Episode Transcript
[00:00:00] Speaker A: Foreign.
[00:00:11] Speaker B: Welcome to Wealth Intelligence with Dominic d'. Andrea. I'm Dominic d' Andrea and today I'm bringing you a guest who lives where markets, data and real world decision makings collide. Joining me is Gene Goldman, CFA Chief Investment Officer at Zotero Financial Group, where he leads strategic direction of the firm's research and investment guidance. He spent more than three decades building investment strategies, overseeing analysts and translating market complexity into usable clarity. And you've probably seen his commentary across major outlets like the Wall Street Journal, Bloomberg and cnbc. Gene, welcome.
Let's set the foundation before we go into 2026 in in a market cycle where narratives can whip investors panic to euphoria, I'm using this first segment to establish Gene's decision making framework. How he defines risk, how he stays grounded when headlines spike, and how a CEO thinks about investor behavior when expectations run high.
When I look back across your 33 plus years in the markets, what's the biggest upgrade in how you define risk today compared to early in your career?
[00:01:36] Speaker A: First of all, thank you, Dominic. Thank you for having me on your show.
33 years, that's a long time. So anyway, whenever I hear that, I'm always surprised. Anyways, great question. So, you know, early on in my career when I started, I thought risk was just volatility. Now I know volatility is just the price of admission. Real risk is really permanent loss, whether it's from poor fundamentals, lack of diversification, hidden correlations, liquidity, shocks, or just emotional decision making during stress. So over my 33 years, my definition of risk has broadened from what the market does to how portfolios and investors behave when conditions change. And that's so very important.
[00:02:18] Speaker B: Great answer. Thank you very much. Gene, when I'm hearing 10 different market storylines in the same week, what's your personal filter for deciding what actually matters?
[00:02:31] Speaker A: Just 10. That's a quiet week. Anyways, for me, I filter.
For me, I filter market narratives by asking whether they change the overall fundamentals, the broader macro regime or investor behavior and over what time frame.
Keep this in mind. Most stories fade quickly, but the ones that persist are the ones that actually influence earnings, policy or even portfolio positioning.
[00:02:59] Speaker B: Great answer. Thank you very much. Gene, you've been a regular on major business networks. What's the hardest part of staying both precise and and useful when the audience wants a quick answer?
[00:03:12] Speaker A: Yeah, it's thank you. And I probably go on TV about every couple of weeks and you know, first of all, there's good parts and bad parts. The good parts is that I live in California and my mother lives in Massachusetts. So she gets to see me every couple of weeks. And you know, we have this bond via video, real life video. But the bad part about being on TV is that my mom lives in Massachusetts and I live in California. So every two weeks she calls me. She's like, gene, you're losing your hair. Gene, are you eating enough vegetables? Jean, I don't like your tie. Gene, you should stop slouching like I'm doing right now. But anyways, going back to your question, you know, you have to think about when you're in tv, you want sound bites that are very clear, very concise, and at the end of the day, something very memorable. I'm a big believer in numeric framing. The three things that drive in the markets. Three things, why risk is increasing. Three things, whatever. But numeric framing is such an important way to take tons of information and just make it clear and concise. The other thing to think about what you want to do is have a, have a statement like, I'll make this up. Let's just say, for example, you know, I like crypto. Then I might start by saying cryptocurrency is the best investment going forward. And here are the three reasons. So something that gets the attention of the media and gets attention to the audience. What you also have to be careful about is that you have to be careful about what you say. So let me give you an example. Back in 2020, actually, sorry, excuse me. Back in 2019, so it was a year before COVID I made a statement on TV and I said, based on the data we see now, a recession is probable in 2020. Of course, I didn't know about COVID and about the COVID led recession. But to me, if I go back to 2019, you can look at the economy is slowing, inflation was still elevated and the Fed was raising rates. And in a slowing economy, to me that was a recipe for a Fed mistake. But what I learned is that, you know, you can make these definitive statements, but a lot of times you have to make sure that you're not being too aggressive or too conservative. You know, what you don't want is, is a, let's say a lawyer coming down to, to you, Dominic, and saying, hey, back in 2019, your CIO said a recession was coming, although you went conservative and you reduced your aggressive growth clients from 100% stocks to, to say 95% cash.
They're going to look at the video and say, well, you should have gotten 100%. So what I've learned is that you have to be very careful about what you say on TV because things can be construed the wrong way. So again, be clear, be concise, and say something memorable, but be very careful about what you say.
[00:05:47] Speaker B: And I got just to go on to that real quick because that was a great answer.
I got to believe that you try to also have more facts than opinions in your, in your commentary.
