The Pomp Podcast - #394: Amanda Agati on Tactical Asset Allocation

Episode Date: September 28, 2020

Amanda Agati is the Chief Investment Strategist for PNC Financial Services Group. In this role, Amanda leads the team which establishes overall strategic and tactical asset allocation guidance of client portfolios, oversees the evolution of investment processes, provides thought leadership on key investment issues, and authors numerous publications. In this conversation, we discuss COVID-19, the Federal Reserve, inflation, the Presidential election, trade policy, whether 60/40 portfolios are dead, betting odds, and Bitcoin. ============================== Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ============================== Pomp writes a daily letter to over 50,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at https://www.pompletter.com

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Amanda Agati is the Chief Investment Strategist for PNC Financial Services Group. In this role, Amanda leads the team which establishes overall strategic and tactical asset allocation guidance of client portfolios, oversees the evolution of investment processes, provides thought leadership on key investment issues and authors numerous publications. In this conversation, we discuss COVID-19, the Federal Reserve, inflation, the presidential election, trade policy, whether 60-40 portfolios are dead, betting odds, and Bitcoin. I really, really enjoyed this conversation

with Amanda, and I hope you guys do as well. Before we get into the episode, though, I want to quickly talk about our sponsors. First up is BlockFi. I really love these guys. I'm an investor, I sit on the board and I'm a heavy user of their products. They've got three products so far. You can buy and sell crypto on their crypto exchange. You can deposit crypto and take out a US dollar loan against your crypto collateral. Or you can earn up to 8.6% interest in an interest-bearing account. Go check them out at BlockFi.com slash Pomp. Again, BlockFi.com slash Pomp. They'll also be coming out with a Bitcoin rewards credit card at the end of this year. And that's something to look forward to. BlockFi.com slash POM. Next up is Choice. They're a new self-directed IRA product

I'm really excited about. If you're listening to this, you're likely part of the 7.1 million Bitcoin owners who have retirement accounts with dollars in them, but not Bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax advantage dollars to do it too. Absolute game changer choice, a self-directed IRA product that allows you to buy Bitcoin, hold the private keys and use tax advantage dollars as well. I've got my account. Make sure you get yours. You can go to retirewithchoice.com slash pump again, retirewithchoice.com slash pump. Lastly, don't forget that I write a daily letter to over 75,000 investors about business technology and finance.

I break down complex topics into easy to understand language while sharing my personal opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. All right, let's get into this episode with Amanda. I hope you guys enjoy this. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

All right, guys. Bang, bang. I have an awesome treat for you today. Amanda is here and we're going to talk about everything that she does on a daily basis. So thank you so much for coming on and doing this. Thank you so much for having me. I'm delighted to be here. Absolutely. Let's jump right in. Let's go over your background first before we get to the fun stuff. Maybe just tell us kind of where did you grow up and what did you do before you got to PNC? I am originally from the Scranton, Pennsylvania area in the Poconos, if you're familiar with that. But I moved around a bunch as a kid as my dad got transferred through a number of jobs. So I spent time in Pennsylvania, obviously, where I was born. I spent a number of years in Alabama. I lived in Indiana and then

kind of finally made my way back to Pennsylvania. I live in the city of Philadelphia here with my husband and two girls. They're eight and four. The door behind me is locked to try and keep the four-year-old from banging on the door and trying to make her grand debut here. I went to Penn State, so go state. I'm definitely a Nittany Lion through and through. My career has largely been a long and winding road through the asset management business and the investment management industry. So right out of college, I spent a number of years working in investment banking. I was a private equity analyst for a little while, which was kind of interesting to see what's going on in the private market world. The lion's share of my career, believe it or not, has been spent in equity

research as a generalist covering a number of sectors and industries. And I think that really it was sort of the best training ground for where I find myself today as a strategist. It's really given me kind of a broad view of the world and kind of the inner workings of the markets. And so I think that helps from a practitioner standpoint. I definitely did not come to this job from an academic standpoint. It's really more learning on the job and effectively kind of being street smart, if you will. So a long and winding road through the industry. And I think that gives me an interesting and perhaps differentiated view of the world. Absolutely. And so today you sit as the Chief Investment Strategist at PNC Bank. As we were talking beforehand, there's a whole bunch

of stuff that goes on at PNC. So help us understand what that role entails and then where you sit within the organization. So as the Chief Investment Strategist for PNC, I lead the team that's responsible for developing all of the strategic and tactical asset allocation recommendations for our clients in the asset management division. And our client base really spans three primary lines of business. We have institutional clients, so endowments, foundations, pension plans of all different sizes. We have an individual kind of wealth-oriented private client business. And then we have an ultra high net worth family office business called Hawthorne. And so my purview is really to drive the asset allocation, both

strategic and tactical for all three lines of business, as well as kind of publish on a fairly high frequency, trying to make sense of the insanity that is this market. And so we put information out on a weekly, monthly, quarterly basis, and then ad hoc, depending on whatever is going on. So we really own an investment strategy, kind of the house views of the markets and the investment landscape across both public equities, private investments, and fixed income. Okay. So this is a big, important job is the takeaway. For people who don't understand the finance world who are listening to this, this is really important because asset allocation is one of the most important decisions that people are going to end up making. Maybe talk a little bit

from your perspective, the importance of asset allocation versus actual manager selection or kind of individual security selection and kind of how you think almost like top down from that asset allocation to the rest of the portfolio construction that goes on? Well, the asset allocation decision is a really, really important part of the portfolio management process and the investment management kind of approach. It's not the only decision, but it is definitely a critical first step. But really, in order to do a good job of deciding what the right asset allocation should be, we really need to get a clear understanding of a client's goals and objectives. And so we're very goals-based and goals-oriented. And can we quantify that goal

or objective as a starting point and then decide what is the appropriate asset allocation recommendation to build around it to actually be able to support that? You know, you could of the greatest ideas in the world. But if you're not even close to being in the right ballpark in terms of the potential to generate the returns that a client might need to support their longer term goals and objectives, it's still kind of a failure. And so at the end of the day, we really do start by trying to identify and then more importantly, quantify that goal or objective. And then the asset allocation decision comes in a close second. That really is the guiding light for how we build portfolios. But we work in very, very close partnership with our partners in

manager research. So those that are doing due diligence on third party strategies that we might implement. So a core fixed income manager or a venture capital strategy, or even just an S&P 500 growth oriented strategy. And we also work very closely with the portfolio construction team to make sure that when we put the asset allocation and the manager recommendations together that we don't end up with unintended exposures or consequences. Again, you could have the greatest asset allocation in the world and the greatest set of managers, but you could end up with really outsized exposures and things you are not looking for when you start putting a multi-asset class portfolio together. So the portfolio construction piece of it is really

