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WEBINAR RECORDING

Economy and Markets in the COVID-19 Crisis with Professor Jeremy Siegel

Recorded on March 8, 2022

You’ll hear from Professor Jeremy Siegel, wisdom senior investment strategy advisor and the Russell e Palmer professor of Finance at the Wharton School of the University of Pennsylvania. Professor Siegel has written and lectured extensively at the economy and financial markets. They’re contributed to the financial news media. He has received the highest teaching rating and ranking of business school professors conducted by Business Week Magazine. So Professor Siegel, we’re all very excited for this presentation titled on the economy and markets and covid-. Nobody’s here to listen to me speak. So without further Ado. I’m going to pass it off to Professor Siegel. Thank you for joining us today. Thank you very much, Eric. And thank you. Yeah, I’m very happy to be with you. I’m going to tell you my views on the economy and why and what this means for the markets and then we’re going to take your questions. My most well-known book is the one on the right called stops for long run by the distance. uh sold over half a million copies all told The most important graph in that book you’re going to see first of all, I have to go through a course a couple of disclaimers are our Legal Group. Make sure we put all these in here, I would definitions and what to expect but now we’re gonna get to that most important graph. total real returns What do we mean by total real returns? We mean the Returns on these asset classes in the United States. After inflation, including all capital gains and dividends in the case of stocks interest. coupons and capital gains or losses also in bonds So take a look at this $ stocks. I’ve gone back further than anyone else. We almost have a Honda years. That’s how your stocks would go one dollar almost two million dollars after inflation. This is bonds. This is treasury bills. This is gold. Notice gold only stays a little above inflation and this is the depreciation of the value of your dollar and on the left. Over here you will see the real returns. They average annualized real Returns on these asset classes. Stocks over years have average. % per year. After inflation dividends plus capital gains. We’re not going to be that high in the future and I’m going to talk about that. Bonds have been. and Whoa We are going to be much lower than much lower than that. treasury bills which are bank accounts also. way lower than that negative numbers by the way for those two gold. Old has will not do as well as stocks. But I think gold is gonna do better than bonds and the dollar is going to continue to depreciate. And it is my belief. It’s going to have depreciated at a gonna appreciate at a much more rapid rate now. Let me just give you seconds on my background– I got a PhD in economics at MIT. With a specialty and monetary Theory and policy. My first teaching position was at the University of Chicago where I was college with Professor Milton Friedman, I’m sure many of you have all of you have heard expert in monetary Theory and policy in fact received a Nobel Prize. He impressed on me how important the money supply is. For not only the economy, but also the financial markets. Now what I’m showing you over here is a graph that I was looking at last summer. This is a graph of the money supply M is actually checking accounts payroll accounts and debit accounts. Are and I said to myself wow. From March when this pandemic began through June and July the money supply jump % I had never seen anything like that before by the way, when all the way back to the financial crisis years earlier. And in the whole year following the financial crisis the money to buy it only gone up by % less than %So I said to myself. Wow, we’re going to have a boom in stocks. And we’re also gonna have more inflation. UmBy the way, just to show you. Our increase is Compares it to the rest of the world and other developed economies was more than twice the increase that I saw on the rest of the world. Also means that our dollar is going to go down in value in half. I remember going on to CNBC. Last summer saying we’re going to have inflation in. We’re going to have higher interest rates not by the Fed. but in the long bounceAnyone, see what’s happened today? for a few minutes the -yearus treasury bond hit. %by the wayMany people didn’t even predict that by year end. I had predicted already % by year end now even that might be too low. We’ll talk about that later. umWhen I went on the air last year and talked about inflation. Whoa. Did I get blowback? Actually single have you been looking at what’s been happening to oil? You know down, you know, I remember crashed to zero. below zero look at that being commercial rents. They’re crashing. On and on and on I said, yeah, you just wait. Yeah those you know commercial real estate’s gonna be challenged for a long time. but you watch everything else next year. Once the vaccines come online. And once the economy opens up. You’re going to see inflation. Now, let me make something very clear. I do not mean hyperinflation. I don’t even mean inflation like the s. I don’t even mean High single digit inflation. But I do mean inflation of three four five percent that my persist for two or three years. And that’s more than double the rate that we have had. over the last two decades and let me tell you show you another chart. Just a chart appeared a month ago in an op-ed piece that was written for the financial times of Britain. They emailed me back and saying it was the most cited article in the newspaper