Lead-Lag Live

Vance Barse on Narcissism in Professional Careers, Market Volatility Strategies, and Psychological Investment Influences

• Michael A. Gayed, CFA

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Uncover the surprising links between narcissism and career paths in finance, medicine, and law with renowned personality dynamics expert, Vance Barse. This episode promises an enlightening exploration into the multifaceted nature of clinical narcissism, dissecting its overt and covert forms. We go beyond surface-level traits, examining how these behaviors play out in professional environments and personal lives. Listen as we break down the phases of love bombing, idealization, devaluation, and discard, alongside psychological phenomena like trauma bonds and the Hoover effect. Gain the knowledge needed for a deeper understanding of these behaviors and their implications on both personal growth and professional success.

The conversation also navigates the complexities of investment strategies amidst volatile market conditions. From historical perspectives on high interest rates to the current challenges of inflation, we explore how these factors shape client perceptions and decision-making. Discover the balance between equities and fixed income needed to build resilient portfolios that can withstand economic shifts. Vance and I delve into cultural and psychological influences on investment behaviors, such as recency bias and the YOLO mindset, while discussing the implications of the CAPE ratio and recent market performances. Prepare for a comprehensive understanding of today's economic landscape and the strategies that align with both client objectives and market realities.

The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

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Speaker 1:

I'm curious to hear your thoughts on what is the link between markets and that being a flame for the mothyncrasies of that personality that needs the validation needs the applause, needs to be the center of attention to thrive.

Speaker 2:

And when it comes to clinical narcissism, there are actually two subtypes.

Speaker 1:

There's the I'm going to be talking to Vance Barsher, who's a friend of mine who I've known for the last year and a half, two years, maybe more than that. He and I spent some time at Camp Kotak. I'm going to be talking about all kinds of fun things and deep things beyond just markets. Narcissism might be one of the topics during this conversation, so we'll get into that. My name is Michael Guy, a publisher of the Lead Lag Report. Joining me here is Vance Boris, who I know some of you have probably seen do the media runs over the years. But, vance, for those who don't know who you are and have no idea what the voice of a real man sounds like, please introduce yourself to the audience.

Speaker 2:

Well, thank you very much for the glowing introduction, michael. I am, in fact, vance Bars all day, every day, seven days a week, 24 hours a day. I met Michael three years ago at a well-known conference in Southeast Florida and have been a huge fan and follower. And we crossed paths earlier, in 2024, at Camp Kotak, and I'm sure we'll talk all about it.

Speaker 1:

All right, so I named this conversation the bull market is in narcissism. I came across this study, or this argument, that, of all the professions and all the domains that people can operate themselves in, something about this business of investing and trading tends to result in more narcissists than other domains, other careers, and I think narcissism is an interesting personality dynamic in that it tends to also result in leverage, in volatility, in things that you see at major market tops. I know you've mentioned that you've studied some of these dynamics and you have some background academically in there. I'm curious to hear your thoughts on what is the link between markets and that being a flame for the moth of narcissists to get into trading. How's that for a starter question? Exactly, I hope you don't have any plans for a flame for the moth of narcissists to get into trading. How's that?

Speaker 2:

for a starter question Exactly. I hope you don't have any plans for the next five days, because we're going to Bring it on, man.

Speaker 2:

Bring it on, but how narcissistic of us to think that people would actually give us that amount of time. So I had an experience last year wherein a very close friend was the subject of a smear campaign in which he was labeled a narcissist and I thought about it and I'm going. This guy is at his core what is known as a Sigma empath, and I have a measly undergrad degree in neuroscience, so I'm by no means a PhD-level expert. But that experience last year in watching what he endured and hearing that word narcissist used so often in society, it just led me down this rabbit hole in which I became completely consumed and fascinated by learning about access to cluster B personality disorders, with a very heavy emphasis on true clinical narcissism, and two things come to mind.

Speaker 1:

When it comes to cluster B, first of all, what's cluster A? What's cluster B? Let's just talk about what those categories are.

Speaker 2:

That's a great question. So cluster B, we'll just kind of stick to that one. So histrionic, borderline, clinical narcissism and antisocial personality disorder having, for example, one really loving parent that adores you and tells you you're great and another parent who is completely withdrawn, it is literally a survival mechanism. And I'll talk about actual clinical narcissism because you know you go to Starbucks and someone orders a 17-syllable drink. You're like, oh, this person is such a narcissist. Maybe, maybe not, but in reality a true clinical narcissist will literally put on a mask and often only the people closest to him or her are able to see what the real personality profile is like.

