Hello, and welcome to the Life By Design podcast, brought to you by Strategic. This podcast is all about helping you live your great life.

Each episode will feature insights from our Chief Investment Officer, Doug Walters. Hello, and welcome back to Life By Design podcast again.

Doug Walters is joining me. Hello, Doug.

Hello, Jay. And, uh, we're going to do our weekly insights at the top here, and then we are gonna talk about the art of doing nothing today.

of my favorite topics. Perfect.

Yeah, so are my cats too. Uh Yeah.

So, uh, yeah, let's start with the, our kind of like, the week so far, and, and what we're looking at ahead. Yeah.

Yeah, so it's an interesting week if we look back over the last 7 days, because I've been saying probably on just about every one of these podcasts, there's 3 things that seem to matter right now, tariffs, the Fed, and inflation. Mm-hmm.

And we had a bit of all 3 of those in the last week. So, last week, we had the Fed, who had left rates on hold, kind of a non-event.

It was what was expected. However, over the weekend and on Monday, the tariff announcements were out that, you know, were gonna put tariffs on hold with China for 90 days.

That was a big market moment. Hm.

Big market rally on Monday. Today, in the morning, we had CPI inflation data, which came in a little bit more benign than expected.

So, kind of the trifecta of data coming in, but the big one that really moved the markets, of course, was the tariffs. Hm.

It's what the market has been pinning most of its price movements on the last, uh, few weeks. And it's, you know, and I, again, I know, uh, we have talked about this, I think every podcast, uh, for the last several weeks- Mm-hmm.

least for, for a moment of it. And, you know, I think this is, w- leads into our next topic, which is, is the art of doing nothing, which, you know, we need to be able to zoom out from these moments and from the, the relentless news coverage of these moments, and ups and downs, like that's what the market does day-to-day.

Right. secondtosecond ups and downs.

And, you know, we, I know I've heard it here a lot, but just encouraging folks to pull themselves maybe a little bit higher into like the 10,000-mile view of, of this, over years, or 5 years, 10 years, and like, looking at the market that way. Yeah.

Yeah, it, it is It's one thing to say that these tariff discussions are driving the market. It is another to be, to say, you know, somehow I know where these discussions are going to go.

You just don't. Eh, you can see how big of an impact they have.

Yeah. But it's just not something that's in our control.

Within our portfolios, we need to control what we can. We need to pre- be prepared for moments like this, but we can't predict them.

Hm. We had some good news on tariffs this week.

It could be bad news next week. We just don't know.

Yeah. So we wanna be ready for, for all of those moments.

And I think it's, it's great, and it kind of leads to our next topic- Yeah. Doug, which is the art of doing nothing.

Yes. And that's where we cut the podcast.

No, uh Yeah. But, um, so kind of explain maybe a little of the background of this idea for you, and, and, you know, where it comes from, and, and why you're thinking about this right now.

Right. And I do I wanna distinguish it from being patient to some degree.

It's related, right? Okay.

Being patient in these moments, letting the market do what it's going to do, control what you can. But there's a difference between being patient and doing nothing.

So, that's kind of like what I'd, I'd like to touch on today. Okay.

And this idea came to me as I was sitting, uh, I was at the CFA Live conference in Chicago this past week, which, um, for those of you that don't know, CFA stands for Chartered Financial Analyst. It's kind of the pinnacle of designation for us financial individuals, and this was a conference where we all get together and talk about topics of the day.

Hm. And there was one of the presenters, uh, up there, he was talking about his investment process, analysis process, and he said, "The hardest thing is you spend all day, all week, several weeks analyzing the market, diving into the economics, looking all, at all this data, trying to take what you're talking about, all those moving parts, and distill it into an opinion.

And more often than not, the conclusion is, the best thing to do is nothing." Hm. And that is very hard.