on that day. This is the M money supply yearly growth. M is a broader money than them one because it includes all savings accounts and Banks and money market mutual funds. And take a look at where we are. That is the highest level of growth in. That we have in the hundred and fifty years of Dad. By the way, most of this data was collected back in the s by Professor Milton Friedman. And used in his uh, just legendary book monetary History of the United States, which was cited by the Nobel Prize Committee in awarding him the Nobel prize in economics. I also want to show you this little bottom graph because that’s shows you the deviation between growth and inflation. You see inflation usually follows money growth by anywhere from six to months sometimes two years. so we’re also at a record deviation of liquidity. From inflation again. I’m not talking about. You know super high in place. But I’m talking about inflation that we have not seen for a long. long timeNow what what does this all mean? UmFirst thing I get the following blowback. Not to say go. There’s the Federal Reserve engage in quantitative easing, you know, increasing the reserve Supply dramatically after the financial crisis, and yes, I heard all sorts of cries about inflation inflation and it didn’t happen. You know now you’re crying inflation inflation. What makes you so sure. We’re gonna have it this time. By the way, I did I was one of the economist it did not call for inflation last time and you know, why? Because most of the reserves that were created by the Federal Reserve last time. Ended up as excess reserves in the banking system. They were not lent out. or only a small fractionWe have a very different situation today today the money that’s going created by the government. Really financed by the federal buying all the debt is going directly into the pockets of consumers and businesses. through the stimulus checks through the payroll productive Protection Program through the grants to save some localities. They just put money in people’s accounts. That’s the difference. As Professor Friedman told me he said Jeremy. The money that the FED creates as reserves is very important. But if those reserves move into the money supply M or M. You’ve got a real powerful stimulus in the economy. All right. um againThis is as I said last year first into the stock market and then roll right into the economy. Causing inflation, I think four to five percent. Out can’t be precise on this. Also, I think the FED is going to let it roll down. You might say just a minute your doctor Seagal. Isn’t the FED say we’re gonna live I let it go a little bit above the target. On yeah. A little bit gonna turn to a little more to a little more. to a lot moreBecause they want to run this economy hot. That’s clearly the purpose that we don’t need this stimulus plan that by the way out, you know, we hear it’s gonna be passed tomorrow. You know already a trillion hours of the previous stimulus plan hasn’t been. been spent they wanted to run really hot. We’ll talk about one of the reasons why they want to run it so very very hot, but they want to run it really very very odd. And by the way. Um, the FED has the levers to control inflation. but noton a tick by tick basis. What do I mean by that? It’s it’s not. You know, yeah, you know. Johnny yelling and I respect your dramatic very much as a very bright. I know where I was actually the first person to interviewer and a huge venue when she stepped down as Governor chairman of the Federal Reserve Board of Governors. You know, she said we have the tools. To control inflation. Yeah. Those tools. Yes. But they’re not too it’s not like driving a car where you know, you move the steering wheel a little left and it goes immediately a little left. You put your finger your foot on the brake and immediately. the car slows down we don’t have tools like that. There are long and variable legs betweenThe tools and the economy. Oh, we can slam it and get any inflation down. I mean, you know Paul Walker. Certainly, did that ? Um, but it is not a it is it is not a tool. That’s at all what precision? So they’re gonna run this hot then they’re finally gonna tighten and that may not be built to the end of . And meanwhile, they’ll let the inflation run. In the economy now you say oh, wow. What does that mean? What do I do is stocks good there. Well, you know what stocks are very good in moderate inflation environments. Yeah. stocks rememberOur claims on real assets I mean land. Property Capital machines plants trademarks copyrights intellectual property on and on these are real assets. As prices rise these real assets will rise. No not always one to one sometimes more sometimes less. But the evidence that I gathered very convincingly over the long run stats are one of the very best Hedges against inflation. Probably land is the only thing that even you know really comes close to it. So stocks will do well in a moderate employ. They don’t do well in high inflation environment. and the reason for that is because the FED is going to eventually slam on the brakes. But don’t worry about that yet. I mean both Powell and yell enough told us they’re not ready to do this. Quite yet, I mean Powell knows. if you want my opinion I and I have not expressed this before butA Powell I think knows this stimulus is too much. But I think he’s keeping his criticism down. and the reason for that is that I think he wants to be re-nominated. by Biden as chairman next year when his term comes up. And I think that’s very important. Not remember actually the Federal Reserve. Is is actually one of the few institutions? whereParties have let other