I was thinking about the different fashion trends. Right now, me personally, I've been seeing cargo pants coming back on the female side, especially on the athleisure. Oh. And I love athleisure when I'm not a business professional at Dimensional, and I see 'em every time, I haven't gotten them. I'm tempted, I know maybe I'll wear them once or twice, and get made fun of by my mom friends, and then I will have wasted 60 to $80. So I haven't done it yet. I'm using my Dimensional investment philosophy, and applying it to my fashion choices. But what about investing? We have these thematic funds that have become extremely popular. We're gonna look at the popularity, and then talk about survivorship as well, because that's really important in thinking about your investments as you're analyzing what to do. Yeah, it's almost like trying to balance the FOMO with being, you know, like forward-looking when it comes to your fashion sense. But you know, with all the trends we see, and you know what we've often called thematic style of investing, you can imagine that, again, going back to the trade volume, we see in index fund ETFs that many investors are gonna reflect their viewpoints on the future through their trading. And what we've seen is an explosion in the number of thematic funds. So as the name suggests, you know, these are index funds and ETFs that are forming their holdings around some sort of theme. Some of my favorites are the millennial-themed one. So it is holding, companies are expected to capitalize on the expenditure patterns of millennials. Go figure. There's another one that is seeking to capture what is ostensibly a growing tendency to spend a lot of money on our pets, whether it's pet care, pet food, whatever. These are, in fact, thematic ETFs that you can invest in, and you can see just the growth in the number of these funds. We got passive, we also got some active ones in there. So certainly a lot of growth. What you don't always notice is the number of funds that exit the space. And I think the survivorship around these is also something else notable. As you can see on this chart here, we have the number of launches in the teal bars, the number of closures in white. And again, this is sensible if you think about these things as being launched to cater to what is currently a fad, or what investors are currently interested in. You know, something that is interesting today might not still be interesting years from now. And that means if there's not sufficient investor interest to garner assets into these funds, then that fund could be shut down in the future. And that's what you see in terms of the pattern here. So interesting concept here, you know, and again, we think this is antithetical to what most investors would be best served by, which is, okay, what are my long-term investment goals? What are the reliable ways to get there? And not necessarily can I time markets based on the cost of dog food, and how much I wanna care for my pets in the future? Yeah, I think there, what I always tell people when they ask about these types of investments is it's okay to speculate, it's okay to invest in something you might be interested in, like cargo pants if you choose to go that route, but know that it is a speculative investment, it could go to zero. So really take that into consideration when you're looking at your overall investment portfolio and the duration that you're gonna be invested in it. Yeah, and you probably have exposure to many of these things already. That's one of the things when you're looking at niche parts of the market is, okay, well, I've probably got a portion of this, if it's a broadly diversified portfolio, I probably have something that is indicative of its weight in the global portfolio, which is what is the rest of the market things, and a sensible amount to hold in this. And so then you gotta ask yourself, do I need 20 times the market allocation to this segment of the market? In many cases, the answer might be no. Mm-hmm, and honestly, it's challenging enough trying to chase trends with things, like when is the right time to buy cargo pants? You probably don't want to be dealing with that headache when it comes to the funds that you're investing in. Talk about making it hard to ignore headlines. If you're constantly turning over the types of things you wanna be incorporating into your portfolio that's gonna give you a lot of headache, whereas if you just had that globally diversified portfolio, you'd be exposed to all these things, and you could tune out that noise that we were talking about at our outset today. That's a really good point, Isabelle. As we were pulling headlines for this webcast, we pulled just in the last week, and it was so easy to find. So take that back a year, five years, 10 years, if you're looking at all of those headlines, you're investing in each trendy investment. Imagine how stressful of an experience that is for an investor. And we know that investing will be stressful. There will be ups and downs. Without risk, there's no reward. But the idea is to make it as comfortable of an experience as possible while still getting those returns when you can. And as an investor, you can, you wanna focus on what you can control. And you can't control those sorts of things. So setting yourself up so you can try to worry as little as possible about that stuff, such a difference maker. We all have enough going on in life. We don't need to be worried about our investments. Alright, Wes, I'm gonna stay on you. I wanna talk about a couple of other things that are always in the media right now. We had the US debt downgrade, and then how that kind of ties to the potential impending government shutdown, and what happens when the government shuts down? How does that affect our investments? What should investors be looking at or concerned about when it comes to their portfolio? Yeah, I guess government debt started to make some news cycles recently when we had the downgrade of our sovereign debt from Fitch. Of course, when we looked at the actual market data, there seemed to be much ado about nothing. The market didn't really learn much, because, you know, spreads that, you know, would quantify the riskiness of US government debt really didn't budge around that time period. But the government debt is something that people I've been pointing to as of last year. The US debt, scaled by our GDP, was a little over 100%, about 120%. Now this is not particularly unusual. In fact, we can find instances of countries historically that have had long stretches where their debt exceeded 