It has been 5 years

0:00 Welcome to Something More with Chris Boyd. Chris Boyd is a Certified Financial Planner Practitioner and Senior Vice President and Financial Advisor at Wealth Enhancement Group, one of the nation's largest registered investment advisors. We call it Something More because we'd like to talk not only about those important dollar and cents issues, but also the quality of life issues that make the money matters matter. Here he is, your fulfillment facilitator, your partner in prosperity, advising clients on Cape Cod and across the country. Here's your host, Jay Christopher Boyd. Thanks for being with us for the Something More with Chris Boyd show. You know, I was thinking it's been 17, almost 18 years that we've been doing this show.

0:44 We've seen a lot of market conditions along the way when we started out. It was even before the problems of the financial crisis. We helped our audience kind of navigate some of the challenges going through that. But more recently, by the way, everybody, I'm joined with Jeff Perry and Russ Ball of the AMR team from Wealth Enhancement Group. Guys, I was thinking it's just about five years since the pandemic hit. And I thought maybe we just take a moment to do a little bit of retrospective, but also maybe to try to take a moment to derive some lessons from extreme experiences that come along in the markets.

1:38 I know we have a lot of clients and listeners who are probably a little bit anxious as markets have been quite volatile in the last several weeks. And maybe there's some opportunities to draw some lessons from other experiences as well. Let me just start by saying, I'd be interested in hearing from you guys where you were. What was that song, When the World Stopped Turning? Essentially, I was thinking about how Kristen and I were out with friends on the weekend where we were at a show in Boston with hundreds of our closest...

2:26 No, I'm kidding. Hundreds of people in this theater in Boston at one minute and out at restaurants and things. And within just a few days, everything started closing down. The athletics, professional teams, the basketball... I remember the basketball teams particularly, where it was like, they're not having games anymore. I think there were some... There was a basketball player who... I forget which one that had COVID was still... And then they were like, oh, isolation. And then all this kind of thing. It was like, then the whole team got it, this kind of thing. So they said, all right, no one's gonna... They weren't gonna play.

3:07 And then New York City seemed like the hotbed of... In the United States, there was a couple of boats off the coast that had some people that they were quarantined. They weren't able to land and then dock or whatever. And then it was this thing, we're not gonna let it into our country kind of mindset. And long and behold, I'm sure it was already here. We just didn't know it. My son lived in New York City at the time. And we said, it sounds like things are gonna shut down soon.

3:48 Why don't I come and get you? We don't know how long it's gonna be. Why don't you hang out here on the Cape instead of being in the city with who knows what going on? And maybe it'd be safer kind of mindset. So I remember driving down to New York on highways that were just desolate. Nobody was out. And the world had stopped at this point. It was crazy. And the easiest drive I ever had going to and from New York City. But in any case, tell me what you guys remember where you were.

4:30 Who wants to go first? Jeff, I remember it very well because two important things were happening in my world on March 13th, five years to the day. We were selling our house that we had for many years in downtown Sandwich. So we had a closing that day. And I walked into Doug Cabral's office. Doug's been a guest on the show because he's handling the closing for the buyers. And that morning was the morning, as you indicated, Chris, that things started to get serious. We were hearing more substantial news and possible shutdown.

5:12 So we were all talking like, should we be using different pens? Should we be in the same room? And it was just kind of joking conversation at the moment. An eerie awareness though, right? That's right. Something had changed that day for me. That's when I noticed it at that closing. And then, so we had the closing. And I was leaving the closing, calling my son, because I had just heard we had tickets to the Celtics game that night. Another thing you mentioned. I had just heard that our game was the first game that was canceled.

5:52 So I was calling him to tell him. And so, yeah, it seems like a lot longer than five years ago. That's amazing, right? Yeah. I remember it was funny. We had a client in maybe January of that year who had said, there's this crazy thing going on in China and I'm really nervous. I want to pull everything out. And I was like, are you sure? That seems kind of crazy. Maybe that's extreme. I didn't say crazy, of course. But I said, oh, that's extreme. What are the odds? This kind of thing. So she did, she pulled everything out.

6:33 Of course, genius, right? On the other hand- Did she put it back? She never put it back in. She missed out on a lot anyway. We'll come back and talk about markets. Yeah. That's a good subject to talk about. But it was at this point that you're talking about, maybe just before this, that as a team, we started talking about, well, what if this really does evolve into something that there seems to be this growing concern around? How should we be navigating that? And so I think one of the things we want to talk about in a few minutes is just how did we, what might we derive from this?

7:17 Got some lessons. But I want to hear about Russ. Russ, you lived in New York City, didn't you? Yeah. I was in New York City at the time. And I remember in probably about December of the previous year, I was reading about COVID. It was way at the bottom of the news app. It was like, oh, by the way, there's a virus in China. And I remember reading it and thinking, oh, that's, I had an eerie feeling about it. And I started following it from that point. And I was up in Spain. I remember it was like, it was kind of moving around the world a little bit. Exactly. And I think it was around that time, probably like January or maybe February, I started buying, I was an early adopter of masks on the subway.