other members of the Party Pals or republican rule over. you know Clinton group and and Obama, you know, letGreenspan continue to Republican continue to rule over it is it is so important that it is seen as as non-partisan, but it is important. I mean, I I respect power. I think he’s playing ah a little koi here. I think he wants to be renominated andIf what happens is going to happen? I think he will be renominated. And it would be good. to have thembe chairman again. That’s why he’s moving his criticism. He didn’t want to be renominated. I think you would be on board saying this stimulus is is justAll right now. Are you guys worried about valuation? You think the price earnings ratio the market which is the most important. measure of valuation you think we’re overbought? Well, not really. Let me show you now. This is a plot. of the price earnings ratio in the S&P since So we have almost years of data here. Um going up and down it’s been as high as. Right right over here. That was a tech bubble. We’re nowhere near that. When the mid s, we’ll talk about that. But I want you to notice you notice that the trend is upward. And it hits today. actually almost think that is like the new normal price earnings ratio of the S&P We’re little higher. And we’ll talk about the consequences of that. All right. So what does that you say? All right PE ratios. What does that mean for returns? today on the marketWell, let’s get to this. next slide if you want to convert returnsIn excuse me convert price earnings ratios into returns. You take the price earnings ratio and you flip it. You take the reciprocal of it. That’s called the earnings yield on the market earnings over price. It turns out that the earnings yield. On the market is an excellent predictor. Of long-term real Returns on stocks. So let me give you the other statistic. I mean if we have earnings on the US Stock Market for years from about. The average PE ratio in the market since has been. One over is what. now if you remember that very first slide I showed you. What was the long-term real return on stocks? . It’s not a coincidence. It’s good. I well we won’t go through the finance why that’s true, but it is absolutely true. So we have to pay attention the price earnings ratio, soWhen I did this exercise I were a little bit lower now with this little sell-off last couple days, which we’ll talk about. The S&P is about. Well when I did this on February of st. That was or times. This year’s estimate of operating earnings on the index. Which are now estimated now my opinion is that’s too low. I think we’re going to be above it. By the way, that’s a month ago with. Now. What now? They’re. Um, I think we could easily be or. Let’s take. So we’re between and. So if we take the earnings yield on that one over is about four and a half percent. so when people ask meProfessor Siegel when we look ahead three to five years in the market. What is your prediction for? The real Returns on stocks in the US? And I say around four and a half percent per year now. after inflationJust going higher. rightAfter inflation, give it in bus capital gains. after inflationWhat do you get in bonds after inflation? Well, we’re at a one and a half today on the year bond if inflation is two and a half your minus one. Well that you could take doctor. Can I just go to the tips Market? Inflation protected Government Bond. Yeah, you know what you get there minus point seven minus point eight negative, you know words the government has no means to even guarantee you just the rate of inflation on your investment. Think about that. There’s no way to even guarantee that you’ll get zero. return after inflationNo guarantee, you get Negative return after. In place, so the difference between stocks at four and a half and and bonds at minus one or worse. It’s about five and a half percent. Now given that the historical averages three to three and a half. I think this is pretty good, right the advantage of stocks over bonds. Which by the way we Economist called the equity risk premium. Is actually almost doubled. the long run historical averageI do want to also say one reason why the price earnings ratio should rise over time is not just because interest rates are low. That’s could be one reason but also because the liquidity of the market is so much higher you guys can index over Broad. internationally and domestically so much more efficiently and a lower cost than you couldDuring the th century when the when the PE was. As you all know a straight indexed investment today can be had for five basis points six basis points, you know professionals can get it for two basis points. Wow. So that was never available before now. When you have higher liquidity you have higher prices does me lower returns? Well, we you know when we say six and a half percent in th century Returns on stocks. You think the average investor got that or even the first half of the th century No Way. I mean because of transactions costs are probably got five. Five is consistent with a PE ratio. You see why the PE Ratio Rises when liquidity rises in the economy. All right, and we are a little bit higher than that again because interface are so very very low and by the way. even though interest rates are going up and they definitely iron I’m gonna talk about that. They are not going to be rising to the old levels. and especially in your bank accounts because power is going to keep that fed funds rate. at zero until the employment the employment goal is reached. What is that? That’s something new. The FED is added a full employment as defined by who the Democrats the theBynum AdministrationI don’t know. They’re