00:00The menu for you, stocks and bonds, the risk-reward, what's more compelling right now, fixed income or equities?
00:05Well, on a relative basis on the comparison between stocks and bonds, we're going to choose stocks and we're overweight
00:10relative.
00:11That having been said, you know, right now we think we're going through a period of seasonal weakness in both
00:16asset classes.
00:18We would be buyers. Ultimately, our best guess is as we get into the election, the election will be a
00:25cathartic event.
00:26There will be a clearing event and you'll be able to resume buying in stocks and we're going to see
00:32much better action in the bond market and potentially lower yields.
00:36And not a secret that you're one of my favorite guests, but it's rare to hear you say we would
00:40be buyers.
00:41That is correct. I often say that to folks, you know, shock of shocks.
00:45You know, I don't know if it's the contrarian indicator.
00:48But look, you know, we came into this year with a lot of skepticism about overall stock valuations, about the
00:55concentration in the market, about, you know, excessive stimulus in this market.
01:02And, you know, the market has proven to be extraordinarily resilient and extraordinarily, in our humble opinion, rational.
01:10So we have now seen multiples come in three and a half turns from where we were in January on
01:16spectacular earnings, right?
01:19So the market's up, you know, 12 percent on earnings that are up 30, right?
01:24That is not an excessively exuberant market. It just isn't.
01:28You're seeing discipline in the bond market as hyperscalers are issuing debt at, you know, a bit wider spreads.
01:35That may be part of the problem for treasuries right now.
01:38But, you know, our view is that the earnings power that is still in this market and is reasonably visible
01:45over at least the next six to nine months is excellent.
01:48And ultimately, earnings can carry the day.
01:51Does that mean we're going to get double-digit returns over the next year?
01:55No, probably not.
01:57Our best guess is a 7 to 10 percent, right?
02:00But that's okay.
02:01That's normal.
02:02And it's all part of this normalization process.
