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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.
Justin Dyer: Hey everyone.
Welcome back to another
episode of a WM Insights.
We concluded our, our series on building.
Uh.
best
in class human-centered
investment portfolios.
We're gonna go back to our
normal programming here and just
talk about the markets today.
Talk about how we're viewing, what's going
on, interpreting what's going on, how we
think about it as it applies to a lot of
our core pillars of, of investing today.
Um, and as you guys all
know, uh, we, we love.
Following the, the, the, uh,
happenings within the market.
And there's usually never a shortage.
we're entering the summer, months can
be a slow time, but I, in the last
few years, it, it, really hasn't been.
There's this great old adage
of Sell in May and go away.
And guess what?
We just had the best.
May in 30 years, up 6% the S&P 500 that
is, so market has rebounded quite a
bit off of the, off of the lows, the
tariff induced lows, let's call it.
And, and yeah, there's just, there's
some interesting stuff going on
that we're certainly keeping an eye
on and want to talk about today.
So Mena why don't you jump
in, give, me your take.
What are you looking at?
What, what's going on?
What's keeping you your
attention right now?
Mena Hanna: Yeah.
I think the rally in May's been,
has been super interesting and was
super interesting to see because
there wasn't a whole lot of just
positive news that came out.
But markets still rallied and if you
really think about it in terms of scale.
Markets are up on average
less than 1% a month.
6% that figure, that's
three quarters of return.
Super strong realized in one month.
So yeah, crazy.
A little bit out of the blue too.
Like I said, there isn't a ton of,
there wasn't a ton of data that
came out to Propel Markets forward,
but it's really comes down to,
one of our core tenets where of.
Not being able to time markets.
You can't time markets.
You don't know when you're going
to realize this massive up month.
and if you're also operating based off
news, based off predictions, everything
that, that you're, reading about
researching this totally blindsided you.
Justin Dyer: Yeah.
right Discipline, long-term
focus, all these things.
We say time and time again, and, we
say them time and time again for good
reason, are just reinforced, right?
You're, gonna see headlines of oh,
so and so got the timing right?
But those are outlier events.
Those are outlier predictions,
and they're not the way you
build a consistent repeatable.
Higher confident investment
solution or investment portfolio.
we went through the nitty gritty
of actually how, to do that over
the last four or five episodes.
But episodes like this and they're
just great actual data points, data
reminders of, why we say what we, do.
I think we've said this
before, but these, we, don't.
Have these pillars and have the, this
philosophy just because it sounds good.
or, because we feel like it, it's
very much rested in just hard
data over many, market cycles.
and yeah, go for
Mena Hanna: Yeah.
The data tells you that, in
terms of market timing, people
buy high and they sell low.
They get scared and spooked in times like
COVID in times like Liberation Day, that's
when funds and and flows actually leave.
Equity markets, leave stocks, leave
risky assets, and they go into more
conservative asset classes, which.
Don't actually benefit from the rebound.
So, yeah, it's exactly what you just said.
The data is pretty overwhelmingly
against timing markets and unfortunately,
human emotions outweigh data.
Justin Dyer: Yeah, 100%.
And I've been thinking about
that general topic a little
bit lately where, periods like,
this, short period of time, let's call
it, since the lows, and there's many other
periods over the last, I don't know, five,
six years, where you can get trapped into.
Complacency.
You're like, oh, wow, actually, I
just buy the dip and keep, riding
this or this game is quote unquote
easy and I'm old enough now.
I, unfortunately you have to say
that, but old enough now where you've
seen, I've seen, Huge, huge market
corrections, whether it be the great
financial crisis in 08 09 where
there were substantial drawdowns.
even going to, more recently, some
folks will, who are listening, know
COVID the COVID period of time, right?
Where there are these.
Fierce, drawdowns that
happen quite viciously.
And that's, really what we're
prepared for, not these little more
short term points of volatility.
and that's when your discipline
is truly, tested, I would say.
