Ignore the Election: Why Staying Invested Matters

In this episode, our hosts have a special conversation with Mark Malek, CIO at Siebert, just days before the 2024 presidential election. Mark discusses the firm's strategies in preparing for the election, the impact of big tech earnings, potential changes in tax policies, and market volatility. As they dive deep into the probable outcomes of the election and its effects on the market, the conversation offers valuable insights for investors navigating this volatile period.

The What Does It Mean? podcast cuts through the noise to lay out what matters most for the stock market, the economy, and your personal finances. Each week, we break down the latest trends, explain the headlines, and help you understand how they affect your money in a clear, no-nonsense way.

Chris Versace

Bob Lang

Lindsey Bell

Mark Malek

Transcript:

[00:00:00] Chris Versace: Hey folks, Chris Versace here. Thank you so much for tuning in to this latest episode of the What Does It Mean podcast. Normally I have the pleasure of speaking with my co host Lindsey Bell and Bob Lang, and this time I have that again as well, but we have an extra special conversation to share with you this week.

That's right, with less than a week to go until the 2024 presidential election. . .

We're bringing in Mark Malek, the CIO at Siebert. To share his thoughts about the election, what he's been telling clients, how he's been preparing them for the election and its potential outcome, and across all of that, we'll also mix in some quick conversation about big tech earnings, the upcoming Fed meeting, and essentially putting it all together for you.

So hang tight. Here we go with Mark Malek. CIO of Siebert.

You know, Bob, Lindsey, I got to tell you, I am really excited to talk with, excuse me, to talk, see how excited I am. I can't even get the words out right to talk with Mark Malek from Siebert. He's the CI over there. My understanding is he also leads the portfolio management for not only the ETF platforms and equity and fixed income portfolios, but he's also been pretty influential in developing Siebert's RoboAdvisor as well.

And As much as I want to talk to him about all that, I really think the big conversation we're going to have today about the election, how Siebert's been preparing for the 2024 presidential election, what risks they might see, I, I think this could be a well timed conversation. So Bob and Lindsey, with that, let me welcome Mark onto the podcast.

Mark. Thank you so much for joining us today.

[00:01:46] Mark Malek: Thank you for having me.

[00:01:48] Chris Versace: So, Mark, tell us a little bit about Siebert before we kind of dig into the meat of the conversation today about the 2024 election. It's running, , neck and neck with less than a week to go, and we're going to want to tap into what you think about it, what the outcome is, but more importantly, How you been prepping and preparing Siebert's assets and various portfolios for the outcome?

[00:02:12] Mark Malek: Sure. so based on the Siebert's traditional clients that we have here, they tend to be higher net worth individuals. They tend to be a little bit On the I don't want to say older, but a little bit on the more mature side, which means that we have a lot of anxiety going into this election. As you would guess, we have a pretty interesting split of political interests that span across our firm.

And so my job, I would say, over the last 2 months has been chief in charge of. Bringing people's anxiety down because , and doing that requires a lot of research every single day, because as you probably know things are changing daily. , ever since Kamala Harris put her hat in the ring, that's when the market started taking things a little bit more serious.

Then the serious questions started to get asked, right? What does this mean for my money? What are the policies that these guys talking about? So I've spent the better part of That period since then, trying to filter out what part of what we're hearing in the media is noise and what part of it is actually policy, right?

And of course, you have to ignore the politics, right? My, my rule is always, , policy, not politics. And so that's a tough line to walk also, because it's easy to offend people if you're, cutting down one or the other side's, , policies but we try to stick to the policies and we try to see which ones are real, which ones are likely to happen and what would be the possible impacts.

So that's been a key focus.

[00:03:37] Chris Versace: that's a Herculean effort, especially with all the, , the mud slinging that's going on, especially this time around. Right. But. How do you make sense of some of these policies knowing that, especially as the election has gone on and it's become, , extremely close, that there's a lot of things being tossed out there that, , the sane person would be like, there's no way that's going to happen, especially when we have to consider that a, they're campaigning, and b, any policies have to clear the congressional hurdle.

[00:04:07] Mark Malek: Yeah, that is correct. And that was one of the first things that we sort of tell our clients is that, , let's be realistic here. , this is the what we refer to as the season of giving, right? So everyone is both sides are offering, , all sorts of incentives, possible tax cuts and so on and so forth.

And the first thing we have to do is step back and say, okay, who enacts tax policy, right? Of course, it takes the president, but it also takes both chambers. Sure, they can compromise. But, , the chances of compromising to any extreme are very low on. Then we focus on the things that can be enacted by executive order, right?

And, , so, I mean, I don't want to jump ahead of myself, but, , tariffs and things like that are things that the president could do unilaterally. So, , we have to look at those things first to decide. Which of these can actually be enacted? Which ones are most likely to be enacted? And that's sort of the first big filter that we have.

