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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.
Brandon Averill: Hey everyone.
Welcome back to a WM Insights.
I'm Brandon, and I get to come in as a
guest today and really mess things up.
Justin's on vacation, uh, but
I get the privilege of sitting
down with, uh, Mina as you guys
hear from week in and week out.
He is the portfolio manager here at
a WM, really bringing the knowledge
to you guys on a week to week basis.
And then throughout the week
making sure that your guys'
portfolios are well taken care of.
Uh, little known fact, Mina is
actually the athlete of the office.
Um, so he's not only the brains behind the
Mena Hanna: not really, but,
Brandon Averill: but, uh, he's
quite the athlete himself.
So, uh, with that introduction, I
would love to just jump in today.
Mina, you know, today's gonna be a rapid.
Fire, real talk.
You know, really what do our clients need
to know, uh, really to be a professional,
uh, when it comes to the markets.
And these are a collection of
questions that we've gotten from
you guys throughout the week.
And at the end of the episode, we'll
also give you a way for you to reach
out directly to Mina and ask 'em some of
these questions, uh, so we can continue to
bring you guys the answers that we hear.
Mena Hanna: All right?
Yeah.
Let's kick it off.
So, first question, am I invested in
the s and p 500 as a client of a WM?
Brandon Averill: Absolutely.
Uh, the S&P 500 is a, is a very
important part of your portfolio.
It's a big segment of the portfolio.
I think one thing that people forget
is what is the S&P The S&P is actually
just a collection of companies,
happens to be 500, hence the name,
the S&P 500, but it's actually the
largest companies in the United States.
Um.
We talk about this a lot with
you guys, we want you globally
allocated to every company virtually
throughout the entire world.
Um, and so that does include,
believe it or not, the 500
largest companies in the us.
Um, but we just don't want
you to only be invested there.
It's a common thing you're gonna hear on
CNBC or any of the financial news markets.
And it is something that
our industry uses to.
Benchmark things.
However, when you're taking a more
sophisticated approach like you
guys are with your portfolio, your
opportunity extends far beyond that.
But yes, the answer is yes,
you do have access or you are
allocated to those 500 companies.
I think a way good example of
that is in Nvidia, we've seen
that kind of skyrocket this year.
Um, it had a a little down trough,
but then it skyrocketed even in
the midst of all this tariff talk.
Uh, it continues to go up.
The question is, do I own Nvidia?
Yes you do.
In fact, your portfolio is allocated
about five, a little over 5% to Nvidia.
So you are participating in that
growth even though you're allocated
to many areas of the market.
Um, so hopefully that's
helpful to you guys.
You know, another question,
Mina, we've gotten throughout
the week is, you know, why?
Do we buy into the market?
Why do we want this globally
allocated portfolio to companies?
Uh, instead of going after the,
hey, kick, kick the dirt, you know,
actually have the real estate go.
All real estate or all gold, for instance.
Um, you know, I'll stay away from
that one 'cause I'm too opinionated.
But give, give our, uh, audience
the answer to that from our
Mena Hanna: perspective.
Yeah, and actually there's been a meme
going around about gold real estate
and the growth over a 50 year period
of time where $64,000 of gold or real
estate to, that you could have used
back then to buy a house would be worth.
The same amount, approximately $1.3
million.
That sounds great.
You know that's a 20x on your money, but
over 50 years, if you actually look at
the growth rate, it's not incredible.
It's only a 6% rate of return.
If you actually look at, uh, index
of the entire global economy,
the MSCI world Index that.
$64,000 if you would've just
invested it in that index and
reinvested your dividends and
dividends are your passive income.
When you invest in the stock
market, you would have not 1.3
million, but $12.4
million, so that's almost 200x on
your money over a 50 year timeframe,
and that's the power of compounding.
When you can move the amount of money that
you're making and your return from 6%.
To just 11%.
It's a 5% difference.
It doesn't sound massive, but it's a
180 times difference from, from your
starting value to your end value.
Brandon Averill: Yeah, and I
think that's an important point.
I think one thing that a lot of
people lose is what is investing
in the first place, right?
What are we expecting?
If I'm gonna put my money into
something, I'm gonna go buy
a block of, of gold, right?
What?
What am I expecting
outta that block of gold?
Well, maybe I can shave it off
and go down and buy something.
I don't know how you do that,
but maybe you could do that.
But when we actually go invest our
money in the market, what are we buying?
You hit on it, the dividends, right?