And, we're reminded right where you
miss the best days, the recoveries,
which happen super fast, it.
decimates your returns.
And so, um, you know, luckily we're
not in any, any crazy periods of time.
There's a lot of uncertainty right
now, and there's been a heightened
volatility, I would say, year to date.
But, um, we, we haven't experienced
these crazy, crazy, uh, bouts of, of
strong, severe
drawdowns.
And hopefully we, we won't for a while.
We will at some point, right.
It's kind of like, it's, it is one
of those inevitable, I would say, um.
And we, we are constantly prepared and
very vigi vigilant there where you know.
Protecting on the downside and
being disciplined is almost just
as important as cap capturing it.
Arguably more important than capturing
some of the upside that we're seeing.
Uh, and yeah, I think it's just,
it's great to remind ourselves this,
we've certainly seen a positive month
and it's great to remind ourselves
that when we see positivity in the
market, just as it is when, when we
see negativity in the market, um.
Maybe shifting to more of
the macro side of things.
Macro being a term used for just
the economy, what's going on?
Broadly speaking in the economy, I kind
of alluded to a little bit of uncertainty.
There's obviously volatility
that's we've seen in the market,
both up and down volatility.
Um, largely driven by what's going on.
On the macro side of the equation,
we don't need to hash out all this
specific news items, but just what
are we, what are we seeing there?
Is it clear?
Are we out of the woods?
Is it a mixed bag?
How are we interpreting
Mena Hanna: that?
Yeah,
it's super unclear and we
are getting mixed signals and
yeah, getting hot signals.
Some days, cold signals other days.
I think that's why the rally
has been so interesting.
And if you really look at it, it was
kind of just up and to the right.
Um, you didn't, you didn't really get
many, uh, many big negative days in May.
Um, and this is just off of,
you know, mixed economic data,
mixed manufacturing data.
Nothing really that's pointing to,
uh, just rosy, rosy streets ahead.
Um, but nothing that, you know, tells us
that we're in the path of a recession.
Um, so.
I would say maybe the only really
big piece of, of negative data
has been the US debt downgrade.
Uh, we've seen that a
few times in the past.
I don't think it's, it's a
massive surprise, something that
we, we've discussed internally.
Um, but the market's reaction to
that even was, was pretty muted.
I think the market was up, um,
the day that it actually happened.
So you never really know how,
how news gets processed by.
By markets and by those, you know,
trading on, on a daily basis.
Justin Dyer: Right.
And that, I mean, can kind of
speak to market efficiency, right?
The market probably already
assumed that that's where the
debt rating was for the us.
Um, so great reminder of
market efficiency there.
You know, I, I would just add to that too.
Yeah, it's very unclear.
There's kind of a mixed picture, right?
We saw some, uh, data slightly to
the upside from the bureau or, uh.
Department of Labor on, uh, job openings.
But then today as we're recording this,
this is June 4th, uh, this week, the
ISM Services index, it has weakened
and been weakening, um, quite a bit.
So, um, we're, we are seeing potentially
some impacts of the tariffs now
that they got theoretically delayed.
I mean, we'll, we'll see where,
where the courts take all that.
Um, and, uh, and, and how
that, that dust settles.
Right now, there, there does seem to
be some bleeding into the, uh, overall
economic picture and, uh, we'll,
we're keeping an eye on that as well.
One other topic I wanted to hit on, I
think it's probably been been, um, uh,
seen by, by many of you all, but, uh.
The gold market, both crypto
and gold, let's call it.
I, I kind of put those two
things in, in the same category.
Certainly from a trading perspective,
they, they can, um, be lumped together,
but I think there's plenty of nuance.
Maybe we can highlight at least our
quick take on crypto specifically,
but, um, what, what, what's going on
Mena Hanna: there?
Yeah, let's go, let's go through gold
first, because that's an interesting one.
