Building Your Boat Before the Storm | AWM Insights #250

In this episode of AWM Insights, Chief Investment Officer Justin Dyer and Portfolio Manager Mena Hanna break down what record market highs truly mean for multi-generational wealth. Together, they weigh in on the latest market headlines, dispel myths about bubbles, and share how the 100-year family should respond to shifting economic tides and Federal Reserve changes. With stories, data, and hard-earned wisdom, they reveal why disciplined strategy and proper diversification outweigh fleeting headlines. Tune in for a master class in stewarding long-term family wealth—designed for anyone aiming to make an impact that lasts generations.

Chapters
(00:00) Navigating Market All-Time Highs
(02:40) Historical Data and Market Cycles
(05:10) The Value of Long-Term Discipline
(08:13) True Portfolio Diversification
(09:04) Federal Reserve Leadership Transition
(10:32) Interest Rates, Inflation, and Portfolio Strategy
(13:39) Building Resilient Investment Plans
(15:11) Preparation Over Prediction

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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.

Mena Hanna: Hey

Justin Dyer: everyone, welcome
back to another episode.

of AWM Insights.

Justin

Dyer here, as always, chief Investment
Officer here at AWM Capital,

joined by Mina Hanna, our portfolio
manager, one of our portfolio

managers here at AWM capital.

Uh, and today's conversation

is aimed at the hundred-year
family, I guess you could say

this entire podcast is, but really

the hundred-year family
digesting, understanding

a couple of the big headlines that
are going on within the markets right

now.

Uh, I wouldn't be shocked if people

are like, oh, what headlines,
what's actually going on?

Um, but there are some

decently meaty, uh,

um, events

uh, and whatnot

that

we wanna just cover,

sift through a little bit,

um, and give you our quick take on,
on how we think about it, how the

hundred-year family should think about it.

And really, I guess without further
ado, we'll jump right in, Mina, so.

Um, those

big events, big headlines, at least
in our world, are, I would say

markets at all-time highs.

We just had the best month since
twenty twenty, uh, in the market.

So we're recording this
right at the end of April.

That that's,

uh, the month we're,
we're referencing here.

Um,

just

getting through

at least some initial earnings
reports from a number of companies,

big tech companies included.

Jerome Powell J.

Powell,

chairman of the Federal Reserve

is stepping

aside.

his tenure is coming to an end.

We're having a regime

change, if you will, within that,

um, very

very, important body.

We'll we'll try to stay a little
bit out of the nerdiness there, but,

uh, it's worthwhile.

and It impacts a lot.

So we'll cover that.

Um,

people are questioning bubble talk again.

Um.

that hasn't-- That's come and gone, I
would say maybe over, the last six months.

But, you know, peaking back up given
what we're hearing from earnings,

uh, with markets back at
all-time highs, et cetera.

So, um,

yeah,

a

lot a lot, Those are, those
are no shortage of topics.

Maybe they're more interesting to US
finance nerds, but they're, they're

pretty meaty.

They're pretty substantial.

And so

let's jump, jump right into it and,
and really specifically starting,

um, with

this,

uh, you know, markets at all-time highs.

What does that mean to
the hundred-year family?

Does that mean and we're at a,

we're at a top and we should
make some adjustments?

How do we think about it?

What is more importantly?

What does

the data say?

Mena Hanna: Yeah.

and

I was just looking this up.

We spend around thirty percent of
the time at all-time highs, so it's

not like this crazy, crazy ...unicorn

event.

It is.

It's a

Justin Dyer: great headline.

Mena Hanna: Yeah.

Though.

Yeah.

it's, it's a great way of, and
people sort of always have this

misconceived notion of like,

the market is very linear.

It either goes up and it goes up to
a certain point and then crashes,

and there's all this technical analysis
and charts that people like to draw.

That

is not really the wi- right, way
of framing it, and it's definitely

not the right way of framing it.

For a 100-year family, you spend
30% of the time at all-time highs.

Things are obviously going to fluctuate.

The way I like to think about it is

all-time high is like a
beautiful week of weather

doesn't mean that next week
is it's gonna rain, you know?

Not necessarily.

It could be just like an amazing
summer and you could have.

An amazing season.

So that's that's one.

That's one piece of this.

I think the other piece that people
don't necessarily talk about as much

as they should is from a relative
standpoint, well, all right,

markets are all at all-time highs,

but there's a lot of ratios and
there's a lot of reasons and

kind of financial fundamentals.

Tied to these all-time highs,

what do those numbers actually tell
us in terms of relative valuation?

Well, I'd say this is where we're
seeing some yellow flags, where some of

these ratios, some of these metrics we
haven't seen since the dot-com bubble.

Now, that might scare some people,

but if you kind of really think
about it, all right, things are a

little bit of expensive right now.

People are obviously.

optimistic

about ai, about the uni- economics
of what AI can do for our economy.

Why

do we necessarily think that
this is going to be an exact

replication of what happened in

the early 2000s?

and even if it is

for a 100-year family, how does
that actually change things?

