Brad Simpson – 07/15/2022

[theme music] >>hello, I'm Greg Bonnell and welcome to MoneyTalk Live, brought you by TD Direct Investing. It's a new program broadcast daily and WebBroker. Every day, I will be joined by guests from across TD, many of whom you are only going to see here. We will take you through what's moving the markets and answer your questions about investing. Coming up on today's show, we'll be joined by Brad Simpson, chief wealth strategist at TD Wealth. We are going to discuss how investors can position themselves amid all this market volatility. In today's WebBroker education segment, Caitlin Cormier is going to take us through how you can customize the data that you're seeing on this very platform. so here's how you can get in touch with us with your questions. Just email moneytalklive@td.com, or you can fill out the viewer response box right under the video player here on WebBroker. Before we get to our guest of the day, let's get you an update on what's happening on the market. We have some green on the screen. I want to start here on Bay Street with the TSX Composite Index. It's up a fairly modest 80 points but after the week that we've had, if you are in the market, you like to see green. A little less than half a percent on the upside, 18,408. Seeing some money move back in some of the energy names today. Let's check out Imperial oil. It's up to .3%, 5448 after a pretty rocky ride for the price of crude and for energy stocks in particular this week. The mining sector and the material stocks still under a bit of pressure taking points off the table. We will show you Kinross Gold right now, or bucks and a penny a share and a little less than 2%. Let's check on the S&P 500, the broader read of the American market. We've got retail sales data out of the United States for June. Came in stronger-than-expected. A large part of that story was what people were paying at the pumps for gasoline. At the same time, soaring inflation at 9.1% cream we got earlier this week it doesn't seem to be dissuading consumers at this point. What does the central bank do that kind of information? I guess we'll find out later this month. But right now, it does have people moving back into equities. Let's check out the tax base, the NASDAQ 100 and see how it's faring. It's up a fairly positive one and 1/2% at this hour. One of the names making gain south of the border is United Health. Let's check in on those shares right now. You can see it's 527 bucks and change per share. It's up 5%. And that's your market update. it's been a volatile time for the markets, equities swinging from negative to positive on any given day on the back of whatever economic datahits our radars on a given day. Joining us now to discuss how investors can be positioning themselves in this environment, Brad Simpson, chief wealth strategist at TD Wealth. Brad, great to have you on the program. It's been a wild ride. We are now at half of the year behind us. Like I was saying, you get the retail sales today and you're wondering, okay, now you get a positive reaction to this, but it's a very hard market to navigate. What should we be thinking about? >> When you get into a world like the one we have here, if you have good news, it actually is bad because you think, oh, geez, things are gonna… Inflation going to persist. And if you get bad news, well it's bad news. We're in a world where bad is bad and good is bad, it certainly makes it difficult to define how you're gonna make decisions and really where we are going to go from here, which I guess is the real challenge everybody's trying to work with now. >> How do we work with that challenging? Every time I sort of thing, I'm by no means an expert, I just ask the questions, maybe now things can settle down a bit because of this, this and this. But then, not so fast. >> I think the real starting point is thatI think sometimes we have to break downwhen you're investing and how you're going to allocate. Markets like this really set a reminder that there is a very big difference between investing and allocating because something's going up and it's moving and you're following in that direction. And so I think, in many ways, the challenge that we have is that, in many ways, things… We've been on this incredible run, and I don't mean just, you know, in the last year and 1/2 year or so. If you take a look at… Go all the way back to spring of 2008, for the most part, equity markets have gone up and up and up. We've had some bumps along the way and of course, we had the pandemic kid and we had this big market drop, and it was a reminder to everybody that sometimes, things can get very difficult. But the central banks came to the rescue once again and really pushed markets to get going again. And so now, I think, the way we have start looking at things is that I think that sometimes, these are overused, but I don't think in this case it is, we are in one of those shifts for investors that happen every few decades. This is a monumental period of time we are in the middle of. So I think the starting point, quite frankly, because a lot of what I do is thinking about how do you make successful investment decisions over the long term, and how do you do that consistently, and one of the real keys to that, in my mind, is how you make those decisions and one of the things that I think we really struggle with is that we actually have a really hard time defining the current state, just where you are right now, period. And if you get better at doing that, then I think you can have, and