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2020 Diamond Club: Problems & Solutions for the Economy & MarketsHello, everyone. This is Neil George and thank you for attending the virtual discussion for Diamond Club for this year. Again, like you, I'm very disappointed that I don't get to spend some time one-on-one and discussing things with you and hearing some of your comments and questions firsthand as I have over the past years. Again, I have a lot of gratitude for having the opportunity to meet some subscribers, always have over the last decades of my being in this business. Again, I always find that having the interaction, getting the comments, being able to bounce ideas off of you, and so forth, as well as getting your input makes for a much better ongoing Profitable Investing.But note, of course, is that the COVID-19 it's going to get taken care of at some point in time. Obviously conjecture, guesses and so forth put it X months out and again, it's something that we all are hoping for so we can start moving on to some normalcy. And I think it's a fair guess at this point or a fair prognostication that for next year, we'll be able to resume our annual gathering together at some point during 2021.So with that again, thank you for subscribing to Profitable Investing. Thank you for joining the Diamond Club and becoming a lifetime member. Again, I take your confidence in continuing that sort of process as being very supportive for my ongoing work. And of course she represents a sort of the core of the subscribers for the product and that basically is important for me, and of course, for my publisher, Brian Hunt, and everyone else at Investor Place and Stansberry and Associates. So again, from all of us, to me, thank you very much.So let's get to our discussion. And so again, the title of course is Problem & Solutions for the Economy & Markets. And of course, there's probably someone out there that's going to say, "Well, Neil, I don't understand what that little gobbledygook of mathematical equations," and those that perhaps do understand a lot of these equations are saying, "That looks like a much a hogwash," but the key thing of course is that right now there's a lot of things going on in the marketplace and a lot of people trying to make heads or tails of various directions in stocks and bonds, the economy, we have the election, of course, and we still have COVID as I was just mentioning a moment ago.So there's a lot going on. And therefore, all of that is part of what I continue to work on seven days a week. And therefore, I thought it was an appropriate sort of lead in graphic. That being said, the key thing of course, is that let's lead off with the idea of this solutions part of the equation, which has been the S&P 500 stock index. And also if not more important, the standard and poor information technology index, the leading tech stocks of the U.S. Stock Market.And of course, everything was doing very well. Continuing the upward bias of the share market in the beginning of this year, as reflecting a lot of the forward-looking expectations for some of the further alchemy of so much of technology, as well as the ongoing super resilience of the expanding economy. I Recall at the beginning of the year, we had unemployment death, historic, I mean, absolute historic lows across the board, not just for the average for the U.S. population, but for various segments of the population we're seeing, again, historic lows in unemployment.We also, we're seeing some fairly good wage gains on a real basis across the board from particularly on the lower end of the wage scale. And the consumer was doing exceedingly well. Retail sales were good. Business expectations were a little bit muted because we were still in the midst of ongoing trade negotiations with China and elsewhere, Europe, And therefore that was kind of muting things, but things were in general, were doing exceedingly well.And then we started getting, from last November and in December, we started getting the discussions about the emergence of this SARS type of a virus. Now back late last year when this was starting to emerge and move on. Which if you recall, I've been to Wuhan and conducted business there in my prior real world life. And therefore, I know that city. I spent also a lot of inland and main parts of China and lots of contacts.And so, I basically was reaching out to folks over there and it was getting sort of a handle on what was, what was occurring. And what I was gathering back then was that the Chinese were effectively beginning, quickly beginning the lockdown process for the areas in and around the laboratories that originally had discussed it. They looked at the early stages of the fresh markets in and about Wuhan, which was very close to a lot of the parts of the urban area of Wuhan, and therefore, that led to sort of initial lockdown other parts of the country were put on an extremely high alert.And again, from my past experience in dealing with the bird flu, the H1N1, the prior SARS and so forth. China has always had, as well as much of the rest of the Asian markets, has always been very good at being able to control the various spreads of these sorts of things. I'd always basically conducted business and travel and so forth and dealt with some of the restrictions and the screening process.And therefore my experience in the past was that they were going to keep this very well locked down. And therefore my initial words to you, and so forth, both in the journal, as well as in the regular webinars series I do monthly for all subscribers, was that I basically believe that things were going to be under control. As effectively china was starting to further lock down their economy, lockdown transportation, so forth. I spent some time looking at some of the transport restrictions. I was looking at some of the exports, the shipping flows, logistics, and I started to point out that this was going to be a little bit of a drag on the U.S. for some consumer goods and elsewhere that might not be flowing as easily to some of the West Coast ports.You go back into the issues in December, January, into February and so forth, you'll see some of those discussions, but what I really sort of have missed and dropped the ball was the idea that while there were initial discussions to close air and seaboard ports for human travel, particularly coming from some of the affected areas in Europe and in Asia, largely those were sort of sidelines or were opposed, and therefore things sort of came in and basically chaos started to ensue.Of course, the other thing to recognize, as I also pointed out was, in Europe, particularly in Northern Italy where we saw some of the initial major flare up in this sort of the condition, I pointed out that a lot of the craftsmanship that was done in leather works and elsewhere in and around some of the major Northern European towns from Venice through Florence and onto Milan were done by a lot of Chinese workers that travel to, it's something that's not necessarily fully discussed by some of the major fashion houses, but I basically witnessed firsthand.And therefore, I think that largely was come from some of these folks before was recognized as being a real problem, their travel basically inadvertently brought the virus into Northern Italy and therefore that allowed the rapid spread to an unprepared Italy and in parts of then in toward Central Europe and therefore, and with the lack of border controls in the U.S. it spread here.So all of that basically started to, it really seemed to come to a head into February and of course, everything just basically went into full chaos mode. And of course, as you recall, we have February and into the majority of March was just gut-wrenching. As I recall, I don't think I slept much during all of that watching what was occurring in teachers and trying to discern the winners and losers, as you might also recall, I spent a lot of time further detailing my ongoing credit analysis of each and every position we have in the model portfolios.And then I expanded that to status for all the positions. And by status it was not just on the credit viability, the credit continuation of each and ever position, but also in terms of how each and every company was going to be able to sustain itself, as far as keeping its supply lines, keeping its customer basis and keeping its business going through this problem. And therefore, I made a collection of sell recommendations from some traumatic turns in certain industries and some companies identified just weren't up to the COVID mess at challenge and the ensuing lockdowns, but subsequently the companies that remained in the portfolio have proven out to not only have been able to maintain their credit standing and their credibility, but also their status as far as their underlying businesses.And of course, on March 23rd, we had the federal reserve come in with everything, not everything they can, but a tremendous amount of effort. And again, past criticisms of chairman Jay Powell, basically evaporated within seconds. And again, I would argue he's basically being sort of the non-traditional Fed chair has been one of the best leaders of the Fed during this current mess and certainly he has recognized the necessities of what the Fed's capabilities are and what the Fed could and should do and basically he delivered. And as a result, as we can see on this chart of course, the S&P basically has just rallied back significantly. And of course the technology part of the equation benefiting not just from the general benefits of the economy, but also from the benefits of the remote work and the stay at home and therefore that basically rallied.Now, we ran into sort of a peak to the opening days of September, and therefore September was a major fallback in the marketplace in which the S&P and technology stocks even more so really sort of took a tumble. And again, this was something which I pointed out during the issue that was going into print that this was not necessarily what we had seen back in September of 2018. You might recall that the fourth quarter of 18 was a very dire correction after a major rally following the tax cuts and JOBS Act of 2017, that sort of set off a major rally as far as corporate sales, corporate bottom line earnings, post taxes, as well as the general economic boom time. And they're therefore in 18, the viewpoints was arguably that things had gotten as good as it was going to get, and therefore it might sort of subside from there.But as I pointed out that that really wasn't necessarily a case because back in the early part of September as is now the second quarter, and of course now we're in the third quarter reporting as we're now in the fiscal fourth quarter of the year. Second quarter was not very good for sales earnings for the members of the S&P and same thing for the technology space. And the third quarter is also not necessarily going to be all that great. But as I continue to point out and show some of the compile of illustrations, as far as the average sales gain for the various segments, as well as the average earnings gains for the members of the S&P and technology index and other sectors, we really are looking for sort of a major turn into 2021, particularly in the second, third and fourth quarters of next year, in which we're seeing further increases in revenues and further increases in earnings across the board.And therefore that is what the stock market looks for. It doesn't care where things are or were. Its looking at where things might very well go. And therefore, that's what we started to see sort of a rebound in the past week including today, in which the markets have continued as sort of an ongoing daily rally. Now, it's not with some concerns everyday after I'm up, I turn on my Bloomberg terminal. I immediately check both where the Asian markets have been, the European cash markets, and the futures markets for the U.S. markets.And again, I look at the green on the screen and I'm seeing another rally and the S&P and so forth and I keep thinking, "Okay, it's nice. I don't have to worry at the moment, but I still have to worry that we seem to have this day after day." And therefore it's something that again, I don't basically just assume that everything's just going to keep going in that direction, but the key thing of course is what basically has been getting us there. Well, yeah, as I'm point out and others out in the marketplace have said as well, the retail investors really sort of came into this marketplace because of the stay-at-home and work-at-home work.People have a bit more time to spend on their financial homework. Now, I know that you, as being a diamond members, you take a direct interest in your portfolios and therefore whether you're doing it specifically on your own, or if you're working with, or counseling your advisors again, you're integrally involved in the allocation and visual securities and so forth.But for so many households in the U.S. that really had been diminished from the nineties, back in the nineties, individual investors were a large number, a large portion of the U.S. Stock Market. We also had a significantly higher number of individual stocks that were listed in the U.S. marketplace. And that really sort of has gone away in which a lot of packaged products, investment products, a lot of funds, of course, the merchants and expansion of exchange traded funds has brought sort of that index part of the equation and therefore individual investors really weren't necessarily there, but they really have been coming back with a vengeance added of course, or aided rather by the reduction in transaction costs.Of course the zero commissions has become much more pervasive across various brokerage firms and therefore that has been very much a positive, but again, as we all know, no one gives away stuff for free. There's always something that's making money behind the scenes and of course, transactions and market making and so forth and a wide variety of other things that happen in brokerage firms. And again, having run various parts of brokerage and financial firms in the past.I could give an entire lecture of how firms can make money, but nevertheless, the headline cost of commissions are going away, I think really help to move that. And of course, retail investors spend some time and realize that there's a lot of good things and that kind of flew in the face of a lot of shellshocked professionals. But again, the other part of the equation as I just mentioned a moment ago forward expectations. Bloomberg and it's compiled estimates for a per sales earnings of companies across the board show improvements.And therefore, since the market looks forward with expectations on the rise for recovery and improvement, that helps drive the stock market. And then more recently we've seen a reduction in electoral risks. Again I think a lot of this year the elections, you know, had been sort of front not really completely but, right alongside many other things I've been thinking about. And of course, a lot of that seems to be sort of sliding.We've seen some dramatic changes and challenges, both from the top of the electoral ticket and through state and local and therefore, there's arguably there have been a reduction in some of the major concerns. There's also potentially a reduction in sort of the contested part of the election, which I think was arguably one of the more significant risks in the electoral, not necessarily the results, but the protracted election and potentially having both sides fully lawyered-up around the country and doing battles with pickax against each other. That was not necessarily going to be good for anybody in the financial markets. That might basically be subsiding if, but of course, we've got a lot that's going to be happening into November 3rd.And again, even with some of the polls and so forth, it would be surprising if we got a full definitive results, even by the fourth or 5th of November. So again, it's still something that's out there and I'm going to be watching as we head through there. The other part of the equation with the Fed's action, cash is so low in yield. And therefore the opportunity costs of being in the financial markets is really been significantly reduced. And therefore as cash opportunity costs are dropped, it means putting money into the financial markets, both stocks, bonds, gold, and so forth becomes that much more appealing. And of course in the financial news and the financial markets, it just seems like we just get every day, just constant flow of hype news about various segments, various technology parts of the equation.And of course, so much more recently has come from the special purpose acquisition corporations, the facts, which again, as I pointed out some of their major challenges in the structure and the complete lack of transparency, and of course we can look at Nicola has being one of the