‘Essential Businesses’: Managing Focused Stock Portfolios in a COVID-19 World

FromSimple, but Not Easy

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‘Essential Businesses’: Managing Focused Stock Portfolios in a COVID-19 World

FromSimple, but Not Easy

ratings:

Length:

33 minutes

Released:

Jun 8, 2020

Format:

Podcast episode

Description

Our equity portfolio managers talk about how they're navigating the COVID-19 crisis and their outlook.

Released:

Jun 8, 2020

Format:

Podcast episode

Titles in the series (100)

Simple, but Not Easy is a podcast about investing and behavioral science by Morningstar Investment Management LLC. Most shows focus on our asset class research, our principled approach to managing money, or our insights on using behavioral science to help investors and advisors make better decisions.

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Getting Personal: Getting to Know How Advisors Get to Know Their Clients: In today's episode, host Drew Carter gets up close and personal--into investing, that is. Getting personal might elicit nervousness, but why does it seem so antithetical to investing? We explore personalization and customization in financial practices: If you’re an investor, how well does your financial advisor know you? And advisors, how much time have you taken to get to know your clients? Joined by Morningstar Investment Management group's Matthew Radgowski, chief operating officer for the Americas, and Marta Norton, head of outcome-based strategies in the Americas, as well as Ryan Murphy, Ph.D. head of decision sciences, the conversation reviews Morningstar's belief that getting *personal* can be good for investors AND advisors—but it may be more complicated than you think. by Simple, but Not Easy
37 min listen
What Is Sustainable Investing? [Part 1]: Are you new to sustainable investing and ESG? Guests Jon Hale and Julie Koska of Morningstar Research Services explain how managers are incorporating environmental, social, and governance into investment decisions, why investors are flocking to ESG portfolios, and the effect of ESG on investment returns (which might surprise you). Drew Carter hosts. Recorded on: April 1, 2019 by Simple, but Not Easy
24 min listen
The Next Generation of Investors: A Conversation with Millennials: Millennials. Has a generation ever attracted so much attention from—or created so much angst within—the financial services industry? If you Google “Millennials and financial advisors” or “Millennials and investing,” you’ll find a dizzying array of surveys and published opinion pieces on the topic. And for good reason—Millennials and those that will come after them represent the future of investing and financial advice. Host Drew Carter decides to leave the surveys and data behind, and focus some interviews on real… live… Millennials, here in the studio to talk about investing and financial advice. Drew Carter asks our 4 millennials in the studio about their investing habits, their opinions on working with a financial advisor--and what specific types of financial advice they're looking for, and their approach to savings. by Simple, but Not Easy
41 min listen
Think Integration, not Outsourcing: The Importance of Choosing the Right Money Manager: Is "outsourcing" a dirty word? Are managed money offerings all the same? Matt Radgowski and Peter Dugery share insights on the challenges and rewards for financial advisors when choosing a money manager to handle client portfolios. Drew Carter hosts. Matt is managing director, Americas, at Morningstar Investment Management, and Peter is head of sales at the same firm. by Simple, but Not Easy
32 min listen
Sinking Treasury Yields: Our Views on the “Belly” of the Curve: Host Drew Carter discusses recent Treasury yield moves with Edward Fane, portfolio manager and head of U.S. fixed-income research at Morningstar Investment Management. They also discuss a scenario analysis Ed did that led to some portfolio implications that might be surprising, coming from a valuation-driven investor--further evidence that investing can be simple, but not easy. by Simple, but Not Easy
41 min listen
Not-So-Crude Markets: Energy Infrastructure and MLPs: A chart of oil prices in the past year looks a lot like a roller coaster. And the stock prices of oil companies tend to follow oil prices higher or lower. Today's episode will discuss an energy investment that’s different in many ways from the oil companies that are household names because of their corresponding gas stations—firms like Exxon Mobil and Chevron. We'll focus on energy infrastructure and MLPs, or master limited partnerships, and how they're used in some of our portfolios. Joining Host Drew Carter is joined by George Metrou, Portfolio Manager for the Dividend Select Equity strategy here in the US, and Dan McNeela, who is co-head of our target risk strategies in the U.S. Recording date: June 24, 2019 by Simple, but Not Easy