then that's how you start building a portfolio. So let's go through that. >> You raise a great point. If you can't figure out where you are on the journey, how can you figure out which direction to go in? That seems to be the basic case we need to make for ourselves. Where are we and where are we going? >> I will sometimes look at my screens or look at what's being said and I'm just shocked at how short of a memory that we have. So let's rewind a little bit. Let's go. We are in the spring of 2020 and you have financial markets absolutely falling from the sky. There is talk about there's going to be a great depression, that this is going to be the ugliest time since the 1930s and where are we going to go and what are we going to do? And here we are, 2 1/2 years later, what happened? Well, we didn't end up in a great depression and quite honestly, we ended up in a world that central banks came in and they said, "Okay, we're going to do something about this. What are we going to do?" Well, they shot the world economy down. They stopped it. So one of the things that I always talk about is that markets aren't mechanical. They are biological, meaning they are like a human being, they are like a biological entity that's alive. And if you took a really healthy body and you put it in a coma, which is what we did with the financial market,and then you just brought back to life with a shot of adrenaline, and then you hit it with a defibrillator, that would be a good way of looking at what we did for six months from the spring of 2020 right through to about September. So if you look at it in those contexts, it's that we probably gave that biological entity it too much adrenaline. >> A little too much. Canada central banks keep riding to the rescue or have they were not out? >> The bottom line is that if you look at how that process works is they hit the economy with adrenaline, is generally made all financial assets go up, equities, bonds, real estate, anything that helped one's personal balance sheet go up. And that, to answer your question there, is can they do it again? Well, here's the real problem. We've grown addicted to getting that medication, right? Every time, we know the central banks are to be there to bail us out. The issue this time is that they are not going to be because their focus is not on the liquidity of financial markets right now,it's in the exact opposite. It's an, "Wait a minute, there's too much liquidity, there's too much adrenaline." So there's tension isn't about thinking how do we help the financial markets. Their concern is, number one, is inflation and, because of that, they are not there to ride to the rescue this time. And so the crazy thing, or the really amazing thing with this is that since the late 1990s, this is the first time we've actually seen the financial market have to stand on its own 2 feet. Think about how long that's been. >> He talked about short memories. I want to dial us back to the 1970s, the decade I was born in. I don't think I'm an old man, but I'm not a young man anymore. It's been a long time since people had to seriously talk about stagflation. Some people are reaching back to a time they don't even remember and saying, this is just like the 70s. Is that too simplistic? >> Absolutely it's too simplistic. In the spring of 2020 with the pandemic, people saying we were gonna have a depression, it's the same thing. What we do is we take these periods of time and it's our frame of reference for understanding. And I again thought, there's a certain element to it. But what it does is it ignores the progression that we've made us a society in the world that we lived in in the 1970s in the world that we live in in 2022 are incredibly different from one another. And the financial mechanisms that we've developed and utilized every day to make the financial system work would be unrecognizable to somebody in the 1970s. So I think that's the starting point is we have to look at it in those terms. Then, they have to look at it in those terms and say, when we were looking at that. In time, the key to the stagflation part of that is actually employment. 3.6% unemployment in the United States says there's a long way until we are worried about we have a really high unemployment numbers. Stagflation, the key to it is you have slow growth, and high unemployment problems. We don't have that right now. We've actually published a big paper about stagflation a few weeks ago and really delved into that because the fear of stagflation makes a lot of sense. Stagflation is as ugly as you want to get. If you have high unemployment and slow growth and high inflation, you want anything you can to work your way out of this. We may end out in an environment that looks like that, but that's not what we have today. What we have today is an economy and a financial market coming off of just a mere two years ago this incredible push that we put in and I find it actually kind of amazing that we have a really hard time framing that. If you went back nine months ago, people would've been saying, "Durable goods are going to be up forever. This is going to be the driver. Every story go to, there's no inventory." Those inventory shelves are all getting rebuilt again and durables are starting to fall off and we are starting to see, of course, we are seeing PMI numbers come out from manufacturer haying you and now it's going to be services. it's always going to be high. Not so fast. We didn't even learn from what we did in the last six months, never mind going back to the 