So from the beginning we were telling our clients, you should be focusing on the Senate race, right? That not necessarily, of course, it takes the president to play, but, , if we have mixed chambers you're less likely to come up with something.

[00:05:15] Lindsey Bell: I think you make a real this really good point is that perhaps the assumption in markets right now is is gridlock because no matter who wins the presidential seat, that the You need Congress to act, right? You just said that. But what does that mean for the economy?

Like, like you just said, if, if all we can do to move this country forward is through executive order, what does that do for our economy? Sure, we can continue to grow and we can continue to move forward. But do we fall behind from a competitive standpoint? I mean, you have one, one candidate that's adversary, right?

To our trade partners. You have one that's antitrust. And so there's there's enough on both sides to, , with that we could pick nitpick at what is it? What do you see from from an economic growth perspective, I guess, going into 2025 and beyond once we do get past this race?

[00:06:07] Mark Malek: Yeah, there are challenges.

As you pointed out , one of the things that we, when we reduced it all down from a broth to a thick brew of something, we came up with the reality that the, the 17 act is going to expire at the end of 2025. And so if nobody does nothing,

[00:06:25] Lindsey Bell: just, Just for listeners, that's the tax policy act that you're referring to,

[00:06:30] Mark Malek: right? From 2017. And so if that expires and it'll, expire if no one touches it at the end of 2025, corporate taxes are going to go up and they're going to go to 35%. So. You just, you don't even need a fancy calculator to figure out that, , earnings for any company that's, , paying taxes are going to go down.

And so there's no way, there's no way you can candy coat what's going to happen to the valuations of stocks, or at least there's going to be, I would say for sure, you're going to get a little bit of overhang just from that alone. So if we continue to see gridlock, you're going to see something like that happened for sure.

And that's something that we're really concerned about.

[00:07:12] Lindsey Bell: One thing I would just add about the corporate tax concern is that that's one of the permanent changes of the 17 act, but that doesn't mean it's permanent forever, right? There's just this uncertainty because you get somebody else in the white house, you have a different looking Congress and things can obviously change.

And I think it, to your point, it is creating this anxiety. I think it's, , I've talked a lot about how it's impacting business decisions near term yeah, because they don't know, like, if you don't know what your tax rate is, you don't know how much you can hire. You don't know how much you can spend from an investment standpoint.

But like, interestingly enough, the market doesn't care and it has just taken off. And, and we've heard from Stanley Drukenmeller in the last week or two weeks. I think it was, he was on Bloomberg and he was talking about, look, the market run up, especially since , But since the September low, I think we're up more than 7%.

It's pricing in a Trump win, and he thinks a red sweep is more likely. I mean, is it, is the recent run up really due to, to politics, to the election? Or is it, I mean, you've also, and I know you've talked about the move in the bond markets too, but, or is it like, we've also have. A decent earning season. We have economic data that's coming in better than expected.

Things seem to be picking up. Inflation has been sticky. Like, what do you make of the recent run up in the market?

[00:08:34] Mark Malek: Yeah, I would agree. I would say that a lot of the movement is because we are getting some positive numbers, right? The wind is blowing in the right direction for, , positive moves.

Earnings is about to, . Go through a very large inflection point over, let's say the next two or three days. So this conversation may be different next week. But, , the financials went first and, , we were expecting some positive surprises. And we got them. So we were very happy with what we saw in terms of earnings from the financials.

 so that really kind of was the appetizer for well, , what's next? I mean, well, we had industrials that was not so exciting, but we weren't expecting any fireworks from that. But everyone's really holding their breath for, , tech. And of course, the tech leaders, which are the mag 7, which are loosely tech, right?

They go across several different sectors, but we're going to know a heck of a lot more starting this afternoon. , once we get alphabet, but I think people are having high expectations for that as well. But , I think in a lot of cases, those companies were expecting them to come in as expected.

But the bar is very, very high. So people are expecting fireworks, not necessarily coming in on on the numbers. So, , there's no telling how the market will react in the short term, like, initially, like, the day after, although the number so far suggests that. The, , earnings beats certainly have been have yielded bigger next day returns in the tech sector.

But, , again, , those companies, if you look at the fundamentals of a lot of these companies that everyone's watching right now, they're very solid. Right. So there were times that people were questioning them leading up to this period, right? As we were coming to earning season, everyone was talking about, Oh, but they're earning EPS growth is slowing.

Yeah, they're slowing, but they're slowing to, , 20, 24, 80%. Right? So, you know, as an investor , and you're thinking, , let's just think, Super long term, like two years from now, right? In the investment world, right? , in two years from now, those companies are going to be doing well, unless we hear something from them that suggests otherwise, right?

any kind of shocks that we hear from these companies during their earnings, Possibly, I dare say, because we mentioned it before, possibly Department of Justice trying to break up a company, these things will affect these companies long term. But all these arrows are pointing in the right direction, which means , we're setting ourself up for either a bigger upward move or a lot of volatility.

