The Dividend Cafe - Market Outlook w/ David L. Bahnsen - Conference Call Replay - October 11, 2021

Episode Date: October 11, 2021

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Well, thank you, Erica. Appreciate it. And Scott, welcome back. Thanks once again for joining us. I think that we're a little off our normal schedule because of the money manager meetings that we had last week. I think last Monday would have been our two-week spot, and here we are today. So I'm kind of fresh off of 20-ish meetings last week, and I'm ready to roll here. So we have plenty to talk about. We actually finally do have a little bit of volatility in the market, which has been nice. And I'm sure there's plenty of questions that are out there. Like Erica said, send those in real time. She'll get them and send them to Scott while we're talking

questions at thebondstonegroup.com. But Scott, I think you got a lot you want to go through with me. So I'm just going to hand it right over to you, my friend. Well, David, thank you as always. go through with me. So I'm just going to hand it right over to you, my friend. Well, David, thank you as always. And great to be back with you after a couple of weeks. And I think that's a great place to start, David, was some of the takeaways that you wanted to share from the meetings that you had last week and maybe also how the volatility and some of the uncertainty around taxes may have changed the normal course of discussion at those meetings, which you have every year around this time. Yeah, you know, let me actually first say I wanted to point out that we did this call three weeks ago instead of two weeks ago for the reasons I just said. It was uncanny to me, Scott, a few days later, how much that followed the exact playbook from another Monday, and I believe the month of July, where the market had hit some sort

of severe level of intraday distress in both days, three weeks ago, and I guess it was somewhere around three months ago. The market was down over 900 points in the middle of the day. And on both days, it came way off of those lows. It still closed way down, I think one day 500 and one day 600, but it came back three or 400 points in the final hour or so. And then the next day was up huge. And by the Thursday of that week here and conversations together to reverse market momentum, apparently in the middle of a bad Monday, but I also, in a more serious sense, I bring it up to point out the total futility right now of believing that there is a momentum

thing going on one way or the other. It seems as if momentum goes away and starts to move downside and it can reverse just as quickly. And and that's been the case on an awful lot of occasions. I don't care much about momentum movements. I certainly don't care about it much on a day or two. But to the extent anyone did care about them, they probably were very frustrated because acting on those things has actually been really counterproductive. And so I think that's, it's an important thing to share just since this is our first time together since a couple of weeks ago. So how does that play into, I guess, the buy the dip strategy that has worked for so long, or is that even sort of the right way to think about it? Is there another approach that maybe you'd be more in favor of talking about or advocating for? Yeah, I think

that at the end of the last call, I made the comment that we probably were not going to be looking to sort of deploy some fresh dry powder cash out of that dip, believing that we still really needed to have a real correction. And these 2% and 4%, and I think we got down as much as 5%. That's on the S&P level, the Dow right around the same. The NASDAQ may have had more, certainly a lot of the technology sector. I think the average stock in the tech sector, which is different than a cap-weighted measurement, is now down about 13%. But my point is that I made the comment and it turned out the

next day or so that it probably would have been advantageous to have deployed. But just in terms of believing that any immediate dip right now is instantly viable is not really my thesis. I think the right answer for me to tell you is I really don't care very much. You know, we don't have a client that we're going to make or break by timing entry point correctly or opportunistic dry cash deployment correctly. If we come in a week late or come in a week early, it's just simply immaterial in the long-term scheme of things. Obviously, you want to be as opportunistic as you can be, but these things always come down to a risk-reward calculus. And what we tend to do is on a client-by-client basis, when we're deploying dry powder cash. We either believe it in the right risk profile and temperament of the client

to systematize that and just cut out any risk of timing, cut out any tactical considerations and deploy it over a certain period of time systematically. And then we have some that we want to be more opportunistic with and tactically tether that cash in, which primarily means off of bad days, as you say, buying the dip. And this year, any time the market's been down sizably 400, 500, 600 points, it has proven to be kind of good timing to put some cash to work. But nothing would have been as good as just putting all cash to work in January. would have been as good as just putting all cash to work in January. And so clients that had a significant amount of new cash to get deployed, who understandably, from their perspective and our perspective, didn't want to go all in in January. So we were tethering in across the board, every client that has cost them money. But that's almost always the case. You don't average in