1970s. So I'm not saying this is not going to be a structural challenge that were going through, but what I am saying is is that our propensity to take the immediate, extrapolate that forward is extraordinary in my mind. and I don't just mean not professional investors, I mean professional investors and framers and strategists and how they look at things. And I think that's a real problem. And for us, I don't think anybody predict the future very well. I don't think that's what my job is to do. I think my job is, a big part of it, is just a frame, right now, and go, "How do we make decisions today without ignoring all of the noise that we are hearing?" >> Great start to the program. We're gonna get your questions about asset allocation and the market for Brad Simpson from TD Wealth in a moment. You can get in touch with us any time. Email moneytalklive@td.com. Or you can fill out the viewer response box under the video player here on WebBroker. Right now, I want to give you an update on the top stories in the world of business had a look at how the markets are trading. American consumers continue to spend despite the challenges of soaring inflation. US retail sales worst stronger than perspective, up 1% in June, led by sales at gas stations amid soaring fuel prices. Then there was a rebound in auto sales for the month. TD Economics is the strong retail numbers have been soaring inflation does suggest the US Federal Reserve will continue to move forcefully on raising rates. The question that remains, according to TD Economics, is whether the Fed will move by a full percentage point on July 27. Another big Wall Street bank is putting aside money in case the economy sours. Wells Fargo is joining J.P. Morgan in boasting those loan-loss provisions, move the pressures the bottom line of the banks. Wells Fargo set aside $580 million in the quarter for potential bad loans. While an increase in loan-loss provisions does sound a cautious note, Citigroup managed to deliver an earnings beat today as market volatility boosted its trading business. Canadian home sales continue to fall in June in the face of higher borrowing costs. Canadian Real Estate Associationsaid the number of homes changing hands was down 5.6% in June compared to a month earlier and the average national sales price was down 1.8% year-over-year. Now the Association does point out that its own price index, which compares sales of similar type homes, is still showing an annual gain of almost 15%. It says the cost of borrowing has overtaken tight supply is the dominant factor in the housing market. Quick check-in on how we get the main benchmark indexes trading on both sides of the border, we will start on Bay Street with the TSX Composite Index. We got a bit of a rebound in oil prices today, some energy name showing strength, up 70 points right now, little more than 1/3 of a percent. South of the border, the S&P 500, we are seeing a rally in equities today on the back of the stronger-than-expected retail sales that we just told you about. The S&P 500 right now up 1 1/2%. We are back now with Brad Simpson from TD Wealth taking your questions on asset allocation and the markets. Let's jump right in here. Wow, we are not starting easy at all with the viewer questions. How long is it going to take to get inflation back down to 2%? Nice and easy for you. >> Yeah. [sighs] Part of the answer, I think part of the answer, quite frankly, is the same as what you just did and that is real estate. So we have a print at 9.1% and you go, boy, that super high inflation, and indeed it really is, but I think we have to look at that and go, that's today. Where are we going to go down the road? And I think that's one of the real challenges with the inflation in question is, and I promise, I'm going to give you a pretty hard date and time on that, but I think if you step back right now and you look at that, that number comes out yesterday and you think, oh my gosh, your 10 year bond, why that's important is because it's what you set your mortgage rates off, that's was going to go up to slow things down. That announcement came out. The 10 year treasury went up to about 3.1%. And within about 90 minutes, he came back down and went below 3%. And almost anybody if you look at futures markets, going out to the end of 2023, you get into that area and you start seeing interest rates coming down. So I think though that the answer is that the markets is less concerned about inflation. And they are less concerned about inflation because they have moved to the question of saying, are we going to have a recession? And the answer is, in our case, is that we think there's a 40 to 50% likelihood of that in the next 12 months. But really, the next move of that is saying, yes, there is going to be a recession. And the question is going to be, how deep is it going to be? Is it going to be deep? Or is it going to be a shallow recession? And I think the answer to that, it ultimately comes down to real estate. The Canadian report we were just shown, if we look at peak to trough Canadian home prices are down 14%. That's taking away the really hot money that we had in the last six months. the answer to that question is that today things are really hot but we move through those consumer durables and that starting to be much better,we are starting to see manufacturing slowdown, we are starting to see shells get restocked. If you start to look out and see some of the price action we are seeing, we are seeing at the wholesale level, we are starting to seafood come down, we