And , we're sort of counting on somewhere in the middle there. , throw in the elections throw in the big economic numbers that we're going to get later this week. So,

[00:11:09] Chris Versace: so Mark, let me, let me just sneak a question there because I think you're right. I think a lot of what we're going to see for big tech is going to hinge on AI adoption, early signs that they're able to monetize AI.

And it's not just, hey, we need to spend more because of this AI arms race. But at the same time, , as Lindsey mentioned, the economy, , The numbers are doing extremely well. We can look at the SESI, Atlanta Fed, GDP Now all, all of these numbers. But we've also seen the yield on the 10 year march back all the way to where it was towards the end of July.

And, , today D. R. Horton came out and they issued some really sobering guidance about the number of homes they expect to deliver over the next 12 months compared to. The last year and we're seeing that stock get hit. So I just want to sneak a question here What do you think the fed is going to say absent of the election, right?

Do you think they're going to say hey, we're tracking for two rate cuts before the end of the year and the reason I want to get your take on this Is I was reading this morning on bloomberg that a number of what they called, financial heavyweights Folks from, , Apollo, Morgan Stanley State Street and the like are now saying, it looks like one rate cut between now and the end of the year.

So to quote some other talk show host, what say you?

[00:12:32] Mark Malek: , our base case has been always on the lower side. , the 50 basis point cut, I'd be honest, took us a little bit by surprise. We were thinking it was going to be a 25 basis point cut. There was no immediate urgency for the Fed to cut at the time.

At least it didn't appear so. And why not keep dry powder? It's something that they struggled to do for many years prior to the pandemic. And so, yeah, they came out with that 50 basis point cut. So we're always on the lower side, although our base case, , running into, let's say this week has been two more 25 basis point cuts.

But , I certainly would not be surprised if we only get a 25 basis point cut between now and the end of the year. If that's all we get, I think that , the market is factoring in, I think, something like 75 basis point probability of Of 50 basis points, , 100 base 100 percent for 1 right?

, but those numbers, , based on, , swaps and futures have been wrong, right? They quickly adjust when the Fed does act. So I would say, yeah, between 25 and 50 basis points. I, , would never expect anything beyond that. And, , with respect to the 10 year. That's a very interesting thing where the 10 year yields have gone, right?

You touched on that, and we talked about it a little bit earlier. , a lot of my colleagues and I are talking more about the 10 year yields going higher, Because of an expected deficit, right? The increase in the deficit, right? So everyone is saying whether you're for, , Donald or Kamala, , both of them seem to be in the mood to open up their wallets.

And , that can only mean one thing, , the dreaded D deficit, right? And , the government already has record levels of outstanding debt. Our, the government, the treasuries interest expenses are going up right with these higher yields. And so, , there is a case where people would say, well, the government's going to be issuing more bonds in the future to cover those debts, deficits, and, , more supply.

Pushes prices down, pushes, pushes yields higher. So, , between the two candidates, it seems like one is more willing to spend than the other, but both seem pretty willing to hand out checks and tax cuts and what have you.

[00:14:40] Chris Versace: So, so Mark, before I go to Bob, just one question, last I saw the 10 year yield was around 434 35, something like that.

Where do you guys see it topping out?

[00:14:50] Mark Malek: Yeah. , I was hoping it was going to top out of 44 and a quarter. And , in these cases here, it's very hard to tie a number to it. Right? Because it's really. , the 10 year is in control of bond traders, right? It's not tied to, , the Fed policy or anything like that.

And so, , what do we do there? We always jump to the technicals on that. , we had a close look at the technicals and we saw that there would be some resistance around 4. 25, 4. 26, some more at 4. 30. But beyond 4. 30, you're talking about 4. 5%. And , so what does that mean for everything really, right?

That does mean something, right? Because a lot of people are quick to talk about mortgage rates, like 30 year fixed mortgage rates being the thing that's going to help , consumers get back into the real estate market. And unfortunately those are tied to the tenure note, not to the fed funds rate.

So the fed can cut all it wants. If the bond vigilantes continue to push up yields in protest over the deficit. It's going to affect mortgages and we've seen it happen, right? Cause a lot of questions that people are saying, well, why aren't my mortgage? Why aren't mortgage rates going down now that the fed is flying like doves?

Right.

[00:15:58] Bob Lang: well, Mark, , as an options guy, I pretty much paid very close attention to volatility and market volatility. You wrote a good piece couple weeks ago about tail risk of the election and how that affects the markets and sentiment and how people feel about investing and trading in this market and tail risk for anybody who doesn't understand what that is, it's a, as you put it rare events that exist at the far end of a probability distribution of, of returns.

And again, the jargon there means that extreme. Events that could happen cause panic buying or panic selling on either end. But I thought that the tail risk argument that you made was very good very interesting. And I wonder if you think that tail risk is just going to disappear after the election is over.