not gonna get down to three and a half percent that Trump did. So what are they going to try it strive for that run the economy hot for how long to try to even get down to where we were before the pandemic. by the way back isd riving some of the higher pthis top graph over here shows you the PE of the market and this particular. The blue the blue graph is the entire S&P, but if you take out the tech sector, it’s. Which is really that’s that’s backward looking too. Um, very reasonable and by the way, if you go to other parts of the world, so this is the bottom slide here is is international. That middle one that says. that’s IFA is the world the developed World outside the United States. And the light blue line at the bottom is the Emerging Markets. PE really the best values in the market today now you could argue more. Let’s grow. but in terms of valuation don’t give it up. We’ll talk about that the way. What about value and growth? Finally, I think we’re seeing it really seeing that turn now. I started showing this graph in November to some clients and advisors. It is the relative price earnings ratio forward looking and value stocks and growth stocks. We’ve had three Peaks where growth stocks. have had very high value first one with back in the Nifty Fifty you need to beKind of near my age. I don’t know. How many of you out there. Remember the Nifty Fifty back in the s. That’s when the institutions said. I don’t care the price. I’m just gonna buy the Blue Chips. Like, you know IBM and Procter & Gamble and then others which they thought were blue, blue chips. Like he’s even Kodak and Polaroid and even products and yeah. A lot of them didn’t turn to be as blue as they thought. the second big bubble of course that everyone talks aboutWas the internet bubble and Technology bubble now. I want to make clear when when I say. You know that we are now as you see this last part in that valuation range, I do not expect to crash of tech. To be like. I don’t even think it will crash. I just think it’s gonna underperform. You have to remember that back in over here. the price earnings ratio of the tech sector of the S&P was. What is it? Not ? And that was by the way in a month higher interest rate regime. So was that overvalued that was crazy over value. Now, I don’t think I don’t think Tech is crazy over value. I’m not gonna say every stock. It’s not overvalued. But if you take a look at history here. You’ll see yeah. This could be the time where value terms. Who’s paying for the war? and covid-ever asked that question. in an interesting thatLike World War one. I I know World War One. Remember when the pandemic began last March everyone went back to started talking about? And they they all said and my city which I’m sitting in right now. Philadelphia was hit the hardest. And you know one reason it was hit. Because we were having a parade a war bond parade to fight in other words. The government was raising funds to help our boys fight the war in Europe World War One. a war bond rally called Liberty BondsThat’s how we used to raise money. Is it when asked anyone to raise money to raise money, you know the old ways money is you run Bond programs. And you raise taxes and then you pay for what you have to pay. Oh not anymore. the Federal Reserve buys all that debt don’t have to worry about it anymore. Who do you think is going to be paying for the war? on covid-It’s going to be the bundle. through inflationWhich is he going to eat up the value? Of his and her bonds over time and if you go through history, and I’ve done that. That’s often the way you we’re never paying off debt. We’re never pay off government yet, which is inflated away. rightSo now this little dot that you see coming up there. We’ve hit the level the previous High which is right at the end of World War Two. And we’re going to be going up from there. Is our government going to do anything about that? Let me say something that I’ve been lecturing on for years. The government will not do anything until interest rates long-term interest rates rise enough. To harm the economy. And people say ouch. and home builders say how and mortgage power say out. We’re not there. We’re not anyone anywhere near there. Can we get there? Yeah. Don’t hold your breath. Gonna be quite a while you think the year one and a half or even two or even two and a half? Is enough to cause people to scream as long as the economy is going so strong. No. no, that’s all right. Hey, you guys might have been hearing about. It maybe you have stock bound portfolios. It’s been the classic mix. I mean people run it because first of all, you know, they want enough income and gained and maintain their lifestyle. They don’t want to run out of money now that’s important. Especially you have a retirement. I’m portfolio. You’re not earning anything outside here. You’re saving. And if you can leave a legacy fine, you know, I want to be tax efficient. The only problem isAnd I put only in parentheses because it’s a big problem. Bond interest rates are too low today to make the . Bond stock portfolio viable Let me just show you a little graph that we did here. Yeah, we we studied this in wisdom. We actually did this right before covid. We took a year portfolio. I’m trying to live off of or four folio. um with two different types of draws four percent a year and a % draw a year. Could be a retirement portfolio and you did planning, you know to go to or as long as you can live. And then we calculated by running thousands of simulations using actual stock and bond market returns. What is the probability you’re gonna run out of money? With different stock and allocation all to the