important. I really think all three components are actually very, very important. But if you don't get the client into the right ballpark, you know, right out of the gate from an asset allocation perspective, it can be a very tough client experience. Can you talk a little bit about the process you go through in terms of getting to kind of the asset allocation recommendation or directive? Like what is that process both from kind of internalizing and synthesizing all the information that's out there, and then actually putting that into kind of a final directive as to here's the asset allocation we're going to move forward for clients? Well, it's usually as simple as developing an investment policy statement. That's kind of a

standard starting point, both from CFA Institute, so industry standard kind of guidance and recommendations, and also what we would do at PNC and through the investment strategy starting point. And so when you're looking at an investment policy statement, you're trying to understand what are the key components or values that we need to try to express in a portfolio context. And then we're holding ourselves accountable to that. So it's a document that we develop, but the client also buys into. And so it's really important from a setting expectations upfront kind of approach. So we all agree that this is the approach that we're going to take. And then to the extent that it deviates or a client's goals and objectives change, we would update guidance as it relates to that investment policy statement.

And so when you think about the components of it, it's return objectives, it's risk tolerance, it's special or unique consideration. So in the case of an individual or an ultra high net worth family office type of relationship, sometimes there are big slugs of very low, if not zero cost basis stock in part of the portfolio. And so how do they want to address that? How do they want to handle that? And how should we be building a portfolio around that? We want to make sure that we have a very holistic view and picture so that we can make sure that we're choosing the right recommendation or asset allocation positioning. Time horizon is another important one. So if I only have five years to get a client to its goals and objectives, very, very different recommendation than if I have 30 years. In the case of a foundation, which usually tends to be our most aggressive asset allocation positioning, we have a very different set of recommendations, both whether clients want to use public equities and public fixed income or they want to consider using alternatives. So there's a lot of different flavors and a lot of different direction that we can take with it. We try to be, you know, really goals based and highly customized. And so this is definitely not a one size fits all approach.

A lot of legwork up front. But then at the end of the day, we feel like that is really valuable conversation in making sure that, you know, we can achieve success for the clients over the long term. Got it. And so I'm going to assume that it was relatively business as usual until the beginning of this year, call it sometime between January and March, and then all hell broke loose basically in markets, right? and everything from kind of credit markets seizing up to public equities dropping and then exploding up in value, you saw commodities kind of all over the place. Maybe talk a little bit just in with the hindsight benefit now of like, where we sit today in September of 2020, what's transpired from your position up till now, and then we can

talk about kind of moving forward. But these are some of the craziest markets that many people have kind of navigated. And so kind of how have you navigated those markets and kind of what's changed from an asset allocation standpoint for the clients that you guys serve? So there's so much in that question. We could spend the entire time together talking about that one. Let me start and then you guide me where you want me to go from there. So in thinking about kind of into the end of 2019 and rolling the calendar forward to 2020, we were actually feeling pretty good. Despite how far the market had moved in the back half of last year, we were feeling pretty good about positioning. We were starting to see some green shoots in terms of a cyclical acceleration after a really kind of slow and tough, if not choppy slog over the course of 2019.

And I'll just throw this out for fun. like every year I try to assign a musical reference or a song of the year for the coming year. And so this is going to sound insane now looking back on it, but it's, there's still some truth to it. The song we picked for this year was the Grateful Dead's Truckin'. And so the idea really was that given all of what has gone on, the long, strange trip that was the prior business cycle. Investors really shouldn't get tripped up by some of the challenges that were in front of us that we thought the cycle still had legs and that it could keep going. And so we did start to see in January and February pre-COVID that meaningful acceleration start to take hold. So we were

feeling pretty good about positioning and didn't make a ton of changes early in the year. We did over the last like 18 months, like leading up to that, start to make some changes at the margin because we felt like the cycle was getting pretty long in the tooth. And we thought that volatility was going to continue to pick up where there were a lot of headline risks, macro challenges around trade policy and that sort of thing. And so to try and get clients still comfortable with being fully invested, not overweight, but comfortably fully invested, according to their investment policy statements and their strategic asset allocation, we started to incorporate some asset classes that had a little bit more ballast in them. So as a good example, we incorporated

global infrastructure, and that's a nice way to kind of straddle the U.S. and international markets, stay in equities, but dial back some of the volatility exposure. And so that was kind of a key story for 2019, even though the market finally got its act together towards the end of the year. Of course, COVID hit. That was not in our crystal ball, sadly. It was not in our 2020 outlook by any means. And so the world shifted pretty dramatically.

The good news or bad news about it is I think there were only about three days in the midst of the record-breaking downdraft and then rally that anybody really had a shot at repositioning portfolios in a significant way. And so believe it or not, we stayed fully invested and rode right through it, even though volatility as measured by the VIX hit, you know, 80 plus like all-time records. And so our view on it was really one that the markets over time have wrestled with pandemics. This is not a new phenomenon, you know, dealing with pandemics, though the magnitude of this one has obviously been really significant. What was new was that we proactively or maybe reactively, depending on how you want to look at it, shut down the global economy. Those two things

were never synced up before. And so that was really the key difference. This wasn't an asset bubble bursting or the kind of a typical or usual end to a cycle. We shut this thing down. And so, in our view, we didn't think that there was a need to really pull the ripcord and de-risk. You know, we've seen these things sadly play out before, you know, the financial crisis is good training ground for how big markets can whipsaw around events like this. And so we felt given the strength coming into 2020, the fact that this was artificially induced, that as we shut down the global economy in response to it, that it would be kind of a bridging the gap, shorter term type of event, and that, you know, maybe things wouldn't normalize overnight, but that we would start to get back to a recovery in relatively shorter. And so we felt good about kind of staying the course. Of course, what has changed since then is it wasn't just a few short weeks. You know, it's hard to believe that we're still all very much kind of working remotely. And I think something like half of GDP tied to states today is still in some form of pausing or readjusting their reopening plan. So we're definitely not back to normal. And I would say we're definitely not back to a new normal. But some lessons that we have learned really so far and in this short period of time is that there's a real distinction between the haves and have nots, Wall Street versus Main Street. So we've started to see an even bigger way than pre-COVID, this really bifurcated market and economic environment start to assert itself here. And you can see it in the day-to-day movement in the public equity markets, depending on what the news flow is suggesting on any given day.

