Hello and welcome to Download. I'm your host, Dave Richardson, and I am so excited about this podcast today. My guest is my cherished colleague and mentor, Dan Chornous, the Chief Investment Officer at RBC Global Asset Management. Dan, it's so great to have you on. Thanks for accepting the invitation. How are you doing today?

Good. But after that introduction, I hope I don't let you down.

Oh, we know you're never going to let us down. We know that what we're going to talk about today is so critically important, and we'll get to that in a second. But the one thing I wanted to just check in on, because we've talked about it before quite a bit on the podcast over the years, is you've moved over to London, England, and you've been there for a few months. I know going back years and years, you've always thought London was such an important place for the firm to be in terms of positioning it as a true global investment manager. Now that you've been a few months there—and we've gone through Brexit and everything over the years—what are your thoughts about what's going on in London from an investment perspective? Are you enjoying it? Is there anything special you're doing there? Maybe just update us on what you're up to over there.

On a personal level, Brenda and I, we've been there six months now, and we're having a terrific time. Hoping that you've all been there, if you hadn't had the chance, one way or the other, to find yourself to London at some point in your life, it's like New York City, whatever you enjoy, it all happens there. It happens there bigger than anywhere else, and there's no end to it. It's an endlessly fascinating city, and it's worked out so well for us. Corporately, as GAM and the business, that part has been thrilling as well. The size of the operation that we have on the ground in GAM, the trading boards, by several factors, I guess, the largest we have within the business, larger than Toronto, larger than Vancouver, maybe larger than Vancouver and Toronto put together. Now, part of that is because of the way that we actually have people situated. We have them sitting in a traditional investment bank trading floor type of environment. Because it fits really well with the income-dominated organization that we have over there. But nevertheless, the type of people, the amount of skill that exists on that one floor, to be a part of that every day. I mean, I've enjoyed that through my career. Now I'm enjoying it in London. The other thing that we get from the London business—while Toronto is a very important financial center—in London, there are so many things going on in global finance that we have windows on or deeper windows on, if the right word is that. I found through this transition, particularly in the United States and geopolitics, that you really do feel closer to the news source. That's been a great benefit to us, I think. Again, the quality of people we have within GAM, their global view, it's helped also that many of them have actually long/short views, alternative asset experience. That's has been brought into the firm. I think it's a great thing for all of us.

Yeah. And the first thing I'll say is I absolutely agree, just from a personal perspective. For anyone listening, if you haven't been to London, it's a place you have to go. It's funny, though. I'm in Nanaimo today. And I went to my little coffee shop here in Nanaimo. World-class coffee place. But the two young people behind the counter had never been to Toronto. And they're talking about what a great experience it is as I was sharing having grown up in Toronto. And now you come on here and you're talking about living in London, and I just agreed London is just fantastic. And then I know, because of you, I've had the chance to go to London many, many times from a work perspective, and that's where you see the importance and just, as you say, the difference between even a big financial center—from a Canadian financial perspective, Toronto is the center of the universe—but then you go to London and this is at a different level. This is where you need to be. And you're still a Canadian, Dan. The one thing that I always say to people, we're still a Canadian firm. We bring a Canadian mentality. We're thinking about Canadian investors, but we've got to go out with our expertise, your expertise, and go to places like London so that we can bring the very best of everything around the world to a Canadian investor because it's so critical. Canada, as much as we love it, is still small from an investment perspective.

I agree with everything you said, in fact, Dave, I'll show you, I wear my Canadian cuff links today. I do think that the firm has an awful lot to offer the world as far as investment process, results, breadth of investment product, talent, all these things. I do believe that I have the reason to say the world needs more Canada. I do think in the case of investment management, we got something to offer there, too. That's been a really exciting thing to be a part of.