I think it is. Just because the election is an event, right? And this tail risk certainly leads up to that event. Once that event is over, it's almost like earnings or maybe some sort of FDA. Drug approval from some company. Once all that has gone away, the tail risk has gone away. And we've noticed, that in this election, 2024, much like in 2020 and 2016, there's a big bump in volatility leading out to the VIX futures, which expire right after the election is over. And that is pretty much by design. A year or so ago, a lot of people were buying volatility, looking for some chaos in the markets to happen after the election was over.

It happened in 16 and 20. And what ended up happening is There wasn't any chaos, and all that excess volatility, all that premium that was built into the volatility futures was let out, like letting air out of a balloon, and what ended up happening is the markets just, , took off to the upside. Do you see it happening again?

[00:17:46] Mark Malek: Yeah, that's great. Really great. So, , the tail risk that we're talking about at this point is like more idiosyncratic, right? So it's like market risk, right? And so, , to be, I don't know, very pedestrian about it. I think that risk is going to exist from next Tuesday through January 1st without saying what I'm saying.

, if we just look at history, assuming that there's no major political , problems that go on, you're going to see a lot of Bouncing around and there's going to be a lot of volatility out there. But when you really look at the real tail risks of bad things happening , that are really going to affect the market, you know what I'm saying?

Those are the , specific to companies, right? So, , we can game the Department of Justice , push to break up alphabet and we know that under one president, you know, , one thing. So, you know, , those things that that's warranted if you're looking at specific Volatility and let's say alphabet, right?

But for the most part, I think a lot of the indigestion that the market's suffering from now, the fears are really more sort of market based risks. And I, and I think that once you get past it and I also really, I was implying also when I wrote that piece was that, , the tail risk is there, so we, we have to know that it's there, but I was really trying to send my message to, to my readers that don't worry about that so much.

Let's focus on what happens after the fact. Let's focus on the policies, Those are the ones that are gonna affect your investments. Of course, we're gonna get volatility. If you don't like volatility, , stay out of the market. But, , you need to take that volatility if you want to have some upside, because that's the price we pay to get big returns.

[00:19:20] Chris Versace: Totally agree. So, so Mark, let's shift into Potential not outcomes for the election itself, but where we think there might be some tailwinds continuing to blow from a policy perspective. So, obviously, some of the big issues are going to be health care defense spending. I would lump in public safety spending, which has been a real boon for a variety of companies out there.

And then there's also infrastructure spending. If we look back. There have been a lot of companies that have benefited from that. Do you see any hiccups? Over the next several quarters, depending on who wins. Or do you think those those tailwinds just continue?

[00:19:59] Mark Malek: , that's it's a very interesting question, and I wish there was a straightforward answer.

I remember leading into the last election and it started to look like Biden was getting a little bit of tailwind and the Democrats might, , take over the keys to the White House. Everyone was scrambling to make investments. in those spaces that we thought we're gonna really benefit from a democratic administration.

And we really, we haven't seen enough of what we thought we would see. Let's just say those investments didn't pay off. , it's possible we got into them too late. But, , what we noticed is as we watch this stuff, that a lot of the money. That was set aside earlier on in the Biden administration for these types of infrastructure projects are really just getting distributed now.

So, , frankly, those companies under the next president , they're going to start to see the benefit. We're going to see those. So it's kind of hard to play that to play the infrastructure. Yeah, well,

[00:20:54] Chris Versace: and infrastructure in particular, because there were, I mean. To begin with, there's no such thing as shovel ready projects.

I think we learned that several years ago. At the same time, funds had to go from the federal level to the state level, get approval, and it was just, I would argue, with hindsight being somewhat 20 20, that expectations on timing were way ahead of themselves for these things. Just like, just like they have been for the buildout in this national EV charging network that has gone absolutely nowhere.

Over the last two years. So I, I agree with you that I think the tailwinds will continue to blow, but I guess my question was, do you see any of those programs at risk, depending on who lands in the White House?

[00:21:40] Mark Malek: Yeah. Yes. That is, that is a very interesting scenario. and certainly that's the challenge with, with a Trump win, right?

Because it's not necessarily knowing what the Trump policies are He's been pretty clear about what his high level policies are. But there's enough of a question of what are the again, those tail risks that we talked about before, right? So, , Trump administration that comes in and completely pulls apart an entire conversation Government agency can have a very negative, immediate impact on any of these types of projects.

And now, , again, it's for us to sit here and try to filter out which part of that is bluster , which part of that is something that will actually, occur. if you get a Trump or Harris win, , I think again, , Harris has spent a lot of time talking about how she's different than Biden.

, but her policy seems sort of in line with what we've had in the Biden administration and jumping to another hot topic. , these tariffs that everyone talks about, , these tariffs, most of them are still in place under the Biden administration that were enacted by the Trump administration.

In fact, the Biden administration turned them up a little bit. So, , if there are people out there and I'm trying to figure that out myself, right, because I'm anti. Tariff right? Generally speaking, but if you look at the economy and how it's done under Biden administration with tariffs , I don't know that there's a different scenario.