left. Um, ah isn’t all Bond portfolio. Well Bots are so you know are are giving you so much you in fact, if if you only are in tips, you’ll you’ll never if you’re % tips. It’s like no way you can even do a % draw. You can do a three-point. Three by three year because I was years and with a zero return. On as you have stocks the probability you’re gonna run on many goes less and less and less. Um, but this is interesting. For a four percent draw it is minimized at % stocks %if you have a % draw now that’s aggressive. Um, because that almost doubles the probability you’re gonna run out of undo about a third from about a sixth but it keeps on going down the more stocks you have. Yeah, in fact a hundred percent stocks less probably your run out of money and if you have bonds and why is that because I’m interested so is dead. You’ve got to move more aggressively today. All right, it’s my last graph. I’m gonna summarize the liquidity of the Fed. And government policies and ensure really strong economy and strong stock market this year. I think value stocks. Are going to outperform. Yeah, it’s been a long long. Who? Yeah. We value investors have suffered a long time. But I will not deny it. but I have the feeling in our bones the time has come reopening an economy and the search for yield. We’re gonna get it dividend paying stocks. You cannot can get it in the Box. Now the average of it in the S&P is only one and a half percent. But if you get take these sound dividend paying stocks. And we are Wisdom Tree have a quite a few very Diversified. Give it in portfolios. the cost two and a half three and a halfIf you go internationally you get four and a half five and a half. Yield, not even talking about capital gain and remember. Yields from stocks are basically protected against inflation not in the standard government bonds. Okay, that is Gonna Keep the charade near zero. I already said so, you know. I want to you know, Garner favor with Biden and the dams. He’s gonna let the inflation run well above the % Target before thinking of time. Bond deals will rise substantially last year on CNBC in August. I said that the year bull market in pounds. is overI even said I didn’t think anyone watching this program will ever see yields lower than what we saw last year. I said this last year. Actually, I didn’t even think our children will ever see. I think it’s gonna be an all-time low. I I think as decades and decades go on we’re gonna look back and say, What were those people thinking buying government bonds at one percent for years years years. They were crazy. Yeah. by the wayEven more crazy than where it’s very much like right after World War Two. Remember we built up all that dad, you know Bonds were only two percent. And then we started having inflation what’s called postwar inflation strong economy post-war inflation great stock market. People are still holding on their % bonds back then. Been looking back and then the interest rates went up and their bonds went down and down and then they’re purchasing power went down and down last year. I said on TV on many program that treasury bounds. Are going to be the worst performing asset class in. Absolutely. ListenWe’re in a different world technology has been enhanced, but let’s face it. It’s been priced into the market. It’s great. It’s great. But I’m not gonna be paying a hundred times earnings for a lot of those. Business travels wouldn’t be very permanently. compared but Leisure Travel wow boom second halfProductivity is rising profits as I said are going to see the expectations. And yes, I am. Sorry to say. We are gonna have attacked increase this year second reconciliation bill. This was the first I hear the binding and wants to pass it. versus reconciliation tomorrow at least in the house, maybe the Senate too. You don’t need that but the second one is going to second one. Going to have the corporate tax increase and personal tax increase. Now the good thing is it’s not going to be all Biden’s program that you put on his website. We’re gonna get about a half of it and a lot of it will be delayed until because you don’t want to impair the recovery this year. But yeah, everyone be prepared for higher taxes keep your International location pressure is going to be on the dollar. with all this liquidityI know International investing has not been rewarded. Over the last five years. Just like value investing. Has not been rewarding. Over the last five years. But history tells us. that markets turn and when relative valuations reach the level that we have reached. Late last year and early this year. It’s time to shift into those stocks. that have not enjoyed the tremendous rise ofthatI in my formal comments. And I am very happy to take your questions. Well, thank you so much Professor Siegel. That was so relevant to the questions. We are all thinking as advisors and investors. So thank you so much for your insights and definitely creating a lot of questions here on our panel. We’re at the point where we’re going to start taking and addressing those questions. We see a lot of really good questions. Remember you can still submit your questions just go ahead and put them in that Q&A icon down below on your screen. And so now I’m gonna pass it on to Eric and let him ask Professor Siegel some of those questions and hear what Professor Siegel has to say Eric. Thank you. Sure. Thank you Leah, and thank you Professor Siegelberg presentation. So Leah’s right. We’ve had a lot of great questions coming in and also got some questions beforehand from the audience. So first off I’m going to touch on something you didn’t speak to directly back. Can you speak to