because you think it's going to make you money as much as you're mitigating risk. because you think it's going to make you money as much as you're mitigating risk. And the potential risk of bad timing at an entry level is psychologically, emotionally very significant. So I think that we take one of those two approaches to how we deploy money. But the other thing you could mean when you talk about buying the dip versus deploying dry powder cash is actually rebalancing where one might have to use a pretty decently common asset allocation, some form of equities that equals 60% of their portfolio, 20% in different fixed income, 20% alternatives. And you say, well, if equity is dropped enough that we want to take 5% out of fixed income and put 5% into equity, we're not even close to that. Like you would have to have a lot more 900 point down days before we'd be thinking that

way. People's strategic asset allocation right now is the furthest thing from needing to be rebalanced opportunistically. Like I said, not even close to that 10% S&P correction. As we're sitting here talking right now, the Dow is only 400 or 500 points off of all-time high. So to me, I think you're looking at thousands of points on the Dow before we start thinking that way. But I imagine by the dip, you were more wondering about deploying dry powder cash. And that's the

approach we take to that subject. And when we talk more granularly, maybe about sectors, what's your reaction to the strength we've been seeing in energy and financials, which have been really strong all year, but particularly over the past month or so, even in the face of all this volatility? Yeah, they were really strong all year. And then they did have a little weak patch in the summer and how much they held up in that weak patch. So the worst weeks of the year for energy were the most bullish because there was a sense in which the technicals held.

Fundamentally, you did not see credit spreads widening. You didn't see a lot of companies making new bottoms. You saw the strength in the sector, which, of course, we tend to be invested more in the higher quality balance sheet names. You saw them held in. And so really during moments of weakness, how these sectors and areas perform and behave often gives you an idea of what to expect. an idea of what to expect. And right now, I'm going to have a chart in DC today that 100% of the names in the S&P energy sector are at 50-day highs. And it's like 80% in the financial sector, far and away the most. I think the third place sector is back down around 50%. So the relative strength, technically speaking, in recent times in financials and energy looks very much like it did back in the first quarter.

And part of this in energy, you see strong oil price, you see a very high natural gas price, but you also just see improving fundamentals. You see low cost of capital, you see credit spreads that have tightened, and you see cash flow growth and capital discipline about the way they're spending money on capital expenditures. So I think that the energy sector is one that's very hard not to like right now. And then on the financial side, it's a little more diversified. For us, we have two publicly traded private equity managers, alternative asset managers in our portfolio that are sizable positions that are both up huge on the year. One of them is our largest performer of the year. We have the largest commercial bank in the world, which has a major investment bank,

world, which has a major investment bank, credit card, mortgage, and commercial bank business. And we have a major life insurer. So when you look at that financial exposure versus just saying all financials are equal to banks, and all banks are equal to basically glorified mortgage lenders that take in deposits and lend out a little bit of money at a spread. Therefore, how the yield curve goes is how the whole sector goes. It just isn't true that when you're invested into M&A, when you're invested into the investment banking franchise, when you're invested into prime brokerage, these are massive revenue centers that have very different profit margin characteristics than other parts of just traditional banks. Oh, by the way, I did leave out one name, which we have, which is a super regional bank. It's right up there near one of the top five, six, seven large big commercial banks,

but it's a merger of two super regionals. And again, even then, there's an investment bank, there's a credit card business, there's small business activity. But largely, that business model there is more traditional of a depository institution that receives money short, lends out long, collects the spread. Net interest margin matters, Scott. I don't want to downplay that. But people are just perplexed that net interest margin hasn't been very robust. And some of these financials have done incredibly well. And the reason is because banks are not reliant and certainly the rest of the financial sector X banks is not reliant