[00:05:59] Speaker A: Yes, if possible. I mean, yeah, definitely. For me, my. So my personality is that I'm really good at facts. I'm really good with numbers. I'm really good with just things that have happened. I'm terrible with names and faces. I'm so bad at that. But facts, I'm really good. I can remember numbers. I see numbers in my head. I can, I can relay numbers. I can relay what CPI came out late last, all the numbers. So you have to be very, very focused on, on adding a lot of facts. But of course, you have to add your opinion. What do the facts mean towards the investment decision?
[00:06:29] Speaker B: Great answer. Thank you very much.
Gene, what's one mistake you see smart investors make when they confuse being informed with being positioned?
[00:06:40] Speaker A: Being informed versus being positioned. That's very great, great question. So smart investors sometimes mistake awareness for action. So they mistake being informed as action.
You know, they understand every scenario, but they haven't made the hard decision around how do you position the portfolio, how do you size it, how do you diversify, and over what time horizon? Being informed feels very safe, like, oh, I know what's going on, I know about the information. But therefore the investment advice, being positioned requires conviction and acceptance of uncertainty. So it's very important, yes, be informed, but you also have to be positioned relative to that information you have.
[00:07:24] Speaker B: Great answer. Just to extrapolate on that.
So it's, it's not always wise based on you saying to listen to the guy in the cubicle or the girl in the cubicle next to you to what their investments listen to what's going on the market, listen to what the experts are talking about and get their opinions and talk to a financial professional, basically see what might be better to position you instead of just listening to what's on the street.
[00:07:50] Speaker A: Right, right. I mean, yeah. I mean, obviously everyone has, you know, information. Your Uber driver, your neighbor, everyone has a perspective. But, you know, this is where, you know, when you have a financial advisor like Dominic, for example, this is where you have to go in and, you know, have someone that has the expertise and says, hey, this is what I'm seeing. This is what I'm feeling. You don't go to your Uber driver and say, hey, I have a little, I'm feeling a little sore in my chest, my stomach. What's that mean? I mean, of course they may give an opinion, but you, you want to go to the expert and that' you know, I continue to say this. Have a financial advisor navigate you through the uncertainty. So again, there's a ton of information out there, but going through and navigating it, you know, advisors like financial advisors like Dominic are great at saying, here's what we're seeing, here's what this means, and here's what this means to actionable investment advice for your portfolio.
[00:08:39] Speaker B: Great. Thank you very much for that answer.
If you could give one sentence to coach an investor through uncertainty, what would you say and why?
[00:08:50] Speaker A: One sentence. Okay, how about this?
When the future feels foggy, don't try to forecast it, okay? Stick to a diversified, diversified plan that you can live with. You can rebalance deliberately and let time do the heavy lifting. Support, you know, stick with that diversification. We'll talk about diversification later. But be diversified, rebalance when you need to and let time, you know, time, the time value of money is a huge, huge advantage you have. Let time do the heavy lifting.
[00:09:23] Speaker B: So to further that.
So I would say you shouldn't be chasing the hottest, latest thing of the day because that might have already meet its height.
We should try to buy low and sell high as opposed to selling. Buying high and selling low.
[00:09:42] Speaker A: Exactly. Everyone loves Taylor Swift right now, but where's Taylor Swift going to be a few years now? We don't know. So don't always chase the hot dog. I know, that's a terrible. I'm really bad with analogies and mixed metaphors. So sorry about that.
[00:09:54] Speaker B: No, that was, no, that was a great answer.
Thank you very much.
That was a great, great session. Coming up next, I'm going straight into core theme, how I build 2026 investor mindset. When the economy looks resilient but expectations are elevated, Stay connected to the show and every NOW Media TV favorite live or on demand, anytime you like. Download the Free Now Media TV app on Roku or iOS and unlock lock non stop bilingual programming in English and Spanish on the move. Catch the podcast version at www.nowmedia tv.
Welcome back to Wealth Intelligence with Dominic D'. Andrea. I'm still here with Gene Goldman, CFA and now I'm unpacking what investors actually need to believe in 2026 and what they need to stop telling themselves.
Cetera's 2026 outlook emphasizes resilience amid elevated expectations shaped by structural shifts like AI, automation and fiscal dynamics, while warning the equity valuations are elevated and diversification matters, especially with concentration risk.
Gene, when you frame 2026 as resilient with elevated expectation, what's the one assumption I should challenge first? Growth, inflation or market confidence?