cryptocurrencies? They’re growing acceptance and your opinion on their long-term place as a global asset. Yeah, yes, and I I that’s usually the first question. Um that I’m gonna make a couple comments here. We have the technology today. To have people transfer between merchants and consumers between people, you know, I want to give you $ you want to give me $ click click through the banking system at virtually no cost two or three basis points which are hundreds of our percentage point. We have a crazy system set up with credit card. Where credit card charges Merchants two and a half percent then they give me two percent back in cash. And then they say the merchants you can’t discount cash. You know, you can’t you you know, you got you can’t surcharge it because we charge you. UmWhich I think is wrong. I think it’s a restraining trade. Um, this this opens, you know, the thing let’s do alternatives. But but you know Bitcoin. Is cannot compete as a payments mechanism with what we have today, especially if we liberalize the ability to do debits at two or three basis points between accounts. All we need is a little bit of competitive legislationTo get that started. um, remember number two and all your advisors out there know this we and I you know, I’ve had to take courses money laundering and all that to make sure the cash isn’t used for a liberal purposes. Are we doing that with Bitcoin? No. We’re not. If we put the same regulations on bitcoin that we have on everything else and the same tax regulation. You make a hundred dollar gain on a stock you get a statement at the end of the year from your brokerage firm to the IRS you get that per Bitcoin. To tax evasion not to report it by the way, you’re not it’s it’s not the institutions responsibility for you reporting. You have to report whether they send you the form or not. You have to report a Bitcoin gain weather. Whether anyone sends you a form or not. In other words understand with it. If you just enforce current rules against money laundering. against tax evasion earn rules and liberalize our financial system if those two three things happen. Bitcoin would fall % from its current levels. Now I’m not saying it’s going to happen. But I’m not talking about even new laws. We’re just talking about existing laws. If it Biden says, okay, we’re gonna cut taxes and prevent money laundering and all this to go. I don’t think it’s a medium of exchange that can compete with the dollar if we just have a few rules on the dollar of what we can do with it. Now I’m not saying Bitcoin couldn’t go to , million. It really don’t have all the craziness that we do the fees to the merchants and inefficient that you know, you know people keep on going higher and higher. I’m just saying thatI do not think it is the medium of exchange of the future. for whatever else it might have that’s I’m gonna saygreat. Thank you. We had a couple questions on the minimum wage impact on inflation and I think this one sums it up good the proposed $ minimum wage have an inflationary effect on the economy compared to the other components. She mentioned sure but but it now looks to me that the wage. Yeah, let me tell you what I think the deal was just done the last day or two. I bet I bet but mansions that you Mansions against the wait, he said listen, so the Dempsey listen. I know you think that the. trillion is too much. Let’s do a trade-off. I will drop the minimum wage. You accept the one point nine. And that’s how they’re gonna Ram it through with reconciliation tomorrow. So we’re not having the. And then we’ll deal with that later. And we’ll probably have something like or. I think Mansion said he’ll go for and then a gradual rise in the future. Yeah, it is inflationary. And by the way inflation then reduces the minimum wage in if % inflation, then the becomes. It’s another do reduce the debt and then and then you reduce the minimum real minimum wage. So yeah, it is inflationary. But I do not think we’re gonna get now the. I mean, there may be a year out where they’re going to be some go on it but for or even he who know, they’re not gonna be a national. $ minimum wageGreat. Next question. Are there any particular industries that you would stay away from for the next six to months given what’s going on in the current and future economy? Well, you know, I’m not really someone that picks sectors. I’m a macro person. So I shown away from picking we actually stocks and sectors. I do think that you know in a rising interesting environment financials and continue to do very well. And as I said, how do you absolutely wonderful but it’s fully PR I’m not going to comment on energy. You guys down there no more about oil than I do. You know, it’s been I I don’t know anyone thought we could be dollars. Is there always February wow? I will say the following. Um energy Independence is extremely important for the United States. and I’d be very upset at Biden did anything that lesson that energy Independence that we have. I think the Frank fracking revolution in my opinion is one of the greatest revolutions that we had over last years. umAnd I you know. He may try to shut it down on some federal land blah blah blah blah. I know he’s getting a lot of pressure there, but it is made us energy independent and has been absolutely fantastic. For our economic independence and our political independence from the mid East. What are your thoughts about real estate versus stocks? We always think it’s going to be good in this environment. Let’s face it real Assets in a mile and inflation or environment are good. So yeah. And we’ve seen a big rise in in housing prices and land prices. I think