45 min listen
Markets in Crisis: Our Long-Term, Valuation-Driven Views of Markets Today: Daniel Needham and Andrew Lill share their views on markets, the economy, and how we're dealing with the crisis brought on by the novel coronavirus. Also, Ryan Murphy on how to keep clients calm amid market declines. Needham is president and global CIO, Lill is Americas CIO, and Murphy is head of decision sciences, all at Morningstar Investment Management. by Simple, but Not Easy
19 min listen
Our Back-to-School Reading List (Part 1): While host Drew Carter is on sabbatical, producer Sammie Spector guest hosts a two-part series on top reading recommendations from Morningstar employees. Guests include Christine Benz as well as portfolio managers, sales directors, and behavioral scientists, to provide a variety of reading material ranging from investment self-service books, to environmental sustainability, as well as one 'picture book' and perhaps the only investment principles book in the fiction genre. by Simple, but Not Easy
39 min listen
A Contrarian View: Why We Prefer International Over U.S. Stocks: Developed equity markets outside the U.S. have struggled mightily for about a decade since the global financial crisis. Individually, these markets have their unique struggles, whether it’s Brexit in the U.K. or sustained economic growth and profitability in Japan. So, why would anyone want to invest in these markets, let alone prefer them to the U.S. market? Portfolio manager Gareth Lyons, who covers equity markets outside the U.S., discusses his views with host Drew Carter. by Simple, but Not Easy
17 min listen
Bringing Their "A-Game": Advisors as Behavioral Coaches: Today's episode explores what the role of financial advisors really entails. When you think about, did the role of 'behavioral coach' cross your mind? Guest Ryan Murphy, Ph.D., head of decision sciences at Morningstar, Inc. thinks it should. Host Drew Carter and Ryan Murphy discuss the responsibilities, such as behavioral coaching, that may be central to an advisor’s role, perhaps even more important than some traditional roles, like, say, building investment portfolios. by Simple, but Not Easy
17 min listen
Some Like It Hot: Looking into the IPO Market: The market for initial public offerings, or IPOs, in the U.S. is hot, with household names like Lyft, Uber, and Pinterest coming to the public markets with a lot of media coverage and interest from investors. But many of these so-called unicorns who’ve achieved $1 billion valuations before they’ve gone public have never turned a profit. So, how can investors tell if these IPOs are potentially worth investing in? Host Drew Carter speaks with Ali Mogharabi, senior equity analyst at Morningstar Research Services, about the history of the IPO market, internet bubble, and 'tech unicorns.' Then, we learn from John Owens, senior portfolio manager at Morningstar Investment Management, about the caution taken when approaching 134 firms that went public last year. Recorded on: May 14, 2019 by Simple, but Not Easy
43 min listen
Is Dollar-Cost Averaging Irrational? Compared to What? (Ep. 30 Rebroadcast): While we're off for spring break, we're reprising this episode featuring Terry Hawkins, sales manager at Morningstar Investment Management and Paul Kaplan, research director for Morningstar Canada. They discuss dollar-cost averaging, or the practice of investing slowly over time instead of in one lump sum. Research by Kaplan and others show that dollar-cost averaging might be expected to underperform a lump-sum approach. But what if it's what gets an investor into the markets? by Simple, but Not Easy
31 min listen
Market Turbulence and Loss: Behaving Well When Markets Go Bad (Ep. 20 Rebroadcast): Market losses like the recent coronavirus-induced decline can be upsetting. We're rebroadcasting this episode in which Andrew Lill and Ryan Murphy discuss what investors can do to prepare for market declines and how to respond once losses happen. Lill is the chief investment officer, and Murphy the head of decision science, both at Morningstar Investment Management LLC. by Simple, but Not Easy
49 min listen
Better Decision-Making Through Diverse Opinions, Pt. 1: Getting more women into portfolio management might seem like a no-brainer. But Marta Norton, portfolio manager at Morningstar Investment Management, says "it’s a knotty problem because you don’t want people to have women or diversity on their team … just for the sake of having that kind of diversity. As a woman, I find it kind of insulting when people say, 'We need to have a woman here,' because then you don’t feel like you’re earning it by your own merit. And I feel very strongly that I’ve earned it by my merit, I feel that Michelle has, that Hong has. None of us want to feel like we are some sort of token by any measure, and I would imagine that most people would feel the same way. But at the same time, I like to express this as diversity of thought—if you have people all thinking the exact same way, you’re gonna have biases and your gonna make mistakes. But like Abraham Lincoln’s cabinet—a team of rivals—if you have people wi by Simple, but Not Easy