[00:11:49] Speaker A: Sure. And first of all, Danwick, thank you for having me back on your show. Great, great, great question. So just take a step back. Every year we develop three key investment themes that we think will define the year. So define 2026, for example. Number one was the economy is resilient but will prove to be a little bit stronger than expected. Number two is simply this is that your market returns will be a little bit below average and very, very volatile. And number three, simply this is that we do see a market rotation away from sort of those big large names into other parts of the market. So just want to help your listeners and viewers kind of frame that out. So your question in particular, you know, what's the one assumption we should challenge first? Growth, inflation or the market's confidence? You know, I think confidence right now because valuations were very high at the beginning of the year. Yes, the economy is resilient. We can point to so many factors like you know, fiscal stimulus. That's basically the government providing money to, you know, you know, to our, to Americans. We attack the big beautiful bill last year where we this year we've seen an additional 6 million Americans likely getting a tax refund with an average increase by about $500. The economy is resilient. We have Fed who, who has cut rates by 1.75% over the last two years. Takes a while to get us into our economy, that stimulus. And then you look at low inventory to sales ratios. So last year, given all the tariff uncertainty, retailers really kind of drew down their inventories. This has to be built up. This is going to benefit manufacturing. This will benefit our overall economy.
So the economy is resilient. Earnings look pretty strong. You know, we do think for this year earnings are going to be 13, 14%. You know, that's a great, great number. First quarter earnings expected to come in around what, 13%. And if that comes to fruition, that would make six straight quarters of double digit earnings growth. So earnings look good. So we have the economy looking good. And you want a resilient economy because stronger economy suggests more sales for companies, suggest more earnings. Investors are attracting the shares of the companies generate earnings. We expect strong earnings. But here's the but and the challenge, it's valuations, I guess the market's confidence right now, the PE ratio, the price earnings ratio. So the price of the stock market divided by earnings, it's a valuation measure. Higher is more expensive, lower is cheaper. At the beginning of the year is around 22 to 23 times. This suggests that it's pricing in absolute perfection because the 10 year average is around 18, 20 year average around 16. We were at the beginning of the year around 22 to 23. Everything needed to be perfect. So what we would challenge first is that valuations were the biggest concern for the markets, despite the economy being resilient and earnings being pretty strong.
[00:14:39] Speaker B: Wow, that was a great answer. Thank you very much, Gene.
Next question. If I'm an investor who did everything right but still got shaken by recent volatility, what's the mental reset you'd want me to adopt going into this year?
[00:14:54] Speaker A: Sure, everyone gets worried about volatility. I mean, your plan is always a great plan until volatility shaken. So keep in mind, feeling shaken doesn't mean that you did something wrong. Keep in mind it means that your plan is being exercised in real time. Things are going on. Volatility is picking up. One thing I love the point, and this is one of my favorite data points. If you look at the s and P 500 and that's the broad stock market index, it's 500 companies representing our stock market in the last 46 years, since 1980, the S&P 500 has been positive in 38 of 46 years. We have a positive bias in our stock market. This makes sense. Our growing economy, growing earnings, just makes sense. Right?
But the average pullback, the average sell off, the average biggest drawdown, whatever you want to call it, is negative 14.2% during this time period. So you take all this together, the market has a positive bias, but. But the average pullback that year, that Volatility is negative 14.2%. This volatility happens all the time in our economy, in our markets. And what you do is you got to be diversified to mitigate some of that risk. And we'll talk about diversification later. But at the end of the day, volatility is a normal part of investing.
[00:16:14] Speaker B: So basically what you're saying is wherever possible, try to stay the course through ups and downs.
[00:16:21] Speaker A: Exactly. Stay the course. Of course it means sit down with your financial advisor, like Dominic, and review your portfolio. Because there'll be some periods that go very extreme, extreme where stocks do really well, stocks do really poorly. A lot of Times your, your portfolio is out of whack with your long term goals. Sit down with your financial advisor like Dominic and say, hey, you know, here I am today, here's where I want to be. Things have changed so much. Help me, help me connect the two together.
[00:16:46] Speaker B: Thank you Gene. Great answer.
In your annual outlook, you highlight how structural forces like AI and automation quietly reshaped the economy. How do you separate durable structural change from short term hype?
[00:17:02] Speaker A: Hype. Hype is. Hyp is an important thing. Hype moves faster than fundamentals. You know, structure moves slower but lasts longer. So therefore I focus on the ladder. I focus on fundamentals and structure over hype. So not every exciting technology produces a durable investment return. You We've seen a lot of winners and losers in the past. The winners are usually the ones who quietly do the real work while expectations cool off. So for AI, I focus less on this quarter, but more where is adoption being more persistent? Where is it lasting longer? So again that's the key point. Again, hype moves faster than fundamentals, but structure moves slower but lasts longer. Focus on structure, not hype.
[00:17:49] Speaker B: So basically what I'm hearing is stay the plan, stay the course and you know, keep an eye on what's going on.
[00:17:58] Speaker A: Exactly, exactly.
