AWM Insights Financial and Investment News

In this episode of AWM Insights, Chief Investment Officer Justin Dyer and Portfolio Manager Mena Hanna break down the surprising divergences between market performance and economic headlines. They explore the concept of a K-shaped economy, the reality behind all-time market highs, and why diversification remains essential in unpredictable times. With candid stories, sharp data points, and seasoned perspective, Justin and Mena help listeners cut through the noise and stay focused on disciplined, long-term wealth strategies. If you want clarity on what’s really driving today’s markets, this conversation is for you.

Chapters
(00:00) Divergence Between Economy and Markets
(01:10) K-Shaped Recovery and Uneven Performance
(03:32) Decoding Market Data Versus Economic Indicators
(05:13) The Importance of Diversification
(06:52) Concentration Risk and Recent Market Performance
(09:13) Systematic, Data-Driven Investing Approaches
(11:31) Navigating Emotion and Bias in Market Perception

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Creators and Guests

Host
Justin Dyer
Chief Investment Officer and Chief Operating Officer at AWM Capital
Host
Mena Hanna
Senior Investment Analyst at AWM Capital

What is AWM Insights Financial and Investment News?

A bite sized discussion on timely financial news and investment topics, to help you maximize your net worth and wealth for the next generation with Justin Dyer and Mena Hanna of AWM Capital.

Justin Dyer: Hey everyone.

Welcome back to another episode
of a W Insights, Justin Dyer here,

chief Investment Officer of a WM
joined, as always by am Mina Hana,

portfolio manager here at a WM.

And we're, we're super
excited to be here today.

Lots of interesting things continue
to go on in the world of markets,

and, uh, we're gonna kind of
continue that conversation today.

For many of you who've been listening
over the last couple weeks, you

know, really since the start of
the year, you'll definitely know

that it's been an interesting year.

Uh, and certainly, you know, that
if you, you're paying attention

to, to, uh, the headlines.

Um, and really kind of the,
the, the bifurcation of.

The narratives, you know, it seems
like the economic data is weak,

but then markets are doing okay,
and specifically some companies

are doing really, really well now.

Um, there's a lot of nuance
and a lot of in between there.

And so we're going to, we're gonna jump
right into, into that today, uh, Mina.

Give us an overview, like what, what
are, what are the big narratives, the

big interesting stories, the interesting,
uh, divergences that, that you're seeing?

Mena Hanna: Yeah.

I think the biggest story and
the most interesting one to

me is the KS shaped economy.

And this is sort of a, a newer
term that I'm hearing where if you

think about a K, our economy is
moving along, some things are doing

extremely well, some things are not so

Justin Dyer: Yeah.

Right.

The top, top of the K is doing well.

The bottom of the K is, is not,

Mena Hanna: is fallen.

Yeah.

Um, and that is, it's important
to note that that is very true in

our economy and, and we're seeing
that in some of the raw numbers.

But I think we're also seeing that just
from a soft, soft data side, in person,

unemployment in some areas of the market
is increasing and other, other areas of

the market, employment is really strong.

If you look at employment holistically.

We're at 4.3%,

which is, which is a pretty
solid number in general.

So you have this divergence between,
in some ways the haves and the

have nots, and that's reflecting
in the economy in some ways.

But markets and the economy are
obviously not one in the same.

So we still have all time highs.

We're we're reaching all
time highs on a daily basis,

sometimes depending on the week.

Dow just eclipsed 50 K, um, and held
that level for, for a couple days.

S and p eclipsed 7,000.

So you're getting these all time highs
and you're breaking some of these new,

new figures, uh, digits that people kind
of never saw coming 50 K on the Dow.

Um, but you're doing that in the
face of some areas of the market

and some people especially that are

Justin Dyer: Yeah, and I
think there's a couple.

Really important, really, essentially
punchlines in there, right?

Well, one, you, you said explicitly
that is the market is not the economy.

The economy's not the market.

You know, you can, you can talk to
folks out there and, um, you know,

maybe it's a political conversation
and people are feeling, uh, one

way or the other, and then, Hey,
what's going on with the markets?

Right.

May, maybe you, you, you're on one
side of that equation right now.

Maybe you're on the other
side of that equation.

When you know someone, uh, you don't.

Uh, like, or, or do like, is, is
in office and you really have to

separate those two things, right?

Both who's in office and the markets,
who's in office, and the economy,

and then the economy and the markets.

They are two distinct, uh, uh, you
know, systems, let's call it, right?

The economy and generally the data
you're talking about and seeing

is very much backward looking.

Markets are very much
forward looking, right?

Looking into the short
to medium turn usually.

But obviously we're, we're thinking about
investing very much for the long term

and getting, getting rewarded for that.

Um, and then there's, there's,
uh, there's an element of of

predicting the future here, right?

There's, um, and how, how
difficult that is, right?

What, what you just.

What you just expressed and and
described is an incredibly nuanced.

uh,

System or sequence of
events that is going on.

You know, tell me anyone, two months
ago or six months ago, whatever, pick

your period of time, who would've
said, Hey, we're gonna be in this

period right now, and, uh, and this
is how markets are going to react.