prime examples of what can go completely off the rails. But nevertheless, that has basically spurred a lot of further activity in the course, the IPOs and so many companies have recognized that they want to come to the market while the getting's good with a lot of uncertainty in the next year. I think largely on the backs of if we do see a change at the top of the electoral ticket and the White House and all the agencies, regulatory changes and reviews, and so forth of things are going to be there and therefore given the low rate of cash interest rates and the opportunities, the general market IPO's are really what's working quite well right now.But what are some of the problems out there for stocks? Well, despite what the Fed has done and what the administration led Congress did many months ago, subsequently from the end of July and of course the follow-up evaporation at the end of September, we really haven't gotten the extension of some of the fiscal support and that's I think is still a continued problem. The idea that we could have seen a further expansion and further ease on the paycheck protection program, the PPP the idea of being able to further provide some of the federal additional benefits for the unemployment rates, the unemployment insurance benefits, all of that would have done exceedingly well and it would be very welcomed.We also have certain key industries like the airline industry and so forth, and the other, because it is such a vital part of the general economic infrastructure, the U.S. being able to have some additional support. It's these very targeted things, should, could be done and it seems like it's just not happening. We also have, the Fed as I mentioned, and Jay Powell specifically has mentioned is that we still have very much demand challenges in the economy.Again, while the consumer has been out there buying goods that are being delivered by Amazon, which of course is doing well for us in the model portfolio and Walmart and others and that's also been expanded into the automobile sector as people have been buying, and of course we also have the RVs, boats and so forth, Thor, Marine Products that we've added to the portfolio and things continue to look good for both of those companies and that sector into 2021. Again, we're not necessarily seeing that flow throughout the entire economy.There's still vast segments that are running into challenges and a lot of businesses they still are reticent to make further investments. And really until we get sort of the resumption of broader demand for goods and services across the board, that is going to be a drag on the economy and therefore a drag on the broader share market, not just simply some of the big leading companies that are the boldface success stories.And of course the other part of the equation is the Fed has done a tremendous amount of providing financing, other facilities, thanks to the treasury secretary munition and the mandatory extension of guarantees needed for the Fed to do its job that were granted by the treasury. Financial tightening is still very much there. You look at the commercial banking and so forth.A lot of banks, even with some of the PPP availability still there, a lot of banks have pulled back from making further loans, concerns over of repayment and some of the forgiveness payments. We also have seen that despite some really significant surge in the housing sector with new home construction, new home permits, existing home sales, as well as mortgage applications. Again, we're still seeing some ongoing concerns in some of the existing mortgage portfolios and therefore a lot of the outside of sort of the processors of mortgages like rocket mortgage and elsewhere, a lot of the big financials and banks and so forth, they're traditionally be originating and potentially taking some of these on their balance sheet. It's just not something that they're willing and prepared to do.And then you're looking at more of the main street lending for commercial banks. Again, more concerns and more tightening. So the broad based part of the banking part of the U.S. is just not really on board and of course, significant sectors not working. Major parts of transportation infrastructure, it's just not working. And the recovery is not going to happen for many, many months, even as vaccines potentially get sort of rolled out. And then we also have the restaurant sector hospitality, other parts of travel and leisure. All of that is just not happening for some time, even though we are seeing some glimmers, including some of discussions about how well Disney Parks down in Florida are doing with really sort of very much controlling the COVID spread and emergence in their parks down in Florida.And I mentioned a moment ago. Elections, we're not done, we're not settled, and therefore it's still sitting out there. And then the last part of the equation is valuation. So many of the technology companies are just, I don't want to use the flippant word of silly, but there are a lot of companies that I come across. I understand the business model. I like what they're doing. I see what's occurring. And I, again, I can make the argument of buying into growth, but then I start looking at where they stand now and I just can't basically justify that. It's more like, sort of the putting money down on a betting table. And I think eventually people in the marketplace are going to have to care because even though current conditions are, as I mentioned, aren't really what's going to be the driver.Again, the forward looking has to eventually come back to reality. So those expectations for 2021 have to show up in order to justify those valuations. And I think that's going to be a challenge. But let's also point at things I mentioned a moment ago. When we saw the big sort of downdraft from September 2nd, into the current marketing with the rally back we had last week and the S&P and the S&P technology sector.It's really much more sort of the old solution companies that have been doing much better here. We're looking at the... I've plotted the total return, which is from September 2nd to date. And so we have the white line is the Bloomberg U.S. REITs index, which is in the positive territory. Of course, that has a lot of various components, including some of the more challenged parts of the equation that are still in that index, like leisure and hospitality.But, that's really more than offset by so many other very positive parts of REITs, including logistics like Prologis, the data centers, digital Realty and office properties. And then you look at the self-storage, life-storage and a lot of the REITs that we have are doing exceedingly well. But again, the REIT sector has been positive, the S&P index, even with the rally back that we saw in the past week and we're seeing so far for Columbus day. Again, happy Columbus Day for those of you. Again, I look back. Columbus Day always holds a soft spot in my heart because back in the very early nineties, I basically achieved a very significant financial milestone and recognized on this day.So again, I always look at it as being a personal day that I like to recollect on the past. And of course, for those of you in Canada, happy Thanksgiving. So I appreciate you taking some of your time away from family and friends to participate. But that being said, the S&P is still down from there, even with this recovery, but the index that I want to draw your more particular attention to is the utility, which is the red line. That's the S&P 500 utility sector index, which basically has rallied back significantly.And again, both REITs and Utes really have been sort of left behind during a lot of the big rally in the U.S. share market, but when you look at the valuation part of the equation, you look at the, a lot of the very, even the very solid, good performing real estate investment trusts are still trading at around two times the underlying intrinsic value, book value of all of their valuable property.You can look at data centers, you look at logistics, warehouse space, and look at healthcare facilities that are all basically in strongly demand. And then of course, the laboratory space with Alexander real estate, one of the more newer positions, all these properties are hard to replicate, very valuable, and yet the value of the shares that plug into the Bloomberg U.S. REIT index, again, so cheap at around two times or less of that intrinsic value.And therefore, I think it was, that's really sort of be catching on as people recognize and they can buy. But then you look at the utilities and again, a similar explanation. I think a lot of folks looked at utilities during the lockdowns, and the argument went that with businesses shuttering and so forth and locking down demand for power and other essential services was going to drop dramatically or go away and therefore utilities were going to be in jeopardy.That really has not been the case. It just sort of moved things around as far as demand. Virginia of course, is one of the primary things in which you have a lot of data centers there in Virginia, as well as a lot of homes and work-at-home things that were doing seemingly well, or you look at other states around the nation, again, similar sorts of stories and therefore both power and other essential services demands have been quite strong. And therefore the idea that the valuation of these, of the utility from power, natural gas utilities, the water sector, and other sorts of services really are very inexpensive. And again, coming with some really nice dividends.And then you also add in the further recognition that so many utilities are very much on the forefront or cutting edge of ESG environment, social and governance investing. And that also is gaining ground as we're starting to see some roll-outs of some of the index-[00:31:04]In this, we're starting to see some roll-outs of some of the indexed ETFs and index funds that are getting on board the ESG movement. And of course, I've been drawing your attention to ESG for some time and of course, I've added some of the index funds to the model of mutual fund portfolios, as well as further index participation in the total return. And I think that's also parsing. So again, the old solutions are working and again, the idea that these are still very much good bargains right now.Now, what has also been sort of good for the general share market? Well, consumers are comfy, so here's the Bloomberg Consumer Comfy Index. And again, Chicken Little was right, the sky was falling and it fell. And so from the beginning of the year into March or April, things were just absolutely just dire. No one had any idea what was going to be happening, with the economy was going into absolute Armageddon and what was going to happen. And therefore, the comfy level became very uncomfortable. But subsequently, from Fed action, to fiscal stimulus, as well as the ongoing sort of recognition that the majority of the population would still be able to keep their jobs, work remotely. And we're just spending, but spending in different ways. You look at a lot of municipalities and so forth where originally, we're thinking it's very dire. They were going to lose sales taxes, well, they lost sales tax from their high street, but they picked it up from Amazon and online deliveries, as well as groceries and big box stores, hardware stores, and so forth.So again, the idea that consumers basically woke up and recognize that, while millions are in dire straits, the vast majority of the workforce was doing pretty well or at least hanging in there. And as a result, we've got the comfort index is now above where it was leading into the election of 2016. And therefore, that's also an important parse of what's sort of good for the market. What's bad, and this is what I was alluding to earlier though, is that when I talked about demand, in which the broad demand in the US economy from a lot of businesses, just isn't there. And I think it's reflective in which we're looking at here.Now here, as I've shown various versions of different parts of what the Federal Reserve Bank of New York does through its ongoing survey and touching base with the C-suite, the executives of corporations around the US. And here, we're looking at the expectations for activity. Current, which is the white line, which was just gone in the early part of 2020, but it has been coming back and still very much in the negative territory, but this is a broad viewpoint of all the various industries and not just the Palo Alto tech guys. But then the blue line is perhaps a little more of an importance in which that's where things are looking for six months from now.And again, we're back into positive territory. And again, there's a there's recognition that we might very well be seeing some improvement, but again, the current conditions is so hard to get past. So many companies, so many businesses are just not really that comfortable where they see their business right now, and that's a problem. And therefore, that problem, I think, is reflected in the broader S&P company though. The S&P 500, the standard one, it's weighted. And I've been writing about and talking about the breakdown of the S&P and how it's been evolving. The S&P is always evolving as far as its membership and its waiting in the various sectors, yeah. And Standard & Poor's does this on an ongoing basis.But then there's also the way of looking at the unweighted S&P 500 index. And I first started drawing your attention to this back in 2018, when I took over Profitable Investing. And again, being sort of a broader indicator for all of the stocks, of all 505 stocks, without that sort of heavy tech focus. And you can see that while we've seen improvements and strong recovery from earlier this year, we still have not made it back to positive territory from a year to day basis. We're back in the green for the trailing year, but it's not the same as the standard S&P 500 and certainly the S&P technology index. And I think this really reflects, again, the ongoing concerns of broader industries in which they still have not necessarily gotten back on board and also gotten the attention of investors.And now you might say, well, is this bad? Is this a warning? And I would then in turn, flip this, and have you consider that this variable represents us in value, in which rather than buying or following the super high flying or hypersonic tech, the idea of looking below the headlines and looking for so many companies that are in sort of the broader S&P that are out there doing their thing, maintaining their status, having proven their credit, and yet the stock market hasn't necessarily gotten on board. I mentioned the REIT sector a while ago. I mentioned the utility sector on board. There are also a variety of other sorts of middle-market industrials and so forth, that also are getting some benefits. So again, what represents or shows that there's a challenge in the market also means that there are some opportunity for stuff that we can buy.And therefore, that draws me to what I referenced a moment ago, which is one of the big solutions, not just for this year, but for 2021, is the ESG, Environmental, Social, and Governance. Now I know that for many of you that you basically look at this and saying, "This is his bleeding heart stuff. When I invest, I invest to make money. If I make money, then I'll make my donations to the causes that I believe in." And for a long while, I was very much in that same sort of camp. I basically focus on the investment. I've read and followed and listened to lectures from Milton Friedman, had the phenomenal opportunity to have met him many years ago. Again, I think the world of his sort of approach to capitalism.But again, I think a lot of Milton Friedman wrote about and so forth in the past, I think he would recognize that there are some benefits, in the financial markets and for companies. If there is enough demand from their customer base, enough demand from their investor base to make changes, that they would recognize that that is a tangible result. So it's not something that the businesses are just taking on their own, but they are reacting to the demand of customers and demand for investors. And that is a big thing. If you were to plot effectively the S&P ESG index, which is more of a modern inclination and see that it generally traded at a discount to the general S&P.And that really sort of is as hitting a major turning point this past year. Because in effect, companies that are compliant with the ESG standard, meaning that they show that they care about the environmental impact that they are doing. They care about externality costs of their pollutions, their effluence from their disposal of liquid waste and so forth. They also have concern for the society and their communities in which they operate. And of course, for shareholders focused on governance and being more transparent for shareholders potentially, and