[00:18:00] Speaker B: Thank you Gene.
Where do you think investors are too optimistic right now and where are they missing opportunity because they over focused on the wrong risk?
[00:18:14] Speaker A: Yeah, that's a great question. I think. Remember every investor is different but let's just take investors as a whole. So overall investors are very priced for confidence today. Remember we talked about high valuations a little bit earlier.
If you think about investors are today are priced for confidence but they're only really paid for patience. You know, again, long term investing is a key point. I do think investors are probably a little too optimistic of how smooth things need to be for markets to keep working and they're a little too pessimistic about areas that don't look perfect right now. So again a lot of times we see a news story and we get very optimistic about it, we buy those companies and we get a little too optimistic. On the other hand, if we see some bad news like geopolitical risk and we get too pessimistic or tariffs, again, keeping a long term plan focused on long term is so important there's going to be noise here and there. But again, your portfolio that's been helped, designed by your financial advisor like Dominic is there for you to help mitigate some of these risks to smooth out some of those returns.
[00:19:16] Speaker B: Great, thank you Very much. I appreciate that answer.
If expectations stay high, what does staying invested look like without drifting into either reckless chasing or defensive paralysis?
[00:19:31] Speaker A: That's basically what you're saying is how do you avoid market timing?
And so market timing is simply this, like, you know, using emotion and fear, whatever to say, to make portfolio changes. Like, you know, you're, you're fearful that all of a sudden markets are going to fall, you're too aggressive and you're just irrational. The markets are going up, you're not invested in there. So at the end of the day it's, you know, it's market timing. Market timing, we can go through stats and stats, but market timing historically does not work over the long term. But if you think about your question, you know, your question is expectations are high. What does staying invested look like without being, you know, chasing or without defensive paralysis? To me, I think about it in sort of three things or three layers. Number one, you know, it's participation without concentration. So stay invested, but only, but don't rely on a single theme or a single outcome. The last few years, everyone loved the Mag 7, those big technology companies, those mega cap companies. But again, participate, but without being too concentrated. Stay invested, but have exposure different parts of the market.
Second of all, focus on discipline over drama.
Rebalance instead of reacting. Trim excess rather than chasing it. So if all of a sudden parts of your portfolio does very, very, very well reduce some of the exposure, you know, you take, take some profits, that's pretty normal. It's just, it's a prudent way of investing. Our third thing is patience over precision. You don't need to time every single move. Just avoid making those big mistakes, you know, all of a sudden freaking out that, you know, we hear some bad news and you go all of a sudden the cash again. Things like that historically have not done well because market timing, you know, what's that phrase, the hall of fame of market timers is a pretty empty room. Market timing is very, very difficult.
So again, participate without concentration, discipline over drama, and patience over precision.
[00:21:27] Speaker B: So when you build a plan based on the market you're in and you've got time, it might make more sense to ride out your plan instead of adjusting it because the market changed with a long term strategy.
[00:21:42] Speaker A: Exactly.
[00:21:44] Speaker B: Thank you, Gene. If I'm an advisor inside the Cetera network, trying to communicate this 2026 framework to clients in plain language, what's the one message you want repeated constantly?
[00:21:59] Speaker A: I think, you know, I think what the title was Economic Resilience. And you know, Expectations.
So what you want to realize is that the economy is okay. Okay. I know there's some choppiness. I know the economy is, you can talk about the, the K shaped recovery while the wealthy are doing better and lower income are really struggling. Yes, I do acknowledge that there's definitely some splits going on within our economy.
But if you think broadly speaking, the economy is stable than most people do expect, that's one of our reasons. We do expect the economy to be resilient but prove to be a little bit stronger than expected by year end. The other thing I would look at is just earnings. You know, earnings are the backbone of the stock market.
A lot of times, you know, as I mentioned earlier, you know, if a company sells more stuff, they generate more earnings historically and investors tend to move towards those companies with greater earnings. So that there was that whole phrase earnings drive stock prices. That's true. Earnings are the key driver of stock. So we do believe earnings are going to do pretty well this year.
But with that said, the big overhang is just valuations. You know, you have high valuations in the market, increasing uncertainty. This is why unlike most of our peers, we came out at the beginning of the year and said market returns are not going to be another year of double digit returns. It's going to be an okay, like a method year, like 4 to 6% return in the stock market. Not good, not, not great, but okay. You know, it's a little bit below average. You know, the long term average of the stock market is 9.3%. So overall economy is resilient. Markets are going to be volatile, a little below average returns and then expect the rotation into other parts of the market.
[00:23:38] Speaker B: Great. Thank you, Gene.
Up next, let's translate macro into real life. Rates, inflation and what they actually mean for someone trying to build wealth without living in economic jargon.