are starting to see at oil, some of the price come down. And that starts to chip away to win three and four months out. So the real driver of inflation ultimately, and why the Bank of Canada came out and did the 100 basis points, is that inflation is ultimately driven by human behaviour. And so on my team, when we are making decisions in the organization of how we allocate capital,There is an investment philosophy that we utilize called risk priority management. And one of our principles is embrace human behaviour. And that's one of the mistakes I think central banks make. They didn't embrace human behaviour. They use kind of a very mechanical mathematics to go, this is what our assumptions are. I just came back up from the Calgary stampede andCall out to our Western friends. It was fantastic. And it was full of people. And people all had their credit card out and they were spending money like crazy. And it was just… Let's go out and embrace being together for the first time. And I'd say about every half hour, an announcement came outSaying, you know, that… I think the number was $500 million are put into the Calgary economy from the Calgary stampede. And you could see that spending happening. And ultimately, the question when inflation needs to… Consumer confidence, retail sales of 1% today, but what happens as we start to see more and more this impact of inflation, as our confidence starts to go down and the key is is that what happens to those residential home prices. And so we saw another 10% down with residential home prices, what impact is that going to have? To the end of 2023, getting closer to that 3 to 3 1/2. Not the targeted to, but much lower than the nine now. So by the time we get to the end of this year, were probably looking somewhere back it kind of 5%. And if you look at futures markets right now, that's kind of like a… If I want to go out right now and ensure my portfolio will offer the interest rate risk, I'm not doing it at eight or 9%, I'm actually having to pay about 5% for that insurance right now. So you can kind of go take the market saying, put that money where its mouth is, what that's going to look like, and then head out to the end of 2023, I have a pretty normal life cycle at that point. >> All right. Good insights there on the future path of inflation, where we might be headed. He is a question we're getting a lot on the show considering how tough it's been in the equity space. Frankly, bonds and how they perform this year too, with all this recent market weakness, are GICs becoming attractive? For years, no one said GIC and now everyone's at least thinking about it. >> Yeah. No, look, I think that ultimately, there are two things. I know this is the question. I'm going to tie these two together because I actually think it helps with the overall thinking on this is that what makes valuation of things go up or down ultimately it is credit, how much money is flowing through a system. If it's a low interest rate and loose credit conditions, which is certainly what we see in a lot of over the last decade, that money is gotta go somewhere. And if you look at what's been happening in equity markets, what drives higher equity multiples, if there's lots of credit and easy money in the cycle, of course, some of that easy money in the cycle is, well, if I'm going to get 1% for my GIC and I can go over and look and by inequity, and it will pay me 2 to 4% dividend, that I have the potential to make a capital gain oaths something like 5% or 10% on top of that as a baseline, you can see pretty quickly that you would favour that. When I look at an equity market and say on average, less just take all equity markets and split them down and say down 10%, some are higher and some are lower. And you go, okay, wait a minute, I can get a term deposit and I get 4%. Why am I gonna do that? The question makes sense. What my answer to that would be is that I would far rather go over and look and say, why wouldn't I build a bond portfolio? Because what happens is as interest rates work their way down, bond values go up. So we got a look at it and say, if I go out and buy myself a corporate bond, yields about 4% right now. By a term deposit, it's 4% right now. So the first question was about inflation. Ultimately, you put interest rates up to slower kill inflation and then, as you do that, what happens is you push an economy into where we are today, late stage. And when you are in a late stage economy, you are putting interest rates up to slow things down. But what happens when you come to the other side of that is, well, if you use too much medicine, and my guess is we are going to look back and say we used too much medicine in the spring of 2020 to get this going. We're gonna say this time we use too much medicine to slow this down. I think that often, investors forget, those trading at home forget that not only are we increasing interest rates , but don't forget the central banks were going in and buying bonds in the market every single day,and they were buying by the handful. They are stopping doing that. In fact, they're putting the back out there which is hurting liquidity too. So the point in all this is that if you took… If you took the… And said, okay, let's just look at this as a barometer for an average fixed income portfolio and he said, let's look at what futures markets look like going out to the end of 2023, again, it's the same as the inflation, and say that if you had interest rates working their way down 75 basis points to get back to… To get things going