also including splitting both the chairman from the chief executive, which I think is something that should be a must. That basically, is working. And I think it's working because of the demand shift. Customers want to buy goods from companies that are basically more compliant from ESG. And also institutional investors, which still dwarf individual investors in the marketplace, the beneficiaries that they respond to.So pension funds, endowment funds, including for universities, laboratories, think tanks, charitable organizations. The beneficiaries and the directors and contributors and so forth, has been really sort of putting their foot down in mass. And not just little protests at shareholder meetings and annual meetings, but on an ongoing more significant basis. And this has been led by some significant asset management companies, including BlackRock, which we have successfully in the model portfolio, as well as some of their funds. Larry Fink, the co-founders of BlackRock has been very much in the forefront of saying ESG is something that needs to be, and it's not just because we want to be good people, it's just good business. And therefore that is really sort of getting fully on board. And we're seeing some of the other asset managers in which you're seeing firms, including some of the significant asset management, UBS and others are now saying ESG is more important than traditional investing.Not just because it might be good for people, because it's better for returns. And therefore that's what's starting to show up in which you look at, the white line is the progress of the S&P ESG index. And the blue is the standard traditional S&P. And you can see that the ESG index is gaining ground. And I think this is going to continue very much in through 2021 and beyond regardless of the elections. But if we do see significant changes in the election in November, this will only, I think, amp up the demand for ESG compliance for so many companies and including the bond market for green bonds, which has also a big, big surge.The past week or so, we topped 1 trillion in green bonds out there. And of course, I've gotten this on board in the index front. And again, I've already been identified some mini bonds that are ESG green bond compliant, and you'll be seeing those coming shortly. And of course, this is all basically working out quite well. And if we do see a change in leadership towards the other side of the aisle, I think you're going to see even more so in 2021 and beyond.Now, this brings up, I mentioned green bonds, but just the general bond market, one of the big solutions for the financial markets has been that bonds continue to work. And so here we have the trailing years performance of the US Aggregate, this is all of the bonds, Bloomberg and Barclays take all, theoretically, all the thousands and thousands and thousands of bonds out there in the US, and they basically built this index, that synthetically represents them. That basically has been, it had a little dip in March. But even then, it was barely a negative territory, and it's been very positive for year to date and for the trailing year and for the trailing years.And then you look at the red line, which is the Bloomberg US corporate bond index, which I've been drawing to that has been outperforming, corporations with status, and credit status are doing well. Demand is very, very, very strong for both institutions, insurance companies, pensions that need income, they're buying these. And the municipal bond market, which is the gold line, which has a lower positive return ever. Munis effectively, also have the tax advantages, which aren't necessarily fully reflected in that number. But again, with municipals, we're doing exceedingly well. Their credit standing, so forth prior to the chaos of earlier this year with COVID, was continuing to see further improvements.And while there have been some continuation of some municipalities and some States like Illinois that have pension woes and some other issues, the vast majority of a lot of the municipal issuers, are finding as I referenced a moment or so ago, that sales tax revenues actually they are doing well, if not are up. There a lot of anecdotal things in which, again, because of online sales and collection of taxes, we're seeing a lot of municipalities and states, they're collecting their due. And so the coffers are actually doing pretty well. So contrary to what was me cutting out of some of the state houses and some of the congressmen and senators for some states, a municipality and these issuers are really on a broad basis to well, and of course the fed has their back. They have miscible facilities that are very accommodating, and we've seen very few, very, very few takers of the fed support.I think that's largely reflective is as being ongoing improvement. And I'll talk about more specifics about these markets in just a moment, but the general gist is on a risk reward basis, the bond market is still providing a good yield and particularly in the closed-end bond space, which we have a lot of those. And again, with the fed, basically maintaining the backs of bond investors, things should continue to do quite well. And again, one of the things that I've also been drawing your attention to in the September issue in which a lot of folks have been saying, okay, bond yields are down so dramatically, which you're seeing yields in treasuries, under theten year or less than 1%, how low can they go? And therefore, is there any return left?And even in the corporate bond space, yields have come down, again, am I buying something that's has no upside in price and therefore I'm not going to be able to get in and achieve some of the total return that we have in the past. And therefore, I know many of you, as subscribers are saying, Neil, I know you keep talking about growth and bonds, but how low can yields go and what can that do for pricing? And what I want to point out to you is the impact of reductions in current coupons for bonds means that you can effectively increase the adjusted duration for bonds. Now there's a lot to unpack on what I just said, but what this graph is I had put in front of you, is this basically takes the Bloomberg US corporate bond index.That's the thing I showed you a moment ago, as far as what it was doing on a total return basis. And effectively, I've broken out that index and looked at what the effective adjusted duration of all of the bonds that are inside that corporate index. Now what duration measures and overly simplistic terms, and again, I could give an entire webinar series on bond math, including duration, but to make they make things short and sweet, ratio measures the effective price change for the equivalent yield change. So as yield drops... Yield drops in a bond, prices rise. If yields rise, prices drop, right? Because there's the inverse relationship with bonds. And as effective coupons go down or drop lower, it means that the effective duration or the impact of each 100th of 1% change in yield, it becomes more meaningful in the actual bond price.And therefore putting this perspective, if you've ever invested in a treasury strip or a zero coupon bond, you'll note that, in a zero coupon, you're not getting any current and you're not getting any dividends or coupon payments. And therefore you're just accreting interest over the life. And therefore the price sensitivity of that sort of bond is significantly higher than a coupon bearing bond. And therefore, if you look at it from bonds of today, this is the coupons are so low. And so that effectively, the duration has been climbing. So the duration basically was already starting to climb into the latter part of last year with the dropping in yields. And of course the federal reserve was already addressing some unrelated to COVID liquidity challenges in some of the corporate and financial financing parts of the US economy.But then of course, the duration basically, dropped dramatically February to March as bond yields spiked. And then basically, subsequently these bonds were being bought and effective of the yields and the new coupons with new issues have been coming. The duration has been increasing and therefore as the duration increases, it means that that price sensitivity, the yield drops, which means that even though yields are low currently, there's still a lot more price opportunity there. And that's what I want to get across, is that bonds have more growth potential for them based on just pure bond math. So, and of course it also works with particularly what's occurring in the municipal bond market. So one of the key things that I get questions in the regular webinars on an ongoing basis, asking about some of the leverage that is part of closed-end funds, particularly the closed-end municipal bonds funds that we have in the total return, which include the BlackRock and the two Nuveen. The one, the standard credit one, and then the AMT free one.And the idea that I basically have always advocated that they will have leverage basically aides cashflow. It's basically like any sort of bank or financial. You have borrowings and so forth as part of your own operation. It helps to take advantage of opportunities, as well as just general investment for your loans versus deposits. With the bond market, again, you get to borrow now, basically on the floor at near zero, and therefore closed-end funds, particularly in the municipal side, are able to fund their bond portfolios at near zero. And if you look at the BlackRock and the two Nuveen have been increasing their distributions. So even though the yields are lower and we have not seen some further gains, potentially see some further special dividends that might be rarely coming from these.But BlackRock and the VLA fund has increased twice this year, bringing the current yield 4.94, and then on taxable equivalent basis, that yields 7.6%, which is to me very appealing for the top brackets. But even a 4.94, even if you're in the lower income tax bracket, that's a great yield right now. The Nuveen Credit Muni Fund, NZF, they've increased once, and I think I could see them doing it again before year end. That has a current yield of 5.31, which is 8.17 on a taxable equivalent. And the Nuveen NVG, that's the AMT free. So again, if you're potentially suspect or your accountants basically say you're at risk for AMT tax liability, that's why I have the two versions of that in, that yields at 5.15 with one increase. And I could see another one, and that's a taxable equivalent of 7.92. But I also want to bring to your attention, this isn't a new thing in which these funds and the municipal closed-end market has been a consistent performer, here's the past 10 years alone.And in fact, I've been recommending various components of the municipal bond market for decades in my prior publication, which was personal finance published by KCI Communications and then a lifetime income report by Agora Financial. And of course, in through now in which is... This is just the past 10 years, in which the average for these three funds alone is an excessive 80% with the Nuveen basically touching at close to 90. That means the average annual equivalent is greater than 6% per year with the tax advantages. And so again, I've gotten some of your questions and queries, which I'll be addressing at the end of this presentation. But again, the municipal bond funds are just represent really good performance now, good cash flow now, as well as some further gains over time.And of course, one of the things that's that's helping this process is, as I mentioned, the fed is there, this is the Fed's portfolio, in which you leading into two, the fed was starting to allow the portfolio to sort of start to settle down since it built it up into an excess of 4 trillion and from 2009 on, it's in response to the 2007, 2008 financial fiasco. It increased the portfolio in the fourth quarter because of it's addressing some of the institutional credit challenges in foreign exchange swaps, repurchase agreement transactions, and some other esoteric transactions for most individual investors. But again, into March, basically they excuse just started buying, buying, buying. And therefore we have it in excess of 7 trillion. And again, this is not going anywhere. And the fed has the capability, thanks to guarantees by the treasury, that they could expand this as that as necessary.And Chairman Powell has basically said, "Yeah, we're here, we are here. We're not going anywhere." And then this is a big benefit to the financial markets. And I see this not going anywhere for, just like it didn't go anywhere throughout from 2009 on, it's not going anywhere from 2021 on, and this is a big benefit to the bond market. Now, again, I know a lot of folks are also concerned and they're wondering about the treasury market exist, and we've seen a little bit of a backup or an increase in yields in treasuries. Here, we have the yield curve for US active treasuries. These are treasuries for the various maturities that are trading currently, now from one month up to 30 years. And you'll see the green line is roughly the current marker from a few days ago. And the brownish gold one is where things were a month ago.And you'll note that, in the short term, no real change. We get up to 10 year, a little bit of a pickup in yield. Now, to the 20 and 30 year, a little more of a pickup in yield. And therefore some folks are concerned, is this a harbinger for, is inflation coming? Or is there going to be a problem in the bond market? And I would argue, no, I think the federal reserve is not as concerned about the longer term maturities, which are still very low. Those are not necessarily as important to the financial market mortgages. A lot of corporate bonds are and so forth are priced off the 5, 7, 10 year area. And therefore those, that's the area where the fed is more concerned about. And so while it might, you can see pundits trying to make some hay over this. It's just not really based in a lot of reality from my perspective, as a former bond guy.And of course that brings up inflation, is this a problem or a solution? Now, that the solution is, with increasing demand, which we'd like to see, and I talked about this a moment ago, early on this webinar, we need to have broad demand in goods and services to start seeing any sort of pricing power and some sort of return inflation, getting and sustaining it above 2%. And then some, which means we've got to get inflation in that mid to upper part of 2% in order to get that average to 2%, which the fed sees as mission critical. And so here, we're looking at, the white line is the monthly data points that come out of the census and the commerce department. And then you have the blue line, which is embedded in the gross domestic product and the underlying personal consumption expenditure data from the quarterly data, in which you're both seeing, we're still way below 2%.Now, of course, as we all experienced, with logistic challenges and so forth that are happening in various hardware and the grocery store and so forth, we all are seeing some pricing and some pricing disparities and spiking in some goods. But we're not seeing this broadly translate into inflation, which includes all of the personal consumption goods that makes up the PCE. And therefore, it's still basically, it's helpful that we're not having this. And therefore the Fed's going to keep things as is and be supportive and accommodative. But again, we'd like to see this start to improve because that would show us that the economy is getting a little bit better. So it's both a problem and a solution.Now I'd like to talk a little bit about another thing, which I think is not necessarily getting enough real discussion, which is the US dollar. There've been a lot of discussions out there saying, oh the dollar is dropping like a stone, it's doomed, oh it's going to be worse, blah, blah, blah. And the reality is it's nowhere near that. You look at just the past five years, the dollar in the... This is the Bloomberg dollar index, as opposed to the traditional dollar index, you might see reported online or in the Wall Street journal or elsewhere. The regular dollar index basically is a very Eurocentric index. So it might as well be the Euro.And therefore that has been, at the Euro, seen a little bit of improvement because of some specific things happening in Europe, which I'm going to talk about in a moment. But you look at the Bloomberg dollar index, takes a look at the leading currencies based upon financial transactions and trade transactions, and includes a much broader and more balanced basket of goods and translate into dollars. Over the past five years, the dollar index is still sitting right now, pretty much where it has been on average for the last five years and then some. Now, what I will draw your attention to is the spike in the dollar from February to March. And I basically would