[00:24:09] Speaker A: Foreign.
[00:24:14] Speaker B: Welcome back. I'm continuing with Gene Goldman and I'm making macro usable because rates and inflation aren't trivia. They shape borrowing costs, income, portfolio behavior and peace of mind.
The Terra's outlook to a fed that began cutting rates after inflation stabilized and labor risk rose while arguing bonds may regain value as diversifiers with yields expected to be range bound and potentially drifting lower by year end.
Gene, with your engineering background plus an MBA in finance, how do you translate a complex system like the economy into decision rules investors can actually use?
[00:25:02] Speaker A: Sure, and thanks for having me back on.
First of all, you, you threw up. A quick question I gotta talk about. So I went to school for engineering. My whole, my whole Life. I want to be an engineer. Why did I switch to go into finance? Well, part of it was, you know, I was aerospace engineering and all of a sudden the cold war ends in the, in the early 90s, so I obviously wanted to switch something. I still wanted to stay in engineering but I switched more to, to more like manufacturing engineering. Second of all, you know, although I'm wearing one right now, I'm not a big fan of short sleeve dress shirts or pocket protectors. So I actually wanted to go more in finance I thought be more cool. So anyways, just want to give you a little more insight about me. So with your question, you know, how do you take a complex system like the economy and make it into numbers that people can actually use? And that's a great question because I know a lot of people in my shoes, you know, use these big fancy terms just to like confused and just over communicate, you know, what we, what we, what we've done. What I've done is that I've learned that, you know, as a numbers geek, I love numbers. But I've also learned that the world has changed. You know, the world today wants, you know, data. You know, the world today wants something very different. So when I went to school, went to engineering school, it was always about give you data, data, data and here's your conclusion. The world has completely switched now. It's like give me your conclusion and then provide me the data. So if you look at all the communications we do data, the tv, the white papers, the commentaries, they're all very much, here's our conclusion and here's the data behind this. Also second of all, your communications need to be much more engaging. You know, when I started we would write these white papers, these 50 page white papers about how to invest in small cap value. No one's going to read 50 pages of small cap value investing. So what we've done in particular over the last say 10 to 12 years as we've taken our white papers and make them much more engaging just so they resonate. So here's a simple example. I love that. I love donuts. So National Donut Day, we wrote a piece about national, about donuts. Talk about donuts and flour and sugar prices and where they've come from, who invented them and so on. But then we talk about, let's say if you are, you know, you're going over to a, to a neighbor's house and you're going to bring donuts, you don't bring a dozen of the same donuts, you bring a Diversified box of donuts. So we talk about the power of diversification, but make it much more engaging. So again, you know, start with your conclusion and then add data, be more engaging. And the third thing is just simplify, make things very easy to understand. Like I could tell you, Dominic, you know, the ISM, you know, manufacturing PMI came in at 50.4 last week.
What does that really mean? But a better way of saying is the ism. The Institute of Supply Management is a trade group that surveys hundreds of purchasing managers all over the country. And purchasing managers are the people on the front line of business seeing business change. Right away. They're asked a bunch of qualitative questions and what happens. ISM takes that data, squeezes it together. If it's above 50, it's expansionary, it's above, below 50, is contractionary, and it's one of the first looks at the prior month's economy. So there you simplify the data point instead of just saying ism, manufacturing, PMI to what it actually means to you, to me, to your clients, to my mother, to my wife. Again, very, very simplified. So conclusion, the data make information engaging and just be very much in terms of simplifying what you see.
[00:28:30] Speaker B: The funny thing is I absolutely love that answer across the board. The donut answer resonates with me anytime we're near Krispy Kreme. It's one of my wife's favorite donut places, is not one on the, you know, in the area on Long island, but there are ones we pass at different times in our life.
And picking the 12 donuts to put in the box.
I can understand, you know, how diversification can be confusing for clients. And that's why having a professional help out. Because when you're picking those donuts, you want to get the best grouping of 12 that everybody has something they like. So I love that answer.
[00:29:02] Speaker A: And you want that box, and you want that box of donuts to, to basically like, like diversification. You want to make sure that grandma. Make sure your wife makes sure your kids are happy with what you find in the box. That's, that's the power of diversification in a box of donuts.
[00:29:19] Speaker B: Yes.
When people tell me inflation is down, but everything still feels expensive, what's the clean explanation I should give without oversimplifying?
[00:29:32] Speaker A: Yeah, that's a very, very good, good question.