they’ll continue to go up. So yeah, I I like that now reads, of course in stocks, you know, they’re the good reads, you know that house warehouses for the cloud and then their bad reach our commercial tenants, which I think is gonna be really harm. So you got to know what to do it, even though they traded one class, as you know is a the new th industry that was invented from the S&P. So you got to be careful about what what you go into but as an asset class right now, I think stocks will do better than real estate on an average but I think real estate isIs looking good to me over the next couple of years. Okay, great. What what portions of the fixed thing Market would you focus on for that piece of the portfolio given the current low yields and potential for inflation. Well, first of all because tax are going to rise out, you know and keep your eyes on munis, but I would stay. Short-term in the sense, like don’t put yourself out or years or. You don’t want to lock yourself in. To a % Muni when next year that same Union is going for three percent and you’re locked in for years. stay short, so you can deploy into the short-term Unity so you can deploy into a higher yields as theyoccurinto the future with the changes politics regarding the current Administration including potential Regulatory and tax changes. What do you expect to see in the short and intermediate term as far as the US economy in general? Well, I I think as I said, we’re gonna have a corporate tax cut corporate tax increase andFirst one tax increases. However, the profits are going to be so good. That it’s gonna overcome them and we’re gonna have a good stock market. So, you know, basically, I think that vitamins face that we’re gonna run this economy really hot to be really good for firms and we’re gonna take some of this back. But not it’s not going to be enough back. toSo slam the market. But do expect. It’s going to be the second reconciliation bill. It’s going to come with the infrastructure bill. And that’s when we’re going to see the tax increases. and we’re going to have them I’mI mean, I wish we didn’t. butI political reality is we are going to have tax increases that I think comes with the second reconciliation bill, which will be the infrastructure green. You know Bill. If you will. Great. Thank you a little more detailed question here. So given technology is explosion and overall market cap the past decade which has resulted in a proliferation in the value of intangible assets, which aren’t accurately reflected in many traditional valuation metrics as the way you look at equities changed over time to reflect this phenomena. Oh, yeah, I mean I first of all Book value is a stupid contest concept now is a basic of value. I never liked it. It’s worse now than ever because it doesn’t contain intellectual property in all the rest. I mean, I’m a value investor. I prefer to use earnings or dividends. I don’t like use book. And by the way, that also understates a lot of the profits, you know base, you know, you know basically expenses on technology. You know a lot of that should be capitalized which would actually make profit higher than they are and then depreciate it over time. Um, so it actually could say to understand the profits of the corporations too. Um, so yes it definitely you have to realize that yeah intangibles areAre the source of wealth today in the market? You know, it’s not it’s not machines and planting equipment the way it was and you know the middle of the last century. Great. What do you think about active versus passive management both in equities and in fixed income? wellI I likeI mean, we we’re with some tree our basically indexers, but we’re not capitalization weighted indexes. We were always called fundamentally weighted indexers. Which means we tell towards indexation. Yes and Broad very broad diversification, but not just based on the bad. We don’t just you know say automatically test those right because that’s what the market said. We take a look at earnings and then decide, you know and a formula basis how much tests were to include. Um, so it’s still an index, but it’s what we call Smart index. I think that’s the way you got to go to it. UmIt just don’t accept, you know capitalization weighted indexing is saying burn valuations are right. So broadly diversify according to the market level. And we say no. We say that markets often overshoot. and both sidesAnd we’re not judging it saying and looking at this and looking at that. We have a formula very simple formula about we wait according to the earnings. We wait according to the dividends. I think that’s what you need to go in the future now again, as as I said, this does tilt you towards value, but that’s what I think where you want to be today. with this tremendous run-up that we had last year in these tech stocks much deserved. But now fully priced. All right. Well, we appreciate you answering the questions, and I think we’re about out of time here. So, thanks again Professor Siegel for your time and the great presentation, and we really appreciate all the insights to our clients. Thank you for your time as well, and we hope you enjoyed the presentation. So if you signed up for the for the webinar, you’ll be receiving a link to the presentation in your email after this and like Leah put in the chat. We didn’t get an opportunity to get to all the questions, but our advisors and our staff at TCG will work to follow up on those questions. So, once again, thank you very much Professor Siegel, and thank you. Hope to see you again. Good afternoon. All right. Have a great day everyone.

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