on net interest margin. And when we talk about the energy sector, let's also talk about oil prices, you know, now above $80 a barrel. Talk about what that means from an investment point of view, because I know some of the energy names in your portfolio, your thesis on those companies really has nothing to do with the price of oil, which some may find surprising. That's exactly right. And I actually do believe that you get too much higher about these prices where we are now. I don't know exactly what the number is. I think it starts to get pretty tricky by 90 and by 100, I think it becomes very problematic. And we're sitting here in the low 80s right now. So we're not that far

away. And people go, what are you talking about? Doesn't that just mean higher margins, higher revenues, higher profitability? But what you, of course, have is something called demand destruction. And at that point, the supply-demand tensions are real. And there is this kind of a sweet spot. But I think you get to a point then where you, with low enough supply, high enough demand, and a high enough price, it then starts to push the demand curve down. And ideally, it doesn't ever work this way because of supply-demand economic tensions. But ideally, you always want adequate supply to meet demand.

And you want demand growing on a very realistic sloping curve and pricing that kind of allows and facilitates that optimal equilibrium between supply and demand. It's very hard with oil because you have difficulty getting production ramped up quick enough when you have a demand surge. When you have demand collapse, everything goes to hell in a handbasket very quickly. And it's expensive to invest into additional production. And then you also have the geopolitical complexity of OPEC plus, not exactly reliable nation state actors all the time, and certainly not ones that have the same interest in mind of a US equity investor. and certainly not ones that have the same interest in mind of a U.S. equity investor.

So here's what I would say about where the oil price matters. The midstream energy sector that we're heavily invested in, that I'm as bullish on right now as I've ever been, isn't reliant on a business fundamental basis for higher oil prices. It's reliant on a high supply and high incentive for producers to continue investing in new production that leads to them needing more storage and transportation that, of course, ends up getting downstream to a customer who pays for it. The midstream aspect, The midstream aspect, though, on a stock price basis, has had a lot of sentiment correlation. What I mean by that is people are less prone to bid up the price of midstream assets when the oil prices or natural gas prices are dropping precipitously and the overall sector feels a little crummy. And so right now, I think you've seen, oh, I think about a 12% move higher in midstream in like the last two weeks, as oil prices, natural gas has gone higher. Well, if that was just correlated to the commodity price, they'd be up even more than that.

I mean, natural gas prices are up like 400% from recent lows. However, I think that we don't want to overthink the correlation with sentiment, even though I recognized it now for almost a decade, that midstream gets bid up around the sentiment of the commodity prices and down, even though that doesn't really drive what we're investing in, which is its free cash flow yield. And so I think that we want to be holistic in the way we think about it. But fundamentally, where I want people to feel very optimistic about the energy story is one of energy investment that has been largely ignored, it has been under attention, and there's a need for more. And that almost everybody on the rational side of the environmental discussion agrees that we simply don't have the production capacity right now to meet demand.

And was there anything, David, from your meetings last week that enhanced or maybe even changed your view on the midstream sector? Any tidbits that you learned or things you wanted to share? Yeah, I really do want to reiterate, Scott, something I said in Dividend Cafe. The hit home to me, Brian Seitel, Dea Pernas, and myself, the investment committee sat for, oh, it was almost a three-hour lunch with the two gentlemen who are the lead portfolio managers of the midstream energy strategy we're invested in, as well as with Luanne, who's the president of the company. And so we had all three of them there, two portfolio managers and the executive, having a really robust discussion about this space.

We've been in it a long time. There's a lot of history, a lot of ups and downs, lessons learned, sharing old stories about different companies and whatnot. But one of the just important takeaways is when a yield that has dropped a couple percent because prices are higher and some of the companies cut some dividends last year. And yet right now you have a very, very high yield and a very high spread that may not be as high as it was a few years ago when there was a lot more skepticism in the space and a lot less quality. Their point that a 6% yield of this quality compared to a high percent eight percent yield of that quality of a few years ago there's no comparison we'd way rather