They're all great questions you said, but this is really, really good because think about inflation. So inflation measures the, measures the rate of change, not the level of prices. So a lot of times you'll hear inflation is up 2%, 3%. It's a measure of the rate of change, not the level of prices. So when inflation cools down, all it means is that prices are just stopping accelerating, but they usually don't come back down because, you know, we are a growing economy, things are getting more expensive. So that's why everyone says, well, I remember when, you know, an apple cost, you know, a dollar back in the olden days. Yeah, we're never gonna get those prices because inflation is the measure of the change in price. So what I usually say is that, like, you know, just, you know, inflation, inflation comes down. It basically means prices have stopped rising as fast, not they went back down. So keep that in mind. My key point is inflation is coming down means prices have stopped rising as fast, but not they went back down.
[00:30:34] Speaker B: So we just need to understand that if eggs were two dozen a year ago and they're $3 a dozen now, they might get back to two, but not as quickly as we would like sometimes.
[00:30:44] Speaker A: Exactly. Exactly.
[00:30:46] Speaker B: How do you think about the rate environment today, changing the conversation around equity risk, bond income and duration, especially for investors who haven't trusted bonds in years?
[00:30:59] Speaker A: Yeah, that's a great question. So just to set the stage, over the last, you know, let's just say last five years, yields, bond yields, interest rates have moved higher because, you know, coming out of COVID we spent a lot of money.
Government helps support the economy, lots of spending and spending creates a little bit more inflation. And, you know, we're not going to go into Bond Investing 101. But basically, yields and income have moved higher. This is very different than it was, you know, prior to this, you know, before COVID because interest rates were super, super, super low. And it's very different environment.
So, you know, given the higher yield, the current environment is fundamentally changes the conversation because income, again, it once again is doing real work for investors. You know, again, for years we would take duration risk. So duration risk means interest rate sensitivity. But you get it, get this without yield. Today, starting yields are rebuilding the value proposition of bonds. And for bonds, it's all about improving the portfolio outcomes across many scenarios. Today's yields, but they're a little bit higher than they have been in the past, give investors margin for error that they didn't have for over a decade. Again, it's a great environment for bonds, especially if you haven't trusted bonds. Keep in mind, bonds, given the higher yields, less mark, I mean, greater margin of error for investors today.
[00:32:18] Speaker B: So they could be a great Part of a diversified portfolio for the right person.
[00:32:23] Speaker A: Exactly. Definitely. Definitely.
[00:32:26] Speaker B: Thank you. Gene, if someone is trying to protect and grow wealth, what macro signals do you consider high value and which ones are mostly noise?
[00:32:38] Speaker A: Sure. You know, if you think about high value signals and again this goes to your question, you said earlier that we get a lot of information, a lot of data. We get tons and tons and tons of data.
High value signals shape liquidity, earnings, inflation and the cost of capital. Those are important. Again, if it's a signal, if it's a data point, it's important because it shapes liquidity, earnings, inflation and just the cost of capital. Basically noise is anything that feels urgent but doesn't change portfolio decisions such as like a single data report report or such as, you know, some data that's just very minor. So again, look at and focus on high value signals. My favorite high value signals are like a lot of the survey data of the prior, like you know, the first looks at the prior months. Like we talked about ism manufacturing. I also like a lot of the employment reports. I also like some of the weekly reports that give us a real time indicator. The key thing to think about is that a lot of the data today comes out pretty late. So here's an example. Gross domestic product, how is our economy doing? Comes out anywhere from 30 to 40 days after the quarter end. That's old data because you know what's going on in gdp you can get a better estimate. So I tend to look at much frequent, much newer data as a way that's much more high value. So keep in mind, you know, one data point when you get doesn't change the narrative the but look at the key ones that all help you build a story and broadly how are all the data points affecting the economy? How are they affecting the Fed especially? The Fed focuses on the labor market and inflation. So what type of inflation and labor market datas do we get? And of course earnings. Remember it goes back to what we said earlier. Earnings drive stock prices. So how are earnings coming in? So again, looking at high value data points include those focused on the economy, those helping the Fed to make decisions and just overall earnings.
[00:34:34] Speaker B: Great. Thank you very much Gene.
When I'm building a long term plan, what's the inflation mistake you see most often in assumptions, spending returns or time horizon.
[00:34:47] Speaker A: Sure, the biggest mistake usually isn't returns. It's assuming your spending inflates neatly instead of unevenly and persistently. Because again you think about when you model out your expectations, returns tend to be modeled conservatively. We all do that. Okay. And time horizons are usually very explicit, but spending often gets treated as a smooth linear number when in reality it inflates unevenly given data, given inflation, given changing habits. And they also can be faster in categories people rely on the most, like health care, insurance, taxes, housing and services.
So the mistake isn't ignoring inflation, it's assuming that it affects all expenses equally and predictably. And over decades, that gap quietly does damage to purchasing power than being off by a point on returns. So again, understand that inflation is very volatile and it's not a straight line is so much important for investing.