advocate that the dollar really, and its valuation and trading, I think is more of an indicator for demand for cash.As the market, as you might recall, and you might've done this for your own portfolio and so forth is that while we maintain a pretty heavy cash allocation in the model portfolios of profit investing, people did basically raise a lot of cash just because it was just chaos back in February, March. And that was the case through institutions around the world. And therefore the dollar really was spiking because everyone just, people didn't want anything. They didn't want stocks. They didn't want gold. They didn't want many parts of the bond market. They just wanted cash and therefore cash for the world is the dollar. And then subsequently as the fed stepped in and we got some more normalcy, the dollar basically started to retreat and head back to more normal territory. And I'd also noticed I point to your attention is that into September with the selloff that we had in the S&P and the selloff more so, in the technology space, what happened, the dollar started to spike as people, sold off and they stored away cash.And therefore I look at the dollar as being more of a cash indicator and less so as hard indicator of some of the good or bad and the US markets and economy. But what I will basically also suggest is that if you actually take a peak at comparing the dollar with the Chicago Board Options Exchange, a volatility index, the VIX. The VIX index, again, to way oversimplify the process, it takes a look at all of the put in called transactions that are happening on the Chicago Board on the S&P 500. And it effectively runs its calculation. It comes up with the idea that as the VIX index rises, it basically points to that the expectations are from the options market, that the the S&P should see an increase in its day by day volatility, more erratic changes, as puts in calls being transacted through the Chicago Board starts to subdue, that would lead to a lower VIX. And therefore the expectations are the S&P would might settle down with less volatility.And therefore, if you look at and do a comparison, which you overlay the white line, which is the Bloomberg dollar index for the trailing year, and you overlay that with the VIX index, it's interesting to see that there's a very similar pattern in which you saw the VIX really start to climb and spike as the S&P was going through its dire chaos mode, February, March. And of course the dollar basically, yeah, spiked as people needed cash. And as things settled down, the fed did its thing and the administration got Congress to do its other thing, things started to get more normal. And therefore the VIX settled down, the dollar settled down, as there are less demand for cash and less concern over volatility in the share market.That basically changed a little bit, ahead of September as we saw, the tech stocks selloff, cash rose with the dollar, and the VIX rose a little bit ahead of time. And therefore, again, it's not completely definitive, but it's another part of the toolbox that can be sort of a warning sign for me and therefore in turn for you. And if you follow these two, it can give you a indication that there might be some further trouble coming down the pike, as far as the markets are concerned. Now, one of the other things that I also, I want to draw your attention to is it's been one of the solutions for the marketplace, which is gold. And that solution has gotten now cheaper. So here we have the spot pri-[01:02:04]... got now cheaper. So, here we have the spot price for gold, which is in white, and we have Franco-Nevada, which is the gold company. The gold company doesn't mine, doesn't own mines, it simply has ownership interests in gold and other mineral production, as well as having royalty interests in gold and other precious metal production. And therefore that's been my recommended way of investing in gold from June of last year to now. And of course, what we've seen is that gold... My original argument for why gold was going to do well was interest rates were going lower. I didn't realize that back in June of last year that they were going to go to zero with the lockdowns and so forth and the Fed, but I saw that interest rates were heading lower. And as interest rates head lower, the cost of owning and financing gold drops, and therefore gold becomes more appealing.And then the second part of the equation is, that the dollar was sort of settling down into its averages, again, before we add the sort of the chaos in February and March. And therefore the combination of a lower dollar, because you're looking at gold denominated dollar, if the dollar is weaker, it means gold will be worth more. If interest rates are lower, then gold becomes more appealing. And therefore that combination is what drove me to that, and then to Franco-Nevada because of the structure I just mentioned to you. So again, that worked out very well, and we did see selling back in February, March as people just needed cash and therefore they sold anything that wasn't locked down. But subsequently the gold market and more so for Franco-Nevada, Franco-Nevada has consistently outperformed the price of gold, including its dividend, has basically done a very good job.We sort of hit a peak so many weeks ago, and now we're basically seeing a little retracement. And I think this is largely due to a little bit of opportunity costs, and not just related to cash and short-term interest rates, but because the share market and the bond markets are doing so well, that's another competition for investment in gold. With the share market gaining ground, a lot of people were saying, well, okay, I've made my money in gold, I'm going to redeploy some of that into stocks, or I'm going to redeploy that into some parts of the bond market for better risk controlled return prospects. But the other part of the equation is I'm also drawing your attention are three other developments in the gold and precious metals market in which mining costs are up. Now with the COVID mess, a lot of mines around the world have had to curtail their production or shut their mines.The idea that a lot of miners were, unfortunately, subject to COVID and had to suffer through that or worse. And therefore that caused curtailments in production. And therefore that basically, I think, was weighing on the gold market. And therefore, I think that basically started gaining some traction over the last month or so. The other part of the equation which I've also written about, which is the storage costs, the idea that the gold market really has gone through such traumatic shifts in supply and demand around the world, in which the idea of storing the stuff has become harder to do. In other words, a lot of storage facilities are full up and there's been some shortage in various parts. There's also been shortage as far as where gold is and where it needs to be.For a while, in the past several months, London had too much gold, New York had way too little in which it needed to settle transactions, meant having to move the stuff around, that costs money. And I think the gold market is still sort of settling that out. But the last thing, which I think is a longer term challenge, which is the ESG. Now, when you're mining gold, you're doing a lot, you're not just being in a nice, pristine stream with the mountains behind you and the deer and the antelope prancing around and you're basically sort of moving your little pan around looking for the nuggets coming out of that water. You've got big [terrax's 01:06:19] that are ripping into mountain sides and tearing down mountains, you're digging and stuff, you're creating huge crevices and all sorts of things. And you're dumping stuff.And effluent is flowing everywhere and soil, and you're unlocking all sorts of heavy metals. And then you're also doing some initial processing of stuff and you're releasing mercury, you're releasing all sorts of stuff, which is just not good in the environment. And therefore that's a big problem. And I think the gold mining industry is going to have to start really dealing with getting a handle on how they basically start to finally get around to being a little more environmentally friendly, at least make some inroads into it. Otherwise, they're going to be running into problems. And I think this is one of the reasons we're starting to see a little bit of the softness. The other part of the equation is the social front in which a lot of mining companies are in countries that really aren't necessarily the most friendly places on the planet, particularly when it comes to workers and workers rights.And therefore that's not necessarily going to bode well for shareholders in a lot of gold companies. And therefore that's going to be filtering into the gold price. You don't have to look back too far in another industry, which is the diamond industry. We have conflict diamonds from the Congo and elsewhere in which a lot of folks were saying, I don't want diamonds coming from some of these areas where these despots and warlords were operating, which you might see. Some investors are saying, I don't want to have gold unless I know it's coming from something that's a little more nice coming out of the mines and so forth. So, I think this is a little bit of a challenge, it has to be addressed.But the other part of the equation is, while this is basically creating a little bit of a challenge to the industry, it might very well provide some support for higher gold prices, because as you go through this more environmentally friendly mining operations, you also start treating your workers a little better, maybe paying a little more benefits, et cetera, et cetera, and your PIM looks more clear as far as your government structure.And a lot of mining companies have a lot of various fun share structures that aren't necessarily all that crystal clear. As you go through this, I think you're going to see potentially a cutback in some production, which means potentially cutback in supply. And therefore as that supply basically is hindered, that makes gold that much more valuable for the stuff that's already sitting in a London vault. And therefore that might basically help. So, in the near term it might give people pause, in the longer term I think we're going to see some benefits and potentially some further price rise. So, for now I continue to be, I see gold as being positive, and I see Franco-Nevada as being one of the best ways to invest in this.Then of course, problems, solutions, the elections. White house, and we've seen there's certain groups that are increasing their prognostications that we're going to see a change in the white house. One organization, I think it's 853, 838 is now saying it's at 87% lock by the Dems grabbing the white house right now. Other polls on a national basis, things are all over the board. You look at it on a state by state basis, again, it's still not done, but again, it's looking more decisive as far as potential changes. The Senate, you got 35 seats up for grabs, 23 from the current governing GOP. That very well could basically see a flippant leadership. And therefore, if you see a complete change to where you have a single party leadership on the federal level, that might very well see sort of a streamlining of initiatives, much like we saw in 2016, which led to the tax cuts and jobs act as well as a variety of positive regulatory forums and off to the races for the benefits for a lot of companies.And of course the share and bond markets and consumers and et cetera, et cetera. But at the same time, again, I would caution that even if we were to see a complete single-party leadership, again, it's arguably... And I'm not basically making a political comment, I'm just making the argument that I'm looking at it from the idea of evaluating risks and rewards and opportunities in the markets. And I draw your attention to the Commonwealth of Virginia, which there was a change in leadership in which you have effectively single-party leadership in the governor's house through this legislature. And again, well, you have single-party leadership, they still have shown sort of a hindrance to get policy changes voted on even after many weeks of special sessions. And therefore you might very well see just as the old adage is that... I forget who the offhand, who the comedian was saying.I don't belong to a political party I'm a Democrat, or an organized party. I'm a Democrat in which there are a lot of constituencies that might very well come to the forefront. So again, you might see sort of a delay and sort of things, but nevertheless the key thing of course is election night. Nope. On November 3rd, I think I see a difficult November fourth, fifth, it's coming more likely than it might be and less contested. But the risks and rewards are going to be that, again, if we see change which looks like possibilities gaining, the idea that really all we want to do is get past contested, and therefore then we can move on to the rewards. And the rewards are that there are many, many different companies that are going to be benefiting from changes in the White House.And we already are parcel of this in the healthcare space. Centene, which now is gaining significantly recently as people are waking up to what that company represents as far as government healthcare programs and an ESG green energy initiatives, NextEra, of course, with it's acquisitions and so forth. Hannon Armstrong, and I'll talk about some of these in a moment. There's so many companies that are ready to cash in. Therefore, even though there are going to be some hindrances to some industries, some companies, there are a lot of rewards. So, the whole thing is, elections happen, we get past them and we recognize what the companies are going to continue to do well, what are going to do even better, and some that might have some challenges. And therefore the key thing is, let's just get it past us.Now, I want to draw a little attention, which I also touched on in the regular webinar last week, I thought I basically would sort of touch on, a little briefly, as far as talking about sort of my process. Because I also noted that you had some questions that you were sending in that I'm going to be addressing earlier talking about this. And so, how I do my work is, I don't just kind of stumble out there in the woods looking for an opportunity. I do something a little bit different. I'm digging around and I consume just a ton of news and financial data. I read a collection of newspapers way before the sun's up. I got Bloomberg Television and other things that are running in the background. I follow various interviews. I listen to what are happening, not from the talking heads of financial houses, with a very few exceptions, but I want to hear from CEOs and government officials and so forth. Bloomberg does a very good job of that, I think more so than CNBC.I also am streaming independent news. I have PVC running in the background, constantly. NPR has some other backgrounds. I want to hear different opinions. I also subscribe to a bunch of journals, including Economist Business Week. And of course, more esoteric financial and economics journals, including everything that all the Fed member banks put out, and then some. And of course, I've got my Bloomberg Terminal, which basically gives me just the ability to look at anything at any time and do all sorts of modeling and deep dives into individual markets and individual companies. And therefore, all of that basically is what I do seven days a week. And the key thing of course is that I take notes. I have my Reporter's Notebook that [Greg Early 00:01:14:37], who's a part of my Editorial team at [Profile 01:14:42] Investing, he introduced me to these notebooks a long time ago in which I've always had a blotter for my financial transactions when I was running parts of trading desks and running funds and so forth.But now basically I have a more user-friendly, smaller notebook in which I keep notes on what's going on. And I use the reviews, I can look back and it allows me to sort of piece together what I've basically been able to discern day by day. And I identify opportunities really two ways, I look at from a top-down, I look at the globe from many thousands of feet up and identify various markets and so forth. I look for opportunities and I drill down to find the company that's going to best take advantage of that. Or now, and again, I will stumble across a company and I'll do it from the bottom-up and I'll find this company that has this interesting development, or someone will mention something to me and I'll dig it up, and I'll dig through it and I'll find it and say, "Yeah, this company is something that I like and that you need to buy," and therefore it becomes a -down, I look at it from market developments, identify the industry leader. I look for the industry leader that has better revenue growth than its