100% of the value of their GDP. Belgium, for example, has done it over 30 times in the last 48 years. And over that 48-year period, Belgium's stock market has delivered a return of 12% per year. So when we look back historically, it's not clear that that debt needs to be a strong driver of market returns. But I think some of these factors that played a role in, you know, the fiscal issues that the country has. And recently, we had a debate over whether the government was gonna shut down. So when the fiscal policy expired at the end of the fiscal year, we narrowly averted a shutdown, and we had a temporary stop gap put into place. So that kind of made us wanna ask the question of, you know, how many times has this actually happened in the past in the US, where we had a government shutdown because of a funding gap for the government? And what did that imply about market performance? So the first thing to note here is when we look back historically, we've actually had 14 of what we call these funding gaps. So this is a period of time where, when the fiscal year ends, the government does not have enough in its budget to allocate to the different government activities. You'll see on this chart here, we've started listing these from the early eighties. In the early eighties, the attorney general issued a legal opinion, which my buddies in the legal field say this is, you know, fairly legally binding. Once the attorney general says something like that, it tends to become the standard at that point, and he opined that it was unconstitutional for the government to continue operating once we had a funding gap. So at that point, funding gaps lasting more of a day tended to result in government shutdowns. And you can see 10 out of those 14 funding gaps resulted in a shutdown eventually. Some of 'em were only a few days, in some cases just over a weekend, but we did have a handful, four, in fact, that lasted at least five days. So what can we say about the returns during these four that lasted at least five days? Well, it's mostly good news. In fact, three out of the four shutdowns, you actually see this stock market was up by the end of the shutdown, and one of 'em, the fourth one was flat. So again, if we think about the factors that would play a role in a potential government shutdown tend to be slow moving variables, right? Like the fiscal circumstances of the country are not things that come out of nowhere. So if they're known in advance, or known by market participants, it's not clear that they should be impacting financial markets. And that's generally consistent with what we see in the data. That's great to see. I think, as an investor, we have to remember that we are invested in public companies, and at the end of the day, public companies are always gonna try their best to continue to make money and be profitable. So there is really no data to suggest that if the government shuts down, equity markets are tanking and going away. We don't make predictions, we don't know what will happen. But it's really great to see that historical perspective. Yeah, that's a good point there about companies thinking about the government separating from public companies. Of course what the government's doing, and what's happening with the government debt and government shutdowns may impact companies in some way, but they're going to figure out how to operate through that. They're for-profit seeking entities. And it's interesting, you know, you talked about how this idea of the US debt downgrade was maybe not news recently. You go back to 2011. The first time we got downgraded, and if you look at that year, it's interesting. US stocks, roughly flat, they were up about 2% as measured by S&P. Bond market was up about seven or 8%. Long-term US government bond market was up 27% in 2011. So look, you just don't know what's gonna happen in the future, and you don't know how markets will react to future events. Let's talk about, I'm gonna open this one up to the group here. I wanna show this slide, which I thought was kind of interesting here. We'll talk about another trend that's going on, FOMO, people are concerned about missing out on this. Let's talk a little bit about cryptocurrencies, and what we did on this slide here was we took the price of bitcoin, and then we also looked at Google trends in terms of interest over time of people going out and wanting to know about bitcoin over the last decade plus. I think this chart is absolutely fascinating. I see a lot of, maybe, I'll say a little bit of performance chasing, maybe. People go out and wanna know about things that have just done well recently. That does seem to be evident in the time series behavior, the idea of performance chasing. You know, look, I think this falls into the camp of, okay, how do you evaluate all of these different things that you're reading about, whether they make sense for your portfolio? And I think this is a really good asset test of the two basic concepts I always think about. Is it increasing my expected return, right? Does it have some sort of proposition for a positive expected return, or is it helping me manage risk? Now the risk part, when it comes to cryptocurrencies, if you look at the price volatility, something that can gain or lose value by 20% in a single day, it strains credulity to think that's managing any sort of risk in a portfolio. And even the expected return, it's like, okay, well, what am I being entitled to by holding bitcoin? I don't get more bitcoin in the future just because I'm holding it today. It's not delivering me a stream of future cash flows for a company, or a stream of coupon payments, like with a bond. So it really can only appreciate through speculation. And I think that's a challenging proposition for investors, and you know, its size in the global market is another relevant starting point where it's, you know, less than a half a percent of a global stock and bond market, to have a million dollar portfolio. That means, okay, a $50,000 allocation to bitcoin, that's one thing, but if you have it as 10% of your portfolio, that's a different story. So I think it really brings me back to the notion of how would you evaluate something for your portfolio. And cryptocurrencies in general have generally not checked many of those boxes. There's a piece that was written a couple years ago by Gerard O'Reilly, our CIO and Co-CEO, "To Bit or Not to Bit?" And he walks through that framework that you kind of walked us through there. I think that's incredibly helpful. What's the goal, what's the expected return, what's the risk, and what's the