30 min listen
Planting Sustainable Investing in Your Practice [Part 2]: Now that we've been given a great background on sustainable investing, Drew Carter turns our attention to how advisors and investors might go about investing in a sustainable way. Recorded on: April 5, 2019 by Simple, but Not Easy
34 min listen
Dump the Dow: Why What You Pay Attention to Matters: In this episode, John Owens and Ryan Murphy talk about why price-weighted indexes like the Dow Jones Industrial Average can be distracting to investors. John, who's a senior equity portfolio manager at Morningstar Investment Management, explains why investors should disregard single-day Dow point drops, and also any short-term performance. Ryan, who's head of decision science at Morningstar Investment Management, shares some recent research that shows someone's risk perspective can be affected by what they pay attention to. Together, our guests discuss with host Drew Carter how discipline and nudges can help investors ignore the noise and stay focused on their financial goals. by Simple, but Not Easy
28 min listen
Is Dollar-Cost Averaging Irrational? Compared to What?: Terry Hawkins, sales manager at Morningstar Investment Management and Paul Kaplan, research director for Morningstar Canada, discuss dollar-cost averaging, or the practice of investing slowly over time instead of in one lump sum. Research by Kaplan and others show that dollar-cost averaging might be expected to underperform a lump-sum approach. But what if it's what gets an investor into the markets? by Simple, but Not Easy
31 min listen
Outlook 2020 Pt. 2: Finding Opportunities When Most Markets Are Overpriced: We conclude our two-part conversation on our Outlook for 2020 and beyond with views on asset classes we view as being attractively priced. Philip Straehl, head of capital markets & asset allocation, Americas, and Tanguy de Lauzon, head of capital markets & asset allocation for EMEA, return to share their views. Important Disclosure: Returns for U.S. stocks are indicated by the Morningstar US Market Index. by Simple, but Not Easy
33 min listen
"The Largest Purchase Most Americans Will Ever Make": Researching the State of Retirement: When you save and invest, most likely your biggest financial goal is retirement, a topic that can be daunting or even frightening on both a personal level and on a macro level. Host Drew Carter discusses the state of retirement with David Blanchett, head of retirement research at Morningstar Investment Management, who has called retirement the "largest purchase most Americans will ever make." Today's discussion revolves around the "right" age to retire, online savings and management tools, retiring earlier than planned, and how far off people tend to be when planning for retirement, as well as if there is in fact a retirement crisis. by Simple, but Not Easy
27 min listen
Markets in Crisis: Finding Income in Today's Markets: Income investors might despair in today's COVID-19-ravaged environment—the Federal Reserve has lowered cash rates to near zero, shuttered businesses can’t pay stock dividends, and defaults are expected to rise. Yet, our income-focused portfolio managers say their prospects for income have improved greatly since February. Marta Norton, head of outcome-based strategies, and Hong Cheng, associate portfolio manager, share where they see income opportunities in today's markets. by Simple, but Not Easy
35 min listen
Red Dusk: Do Post-Rally Prices Call for Russian Bearishness?: In today's episode, host Drew Carter talks with Nabil Salem, senior investment analyst at Morningstar Investment Management, about his latest research on Russian stocks that resulted in a downgrade to this "permanent contrarian" play. by Simple, but Not Easy
37 min listen
Market Turbulence and Loss: Behaving Well When Markets Go Bad: Market losses can be upsetting. Aside from the pain of losing money, there’s something about it that just doesn’t feel right. Yet, we know that market dips, declines, and disasters are all a part of investing. So, what can investors do about them? Host Drew Carter is joined by Andrew Lill, chief investment officer, and Ryan Murphy, head of decision science, both at Morningstar Investment Management LLC, to discuss what investors can do to prepare for market declines, and how to respond when we find ourselves in the middle of an unfortunate drop in prices. by Simple, but Not Easy
48 min listen
