Katerina Simonetti. She's at Morgan Stanley Private Wealth Management. She's a private wealth advisor over there. Katerina, again, I'd love to hear kind of the conversations you're having with your clients as you can close out a pretty successful twenty twenty four and think about next year. What do you guys, how are you talking to your clients these days?

Katerina Simonetti. She's at Morgan Stanley Private Wealth Management. She's a private wealth advisor over there. Katerina, again, I'd love to hear kind of the conversations you're having with your clients as you can close out a pretty successful twenty twenty four and think about next year. What do you guys, how are you talking to your clients these days?

Well, Paulin and Caroline, thank you for having me on the show. This is a really important conversation because it's not lost on clients that we've had double digit returns for two years in a row, and it is only reasonable to expect that the returns in twenty five are going to be somewhat subdued. So clients are concerned the questions that we're having about how to capture returns in the portfolios, how to maximize the income in the portfolios, and most importantly, risk management in the upcoming volatility. And to be fair, our expectations for the year are not dim. We think a lot of emphasis are on FED and inflation and how all the other factors are going to play out. But when it comes to the practical things that we do before the year end, rebalancing the portfolio and achieving maximum portfolio diaresification in stocks, bonds, real assets, and private investments is the absolute key.

Well, Paulin and Caroline, thank you for having me on the show. This is a really important conversation because it's not lost on clients that we've had double digit returns for two years in a row, and it is only reasonable to expect that the returns in twenty five are going to be somewhat subdued. So clients are concerned the questions that we're having about how to capture returns in the portfolios, how to maximize the income in the portfolios, and most importantly, risk management in the upcoming volatility. And to be fair, our expectations for the year are not dim. We think a lot of emphasis are on FED and inflation and how all the other factors are going to play out. But when it comes to the practical things that we do before the year end, rebalancing the portfolio and achieving maximum portfolio diaresification in stocks, bonds, real assets, and private investments is the absolute key.

So, Katerina, I mean again, a lot of folks are stayingpoint. Can you have a third year of performance in the equity markets and to the extent you're going to be a little bit more cautious. Well, you can look at the fixed income market. How do you think about the fixed income trade? Do I sit there in a two year treasury and get you know, four point three percent from the US government, or it take some credit risk.

So, Katerina, I mean again, a lot of folks are stayingpoint. Can you have a third year of performance in the equity markets and to the extent you're going to be a little bit more cautious. Well, you can look at the fixed income market. How do you think about the fixed income trade? Do I sit there in a two year treasury and get you know, four point three percent from the US government, or it take some credit risk.

Well, Paul, if we are expecting that fat is not going to have quite as many rate cuts as originally expected, it's not necessarily the absolutely worst thing in the world for fixed income investors. Number one, we're going to get higher yields of cash for a little bit longer than expected. And two, if we don't think about fixed income as per se a trade, but as a whold and as an asset that delivers that consistent income in risk management, because on the risk adjusted basis going into twenty five, we prefer bonds over stocks. We think it's going to generate yield, but quality very much so. Within bonds as well as stocks is going to be the name of the game for twenty.

Well, Paul, if we are expecting that fat is not going to have quite as many rate cuts as originally expected, it's not necessarily the absolutely worst thing in the world for fixed income investors. Number one, we're going to get higher yields of cash for a little bit longer than expected. And two, if we don't think about fixed income as per se a trade, but as a whold and as an asset that delivers that consistent income in risk management, because on the risk adjusted basis going into twenty five, we prefer bonds over stocks. We think it's going to generate yield, but quality very much so. Within bonds as well as stocks is going to be the name of the game for twenty.

Five volatility because there's so much well lack of clarity as it currently stands. Katerina, just take us through the thought process over at Morgan Stanley Private Wealth more broadly as to whether or not the FED will cut more than two times. What sort of realistic infrationary pressure will we get from the talked about tariffs that I get to be imposed.

Five volatility because there's so much well lack of clarity as it currently stands. Katerina, just take us through the thought process over at Morgan Stanley Private Wealth more broadly as to whether or not the FED will cut more than two times. What sort of realistic infrationary pressure will we get from the talked about tariffs that I get to be imposed.

Caroline, where do I start? Uncertainty about the Fed, uncertainty about inflation, uncertainty about the terrorifts and immigration. As all these headlines are going to start coming out in early twenty five, all of this is going to play a role, and so our expectations for the early half of the year come with the expectation of the higher volatility in last couple of weeks gave us a bit of a taste of words to come. Now tel investors not to chase rallies. And this is the other side of this coin where we have to PreCure and stay calm and make sure that we have high quality portfolios. Focus on sectors that generate yield, Focus on the areas like financials, industrials, materials and make sure that we take some profits of the table and avoid higher concentrations in the portfolios. We've had some fantastic performance, this is the time to take some games.