[00:35:47] Speaker B: Fantastic. Thank you again Gene for this session.
Coming up, final Patience AI and Portfolio Construction for Real Life I participate in innovation without overpaying for a story.
[00:36:05] Speaker A: Can we start again when you say thank you Jing and wrap it up and finish because you paused for a few seconds only. Let me do it again.
[00:36:16] Speaker B: Thank you Gene for this last segment. Coming up in our final segment, valuations AI and Portfolio Construction for Real Life. How I Participate in Innovation without Overpaying for a story.
[00:36:37] Speaker A: Foreign.
[00:36:50] Speaker B: Welcome back. For our final segment, I'm here with Gene Goldman and I'm combining two things Investors struggle to hold at the same time, believing in long term innovations like AI while still respecting valuation, concentration risk and real life needs.
Satera's 2026 Outlook flags elevated valuations and index concentration risk while emphasizing diversification and the reward.
Sorry, I apologize.
I'm trying to get this done for Jean.
All right. Sotera's 2026 outlook Cetera's 2026 outlook Flags elevated valuations and index concentration risk while emphasizing diversification and renewed role of fixed income as a stabilizer. Gene has also highlighted valuation concerns even while liking growth sectors, especially when the market stories start out running discipline.
Gene, when AI becomes the headline of every market conversation, what's the discipline you personally use to avoid themed blindness?
[00:38:00] Speaker A: Ah, and Dominic, thanks for having me back. AI, artificial intelligence. You know, obviously it's dominating every headline right now for me. To your question, I separate the story from the economics. Basically, what's the adoption rate, what are the unit economics and cash flow. And then I size the overall risk. So my advice is simply this. You know, if you're looking at AI investing in AI, you know, diverse, diversify your AI exposure across enablers and adopters, not just the crowded names that everyone's talking about. Treat AI as a multi year adoption curve and think about valuations. For AI. Valuations are like tripwires. You know, when evaluation moves significantly higher, it's an opportunity for you to trim some of that exposure. So again, diversify, treat it as a multi year adoption curve and then watch valuations very carefully.
[00:38:50] Speaker B: Great answer. It seems like diversification is the theme of today.
What's the clearest sign that a powerful innovation trend has crossed the line into dangerous pricing?
[00:39:04] Speaker A: Yeah, you think about an investment today. Every investment has two main components, fundamentals and valuations. And fundamentals are, is it getting better? Is it what you want? And valuations are people pricing in too much expectations. So great innovations can still be bad investments at the wrong price. And ways that you see it, you know, when you start to see, you know, narratives replacing numbers, time horizons being pulled forward and the bear case, the worst case scenarios being ignored. So those are clues in terms of valuations are pushing the investment into dangerous pricing.
[00:39:38] Speaker B: Great, thank you.
When I look at today's equity concentration that what's the practical risk to a household portfolio and what's the smartest way to reduce that risk without making a drastic bet?
[00:39:54] Speaker A: Yeah, simple answer. Concentrate risk is a hidden bet. You're relying on a very few names and one macro theme. If you think about this, if you look at say the s and P500, we talked about that. This is the broad stock market benchmark. For example, the top 10 names in that index is about 40% of the index. That's a very heavy concentration to our, our perspective is, yeah, some of those are great companies, but you need some exposure, diversify other areas, areas that are more attractive, that on a go forward basis could benefit. You know, these are just some examples like small companies, mid sized companies, non US Investments.
You think about this, you know, a year where the Fed, you know, a couple years, last couple years, the Fed has cut interest rates. Historically, after the Fed cuts rates, other parts of the market tend to do better. It's called market breadth widening. So don't just focus on one narrow area of the market. Be diversified in exposures in other parts of the markets.
[00:40:53] Speaker B: Great. So yeah, we just don't want to be in one stock or two stocks. If you have a large portfolio, you want to have numerous investments. So when things are up, you could make money. When things are down, you might not lose as much. And that's a great strategy moving forward.
You've noted that bonds can play a bigger role. Again, how investors engine volatility or both.
[00:41:21] Speaker A: I need to repeat that question. Start from that question.
[00:41:26] Speaker B: I don't know what's going on today. This is weird. Okay, you've noted that bonds can play a bigger role. Again, how do you want investors to think about fixed income now, income engine, volatility buffer, or both.
[00:41:41] Speaker A: So in this rate environment, again, yields we talked about, yields have moved a little bit higher, have higher. You know, bonds can be both an income and a ballast. And a ballast is a way to support the portfolio. So from an income standpoint, you know, keep in mind cash flow matters again. And cash flow is so important, especially for retirees that are listening to this, to this, your podcast.