Mm. And it's hard because of what we've talked about in the past- Yeah.

you know, action bias, story of the goalies that always have to jump, you know, side-to-side. So, it is, um, it f- always feels like, you know, we should be doing something, but more often than not, uh, the reality is, we should not.

And that's what I'm trying to- Hm. sort of put out in insights this week.

Yeah, and, uh, b- I'm trying to think of a, like an example that doesn't get too deep into the waters. But it would be, uh, you know, if the, if a certain stock that you're in is going down that, a little bit, that maybe it's, uh, you may wanna just wait and see what it 'Cause it could rebound based on other news or something else like that.

Like, is that kind of like a weird example, I guess, but not- Yeah. I'm trying to equate it to something like- it's not, it's not a weird example at all.

Yeah. A stock has to move a lot for it to be a moment.

Mm-hmm. For it to be an actionable moment where you can say, "Something has really dislocated here." Okay.

And we wanna take advantage of that. Either, all right, we totally got this wrong.

We need to cut - Yeah. cut ties here.

Or, there is an opportunity. This stock has fallen, you know, 30% on news that, you know, we feel like was already out there- Hm.

the investment thesis hasn't changed. The stock is now 30% cheaper.

So yes, you need to be on top of it, analyzing the data, understanding what's driving the markets, watching the moves. But not taking that action, you know- Right.

having the discipline not to take action too soon. Yeah, and so it's funny, before we started recording, I was just, like, racking my brain to come up with an analogy that, so that I could understand this a little bit better and I think I got it.

Okay. And I'm gonna do it live and we're gonna see if it works.

But it just struck me as you said that, that like, like I'm thinking about with my kids, right? Like, if they sneeze, it doesn't necessarily mean they have a cold or that they're sick or that there's something else wrong.

It could just be that they just sneezed. Right.

And I don't need to start loading them with medicine or taking them to the doctor or doing something drastic. Right.

I can just be patient. Yes.

And I can wait and see what happens. Right.

See if they sneeze again or if they have a temperature or what s- the other ailments that would then line up with them having a cold, but in reality, I have to be patient and do nothing until some more symptoms arrive. Yes.

Right. Yeah, and- and when we talk about doing nothing, we're talking about the specific action of changing something, right?

Hm. So you were clearly doing something, you were going to watch their temperature, you were going to- Yeah.

you know, you're gonna take in all of the data, and it's when that data tells you, "Oh, yes, I need to go, you know, we need to take this child to the doctor now." Oh, yeah. That's the action, but until then, the bright move is no action.

Yeah. And again, most of the time, you know, and a good analogy because most of the time your kids are not sick hopefully.

Right, right. Um, and then so, you know, you were just monitoring, but not doing anything.

You know, when we see headlines with the market moving, there is a sense that, you know, something needs to be done. Mm-hmm.

And, you know, oftentime I think we have very good open communication with our client base. They're well-educated, they understand, you know, generally that if markets are falling, that tends to be an opportunity to buy as opposed to sell.

So, more often than not, we're having to have those conversations that, you know, a decline of 5%, a decline of 10% isn't one of these moments. Hm.

A 10% decline seems like a lot, but you're likely looking at a market that had generally been going up- Yeah. yeah, let's take our, you know, 2024 as our example.

We come into this year and we get that 10% sell off. For some, I'm sure it felt like a moment.

"Oh-" Yeah. " yeah, should we be taking advantage of this?" You know, that's just normal volatility.

We're looking at the data. That is not that moment you're looking for.

Maybe we were, you know, maybe the market had s- sort of over, uh, you know, had overshot on the upside a little bit and it's just paring that back. Recalibrating.

Yeah. Right.

Then it start- you know, then it came down another 10%. We saw that, you know, 20% decline.

That's probably more around the time you're thinking, "All right. Maybe there's an opportunity here." is an opportunity here." It wasn't thinking, you know, specifically to this year.