have the economic metrics and fundamentals we have now and i agree a hundred percent you have far higher distribution coverage cash flow or dividend coverage from free cash flow than you've ever had. You have a lower debt leverage ratio. You have better debt to income, debt to asset metrics. You have far more corporate governance, far more fiscal discipline around new expenditures and projects that they're committing to. You have far better strength with counterparties. This is a big deal that the folks who pay the tolls to the pipeline operators for their oil and gas to run through, they're in a better credit position than they were. So all of these things to me are a big deal and why we're bullish

on midstream and believe we're not only achieving great returns there this year, but see continued great returns into the years ahead. David, another takeaway from some of the meetings last week, illiquidity as an underappreciated part of one's portfolio. What do you mean by that? And why is it underappreciated? Well, I think it's underappreciated for one sense in how it's underallocated. There is a need to increase exposure to where a client has the tolerance for the illiquidity, which starts with the very obvious definition of not needing access to the capital, but where one can afford to have capital tied up, they cannot get to it, or at least would only be

getting to it in a punitive way. There's what we call illiquidity premium. And that illiquidity premium is strong. It adds to performance. And then I think right now, it adds to behavioral advantages. Because there's just no question, Scott, that you have a lot of people that have entered risk assets for the first time ever, or the first time since the financial crisis. And they've seen a few down days, but they haven't seen a lot of down quarters, even down months, certainly down years. And I believe when they actually get a wake up call to the grown up realities that go with being a risk asset investor, that they're highly likely to hit the sell button. And in illiquidity, you have the benefit of more

mature investors, more sophisticated investors who don't behave that way and can't behave that way, even if they wanted to. And so that illiquidity produces the economic premium via illiquidity, and it creates a behavioral premium in the fact that people cannot sell assets at prices they have no business selling at. Where do you find such illiquidity? There's an awful lot of really diligently vetted real estate projects we're investing in both direct and institutionally. Whether it's for capital appreciation, value add, or for income, just build it and collect rent checks. But then even apart from real estate, which is probably the one most people know best,

the private credit side, whether it be in direct lending, we have one strategy that really focuses on smaller and up to maybe kind of more mid-cap size companies. And then you have direct lending to larger size companies that are actually competing with the high yield bond market and winning business. In the senior secured, first lean part of the capital structure, providing incredible credit protections, security off of cash flows at a senior level, and generating really juicy yields. So we like the direct lending.

We like private credit. The non-bank lenders, you have levered loans. You have securitized. You have the direct lending that's collateralized by cash flows. You get into structured credit where it's securitized by the underlying assets, whether it be residential mortgages, commercial mortgages, asset-backed mortgages. You have pools of cash flow from some of these credit instruments. And there's varying degrees of illiquidity, but really great opportunities of assets that still trade below par or right around par with juicy yields. And then you get to the risk side of things that is more so than credit, And then you get to the risk side of things that is more so than credit, meaning in theory, unlimited upside, and that's in the private equity side. And I've really overthought the concern here for some time because even someone who's basically devoted his life to the cause of free enterprise, you do sometimes fall in the trap of putting a sort of Malthusian lens on the opportunity set.

You think, just as people have always believed commodities were more scarce than they were, people that believe that good ideas are more scarce than they are, that good operating businesses are more scarce than they are. And yes, valuations are higher. Yes, sponsors are paying out more than they used to. Yes, allations are higher. Yes, sponsors are paying out more than they used to. Yes, all things being equal, I'd rather have a very low cost of capital like we have now with a little lower cost of entry at an acquisition level than the private equity industry is seeing now.

But a lot of the reason prices have come up is cost of capital has come down. There's more competition for good deals. as cost of capital has come down, there's more competition for good deals. But also, you just have a lot of entrepreneurialism, a lot of creativity in the private markets that are generating great returns for shareholders. And a lot of these companies don't want to go public. They wait a while to go public. They certainly go through some of their best growth years ever as private companies, not public companies. And that is a major secular trend. I see no sign of changing anytime soon. And so we want to be invested in these different spaces, but all of them have one thing in common, which is not a cost of entry to me. It's an opportunity, which is illiquidity.