, that might exist on the other end of a trump, , trump two dot. O. It's clear that he's gonna do stuff. He's gonna threaten stuff and and so on and so forth. But again, that doesn't necessarily mean it's bad for all companies. It doesn't mean it's always. You know, , because there are companies that will thrive.

in a higher tariff environment , certainly US companies who are manufacturing here, et cetera. So it's hard to say. That's again, a big part of what I found myself having to do, Chris over the last couple months, which is, , which part of this is real?

And if it's real, what does it really mean? And so when you boil it all down to it, , it would seem that, , Trump's policies would be somewhat better for the market in terms of , goosing the market a little further, but , the market would not do badly under Harris either.

Right. Right. And with Trump, though, with that potential upside, we get the volatility. Well, that's what you might enjoy because it's, , volatility is opportunity for options traders. Right. So

[00:24:03] Chris Versace: I was just going to say that, Mark, that, , when we look back on the Trump administration and its time in office, I, I, Find it was extremely unpredictable on a number of fronts.

Are we having tariffs? Are we escalating tariffs? Are we not? , and I know that that's one of Trump's kind of, Key playbook items, right? When you're negotiating, keep people off balance, , , be unpredictable and all of that. But that's not something the market really likes.

The market doesn't like that. It prefers predictability. So I think you might be right that, , either way the market could, , chug higher depending on, , some of the data that we get and where the Fed goes But I, I suspect one would be more, I guess, calm, cool, collected with one president and probably a little more topsy turvy with another.

[00:24:55] Mark Malek: Absolutely. Unquestionably. Absolutely unquestionably. But as I like to say all the time, , volatility is the price for big returns. So if we could surf those waves properly and I do my job well by keeping our clients calm and focused on facts, , maybe we'll bounce through this with some, , better potential returns.

, but I would definitely agree with one, it's going to be business as usual, which is right now. Good. Right. I mean, we're going in the right direction.

[00:25:23] Bob Lang: Mark,

[00:25:23] Mark Malek: Mark, I

[00:25:24] Bob Lang: was going to say something about history here. If you recall that after Trump was elected in 2016 do you remember that in 2017 it seemed like people were, were happy that there was a divided.

Congress with the executive branch, the market was up every single month in 2017, it set a record and never, never before in a whole calendar year, the markets were up every single month, but it wasn't until 2018 got underway. And and then even 2019, after those midterm elections, that things started to get really bumpy and a lot of volatility.

And I think, I think I want to recall that 2017, when we had that string of, of up months. Volatility was in the tank. It was in the low teens for literally the whole year. Is that right?

[00:26:12] Mark Malek: Yeah. , it's interesting. , that that was, I guess that was there the pre let's call the pre tariff era.

And it was more of the getting to know you time. And then once, , he started on the tariffs. And as you said, once we had the midterm elections and, who knows, you know, , I'm sure you guys have all looked at , the history of the divided president house to both chambers. And interestingly, , Based on the way it was set up , the markets do better under Democrats with mixed Congress, I believe, or something like that.

And so, , Trump had the, suddenly the keys to the nation during midterm elections, I guess, then they turned it up a little bit. It's interesting, , we're trying to look at everything we can from The first Trump administration right now that we're getting closer and they're neck and neck.

And, , what can we expect? So, , \ it's hard to look at how the market behaved during that time because he sort of, he got the pandemic on the tail end. But , we could certainly look at how well sectors did under, under the administration up until let's call it, , January of 2020.

And you see the market behaving actually a lot like it's behaving right now. , very well for technology consumer discretionaries, , healthcare energy, though, not doing so well, but, , more recently, not so well. So, , we're trying so hard to figure out all the different scenarios that will occur, if Trump 2.

0 comes into being.

[00:27:32] Lindsey Bell: , I think it's such an interesting topic, especially for folks like us, right. It gives us something to talk about. We always need something to talk about. Analyze the market. what's going to happen in the next month? Right? But I think from a long term perspective, these elections, which it's like every 2 years, really dust off the playbook, right?

Of what what it means for a change in regime or just change and In leadership and but over the long term, if you look at the stock market, the long term chart of the stock market, , it's the election doesn't drive the markets. It gives you clues into to trade sectors and things like that, right?

And the good news is, is that usually the 1st year, like Bob and you just spoke about the 1st year of a presidential candidate is usually the best 1 of the best years. So. Perhaps, , regardless of who's in office in 2025, we can see another really good year after what has been a blockbuster year.

I think it's kind of interesting to the Goldman Sachs Republican policy basket. It's been outperforming the Goldman Sachs Democratic policy basket since the start of September. So that's maybe why Stan Drukenmeller is pointing to a Trump win. But I think though, if you probably look at that and I don't have the data in front of me over the longer term, I think they just even out probably, , cause there's longer term studies too.