It's the stay-at-home trade, you know, everything you need when you're hunkered down, or it's the go-outside trade. And it's just this churning that continues to go on. But net-net, we think a really significant, perhaps structural difference as a function of what has gone on since COVID began is really that the big are likely to get bigger and that the growthy are likely to get growthier. And so what does that mean? It means that, you know, regardless of how long this environment persists, we think that the bigger names, the mega cap tech in particular, so the Q's, which have garnered a ton of headlines lately, are really likely to use this environment to their advantage. You can already see it in the companies that have fortress-like balance sheets, that are paying dividends, that have the potential to grow their dividends. You can see it in the M&A market. There's leverage that's occurring here for those business models that have been able to kind of manage fairly swimmingly, technical term, swimmingly through this environment. And yet the value side of the equation continues to struggle in a meaningful way. And so our view over the course of the summer shifted to be, wait a minute, this is not just a very short-term phenomenon. We think there's something to this. And so we did tactically shift away from small and mid-cap value in domestic markets specifically because of that.

And when we think about small and mid-value, we're really looking at exposures that span the energy sector, the financial sector, REITs, and even parts of consumer discretionary. And we can talk about all the kind of thesis and rationale behind that, but even where we sit today, even how far the market has rallied, it's really hard to point to a significant positive catalyst to really get any of those sectors, and especially the ones that are sitting in the smaller cap part of the spectrum, going again. We think that all of the stimulus that has come into the system has definitely saved the day. Chair Powell with a superhero cape on absolutely changed the game. Critical. But it also has masked, at least on the fiscal side, it has also masked a lot of the underlying stresses that are only now starting to kind of show up in the system. And so we've seen a few bankruptcies, we've seen some default, but we really haven't seen a meaningful default cycle start up yet. And I think the longer this goes on, and the longer we are not able to get some form of fiscal stimulus going, the tougher slog it's going to be. So we may need to do more there from a positioning standpoint, but believe it or not, we are very comfortable with our exposure in the NASDAQ 100 right now. It's not, let me just clarify, that is not our only exposure, but making that tactical shift there, even where valuations are sitting and even how far that part of the market has rallied. We think there's a lot of opportunity left there. You literally couldn't have played it any better in hindsight, in terms of how you guys have navigated this. I think one of the kind of big, you know, turning points, if you will, of what's transpired over the last six or seven months has been the intervention of the Fed.

And so obviously, we had that kind of two emergency rate cuts that brought us to a zero rate environment. There's now guidance that will stay at that zero rate environment for the foreseeable future. We've had kind of three plus trillion dollars from a quantitative easing standpoint. There's a lot of people calling for more. Maybe it comes, maybe it doesn't. talk just a little bit about kind of the Fed's role in all of this. And really from the light of, I think, kind of maybe, you know, back in March, April, and maybe into May, the debate was like, is it a V recovery, a W recovery, like there's a couple of these letters that were thrown out there. Now, there's a new letter that's being thrown out, which is this kind of K recovery, which is what you're talking about of like, asset owners are seeing a major recovery. And there's this great kind of story around investment going up. At the same time, kind of economic data may be going down, those who don't have investment assets kind of suffering. So how do you just see

the Federal Reserve, their role, and kind of how that may have caused this bifurcated response from the market? Another doozy of a question. Absolutely. So let me start by saying we're not going necessarily with a K-shaped recovery, although to your point, there definitely is a distinction between the companies that will survive and move ahead, get a leg up on their peers and their competition and others that will just cease to exist. So I guess from that perspective and just the existence of businesses, I will give you that shape of recovery. We actually get this question all the time, you know, what letter of the alphabet are we talking about from a market recovery standpoint. And I always joke and say D, none of the above, that we go with a

square root shaped symbol, the math symbol square root shape. And this is the shape of the recovery that we actually coined back in, I think it was April. And the thought was really that, of course, we had seen that record breaking collapse in the market, those three short days of with, you know, a flurry of activity. And then this, again, record-breaking rally to near, if not all-time highs. Where we find ourselves today is really in that long horizontal bar in terms of the square root shape. And I think that's very much indicative from a market, from a 30,000-foot level, where we think we're likely to be at least through the election, if not through the end of the year. You know, this market has really rallied to a place where, at least in terms of the S&P 500,

it's pricing for perfection. So forward PE on the S&P 500 is somewhere in the neighborhood of 22 times with well above longer term averages. And yet the backdrop is anything but perfect. It's one of the most challenging backdrops, certainly in my career, perhaps in my lifetime and many others. And so there is this significant disconnect between where the market is sitting today and what the catalysts are to keep this rally going. Now, this is where the Fed comes into play in a huge way, because for as much as I'm saying I'm struggling to find a positive catalyst to keep this rally going, I'm also struggling to find meaningful negative catalysts where the bottom is literally going to drop out of this market environment. We just don't see it.

We really see this as being much more of a range-bound, kind of choppy, elevated volatility backdrop for a while until one of two things kind of breaks. And one is the election and the outcome of the election, whatever may happen with that. We can certainly talk about that. But the other actually bigger catalyst in our view is what happens with COVID. And so again, we can talk about that a little bit more. But without the Fed's intervention, taking policy rates to zero and basically being the $7 trillion backstop, right, the buyer of last resort, very, very active through a number of programs across most, if not all, fixed income asset classes, we would be in a very different place today. So they changed the game in terms of liquidity. So basically, when

we shut down the global economy, we went into a liquidity drought. Everything froze up in the system. And that was really the catalyst for it. It wasn't that banks were over levered or any of that sort of thing, just the pipes froze up. And so the Fed changed the game in terms of fixing the plumbing and getting things working again. The challenge is that they can only do so much. So they cannot solve these solvency issues that are still lingering around. And that's where the fiscal stimulus story needs to come in. With the Fed's massive intervention and wildly accommodative policy, it has done wonders to calm fixed income markets. So for as much as I'm saying, well, we got a lot of volatility on the equity side of the equation,

and it's going to get bumpier. If you look at the VIX, the fear gauge or the volatility index, it's pretty elevated into the end of this year if you're looking at the futures curve for the VIX and you might say oh well it's just a function of the election no big deal but this year actually the VIX is much more elevated than even in the last two election cycles and so we really do think that it is reflective of the heightened degree of uncertainty ahead not only with the outcome of the election, but whether we'll know what the outcome is on election night, and then certainly COVID and a series of other things there. So while the equity market is really bumpy and chopping around, it's a sense of calm in fixed income markets. We're

seeing volatility there basically near all-time lows. So the Fed has really solved things on the fixed income side from a volatility standpoint. What we're finding is much more challenging now is really price discovery and distinguishing between kind of winners and losers because there's this unlimited backstop. And so, again, Fed changed the game. Superhero Cape and SharePal, what they did in a matter of a week, it took the Bernanke Fed six months or more to do during and post the financial crisis. So totally swooped in there, but it has had really important implications for the path forward for fixed income investors so you know what are you going to do in a zero rate environment where are you going to pick up returns and then like the closer you are