Our Back-to-School Reading List (Part 2): While host Drew Carter is on sabbatical, producer Sammie Spector guest hosts a two-part series on top reading recommendations from Morningstar employees. Guests include everyone from our portfolio managers to our sales directors, as well as a glimpse into our Investment Management Book Club and an interview the Morningstar HQ librarian. by Simple, but Not Easy
52 min listen
Thinking in Bets, and About Biases: A Deep Dive into Using Behavioral Science Techniques in Investing: Advisors and investors are hearing more and more about behavioral science and behavioral economics, essentially how our humanity gets in the way of rationality, and what we can do to improve our decision-making. But what about investment managers themselves? Are they naturally more rational? How can a portfolio manager avoid making behavioral errors? Host Drew Carter is joined by Dan Kemp, chief investment officer for EMEA at Morningstar Investment Management. In this episode, Drew and Dan will discuss who is susceptible to behavioral biases and Annie Duke's book, 'Thinking in Bets.' by Simple, but Not Easy
27 min listen
Contrarian Ideas: Have Lower Oil Prices Made Energy Stocks Attractive?: On September 14, 2019, Saudi Arabian oil fields were attacked, leading to a spike in oil prices. But the spike quickly subsided, with prices falling back—and even below—their pre-spike prices about two weeks later. But the phenomenon of lower oil prices is of course not new. And that’s reflected in the returns of U.S. stocks in the energy sector, which lost an average of about 5% a year over the five years ended September 30, according to S&P 500 sector index data on Morningstar Direct. The S&P 500, during that same period, rose nearly 11% annualized, while the IT sector climbed more than 18% on average each year. How does this weigh on our views of the energy sector going forward? We think energy is the most underpriced sector and, as valuation-driven investors, we therefore believe this sector may be poised for better growth than the broad market in the future. by Simple, but Not Easy
46 min listen
Overconfident? Cognitively Rigid? How Investors Can Make Better Decisions by Dealing With Emotions and Biases: Sarah Newcomb, director of behavioral science at Morningstar, Inc., discusses emotions brought on by market loss, talks about how they can affect decisions, and offers some ways to cope. Ryan Murphy, head of decision sciences at Morningstar Investment Management, discusses cognitive biases to watch out for and ways investors can make better decisions. by Simple, but Not Easy
28 min listen
Markets in Crisis: What Are Potential Implications for Inflation?: Inflation has been tame for some time. But where will inflation go from here? Will the massive COVID-19-related stimulus by the Fed and the Treasury lead to higher inflation? Or will rocketing unemployment weaken inflation—in fact, is deflation a greater concern in the near term? by Simple, but Not Easy
23 min listen
Talking Turkey: Pt. 2: In part two of our giving-thanks episode, more members of our investment team share what they're thankful for, and what they'd be thankful for if it were to happen. John Owens talks IPOs, Marta Norton is doubly thankful, Paul Arnold looks forward to greater wealth equality, and Shannon Steiner--new to the podcast--is thankful for her internship with Investment Management and discusses the findings of her study of Morningstar Investment Management's record of selecting funds over more than two decades. Drew Carter hosts. by Simple, but Not Easy
35 min listen
Value Investing: Intelligent Investing Aims to Get More Than You Pay For (Ep. 16 Rebroadcast): From all of us at Simple but Not Easy and Morningstar Investment Management, Happy Thanksgiving! If you’re in a mood to give thanks—or just want to hear others do so—you might check out Episodes 23 and 24, in which a passel of our guests share what they were thankful for this time last year, or something they’d be thankful to see in the future. Or, here we rebroadcast Episode 16, a conversation with Daniel Needham about value investing and why we take a valuation-driven investing approach. We were reminded of this episode after reading a recent article in the Financial Times by one of our favorite market commentators, Michael Mauboussin. In this episode, Needham, president and global chief investment officer at Morningstar Investment Management, shares his views on value investing and the way his team uses a valuation-driven approach to multi-asset investing. As Charlie Munger has famous by Simple, but Not Easy
40 min listen
Advisor Profile: How Has COVID-19 Affected Derek Notman's Practice? 'Not at all': Derek Notman is a virtual advisor. That doesn't mean he just uses video conferencing to talk with clients. His entire practice is virtual, and he's helping other advisors do the same. by Simple, but Not Easy
45 min listen