So we're buying a company, we're buying
a share of a publicly traded company.
We used Nvidia previously.
Nvidia makes money.
They charge clients
money, they make revenue.
They have all their costs.
They have something called profit.
At the end of the day, you're
buying a share in that profit.
You are getting cash flow from that.
So when we take a look at things and we
can evaluate, Hey, if I'm gonna buy this,
I'm expecting these cash flows back.
We can figure out a price.
You know, at least the market
can figure out a price.
I think that's hard.
Point par with gold, right?
Like how do you figure
out the utility of gold?
Mena Hanna: It's just whatever
someone's willing to buy it at.
There you go.
Yeah, there you go.
Um, so yeah, just like you said, with
the sophisticated portfolio holding
10,000 companies that are working
for you and making money for you, is.
Proven
to be a surefire way of actually
making money over time, no
matter the market condition.
Um, obviously you're gonna have
your ups and downs, but over a long
period of time, you can be more
certain that you're gonna make money.
You know, we always talk about the lost
decade for the s and p specifically.
That's why we don't focus on one asset
class, but gold beyond, you know,
this, this last couple year period of
time was flat for a pretty long chunk.
Um, so yeah, that's why diversification
and investing globally really matters.
Cool.
Uh, next question.
Where do you see interest rates moving
and how will that impact markets?
That is a loaded question.
So,
Brandon Averill: yeah.
Hey, it's, uh, I got
to be the guest today.
So one thing I thought about doing
was bringing my trusty crystal ball.
If you listen to early episodes, I
used to have the trusty crystal ball.
I could predict the future.
Um, but no.
All joking aside, I have no idea.
I don't know that anybody has
any idea of when interest rates
are gonna change, but what we.
Probably can take a pretty good
guess at, um, is that over some
period of time, interest rates
are probably going down from here.
Um, we get indications of
that, uh, from the market.
There's ways of looking at that and
seeing expectations from the market.
You also get indications
from the Federal Reserve.
Time to time, although that's a,
a kind of a tricky thing nowadays.
Um, but, you know, trying to predict
when is actually the, the key point.
Um, I think when you think about
interest rates, the point that I would
like to make and, and for everybody
listening to understand is what does
it actually mean when rates change?
Um, you know, president Trump is,
is being very vocal right now.
Uh, his displeasure with, uh, federal
chairman Jay Powell around not.
You know, cutting rates.
Uh, we just had a new, uh, fed,
uh, member appointed, uh, they're
calling for Powell's head.
Uh, so there's gonna be
a lot of changes here.
What, what an interest rate cut
though means is, does not directly
correlate to the loans that you have.
I think that's one misunderstanding
we often have is, hey, if we
get a quarter point, so a 0.25%
reduction, my mortgage
is gonna go down to 0.25.
Percent, or when I go to get a
new mortgage, it's gonna be 0.25%
lower.
Um, and while they're correlated,
it is not, uh, it is not
directly linked in that way.
And so there's a lot of different
things that go into how the interest
rates actually flow down to us.
Um, so I just.
You know, I caution you of, you know,
getting on one side or the other, really
wanting a rate cut or not wanting a rate
cut because it may impact you differently.
The other thing that often gets
forgotten is that, you know, rates do
have an impact on the equity markets.
It is one of the building bo blocks of our
expected returns is the risk-free rate.
And so when we, it's a very complex
situation when we have rates change.
That being said, you know, we do
protect your guys' portfolios.
Uh.
With an expectation of
where rates are going to go.
Um, so it is something that, that we're
acutely aware of, um, and we're making
sure that, you know, we're making
the adjustments necessary in your
portfolio to protect you against that.
Um, do you have something you
want to add to the interest
Mena Hanna: rate?
Honestly, it is, it is
extremely complicated.
Yeah.
Like you highlighted, it moves asset
prices, like equity markets, it moves,
borrowing costs, which you can think
about, like if money's cheaper, probably
more economic activity will happen.
But on the flip side, uh, when you
actually reduce rates in the us.
You're also technically impacting
your currency in a negative way,
and you highlight, highlighted it.
We protect our portfolios and invest
them, you know, in a way where
they should be able to perform well
given interest rate cuts or hikes.
That's where I think the international
piece really comes into play.
'cause even if the US, the dollar
goes down, um, which it has this year.
Our clients can still make money
in international and emerging
markets, uh, no matter how currencies
move or interest rates move.
Um, so yeah, it's, it's about
being prepared and building a
boat that, that doesn't have any
Brandon Averill: holes in it.
