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Episode 119: Russ Koesterich

There we go. Perfect.

Good morning. I’m Russ Koesterich, Portfolio Manager on the Global Allocation team at BlackRock. It’s the week of September 14th. Here are three things you need to know, and one you don’t.

First up. The AI trade in June, early July, a lot of volatility. The key thing to know that volatility was not about the fundamentals. It really came down to crowding. A lot of people do the same thing, at the same time, then all looking for the exit. There are a number of ways to invest in the AI theme, outside of the mega caps. One is to look outside of the United States at semiconductor firms in Asia— countries like Korea and Taiwan. They’re very geared to the buildout that's really been driving this trade over the several past years. You can tactically manage your exposure, but at the end of the day, these themes, these industries, are areas you wanna be long for the long term.

Number two. One of the best performing parts of the market is energy— oil prices elevated. They’re demonstrating some of the best earnings momentum. The other reason to really think about these stocks in your portfolio, energy stocks are actually proven to be a very diversifying asset. In days when the market is down, we often see that energy stocks are some of the best performers.

Number three. Bonds experienced a change in their role in the portfolio. They’re no longer providing that hedge when equity prices go down. Today you’ve got a different dynamic. Bonds are a great source of income. For the first time in many years you can build a portfolio of bonds, without taking a lot of risk and generate a good income. There are plenty of places to look for bonds. One of the better opportunities we're seeing right now is in emerging markets. Where the yields you can get relative to the volatility of the asset class is actually very attractive.

Which brings us to…
I've been doing karate about 25 years. Honestly, I think it's as good for the mind as the body. Best martial arts movie? I’m actually gonna put Kill Bill Volume 1 where she goes to Japan. Not the most realistic fight scene, but she fights about 100 ninjas. To get more three plus one make sure to follow us on LinkedIn and YouTube.

See you next week.