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Lifetime Financial Advice: Enhanced Personalization by Considering Human Capital: The evolution of financial advice in a few decades time has been nothing short of revolutionary. The industry's transformation has been driven by technological advancements, regulatory changes and evolving investor preferences. Traditional methods of in-person advice have been expanded to include digital platforms, providing investors with greater accessibility and customization. And we've all observed an evolution in financial planning journeys and an increase in the number of advisors making financial planning core to their value proposition. But we still have to ask, is there room for improvement? by Simple, but Not Easy
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U.S. Stocks: Beyond the Magnificent Seven: The Magnificent Seven continue to capture the attention of advisors and investors, dominating U.S. equity performance over the last year. Will this trend continue throughout 2024? Will growth stocks continue to beat value? What about large versus small? And what is 2023's signal about where markets are headed this year? We're delighted to be joined by John Owens, Senior Portfolio Manager for Morningstar's Select Equity Strategies, and Paul Tait, Portfolio Specialist at Morningstar Wealth. Together, they help unpack the landscape for U.S. stocks in a digestible manner. by Simple, but Not Easy
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2024 Outlook: Economy, Inflation, Best Ideas, and AI: The topics we're discussing today align with the recent release of Morningstar Wealth's 2024 Market Outlook. A recession seemed to be the consensus view entering the year, but markets love to fool the masses, and a stock market rally followed. However, the rally was not evenly distributed. Bonds, for example, remain in a multi-year drawdown, and many investors are questioning their role in a portfolio. With this as the backdrop, what actions make sense to support clients? In today's episode, we're delighted to have Morningstar Wealth's CIO of the Americas, Marta Norton, and Chief U.S. Economist, Preston Caldwell with us to dig into the outlook, share their perspectives, and, as always, be sure to address the implications on client portfolios and any suggested actions to take by Simple, but Not Easy
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AI's Role in the Future of Wealth Management, Featuring the AI Character "Morningstar Mo": A lot has already been said about the potential of artificial intelligence, or AI, but how are people actually engaging with it? And how should investors think about their AI exposure in a portfolio? Morningstar has invested heavily in generative AI, with Morningstar Mo taking the stage at our investment conference, and in a first, we're delighted to be joined by a special guest: Mo the AI character. We’ll also be joined by Adley Bowden, Head of Individual Investor and Grady Burkett, Portfolio Manager of the Hare strategy. This marks the start of a new season of Simple But Not Easy, with Nick VanDerSchie taking the mic from Jonathan Linstra, whom we thank for his fabulous insights. Together, let's turn AI speculation into real-world application. by Simple, but Not Easy
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The Cutting Edge of Advisor Technology: Ezra Group's Craig Izkowitz: Financial technology is going through a new wave of change, with artificial intelligence – or AI – taking the world by storm. But the wealth tech space is already incredibly complex, with literally hundreds of tech providers battling for market share across the advisor workflow. So, what does Ezra Group, a prominent WealthTech consultant, have to say about this? How can we get ahead of this change? We're delighted to be joined by Craig Iskowitz, Founder of Ezra Group. Together, we’ll dig into his latest technology predictions, covering AI, integration opportunities, fractional outsourcing, and more. A key takeaway: "Meet once a year with your team and talk about your technology." by Simple, but Not Easy