So I think a lot of times people
think about gold as, as mainly
being a store of value asset.
And, you know, it's trading, I
think now above $3,000 an ounce and.
It is a store of value asset because if
you remove that purpose and just looked
at the industrial value of gold, a lot
of people have have studied this and been
like, okay, if people don't believe as
gold of gold and don't look at it as an
investment, how much would it be for?
And the answers really are,
it would probably be worth 90
to 95% less than it is today.
So there's a ton of just speculation.
In terms of the value of gold
and, and recently that's paid off,
gold has done super, super well.
Um, but it hasn't done well because more
people wanna wear gold and people are
buying massive, you know, Cuban chains.
It's because there's speculation
going on and, and there's,
it's international speculation.
You know, some people don't believe
in their international currencies.
We, we definitely see
that in emerging markets.
The US debt downgrade.
Tying to that would be something that
makes you, you know, have a little
bit more trust in, in a commodity
like gold and move away from currency.
So that's all, that's all great.
But you, the people that are making these
bets need to understand that there's,
there's a ton of risk with putting that
amount of value into a commodity that.
Doesn't really make you money.
Um, and, and it's all just, you
know, ballooned up with speculation.
Um,
yeah, totally.
Justin Dyer: Yeah.
Well, yeah, just to add to that, we've
spoken about this in previous podcasts.
Um.
Mena Hanna: and,
Justin Dyer: I, but it's worth
highlighting again, just given the
run that we've seen, number one in
our portfolios, we have exposure to
gold miners, um, et cetera, and those,
those are companies that are actually
creating value out of a commodity.
Right.
To your point.
So that's a, that's a framework
we think about where can we.
Create value.
Where can we actually
attribute value creation?
So one reason why we don't
actually allocate directly to
gold is that how do you value it?
It is purely speculative.
And hey, that goes both ways.
Uh, it, it sometimes
works, sometimes doesn't.
And but we've made the
call that we just can't.
Value that we don't wanna
play that speculative game.
Crypto, in a way, is a lot more nuanced.
A lot of people believe Bitcoin
specifically is now a digital gold, and
in that case the speculative nature.
Um, and, and the, the speculative
comment I just made applies there
as well, but also talked about in
previous podcasts many years ago, um,
that our take on crypto or blockchain
specifically is actually, it's a
really interesting technology we have.
A lot of exposure, a decent amount of
exposure there in the private markets,
in this kind of pick picks and shovels
type approach where again, we want to
invest in startups that are creating
value out of this technology and a
usable, um, a usable application of it.
And that's kind of how, how we see
the, the more, uh, let's call it, um.
Data-driven evidence-based approach
as opposed to just purely playing,
uh, the speculative come kind of
gambler analogy within that space.
So just wanted to, to hit
on that briefly today.
Um, if it's something you all want
to want to hear us talk a little
bit more about, given what's going
on in the market, happy to do that.
Please reach out, hit, hit us up on
for, for specific topics to dive into.
But hopefully this just general
take kind of pulse of the market.
Our quick take was
helpful for you all today.
the, the.
two takeaways I wanna leave
everyone with is, look at the end
of the day, diversification is
this wonderful free lunch, right?
it's still, it can.
Arguably be boring to go back to
that, but it just, it works, right?
And when something ain't
broke, don't fix it.
globally diversified portfolios
helps smooth out these bumps.
Capture opportunities when the market's
giving you opportunities somewhere.
And you don't have to
play this timing game.
It just, it, works.
And then this idea of
evident based data driven.
Investing where we can attribute value
creation to something or we can see
where the data has been robust and,
and really, strong over, over history.
And so that's, uh, those are,
those are come core pillars that
I would take and extract from this
conversation today and, and make sure
we, we lead or leave you all with.
Um, so with that we'll wrap and, uh,
I'll, I'll say, uh, own your wealth,
make an impact, and always be a pro.
Thanks for listening.