Yeah, and a great point to make. We've had Dan on before. You can go back if you subscribed to the podcast, which you can do anywhere, any of the platforms you have that offer a podcast, where you download a podcast. You can go back in the archive. All the episodes are there. Dan actually talks a lot about process the last time that we had him on and about bringing Canada, the rest of the world. I think you'll really enjoy it. So subscribe and rate the podcast. We love that. We always say that, Dan. But let's go to the main reason I wanted to get you on today is the paper that you and the team have produced recently. I guess it's a recast of an old paper, and I'm sure you'll get to that, from the 1990s that was worked on by someone else. But you brought it forward, and the insights are so critically important. I've been talking about a lot on the podcast, and when I'm out with investors, just the whole idea of what we've seen coming out of COVID, we've seen a lot of investors, people who should be investing, becoming savers. So sitting in cash, interest rates moved up a little bit. I'll take the higher rate of interest and I'll just sit on the sidelines. I don't want to take any risk. They think of risk only in the ups and downs of the stock market or bond market. Certainly, there's been enough things to be concerned about, but you're not investing when you're saving. There's a distinct difference between the two. And then on the other hand, we see all kinds of people, given the markets that we're in right now, speculating or gambling, which is also not investing. And what I think this paper does such a great job of doing is highlighting— that's primarily for retirees, and I'll let you explain the paper—but I think it highlights it for everyone, the importance of investing. If I'm losing ground, likely to inflation—and you'll talk about that in terms of what that means in retirement—if I'm just sitting in cash or a cash equivalent. If I'm gambling, when I go to the casino, the odds are I'm going to lose. I might win for a little while, but I'm ultimately going to lose. But when I invest, if I look back at history, generally over time, the longer I play, the longer I'm in an investment, the more likely I am to win, to compound and to win big. So with that set up, Dan, why don't you lay out the paper, what it's about, and then we'll get into the key findings and the results of the paper.

Dave, I love what you just said, because if investing was a game, we could say it's a game that actually stacked in the player's favor. That's really what the numbers show. As far as the genesis of this, it was 30 years ago that a financial planner in the United States, William Bengen—I understand he's updated his work, too, recently—wrote a paper to help his clients as to what is the proper asset mix so that you can prepare properly for your retirement. Preparing for your retirement reflected the pretty simple goals. People wanted to live 30 years from the date that they've retired. They wanted to sustain their prior standard of living throughout retirement, and that was on an after-inflation basis. How much did you need on that retirement date? Given varying levels of asset mix, what was the chance of busting yourself before the 30 years was up? That was done in a very different climate. Interest rates were far higher. Markets were far less sophisticated. The opportunities to invest in different assets just weren't there. It was a very narrow selection set that was available. About a year ago, we thought we should update that paper. It became foundational to retirement planning. The foundation was that in general, you should withdraw 4% of your savings every year, index that by 3% every year to account for the expected and normal inflation rates that we experienced since the 1920s. You could expect that that money would last for about 30 years in most cases. I'm talking most cases being 80 to 90% plus. Essentially, if you put a million dollars away and took 4% a year out, indexed it at 3% a year, you'd get $40,000 a year, and you'd live for 30 years with that. It sounds like a lot of money, but with compound interest, hopefully, we'll all make it there. We said, did that actually work? Let's go back and check if that worked and if it still works given today's numbers. Actually, it's quite surprising. Despite how simple that is. In a business that's so sophisticated and complex, it really did work. He used a 50/50 portfolio. 50% of the savings was invested in US T bonds, 50% of it was invested in the S&P 500. Imagine you have so many other choices now. You also have choices to vary the asset mix. The findings, we're very excited about, and we are actually surprised by some of the things we did find.

Yeah, I was doing a presentation for investors in Victoria last night. And as you'd expect, for the listeners, not all the listeners are from Canada, and not all the listeners have been to Victoria. And so you get a certain demographic when you're in Victoria and you're doing an investment presentation. So a lot of retirees, people just about to head into retirement or retired. And when I put up some of the charts from the paper and started to explain, just as you have, the basis of what you were trying to accomplish. And then some of the base results, which are you likely need more growth or stocks in your portfolio than you think. And it's not just when you're 18, it's not just when you're 58 like I am, it's even when you're in your 60s and 70s and in retirement because that growth is so important. Because people overrate the risk of the ups and downs in market and forget about—and they should remember now, maybe more than they have in 40 years—what inflation can do to your purchasing power and your lifestyle when it's just sitting there in the background. And again, it might tick along for 2 or 3% for a while, but then you do have these spikes from time to time. And the impact. I think of myself. You in London, too. You're working and you're earning a good living, and you go to the grocery store, or you go to buy clothes, you go to have dinner somewhere. You've jumped 25% through this period of high inflation of prices. And so, again, if you haven't increased your income by 25% at the same time, you've lost purchasing power and you feel that squeeze, which so many people are feeling. And of course, in retirement, now we're not making more. We're not earning a salary. We're living off our investments. So anyway, as you look at it, what do you think are some of the key findings and what's the headline out of what you found from the paper?