Caroline, where do I start? Uncertainty about the Fed, uncertainty about inflation, uncertainty about the terrorifts and immigration. As all these headlines are going to start coming out in early twenty five, all of this is going to play a role, and so our expectations for the early half of the year come with the expectation of the higher volatility in last couple of weeks gave us a bit of a taste of words to come. Now tel investors not to chase rallies. And this is the other side of this coin where we have to PreCure and stay calm and make sure that we have high quality portfolios. Focus on sectors that generate yield, Focus on the areas like financials, industrials, materials and make sure that we take some profits of the table and avoid higher concentrations in the portfolios. We've had some fantastic performance, this is the time to take some games.

But the problem is, you had fantastic performance in twenty twenty three, and if you'd had that mindset around and in video or the mag seven, then boy did you miss that rally of twenty twenty four videos up one hundred and eighty percent, let's call it for the year. So how do you talk some of your clients out of that foamo feeling that a lot are going to be feeling all over again when it comes to quantum and.

But the problem is, you had fantastic performance in twenty twenty three, and if you'd had that mindset around and in video or the mag seven, then boy did you miss that rally of twenty twenty four videos up one hundred and eighty percent, let's call it for the year. So how do you talk some of your clients out of that foamo feeling that a lot are going to be feeling all over again when it comes to quantum and.

Ai Carolin, it's only natural to feel this way, and I think that that would be have to ask, is the are the valuations and profit expectations that are on the table, as well as the fact that fat has a lot of pressure on them when it comes to inflation in terms of cuts. Are we going to get as many costs as expected? That is a big question for us and for them. So when investors are looking at their holdings, of course it is natural not to be missing out on the continued growth. So we don't advise selling out of the entire position, but healthy profit taking and diversification into the other areas where the growth of that level didn't occur yet and where the possibility of future growth are significantly more substantial than they are in technology in some of these areas that achieved remarkable growth in both twenty four and twenty three.

Ai Carolin, it's only natural to feel this way, and I think that that would be have to ask, is the are the valuations and profit expectations that are on the table, as well as the fact that fat has a lot of pressure on them when it comes to inflation in terms of cuts. Are we going to get as many costs as expected? That is a big question for us and for them. So when investors are looking at their holdings, of course it is natural not to be missing out on the continued growth. So we don't advise selling out of the entire position, but healthy profit taking and diversification into the other areas where the growth of that level didn't occur yet and where the possibility of future growth are significantly more substantial than they are in technology in some of these areas that achieved remarkable growth in both twenty four and twenty three.

Katerina, how do you talk to your clients about alternative investments something in private equity, private credit, hedge funds, because when I speak to rias, I'm really surprised that the high percentage they allocate to alternatives. How do you, guys Morey extently think about it?

Katerina, how do you talk to your clients about alternative investments something in private equity, private credit, hedge funds, because when I speak to rias, I'm really surprised that the high percentage they allocate to alternatives. How do you, guys Morey extently think about it?

Well, in the time where investors are so concerned about the risk and politility and protecting the values of their portfolio, having the asset plus that could hetch risk in the equity side of the equation, it's extremely valuable. Now it comes with the cost, and that cost is liquidity. So investors that are comfortable with giving up some of the liquidity in their portfolios are perfectly fine using the alternative investments because it has huge value with making sure that we achieve consistent risk adjusted return. But with that, it's just the piece of the puzzle where fixed income delivers income, equities deliver growth, cash delivers liquidity, and alternative investments are extremely effective in risk management.

Well, in the time where investors are so concerned about the risk and politility and protecting the values of their portfolio, having the asset plus that could hetch risk in the equity side of the equation, it's extremely valuable. Now it comes with the cost, and that cost is liquidity. So investors that are comfortable with giving up some of the liquidity in their portfolios are perfectly fine using the alternative investments because it has huge value with making sure that we achieve consistent risk adjusted return. But with that, it's just the piece of the puzzle where fixed income delivers income, equities deliver growth, cash delivers liquidity, and alternative investments are extremely effective in risk management.

We're going to have some changes to the tax policy. It seems like we'll see how that plays out. Then that kind of goes to the asset class of municipal bonds. I'm a big fan of municipal bonds. A triple tax free treatment is I think the good and wonderful thing. How do you guys position municipals in a typical portfolio.