And what should you do if you were,

If you had a crystal ball in two
thou in the early 2000s and you

knew the dotcom bubble was coming,

and you were, you know, part of the
hundred part of this vision, you had

a vision of a 100-year family, you
probably wouldn't sell and just stay

out of the market for the next 26 years.

you would you'd be making a
huge mistake if you did that.

So-

Justin Dyer: missed out,

Mena Hanna: Yeah.

yeah.

You missed out.

The market's up since then, like 700%.

So

that's a lot of wealth that
you would have Missed out on.

Now the market markets did tank
and it took a couple years to

get back to, you know, those
valuations and, and those levels.

But there is value, and that's where
value creation actually happens.

It's riding out the volatility

That could be, you know,
three, five, 10 years of.

negative

or no growth.

But if you extend that timeline to
26 years, and you made this comment

in, in one of our calls, that 26
years isn't that long of a time.

Justin Dyer: time.

Especially for the 100-year

Mena Hanna: Yeah.

Not at

all.

It's, it's, it's a quarter.

Um,

it

really is not something to shy away from.

Over that period.

Like, I'm gonna give the
last annualized, uh, nerd

number before I pass it off to you.

But that's around eight
and a half percent.

It's not the 10% that we'd love to
see, not the long-term rate, but

it's also not a disastrous number
when you really think about it.

Justin Dyer: it.

Yeah.

And, Uh,

you know, what, what, what,

you're highlighting

is, is a hypothetical

kind

of,

uh,

point-to-point type summary

I- it's Illustrative

of how one should.

Think, and, you know, you, you go
back to the dot-com bubble, and

boom and crash and all that stuff.

And those are,

um...

they're,

they're,

they're, they're I don't
know, dramatized I guess.

And I mean, they actually happened, but
right they're, they're, they're, they're,

the impact of them are is

always thought to be incredible.

And it was at the time.

But if you think about the, the, the,

life cycle of a long-term
investor, the 100-year family.

w- Number one,

no one's ever putting all
their money in at the exact

top.

Now, I'm

sure there's, there's
one example out there.

Yeah,

yeah, exactly.

That guy should never

play the lottery

but

right there is that person.

Um, but you know.

And throughout my career, our clientele,
it it just doesn't happen that way.

You earn money over time.

you invest over time,

and guess what?

You're also diversified.

We're talking about some,

uh, m- more concentrated

type hypothetical examples here, and...

but that's why we're diversified.

Right?

And that's why we talk about
long-term investing because we,

we can look back and see even
through crazy periods of time, uh,

valuation-driven, bubble-driven, whatever
the case may be, you're rewarded.

for discipline.

It's the simple discipline of
staying in the market and, and

having the right portfolio,

even kind of more, s- most
importantly, having that right,

um, game plan for the, the game.

You're, you're playing
that 100-year dynasty.

You're trying to, trying to build,

that's what leads to success, not the

short term, oh, we

we just hit a market high, or,
"Oh, you know, valuations of this

very specific part of the market.

Are are overly extended and now.

We need to make an adjustment.

It's just not

the recipe for success

that the 100-year family,

uh, should, should be adopting.

Um-

Mena Hanna: One thing, one thing
I'll add there is exactly what you

were sort of highlighting, which is.

There are going to be periods
of time where you're going to

have, you're gonna see red.

You need to have a plan in place
that can ride out three, five,

ten-year periods of time like that.

And you're not completely dependent
and you're not overly concentrated on.

The market in general, The--
in this case we're just talking

about the US market, which is

A big piece of, you know, a larger, much
larger pie, but you can't be completely

diversified in equities in general.

That's where fixed incomes,
fixed income comes into play.

That's why it makes sense to have a
protective reserve that enables you

to actually ride out these waves.

It is super, super important to think

big picture and to think in that
truly diversified, diversified way.

Justin Dyer: Yeah.

Well

and okay, you

talked fixed income.

great little segue Let's
pivot a little bit.

and we're gonna do our
absolute best to stay out,

of the nerdy wonkiness.

Um, okay.

Jay Powell, stepping

down,

moving along, um, as the

chair of the Federal Reserve,
he will still sit on the

Federal Open Market Committee.

Uh, that is

the committee

that

sets interest rates
for the US economy, has

a ton of implications

and impact on

mortgage rates,

all sorts of different borrowing
costs, whatever the case may be.

It's just, it's an incredibly important

body.

The

chair of that is moving on now.

That's a committee.

It's not a single vote.

So

you could argue, hey, it's not
gonna be all that impactful.

However,

the tone is gonna change and
the gentleman who's coming in

to replace him, Kevin Warsh, is

getting some pressure and seemingly

go-going to want to,

um, try to build

consensus to

or agreement to

lower interest rates at a time when

inflation is high.

And the quick takeaway there is.

Lower interest rates generally
increase inflation in the economy.

And so what, what's the potential

impact?

Or maybe even let's ask the
question in a different way.