to the zero bound in terms of policy rates just inherently you see more volatility in the interest rate backdrop and so we're entering this weird paradigm weird again technical term we're entering this weird paradigm where fixed income positioning isn't going to do much for you in a growth starved and yield starved world. You're not expecting to see a lot of meaningful returns out of fixed income going forward, not expecting to see a lot of yield either. And if fixed income, which should be the safe haven or the ballast in a portfolio, starts experiencing some outsized volatility, it's it's a real pickle for for investors and so we're watching kind of how things play out there very very carefully and really are kind of rethinking although we haven't made any major

changes yet we are kind of rethinking positioning there really in response to what the fed has done the fed talks a lot about you know trying to get inflation up if not above that two percent long-term target. So they really want inflation to run hot. But if you look at the bond markets, they're just not signaling or flashing signs of yields getting ready to rip higher, more inflation ripping higher either here. And then even when you look at Fed funds futures, so out to say like January of 2022, the market is still effectively pricing some downward pressure. it's really sitting at zero out that far. And on any given day, you could see rates kind of trading into negative territory. So the Fed may want rates to move higher from here longer term,

not in the very short run, but the market is definitely looking in a very different direction. So we'll see how to reconcile that as we go through the next few quarters and years. I could literally talk to you all day because you already know the questions I'm going to ask, which are in a zero rate environment, there's been a ton of people who have come on the podcast and talked about, you know, 6040 global portfolios are dead, because you've got so much exposure to kind of a zero rate or close to it, a lot of kind of negative real rate type return profiles in different asset classes, talk maybe just a little bit like one, is that an overhyped kind of narrative around the 60-40 not being kind of the gold standard anymore? And will that change?

And then two, you started to talk a little bit about inflation, but part of this kind of zero rate environment is really trying to drive that inflation up. And really, is it possible for them to get up above 2% for any kind of persistent amount of time? Well, you know, as the strategist, this whole 60-40 debate is so frustrating, let me tell you. Because like the best game in town literally has been the S&P 500 and the Barclays Act split 60-40. So I am all in on the frustration on the part of the broader investment community of the challenges around this. I'm the first one to admit that diversification, though it may be a very well thought out thesis, has not actually ruled the day for the lion's share of the past cycle and certainly for periods of what we've

experienced this year. I think at the end of the day, you kind of have to look at it from a multi-pronged approach. So the asset allocation story can only get you so far, right? If you have unreasonable expectations in terms of return targets and objectives, 60-40 isn't going to cut even in an ideal or perfect kind of market environment, which is absolutely not where we are today. We've had a 40-year bull market effectively in fixed income and in bonds, right? So we are absolutely at an inflection point. And so I think that really does require us to rethink what kind of a standard kind of balanced asset allocation really should be like going forward. At the same time, I struggle with saying, well, 80-20 is the answer, or even 90-10 or 100% equities, given where valuations are sitting. So it's a very, very challenging time for investors, and especially those that, like on the institutional side in particular, find this very, very challenging because they're trying to support operating budgets.

There's regulatory requirements to spend at a certain level, you know, private foundations have to spend five. When you layer on inflation and an assumption for fees, you're at seven and a half just to barely break even on an expected return basis. And so it is a very, very challenging backdrop, but we do wrestle with this idea of, well, let's ratchet up the equity exposure as an offset. And so a part of what we're kind of working through now is thinking about other more creative ways to perhaps step back from fixed income and consider hedge fund strategies that may have more defensive characteristics or private market investments that, again, can throw off some yield and some cash, but are not kind of subject to the whims of public equity market and pricing volatility to try and gain some of that ballast back. And so there is no silver bullet by any means. The other piece of it that can be helpful at times is thinking about the mix of active and passive strategies in portfolios.

So if all you do is own an ETF in fixed income, you have no shot at beating the benchmark that you're attached to. But if you think about active managers that can provide careful credit analysis and deviate from the benchmark, be very nimble in terms of their exposures, be thoughtful about the sectors and industries, so not backing up the truck in energy, CPE, REITs, et cetera that we talked about earlier, that is another way to potentially add value in a very low return environment. So you really have to come at it from a bunch of different angles.

and at the end of the day set expectations up front because clients can be like oh yeah i want that seven and a half percent return but they may not be able to sleep at night with the bouncing around that that portfolio might take so i hear you i'm all in on it it's very frustrating i don't think that that that is necessarily the right starting point just given all these other factors but I'm not really ready to throw it out either yet. The answer is kind of, it depends on your line of sight and really what you're trying to achieve. That is a completely fair answer, I think.

I want to talk about a couple of more things. Let's start first with the election. I think that everyone is looking at November and saying this has many implications. For this conversation, let's just focus on the financial markets and kind of what can happen there. There will be plenty of people who want to debate tax implications and kind of social implications and all that. We'll leave that for another conversation. But from a financial market

standpoint, one, just historical context wise, do you guys put any weight into, there's plenty of studies that come out and show kind of the 90 days leading into an election, up or down, kind of tells you who's going to win. And then two, how do you look at this election in terms of if either candidate ends up being the winner, like what do you almost anticipate happening in those markets? So yes, we've spent a ton of time looking at this. It's probably the most important topic and outcome and event on all of our clients' minds, whether they're institutions or individuals. I would just say, let me start with some general comments. Markets hate uncertainty. no surprise there. And so historically speaking, markets tend to prefer kind of the certainty

from outcomes that are allegedly pro-growth, or at least pro-business oriented. Or as an alternative, markets prefer gridlock, because it's really the checks and balances that come with a divided government that tend to prevent more extreme and uncertain outcomes. And that really is where we get into a place where the market has trouble assigning value. So back at the beginning of the year, when there was concern around Bernie Sanders or Elizabeth Warren potentially getting the NOM for the Dems, that was a really concerning potential outcome because you had a very, very extreme kind of far left ideological view there. And we think between that and the current administration, gosh, the market was really going to wrestle with how the outcome

was going to impact things. It's all one way or all the other. There was really not likely to be much of a middle ground. With Biden getting the nomination and then Kamala Harris getting the VP nomination, this is a much more moderate approach. And so even when you think about the day that Kamala Harris got the nomination, the market kind of smoothed, another technical term, right? The market yawned. It was almost in a relevant news headline that day. And I think that's really kind of where the market is feeling about kind of the election at this point. It's not so much about Biden or Harris. It's really what happens to the overall makeup. So who's in the White House, but who's in control of the House and the Senate. And so that's really where we have

our eye on the potential for the path forward. It's really the Dem sweep scenario that we think the market will likely struggle with. And there's important implications there for the path forward if that were to occur. In terms of guideposts, you're totally right. There are a lot of different things that can be looked at to try and gauge or game, you know, how the outcome of the election may play out. Polling data has been notoriously bad. That's gotten a lot of press and a lot of discussion. So that's not something that we focus on as a key guidepost, but it's something to be mindful of. So it's kind of swirling around in the backdrop there. We do look at betting odds. So according to predicted.org, that's a key source for us in terms of looking at the betting odds, they're giving Biden about a 60% odds of winning the White House and the Dems about a 58% chance of winning the Senate.