Yeah, maybe there's that one
oddball out there that, that did.

I would argue that, that it's
probably more luck than actually

being, uh, being smart and skillful
in, in, in that prediction.

That's how it, how it has
always been across time.

Um, but it's just a great reminder
how nuanced markets are, how much

information they're taking in
and, and how markets potentially

react to certain, certain items.

You know, can be very contradictory
at times where you would think that

it's, you know, a negative, um,
negative data point and markets

re react positively or vice versa.

And, uh, and.

You know, the other thing I would say is
like a, kind of the takeaway punchline for

this is certainly this year, um, and I,
I would argue even 2025 diversification

has proven its worth once again.

Uh, and I say that kind of tongue in
cheek because it's like, it is that

one free lunch that we all have.

And so often people, um.

You know, just, just fail to appreciate
it or get caught up in, in whatever the

theme of the moment is and, and, and
think, oh, I don't need to be diversified.

I can, I can make money, I can
make more money by being overly

concentrated or making a bet.

And hey, that is exactly what it is.

You're, you're, you're, you're starting
to skew towards gambling as opposed

to, uh, uh, very, um, disciplined
approach to investing over the long term

where you get to compound your wealth.

Year over year, over year, over year.

And that is the power of diversification.

It helps you compound wealth in a,
in a better, more predictable way.

Mena Hanna: Yeah, and especially
something that I feel like we see a lot,

um, and we advise against it, but is
concentration and I have a lot of friends

that concentrate in individual names.

Microsoft, apple, you know, have,
have your pick of the litter.

This year has been a great year
so far, and yeah, we're only like

six weeks in to show you that.

That's probably not the best thing to do.

Microsoft is down.

Close to 30% from its all time high,
which is pretty, that's pretty wild.

For a company that had, you know, a
$4 trillion plus market cap to lose

more than a trillion dollars in three
months, that is, that's a big number.

Um, trillion dollars is a lot of money.

So, and, and that's like a company that I
hear a lot of people being like, Microsoft

is the future, AI hardware services.

All of these things kind of
bundled up together, kind of

a no brainer, down to 30%.

Like that is a serious
sell off Apple, down 5%.

If you look at the other side of the
market, the value side, value side

has actually performed extremely well.

This year, especially
like the value premium.

I'm gonna pull up the statistic right now,
but looking at the value premium and if

I'll, I'll throw it actually up on here.

Just looking at the last three
months, the small value premium

has done extremely well.

You can see large growth here,
which represents a lot of the

big names, apple, Microsoft, that
part of the market's down 4.17%

in the last three months.

Small values up 15.57%

and you can see all of the other points.

The premiums are actually
working with us now.

Uh, if you actually push out, I'll,
I'll show the five year figure as well.

Values done extremely well,
so that's why we diversify.

We do still hold, and all of our
clients hold a pretty similar market

like exposure, market weighting
exposure, maybe slightly less to these.

Large growth names, but we do
concentrate more towards small

value because that's where we've
seen the excess return historically

over the last a hundred years.

And yeah, over the last five years,
you're, you're definitely seeing that

play out, so we're benefiting from

Justin Dyer: Yeah, and I, I always like
to say it's like it's systematically

applying a Warren Buffet type
approach to, to investing, right.

That value investing, um, amongst
a lot of other things that we do.

Right.

It's not, you probably hear us say
small value, these factors and whatnot.

There's a lot.

Of other approaches that we're
really trying to apply to,

to, to seek out performance.

Right.

The, when we talk about diversification
and that being your free launch and

this and that, don't time markets.

We're not sitting here saying,
we're not trying to outperform.

We are, we're, we are.

That is a goal of ours within
a client's priorities, right?

That is the, the number one.

A benchmark that we, um, that we
are seeking to accomplish, right?

Making sure clients can
meet their priorities in the

highest probable fashion.

But we are trying to outperform along
the way within various asset classes,

but we're doing it in, in a data
driven, systematic, uh, really, really

well researched sort of way that.

Takes into account taxes, takes
into account the strength of

data and how markets behave.

And yeah, sometimes you have
to wait for that for markets to

behave, quote unquote properly.

Um, and in a way we're kind of
seeing that a little bit right now.

Yeah, there's a little
bit of a, a right sizing.

I, I'm not gonna go so far as to say, hey,
markets are now, uh, a lot more rational.

Like it still is plenty of irrationality
that is, is happening and, and

always does happen, but, um, it.

It there is kind of a, a rebalancing
going on, whether it's between

us and international emerging
markets or value growth, small

versus large, et cetera, et cetera.

Mena Hanna: Yeah, we talked about it kind
of on the sports podcast, but valuations

and multiples can only go so far.

So if you get a crazy runup in the
large growth side of the market.

It is only a matter of time
before one of two things happens.

And this is, this is getting a little
bit, uh, crystal balley, but you

either have small value catch up or
you have large growth sell off and,

and yeah, we've seen that this year in
a pretty, pretty substantial fashion.

Like that's.

Almost 20% deviation in performance
over a three month period of time like

that is, you annualize that figure.

And that is pretty crazy.