again, which is what futures markets are saying, you can take that average bond portfolio with one, three, five with a higher duration note into the tens, you would be looking at a rate of return somewhere between seven and 9%. And so one thing you gotta do, if you go in and get that term to Paulson, what I don't get is I don't get that activity in the market that if rates come back down again, I have the opportunity to get a capital gain. So for me, if I go out and get the same sort of guarantee or thereabouts and have a potential to be able to get a capital gain down the road, then that's why do that. And the second thing or reason why we do it, and look between those two in that way, is ultimately one of the things that's been, you know, I think we talk so much about equity markets, the big story of this year is that if you are a fixed income investor, if you are a retiree, you had a portfolio built up, this has been a really, really, really tough year. I mean, when we wake up every morning on my team, the thing we are thinking about is, boy, imagine our clients and how difficult a time this is. And so one of the things we have to really think about is that you are actually, if you lock in the losses with the GIC, wears in the bond portfolio, you're getting the same healed and you're also getting the opportunity that we will not be running at 9% inflation indefinitely, our economy won't function if that's what happens. We are going to fix this, meaning the central banks, businesses, it's going to have that impact on bonds. And so I think a really structured bond portfolio makes way more sense in this environment. >> Exciting stuff. As always, make sure you do your own research before making any investment decisions. We will get back your questions for Brad Simpson on asset allocation and the markets in a moment. you can get in touch with us with those questions anytime. Email moneytalklive@td.com. now let's get to today's educational segment. the homepage on WebBroker is not just a launch point for other resources but has lots of data that can help you. More on this now, we are joined by Caitlin Cormier, client education instructor with TD Direct Investing. Always great to see you. Let's talk about was available on the WebBroker homepage. >> Hi, great. Yeah, so the WebBroker homepage, I find that sometimes, if you're like me, sometimes you jump through really quickly and move on to whatever it was you were originally signed into WebBroker for. we'll take a lot of time to look at the content that's available on this homepage. so I just want to take the opportunity today to highlight some of the stuff that you cansee right from this main page. So as we kind of load this homepage within WebBroker, we have our market updates that are showing on the right-hand side of the screen. So we can see information either about what's going on kind of during the day, in the morning, kind of at the beginning of the day, we are going to see some premarket information, news headlines from both Canada and the US. After hours, you are going to see news related stuff specific to market close and extended hours, that's provided by midnight trader, and then finally, after that, we have our premarket report which is going to be the day ahead by Reuters and the daily by TD Securities. Lots of information available as far as reports go. And if we click kind of within this particular report, it will bring up kind of a separate screen. As you can see, it just sort of point form about what's going on throughout the day. A little bit of context as to reasons why that's happening with in the market. Just a little bit of information there. Of course a very important link here to MoneyTalk Live. We also have some featured reports. There are some reports that we want to be seen throughout the day. Those are the ones that are updated that I had just listed so that morning call by Thomas Reuters and the other updates that are available throughout the day. Down here at the bottom we are going to see different events in your portfolio. Maybe you want to know any earnings reports that are coming out for securities that you own, any dividends that might be coming out, next dividend dates, any ratings changes for any securities you own, so a quick a kind of synopsis of anything that's going on this week. We can go backwards and forwards in time as well to see anything that might be coming up. And then as we scroll down even just a little bit further, we are going to see the top movers within the portfolio. So this actually is going to show you the five securities causing the greatest change in overall market value, either positive or negative, across all accounts that are linked to your connect ID. This will include stocks, ETFs and mutual funds but it won't include options or fixed income holdings. Just a little bit of context for what you see here. The last thing I want to bring up quickly is that morning call report. I just want to make sure you can see it so I just need to change my sharing. Just a second. The morning call report, you should be able to see in just a moment, there you go. , It's going to give you some information, this is before the markets opening, it's going to get top news, information to consider before the bell, it went to give us economic events that are happening, different companies reporting earnings, not a whole lot going on today. And at the bottom, there's a picture that's a little bit relevant, so we see the Rogers building there which, I'm sure a lot of us were impacted by last Friday's