It's an opportunity, which is illiquidity. But of course, Scott, I need to say that means some people it's not appropriate for. Some people need the liquidity. It's not going to be suitable for them. Some people want to be able to use their asset base as collateral for some of their own credit and lending needs. And illiquidity takes some of that stuff away. And so I understand we have to take it client by client, but I'm very convinced that across the whole investable industry, there's a massive underinvestment in illiquidity. And even at the Bonsai Group,

we believe we're underinvested relative to where we intend to be by the end of the year. Well, and David, speaking of liquidity, let's also talk about dividend growth stocks, right? Obviously, the center of the investing philosophy at the Bonson Group. So with that, though, we know that there are mutual funds, ETFs that aim to capture or at least give investors exposure to a basket of stocks that have that multi-decade history of dividend growth? And so what would you say are some of the differences between that strategy and what you're doing at the Bonson Group for clients in that same dividend growth investing vein? Yeah, I think it's a really important question because I've

long argued with really absolutely no counter argument that I've run into yet that dividend growth can't be indexed. By definition, the nature of free enterprise is such that there are things that can come about with a company's balance sheet, its debt profile, the cyclicality of its earning stream, its competitive moat, the philosophy of management, the integrity of management that represent the risk of dividend cuts. And so we believe it is our job to actively and proactively avoid such things. You look at the avoid such things. You look at the passive ways in which a fund or ETF might go about trying to find yesteryear's dividend growth, and every one of them that I've ever looked at has dividend cuts, sometimes substantial. Some of these with really big assets in their fund in a dividend growth strategy had less income payout in 2020 than in 2019 because of the big dividend cuts. And so I think that their inability to do forward-looking analysis, which is what dividend growth has to be, has to be pro forma. When you only look backwards,

you do have a chance of catching some aristocrats that just really do stay faithful forever. We certainly have many of these aristocrats in our portfolio. But see, we can't just assume because they've been paying a dividend since 1974, they're going to continue to. We think that there are all kinds of situations that may come up that could threaten the dividend. Not only do these ETFs and funds often not avoid those things, but they also keep them in the portfolio for a sustained period of time. And that is not what we believe about the dividend growth philosophy. The other thing I'd point out is being very careful that people understand the difference between dividend growth and high dividend, because there are some ETFs and funds

that will call themselves high dividend, and people think that's the same thing. In reality, they're just indexing or quantifying a universe of maybe the top two deciles of high yield at the point of purchase. And those things have an incredibly high propensity for dividend cuts when they're what we call accidental high yielders. The analogy is always a $100 stock paying a $4 dividend, it's 4%. Stock drops to 50, they're still paying 4. All of a sudden you go, oh, look, I have an 8% yield until you don't because the reason it dropped from 100 to 50 is business conditions are deteriorating so badly that the dividend's in jeopardy. So we've had plenty of companies we had to look at to really question whether or not dividend's sustainable. Sometimes we became convinced it wasn't. We sold it.

Some of those have been career-making moments for stocks we've exited before they ended up cutting the dividend. Look, the largest telecommunications company in the world became the most highly indebted company in the history of the world a few years ago, and we sold it. And that had been a very juicy dividend payer for a long time. And they were adamant they weren't going to cut the dividend, even as they were adding other satellite businesses and content businesses, media businesses. And I thought the whole thing was a cultural mess and an economic mess. And then sure enough, a couple of years, they ended up having a sizable dividend cut recently. Well, I think that stock is in almost every dividend ETF I've ever looked at. And yet, from a proactive standpoint, we're able to avoid it. So that's

the reason why I feel so strongly about this issue. I also want to always point out to people, it's not in my self-interest to be an active dividend equity manager. There's a huge investment in people, research, technology, infrastructure that it has cost us to build out an active management approach. Not to mention the biggest thing that my wife could talk about, which is the lifestyle choice. The reason that we have to kind of work the hours we do is largely because we chose to be active managers. And yet, if all I wanted was to faithfully put in expression and execution of dividend growth in a client portfolio, and I thought it could be done passively, I would add to my lifestyle. I'd certainly add to my bottom line.