And in that, if you take your money out of the market, because your party didn't win, you're going to be the loser. Right? So, I mean, do you see this as noise? Like, do you, is, are your customers more long term or intermediate, near term? Like, are you, or are you like advising on both ends of the spectrum?

[00:29:11] Mark Malek: Yeah.

No, we, we try to focus very hard on longterm. And , it's every client tells you that they're longterm investors, but , they will tell you how well you did last week. Right. Because you're watching that very closely. And, uh, wealthy people don't mind losing money. , we have found quite the opposite, right.

That the wealthier they are, The more upset they are. If you overcharge them 20 cents for something. But no, the reality is, is, , I, I view very much my job as being that person, which is keeping people focused and mainly feeding them with real information and sticking to the longterm, right?

So most of our clients are longterm people. And when I think a longterm, I think five to seven plus years. But, , as I said earlier, even jokingly, , really, , Long term in this market's like two years. And so in a lot of cases we can ask them, , if we're talking about, like, if we have a, , thesis on a particular stock or whatever, Hey, do you think this stock is going to be higher in two years or lower in two years based on what we know today?

And, , you break it down to that level of simplicity, knowing that there's going to be a lot of muddy roads traveled between now and that. That two year end game, but that's our job is to make sure they understand which roads are, you know,, whether it's going up for a good reason or not a good reason.

And has anything changed? Has our thesis thesis still holding? So yeah, I do believe this is a lot of noise. But , that doesn't mean that It can't help the markets. I mean, , we know just based on like, if Trump wins We know, just based on his history, he's going to do everything he can to make the market go higher.

He has a bit of an obsession with taking responsibility for the market's movement, especially when it's going up. So, , we know that if it's just him trying to pump a little Let's call it , investor confidence. We can count on him for that. , I don't know enough.

We don't have enough history with, with, the vice president Kamala Harris. So, , I would hope she would do the same, but uh, you know, , at least we can expect for him to try.

[00:31:09] Chris Versace: Just remember, Mark, that even if it is the best market economy under Trump 2. 0 or not, we're going to be told that it is still the best market environment ever.

[00:31:18] Mark Malek: Absolutely. And again, , that's my job too. , if you just look at my recent writing, , you might make the assumption that I'm leaning one way or another. , but, , the reality is, is that under Trump's last administration, , if you look at all my writing, you're , I was very dubious of some of the stuff that he was doing jokingly, of course , and again, but our jobs in this business is really to sort of, filter through all the what, what part is, , Larry Kudlow walking in front of the camera saying, Oh, the market should be going up.

Thanks, Larry. And, , Trump saying, , this is the greatest market of all times ever. Since the beginning of markets , and , if it does goose the market a little bit and of course we're long the market, of course, we're happy to have that little help, but , the traders would be selling into that.

I could tell you for sure. , long term investors, , they're happy to hear it. They're a little more comfortable with their investments, , from our perspective, in most cases as, as you suggested earlier Lindsey, that we are , our biggest enemy is a client going to cash, right?

Because when clients get nervous, they want to go to cash. And a lot of times clients put their money in, , for management and they're like, oh, let's let's dollar cost average. And, , of course, there are times where it's appropriate. And for certain clients, it is appropriate, right? If you're very, very low risk tolerance and you need the money in the near term.

But for the most part, , , it was easy for us to always say cash is trash, in other words, be in the market. But unfortunately, cash is not trash anymore because, , you can still earn 4%, 4. 5 percent in a money market, I think the opportunity cost of not being in the, in the markets is more than even what you're getting on the money markets right now.

[00:32:53] Lindsey Bell: Yeah, you missed 20 percent year to date. Versus four, right?

[00:32:57] Chris Versace: Agree. 100 percent 100 percent Lindsey. Mark, let me ask you one quick question. And then I'm going to kind of turn the mic over to you. Do you think there's a chance just sticking with the election that obviously people have been voting early?

Don't vote often just vote early. Do you think we have a declared winner Tuesday night? Or do you think this could drag out a little bit? And if it does. Did that make the market a little, , nervous in the short term, volatile, potentially bringing some opportunity for folks?

[00:33:30] Mark Malek: , it's, wow.

That is a dangerous question to answer. , I will just, Well, hang on, hang on,

[00:33:35] Chris Versace: hang on. Let me, let me help you, okay? You don't have to give a hard answer. Just to sign some probabilities to your answer.

[00:33:42] Mark Malek: I will. Yeah. Oh, God. You picked me out as a quant, huh?

[00:33:45] Lindsey Bell: Mark, you can ignore him. Chris is really pushy.

[00:33:51] Mark Malek: Yeah, but it is a great question. Challenge accepted. And I will answer that tough question with a tough answer. Right. , this year we have more information than we've ever had before. And I would say that all of us probably on this call and everybody that I know in my, , my colleagues, they're all watching those markets very closely, right?

The betting markets, , all that stuff. , trying to sort of figure out, can we see patterns, right? Cause that's what we do in this business, right? Can we see a trend? Can we see, , we definitely see some momentum on, on Trump's side, if you just look at the numbers and, you know, , momentum does work in the markets as we've learned.