The blue wave or blue sweep kind of scenario is sitting at about 55%. If you think about comparable numbers back in February, it was much lower. So 43% odds for Biden winning, 30% for the Dems winning. The Senate and the sweep, I think, was down in the neighborhood of 20 or 25%, something like that. So big shift in terms of expectation in the betting odds. I think my caveat to that would be it's kind of surprising that it's not even more significant, just given all of what has transpired since February. But if you just looked at the betting odds, that would be signaling a change in control in the White House around the election.

The other thing that we look at very carefully is actually economic data. And in particular, Q2 GDP, real disposable income per capita, and even monthly payrolls have all been really important guides or predictors for what may happen in an election year. I think the key question for us is, will voters actually hold Trump responsible for the disaster that is basically all of these economic indicators and metrics, or are they going to blame COVID or other forces for this and kind of give him a pass? But if you just look purely at the economic data here, just at face value, this would also suggest a change in control. So kind of very unusual. And we'll see kind of how this starts to play out as we move closer to the election. Of course, the market, though, is also a predictor. So, again, you got to look at this from a bunch of different angles. Context and narrative really do matter. And so usually when we're looking at the market and what the market is foreseeing, it's really the three months leading up to the election. And if the market is up, the party in power stays in power. The market is down, likely a change in control.

It really was the only indicator that got the 2016 election correct. And I think that's really interesting and notable. Some people forget that, that, you know, it was assumed that Hillary was going to be a landslide. Well, the market was not suggesting that. The market was down. And really, the market had it correct. So from August 3rd or so forward, if we're assuming November 3rd is election day, the market is down. And so the market indeed is another guidepost that is suggesting a change in control.

Now, I don't want to go on record as saying this is definitely how it's going to play out, but it's a very interesting election cycle where all of these guideposts are telling a similar story, and it's changed very rapidly just in the last few months. If we had talked in July, the market would have been telling a very, very different story. So we're going to have to watch it very, very closely to see how this unfolds. It's definitely going to be a race to the finish. Yeah, what's really interesting about this is this is probably one of the only events where we're going to go to sleep one night, and then we go to sleep the next night, something changed, you know, in terms of where we got a piece of data that can have such kind of diverse outcomes, right, in terms of COVID was, there's maybe a week or two weeks where it got really serious. But again, it was still over a two week period. It wasn't just like one day COVID's not here, next day COVID's here, right? And kind of that type of very sharp market reaction. Binary, yeah, binary. And I think here that definitely happens on an election.

And so from an asset allocation standpoint, do you basically go into the election almost with like, I'll call it like a Trump presidency plan and a Biden presidency plan. And then depending on who wins the election, the directive can change based on who that presidential candidate ends up being. Or do you go into it more with maybe a range and you say, you know, if it's a landslide, then we're going to be on the most extreme end of this. If it's not, maybe we have kind of a more moderate change to asset allocation. Like, how do you just think about that going into such a binary event like this?

So it's a great question. And our clients have been asking this a lot lately, no surprise. And my answer is, we never want to make grand or sweeping portfolio changes around a binary event because it's so easy. And the odds are very high that you're going to be on the wrong side of that outcome. And so our best advice is really to maintain a well-diversified portfolio into, through, around binary events, but take stock of what the exposures are in your portfolio. Be mindful of positioning. And if there's something that you're really concerned about, and I can talk about some of those things, then it may be worth making adjustments, but we're never going to be all one portfolio or all one another, depending on the administration. That is an important component to the path forward for the markets, but it's not the only component. And I would just say

at the end of the day, really, because COVID is still very much alive and well here, it has not faded into the backdrop, even though the data has started to look better over the course of the summer, we're now starting to see a resurgence in Western Europe. And there is the potential for the COVID curves to start hooking higher here in a more sustained way in the U.S. And so at the end of the day, we actually think that is much more critical to the pace and timing of policy changes coming out of Washington than just the election itself. That is, it's a bit of a mixed blessing. I don't know if that's kind of a crazy thing to say when you're in a pandemic, but It will slow down grand and sweeping policy changes. So if we have a change in control, that new administration and whoever is controlling Congress is still going to have their hands full trying to figure out this COVID story, not likely to start slapping, you know, big tax increases in right out of the gate in the new year.

And so we may ultimately get them, right? But it's a little bit of a slower, longer drawn out process in our view. And so I think that will help to calm equity markets in particular, but just public markets in general, if we were to get a change in control. Some of the things that we're thinking about, though, I can talk through. So the biggie if Trump were to stay in control and get reelected is what happens on the trade policy front. If you think back to 2018 and even 2019, every time he put out a tweet talking about trade policy or a change in tariffs or an escalation, whether it be China, Mexico, our trading partners in Europe and so on, the market freaked out. And yes, that is a technical term. I mean, the market just hated the stance that he was taking around trade policy. For better or worse, that has faded largely into the backdrop. So we got a handshake agreement, if you will, pre-COVID at the end of 2019. That was a very welcome sigh of relief that that effectively was now in the rearview mirror

and the market could chart a path higher. But we're starting to see that rhetoric pick up again. And so to the extent that he gets reelected, we think that will be a key focal point. And he will take a much harder line stance. And I think that will be something that the market is going to have to wrestle with for a while yet. We might see more tariffs. We might see more blocking of deals. I mean, the list could go on and on, depending on what he decides to do. But that will inject a pretty significant amount of uncertainty. And I don't think it's really getting the attention that it deserves in the media, in the press, and really in the markets. That's a real significant headwind.

And I would say from a portfolio positioning standpoint, it would be a big negative for emerging markets. We do have exposure to emerging markets. We continue to like emerging markets. We think it's one of the most, if not most, attractive equity asset classes across the globe. They've handled COVID on a relatively better basis. I'm not talking China necessarily. Just all of emerging markets has done a collectively better job.