I think that's super helpful and you kind
of, you know, teed this one up For me.
It's a conversation I'm having a lot
right now with clients, um, because
it's a good time to remind them of
why we're invested, uh, globally.
You know, it's pretty natural to,
for us to want to invest in the us.
I mean, when you start to take a
step back and you're like, Hey,
the US great performer over a long
time, we talk about this a lot.
One of the greatest wealth building
machines has been the US economy
over the last a hundred, 150 years.
Um, but it's also a really good time,
even when the US market has been really
good to take a step back and go, Hey, in
a really good market, has it benefited us
to be a part of the international markets?
And so me, and I'd love for you
to hit on a little bit, why do we
continue to invest internationally and
especially with all this tariff news
is out there, you know, tariffs, um.
Well, I, I won't give you the leading
question, but you know, I think the
perception is leading tariffs are very
negative for the international markets.
Um, but I would love to
hear your perspective.
How are we thinking
about it and building the
Mena Hanna: portfolio?
Yeah, and just from a, from a surface
level perspective, they should be bad
for international emerging markets, but
this year has sort of defied that for.
A bunch of reasons.
Um, if you actually look at performance
international, emerging markets
have outpaced our markets here.
Even though you could, you would think
that there would be pressure on them.
That's because of the currency reasons.
Um, the dollar has been devalued.
Our interest rates are
expected to go down.
Those, those two things
actually operate together.
And also the fact that, you know, we
are not the entire global economy.
I'm a car guy, so I'm gonna
use BMW as an example.
You know, there's a 15% EU tariff
if you're buying A BMW here, when
that tariff is in, in effect, it's
going to be more expensive for sure,
so less people are gonna buy BMWs.
That doesn't necessarily mean
that BMW is not going to shift
its strategy to sell more.
Cars globally and still potentially
make the same amount of money.
So what the market right now is, is
doing in pricing in is it's pricing
in that the global economy is strong,
these international markets are strong,
and these companies that are selling
products that are probably going to
get hit in the US slightly are figuring
it out and actually still making money
in the other parts of the world where
tariffs are not hitting them as much.
Brandon Averill: And I know you guys
have talked a lot about tariffs,
but let's not forget tariffs are,
tariffs are ultimately a tax right?
And so when we think about,
uh, the domestic versus the
international conversation, there's
an impact domestically as well.
Apple is not going to eat
the cost of the tariffs.
Let's just call a spade a spade who's
going to eat the cost of the tariffs.
Everybody that buys one of these iPhones
is going to eat the cost of the tariff.
Uh, and we already see there's
a lot of gamemanship going on.
You know, there was the 100
the threat of 100 tariffs on
chip manufacturers right now.
And then Apple says, no, we will
open a manufacturing facility and
dump $100bn It's like, okay, now
you're excluded from the tariffs.
So, you know, I just hesitate to, to.
You know, or I, I caution
everybody again, there's a lot
of news flying around out there.
Um, you know, I think the, the thing for
you guys to take away is a, we're paying
attention, but also we're allocating
your portfolio in a way that is going
to withstand any short-term disruptions
that we see because we're building
for multiple, multiple generations.
You guys are trying to build generational
wealth, and we know in the short term
we're gonna have peaks and valleys.
That is just.
Part of it, and that's why
we get rewarded as investors.
Uh, but we're really keeping a keen
eye on what the long-term trajectory
of your portfolio looks like.
So, um, yeah, this has been a lot of fun.
I'm glad I got to come back, uh, and, and
make a little bit of a guest appearance.
I'm sure they'll kick me out next week.
Um, but make sure to, to
shoot mina some messages.
Uh, we'd love to hear your feedback.
Um, I think he's even
gonna let you reach out
Mena Hanna: to him
directly.
Yeah, text me directly.
Text me directly please.
Always here to help.
And, you know, you can actually
set our agenda for a future
insights episode and we can talk
about what matters most to you.
So my number, direct
line 6 2 6 8 6 2 0 3 5 5.
Feel free to text me and
Brandon Averill: yeah.
Yeah.
And if you wanna be a guest, come on in.
We'll, we'll put you in the pod here.
We'll record an episode with you, uh,
or we'll get you on the line somehow.
We'll figure that tech out.
But, uh, we hope you have a great week.
Hopefully this was helpful.
Um, we appreciate you more than you know.
And, uh, yeah, own your wealth.
Make an impact.
Always be a pro.