, it's still not enough. But I'll give you a bit of anecdotal information, which is something that maybe I ignored the first time Trump won, which is, I'm listening to a lot of people that I'm speaking to and I'm telling you that, , nobody is really telling me who they, what side they favor.

And , I suspect in a lot of cases when someone doesn't tell you, that means that they probably favor Trump. And the people who I would expect to immediately, some people I would expect to immediately favor Harris are saying, I don't know yet. Right. Or I'm not telling you. I suspect there are a lot more people that are going to vote for Trump than you would think would vote for Trump.

And so, , it's quite possible it's possible. I'm not saying it's probable that, You can have a clear winner next week. But I think again, if you have a clear winner and that's Trump, , the market's not going to take it that easy either.

I think, , the volatility is going to come no matter who gets the keys in January. so, , listen, all I could. So what we do as a as a as a regular guy. It's hope that there's a clear winner, right? Because I believe that that's really the biggest part of the risk to the market, overall, which is the question that are we going to have, , some more shenanigans like we had last time, right?

One

[00:35:44] Bob Lang: quick question, Mark. if you see that sort of scenario playing out where you maybe have a clear winner. I think I read somewhere that some statistician said there was a 60 percent chance of a landslide on either side. I don't know where that number comes from, but he did some analysis of that.

But if you do see that sort of. Skewed result here. Are you buying volatility for your clients to protect them? At all? Or are you just waiting with those who have some some cash to buy some buy some stocks that that dip for no other reason other than people are scared of the unknown? Yeah,

[00:36:22] Mark Malek: yeah, that's that's a really good question.

So I will say that, , our approach has been. Leading up to this and the, , we always finish our conversation after trying to do that filtering dance that I told you about earlier is let's not make investment decisions on what we think might happen in 2025 or 2026 because those typically don't work out.

We've tried those for the last several elections and they never worked out the way we expected them to. Instead, let's focus on what happens after the day. Who's in the white house? What are the policies? What are their chances? So what we're really trying to do is yes, there is the world where we can say, , let's buy volatility.

Let's let's try to hedge ourselves against this volatility. We really feel like the problem with buying volatility, , Bob, as you probably know, really, really well is it's easy to get in, but it's very hard to get out. Right? So, , , you could buy the VIX at the very, , and and the thing will spike up and you'll feel like a million bucks and you'll step into the restroom and you'll come back out and you've already lost money on that hedge.

So, , it tends to spike very quickly and then it, . Happens to, , comes down before you really have a chance to get out. And so we really just telling people that what we should do is ride through this thing. Look at the strong sectors that we have. Look at what we are expecting in the future.

What made us buy these stocks or buy these portfolios? , four months ago, why are we so confident today? Are we still going to be confident if it's Kamala Harris in the white house or if it's Donald Trump in the white house, if we've done our homework correctly, it shouldn't matter. It shouldn't matter.

And so, , , our, our job again is to keep people from panicking. Unless there's a good reason , unless there's, , something bad happens in any of these companies, but, , if, if nothing stays the same, if earnings goes off the way we expect it to go off, I think we're in a very healthy environment for certainly certain sectors with a lot more room on the upside.

We certainly are still constructive in the overall market going forward, but we definitely expect a little bit of, , let's call it explaining that we have to do, , between next Tuesday and, , January 1st, but I think things are going to settle down settle down and hopefully on the upside for us.

[00:38:35] Chris Versace: All right. Well, Mark, hey, I really want to thank you for taking the time out. I know this is a big week of economic data, big tech earnings. Obviously, you're getting ready for not only the outcome of the election and the Fed a lot going on. So thank you so much for joining us here over the What Does It Mean podcast.

And for folks who want to continue to follow your thoughts, right? Get the insight from the CIO over at Siebert. Where should they go? How can they find you and your thoughts?

[00:39:03] Mark Malek: Well I put out a daily market note and I probably haven't missed a day since 2018. And as you guys probably well know, writing a market note every day is no easy task because , the many days you wake up and you look at the markets at four in the morning, you'll say, Oh, same thing as yesterday.

But I I can't write that always. So, , we spent a good amount of time on those days, which are the same, , one, as yesterday. Try to teach people and get people prepared. But , you can get that, that daily market note. You could find it on our website. You can see it.

I sometimes, but not as religiously as I should put it on Twitter. So, , you could find us if you want to get more. And of course I always end with please call if you have any questions. And people do call me from the weirdest places. But the questions are always good and we do our very best to always respond to people.

[00:39:50] Chris Versace: Awesome. Awesome, mark, thank you so much. And we're gonna reserve the right to call you back.

[00:39:56] Mark Malek: Please do. I'd be real honored to do it.

[00:39:59] Chris Versace: Awesome.

[00:40:00] Mark Malek: Thank you, mark.

[00:40:01] Lindsey Bell: Thank you.