Um, over the one year, and I'll, I'll
throw that up right here, but 2.98%

for large growth, 15.94%

for small value.

So, um, yeah, this is, this
has been a good time to have

exposure to those rewarded factor

Justin Dyer: Yeah.

And, and bringing this back to what
we talked about at the outset, right?

There's, there's a lot
going on in the markets.

We're highlighting some of the, um,
uh, I guess more intricate, intricate.

Data points and, and the nuances between
larger companies and small companies.

But going back to comments around
the economy versus the market, right?

It is, it's just a good time to remember,
um, that those two things and headlines

and, and you know, the people you're
talking to or your friends of a friend or

family members, extended family members,
um, you know, they could be feeling a

certain way and markets could be reacting
a, a completely opposite way and, and.

That is just the nature of, of investing.

Now, I will say, Hey, you know,

Mena Hanna: Yeah,

Justin Dyer: take that with,
um, uh, measured, I guess,

um, appreciation number.

Yeah, appreciation's a good word.

Where right there, there's, it's
always good to prepare for potential.

Uh, and I'm, I'm saying this more
emotionally than, than anything.

Prepare for potential pullback.

You know, we, we've seen
quite a bit of volatility.

We've even talked about it on
insights recently where, you know,

volatility and meaning markets
come going down specifically, like

that's the one that actually hurts,
that it makes you uncomfortable.

And could the current
economy lead to that?

Sure.

Is it a, is it a foregone conclusion?

Absolutely not.

But at least having that, that mental, um.

Preparedness is always a good
thing and knowing that there's

a plan in place ahead of time.

Right.

We certainly talked about that a decent
amount last year, I think, on this podcast

where there's a plan in place really
for an all weather, all season type

approach to markets to take advantage
when, when you can on the positive side

of things, but also the negative side of

Mena Hanna: Yeah.

And to double down on one thing that
you said, just in terms of kind of

as people gauge markets and as people
gauge the economy, a lot of times that

comes from your own social circle.

You're asking your
friends, how are you doing?

How are you, how's your job?

If they're looking to, to
change jobs, how easy is that?

We're looking at these extremely
small data sets and potentially making

assumptions that we know what's going
on in, in the greater economy based on

what our social circles look like, and
that's an extremely small data set.

It's also important to know that like
even if you look at the macro side and

you look at consumer confidence, which
should be a representative statistic

like that doesn't always line up.

Consumer confidence has been
at near an all time low.

If you also look at, we were just talking
about this, but car repos, like people

have been getting their cars repossessed
at an incredible clip recently.

You'd think all of these things
would lead to a soft economy.

economy.

Maybe people are, are buying
less iPhones because iPhones are

now super expensive and they're
typically a discretionary purchase.

And I'll take it a step
further, like I don't think the

latest iPhone is that great.

So all of these things together
might make you think, well,

Apple's not gonna do well, Apple's
not gonna sell a lot of iPhones.

Stock price of apple's gonna go down.

We just saw Apple have the best
quarter in terms of selling

iPhones that they've ever had.

So.

Uh, there's a lot of these, call it data
points that, that we perceive, but they,

they can't be acted on, like you said,
because it is such a, there, there's such

a gap between how the economy's doing,
what you actually see, the biases that are

also included in, in what we see and what
we perceive as humans and as investors

and what actually happens with the stock
price of something, which is completely

Justin Dyer: Yeah, totally.

Totally.

I mean, you can even add to,
to the Apple story, their lack

of investment in ai, right?

They're, they're investing a fraction
of what these other companies

are yet, and people have been
scratching them their heads, but

they have their a record quarter.

It really is, really is a fascinating
world we live in right now, and

we haven't even got into how AI
could be potentially, uh, impacting

some of the, the economic data.

I mean, that's like a whole nother.

Conversation, which maybe
we'll get into at a later date.

Um, but yeah, a little bit of a, a
kind of roundabout rambling episode.

But, um, it, you know, the, the
core takeaways here, economy is not

the market on either side of that.

of that

Good economy, bad market, uh, weak
economy, really good market, or at least

a market that's hitting all time highs.

You know, it's still early to tell what
this year will actually produce for us.

Um, but yeah, just, just a reminder,
it's hard, it's hard to discern, um,

anecdotal economic points from your
social circle, even distill what's

going on between consumer confidence
and then what's going on with iPhones.

Right.

The, these systems are
incredibly complex and.

Paying attention to them,
number one, is super important.

Having an opinion is completely fine,
but then knowing how and when to act

on that opinion, which the answer is
very rare, very, very, very rarely,

um, is the most important piece to,
to the, the, the long-term puzzle.

Um, hopefully that was helpful.

Uh.

Mena Hanna: Uh,

Justin Dyer: We will certainly
cover any and all topics

that you guys throw our way.

Mina will send his, uh, or
shoot, shout out his text,

six two six, his phone number.

Excuse me.

Mena Hanna: me.

Yeah.

6 2 6 8 6 2 0 3, 5

Justin Dyer: Yeah.

And we're, we're always looking
to top topics and or questions

you guys might have, and until
next time, we'll wrap there.

Own your wealth, make an
impact, and always be a pro.

Thanks for listening.