Speaker 1:

Does that help? Interestingly enough, you are describing two people that I have separately interviewed on this show that were putting on a mask as guests. I'm not going to say who they were, but I found out afterwards who they really were and was blown away by that.

Speaker 2:

Yeah, it is a really fascinating life cycle. So, with clinical narcissism and you look at a, at a clinically narcissistic relationship pardon me it starts with love bombing and then an idealization phase, followed by a devaluation phase and then ultimately what they call a discard, which could be the silent treatment, or exploding and walking away, or a permanent discard where they end the relationship. But in those cycles, michael, there's often what's called a Hoover, where the actual clinical narcissist will go in and literally suck the so-called victim or the recipient of the narcissistic abuse back into the cycle and that forms a trauma bond. And breaking that trauma bond can be remarkably difficult, often requiring clinical help, not that someone is crazy and needs that much help, but a sort of guide, if you will, or a coach on how to dissect the nature of the relationship and what happens. And so to go back and answer your question why does finance and, for that matter, medicine, attract so many narcissists?

Speaker 2:

I'll go ahead and throw lawyers in there. It's because when they have that type of personality, it's an opportunity and a platform for the idiosyncrasies of that personality that needs the validation, needs the applause, needs to be the center of attention to thrive. And when it comes to clinical narcissism. There are actually two subtypes. There's the typical one that everyone thinks about the overt narcissist.

Speaker 2:

the louder than life guy who's always the center of attention which can also be an empath, by the way. Then there's the soft victim vulnerable, covert narcissist, often misinterpreted as being a constant victim, always misunderstood, always the victim of bad circumstances in life. It's really important to know the difference between the two and when we humans become evolved and understand the microdynamics between the two, it can help us navigate those relationships in work, in personal lives and so forth. And the second thought that I really wanted to share is that, as it relates to clinical narcissism and the trauma bond specifically, I want to start with what is a trauma bond? I went ahead and reached out to AI. Here is what I found.

Speaker 2:

Signs of a trauma bond include love bombing. The abuser may shower the victim with affection, gifts and compliments to hook them into a relationship, Maybe like QE right when stocks kind of go down. Cycles of abuse. A trauma bond is formed through a cycle of abuse followed by the abuser being apologetic and loving. This pattern is called intermittent reinforcement, kind of like cutting interest rates and launching the printing press every time the equity markets decide to go down 10 percent or more. Dependency. The victim becomes increasingly dependent on the abuser for emotional support and validation zurp tina qe. I think you know where I'm going with this as I read through this. The gaslighting, for example. The abuser may use false accusations, blame shifting that is a huge component in dealing with someone who has clinical narcissism or lying to make the victim feel like they are going crazy. The list goes on and on, and as I studied this ad nauseum last year, Michael, it hit me Capital markets have a trauma bond with the Fed.

Speaker 1:

And maybe the Fed has a trauma bond with what happened in 08. I wonder if everything that we've seen here is still the reverberations of the great financial crisis.

Speaker 2:

I 100% agree. I tell that to clients all the time. So if the initial trauma event was the collapse in 2008, we can, with hindsight, bias to our advantage, understand and apply this sort of clinical lens toward the Federal Reserve and capital markets. And look at QE and the fact that we have an entire generation of investors who today have only really experienced ZERP or zero interest rate policy, qe, quantitative easing, tina. There is no alternative and markets became conditioned to expect that monetary policy regime and things came to a screeching halt in 2022, post-covid.

Speaker 1:

None of this is healthy, even though it feels pretty good when markets are going up and you're getting that affection from that other individual or that entity. What causes a break, what causes a separation, what causes somebody to say enough with this dynamic?

Speaker 2:

Healthy boundaries, healthy boundaries, healthy boundaries, healthy boundaries. At some point the recipient of the abuse will stand up for her or himself and say enough is enough, I have to establish healthy boundaries as a framework for life. And typically what can happen in the sort of clinical sense anyway, is the clinical narcissist will look at that their worst thing in the world are healthy boundaries. They're just suggestions, right, very annoying Transparency, authenticity, honesty out the window.

