[ENERGETIC MUSIC]
Let's dig into renewing portfolio resilience with the Elyse Ausenbaugh. Elyse, thanks so much for joining us.
Thank you for having me.
If you are worried about burgeoning government deficits, if you are worried about the potential inflationary impacts of continued fiscal spending, adding things to your portfolio that are less correlated with stocks and bonds, but still give you those diversified sources of income or diversification, could be really attractive.
Yeah, and I think in particular, the first place we might look is to an asset like gold. It is the original safe haven asset, and we do think that that's going to be the go-to place, particularly if you're concerned about those deficit risks. You've seen other central banks around the world start to diversify their own reserves by increasing their allocations to gold, and so investors might consider doing the same. But if it's the inflation risk that you're more concerned about, I think that's where those income-generating real assets can really be beneficial additions to that traditional stock-bond mix.
Got it. So when we think about real assets, what do you really mean?
Real estate, infrastructure-- think things that are going to be able to generate those cash flows and have some link in pricing power if inflation does start to re-accelerate and move higher. That income generation, in particular, we think can be a really helpful kind of steady support for portfolios going forward.
Right. So I mean, just to give an example, when you're a landlord, obviously, you're going to raise your rents if inflation is rising, if the economy is tight, if there is expansion, if there is demand that outstrips supply. So if you can be yourself-- a landlord in your investment portfolio-- you should be able to benefit from that pass-through of inflation. And that's really what we're looking for.
Yep.
Got it. So the final thing that I think we should put in the context of this entire discussion is that people are in a pretty good place. I mean, when you think about what multi-asset portfolios have done, not only in 2024 but also in 2023, performance has been really spectacular, just from your market exposure. So why don't you just give some other considerations for folks who have been invested throughout this run in the stock market, and maybe think about some of the tweaks and changes they can make along the edges to ensure that those gains continue to hold?
Surely. I mean, even despite those inflationary headwinds, asset holders have really benefited from this big market rally, the appreciation of things like property values, and we are really focused on helping them defend that surge in their wealth. So maybe that looks shifting the composition of your portfolio to focus more on income generation, like we talked about before. And by the way, you can even do that on the equity side of your portfolio using something like dividend-oriented equities. You can also adjust the risk-return trade-off of your equity allocation by employing something like derivatives or structured notes as a means of targeting a certain level of return while potentially getting some downside protection.
So sorry, on the dividend side, I think it's interesting because another worry that I hear-- and I'm sure you hear too-- is the market's extended. It's at all-time highs. Valuations look full. But those dividend-oriented equities, those quality income-oriented equities, are trading at a pretty substantial discount to the rest of the market.
Yes, which is certainly hard to find in today's market, so I think makes that potential consideration all the more compelling. I would be remiss not to mention core fixed income as that means of conventional portfolio balance, because while we know it might not protect you from a rise or a re-acceleration in inflation-- I mean, we learned that lesson in 2022 when you had that stock-bond correlated sell off-- we do still think that that's going to be a really good defensive ballast if our base case ends up being wrong and you do get a big growth downturn, either here in the United States or elsewhere.
So continuing to rely on that, taking a global perspective and looking across the developed world landscape for those opportunities, and, especially if you're a US taxpayer, really embracing that relative value that's being seen in the municipal bond market right now, we think is still prudent, particularly if you're looking for places to deploy excess cash.
Yeah, absolutely. I think those are some fantastic considerations. So maybe just let me summarize the key points.
Markets have performed exceptionally well over the last two years. And to really ensure that we're harnessing those gains and making our portfolios resilient, I think focusing on income and focusing on real assets are a great way to do that. Is there anything else that you would add?
I would just add that one of the reasons why this is my favorite section in the entire Outlook is because while there's so much that we're excited about when we look ahead to 2025 in terms of being front-footed and embracing new opportunities, this is also an opportunity really balance that mindset with one that's focused on that resilience and foundation for long-term financial success.
Right, it should help folks stick to their goals.
Yes.
Absolutely. Thank you so much for joining us.
Thank you.
And thank you for watching.
[ENERGETIC MUSIC]
(SPEECH)
[ENERGETIC MUSIC]
(DESCRIPTION)
A U.S. flag flies atop the White House. A photograph depicts the upcoming speaker. Text: Elyse Ausenbaugh, Global Investment Strategist. Renewing portfolio resilience. The gold rush. Finding value in income. Defending against inflation. Reconfigured returns. Jake Manoukian, US Head of Investment Strategy. The two sit together in front of a golden J.P. Morgan logo.