So they've entered it and exited first. They've seen a second wave. It's been very mild. They've been able to control it. Earnings growth has held up much better than every other part of the world. and we're seeing actually a really significant acceleration projected for earnings growth in 2021. So fell less far and a much more significant acceleration. And then the valuation story for emerging markets is really attractive. It's not quite half of what the S&P 500 is trading at,

but a very significant discount. And so for all those reasons, we're actually very comfortable with emerging market positioning. But to the extent that that trade story started to rear its ugly head again, it could be a very significant headwind for our emerging market allocations. On the Democrat side, the biggest taxes. At the end of the day, that is the thing that we're most concerned about with a Biden win and a Dem sweep in particular. We've done some back of the envelope calculations based on what he has proposed so far. Corporate rates going back to 28% from the 21% that they are at right now. We think that could knock off somewhere in the neighborhood of 11% or 12% of earnings growth in 2021. So when you think about the next 12

months earnings growth, we're only looking at about 1% or 2%. The lion's share of the pickup and acceleration in earnings growth is in the second half of 2021. It's kind of a Hail Mary into the end of the year. And so if he were to institute tax increases of this magnitude very early in the year, boy, that is a big headwind for earnings growth that is next to none, right, at one or 2%. And so as goes the path of earnings, so goes the markets. That's a mantra that we say over and over again. And so it's not our base case, again, because we think the COVID story will trump, pun intended, the tax hike story there. But it is something that we're watching very closely. A small offset to that could be Biden's softer stance around trade policy with

China. He has kicked around the idea of rolling back China tariffs. And so if that were to occur, that might get us back another 5% or 6%. But it's still a significant net negative and a headwind to multinational earnings at a time where it's still very, very fragile in the backdrop. And then in terms of sectors, a couple of usual suspects. I don't know that there's anything here really revolutionary. The big one that's been talked about a lot is really big tech, likely to be under scrutiny regardless of who wins. You know, the winners are always having the targets on their backs, right? And so at the end of the day, what is the regulatory backdrop going to look like for mega cap tech and Silicon Valley? We think it's probably more noise than

news, but it's definitely something we are keeping our eye on. Healthcare, obviously in the midst of a pandemic, but in any election cycle, health care is always in the crosshairs. And so looking at rising costs, looking at drug price reforms, expansion of uninsured coverage, the list goes on and on. And so it's a headwind regardless of who wins the election in our view. And so continue to watch health care very, very closely. And then the energy story, another doozy. And it really depends on your point of view as to whether it's a winner or a loser. So very, very different kind of bifurcated outcomes depending on who wins. Clearly, regulations and restrictions have come down very significantly under the current administration. but Biden supports the new the green new deal he supports ending oil and gas drilling on federal lands he supports a recommitment to the Paris agreement on climate change and so for our ESG

oriented investors our responsible investing clients that is a really important and strong positive and so it really kind of depends on your line of sight and your point of view as to how that may play out in a portfolio context. So again, positioning and exposures definitely matter there. So I want to throw out one scenario, which is down the fairway or kind of down the middle of the two scenarios you just described, which is if we go into the election with eight Supreme Court justices, and there is this kind of election result that is called into question by either side, or even maybe both sides, it feels like there's this underpinning of that is a possibility, maybe not probable, but a possibility with mail-in voting and all that kind of stuff.

And we end up in a situation where there's like a locked Supreme Court ruling. What happens? And obviously, I don't think that's ever occurred before. So it's kind of, we don't know is probably the answer, which is how do you think through what would end up being probably the most uncertain of all potential outcomes here and how the market would react to something like that? Well, you're right. The answer is, I don't know. And from a legislative and kind of rules-based of law kind of argument, I don't have a technical answer for you. My intuition around it would be that the market would trade off, maybe not overnight and maybe not to a kind of record rating correction level that what we saw earlier in the year, again, with all the stimulus sitting

in the system, that is going to provide some underlying level of support that wasn't there when COVID kicked off. But I do think that the market will struggle mightily with that uncertainty. At the end of the day, what matters the most is does it impact the outcome, impact the trajectory of earnings growth? Does it impact the trajectory of economic growth? Does it impact the trajectory of monetary policy? Will all of those things suddenly fundamentally crack overnight or in the days or weeks following a lack of outcome as it relates to the election? I don't think so. So corrections are natural. This is not a satisfying answer, but corrections are natural and healthy normal market functioning behavior. We had a bit of a correction coming into September

here. I think I welcomed it after the exhaustion that was the rally off the bottom in April. And I think we very well could see that again, just given where positioning is in sort of the hedging and trading kind of world and where volatility and the fear gauge is sitting. I think it's very likely that we could see a correction. But at the end of the day, I think it would be more of a technical one and short-lived, as long as the fundamental backdrop kind of stayed intact based on where we are today. That really is what would drive a more meaningful correction, in my view. If we started to see the wheels come off, earnings growth, or even Q4 earnings season, which would kick off in early January, and guidance slashed or cut in a very significant way, those are the

things that I would start to worry about. It's not so much the election itself. It's kind of all these things down the line. All right. We're now at the most important part of the conversation, which is Bitcoin. I want to caveat this entire part of the conversation with you manage by proxy a lot of money, about $150 billion in assets. Maybe just talk a little bit about first what work you guys have done on Bitcoin? Have you looked at it? What some of the structural issues are with if you actually did want to go get exposure to it? And then we can kind of talk through just kind of how you guys look at an asset that is in the finance markets, very new, very different, kind of just your thought process and the work you guys have done

around Bitcoin specifically. Sure. Well, I'm just going to kind of jump in here. And again, And you guide me wherever you'd like to take it. I don't want to get too far into the technical weeds on this, but I'll give you my 30,000 foot kind of strategist view. We really started paying attention to what was happening in the crypto world back in 2017. And then really after that massive rally in terms of pricing and the crash, you know, the idea that it just didn't go away, right, that it didn't just vaporize it.