I think there's two key findings. The first one goes back to a paper that Gary Brinson wrote 40 years ago, maybe 45 years ago. In the paper, he confused us all as analysts. He said, the most important decision that one will make in their financial life will be their asset mix. Of course, all of us that deal with stocks, bonds, gold, whatever, all day long, thought that meant about what day you buy them and what day you sell them? It meant nothing about that. It meant, do you own equities anyway? Because if you decide to not own risk assets or decide to own just the least risky assets in your investment plan, you've determined your outcome right there. All the risk of what we do in finance is just working around the edges, adding a little bit here, protecting a bit of downside here. The question is, how much risk will you take right from the start? And of course, you want to make that start as early as you can. You don't wait until you're late in life to start worrying about this stuff because it's the miracle of compound interest. The second thing that was so surprising goes back to another great author, Daniel Kahneman with Amos Tversky and the Prospect Theory. So the Prospect theory really dominates so much of what we do in markets, behavioral aspects of finance. But prospect theory basically says that there's this asymmetric and almost irrational treatment of the fear of loss versus the opportunity of gain. When you approach your retirement savings with, I just need to have some money to retire, as opposed to, how much could I have when I retire if I did this smart? You get a very different answer. We built a whole bunch of portfolios ranging from all cash so I can sleep every night. 0% chance of not having that cash when I retire. But how long will it last? All the way through 100% equity portfolio, which, of course, was very volatile. Sometimes we've seen in the last 25 years, sometimes pretty tough corrections, one being 44% and one not being too far off that. But the most risky portfolio was the 0% cash stock portfolio. If you sit with 100% cash, you can sleep at night. But there's an 81% chance that after 30 years, you've run out of money. You go back to 1928, and if you created one of these portfolios every year since 1928, one that's 0% stock and one's the 100% stock and all the gradients between that, in one case, the 100% cash portfolio ran out of cash within 17 years. So you retire at 65, by 82 or 83, you could sleep well, but I don't know what you do after that point. So what we're learning from this is intuitive, is that if you don't take some degree of risk, there is no actual wealth creation. There's certainly no offset for the inflation that you just talked about. You're always doing yourself to a bad outcome. Now, where you sit on that risk spectrum now becomes behavioral. The math says you should push it maybe as far as 75% equities until well into your retirement. For some people, that's not necessary. They'll trade off the opportunity of actually creating wealth during their retirement, index that a bit, pull in their stocks, maybe as far as 60, 55, 50%, but you do need a healthy amount of stocks in those portfolios in order to survive that 30 years. So those are the two biggest learnings. Fear of loss is extreme. You need to shake that to some extent. And when we talk about asset mix, it's not buying stocks before they go up and selling them before they go down. That would be terrific. We do a lot of that, and hopefully we do it well. The most important thing is having exposure to risk assets, not only during your savings year, but in your retirement years as well.

When I was a practicing financial planner, when I had clients, I'd sit and we talked about that first conversation about what you say is so important, that asset mix decision. And how much risk am I going to take and set up in my portfolio? And thinking long term because financial planning is a long-term process. And the biggest fear that everyone would have would be, okay, so we're sitting here today, we make the decision, we go into a 60/40 portfolio, 60% stock, 40% bonds, and the market crashes tomorrow. I just happen to make my decision around my financial plan at the worst possible time. So I would always run numbers with them. And these would be people in their 30s and 40s and maybe early 50s. And we'd run through that scenario and people would be surprised. Markets drop, but you're continuing to add because you're working, and then markets recover and you end up quite fine. And now we get to the retiree. So someone who's now in retirement, drawing on their assets. And we sit down to make a plan for them, and it's the same thing. Well, what if the day that I decide to retire, boom, it's 1929 again. We have the stock market crash. We go into the Great Depression, World War. We go through that period. Wow, I would absolutely ruin my retirement. But again, what this research goes through, if you look at retiring in 1929, you look at retiring in 1937. Where else will we go? 72, 73, 2000, 2008, all these... We don't have the rate before COVID, but I'm sure we already know how that result is going to play out. But I picked the worst times historically to retire. And still, I need to have growth in my portfolio. I get a better outcome if I have some equity in my portfolio.