Speaker 2:

At some point the recipient of the behavior will either leave to end the relationship and have to go through breaking that trauma bond, which is very significantly difficult for most, or they'll vocalize hey, if this behavior does not stop, then I'm going to proceed with a particular action item, like ending a relationship or whatever. And oftentimes the true clinical narcissist will then do a final discard or simply bolt, and when I say bolt, they exit the room, they exit stage left very quickly. So, as it relates to the Fed, we have a lot of things to think about in terms of how capital markets can break the trauma bond with the Fed, because my view is that the economy, while not worse, is, if you will, essentially structurally different than the economy that we had for the 13 years of Cuba.

Speaker 1:

So that's a good direction to go. That's this point about structurally different, because I think a lot of people say, well, of course, look at social media. Of course, look at technology. Of course, look at the advent of options trading, zero DT and all this stuff. That's on the back end. But when you say the economy is structurally different, is it that it's structurally different or culturally different in the sense that we have this need for instant gratification?

Speaker 1:

We believe that we're entitled to 20% annualized returns, we believe that the Federal Reserve has to be at our back at all times, otherwise what's the point of doing anything? What is the actual source of the post and pre being different?

Speaker 2:

Yes, so there are a few factors that go into this. One is the cultural aspect. I'm going to talk about social media, instagram in particular. Instagram is fascinating because you can go down a rabbit hole and the algos are great. It's massively entertaining and it's easy for many people to get completely sucked into that.

Speaker 2:

But if we live in the social media world where everyone puts their best foot forward through filters and on and on, it creates this level of expectation that is inconsistent with reality. We live in a very narcissistic personality right or, I'm sorry culture and world in which these personality profiles pardon me can really flourish and thrive. There's something very inherently narcissistic about posting about yourself all the time. I love LinkedIn. It's great. I should probably use it more. I don't think it's narcissistic to post articles in which you're featured or that you write. It's an educational platform and it's a great networking opportunity.

Speaker 2:

But on the flip side of that sort of social media heavy society is this sort of culture of narcissism. Force them inside. For, call it, six months to two years, the way people spend their time and the way they spend their money evolves. It doesn't mean that it's worse, it's just a little different. Go back to 2019 and think about the number of Amazon deliveries that you would receive on average. Fast forward to today. It's markedly different. There's so much e-commerce. There's so many things that are being purchased online.

Speaker 2:

The majority of my Christmas shopping was done online other than Black Friday. I actually got up at four o'clock in the morning.

Speaker 2:

I had a newfound love interest, michael, and that is actually getting up and going out on Black Friday for my kids and sorry kids, santa Claus doesn't exist. Anyway, I hope that helps. I just think that, because the economy is structurally different, that's going to play out in inflation, expectations and materialization differently than what we experienced for 13 years, because I think that 13-year window was the exception to the rule, whereas most people think it is the rule.

Speaker 1:

How does that change up an investment process?

Speaker 2:

if that's the case, we have to throw out the QE playbook and look at history. You're a smart guy, you have a CFA. What were we taught when we were looking at portfolio management? What is the assumed rate of inflation? I'll give you a hint it's between 2% and 4% and it's called 3%. We're kind of there. So one of the things that we really point out to clients as it relates to portfolio management and the financial planning process is that mythical, magical 2% number that JPO talks about is only interesting. We really need to look at 3% to 3.5% as potentially being the norm For now. You and I hang out with a lot of Fed heads and folks who have been at or are still in the Federal Reserve and several of them offline, have said even we can only predict three to six months out, and that's with hundreds of PhDs. So I think it's really important to manage our expectations on a move forward basis as it relates to inflation.

Speaker 1:

But as somebody who's managing money, you're not just managing your expectations. You have to manage other people's expectations with how they think about money and their allocation to you. So let's talk a little bit about your business and how you've navigated through this most recent period. You're a fiduciary, as am I. You're managing money as I do, in a different way. Has it been hard to communicate what's going on in the real world to existing clients that are maybe getting a certain view from the media? That's not real.

Speaker 2:

Oh, that's a phenomenal point of conversation. In short, no, it has not been, because the families that are served by my firm are typically headed by folks in their late 60s to early 80s. They remember 14%, 15%, 16% interest rates on mortgage. They remember the various iterations of the Federal Reserve. They remember Volcker it's so funny, michael. They're like oh, vince, you know, kids your age complain about 7% interest on a mortgage. I remember back in my day when I paid 18% back in 1981. And to hear them walk down memory lane, it's really not an issue.