outage, so maybe a little bitof a relevant topic there. >> This helps us modify the WebBroker platform to suit our needs. what if clients decide there is another page they want people to see right away? What would they be able to do in terms of customizing the start page.? >> Absolutely. So this page isn't what you are looking to see as soon as you walk into WebBroker, there is actually a way to change which page you see. So in order to do that, you're going to click right up on the top right hand side. It should show your name. We are when you click on your customize site. That will take us to the customization page andthat will allow you to change your start page do something different. If you want to go directly to advanced dashboard, account holdings, balances, any of those things can be made your homepage to customize your experience and make sure that the most pertinent information to you is available as soon as you get in. >> Caitlin Cormier, client education instructor with TD Direct Investing. Make sure to check out the learning centre and WebBroker for even more educational videos, live interactive master classes and some upcoming webinars. Before we get back your question for Brad Simpson on asset allocation and the markets, reminder you can get in touch with us at any time. Give a question about investing or what is driving the markets? Our guests are eager to hear what's on your mind,So send us your questions. There are two ways you can get in touch with us. You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just writing your question and hit send. We will see if one of our guests can get you your answer right here on MoneyTalk Live. We are back now with Brad Simpson discussing what's happening in the markets right now. Hiking the position in your portfolio. We have a question on the energy space. Energy seems to be in demand worldwide and feelings of uncertainty of supply are rampant. Where do you see the oil price going in the next six months? Crystal ball time. >> Yeah. You know, I'm gonnatackle this in a number of different ways. And one is that I think is is really difficult to know where the oil price is going to go. So I'm going to turn it on its head a little bit and ask is oil a place to invest? And let's look at this a little bit. One of the things we were talking about earlier is that the change and growth of the marketplace, in my career, and I started out officially in 1991, so here I am, almost 32 years later now, and there's this idea that when markets move, there are a few people who look a little bit like me in a room with calculators going, have you seen the valuations? I can't believe it! And, you know, over the short term today, the way the markets trade is not in… Is so dissimilar to what happened 30 years ago or 20 years ago, markets on the short term, really, in many ways, trade number one on algorithms with kids writing widens on code saying, we are in a late stage economy, that equals this, this is how we need to be able to allocate capital and these lines of code have quantitative trading mechanisms that go up against them and they just flow through the marketplace. Often, the way those flows work have nothing to do with what's going on in reality you in the economy every day. It just has to do with, oh, if it looks like this today, it must be. So if one takes a look over and says that right now, all of a sudden, oil is trading under $100 a barrel and you say to yourself, how did that get there? Like, what's really changed? What's happened in the last 30 days that's made oil drop like that? When you go, if you stop for a minute and say, the actual demand side of the equation hasn't changed whatsoever and that when you look down the road, the demand is going to be pretty consistent plus or -5% and look at it in those terms and say, well, if that's so, and the look over and kind of the divide between the physical market and the paper market, it makes you stop and pause for a few seconds. And so the way an answer that is that if there is anywhere you want to look, there is limited supply that's coming. So if you say there isn't more supply that's coming, then you're going to have to save yourself that oil is gone a likely stay fairly high for an extended period of time. Then I look over at equities and look at the companies, where they are trading, and look at the valuations that they have, the type of cash flow that they are making, the ability to pay that out in dividends, their ability to take that massive cash flow rate that they have and buy those shares back, that if one stopped being a speculator and one stopped and said I'm going to build a diversified equity portfolio, I'm going to allocate part of that equity portfolio into energy, I'm going to collect that dividend and I'm going to wait for the valuation to go up, at the end of the day, that would be a very prudent part of a well diversified equity portfolio, which ultimately answers, I don't know where oil goes, but I do know that I want to build an investment portfolio and on the equity side that I build good, meaningful exposure, overweight exposure there to get the return I'm looking for. >> When I see people struggling to get an answer as to why oil is making these moves, we talk about algorithms, people will throw out recession as an answer. >> I do think back, again, the algorithms and recession kind of go hand in hand because you look at it and say, if I'm going from a late stage economy, typically a late stage economy is really where your commodities turnover and so