peers. I also want to look at improving margins. So, the idea that they're not only selling more stuff, but they're widening the margin and everything they sell. And I want to have proven results. I want to make sure that they've been able to do this for some period of time during both the good times and the challenging times, and that ability to overcome challenges.That's very, very crucial in which I look at the big challenges for companies, are costs going to rise? Or are the customer's going to buy less? And therefore, if costs rise, that's going to squeeze our margins. I want to see how a company is going to be able to make it through. If they're going to have a sales hiccup, how is that going to play out as far as their financials and their business and so forth, and how they're going to get through it. On the bottom-up, I will come across an opportunity and I never know where it's going to come from. And to get one of the more recent examples is Covetrus, CVET, which we added to the portfolio recently. I came across this company because I was just talking with one of my old bank client's who runs an investment management firm, he's been doing it for many, many decades, fellow named John Lombard, excellent guy up in Hollis, New Hampshire, Lombard Investment Counseling.He does an excellent job, working directly with clients, low fees. I'm not doing an infomercial for him, but again, we share stories in which we talked, he follows and reads me. We talked about the sodas, which is in the animal vaccine and also pet care products. He had participated in that, and he drew my attention to Covetrus as a newer stock. And he gave me the history, where it came out of, Henry Schein. And Henry Schein basically covered dentist's office. And basically was there to provide the day by day, week by week needs of these offices and that through acquisitions and so forth. Butler Health and so forth, they were basically starting to do the same with veterinaries, and then through an acquisition, they basically spun off and created Covetrus, which was doing the same thing successfully.And therefore I said, "Okay." So, I started digging around, turns out that the vet where I take my mini Dachshund, Blue, they basically plug into this thing and I got to know it. And it basically fit in quite well, revenues rising, improving operating margins. And again, what will go wrong and how will they deal with it? How has it survived and how will it survive? That all goes through it. And then the other thing, as I mentioned earlier, when the chaos was hitting in February through March, I did a further review of the credit of all of the holdings, the idea that what was going on with debts, what was going on with the cash and their cash coverage, what was the distribution of their debt, who were the banks, creditors, who were the bond holders. The rollover risk and the ability to fund.And again, I not only did it then, but effectively, I do this all the time. So, before I make any recommendation, I do the credit work because remember I'm an ex-banker and a bond guy. So, I'm at my heart, I live on the balance sheet, not just on the income statement where most analysts and most newsletter guys live, in which they talk about sales doing this and earnings doing that. I do that, but I also want to make sure that the credit is good. So, I look at the debt to assets. I look at the cast coverage, and I look at how they're going to make it through. That's a big deal for me, because you can have some great sales, but if your credit stinks, you're going to run into trouble. And therefore, I basically want to avoid that from the get-go. And therefore that's also part of the equation.And of course, once I found a company, whether it's bottom-up or top-down, I want to make sure that it's not overly priced. And therefore, I basically take a look at some of the basic valuation tools. So, the price to intrinsic and the other is the price to book. I look at how that compares to its peers in the general market. I look at the price to trailing new revenues, sales. I compare that to its peer group in the market. I want to make sure that it's a value compared to its peer groups and to the market. I have expectations that I can justify for underlying expansion in that intrinsic book value. And the expectations that their sales should grow and therefore justify higher price. And therefore I set a price objective in which I see a stock as being perfectly priced.But then, again, if I say, "Okay, here's a stock that's trading now at 50, I think a good value is at 80." I don't tell you to buy it up to 80. I look at the price of the marketplace. I look at the sensitivity, and I say, "Okay, I'm going to have you start buying this stock and I'm going to have you buy it, let's say, at under 55," either a tax or tax free account. And therefore that basically gets you in and know that you're buying into something along the way. And therefore, I keep reviewing that. And as you know, I will increase and revise the prices upward as the stock market and the underlying stock and the company justify that, or I'll reduce the price and revise it lower if the current market is a little bit lower.And the idea that I'm constantly reviewing that each and every issue. And of course, I also sell, a constant review with an eye to buy a new. So, once I recommend something and we buy into the portfolio, I basically, every issue, I come to the conclusion, would I buy this all over again? And at what price? And if I can't say I'll buy it all over again, it's time to either review it a bit more and I have it on watch or it's time to sell and move on. And what causes this market changes? Performance of the company and its management might slip a bit if they're not proving that they have a plan for adapting to conditions. I'll look to maybe review, intentionally look to sell, or if there's risk on in certain sectors of markets.And of course, the ultimate risk on was in February, in which, again, with the economy going into its full lockdowns, I basically came to some sell recommendations very, very quickly in a lot of companies because of such a dramatic change. And the poster child for this was American Campus Communities, ACC, in which being in the business of having college dorms was not a good business model. And therefore, it was time to go quickly. And therefore, that was when I hit the sell button.Now, what are some examples of things that I've been using? Well, with the ESG front, again, there are a variety of companies and even with companies that are not necessarily on the forefront of ESG, I still am also doing an ESG analysis to make sure that even companies that are in other other industries, other segments, I want to make sure that everybody is not going to get flagged negatively. But on the forefront, NextEra Energy of course is one of the largest wind and solar operators in the world. I'd like to see them acquire and integrate Duke Energy's asset. I think that would liberate a lot of Duke assets and bring the valuation of Duke assets up to match up with NextEra. And an Armstrong structure is a reach. They provide funding for green energy projects. Often a majority of ones come with guarantees, a nice dividend yield.I referenced Zoetis earlier. Zoetis came about in which I was looking at the African swine flu, which was decimating commercial pork operations throughout the world, principally for the primary market for pigs, which is in China. And that flu was just decimating to pigs. And so, I dug around saying, well, who's working on this? And so, I dug around and found Zoetis, and Zoetis basically was the first... They already had experience in prior swine flu's outside of the patents on the new ones and so they were the ideal choice. And as I dug further into them I realized what was happening in regular pet care, as well as other livestock products. And also, since we've already seen with COVID jumping from animal to human, we've also unfortunately started to see it with the swine flu jumping from a pig to human again in China. Zoetis is not just crucial for livestock, not just crucial for our beloved dogs and cats and other pets, but it's also crucial for locking down the next virus killer for humans. And therefore, they're on the forefront for that.Covetrus, I just talked about that a moment ago. Ericcson's another company, again, we had it in the niche investments, now part of the total return. This is a company in which a lot of people just sort of kept it as sort of at sleepy Northern European telecom company. But what I recognized was that, Huawei, ZTE in China, they had problems even before we had challenges from [Ceephus 01:25:30] as well as the White House. As far as Huawei and ZTE, I already recognized that a lot of the company's products were subject to patent restrictions or patent violations, allegedly, that were held by Ericsson when it came to telecom equipment principally surrounding 5G, antenna, and relay equipment from Ericcson. Ericcson really is in the forefront of the actual antennas that are needed to transmit fifth generation, which is way different than the LTE 4 generation wireless, which four generations basically are these individual... Or it's basically a broad spray of sort of the signal.And so, therefore, you can be waddling through sort of the overall spectrum with your smartphone, your car, or elsewhere, versus 5G, are very targeted sort of individual sort of spikes in the sense. You need to have a lot of these and be able to process these. And therefore, Ericsson's antennas are what makes that happen. And therefore, Ericcson is a very, very cheap company that's not really recognized for what it's got under the hood. And the company was largely run, I would argue, as sort of a semi-socialist operation. It could have been a government operation in Northern Europe. That really is sort of changing as necessity is making them sort of step it up. And therefore they're gaining contracts along with Samsung and elsewhere in which this is one of the primary companies that you need to own for the full rollout and evolution. Remember, 5G ain't just flip the switch, it's going to be developing over many years.Think about when we went from analog to digital, that took some time. Think about when we went to 3G from 2G. You remember when you had your cell phone or your smartphone, like I did with my Palm device and other devices, constantly we're looking where I get my 3G signals, where I get my data, my old Blackberry's, that's kind of what 5G is going to be like for a long time. And then we have life storage.Again, I look at companies that are in the self storage in which I learned, decades ago when I used to be with a major commercial bank in the Midwest, in which I came across a lot of property guys that taught me long ago, if you've got a piece of property and you're not ready to develop it, one of the best ways to deal with it is, you can put a cheap plot of asphalt or concrete pad down. You put some storage sheds on top of it. You put a sign out front and you put some cheap electricity on, and you've got self storage, which basically monetizes your land for a period of time until you want to easily rip that stuff down and do something else with it.And therefore, I basically came back into that, in which I looked at the space and I came up with life storage because of its ability, not just deal with rural and suburban and semi-urban areas, but also what they're doing in urban areas as well. And of course, their warehouse, Aaron newer product just made things that much more compelling. And of course, with logistics, again, I was a little slow to this and I apologize for that. As I've been watching the Amazon and all of the packages and all of the moving things around and everything from toilet paper to flour and so forth. During, the stay at home and so forth and lockdowns. Logistics and warehouses really was something that I should've had us in a bit earlier. A little slow to the game, I apologize for that.Prologis is really the company you want to have in this space. A lot of logistics companies that are public are hodgepodges of other properties, where Prologis really is the pure play in this space. Gaming, again, Activision Blizzard, again, with the idea of stay at home, a lot of people need to want to do something in electronic gaming. Now, again, I'm a little reticent. I'm not really a gamer. I used to play some online chess and so forth, just not necessarily my sort of thing, but that's why I have my team. My editorial team, basically several folks are very much into gaming and so forth. And we talked about it and I looked at the various companies. And what drew me to Activision was that unlike some of the other companies in which they might be very focused on the mobile space, which was not necessarily what you needed to have when everyone's locked up at home, where they were tied to certain consoles, but Activision's games really plug in across all spectrums, all consoles.And so, for now, they get to plug into the Play Station's and the X-Box's and elsewhere, as well as PCs and mobile. And they are very much outside of the purview of some of the anti-Asian or anti-China markets. And they have less risk in that part of the world. And therefore it made it that much more appealing. Plus, they like their shareholders and they cut us a share of the profits with the dividend. B. Riley, of course, this is a company which I came across because before COVID, I was looking at retailers throughout the U.S. as going belly up for good reason in various parts of the country. And I wanted to know what... I recognized from some of my real estate friends, is that when you got a retail tenant, you got a lot of headaches. So, you got to get rid of them. You've got to change things out and you got to clean it out. You got to move the facilities.And then from a creditor standpoint, you want to grab what you need to grab, grab what you can get in order to get your money back. And I learned this from the banking world. And so, I looked, well, who are the specialists that worked through this? And I came across a company called Great American, which was owned by B. Riley, and B. Riley founded by a fellow by the name of Bryant Riley who also is the single largest shareholder, has a collection of interesting companies, including Great American and some other financial and accounting firms, as well as some financing arms. It's a phenomenal company. That, again, if you haven't bought into it, you need to buy some shares in this.Centene. Known Centene for decades. In my St. Louis, principally in Clayton, Missouri, the County seat of St. Louis County. It is a company which I always looked at them with a little bit of disdain. I've known the CEO for a number of years, Michael Neidorff, and again, I always looked at them as being sort of taking advantage of the government, until the light bulb finally worked out. I said, "Exactly," I basically have been recommending companies that have government contracts left, right and center, in the real estate sector, Easterly Property and so forth. So, I want to make sure I have Centene, which is the primary supplier for administrating health insurance and health plans both within the ACA, as well as state Medicaid, various Medicare programs, as well as government healthcare programs, military healthcare programs. They are the company when it comes to government run-.