after that crash from an all-time high. It really has been on the radar ever since then, trying to get an understanding of what is going on here and what is the potential path forward. I'll give you some thoughts about how we think about it today, again, from an asset allocation standpoint and from a strategy point of view. So we think about cryptocurrencies as effectively a digital currency. But the challenge with that from our perspective is that we don't trade currencies. That is not really an asset class in our view. It's not that we don't have hedged exposures to currency. So a good example of this is we found an active manager, a third-party strategy that invests in global infrastructure. And part of their thesis is hedging around

some currency exposures depending on the country. And so it was just the right exposure that we were looking for. And even though the hedging part of it is really not something that is in keeping with how we think about the world, we've offloaded that to them to do. So if they think they can add value there or at least provide balance in a hedging currency approach, we're okay with pursuing that strategy. So that's point one. The other aspect of this is if we really wanted to express a very nuanced view. So if we thought a currency, as a primarily U.S.-based investor, if we thought a currency in a particular region or country was going to go against us, but we really thought there was an attractive investment opportunity there, we might think

about putting a tactical allocation in place with a hedging component to it. But in general, we are not active currency traders. And I think to do this right and to do this efficiently and have any shot at adding value, you really do have to be very active in terms of trading. So that's kind of key point one. The other point of it is if you think about cryptocurrency as more of a store of value, then we would equate that as being more like digital gold. And at the end of the day, why would you own gold? It's really for inflation hedging purposes. And so at the end of the day, based on our analysis, we actually think the better inflation hedge over longer horizons is equities, and in particular, dividend paying equities. So not the high yielders,

but those that have that ability to grow dividends over time. And so it's not quite the right fit at the moment, depending on how you define it in terms of our asset class universe. And so that has been a little bit of a challenge in terms of thinking about how it fits into a portfolio and what its role might actually be. I know you talked to Kramer not that long ago about having, well, why don't you just throw a 1% allocation into a portfolio? No big deal, right? 1%. But if you think about the size of our asset base, we're somewhere in the neighbor of $150 billion in assets under management. So that moves around as the market moves around. But we effectively become Bitcoin whales if we took 1% of that asset base and plunked it into cryptocurrencies of sorts.

And Bitcoin, I think the market cap there would equate to somewhere in the neighborhood of the size of a stock like AT&T. So it would effectively be saying, let's make an allocation to one security. Let's buy 1% in every single client's portfolio AT&T. Even if we thought the investment thesis made sense, and this is, by the way, not a knock on AT&T at all. This is just a hypothetical example. It's just really too small at this stage to try to incorporate it into a portfolio in an efficient way and then in a meaningful way. 1% of anything doesn't really move the needle for better or worse. And so we tend to try to take larger positions and portfolios, whatever exposure we're trying to gain access to, then just kind of 1%. So that's sort of how

we think about that. I think the area that's really interesting, just fascinating to me, is the technology underpinning cryptocurrency. And it's really the blockchain technology. I think if that led to some scalable uses, we would absolutely pursue those opportunities from an investment standpoint, but just trading, you know, like DeFi tokens or day-to-day trading, you know, Bitcoin, that's just really, it's not an area that, you know, we're playing in from an asset allocation and investment strategy standpoint. point. I think longer term, I'm all in on the idea. So I'm a big fan. I'm watching from afar, but I'm definitely a big fan here. I think it will continue to gain traction. Again, as people start to come around to the idea of, is it a usable currency? Is it a store of value? What kind of role? How do we define it? Where does it sit in a portfolio context? I know traders love it today for its uncorrelated asset-like nature.

I'm all for uncorrelated assets as well. But again, there's still some hurdles that we need to overcome here. And then I think too, it's still just a very, very new world and new asset. And I think there is some inherent distrust, like it or not, there is a little bit of a stigma to overcome there.

But I think really the blockchain technology could be the platform of innovation for the future, Not only for like this next cycle, but the next multiple cycles. And if you think about pre-COVID, that long, slow, sluggish cycle that we've been through the last 11 plus years, there's been an innovation drought. There have been pockets of innovation, but it really hasn't been grand and sweeping enough to drive meaningful productivity enhancements and GDP growth. And so I think the prospects for this are just really, really interesting. So much potential here, but it's still very, very early days. So we're going to keep watching it very closely. And maybe I can come back on the show and talk to you about when and how we start to implement it in portfolios. So, one, I think that everything you just said is really, really rational, right? And I think that there's this thought process in the Bitcoin slash crypto community of everyone's asleep at the wheel, no one's paying attention, like, you know, the large asset management firms are completely missing this. And just given the thoughts you've shared here, obviously, you guys have, one, been paying attention for multiple years, two, have a pretty good understanding of the various narratives around the asset, and then three, even have gone as far as like, well, even if we could get there as to, yes, this asset makes sense for whatever reason, like, could we do it, right, from an execution standpoint? And I think every single thing you outline, not only is one rational, but makes sense and is challenges you guys face. My favorite question to ask people, though, is what would change your mind? Or what are the things that you're going to look for in the future in terms of saying, you know what, now may be the time where we think this becomes more interesting?

Is it price related? Is it structure and regulation related? Is it macro economy? Something shifts and then something like this becomes more interesting. But just how do you think through maybe things you'll watch as this unfolds? And really, the thought process is for those people that are listening, you know, they're probably more insular looking, like they're looking at Bitcoin, not necessarily looking at here's the things that major asset management firms or asset allocators are looking at as kind of, you know, warning signs or alarm bells or whatever in terms of bringing more attention to it. Yeah, I think it's just a few short things really that I'm looking for, but maybe it's asking way too much. I mean, I think structure is definitely important and kind of getting an understanding of maybe perhaps which cryptocurrency is going to win out. There's so many different ones, seeing a little bit of consolidation there and just like a better understanding of what the landscape or the competitive landscape is going to look like. So I think I think structure is important. I think time just helps. right? This has only really been on the scene for maybe 10 or 11 years, maybe. And so I think that, you know, time and education and hand-holding, albeit virtual, I think would definitely help.

A better understanding of use cases is also critical. So if I think about, you know, the U.S. today, what are those use cases? You know, it makes a ton of sense in other countries where perhaps there's a lot more distrust around government power, political power, regulatory oversight, et cetera. Totally get that. And let me just say the crisis of confidence that we experienced at the beginning of this year from, you know, government policy officials, public health policy officials, even, you know, the Fed. I mean, there was so much mixed messaging going on, like who's in charge and, you know, what is the path forward going to look like and who makes the final decision?