they go up and up and up and as you kind of get late stage, you start selling it off to get out of there. And if you look over, you can see that when the copper side of the market that while the supply side there doesn't look great 10 years out either, so we are probably looking at all a good long-term story to, you can look at inventory levels through 23 on copper and say actually the supply is there so copper might be trading in a way that looks late stage and indicating a recession, that would make some sense,that would look that way. You go over to the oil side and it's more structural. Ultimately, the lack of any kind of growth in refining over the last decade, the… TheCompanies that really have committed to saying, you know, we are just not going to change our business plan. We are not going to do these boom and bust cycles that we've done in the past. It's a different structural story than it has been. I think that a lot of this trade that you see in oil is just a ton of noise based on what it should be doing now but not the reality of framing today and going, how my going to make that decision? >> Very interesting stuff. Let's get to another viewer question. This one is about the pain that we've endured in 2020. He couldn't hide anywhere, really. When are you going to start C bonds and stocks stop selling off at the same time? Lots of esses in that question. Trip me up. >> What are we going to start seeing bonds selling off? Let's frame this. One thing, I think, one of the things one you do what I do, we are allocating capital on behalf of human beingsthat are entrusting us to do that. I can't stress to you enough what a responsibility that feels like. And when you look at 2022 and you could take a very conservative investor, and you can take a very aggressive investor and if you just looked at traditional allocations for them, so a very conservative one using traditional allocations and traditional, heavy allotment of fixed income investments, their losses in the first half of this year could be somewhere between 11 and 14%. Then you go over and you look at an aggressive investor using traditional benchmarks, allocations, their losses this year are somewhere between 13 and 16%. Those are pretty close to one another and a very conservative investor and a very aggressive one, there is a lot of difference between the risk threshold. So for conservative investors, this has been one of the most difficult investing times in the history of markets, really. This has been very, very tough because you're not used to seeing your fixed income part of your portfolio go down. So it's a really, really, you know, I really important, I think, for many folks that looking at their investment statement right now and saying, gee, remember, as interest rates worked their way down, bonds go up, you're making the interest payment, the value is going up, and we just went through 30 years of a bull market in bonds. So pretty much for 30 years you could open that statement, almost… In 1994, that so far back you have to go, Mexican peso prices, interest rates will quickly and hit, duration markets, government bonds, they were going up. Ultimately, I would look at today, I think we can very comfortably allocate the fixed income markets. Do I think… Do I know if this is the low? No, we are never going to know. Just like in equity markets you don't know if it's going to be a lot. But many of the things that we talked about today are what happens with inflation. Well, really difficult measures are getting implemented right now. Central banks do not want to stay on the wrong side of this. And they will not say on the wrong side of that. . , That is the reason they exist is for moments like this. And so as we look at this measure being used to say the same thing again, to hit it home, is that interest rates have gone up to slow things down. as things start to slow , if we move into a recession, which we think we are going to have that, we believe that it will be a shallow recession. If it was a deep recession, we think that? Is going to be on residential real estate and so as that happens in any of those questions, at the end of the day, as that slowing happens, we are going to have to start lowering interest rates to get things going again and we think a lot of those measures that are in place right now are preparing for that there. So we are very comfortable with starting to move out of higher out in duration, long road and bonds, we are very comfortable with doing that here. We may give a little bit back in the short term as we oscillate because we have a real interest rate volatility today, but our comfort level doing that, we think, you know, risks all being equal and working for the investor, we think this is actually pretty good. >> Appreciate you being here. It's been a fascinating discussion. I've learned a lot today and the audience has as well. >> Thank you. >> Thanks to Brad Simpson, chief wealth strategist at TD Wealth. Stay tuned, of course there's a little time off on the weekend, on Monday, David Mau, portfolio manager at TD Asset Management is going to be our guest on the program. We will take your questions about industrial stocks, including the rails, the airlines and Aerospace. It doesn't mean you have to wait until noon Eastern time to get those questions in. You can get ahead of the game and get in touch with us anytime, send your email to moneytalklive@td. com. That's all the time we have for the show today. Thanks for watching. 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