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$The Cutting Edge of Advisor Technology: Ezra Group's Craig Izkowitz: Financial technology is going through a new wave of change, with artificial intelligence – or AI – taking the world by storm. But the wealth tech space is already incredibly complex, with literally hundreds of tech providers battling for market share across the advisor workflow. So, what does Ezra Group, a prominent WealthTech consultant, have to say about this? How can we get ahead of this change? We're delighted to be joined by Craig Iskowitz, Founder of Ezra Group. Together, we’ll dig into his latest technology predictions, covering AI, integration opportunities, fractional outsourcing, and more. A key takeaway: "Meet once a year with your team and talk about your technology."$
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Is Dollar-Cost Averaging Irrational? Compared to What? (Episode 30 Rebroadcast): Terry Hawkins, sales manager at Morningstar Investment Management and Paul Kaplan, research director for Morningstar Canada, discuss dollar-cost averaging, or the practice of investing slowly over time instead of in one lump sum. Research by Kaplan and others show that dollar-cost averaging might be expected to underperform a lump-sum approach. But what if it's what gets an investor into the markets? by Simple, but Not Easy
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Dump the Dow: Why What You Pay Attention to Matters (Episode 14 Rebroadcast): In this episode, John Owens and Ryan Murphy talk about why price-weighted indexes like the Dow Jones Industrial Average can be distracting to investors. John, who's a senior equity portfolio manager at Morningstar Investment Management, explains why investors should disregard single-day Dow point drops, and also any short-term performance. Ryan, who's head of decision science at Morningstar Investment Management, shares some recent research that shows someone's risk perspective can be affected by what they pay attention to. Together, our guests discuss how discipline and nudges can help investors ignore the noise and stay focused on their financial goals. by Simple, but Not Easy
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Key Investing and Behavioral Messages for Advisor-Client Meetings (Episode 51 Rebroadcast): In this rebroadcast of an episode from 2020, we explore why advisors might change the focus of annual meetings to progress updates with Ryan Murphy, head of decision sciences at Morningstar Investment Management. And Daniel Needham, president, shares his thoughts on how to keep investors focused on the long term. by Simple, but Not Easy
39 min listen
Risk, Downside Protection, and the Goal Mindset: Short-term worries versus long-term goals—which are guiding your investment decisions? If you’ve done your homework and you’ve given careful consideration to achieving the financial results you want, that question is easier to answer—even if it remains nerve-wracking to stay the course. Here in early 2022, we’re awash in short-term concerns once again. Between inflation, rising interest rates, and more, it’s easy to question the faith you had when the outlook was brighter. So, with that in mind for this episode, we’re focusing on how to keep your worries at bay and your eye on the ball. by Simple, but Not Easy
62 min listen
Overconfident? Cognitively Rigid? How Investors Can Make Better Decisions by Dealing With Emotions and Biases (Episode 50 Rebroadcast): "[W]e can’t avoid the reality that we’re experiencing and probably will continue to experience stress, uncertainty, and change. But the question is, how do we cope?" — Sarah Newcomb Given recent market volatility, we thought it might be helpful to revisit this episode from July 13, 2020, which features two experts on investor behavior and decision-making. Sarah Newcomb, director of behavioral science at Morningstar, Inc., discusses emotions brought on by market loss, talks about how they can affect decisions, and offers some ways to cope. Ryan Murphy, head of decision sciences at Morningstar Investment Management, discusses cognitive biases to watch out for and ways investors can make better decisions. by Simple, but Not Easy
28 min listen

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‘Essential Businesses’: Managing Focused Stock Portfolios in a COVID-19 World

‘Essential Businesses’: Managing Focused Stock Portfolios in a COVID-19 World

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