You know, cash flow definitely does matter. With higher yields, more cash flows being generated from bonds today. So it's helping on the income front, on the ballast front again, that volatility buffer within the portfolio bonds can help stabilize, especially during growth scares. Think about the great financial crisis in 20 in 2008, for example, everything sold off. But high quality bonds were a ballast and helped protect some of the downside in portfolios.
[00:42:28] Speaker B: So don't always. So basically what I'm hearing is sometimes it's good to have something that can balance out if we hit a bad market. And maybe you'll give up some return in the short term but protect your downside in the long term.
[00:42:42] Speaker A: Yeah, definitely. And again, making sure that the amount of bonds in your portfolio is aligned to your long term objective. And how do you answer that question? Sit down with your financial advisor like Dominic to go through and say, do I, do I need more bonds? Do I have too many bonds? It's very, very important because diversification and you're, you know, not being too aggressive or too conservative relative to your long term objective is still very important.
[00:43:05] Speaker B: So having a second set of eyes to look on your portfolio, looking at your investment and again, building long term that you're not analyzing it on a daily basis, you're looking at it regularly, but not every day.
[00:43:18] Speaker A: Exactly.
[00:43:20] Speaker B: If I'm building a portfolio for real life, college retirement liquidity needs legacy. What's the framework you use so the plan survives stress without forcing panic decisions?
[00:43:34] Speaker A: That's a very broad question. So the key point here is how do you have money, some investable assets, but how do you kind of segment it out into what makes sense? So my, my perspective is, you know, you want to segment on goals, you want to match time horizon and you want to pre commit to rules so you're not trying to negotiate with fair with fear. Excuse me. So what I would do is use a classic, what we call a bucketing approach. So you have different buckets based on your needs, based on your time horizons, based on your goals. So you have like a, like a liquidity bucket. Maybe from zero to two years, short term cash, fairly liquid investments that you could access. If something happens. You need a stability bucket where it's like investments for the next two to seven years, you know, some high quality fixed income, some bonds you're basically trying to fund, some plan needs but with less volatility. And your third bucket is sort of like growth investing, like stuff that you're trying to save for like a house or just longer term investment goals. And then the last bucket, the biggest one with the 10 year plus horizon, depending on how old you are, is a retirement bucket where you're investing in long term investments to help you retire for your overall help you save your retirement. So again, focus on goals, time horizons and try to pre commit to rules so you're not trying to negotiate with fear in this classic bucketing approach. Really makes sense. And again, if you want more information about this type of investing, please sit down with Dominic or your financial advisor for more information.
[00:45:07] Speaker B: That was a great answer. And definitely yes, your risk is definitely a time horizon. So yes, you want to be more conservative for short term and we can definitely take on more risk for long term and understand that in changing markets. So if the market's booming, it doesn't mean you should take more risk on your short term emergency assets as opposed to where you could with your longer term. And if the market is going down, it might not make sense to be more conservative on your long term dollars. That's what I'm hearing, right Gene?
[00:45:36] Speaker A: Exactly, exactly. Just have these rules, segment your goals and match these your investments to your time horizons. Perfect.
[00:45:43] Speaker B: Fantastic.
Gene, for viewers who want more of your market perspective through Cetera Research, what's the best way for them to engage through their financial professional and their firm's research insights?
[00:45:58] Speaker A: I think the easiest way is just to work with you as a Dominic, you're one of our financial advisors, you have access to all this information.
If you don't want to do that, if you're a little shy or if you want to look on your own, you can go to cetera.com that's our firm and there's a whole section on investment insights where we have lots of communications like white papers engaging the donut piece. Remember the donut piece is there market outlook. We're also on X, formerly known as Twitter, so under Cetera Investment Management or Cetera Financial. And of course we're on LinkedIn at Cetera Investment Management. So lots of places to find it and please do take a look. There's lots of information that we're helping to get you through all this noise.
[00:46:42] Speaker B: Those are definitely great resources and definitely you can look them up without talking to somebody.
But to me it's always better if you have somebody that can help you understand what they mean in your situation. So after you read those resources, reach out to a financial professional and see how they for your plan and your strategy because again everyone is different. Everyone has different time horizons, different situations.
So there's no cookie cutter approach and nor should there be a cookie cutter approach in a planning strategy. So I want to say Gene, thank you for bringing clarity without hype. Today I learned that the 2026 investor mindset isn't about predicting every headline.
It's about staying resilient when expectations are high, translating macro into simple decisions, respecting valuations even in exciting themes like AI and building portfolios that actually work in real life.
I'm Dominic d' Andrea and this was Wealth Intelligence. I'll see you next week.
