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Of the year.
Well time now for our special -- that segment every month we bring you top level advice from some of the nation's best wealth managers.
They're all highlighted in the latest issue of worth magazine.
Today's guest mark lowly -- the -- wealth management.
He's been named one of America's best financial planners last five years he's got a minimum net worth requirement of two and a half million bucks.
But he is here for you right now mark good to -- it's -- for -- All right you believe it treasuries US government debt.
-- -- huge ball tell us why.
Well what's happened in the past several years as investors had feared the market so much that they've thrown money to long term treasuries.
Bidding up the prices and reducing -- yielding gone.
What that has caused is the yield on the thirty year treasury to essentially being almost the negative yield when you account for taxes and inflation.
So when I sit down with a client is a very long term time horizon and they've gotten off their plan and they've invested in long term treasuries.
We look at the other options -- where the money could have done much better on inflation risk adjusted basis.
It seems that treasuries -- not the place to be where -- -- -- -- money for thirty years after Lehman the investing -- has seemed to be.
The most important thing is return of your capital not return on your capital it is a measure of fear should we put that aside for now.
You know it depends on what -- timeframe is again you know and and it you know it return of your capital is important if you need the money shouldn't.
If you're gonna tying money up for thirty years in treasuries and interest rates.
Go up your principles gonna go down the only way you're guaranteed your principal back is -- that interest rates are currently where they were when you bought your bonds or chart.
So if you buy thirty year treasury that has a 440 rate of return for thirty years.
You're guaranteed that for forty rate -- return for thirty years the two principals only guaranteed back to you in thirty years or interest rates are at 440.
Or -- and which case she could make a profit at historically low interest rates in an historically low interest rate environment.
You've actually thought emotionally and not rationally about the start of your time frame and protection you prints.
But here's the complexity if people do sell their treasuries.
Yields will rise and thus they -- become more attractive again.
Let's say somebody is ten years at least a waste -- time.
What's -- proper percentage for the holdings of bonds first stocks.
Obviously we depend on how much money they make and what their income in the net worth.
I would say ten years to retirement you know I would probably have -- No less than 60% equities.
And 40% some sort of fixed income to have you raised that recommended equity allocation in the last couple of years of -- as stocks -- were you saying to people listen.
I know it's bad now.
Think twenty years from now.
You know again it depends on the individual that were advising cause we do do it gonna customized -- for the -- On the bond side what we've done in house to our research is really flying.
High quality bonds.
Reduce our exposure to lower quality credit quality -- on what that means we're -- demarcation point about junk vs non junk John Burris is -- -- who usually are better we're shortening durations because interest rates are most likely to go higher over the next few years.
I'm so that our clients on stock over a long period time -- bond.
Portfolios really research you know driven based on on what our research -- final candidates chunk of something because it's yielding 6% correct and that's that's where investors have gotten off I mean I think investors have stretched.
Their time frame out.
Four actually yields and where they've gone way out on the yield curve and and and really incrementally and had very little return.
But it's only -- ten years to two.
Retired the real question is is what you know my equity -- do I believe that'll be higher in ten years.
-- lower what goes on between now and ten years from now.
Islamist irrelevant the problem you run into when you're investing -- every day you see it in the paper on the news so -- network is going up and down verses where to make an investment in -- business and you don't see it.
What looks good to you right now at for the ruling.
You know we're looking forward some deep value situations in here.
High dividend paying types of ETFs and and mutual funds.
You know -- long you -- -- closed in months.
We don't buy clothes and bond funds we're we're very big in the agency market in the asset backed market as you probably know from talking to David to -- -- in the past.
You know and I would I would probably leave that to him on the next.
Segment because he really is very good address and a -- -- gas.
But you know on the bond side it will tell you we are very research driven and under the understanding the underlying risks to the bonds.
The duration of the bonds the credit quality to bonds he -- didn't -- So we buy bonds on an individual basis.
On the mutual fund side.
You know T.
Rowe Price capital appreciation funny things are very good conservative fund with people with a long term you know horizon.
The fare home fund which is management and Bruce Berkowitz has -- exceptionally join the board of St.
Joe company we discuss the David -- in order shorts aged couple last week.
But by Bruce Berkowitz is really very good when he does.
You know there's -- -- -- -- fund that pays three point 6% which is qualified dividend.
You know these are very good manages.
You know in very good funds with good return that I think of a long period of time will outperform with a minimum net worth of -- to have made your clients are obviously you know pretty successful individuals.
Are they started to call you up and say -- -- -- run -- stocks I need to get back in or they already been back again.
You know one of the things we have in our clients.
Our relationships with them are pretty much they use our judgment and and what they pay us -- really is to separate.
The emotional decision making process.
And -- -- this to my clients all long while the market was declining you know should get a stick in there I I think you know I -- -- -- your money.
All our team our money average you know dollar cost that I don't panic don't buy low sell high pick exactly don't sell high -- or buy high sell low that's correct.
And so wit when they speak the -- they more or less deferred our judgment on our job is to really understand what their needs are.
The risk tolerance the dynamics of you know their families worth of wealth than what did you feel -- people are willing to take a little more risk on now than a year ago I used ideas I did.
Yes I I think there's an inverse relationship with where we are in the markets in any manner as the public's willing to today.
Usually in the public's willing to take more risk the markets a little more frothy and when people are least likely take risk -- -- whatever does that without when it's easy to get bearish right and I and that's where our job comes -- because our job is to keep you rational not emotional as an investor.
So when are when clients and to -- when NASA management there's an understanding that my job.
Protect -- from emotional decision making process and put the best plan in place for you and to keep it consistent with what you need over the planner and a psychiatrist.
Mark Lola thank you very much thank you a further.
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