You use 1929, which is the one we all think of. And even then, this was the right thing to do, was to include a high amount of equities in portfolios. One of the numbers that really interested us, though—because we've made a whole bunch of different ways of coming at it and understanding and explaining it—I think you should really now take the pre-war years out of the data. We didn't in our analysis, but I think it makes our analysis super conservative as a result, as was Bengen's analysis. The reason is that in 1929, we didn't have the institutions in place that we do now. We have the Reserve. We have the market regulation, all these kinds of things. The understanding of monetary policy. We know what happened in '35 to '37 when they created the secondary low in the depression. They did everything wrong. They were actually drawing, they were actually reducing the money supply as the economy was recovering because appeared inflation. We know not to do that. We know quantitative easing. All of these things that happened. We learned more in 2008. We learned more in COVID. I have to think that the institutional responses to really big threats to growth and the economy may limit the risk of the catastrophe of the Great Depression. One can believe that or not. If you believe that—I do—that the world is actually a little bit safer than it is now, that it doesn't make it safe, because we did see that 44% correction in 1999 to 2002. We saw a huge one in 2008. But nevertheless, if you take the pre-war data out of it and you consider, how long does it take? If I was so unfortunate that I load enough my portfolio the day before a big bear market started or an average bear market, how long would it take me on average before I finally got back to those prices? The answer is three years. You're outside for three years, but your retirement period is 30. It's 10% of the period that you'd be actually retired for. If you can sleep through that average of three years—and sometimes it a little shorter, and sometimes a little longer, then a lot shorter, then a lot longer—you're better off to do it, even if it was the worst day. If you're like most of us and you're saving fairly constantly on some program over time, you're going to get some good buy days and you're going to get some bad buy days, but on average, you're going to get an average bill, and that's all you need.

That's all you need. I think back to from the global financial crisis, which is an experience that most investors listening to this podcast would have experienced or have read about and studied if they're an advisor. I think of a conservative portfolio—the conservative portfolios that you and your team run—I believe even after the massive correction in '08, '09, a conservative portfolio recovered, I believe it was 21 or 22 months. A balanced portfolio, a 60/40 portfolio, took about 42 months. Such a surprisingly quick bounce back. I love your thought around eliminating some of this old-time stuff. You want to put it in because it's important. Again, like you said, the first thing people think of, 1929. That's what we all grew up learning about and studying. So you got to include that. But again, we've made so much progress, and you see that in the experience of '08, '09. And then the other one, and what leads to my next question, is the experience from 2000 to 2002. It's a little bit farther back in the memory banks for some people. But that was what we would call the tech bubble burst. I was saying to a group last night as we were having a conversation afterwards, the similarities between the market today and the market then. Back then, I would take my company, Dave Company, and I would rename it dave.com. And people would pay $200 for every dollar of revenue that I'm generating. And then they figured out I was never going to generate any revenue and my stock collapses. Today, I would rename my company dave.ai, and I'd see the same things happening. But what happened through that market, what was interesting is that my technology stocks collapsed in that space, but my broader portfolio actually did fairly well if I was invested in quality. So what you're talking about here, do you think about ways that you might manage your equity? So say I'm going to go with a 60% equity portfolio, but is there ways that I would position that portfolio in retirement relative to through my accumulation years to even protect myself? So I almost get the best of both worlds. I get the growth of equities, but I'm playing a little bit of defense as well, so I can sleep at night.

I think you just answered the question. It's one of the things we did put in the paper. When Bengen wrote the paper, he used the stocks and bonds, US stocks, US bonds, and that was it. But they were really narrow, unsophisticated markets at the time. Canadian market at the time was tiny. There was no investment-grade market in Canada. There were a couple of bank bonds in there, and certainly no high yield market. You wanted high yield bonds, you had to go to the United States, buy some of those, hedge them back in Canada, and that was it. So you didn't have a lot of choices. You have tons of choices now. You should take those. The best thing you can do is not guess or ride with the single group that's driving things, for example, the Mag7 AI right now, you should carry diversified portfolios. You don't have to make all those choices all the time perfectly right if you have a diversified portfolio. You should have equities exposure across geographies. You can add over weighted or under weighted relative to broadly diversified or recognized indices, whatever. But you scatter that across a bunch of different geographies. You're blending together a bunch of business cycles and politics, outcomes, etc. You go across different asset classes. In the bond market, you just don't buy sovereign bonds. You also blend in credit. In our case, we have much more credit than we do sovereign bonds. You don't just have investor grade. You have exposures towards things like some high yield bonds, some CLO’s, etc. There are so many choices. So that you have some things going up and some things going down. But the broader trend, you're getting a full piece without having to make extreme choices. Like today, it's AI, and then I think AI is expensive and I'm out. Those will be blended in at appropriate amounts within a diversified portfolio. I think that's a critical aspect of these savings plans that wasn't picked up 30 years ago. Maybe it didn't need to be contemplated 30 years ago. Why wouldn't someone take up the opportunity to have all of these different expositions?