Speaker 2:

That being said, the number one sort of point of noise that we hear from clients are their baseline costs at two places. One is at the grocery store, two is at the gas box. And particularly as it relates to the grocery store, the Fed puts out this PCE number and GDP and all these other things and depends on the different bureaus that put the data points out. But nonetheless they commonly say look, the Fed puts out X, or the media states X, but in reality it's X plus whatever, and what we're paying is actually significantly more than what's reported by our government. Fortunately, many of those are well healed and so it's but a minor inconvenience, because if they're paying, you know, $4 or $6 for this, it's not a big deal, right.

Speaker 1:

I think everybody knows that inflation is understated. I guess it's degrees of how it's reported, all right. So if inflation is here to stay and we're in a structurally different environment, how do you create a portfolio that can keep up? I have made this point repeatedly that there's no such thing as a store of value. Everything has risk, right. So that's what's happened. The central banks have forced all of us to be risk seekers, because if you're not a risk seeker, you don't have a chance at keeping up. It's a guaranteed loss after inflation. If you're not a risk seeker, you don't have a chance at keeping up. It's a guaranteed loss after inflation. So how do you construct a portfolio that doesn't take on too much risk when, let's face it, maybe that's the only way to actually keep up?

Speaker 2:

You just throw it in the mag seven and pray.

Speaker 1:

That's what I want to hear.

Speaker 2:

Exactly.

Speaker 2:

We tell clients a number of things and I'm just kind of I'm going to do this sort of ad hoc the last two years. Let's go back to 2023. 2023 started off a very technical low because 2022 was a maelstrom and stocks and bonds essentially had a correlation of one and went down together Surprise. And stocks and bonds essentially had a correlation of one and went down together Surprise. Congratulations to everyone who got out of duration and FI fixed income back in December of 2021.

Speaker 2:

I remember doing math at that point in time, michael, and thinking okay, well, we have the CPI, the PCE, etc. All going up markedly. The Fed has done absolutely nothing yet. All going up markedly, the Fed has done absolutely nothing yet. So maybe, just maybe, the Fed is going to play the game of catch up quickly over a short amount of time. I remember going to clients in December of 2021 and saying listen, if the Fed raises interest rates, we have this inverse relationship between interest rates and yields. They get the seesaw picture. I go the Fed raises rates 1%, 2% over a year to three. No big deal.

Speaker 2:

But if they raise significantly I'm talking 2%, 3%, 4%, 5% over a short amount of time, long duration is going to get hit. So if we exit that and start rolling T-bills and we were very early adopters of the T-bill and shill trade if you will rolling three and six-month treasuries, then our ultimate sort of loss is going to be missing out on essentially 35 to 50 basis points of yield for a six to nine month period. We'll see, we'll know. And now we look at the equity performance in 2023, coming off of that technical low in 2022, and then also 2024. I mean banner, banner years, double digit years. Look at last year gold and the s? P are up. What 25 ish percent each find me a time in history when that has happened before. And I have oceanfront property in landlocked west by god virginia for you.

Speaker 2:

So in managing clients' expectations moving forward, we are telling them look at 3% to 3.5% core, super core, somewhere in that range for inflation. We don't believe it's coming back to 2% anytime soon. Should that change, of course, we have an action plan. What does that mean for equities? Well, let's look at the CAPE ratio. It's pretty stretched. Valuations are pretty high at the CAPE ratio.

Speaker 2:

It's pretty stretched. Valuations are pretty high. Valuations can't drive the timing of when a sort of pullback in the market specifically stocks will happen or a 15% or 25% or even 50% sell-off might happen. But we know, being in that part of the pool, that valuations are stretched. We're telling clients on a move forward basis look for 5% to 8% in equities. If we're buying equities for the next 10 years, no big deal. If we're buying equities for the next six months, you might want to manage your expectations and we trade around that. On fixed income, we still have about 50% in T-bills and 50% in duration. This is a lot of mixed signaling coming out of the Fed and different data points and we just really want to kind of hedge it on both sides.

Speaker 1:

Given your years of experience and you mentioned valuation I wonder what you think is more expensive stocks or bonds?