[00:40:02] Interview combined: Thank you.

[00:40:03] Chris Versace: All right, Bob and Lindsey, we've just wrapped up our conversation with Mark Malek, CIO at Siebert, and I have to say it was a good conversation. I, I don't know that Mark was all that surprising giving his role and the uncertainty ahead with the election, but Bob, I'll start with you. What jumped out at you?

What did you learn from our conversation with Mark?

[00:40:26] Bob Lang: Well, one of the things that he talked about, Chris and Lindsey early on was about the demographics of their client base and it's, , older, more, he called them more mature investors. And I thought that that was interesting because when it comes to age, And those demographic, we have to remember that risk is a lot less tolerable as you start aging and you start having needs for the money that you've earned over the over the years and

[00:40:55] Chris Versace: income income is what you mean

[00:40:57] Bob Lang: income.

That's right. And I think what Mark was trying to say is as well to a little bit later on in the conversation is that we encourage all of our clients to keep their money in the markets. And that's always been a very tried and true long term investing approach. Don't pull your money out of the market and then jump back in and then jump back out, etc, etc.

You just gotta keep it in there for the long term. Have some cash available. He did reference cash is trash. Although that's not really, that doesn't really apply anymore considering you can get four, four and a half percent on a money market, as he said. But I think what's important here is that keeping a long term focus and not jumping in, jumping out and over.

If you look at the charts over the long term, and you want to look 20 years, 50 years, almost a hundred years, Chris, that it's from the bottom left to the upper right. That's where the market goes.

[00:41:49] Chris Versace: Lindsey, what about you?

[00:41:52] Lindsey Bell: Yeah. Yeah, I mean, I think it was interesting listening to him talk and I think a lot of us have been in his seat before and you could tell that he was grappling with like, what is the investment strategy and clients are calling?

What do I do with my money to position for the election? And like Bob said, we talked about what the longer term trends are. But just having that conversation with clients that are, that feel the anxiety in the nation, perhaps right now about where does the market go from here? You could just hear it in, in the way he talked and things he said, but I do think one point he made was really, really good one, which was that if we're doing our jobs, right, as guides to investors, that it doesn't matter who's going to be in the presidential seat at the beginning of next year because Long term investors typically went out over time as long as you're invested in the market.

So, but there's trades to be made. And so, yeah, it's, it's a tough seat to be in, but it was really good conversation. We covered so much ground, Chris.

[00:42:51] Chris Versace: I know, I know, , the, the one thing, well, there are two things that stood out to me. One was the reminder. It's not just the presidential election. We need to see what happens in Congress and, , I, I've been sharing that thought with folks over at the Street Pro Portfolio who are asking me, what's going to happen?

What are we going to do? And I think a lot like Mark, I was kind of saying, well, let's remain calm and see how it all plays out. We can decide what to do once we have a better. Understanding of the new landscape in D. C. But the other thing I will say that he brought up and Lindsey, you jumped right on top of this with him is the expiration of the 2017 tax cuts.

And, , I was thinking about this, , a couple of months ago, because if we think about the forward trajectory of earnings. I don't really think that folks are baking into their 2026, forecasts, at least yet. The possibility that those tax cuts expire, corporate tax rates go higher, and it's going to impact, , EPS expectations.

So that, that's one thing that I think Mark said, if we get gridlocked, that's certainly likely to expire. So we'll have to, I think, keep a close eye on that. Because if you remember, if you look at, and I'm going to tease you, Lindsey, because I know you're S& P Global fan. If you look at the fact set chart of annual EPS numbers, , at one point, you saw a huge jump.

And it was really just because of the installation of those tax cuts, , nothing else really changed from an operating profit perspective. So, , what benefited us back then, that might be something we have to be worried about going forward. So any, any other quick thoughts or learnings from our conversation with Mark?

[00:44:35] Bob Lang: I thought his comment about he doesn't seem to lean in 1 direction or the other in terms of who's going to win this election. But they're prepared for either scenario, either winner coming out and you have to expect that one candidate, if they win, is going to have a certain effect on the markets while the other is going to have another effect.

But, , when you look back the last eight years, actually, , the, the Trump administration markets were strong. Overall, the Biden administration, four years, the markets were strong too. So I, I think it's a win wins for investors whoever wins next week.

[00:45:10] Chris Versace: All right, Lindsey, I'm going to give you the last word.

[00:45:13] Lindsey Bell: Stay invested.

[00:45:15] Chris Versace: Oh, cash is trash, Lindsey says. All right, folks. That's this episode of What Does It Mean? Be sure to come back next week. I know we're going to have a lot more to talk about coming off the election, coming off the Fed policy meeting, big tech earnings. Between now and then, if you need to get anything from us, Go see Bob Lang over at ExplosiveOptions.net. Check out Lindsey Bell and the Shift newsletter. Me, Chris Versace. As always, you can find me over at the Street Pro Portfolio. Thanks for listening.