Yeah. It wasn't a huge opportunity again because the market had, uh, risen so much- Mm-hmm.

in the previous 2 years. We were coming from a moment of like a very expensive market.

Mm-hmm. But 20% down is a decent decline and certainly our rebalancing was gonna wanna take advantage of some of those cheaper assets.

So in, and I know we've kind of talked about this before, but i-it's interesting, uh, 'cause the more I think about it, the more we talk about it, right? We always talk about the market as like this nebulous creature- Yeah.

of its own, right? Like but in reality, it's folks like our listeners, it's, it's folks like you and I who, who are getting the same, just about the same news- Right.

and information and reacting to it. Or, um, in some of the cases whe- like where you say, "Oh, it was built into the market already," that means that maybe they saw it coming down or like news of it w- that, "Oh, hey, in the next 60 days, we're gonna look at tariffs," as an example.

Well, that gets built into the market because they're already thinking about that 60 days ahead. Is that So, so I just was thinking about like this is just, it's just people.

Yes. Like reacting to the news of the day or the news of the month or week and then a- acting on it.

Right. Yeah, it's a, you know, that is a great point.

And it, it is I do have to catch myself. Writing insights, talking about the market.

We are talking about investors. We are talking about people and this may not have been where you expected this conversation- That's okay, yeah.

Yeah. Mm-hmm.

And then there are those that believe that, yes, but So there are 2 trains of thought. You know, we tend to lean more towards that space where there are behavioral biases and we do see the market overshoot and undershoot and we wanna take advantage of those opportunities.

Yeah, and it's just, um, yeah, it's ju- it's interesting to think about it sometimes because I, I just Yeah, it's just a bunch of people making decisions. Yeah.

Mm-hmm, right. Moving things in different directions, right?

And like to bring it back to that podcast couple, uh, couple podcasts ago with the like collectibles, right? And driving up the price and going, "It's worth $2,000" you know?

Yeah. So Yes.

And you think about cryptocurrency. As soon as they stop, then it's worth nothing.

The difference with, say, cryptocurrency and investments where you are investing in a company- Mm-hmm. you know, stocks.

You are investing in future cash flow. Right?

In the end, investors are con- constantly and consistently trying to determine at the company level what is their future cash flow- Yeah. And that is, you know, the difference between, you know, stocks and bonds and certainly cryptocurrency and perhaps your, you know, Star Wars figures.

Yeah. I don't think they're producing, uh- Right.

shooting off, you know dividends. So, so I guess that for, for like stocks and bonds it'd b- it'd be more of thinking of it like um, a, a player for any type of sports, right, like a baseball player, right?

So when a team wants to sign a player for a contract, they're signing the contract based on future, what they think that player's potential future is going to be. Right.

Uh- Yes. That just, I was just thinking about that.

So it's like, okay, so we know this company has done this to this date. We know that they have, um, you know, a pipeline coming of all these cool, let's say technologies, if we're gonna use a technology company.

So we think they'll be worth this in the future, so we wanna invest in that to be part of that growth. Right.

When you get an announ- an announcement like, you know, tariffs are on hold for the next 90 days, why did the market jump up? You know, that those tariffs are gonna continue to be, uh, lightened from where we were- Right.

last week. It's all about future corporate cash flow when it comes to stocks, yeah.

Yeah. Yeah, it is, y- you know, there is a lot of action happening behind the scenes.

And often, that leads to decision, "Yeah, we're- we're good right where we are." Hmm. Right?

levers than, you know, a 90-day pause in tariffs. And so we're- we need to see something much larger than that to, to decide that, yes, there is an action that needs to be taken and it's related to patience.

Historically, we've talked about patience just being, you know, tuning out the noise and avoiding headlines and just sticking the course with your investment process. Here, I'm talking about, like, actual decisions within the portfolio that requires patience as, as well and it requires, um, and often means we're not taking action week to week.

I like that. Yeah.

All right. Well, thanks, Doug.

Really appreciate it.