[01:33:04]The company when it comes to government-run, or government paid for, health policies, and health insurance companies, they are the guys. Centene, if we see a change in leadership in the White House, and a further resumption in the public sector, part of the healthcare equation, it is off to the races for Centene. And I think that's what's being recognized again in the stock market, as Centene is getting a little recognition over the past couple of weeks.So Centene, if you want a big election win stock, that is your company. Based in St. Louis with some new facilities in the East Coast, in Charlotte, as well as out in Sacramento, California, they are very politically savvy, very focused on growth. And again, is a company you want to own. And then of course, I also looked at, again, a lot of companies that are heads you win, you tails you win, I came across the idea of auctions. And again, I follow the auctions because I love classic cars. I used to be in that market ages ago. And I looked at the idea of auction sites as being when times are good, companies and individuals buy stuff at auction, because it's an opportunity to get something now. When times are bad and companies need to liquidate something, where it's industrial goods stuff coming out of oil fields or other stuff I mean, auctions are where people, or financials and banks go to get cash for stuff that they just grabbed.And therefore, Ritchie brothers out of Canada, they're basically one of the key leaders in this market. And as I've written about the three brothers, the Ritchie brothers, they learned it firsthand when they had their dad's used furniture business that had debts that needed to be paid immediately. They came up with the idea that instead of just trying to sell more furniture, let's just auction off all of it. And therefore the light bulb came off and they exited as a business and they became auctioneers. And that was a long time ago. Subsequently they are the auction chiefs and that's why we have it in the portfolio.What am I working on now? Well I'm looking at a European companies. Looking at smaller and mid-cap companies. And again, looking into 2021, which I'm not looking at financials. And again, the big majority of the leading indexes in Europe are banks, and you don't want to own any of those. The financials, you don't want any of those. And you also have some of the transports and so forth. Those have got major problems, as we all know, but there are a lot of the small and mid-cap companies that are industrials and they do substantial technology and engineering products that are hard to replicate and aren't just something that you just whip out on the cheap in Southeast Asia.And therefore, I basically have some companies that I'm going to be bringing out very shortly that fit into this quite well. Including a company that is excellent at providing both for new construction and retrofitting for HVAC systems and water purification. So as things start to unlock and so forth, they are very strong in demand, good financials, good track record. And in the past I followed some of these companies, but I couldn't recommend them because they had really, their shares really only traded in London or in Europe. And they just didn't trade well in the US, but now they do as recent and therefore you're going to be seeing these showing up very soon. I'm also looking at post-election in Asia. Again, if you read my bio and you've heard me, I've got lots of war stories, I spend a lot of time in Asia, principally in China.I know a lot of opportunities and a lot of folks there, but I've been very reticent to buy into some of these companies because of the political risk of Chinese companies in the US marketplace. I think the election changes that significantly. And therefore I've got my, a lot of companies that I'm going to be sort of re looking at and unlocking my viewpoints on. And so you'll be seeing some of these soon.Gaming. I talked about Activision, therefore, electronic gaming and also platforms both for, just for games as well as for betting and so forth. I think this is another significant era area for a new era in how things are done, both for gambling, as well as just for general entertainment. And you're going to be seeing some more companies. My team has been working on with me and therefore more coming.Another part is Evolving Consumer Companies. Again, there's been a lot of companies, both super high-end, super Lux retail companies, that are waking up and now are starting to recognize that they don't need the stores like Neiman Marcus and Saks to sell their stuff they can do so directly. Also looking at other companies that are in the consumer space. There's one company in particular that has some very strong consumer branded goods in personal care items and so forth that are sort of must have stuff throughout the US and beyond. They basically have been changing, dealing some things more direct, and therefore I've got some companies that I will be bringing you there going forward. Other part is plastics. Again, plastics, of course, that comes back to the old movie with Dustin Hoffman, The Graduate back in the 60s, in which, during his graduation party, when his neighbors said, "I got one word for your kid, 'plastics.'"And again, plastics today, of course, it's not just about, what's good about plastics, but what's bad. The pollution part of plastics; major crackdowns on plastic bags, carrier bags, and so forth. Other sort of, as plastics degrade, they don't necessarily go away. We have the ocean pollution. We also have discussions about how so many of just our normal food stuffs are, are stuffed with plastics. This is a big problem. And therefore, I've been following the ongoing work by various laboratories and trying to come up with ways to degrade plastics in landfills and so forth. So it doesn't take thousands of years. It might just take days, weeks, or months. And therefore we're starting to see some breakthroughs in both European and English universities. And I'm following some of the companies that are looking at and starting to develop some of these processes.Therefore, I think this is going to be another wave for the waste disposal market, including know what we've done with waste management. Covanta before, which unfortunately ran into some financial challenges, but I think plastic processing is going to be a big thing. And so I'm a little ahead of the curve still with this, but again, I want to make sure we are on the forefront. And so you're going to be seeing the companies that are part of this process as soon as viability starts happening. And so I'm going to be bringing you along this curve as we go along.And of course the post COVID-19. Of course, airline, transportation, hospitality, all that stuff, and sort of other sorts of changes. And again, eventually things are going to happen. And therefore, I want to make sure we are going to be on board at some point, not now, but for a while.What are some of the key themes for some of the ongoing solutions? Here are a few other ones that I want to, can you draw your attention to. ESG Demand Push, in other words, current companies are, the customers are demanding that their goods and their processes are more compliant. And the idea that investor demand is pushing for companies to be more compliant. And of course the tangible market results. And therefore I'm doing more ESG analysis on all of our companies in the portfolio. I'm furthering our green bond and ESG bond partner participation. And as we started to see this year, and I think we're going to see in 2021, 2022, more so with, with a change in leadership post-elections, I think ESG is going to be that much more important for proven performance.Asset Managers. Again, I've told the story about Asset Managers as being sort of the Bonfire of the Vanities and Thomas Wolfe. The idea that the protagonist, Sherman, basically was kind of explaining what he did to his kid, in which the idea that he sort of slices the cake. And as the cake is passed around, he collects those crumbs. That's why he puts those crumbs together to make an even bigger cake for himself. And that really, to me, in a very quick way, is sort of heads up the, what I see as Asset Managers.Asset Managers are all about the idea of GPO. You'd get your little crumb or your fee from the management of the assets, the big cake. So the big cake is the assets that you have under management, and you collect those crumbs quarter after quarter or month after month, and you pile it up and you effectively make a ton of money, but the more assets you have, the more AUM, the more your fee income, and it's, as long as you keep the assets there, you don't have to be the best Asset Manager, you don't have to be the worst.But as long as you're good enough to keep the assets in place and get some more, you're going to do well. So we have Alliance Bernstein, which has been doing well for us, delivering that great yield for some time. BlackRock, of course. We've had that in the portfolios doing well inside the dividend machine. But what we're also recognizing is that other parts of the financial markets, the big guys, are stepping in. So you have Morgan Stanley stepping up and they're trying to acquire Eaton Vance. You have Trian with Nelson Peltz taking big positions and things like Janice Henderson and elsewhere, and basically recognizing Asset Managers. Yeah. It's like, I'm reading my playbook from these press releases and their interviews. And yet we've been there and I see Asset Managers, that's the place to be. It's dependability, as far as your fee income.The heads you win tails you in. You talked about the auction houses, like Ritchie brothers, car auction services, B. Riley with, when times are good, their finance arm does super well. Times are bad and needs to get liquidated, their great American unit, which has been renamed Riley. They do well, their collecting these sorts of companies that are out there ready to go.The health care post elections. Again, I've talked about Centene earlier. Again, the idea that medical properties trust. Also looking at some of the drug developers and so forth. As well as other parts of the healthcare space, which, if we see a change in electoral leadership, are going to be big beneficiaries, and therefore I've got those lined up and therefore we'll see what happens post-November.I mentioned the post COVID-19 changes, and who's going to be the leaders and as we get a successful rollout of vaccines. And the key thing of course to keep in mind is that we've got a litany of various types of vaccines in different stages, and we're going to get various levels of approvals. Which means that these things are going to be hitting the market, week by week, month by month as we get through 2021. And therefore, Businesswomen had an interesting article recently talking about what's going to happen. How many people are ended up getting, potentially getting multiple vaccines? How many are going to get one, not the other? How many people are going to get, if they have a two-stage, are going to get both stages? In which you still have a lot of uncertainty with this. And therefore, even if you get a couple of these things, hit the marketplace and start distribution, we still aren't done until we're done. And they basically, I want to be sort of the word of warning out there in which it's not all clear till it's all clear.And then of course, I referenced earlier the Back to Value. Real estate investment trust utilities, again, they're cheap now. They started getting recognition through September to date. And again, I think, we're looking at some really good opportunities to buy into both these sectors for value, as far as buying the stocks and mostly getting some good yield.The other part of the equation is Non-Bank Financials. One of the big risks in leadership change in the White House, which also means leadership change in regulatory things, is that potentially new leadership in treasury. And as far as other regulatory arms outside of the fed, I think you're going to see banks, which are regular traditional banks, are already very overburdened and that's going to get worse. And therefore you want to be in the Non-Bank Financials. They fly under the radar that continue to do well. So sixth street, specialty lending, main street capital, Hercules capital. We've been in this space for some time. And again, they're, they're going to do even better. If they're more public regulated, banks of financials run into further problems.The other part is to be wary about infrastructure. Now there's been a lot of ongoing discussions as we lead through election, that we're going to get this big swath of shovel-ready projects if we see a change in leadership or, and, or a single party rule post November. Again, very wary about the timeline for this and getting road construction, bridges, and all that stuff. That's not going to happen in the immediacy. You're going to see some materials companies, the Martin Marietta, and some of the other ones. I keep an eye on those, but I'd be a little bit wary.The ESG infrastructure, I would be very, they're doing well now, they'll do even better still. So the wind turbine, solar deployment companies, not just the producers, but the stuff that actually deploy it from the utilities and so forth to other parts of the ESG space they're going to do better. I'd be a little more weary about the bridges and the roads and the road companies.And of course, bonds, bonds, bonds. On a risk reward basis, they still represent some of the best values right now.So, that sort of thing that I've been getting a wide litany of questions. And I started addressing some from you. So E. asks, "suggestions for purchasing Samsung from a broker." Now E, I recognize that Samsung, which has its trading symbol SSNLF, for its ordinary shares that trade over the trade haphazardly in the over the counter market for US individuals. It also has its regular trading symbol of 005930 out of the Seoul market in South Korea.It can be challenging as far as being able to click and buy for most online brokers, not going to happen. You're going to have to make a phone call. You're going to have to basically say "yes, I understand I'm buying a foreign share. Yes. I understand it's not listed in the US. Yes, I understand that I've got additional risks. Yes, I know this is a green company." You're going to have to say yes, yes, yes to a whole bunch of stuff, depending on how much of a nanny your online broker is going to be. Now, you might look at interactive brokers, they're the least nanny of any online brokerage firm. Their standards for accepting new individual clients is a little bit higher as far as the sums, but they'll let you buy anything and sell anything you want at great rates.But otherwise, again, most significant financial firms will do this for you, if you make the phone call and, unfortunately, pay that phone fee. And there's just no way around that. But the good thing is that if you buy Samsung, it's a stock that I think you can buy it and you can own it for some time. And it's so cheap, as I've referenced, trading at basically a little more than its intrinsic book value and it's trailing sales. Again, it is the go-to company when it comes to so many things technology oriented, including it also has its Foundry work. It does its own batteries. It's in the next generation like solid state batteries. You can take any big headline technology story and you will find Samsung is one of the big leaders. And therefore, I've got it in the niche because it's a pain in the tuchus to buy.But again, make the phone call. And ask, "please discuss the energy sector." Kinder Morgan, Viper Energy, Enterprise Products, as well as what we have in the utilities, like Duke and Dominion. And the key thing to think about is that oil and gas are not going, are not completely done. We still need oil for transportation in which it's still necessary for aircraft, for shipping, the vast majority of cars and trucks and so forth. There's going to be an evolution. That's going to take a long time and therefore it's still very much there. Natural gas, it's mission critical. Even when you've got wind and solar, you need natural gas for some time to be able to make sure you've got a backup or an ancillary power source. Sacramento in California learned the hard way of recently, it basically proved positive. Yes, I also recognize that hydrogen particularly, using electrolysis and so forth, that's coming down the pike and it potentially will replace the need for natural gas.That's coming. I follow that market. I follow the companies that are part and parcel of that. But for right now, Kinder Morgan, Enterprise, they're the pipes that hook up to utilities. We also need natural gas and other potential petroleum products for a lot of chemicals; pharmaceuticals, plastics. I mean, also again, industry and consumer goods don't happen without natural gas, so that's not going away. Viper energy. Again, landlord. They basically have, their tenants are doing their things. They've done a pretty good job at controlling their risks. They're sitting on boatloads of cash, great credit profile. Again, cash flows are their dividend. It's there. I think it's still a very inexpensive company that's in an unloved sector, but it is again, very, very good value.Then you look at the utilities like Duke and Dominion. Dominion has really transformed itself into the burgeoning ESG company. It basically, it has this new project with some of the largest offshore wind turbines in the US. It also has its other sort of renewable energy projects. Duke Energy hopefully is going to be soon part of next era. I'm going to be campaigning for that. And again, shareholders at Duke, I recommend if we get to a proxy vote Yes on the next era takeover.Barbara asks, "what's your favorite bond investment today?" Barbara, again, I like the general bond market, but then specifically I like corporate bonds. The BlackRock credit allocation, I think is an easy pick as what was some of the ETFs we have. But the municipal bond front, that's where I think there's some really good value right now on the closed-end space. Again, cheap financing that they have internally, a lot of great credit that's not really being recognized in the municipal bond market. Good current yields right now in the, from the closed end space and those funds. So the Nuveen and BlackRock, that's what I'd be buying right