Speaker 2:

If you want a guarantee, buy a toaster, but I say in the meantime I would wager that stocks are more expensive. But because I know that compliance alligators are going to look at this, we really have to understand the true investment objectives of a particular estate and look at other holdings. A lot of our families have businesses that they are going to transfer to heirs or ultimately take to market. They have real estate holdings. Many of them have both, so we have to look at the entire estate, if you will, as it relates to how to manage the portfolio.

Speaker 2:

And interestingly, having spent literally thousands of hours, michael, in my former career of going into family offices, rias, wirehouses and so forth specifically to teach their private wealth advisors and analysts on how to use alternative investments for their high net worth and ultra high net worth families, it never made much sense to me in looking at a client's overall estate profile and going 50% of the net worth is in real estate. Why is the advisor putting 15% to 20% in real estate without the client asking for it? Maybe it's the big commission that the REIT is paying.

Speaker 1:

Show me the incentives, I'll show you the output. I mean, that's really what that's a lesson in. You also do some financial planning, as I understand it. As I understand it a little bit.

Speaker 2:

At our core, we very much are a family office structured financial planning firm. About one eighth of what we do is investing, but yes.

Speaker 1:

Do you think that people should focus more on the financial planning side and less on the investment side? I mean, it seems like everyone always wants to talk about stocks, but never their financial plan.

Speaker 2:

So that's really driven by the environment in which we find ourselves at any given point in time. I think that for the foreseeable future it will be a little more of a stock pickers-ish kind of market because the baseline inflation number theoretically might stay higher relative to the 2%. But again, this is something that we're talking with clients about day in and day out because they're referencing the S&P 500. They're referencing the NASDAQ, so we have to remind them what goes into an index, what percentage of the S&P 500 is comprised of the Magnificent Seven. And they start to understand that when you look at the S&P 500 and 40 plus percent is intact and there's an overwhelming you know, 50 plus percent of the return driven by seven names last year.

Speaker 2:

Then you look at a diversified portfolio of large cap growth, large cap value, mid cap growth, mid cap value and on down, including fixed income, with the particular realization that international equities have trailed relative to the United States and there are international countries that are looking down the barrel of recession, people understand why a broadly diversified portfolio has underperformed relative to these indices. So in the QE world, passive all day. Generally speaking, we really like to look at clients' tax returns and look at the intra-year tax return profile by leveraging the CPA or the tax advisor, because ultimately it's not how much the portfolio makes in return, it's how much the portfolio can keep of those returns after taxes. And many of our families have what's called non-qualified or non-retirement assets that we help them manage.

Speaker 1:

What makes for a shitty client. I mean, let's face it, if you're going to be managing other people's money, they're always going to be touchy because of their money. Right, it kind of comes with the territory, but it's always nice to fire somebody, isn't it?

Speaker 2:

One thing and one thing only, and yes, it's the answer to that question an overt clinical narcissist. So you look at hindsight bias right, and over the years I've become very evolved at spotting this from far away. If the first question that someone asks is well, how consistently can you outperform the S&P 500? Whoa, there's a way to talk about that and understand really what is driving that question. But clients who go, well, wait a minute. A certain tech stock is up 400% over the last two years. I want to have 30% of that in my portfolio. Here's why that's where it becomes a little dicey, because when you apply experience through that prism and understand that things come in cycles, you can help navigate not only the investments but also that true family office experience that involves all the financial planning that you mentioned.

Speaker 1:

So here's the thing. I think all this makes a lot of sense, I think it's important and fiduciaries have a critical role for most people, family offices or not. But let's face it, people want to gamble. All right, I mean, they want to do things their way, they want to go into levered products, they want to go YOLO, into zero DC options, and it seems like more and more people are getting into that way of thinking about what to do with their money. Am I off on that? I mean, is there some weird secular trend that's happening now that's causing money to move in ways it never did before, even beyond the structural arguments around changes in the economy?

Speaker 2:

So momentum begets momentum and we have seen a lot of that coming off of and I don't mean to keep going back to 2022, early 2023, but we did come off of that technical bottom.

Speaker 2:

And the human brain is such a fascinating thing to study because, without even realizing it, so many of us look at recency bias and hindsight bias and apply that to what life might be like moving forward.

Speaker 2:

And we're telling clients right now we just came off of two great years in equities, particularly large cap growth.