And clients would be no worse off for it. It is because we believe so strongly that it's the right thing for clients to have an active approach of individual securities, tax efficiency, transparency, and at least every earnest intent and attempt to avoid dividend cuts, which I don't think people are getting from backward-looking funds. Well, and David, as an inflation hedge, talk about dividend growth specifically, not just dividends. Yeah. I mean, I think that when you start off with a dividend yield in your portfolio, it's above the rate of inflation, and then you have a rate of growth in that income that is above the rate of growth in the inflation rate, you have

created the definition of a mathematical hedge against inflation. And dividend growth has given that very situation to its investors for decade upon decade upon decade upon decade. And so I think that it provides an incredible inflation defense, all the while representing the various other aspects of quality portfolio management that we care about, better underlying companies and less volatility and so forth. But to the extent that one wants to be able to deal with the realities of inflationary pressures in any period of time, whether that rate of inflation is growing as it has this year around all the supply chain and shortages and disruptions, or even in a disinflationary period of time where the rate of inflation is going down,

which it has most of the time since financial crisis, yet you still have inflation that is eroding at your purchasing power to be able to outperform that inflation via superlative dividend growth is something we care about a great deal. All right, David, I think we've gone through the list of questions that I had. Anything else you wanted to add? No, I'll look to see if any other questions have come in. I assume that you would have received them. So, yeah, I'm going to say that we probably covered the main bases, Scott. I think those were very thoughtful questions.

To the extent that anyone has any other questions, feel free to send them in. And we're trying to even address one question per day in the DC Today now. I've been having fun doing that. Those are all, by the way, real life questions that really come in. But Scott, I don't know what to expect for the next two and a half months of the year. My view is that tech seems like it's ready to have its day of reckoning. But a lot of times when it has seemed that way, and it's corrected 5%, 10%, 15%, there's so many people out there want to buy the dips in those names. And maybe that happens again. I've never had any interest in timing it. I think things that are 30% overvalued, correct 30% at some point. Things

that are 50% overvalued, correct 50%. Things that are 5% overvalued, correct much less. Whatever the right valuation level is, we'll see. But I got to say, I don't think that anybody should be overly confident in their short-term projections on things right now. I know I'm not. Anybody should be overly confident in their short-term projections on things right now. I know I'm not. It was something that was really evident last year from very mature, seasoned money managers here in New York City, whether they were in alternatives, hedge funds, real estate, credit, boring bonds, emerging markets, not to mention US equity, small cap up to large cap. There has to be a sense of recognition that

yields are low, valuations are high, there's geopolitical questions. I'd still believe that one could make an argument for bullishness if they want to do and one can make an argument for bearishness. What an investor has to do is create an asset allocation that accounts for both sides of things, deals with the risk tolerance and accounts for the needed returns over time they need to get, rather than trying to guess what's going to happen the next month, the next quarter. One thing it sounds like no one asked about, but I'll address quickly, is the state of the spending bill. You mentioned the idea about tax increases and people maybe having concerns

volatility around that. I think that the idea of the very draconian tax cuts, very large, very punitive, very heavy handed that were discussed earlier in the year that the market virtually never really responded to,

those things are pretty much almost entirely off the table. Some of the just kind of, if you don't mind me saying it, just sort of ridiculous ideas that were floated. Maybe some of them were meant to be serious. Maybe some of them were just meant to kind of appease some progressives and they always knew they're going to come way down. Do I think you could end up with a bill getting done? Yes, I do. Do I think that it will end up having a modestly higher corporate income tax and a modestly higher top level capital gain tax? I do. I wouldn't bet for sure on any of those things, but I think all those things are possible. But what isn't possible at this point is a kind of

significant high-level move. So now if there's going to be a bill, which I really wouldn't care if there wasn't, and if there is going to be some modest tax increase, then what you want is to try to work around it, that the LLCs and S-corps and small businesses that you will at least do the least macroeconomic damage possible. And I think there's some folks legislatively working towards that aim. I understand there's also spending aims and other political or social objectives that some have, and people can have differing opinions on that stuff. My point is just simply in evaluating it for market impact. opinions on that stuff. My point is just simply in evaluating it for market impact. I think some of the things that we're most feared are not only not going to end up being in the legislation, because I never thought they were going to be in the legislation, but I mean that at this point,