8:03 And I was, you know, people were looking at me like I was crazy. I was trying to convince my girlfriend to wear a mask. Because it was only like, at that time, you only saw people from Asia in airports, wearing masks, I think, prior to this. It was unusual. But they had bird flu. And they had been through some of these kind of things before in other parts of the world where they had grown accustomed maybe to masks and so forth. Right. Right. And so I was definitely an outlier in the subway. My girlfriend was trying to get as far away from me as she could. And you hadn't gotten it until just recently. Exactly. Exactly. I was extremely cautious. So in any case, I was following what was going on.

8:45 And I was watching pretty closely when you start hearing about these cases in the city, like doubling, tripling overnight. And similar to Jeff, I was out at a show at Radio City. I think it was like a Thursday night. And, you know, pretty big crowd in the audience. No one really seemed to miss the show because of all this stuff that was going on. But next day, they shut down Broadway. And I was like, OK, that's a pretty good sign that things are escalating here. So I sounded the alarm bells for my family. And I was like, let's all get in the car. Let's get out of the city. Let's start there. My dad always had this thing about, you know, getting trapped in Manhattan if there was ever any kind of emergency, if they shut the bridges down.

9:33 So I was like, let's get let's get in New Jersey. Went to my grandma's house in Jersey and hunkered down with her for about a week. As things started escalating, you start hearing these horror stories in New York City that, you know, the hospitals were getting overrun pretty quickly. There were these crazy stories about at the time. I was obsessed with the news and the New York Times app page that I was on the app, but they have on their website some details about tracking COVID in various locations by counties. You know, I became obsessed with that stuff because there were these horror stories about people who just would die these horrible deaths with they couldn't breathe, you know, with the ventilators and all this.

10:24 And remember how ventilators were at a premium and they're just there were not enough of them and the hospitals were being overrun. And then it was like, well, should you go? Should you stay home? It's just unclear what to do. And I remember in those early days with makeshift masks, we didn't have the masks that you were an early adopter for. So we were getting cloth masks. It was just something, you know, and then going to the grocery stores, wiping down every box that came home. It was like, it was just segregating packages. And yeah, the most memorable thing that followed was my mom was in an assisted living and I went to visit her one day and couldn't get in doors are locked and no visitors.

11:15 And my mom lived in a continuing care retirement, independent living, and they too were isolated because of course it was the elderly who were the most susceptible to having other issues that that became the most prone to being hit hardest by COVID. You know, I remember thinking to, you know, when you saw those, you were talking about the hospitals being overrun and then they had these refrigerated trucks with just the huge number of deaths and they didn't have ability to deal with it all.

11:58 It was just, and then he couldn't have a funeral. I'm sure you all knew people who died from COVID. My mom died with COVID. She had so many other things, but we were not able to have a public funeral. We just had a family gathering, you know, at the cemetery and so much was changing. And along with all that, you know, nervousness and concern in the world, the market started to. Yeah. I remember my aunt Rita died in that time. My wife's cousin who was, you know, similar in age died.

12:39 You know, so definitely I think everybody at some point had some connection to loss related to COVID. Yeah. No family, unfortunately, but there were a couple of people in our building that we were close to that passed away prior to the realization of what was even going on. It was like some kind of crazy pneumonia. I think we had a client who died of that. I really wonder if it was. Yeah. So in any case yeah. So there was, and I will say one of the things that I also think about and associated with COVID was this sudden shift where everything shut down and we closed the office.

13:25 We worked with people. Suddenly we're adopting virtual meetings and technology that previously we weren't inclined to do. Clients like coming in in person. But in the midst of this, it opened up the door of everyone worked remotely. Brian was commuting from Boston three days a week to the Cape. I'm sure he was happy that we adopted virtual stuff. He didn't have to come after that. All of a sudden everybody knew the word Zoom. Yeah, that's right. That's right. It has changed business and business travel meaningfully.

14:09 I don't think conferences are ever back to what they were previously, but yeah, there's this notion that for a time life slowed down, which there are times I missed that aspect. I don't miss any of the other stuff, but I did like the fact that we worked from home and we had family nearby. We took walks and we were out, got fresh air a little bit with for just because we were crazy. You weren't driving anywhere. You weren't doing anything. But for working from home, I did the show from my dining room table with all our equipment.

14:57 Anyway, I think there are some lessons to come out of that. Sometimes it's good to slow down a little bit because we're in such a rat race. Yeah. There are other lessons that we want to derive from that experience. Let's talk about those stuff. You started to go there with the financial story. Well, I think we can agree that COVID and the chaos and the uncertainty, I guess, that followed the recognition of what was happening was a driver of a market decline in April of 2020, shortly after the time period we're talking about.