Speaker 2:

That is because the economy has had more growth than I think the majority of strategists and so forth expected, which is a product of the so-called different economy Again, not worse, but it's really important to understand that moving forward, things can be different and the old playbook should probably be thrown out the window, because when they look at the two most recent years of performance and they're stellar people expect that moving forward, and that's really where the behavioral characteristics of a particular client come into play. So this whole exercise that we do, michael, in which we meet with the clients to understand what their true risk tolerance is, these standard boilerplate risk tolerance questionnaires that are offered in the industry, in my view, are completely ridiculous and don't allow the practitioner to understand the true investment objectives of a particular client. Understand the true investment objectives of a particular client but at the end of the day, if a client wants to swing for the fences, we know how to do that, but in reality most of our client base doesn't have that as an objective.

Speaker 1:

Talk to me about your expectations for what's going to happen the next several years here under Trump. I mean, do you think that the economy, yet again, is going to change in a dramatic way? Are things going to get accentuated? Are things going to get weirder? I mean, do you think that the economy, yet again, is going to change in a dramatic way? Are things going to get accentuated? Are things going to get weirder? I mean, what's your take on sort of what happens next? Are things going to get weirder? It's all been weird, man. No, seriously, it's been weird because look what's happened. Everyone is bearish on bonds, but they're bullish on junk debt, which is the riskiest part of the bond market. Everyone is bullish on equities, yet small caps, after inflation, are still way below their 2021 periods and most stocks are small. Everyone says the S&P is a reflection of a great economy, but small caps are more of a reflection of the consumer more domestic, less international, less global in terms of revenue attribution. So, yeah, it's been weird.

Speaker 2:

It's been very weird. It's like this weird gaslighty, dialectical materialism type of environment, and I only laugh because, even though we didn't talk about this before we went live, I 100% am in that camp. It's just weird. It's just weird. Adulthood is weird. Parenting is weird. Driving through traffic is weird. Parenting is weird. Driving through traffic is weird.

Speaker 2:

So I think under the Trump administration there's going to be and this kind of goes without saying inflationary policies or, said differently, policies that, if implemented, as he campaigned on, will result in higher inflation, the extent of which is a number that I just don't know and I don't know how to quantify that, and I think that we can assume that he will actually follow through on things like deportation.

Speaker 2:

But how is that going to be manifested within society? Are we actually going to create jobs and have people go and export human beings? It takes years to repatriate an onshore production facilities and there's a lot of math involved. So I'll say, cautiously optimistic, that, in the context of international equity markets, in the context of international equity markets, and I guess, specifically the countries they're in looking in many cases at the brink of recession, maybe it happens, maybe it doesn't, but we come back to the United States of America. We are the reserve currency, we're flanked by two oceans, there's a lot of good in the country and I think that we'll see a US-centric sort of bent as it relates to portfolio management, and we're certainly managing portfolios that way. So cautiously optimistic is my vote.

Speaker 1:

Cautiously optimistic, is my vote yeah, although I'll tell you there's a part of me that thinks that the ultimate contrarian trade is that China's stock market way outperforms the US stock market in the next four years. You and I should have a bet. We'll see right now, a friendly bet. I don't know how much you want to bet. I don't have that much money. I'm putting too much of my money into my own business and I'm saying that just because of some of the things you already referenced. The KP and valuations in the US are stretched. Valuations in China are not. It's like the ultimate contrarian trade is thinking that under Trump, china actually outperforms right, which sounds crazy, but that's maybe why it happens. But having said that, good luck trying to get your clients on board for that, because nobody likes putting China in their portfolios, right. Everybody wants to be America-U US focused and you can't blame them, aside from the fact that there's a patriotism aspect to it. It's worked.

Speaker 2:

Yeah, it's worked. And two thoughts come to mind. One, I think what we wager is a really nice cigar at Camp Kotak, because we're both going back. And the second thought is when, when we look at all the wholesalers, right the actual product sponsors that incessantly email and call, for the last seven years they've all been saying okay, this is the year for China, this is the year for emerging markets, and I'm going one of these years, michael, they're going to be right.

Speaker 1:

Listen, man, I'm laughing because I've been in that camp myself. I mean I thought I've been thinking for the longest time. It's only a matter of time, and time just keeps ticking, all right. So it's just been brutal to try to play that.