(SPEECH)
Let's dig into renewing portfolio resilience with the Elyse Ausenbaugh. Elyse, thanks so much for joining us.
Thank you for having me.
If you are worried about burgeoning government deficits, if you are worried about the potential inflationary impacts of continued fiscal spending, adding things to your portfolio that are less correlated with stocks and bonds, but still give you those diversified sources of income or diversification, could be really attractive.
Yeah, and I think in particular, the first place we might look is to an asset like gold. It is the original safe haven asset, and we do think that that's going to be the go-to place, particularly if you're concerned about those deficit risks. You've seen other central banks around the world start to diversify their own reserves by increasing their allocations to gold, and so investors might consider doing the same. But if it's the inflation risk that you're more concerned about, I think that's where those income-generating real assets can really be beneficial additions to that traditional stock-bond mix.
Got it. So when we think about real assets, what do you really mean?
Real
(DESCRIPTION)
Text: Renewing portfolio resilience against inflation.
(SPEECH)
estate, infrastructure-- think things that are going to be able to generate those cash flows and have some link in pricing power if inflation does start to re-accelerate and move higher.
(DESCRIPTION)
Text: Finding value income.
(SPEECH)
That income generation, in particular, we think can be a really helpful kind of steady support for portfolios going forward.
Right. So I mean, just to give an example, when you're a landlord, obviously, you're going to raise your rents if inflation is rising, if the economy is tight, if there is expansion, if there is demand that outstrips supply. So if you can be yourself-- a landlord in your investment portfolio-- you should be able to benefit from that pass-through of inflation. And that's really what we're looking for.
Yep.
Got it. So the final thing that I think we should put in the context of this entire discussion is that people are in a pretty good place. I mean, when you think about what multi-asset portfolios have done, not only in 2024 but also in 2023, performance has been really spectacular, just from your market exposure. So why don't you just give some other considerations for folks who have been invested throughout this run in the stock market, and maybe think about some of the tweaks and changes they can make along the edges to ensure that those gains continue to hold?
Surely. I mean, even despite those inflationary headwinds, asset holders have really benefited from this big market rally, the appreciation of things like property values, and we are really focused on helping them defend that surge in their wealth.
(DESCRIPTION)
Text: Reconfigured returns.
(SPEECH)
So maybe that looks shifting the composition of your portfolio to focus more on income generation, like we talked about before. And by the way, you can even do that on the equity side of your portfolio using something like dividend-oriented equities. You can also adjust the risk-return trade-off of your equity allocation by employing something like derivatives or structured notes as a means of targeting a certain level of return while potentially getting some downside protection.
So sorry, on the dividend side, I think it's interesting because another worry that I hear-- and I'm sure you hear too-- is the market's extended. It's at all-time highs. Valuations look full. But those dividend-oriented equities, those quality income-oriented equities, are trading at a pretty substantial discount to the rest of the market.
Yes, which is certainly hard to find in today's market, so I think makes that potential consideration all the more compelling. I would be remiss not to mention core fixed income as that means of conventional portfolio balance, because while we know it might not protect you from a rise or a re-acceleration in inflation-- I mean, we learned that lesson in 2022 when you had that stock-bond correlated sell off-- we do still think that that's going to be a really good defensive ballast if our base case ends up being wrong and you do get a big growth downturn, either here in the United States or elsewhere.
So continuing to rely on that, taking a global perspective and looking across the developed world landscape for those opportunities, and, especially if you're a US taxpayer, really embracing that relative value that's being seen in the municipal bond market right now, we think is still prudent, particularly if you're looking for places to deploy excess cash.
Yeah, absolutely. I think those are some fantastic considerations. So maybe just let me summarize the key points.
Markets have performed exceptionally well over the last two years. And to really ensure that we're harnessing those gains and making our portfolios resilient, I think focusing on income and focusing on real assets are a great way to do that. Is there anything else that you would add?
I would just add that one of the reasons why this is my favorite section in the entire Outlook is because while there's so much that we're excited about when we look ahead to 2025 in terms of being front-footed and embracing new opportunities, this is also an opportunity really balance that mindset with one that's focused on that resilience and foundation for long-term financial success.
Right, it should help folks stick to their goals.
Yes.
Absolutely. Thank you so much for joining us.
Thank you.
And thank you for watching.
[ENERGETIC MUSIC]
(DESCRIPTION)
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