15:38 In effect, the government said, hey, it's not safe. Stay home. But if everyone's staying home, there are people who don't have paychecks coming in and companies were going to likely fail. So there was all kinds of measures, extraordinary measures to try to help individuals to have income and companies to be able to keep afloat and maybe keep up with some payroll and the like. There were loans.

16:19 People had to pay back loans for employees. There was all types of government intervention. But the markets, the financial markets, were worried about the revenue of corporations and how this was going to play out. Things dropped starkly in the face of, hey, the world has stopped. The world has stopped. And will that mean profitability stops? And therefore, is there going to be any revenue? Well, I think in times like those, it's hard to keep your perspective on things. The idea that Brian would talk about the idea that earnings aren't a single year when it comes to stock value.

17:02 It's not based on a single moment in time. It's based on projected over many years. How does this play out? But of course, you have the uncertainty of, well, what's changing? What does that mean? How will it play out? I think that's the key word there, Chris, is uncertainty. Corporations and markets adjust to things. And maybe we're going to talk about this. I'll just tease it now. Go for it. Let's do it. It's kind of uncertain in the market right now. The uncertainty isn't a pandemic. The uncertainty is economic and political. And to it, specifically, tariffs. The market isn't sure what's happening with tariffs. And it makes the market unstable and uncertain.

17:44 And that usually means a downward trend, in my opinion, when the market and corporations are uncertain about how they're going to be able to do business or what the rules of doing business are. Taxes, in this case, tariffs. We tend to see a downward trend, especially the market had been good and is good now or was good. So there's some analogy between then and now, even though it's a different subject. When we came out of 2019, we were dealing with a great wind at our back, a solid year in the markets.

18:26 And then suddenly you have this disruption. I think what you have to take away from that experience and perhaps the analogy in the midst of what's going on now is good investors are the ones that take advantage of opportunity. The impulse that people have oftentimes is to say, I'm going to get more defensive as a consequence of anxiety. And the best investors say, what opportunities is this creating for me to take advantage of as a long-term investor? And I think that's the mindset we need to be interpreting as investors.

19:12 When things are feeling perhaps a bit excessive, we get a little more defensive, which is what our firm had done on the edges in 2019. So as it turned out, not anticipating the pandemic, but just feeling like things were a little bit overpriced, we were better positioned to not feel it as fully as some people might have. Similarly, I think when we look at going into this year, our team strategies for our clientele, the discretionary strategies we manage for our clientele, we've been recognizing that for those most conservative investors, well, there's a little bit of excess in the price of the market, the multiples that people were paying for certain parts of the market.

20:08 So there was an opportunity to be a little bit more defensive, which we were. That's been good in the sense of what's going on around us. And what we need to think about, whether we're a moderate or aggressive investor or a conservative or preservation-minded investor, is in the midst of these changes, as markets become a little bit more volatile, valuations readjust, does that create opportunities? And I think that's one thing I will say to give Brian Regan some credit for our team. In the 2020 environment, he had great insights in the way he was thinking about things, which I was very appreciative at that time.

20:59 It kept us in perspective of opportunities that were being created, whether it was in treasuries or in municipals or even high yield exposure, there was opportunity with less risk than maybe stock-like returns, but maybe not stock-like risk. Similarly, when it came to our stock exposure, there were certain sectors we wanted to reimagine how we wanted to be positioned in, given where there was greater disruption, there was greater opportunity. So these are things we need to kind of take to heart in challenging times, when the inclination, the temptation is to say, you know, arms in the air, run for the hills, you know, like we want to be inclined to increase our cash, you know, hey, let's do something.

21:56 You know, that notion, don't just sit there, do something. We want to take the option and say, don't just do something, sit there. We've already, with our client's strategies, had the opportunity to be a little bit proactive on some of these considerations. And that doesn't mean there isn't disruption. When markets move, everybody feels it. If you have stock, you feel it. But, you know, to what extent? And does that create some room for opportunities to be benefited for, as we look longer term ahead? I don't know, what's that?

22:36 This conversation reminds me of something that we talk about from time to time. It's probably 10 years old now, but the Vanguard study, who did an assessment of the value of working with a financial advisor who has your best interest at heart, and, you know, who's doing these things every day, is aware of history, aware of patterns, aware of the ups and downs, and, you know, is going to be less impacted by some of the emotional things that happen. Because we know that a majority of investors, this isn't just our opinion, this has been studied, the majority investors, when the stock market's roaring to record highs, say, get me some of that.

23:20 I want in. I want in. And when the market is down with a correction or even in a bear market, people say, get me out of this. I don't want to lose more money. And what this Vanguard study showed is that when you work with an advisor who has the tolerance, who has the experience, who has the wisdom that you've been describing, Chris, back in 2020, or today, even,