now.Bernard asks, "Yields at 10 and 30 years of moving up. Is this just a temporary blip or a trend?" Bernard, I talked about this earlier in the presentation. Again, I think it's potentially the 20 and 30 years where you've seen a little bit of an increase. That's because it's been largely outside the purview of most traditional financial transactions and outside the general concerns of the Fed. 10 year really hasn't seen as dire a movement and the Fed is going to keep a clamp on that yield.Bob asks, "what's the best place for cash?" Well, Bob, maybe in a couple of years, going back, I recommended the 2 year treasury in which my original concern was a backup and yield. And the two year was basically as neutral as I could be. That turned out to be not the case, that the yield basically went South. And therefore, the two year, when I first made the recommendation, that worked out well for those that owned it, but that's kind of gone away. The synchrony bank basically is still sort of hanging on to that yield. I think you're going to see that a little bit further as are a lot of other money market funds, but I think the best place for cash might be sort of well dispersed allocation in the lot of the fixed income funds that I basically recommend. If you spread it around, a lot of those closed and indexed funds, and maybe spread a little more your cash on the bond front, I think you'll see that that will provide safety for as part of your cash part of the equation beyond just what synchrony does.And then Chris asks, "how long do you see increased bond yields lasting? What impact would the election have on Muni-bond yields?" Well, Chris, I mean the increased bond yields, again, a little blip in the longer term treasuries really does impact us. Corporate yields, I think heading lower. Uni yields, heading lower. The elections, if we see current leadership, which is looking little less likely, we have what we have, which is, which is good now. If we see a change in leadership, post-elections, I think you'll see dumping cash on state and local authorities. And therefore, the financials for muni issuers are already good, even though some of them are whining and some of the politicos are whining about it, but they're good. And if they throw cash at them, they'll be even better. So I think munis are, to me, represent some of the best bond opportunities now.And then Colonel Fred basically asked, "What are your perceived future for AllianceBernstein?" Well, I see AllianceBernstein as being quite good. Again, you might say, "is it a takeover candidate?" And the argument would be no. So originally, you had a significant shareholder interest by AXA via the equitable. And with AXA effectively, the French firm, effectively going through some of its, changing in its capital structure, it's ended up under the part of the equitable. And therefore you have a lot. I don't necessarily see it as being a takeover candidate per se, unless you see a big multiple stage transaction. But what AllianceBernstein represents is, because it's a pass through you have to avoid the corporate income taxes. You have the ongoing good asset base for the assets under management, which has been climbing over the years, good defendable fee income, that good dividend. I see it as being an attractive stock. And again, I will be raising the buyer under price shortly for that, for those shares.David asks, "we have a readily to high percentage of our net worth, and you recommend muni bonds. Any specific to be cautious about?" David, well, yeah. So again, I appreciate that you've got a lot of muni bonds and again, for good reason, you've got good yield now and on a tax equivalent basis, even better. And if you're in a higher tax state, California, New York, Connecticut, and so forth, it makes it that much even more appealing. I think the credit standpoint, I think is pretty good. As I said before, I think a lot of, outside of some specific areas like the state of Illinois and some others, I think the general condition of this municipal issuers is much better than what's being sort of lined about by politicos. And if we see a change in leadership, post-November, either you're going to see some more stimulus and cash flowing to municipals and States, which even shores them up further. So again, for now, I think munis are good and post-election potentially better still.Dean asks, "how will the bond market hold up in a very low interest rate environment?" Dean, as I mentioned earlier, low inflation, which is what we have. And until we see a big broad increase in demand, inflation is not coming anywhere. So low yields to lower yields as we see further demand from institutions. Insurance companies need to have bonds, need to have yield. Pension funds need yield to make their payments. Other institutions need yield. So you're seeing buyers from the corporate and mortgage and other parts of the bond market. Get to the muni front, we're all in, many of us are in high tax states and that makes munis that much more appealing. If we see changes in both individual tax rates, as well as other sorts of corporate and other entity tax rates, and a change in leadership in November. that makes munis that much more appealing. And as I also explained with more of the issuance and lower coupon, we've seen an increase in duration in various parts of the bond market, which means there's still opportunity for price gains.Diana asked, "do you think subscribers should just forego dividend reinvestment now and gather and or hoard cash instead?" Diana, I recommend a lot of cash. You know, we have it sitting at 11%, which is higher than, what traditional 60/40 splits on most allocation, which you'd have 60% in stocks, 40% in bonds. And so again, I think the idea that, I basically have always recommended that you take your dividends from all your positions, you pile up the cash and you use it to strategically and selectively invest in stuff as they become appealing. So on down days for certain markets, for some of the stocks or some of the funds, I might have a down day, that's when you can step in. So I don't, I don't recommend automatically recommending it. In fact, in the book, the Book of Income that my publisher published for me, one of the chapters talks specifically about how to reinvest dividends for better returns and it's basically collected, stored, and then redeploy it as opportunities present themselves.Doug asks, "please address your outlook for inflation, deflation, gold, oil, and increased taxes on capital gains and wealth." Doug, that's a big ask. So inflation, as I mentioned earlier, I just don't see it. Deflation, I don't see that either. We've been in a dis inflationary environment with lower prices.Gold. Again, I see there's, as I mentioned earlier, good prospects for some further improvements. Oil market. Pennsylvania gas being supported right now. Oil, I think is going to, is kind of be sort of parked in this range for a bit. Maybe see a bit of a pickup post COVID-19 with transportation, transport use increasing. But when it comes to increased taxes, I think that even if you see a change in the Senate and you see a change in the White House, it's going to take a long time. And I think changes in corporate tax rates, changes in individual tax rates, changes in the death tax and so forth, or estate tax planning and so forth. It's going to take some time and I don't see that really getting wrapped up in 2021. I think that at best you're looking at into the mid part of 2022, and that even puts it at risk with the midterm elections. As we know, we always got election season in this country.And then Elaine asks, "Neil, appreciate all your hard work analysis." Thanks, Elaine. "What do you suggest putting new money to work right now?" Well, Elaine again, we always have new stuff that we can buy and I draw your attention to the values. I think, as I mentioned in the presentation, I think REITs and utilities are really good values right now. They've been sort of left behind in the general market for tech. I also think that the bond market, again, municipals, corporates. I still represent good value. And again, I also think that some of the ESG front, I think we're going to see some further progress there. And as I said, keep some cash on hand because in the coming issues, you're going to see some new stuff from me. Some of those mid-sized companies in Europe, post-election in Asia, and some other companies. So again, have some cash and I'm going to be giving you some new buys soon.And then Emily asks, "why hasn't Blackberry been a target acquisition?" Emily, yes. I see Blackberry as having a lot of good stuff happening under the hood. Yes, blackberry phones. They were a great thing. I still, I carry the newest Blackberry that, which is not made by Blackberry, it's just their technology is licensed. It's made by someone else. But the real thing is their data security business, which they have governments around the world, companies around the world that rely on them, increasingly. We also have their automotive electronics, their QNX system, which is embedded in the vast majority of cars. It's like, people don't know and haven't been paying attention to what this company does now, and therefore trading around five bucks or so, it will either be recognized or it's going to get bought. It should get bought. That's a great exit strategy for us. I think it just takes a while for someone to figure it out and it's just a matter of time. Meanwhile, I think it's a really cheap, very innovative, dominant company when it comes to patents in technology for some of the key areas that are working right now.James asked "my two year treasury mature soon. What should I do with that part of my capital?" James, yeah, that was not the goal I thought we'd be rolling that over a while ago at maybe some higher rates, but that changed with the COVID. So again, being able to replace a nearly 3% yield on super secure, pretty liquid is going to be tough. Synchrony, parking money, that's not close to that yield. As I mentioned earlier, one of the other queries.[02:04:04]Close to that yield. As I mentioned earlier, one of the other queries, I think Eddie, if you look at spreading money around the fixed income closed-end, the individual mini-bonds, as well as somebody index funds; if you spread that cash out across that board, I think you'll have some security with some of that cash allocated besides that Synchrony, because I think the idea that, as I said before, bonds, I think are doing well. So, therefore, the idea that if you're looking for places to park cash, spreading them around the bond front is basically what I've been recommending to in the issue, as well as these webinars.James asked, "What are your thoughts on tech stocks moving forward?" James, I'm talking in general terms, so I can't give individual things, but again, you're just looking at a perspective when people are looking to park cash. And for those that follow the two-year treasury, the key thing is that you can't buy a two-year treasury getting that. So the idea that, where are you going to find a parking place for cash? And again, the key thing is that Synchrony bank for their high yield savings, otherwise look at the fixed-income allocations. And the idea that if we spread that around, that might basically provide sort of that risk-reward plate category for parking money for some period of time, James asked, "What are your thoughts in tech stocks?"Well, James, I think technology, as I referenced before, it's the alchemy of the markets. And again, I think you're looking at that a lot of the tech stocks have gotten ahead themselves. Others still are not necessarily fully valued, but the key thing is that you have to look forward.And so the forward-looking expectations for products, development, sales, and earnings still seem to point to some further progress, but again, big run. And I think the warning sign is what happened this September and the idea that if we've made a ton of money, maybe we'll need to think about reallocating into some of the broader markets or some of the more valued areas. I've talked about earlier, the reeds and use as being some of the value part of the equation. So techs still like a lot, and we still got a lot of positions there, Microsoft. We've got Amazon, as part of the tech space and others, we've got the Digital Realty, all of these sorts of things, they're still very one doing their thing, but we get to some of the more flighty parts of the tech.Generally, my word is caution, which, and Jeffrey asked, "What companies can feel can lead the way in the delivery of virtual education, postcode in any investment opportunities?" Jeffrey, again, I've also been in the education business. I served as an adjunct professor at Webster University and the George Walker school of business. And I've lectured here in the US as well as in the China campuses for many years. Again, the idea that there are several platforms, a lot of these companies that are good at this have been taken private, including, Blackboard structure. But then you also have companies like Cisco that have part and parcel of this process, which also comes with its own challenges, Pearson, PSO, a British-based company that is been the forefront of education. But then, as I mentioned earlier with Samsung, Samsung has its fingers in so many things, including the education space.So both for its hardware and software, Samsung is also part of online education. So just one more reason to make sure you buy some shares in that company. And then Jerry asked, "What are the best investments for short-term liquid money?" Jerry, again, the Synchrony that's where we recommend the money market allocation for, within the newsletter, again, spreading things around in the broad bond market funds and so forth. That's another way to park money. Again, each one of those comes with its own challenges. And then Jim asked, "What's the better buy Nuveen municipal credit or Nuveen AMT free?" Well, Jim, Nuveen municipal credit. I have that, if you're not at risk for being subject to AMT, if you're at risk to be part of AMT, then you focus on AMT. And therefore, that's why I have the two there.Then Joe asked, "What does one do with intermediate bond funds when interest rates are almost zero and Neil has nowhere to go?" But up Joe, the yield will go up, but not for a long time. Meanwhile, yields still can drop lower. And as I had discussed earlier in the presentation with duration, duration with the corporate bonds and duration with municipal bonds still means that there is price opportunity for these bond market sectors. And again, and Joe asked, "What the bond market do in the next six months?" Joe, I think the bond market is going to deliver positive returns, and we'll do it with less risks than the general stock market. Then John asked, "How do you come up with genuinely unusual ideas in the niche investments, e.g., Blackberry?" John, as I mentioned in my methodology segment of the presentation, I basically read everything, listen to everything, and I'm constantly looking for stuff and ideas, and therefore I stumble across stuff, and I drill through and find stuff.And therefore, if you look at the niche investments, as well as other companies that are a part of the total return and the dividend machines, some of these companies are not necessarily household names, but I came across them. So even the incredible dividend machine, Sixth Street Specialty Lending, that's not a main street. Yeah. Sort of a company Main Street Capital, that's not really a main street stock. But then in the niche investments, beat Riley, I explained why that came about Blackberry. Of course, I knew them from their old phone, but I've also followed for years their acquisitions, the development of their security, and their automotive platforms send team. I've talked about that Covetrus, Gray television because I follow and understand the eyeballs that local televisions in their websites have.And it's back to, it's a chapter in the book of income, I'm talking about television and local television companies, Marine products, and Thor industries. Of course, I came across that as I was digging around, who were the leaders for the alternative ways to get out and about the auction stuff, Car Auction Services, Ritchie Bros. TDK, again like Blackberry. I was looking around companies that are in the power business, making electric cars work and the batteries behind making electric cars work. And so TDK that's the leader, and therefore it's yet, it's not necessarily well followed. And therefore, I work on finding these suckers. Kathleen asked, "Would you please emphasize investments for 70 year old and older?"Kathleen, again, my perspective has always been, I don't think it makes a difference whether you're 21 or whether you're 90. I always invest with the idea that I focus on income. I focus on dividends. Dividens to me, even if you're not taking them as