We're going to have some changes to the tax policy. It seems like we'll see how that plays out. Then that kind of goes to the asset class of municipal bonds. I'm a big fan of municipal bonds. A triple tax free treatment is I think the good and wonderful thing. How do you guys position municipals in a typical portfolio.

Well, taxes are a major concern, and inflation is a concern as well, But when investors are looking at their portfolios and analyzing the after tax income and after tax performance that they're receiving, tax efficiency is something that is a part of every single conversation that we're having with clients, and this is where municipal bonds come into play. Now, with municipal bonds, you have to make sure that the tax equivalent rate of return that we're getting on unibonds is actually as good or better that return that we can achieve in corporate fixed income, because there are some amazing buying opportunitiesies on that side, but investors certainly like having that tax free cash flow in their portfolios, especially in retirement.

Well, taxes are a major concern, and inflation is a concern as well, But when investors are looking at their portfolios and analyzing the after tax income and after tax performance that they're receiving, tax efficiency is something that is a part of every single conversation that we're having with clients, and this is where municipal bonds come into play. Now, with municipal bonds, you have to make sure that the tax equivalent rate of return that we're getting on unibonds is actually as good or better that return that we can achieve in corporate fixed income, because there are some amazing buying opportunitiesies on that side, but investors certainly like having that tax free cash flow in their portfolios, especially in retirement.

Taxation clarity is something that perhaps the crypto world is potential yearning for Girning four for twenty twenty five. How have you thought about crypto and that particular area of potential investment alternative investment for the twenty twenty four into twenty twenty five, Katrina.

Taxation clarity is something that perhaps the crypto world is potential yearning for Girning four for twenty twenty five. How have you thought about crypto and that particular area of potential investment alternative investment for the twenty twenty four into twenty twenty five, Katrina.

Well, Caroline, when you think about the development of crypto world, it turned from something that we don't mention or talk about into something that was, you know, the most exciting part of the portfolios than the most volatile part of the portfolios. And now we're seeing more over a legitimization or the use of crypto in the normal portfolios, you know, with the availability of ETFs, with people feeling more comfortable investing in this type of investments, but they can't lose track of the fact that the volatility still remains extremely high. So the positioning in the portfolio has to be extremely careful, and investors that are relying on the crypto for liquidity certainly have to have that in mind. Because the volatility and equity markets at high is high, but our expectations for volatility in the crypto world is significantly higher. Than that.

Well, Caroline, when you think about the development of crypto world, it turned from something that we don't mention or talk about into something that was, you know, the most exciting part of the portfolios than the most volatile part of the portfolios. And now we're seeing more over a legitimization or the use of crypto in the normal portfolios, you know, with the availability of ETFs, with people feeling more comfortable investing in this type of investments, but they can't lose track of the fact that the volatility still remains extremely high. So the positioning in the portfolio has to be extremely careful, and investors that are relying on the crypto for liquidity certainly have to have that in mind. Because the volatility and equity markets at high is high, but our expectations for volatility in the crypto world is significantly higher. Than that.

Meanwhile, though, going back to the equity markets, whether there still gobs of volatility. I'm interested in your overweights industrials, utilities, and software, and actually that software shift from hardware to software, from chips into a paneteer or to a software application and generative AI has been a theme we've been hearing. But talk a little bit more about the industrials and utilities. What drives that for twenty twenty five KILN.

Meanwhile, though, going back to the equity markets, whether there still gobs of volatility. I'm interested in your overweights industrials, utilities, and software, and actually that software shift from hardware to software, from chips into a paneteer or to a software application and generative AI has been a theme we've been hearing. But talk a little bit more about the industrials and utilities. What drives that for twenty twenty five KILN.

We're looking for a defensive place. We're looking for companies that are not just delivering attractive earnings outlook, which is something that we see across the board, and of course we'll be looking across the board for twenty five, but also that bring to the table attractive valuations. They didn't have that explosive growth that some of the sectors we're seeing. So that's where the industrials, that's where the materials, that's where consumer staples come in. We're looking for qualities and also for companies that are in physition to make money to be profitable in twenty five.

We're looking for a defensive place. We're looking for companies that are not just delivering attractive earnings outlook, which is something that we see across the board, and of course we'll be looking across the board for twenty five, but also that bring to the table attractive valuations. They didn't have that explosive growth that some of the sectors we're seeing. So that's where the industrials, that's where the materials, that's where consumer staples come in. We're looking for qualities and also for companies that are in physition to make money to be profitable in twenty five.

All right, Katerina, thank you so much for joining us. Always appreciate getting some of your time and your thoughts on these markets. Categorie disseminetti

All right, Katerina, thank you so much for joining us. Always appreciate getting some of your time and your thoughts on these markets. Categorie disseminetti