Speaker 1:

I thought speaking about, like back in the school days, right, two to three percent or two to four percent inflation three percent is in the middle, obviously. So I thought international diversification was supposed to be beneficial. It's not, let's face it. I mean, we are in a world where all the old theories just haven't mattered. It's either that or we're just in a very unusually long cycle where it hasn't mattered and it will soon matter again. So that's maybe a good direction to go with for the final few minutes here, which is that so much of being a fiduciary and a portfolio manager is playing the cycle that you're in. The challenge, of course, is knowing what cycle you're in, and the thing I always joke about is that people don't know if the cycle's changed until two to three years after the cycle has changed. So how do you know when to change the playbook in terms of your own portfolio construction?

Speaker 2:

Data should drive those decisions and there's a bit of the peeling back of the Aspect to this. I subscribe to multiple economists, a very dear friend, danielle DeMartino, being one of them, and I read her daily missives that come out that incorporate intra-month data and key facts and figures that help us look at the directionality of different economic trends. And I say that but also I have to zoom out because at my core I'm a macro guy. I love big picture. Organic chemistry was by far my favorite class in undergrad. Most people absolutely despise it and I was quite the contrarian in that class, because you have like 37 different rules and you get to mix a bunch of stuff together.

Speaker 2:

It's no different than looking at a client's overall estate and going okay, what do we want? Going to whom? As tax efficiently as possible. But as it relates to portfolio management, modern portfolio theory was founded on some pretty significant assumptions. I'm not negating the importance of it. I just think that on a move forward basis, the 2% mythical magical number should be challenged academically and in practice. As it relates to deployment within fixed income, I'm thinking that more and more there might actually be the potential for the Fed to don't shoot the messenger here, raise rates the back end of 2025, maybe in 2026. But you ask me what's going to happen over the next year?

Speaker 1:

to three, I'll tell you in four. That's my favorite line, man, that's like. I'll tell you next year what happens this year.

Speaker 2:

but, case in point, how many strategists and portfolio managers in october, november or december of 2019, we're going all right, all right, all right. Hey, ted, grab me another beer, damn it, because, guess what, we got this vibe. It's like no one, absolutely no one. And I say that because no one knows anything. Right? You ask me. You know, kind of do I gamble? Yeah, michael, I get out of bed in the morning, my feet hit the ground. I make some coffee, I then have a second cup and then the day gets going. You never know really what's going to happen. I'm just along for the ride.

Speaker 1:

Yeah, no. I think that's a good mindset to have, vance for those who want to track more of your thoughts, more of your work and maybe learn more about the services you offer. Talk about where people can find you.

Speaker 2:

You can simply Google Vance Bars. My firm goes by YDF, which is an acronym for your Dedicated Fiduciary. You can check out the site Also, vancebarscom. I'm very fortunate to have a great relationship with the Fourth Estate. I do a fair amount of lecturing. I did write Fiduciary Wealth Management subtitled A Millionaire's Guide to Hiring the Right Financial Advisor, which essentially takes the 10 years I spent inside of wealth management firms and tells the public exactly what it needs to know about A whether or not a client needs a financial advisor, and. B the key questions to ask.

Speaker 1:

Vance, I am legitimately a big fan of yours as I've gotten to know you over time. It's funny because I get to interview a lot of different people and interact with a lot of different people, but it's all digital, it's all via screen, via camera. You're one of the few guys I've actually met in person who is not a narcissist and who knows a little bit about Thank you, it's a good compliment in this industry Knows a little bit about not just the business but also how to be thoughtful and helpful to others. I appreciate you as a friend. Appreciate those that watch this Again. Learn more about what Vance offers on his various websites. Also, follow him on X. He posts every now and then. He's got some Every now and then I will tell you Michael last year was a very busy year.

Speaker 2:

I made it the year of father time with my kids. You know you mentioned the narcissist whole thing. I love the theme of our conversation today. I actually took the initiative last year to go and have a full, deep dive personality test done and I came out a Sigma empath, very similar to the friend that I mentioned earlier. And it's weird because when we really understand ourselves, who we are, our frequency in the universe, we tend to then understand the people we attract and it's such a great thing to do because we can understand how to live life with fulfillment.

Speaker 1:

I'm still trying to figure that out. I appreciate those who watch this and I'll see you all in the next episode. Thank you, Vance, appreciate it. Thank you very much.

People on this episode

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Michael A. Gayed, CFA

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