cost? And if you answer those then you can say, "Okay, listen, what is sort of the market telling me about the natural weight that I should have in my portfolio? And do I wanna overweight that by 10 or 15 times, considering where cryptocurrencies are at?" Yeah. Yeah. To me, this is all fear and greed together in one. And I know our whole Halloween webcast was spooky, but we wanted to end on a positive note, and really take a look at the growth of wealth of a dollar over time next to all of these headlines. I mean, we've seen wars, recessions, incredible things happen in the market over the last decades, but we see the trend overall. Isabelle, go to you to speak on this. Yeah, absolutely, so when we were talking about doing this webcast and all the things we wanted to talk about, there were a lot of things that could spook investors. There's a lot of potential items that may cause fear. But I sort of thought about it in terms of going back to my own experience as a child trick or treating, you know. We use the term trick or treating. There's this idea, is it a trick or is it a treat? But how many people actually walked up to houses, and the outcome was in the trick, world of tricks? By and large, you got a treat as a kid. You went up to every house with the reason pretty sure that they were gonna give you a candy of some sort, and it was more a matter of how great the candy was, versus is it something you're gonna try to swap with someone else. The market really gives investors that sort of experience every day. Are there bad days in the market? Absolutely. Sometimes there are, but there are a lot of good days, and by and large, if we can tune out the noise with these headlines, we can experience really positive results. And when you zoom out and look at history, we see that, of course, all these very serious real world events, these economic events have happened, they've been stressful, but markets have gone up persistently over time, even though occasionally they have down times. Just look at this year. We've talked about all these spooky items, all these things that might cause us to be afraid. But the reality is the global stock market is up over 10% as of the end of September if we look at the all country world index from MSCI. If we look at just the US stock market, the Russell 3000, which broadly measures the US stock market, we see over 12% returns. So there's been a lot that might make people nervous, but I go back to what you all opened with, this idea that there is a lot of pressure from the financial media to garner fear, to make us nervous, to grab our attention, reassuring ourselves, and remembering that that all really fades into quiet noise when we can focus on the good long-term treats we get as investors. It's a pretty great way, I think, to end our session today. Yeah, absolutely. Great analogy. I really appreciate your thoughts there. Wes, I'm gonna go to you for final thoughts. I'll go back to you, Isabelle, and then we'll wrap it up. Yeah, I mean, I would echo a lot of what Isabelle was saying. I think that a lot of these news headlines are things that we already know about, and most of this stuff is not coming out of nowhere. So I always go back to my favorite Calvin Coolidge quote, which is, "If you see 10 troubles coming down the road, you can rest assured nine of them are gonna veer into the ditch before they get there." It's really not the stuff we know about that's going to impact our portfolios one direction or the other. It's likely gonna be the things that we didn't anticipate. So if you're reading about it, if it's common news, commonly held wisdom, markets have probably already reflected it. And no matter how grim that information might be, if markets have have already incorporated into market prices, then you can still have a good investment experience. Isabelle, how about you? Absolutely. I don't have a Coolidge quote That was impressive, Wes, but I think the lesson here is a really positive one, and we had a lot of fun with the Halloween theme, but we wanna leave investors with a really positive note here that we know there will be more news going forward as we end the year that will get us all a little spooked. But if we can all really focus on sticking with our investment strategy for the long run, we're far more assured of having better long-term returns. Excellent way to end it. Wes and Isabella, thank you so much for being good sports and coming on the Halloween webcast today. Really appreciate your time. Jake, I'll come to you for final thoughts as well. When I look at a chart like this, and everything we talked about, uncertainty is always present, but that's the reason that you get a return as an investor. You know, all of the things that we highlighted here around government shutdown, around the debt levels, around recessions, around inflation, around just what's going on in the world, to me, that's always sort of present. But again, you have to ask yourself, why do you get a return as an investor, and you're willing to bear uncertainty in some form. So you have to sort of approach the financial media with a bit of skepticism, and know what their objective is and what they're sort of trying to do to you to get to pay attention to the articles, but also understand that you have to kinda live through that uncertainty if you wanna capture the returns that we see right here on this chart. So to me that's the big takeaway, but that's always the takeaway as an investor. Yeah, and you mentioned this in the beginning, the value of an investment professional. All of our investors that are watching today work with an investment professional, and it's for exactly that reason. When you're having doubts, when you have questions, when times are tough, and you're seeing the returns that you don't wanna see, you have someone helping you through that entire process. And that's where we really see great results with people having that long-term relationship, and getting those long-term returns. Great point, Court. Alright, we got a couple questions in today. We weren't able to get to them, but we'll make sure somebody follows up with you after the webcast. Also, we got some questions around a replay being made available that will be made available on our client site, and also be able to be shared with investors as well. So we'll make sure to get that to you in about a week or so. So with that, on behalf of myself and my colleagues here at Dimensional, thank you so much for your time. Thank you for trusting us every single day, and we hope you have a wonderful Halloween with family and friends.