I mean, I totally get it. That's maybe kind of a weak example, but I understand sort of the inherent distrust and wanting to kind of step away from, you know, the U.S. dollar or perhaps other kind of global currencies. And so I don't think that we're necessarily expecting to see greater regulation in this area. We'd be kind of at odds, right? a little bit with the whole idea of cryptocurrency. So that's not necessarily it, but I think it's

more on the structure of the industry side, consolidation, use cases, and then really vehicles to implement more on the innovation side, right? Not just trading the currencies themselves, but, you know, is there a venture capital fund or are there multiple venture capital funds or private investment type of vehicles that are capturing early stage blockchain-oriented technologies, investments, innovations, that kind of thing. I think there's a huge opportunity there. There's just not a lot to choose from today. And so again, I think it comes back to it's just still a little bit early. We need to see a little bit more growth and expansion of the use cases and the opportunities there. And then I think asset managers will start

to come around. I think that is a very fair view of the world. And I do not envy you having the conversation internally about, hey, do you guys want to look at this Bitcoin thing? Because I can only imagine the various reactions that you get internally. There are a lot of different reactions. It's the wide spectrum of emotions and opinions and feelings about it. Absolutely. But that's the reason why we're having the conversation, right? If we were all thinking along the exact same lines, something's wrong. And so it is definitely a lively and very recurring debate that continues and will continue. I don't know who they are, but it sounds like there's Bitcoiners who have infiltrated the

office. So we'll see how it plays out. I'm not naming names. before we get into the rapid fire questions to wrap up, where can people find you on the internet or find out more with the work that you guys are pushing in terms of the market outlooks and just the content that you guys continue to produce? Well, there are a number of things that show up on pnc.com. So that is a good starting point, certainly for a number of the formal publications that we put out. You can also find me on Twitter. My handle is Amanda Agati PNC. And so I try my

best to share as many publications as I can for that channel. And also the insanity that is my mind and reaction to, you know, whatever the news of the day might be. You might also find a panda video or two. It's a little bit of a mishmash of everything, but that's also a good way to kind of track what our views of the world are and what's really top of mind for me and the investment and strategy team on any given day. Panda videos are welcome. No, no, no qualms there at all. You gotta love a panda video, right? Of course. I asked the same two questions to everybody to wrap up and then you'll get to ask me one. The first is what is the most important book that you've ever read? Oh, that is a good one. I would say the most important book, well,

there are probably two, but if I had to pick one, I would go with Andy Lowe's Adaptive Markets, which is actually a more recent read. It's not from eons ago. And I think what resonates the most with me about that is this really inherently dynamic, complex, adaptive system that is the markets. It's really an organism that's kind of living and breathing and continuously learning and continuously improving. And so that's really something that I have taken away and tried to apply in the context of investment strategy and how we think about the shorter term as well as the longer term, that continuous improvement, dynamic, be nimble. You may have made decisions about things like cryptocurrency in the past, but things evolve and in fairly dramatic fashion,

especially given all the issues that are swirling around in the macro backdrop. And so you got to try and get out ahead of it because the market is going to continually adapt and think about things in a very complex sort of way. And so it also injects a little bit of psychology, behavioral finance into the equation as well. And I thought it was a really impactful book that I highly recommend. That's an awesome suggestion. No one's recommended that one. Second question is more fun. Aliens, are you a believer or a non-believer? oh that is a good question no one has ever asked me that before uh i'm gonna say i'm a believer sure why not why should why should there only be life existing on this earth um the universe is uh

you know totally expansive right unending surely there has to be other life forms in some way shape or form out there. So in a former life, I wanted to be an astronomer. So that's actually kind of an interesting segue. If I wasn't a strategist, I'd be an astronomer. I don't know why. Some may say those two things are quite similar. I guess maybe they are a little bit. I don't know if I kind of intentionally thought of it that way, but you're really pulling on my astronomer and studying of the stars and the universe and meaning of existence kind of, uh, vibe. So I'm going to say, yes, absolutely. Life exists out there. I agree with you. I think there's somewhere, I don't know if we're going to find them or if

they're going to find us, but, uh, but they're there somewhere. It's going to take a while. Maybe that blockchain technology. You could ask me one question to wrap up. What do you have for me? Oh, that is a good one. Um, let's see. Did I, I guess my question to you would be, demystified anything or shared anything with you that you might have kind of thought a stigma about or felt differently about that made you stop and kind of think twice about? I think one of the misconceptions, especially given the seat that you sit in, is this one size fits all, right? And it's just like, oh, let's go 60-40. Yes, no. Or what about public versus private? Or is there a passive bubble or whatever? And these questions get asked in a way of, and I'm as guilty as anybody because

they're funded debate in terms of just everyone wants an answer. What is the answer? And I think what you really highlighted earlier and is a challenge of your job is you're serving different customers. So that big foundation or that big institution has very different goals, very different objectives, very different resources, has different time horizons than maybe an individual who has kind of saved some money and is trying to grow their wealth, but doesn't have the same kind of infrastructure and things that maybe an institution has. And so to me, it's one of these things where it's hard enough to manage a portfolio when you just have one set of goals and objectives and kind of have to think through

what are the resources I have and what's my time horizon. When you then multiply that across, you know, all the way from a large institution to a single individual, like I do not envy the kind of duplicitous nature of having to do that over and over and over again, but come to a different conclusion each time.

Because I think it kind of challenges maybe the beliefs that you hold, right? And you've got to be able to context switch, which I don't think people have an appreciation for that. like most people struggle to manage their own portfolio. Well, what if you had to do, you know, 10 different types of clients portfolio. And so I think that just, you know, really comes through as an added challenge to what is already a pretty difficult job of just managing a portfolio. That's great. Well, I'm, I'm glad that helped clarify a little bit on that front. Can I ask

you one other question? Of course. What's your spirit animal? Ooh, spirit animal. Um, man just like 10 animals went through my head i don't know if that's good or bad um i kind of think that like something like a cockroach or something like that uh mainly just because it's like uh whether when you're building a business when you're doing kind of content stuff even when you're investing in businesses like the first goal is just don't die right like if you just survive like there's got to be some value that accrues um and so if you think of just like all the animals in the world that maybe aren't deemed uh tough or uh very predatory but still somehow like they just never go away um i tend to think that like that's a pretty good strategy

in life of like you know it's kind of like investing right like just don't lose all the money like rule number one and so if you can stay in the game for a long period of time you got a shot at at least growing it somehow no what's yours i'm going panda oh that's why hence the panda videos. When I think about a panda, it's a little bit like I'm a female in a largely male dominated industry. Pandas are somewhat rare, right? If not endangered in the wild. So there's a little bit of a connection there. And then I would also kind of say it's a little bit of a poke the bear or don't poke the bear kind of thing. I can be very warm and fuzzy and cuddly, but at the same time, like, don't poke the bear.

So that's kind of what resonated. And then of course, you know, get the usual Amanda Panda thing growing up. So yeah, that's- That's an awesome answer. I think that's what resonates most with me. I love that. All right, Amanda, listen,

thank you so much for doing this. I think people are really, really gonna enjoy this one. And when you end up actually getting allocation to Bitcoin, even if it's 20 years from now, we're going to come back and we're going to do this. So thanks so much for doing it. We'll do it again in the future. Awesome. It was so great chatting with you. Thank you so much.