How do we build portfolios to deal

with these changes

and,

um, whether

it be

to kind of

co-core key interest rates in an economy

or

potential inflation?

Mena Hanna: Yeah, interest rates and
inflation are two of, I would say, the

most fundamental pieces in how we build
our, our plans and the assumptions

that we actually make in terms of

returns, in terms of
final real value, because.

we don't try to calculate

just total value.

We try to calculate real
value after inflation.

Inflation obviously always erodes wealth,

So these

are

super important things that
we always take into account.

The way I would kind of think about it
is if a new coach walks into a locker

room, that changes kind of how much
emphasis there is going to be in terms

of training, in terms of the game plan.

Leans more offense versus defense.

That doesn't necessarily change
the sport that we're playing.

It just changes a little
bit, and it's a small tweak

of how the game is going to be
played in market dynamics, but

it's not something that you

Are going to pick up the playbook,
tear all the pages out, and

then just start from start.

from scratch.

Start...

Yeah.

So it, it does, it does matter.

It's not something that we
can completely disregard.

This is gonna impact everything,
mortgage rates, commodity prices.

It's gonna, it's gonna be meaningful,
but is it going to be this completely

new regime where we have to blow
everything up and start from square one?

Absolutely not.

Justin Dyer: Yeah.

And I, I

I,

I wanna say, or build

on your analogy too, right

from.

From our,

side of

things, let's call it from the
opposing team side of things,

we're not gonna rip up our playbook.

We have a, playbook that is

built to deal with really good
offensive teams, really good defensive

teams, and we're ready for that.

The the other analogy I always like
talking about is, you know, we're not,

um, we're not

trying to predict things.

With some sort of statistical measure,
like yes, we definitely pay attention to

what markets have done and what average
returns have been on all that good stuff.

We are building a, a proverbial boat
that kinda can rise and fall with

the changing seasons or you know,
the changing whatever, where

the boat stays afloat.

It's protected.

Through, thick and thin, storms or sunny
days, whatever the, the case may be.

Uh, and the the, technical
term for how we think about it,

is immuniz-immunization,
immunizing a portfolio, excuse me.

Um, And,

and that's really what it is.

like.

You're, you're, you're protecting
a portfolio kind of from outside

forces to make sure it moves where
it needs to be and is protected at

least the core of the portfolio.

Um, and so

the other thing

I'd

say is none of this changes overnight.

Right?

You're, you're definitely right.

It could change if we have a

more offensively-minded coach
that we're playing against.

Changes the game a little
bit, but not drastically.

And it

al- often takes a lot of time
for that to kind of flow through.

um, The

economy and markets, and we make
adjustments along the way, right?

You make these in-game
adjustments, if you will,

to make sure our,

our protection

is, is where it needs to be.

Yeah.

Mena Hanna: Yeah.

And kind of the boat example, this, these
are videos that I really get into, like

the Drake passage videos or the Bering sea

boats can deal with a
lot if they're built.

Well, if you're using the right
kind of boat in the right,

call it atmosphere,

right environment,

they are going to deal
with the situations.

Well, if you have a little fishing
boat in the Drake's passage, well

that's, that's completely gone.

It's going to get- Yeah.

So you have to be thoughtful.

In terms of what kind of boat
you're using and the sophistication

that you're bringing to the table
when you're constructing the boat.

Other thing that I do want to say,

um, because you know, we never know when

a dot-com bubble is around the corner.

You don't want to be building your
boat when you've already left the port.

That is a job to be done before
That, like I'm saying this now,

given that we're at all-time highs,

it's a great time

to reevaluate and see.

Hey, how big of a hull do I actually need?

How big of a boat does this
actually need to be so I can weather

whatever storm really comes my way?

And that can only be
done with preparation.

So

we see it a lot where
people are just hoping that.

uh, you know, seas are not that rough
and once they, once they experience some

turbulence, they start building up their
boat, that really doesn't work, especially

in a dot-com bubble in a 2008.

You have to be prepared and you have to
be super thoughtful and your team has

to be super thoughtful in terms of how
this boat is engineered and crafted.

Yeah.

Justin Dyer: That's

right.

I

mean, hope, hope is not a

strategy, right?

Yeah.

Mena Hanna: Not at all.

Justin Dyer: Uh, that's
a great place to end.

Hopefully this was helpful again,

digesting just

current

environment.

um, lots of interesting things
going on within markets,

um, and within the broader economy

that the 100 year family is going to

have to sit with.

It's certainly things we pay
attention on your behalf, but,

uh, Hopefully

the

conversation and our
perspective is helpful and just.

reminding you

all

to build your 100 Year family.

It takes discipline, it
takes patience, it it takes,

um, consistency

really at the end of the day as well.

That being said, definitely let us
know if you have any more questions

along these topics or any other
questions that are floating out there.

headlines you want us to discuss,

um, topics you want

us to unpack.

Send

us a text message.

Mena Hanna: number is six two six
eight six two zero three five five.

Justin Dyer: And until next
time, own your wealth, make an

impact, and always be a pro.

Thanks for listening.