a younger person, or if you are taking them, if you're retired if you're not taking them, you pile them up, you re-invest, and therefore you help build your portfolio value. But the idea that income and dividends are one of the surest ways to carry you through tough economic times and to build up and re-invest during the good economic times.And again, I think the overall portfolio that we have and the total return, and across the board, I think we have a lot of perspective for again, the safety part of the equation with the general allocation between stocks and fixed income, and even within the stock side. So many of them are really sort of in the safe category of being dependable for income and being dependable as far as their underlying assets.And then Kristen asked, "What the best investments for taxable and non-taxable Vanguard account?" Well, Kristen, again, we've had the Vanguard fund portfolio, and therefore everything that's in there can fit into a non-taxable, including the municipal fund. Cause I'm looking at the monies from a total return standpoint, from a taxable standpoint, of course, the mini one makes perfect sense in general terms, for Vanguard the same thing for the Fidelity account or for the General fund account, as we have with that fund portfolio. Again, the key thing is that I have those setups so that they basically can plug into whether you've got a Fidelity Account where they've got a Vanguard or, even with Vanguard or Fidelity, they'll let you buy anything for the most part at zero commissions.And therefore you're not just restricted. And that's why, again, you can buy other securities as well. Lawrence asked, "What's the future for munis again, Lawrence I think good value, more income. And I think a good credit if not better credit going forward. Lawrence asked, "What's the weakness with Covetrus. Well, Lawrence, I think you were looking at were things we saw a little bit of a slip weeks ago, but subsequently, Covetrus is doing really well as people are sort of catching on. Of course, the share is nearly double in price year to date for the trailing year. But again, I think there's a lot more progress. I remember the key thing to look at Covetrus is that because it was a spinoff and a conversion, some of the financials initially were not that great. So in buyers need to do their homework and dig into it and get to know what's going on.Like I did to understand what the numbers mean and therefore, I think that's what limited it for a little while, but I think now people are catching on. I think it's going to do very well. Len asked, "When should I sell my gold and silver stocks?" Well, Len, I see gold is doing well. We have the one recommendation, which is Franco Nevada. And my recommendation is I have it as a buy, and I see it having a buy for some time until we see a rising US interest rates. If we see a rising dollar or if we see other heavy competition for investments pulling away from gold. So for now, I like gold. I like Franco Nevada, that's what's the recommendation. Lauren asked, "Any thoughts on Bitcoin for long or short term?" Lauren. Again, I'm not a big fan of the mine coin market.Now, as a quick background, back in the nineties, when I was with Mark Twain Bank, and we were doing the non-dollar deposits that got us into newsletters and made me aware of the newsletter world, we actually had something called E-cash in which we had individual coins that can be bought truly anonymously because each thing was, you purchased it, you bought it. You made a deposit, and you could denominate your E-cash in dollars. You can have it in Swiss Francs. You could have it in Deutschmarks, Euros, et cetera. And you could bend it anonymously utilizing what was then ahead of its time, which was 141-bit key encryption. And it was completely anonymous. It was true cash. You didn't have to go through an exchange; you didn't have to buy it and sell it, you didn't have to pay a fee.It was cash hence the name E-cash. So, I understand coins as far as a store value and use for financial transactions. Bitcoin is neither. It is simply a speculation on solving of algorithms and how many more algorithms will be solved. And who's going to be willing to buy it more for you without any underlying intrinsic value. That's why I just haven't been gotten on board because it's just not a store value. A and B it's no a means for financial transaction. Michelle asked, "Does the tax-free and taxable designation mean a dividend is non-qualified or qualified?" No, it doesn't Michelle, qualified dividends come from traditional corporations, so if a company pays inc corporate income taxes and then pays a dividend that is traditionally considered qualified and therefore is subject to potentially a lower income tax rate on the individual level.Non-qualified traditionally comes from companies that are not necessarily subject to traditional corporate income taxes like REITs and other sorts of pass-through securities, as well as bond funds and so forth. And therefore be taxable as far as ordinary income, I list the tax-free and taxable as being the ideal place for them. So even though if you had a traditional company, let's say like Microsoft, that would have a qualified dividend, I basically have it as a tax-free, even though that dividend would be potentially taxed at a qualified, hence lower rate, but because it doesn't have any tax benefits or penalties to hold in a tax-free versus I have a tax-free on something like a REITs because for now, thanks to the tax cuts and jobs act, the dividends that are paid by REITs come with a 20% deduction or for our Past security that might be subject to, to IRS regulations, as far as how much you can or cannot have.Therefore, you want to have it in a taxable account. So otherwise again, if you have somebody that's qualified and if you have it in a taxable for most individuals, that comes with a lower tax rate. Neil asked, "How should we plan for the election? Should we sell some stocks?" Neil, again, I was looking for more uncertainty and more volatility and more chaos class with potentially contested elections. I'm looking for right now, I'm expecting less chaos, and therefore less concerned. I'm not at this point necessarily going to make a broad prognostication leading into the election. However, that being said, I understand. And the idea that if we're looking at it from a trading standpoint, I think I'm looking at the idea that you're having a bit more cash on hand or a little more stock, a little less stock exposure, potentially can reduce some of the volatility risks.I'm trying to figure out how to do that in the portfolio without basically causing everyone to sell things in mass. So, therefore, I basically have been making some cautionary discussions in the journal in the issues so that individual subscribers make their own call as far as making sure that they have perhaps a bit more cash on hand. Nick asked, "Best REITs for need income?" Thanks, Neil. You're the best. Well, Nick, thanks. I appreciate you as a subscriber, the REITs that we have, with the exception of WP Carey, which has some commercial properties, which have a little more risk to them, although WP Carey is a very good company. The rest of the spectrum of the REITs that we have throughout the portfolio, principally in the total return, are really good. Alexander Real Estate, the Lab Space, hard to replicate strong in demand, Digital Realty.Again, data centers, strong in demand, good yield. Hannon Armstrong, ESG funded with government-guaranteed projects, can't beat that. Life storage, good heads we win, tails we win stock. Medical properties, who would full rent-paying facilities. Prologis Logistics, logistics, logistics with the online world. All of those look very good, going forward again in the dividend machine corporate office properties, again, data centers for Amazon, again, I think you look at easterly government properties with the US government as your tenant, uncle Sam pays, can just write checks. That's good. That's a good place to be. So again, I think the reach we've got all look good. WP Carey looks good. It just has a little near term risk because of some of the corporate real estate it's got. And Richard asked, "Does Microsoft lose a contract that would explain the market retreat a couple of weeks ago?"Richard, no. The big thing about Microsoft has been that we saw, September 2nd, the general stock market, and tech basically took a pause. And that's why I addressed earlier. The value part of the equation, including reeds and use, picked up the pace, but Microsoft is good. I see it as a holding that we should; we'll probably be, see buying things. It is a buy and own. For some time, Richard asked, "Ideas to protect the portfolio against a falling dollar, a resurgence of inflation. And what impact on the portfolio might these have?" Oh, Richard, I mean, again, the dollar is not going anywhere. And again, the dollar I, as I've argued before, it really is more of a parameter for cash demand, not only in the US but around the globe. And therefore I think, as we saw in September, the dollar picked up, which we saw during the chaos really this year, the dollar was spiking.The dollar does not have a challenger, inflation we don't have it. Until we get big, broad demand, it's not going to show up. So again, if the dollar and credit the US-run into trouble, remember I'm a global bond. I'm a global bond and a global banker from the get-go of my career. Again, if I see chaos or crisis hitting the dollar, you're going to know about it way ahead of time. If we see inflation, initially, that's going to be good. If we start seeing a problem, that's a long time down the pack and pike, and I will be telling you about it. Robert asked, "Any update on MFA financial?" Robert, MFA has been coming back a little bit in its pricing. It's been working through its portfolio. It's been working through some of its credit lines and so forth.It's still trading at a big discount to its book value. It's had to reduce some of its assets, which reduces the book, but the book value right now is sitting at somewhere between a 40 and 50% discount. And therefore, again, I think as I recall, it's trading maybe around 2.40 a share ish, and therefore it might be arguably is worth more than that. Again, I think it very well has the probability of working itself out. I continue to follow it in the periphery, but for now again, it still has more work to do. And then Ronald asked, "Please signifies the degree of confidence you have in your various predictions?" Ronald, I think my predictions are perfect. Well, in reality, of course, I make mistakes like anybody else. I think the key thing that if I go offer a little word of comfort is that I don't just make a prognostication and let it sit there and let it sit there until it dies.I constant review what I basically see happening in the markets, and I evolve. And so just like when I make a recommendation to buy a stock based upon a certain prognostication and prediction, I review that every issue and I go through the portfolio, would I buy it? And at what price? And therefore, that review process, including some resulting sells or a hold and potentially a sell or a re-buy that basically, I think keeps me in check. And therefore, I don't just hang something out there and let it sit there forever and let the markets rise and fall. I basically adapt over time. And then Steve asked, "Comment about Tesla, and you still feel the same way about its prospects or other Ev companies might be recommended?" Steve Elon Musk is a brilliant guy, he's got an ego, and he's got some challenges of his own doing, but he is a phenomenally brilliant guy, and of course, he can buy and sell me many, many times over.So again, I'm not going to criticize that. I look at the shares, and again, I just don't get it. I get it from a cult standpoint. I get it. People are buying it, wanting to ride the thing. And, but it just doesn't, it just doesn't match up. Instead, again, I look at the mainstream companies that continue to bring cars, including from the Volkswagen group with Porsche, Audi, and so forth. You look at other prospects coming from the other firms that have their electric cars. I think the key thing is that a lot of these manufacturers might have a little lower of their advertised range, a little less performance, but there's a little more predictability and sustainability in their performance over time, which yeah, because they run their cars like as if they're going to be on the ground on the road for more than just a few years, and they're going to be on the road for a long time.And therefore, there's a different way of running things. And again, I'm a car guy. And when I walk up next to a Tesla, and I look at the panel gaps, and I look at the, how things line up, I'm saying, Oh my goodness, I can't believe people would accept the car like this. I mean, doors aren't really aligned, the hood is out of line. I just don't get that. And I've been inside the interiors, and I kept thinking, Oh my goodness, but it's again, it's a cult stock at the same time. You know, again, you look at TDK, there are the companies that make the inductors, the casters, and so forth that make electric cars work. You look at the rest of their systems that make things work. You look at Q and X with Blackberry that enables an Ev car or autonomous cars work.So again, I'm digging more into the underlying companies, and of course, Samsung, they make the electronics, they make a lot of the other components that make things like Tesla's work. They also have their mining and battery operations from traditional lithium all the way to solid-state. So again, we have a lot of stocks that are Ev companies that just don't have that cult status. And that's what right now I think is a better value. And then the last question we have here is from Tom, investment opportunities with oil since the entire segment is in a funk. Tom, again, we have limited space in this. And therefore I think that the pipes, the Kinder Morgan enterprise product, with their pipes, I think those are the defensive ones, good dividends. Both companies are increasing their dividends because of their cash flows and so forth.Both are good value, Viper, Energy Venom, again, because of how they operate as effectively as to the premium. I think they're doing well from then as we start to move in a post-COVID-19. I'll be re-looking at some of the other parts of the transportation sector of the fuels for jet fuel and trucking and shipping and so forth. And therefore that's kind of, that's in my notebook to keep an eye on, but for right now, I'm limiting it to the two pipes and to Viper. So with that again, I appreciate your time for the last two and a half hours. I so regret that we couldn't do this in person. I'm so hopeful that, and again, I think the prognostication, I think, should be that COVID-19 will be done at some point next year. So we'll be able to meet in person.I'm going to look forward to that again. I greatly appreciate you being all of you being Diamond members and lifetime members Profitable Investing. You're the core of what keeps the publication going and allows me to do my work for you. Again, you are the foremost of customers of mine and, and the company. So if you have a question or concern, reach out to customer service, tell them you're a Diamond member. They will jump through hoops to make sure they get the answers to you or get your comments or suggestions to me. And therefore, we aim to please. So, and again, if you like, what you read for me, tell your friends, tell your children, your grandchildren, so forth, always looking for, for new members and new readers to the publication. And of course, it always makes for a great Christmas gift as we're heading into that season as well.So thank you very much. I hope this was informative. I always look back, look for your feedback. And again, I'm looking forward to next year being in person. You also, I finished the quarterly report for the Diamond club members. It went to the editors and editorial team and the production people, they are fixing and situating the publication and the graphics and so forth. And it's going to be published very soon. It could be later today. It could be the next day, you're going to be getting it in a matter of hours or days. So look for that in your email inbox. And then, in addition, the transcript of this presentation, as well as the PowerPoint and the recording, will all be posted in the live event section of the website. And you'll also get an email alerting you to when that vote. All these are posted. The transcript usually takes a couple of days. So look for that. And again, you'll get an email notification that. So again, thank you very, very much for reading. Thank you for being a Diamond member. This is Neil George for Profitable Investing. ................
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