they're not even on the table anymore. And so that's a lot of why the market has breathed a sigh of relief. But we know we have tapering of QE coming up. The market has known that for some time. Bond yields haven't really mattered, cared, and equity prices haven't really cared. If they were to raise the Fed funds rate next year, 100 basis points, would the market care about that? I'm sure that it would. Are they going to do that? I don't think they are, no. And so you have the heavy input of the Fed. We have to see earnings season. You have to see, and there's a really, really great chart in DC Today Today, where you look at the first quarter, which was the quarter when the COVID

pandemic kind of hit us all upside the head, where all of a sudden earnings growth was very negative, much worse than anyone would have expected. And then since then, you've had five quarters in a row of earnings reality, far outperforming earnings expectation. Now, the first couple of those quarters, that was because they were less bad than expected, but they were still negative. of those quarters, that was because they were less bad than expected, but they were still negative. Since then, they've been positive and in fact, far more positive than expected. Now, all of a sudden, you figure the market's caught up a little bit, Scott, and said, okay, well, now they're going to price in a little higher expectations for earnings growth as we start this week with Q3's earnings results. Will the market again outperform its own earnings

expectations? Will it underperform? Will it just meet consensus? I think that's a big question. And that will have a lot more to do with where the market goes between now and the end of the year than the kind of dysfunction junction that is Capitol Hill. So that's my take on a couple of the big issues out there. I will, unless any other questions have come in? No, that's it. I mean, I was going to ask you, David, just you mentioned taxes just real quick before we end. I mean, there's obviously so much uncertainty on what's going to happen. So is there anything that people should be doing with their investments or in general to prepare for this? Or is it more just wait to see what happens? Don't just do something, stand there. That's what they should be doing. This idea of

taking big draconian steps right now around an uncertainty is really unwise. Selling an asset with a capital gain because you think you might have a higher capital gain later. So guarantee an asset you don't want to otherwise be selling. It's just stupid. You just simply have to wait to kind of see how these things shake out. I've seen not 10 times, 50 times the money lost by people planning for things that didn't come to fruition than I have from people not planning on things that ended up coming to fruition. So there will be clarity at some point in time. There will be some awareness of what's going to happen. The fact that they weren't able to get the deal done on the timeline that Speaker Pelosi promised, that there had been a commitment on the infrastructure

bill that they didn't get done, and that they all said, okay, look, we're just not ready. We don't have the votes, so it's fine. We still think we're going to get it done, and maybe they will. But it had to punt, and that can only mean good things for the eventual outcome, that now with having to punt, there's more time and more leverage for people that don't just want to give a blank check, want to kind of be a little more rational about what is spent, a little more controlled. And then certainly some of the more unpopular tax increase side of things with a lot of vulnerable moderates that are going to be expected to vote yes on it. I think they get a

chance to have more say. And you know what, they may end up getting a bill done and not getting it done by end of this year. It may have to go into the beginning of next year. And then you get into a midterm year and so forth. So, you know, there's a lot of vulnerability there. And to your question, would I be actually taking steps around capital gain and significant maneuverings of estate planning because of a press release, because of a campaign speech? I mean, half of this stuff is already scrapped. It's already on the drawing room floor. I just can't imagine somebody doing something like that. I hope people will be prudent, tempered.

And if you have a question on things you're doing and you want our advice on it, reach out to us because we are a, you know, big opponent of the shoot first, ask questions later mentality. That's not the way a fiduciary operates. Well said, David. It will be certainly it will be an interesting couple of weeks. And I know you'll be helping people navigate it on these calls and throughout your other discussions with clients. So thank you. And we appreciate it, David, as always. Great to be with you. And thank you, Scott. Appreciate that. I'll turn it back over to Erica to dismiss us. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC,

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