Yeah, which takes us back to the start of the conversation that you're in London. And 30 years ago, if you were the head of an investment management firm in Canada, you wouldn't be based in London. And I was sitting out again as a planner at that point in time, and I had a Canadian equity fund, I had a US equity fund, I think we had a Japanese equity fund, and a bond fund, which invested primarily in government bonds in Canada and in the US. That was about it. So now, if I'm a Canadian investor, I can walk into a bank branch somewhere, I can get online, and I can access virtually anything I can imagine from an investment perspective to build a portfolio. And this is why we do the podcast, because we want people to understand that there's so much choice out there. There's so much ability to get your portfolio positioned uniquely for yourself. And the more you learn, the more you work with a good advisor, get the right advice, the better you'll be positioned to grow your money while you're saving and to have it live through your retirement and have the retirement lifestyle that you want.

Absolutely. That period, 1999 to 2002, still fascinates me. I lived through that as a macro strategist. Not the easiest job to have. There's so many learnings we walked away with. What’s fascinating to me is between 1996 and 1999, that market progressively narrowed. It started with all stocks going up and then less stocks were going up, and then finally, we were down to about 10 or 12 massive global technology stocks that where all that was going up and driving the index. Everybody had a sense that everybody's making money but me because, of course, most portfolios were not actually tilted in that narrowing and narrowing group of stocks. And then you had this devastating bear market from 1999 to 2002. I guess that's the one that's down actually 54%. Nevertheless, down almost 50% or a little more. Interestingly, do you know during that period, more stocks went up than down? The breadth of the market, participation in the market, actually didn't do what the market appeared to be doing. Another reason why one wants to diversify. The reason why one wants to diversify is the indices don't always tell us what's happening within that market.

Yeah. And when it's hardest to diversify is likely the most important time for you to be looking at diversifying. So as you say, when that market was concentrating, and if I'm not in that, I'm losing out. And maybe you are in the short term, but then the market has a funny way of getting back to normal. And that's the learning, as you say, from that period for investors today. And what we're looking at in markets right now with that smaller group of stocks that's leading the way and is so important.

If you start to make a hierarchy of what's important here, number one, own stocks, lots of them. Well, number one, start saving early. Number two, own stocks and lots of them, event while you’re in retirement. Number three, diversify those positions broadly. You don't have to differentiate this.

Especially when I run into young people, and I was sitting at a cafe in Munich, and that young woman from the UK sits beside me and she sees me reading an economic report. I might have been reading your paper at the time. And she's, what do I do? What's the one thing you'd advise me as a young person to invest? And I said, buy stocks. I put, as you just did, the filter with diversify and added a few things. But if there's one thing, just one thing you do, buy quality stocks and time will take care of the rest for you. Little different in retirement, but still that growth is important. And that's why this paper is so fantastic.

Another number that really sprung out, fascinated us was, again, going back to Prospect theory, retirement planning is all about not running out of money. But if we could relax that a bit and say, well, if I took the tiniest chance of running out of money, because you can correct course. And in these studies, of course, you can't correct course. You set yourself on a course at age 60 or 65 and you can't change. Well, of course you can change. But at the 60/40 portfolio—which in my mind is actually not the optimal portfolio, optimal would be somewhere above that—but in the 60-40 portfolio, if you took out 4% a year, index that by 3% a year for inflation, in half of cases, you had the same amount of money when you died or 30 years later than when you retire. Because you're only taking out 4% and you're earning 6 or 8%. So you're looking after your retirement and actually getting wealthier during the period. And then as you index those equities up, of course, there are certain scenarios where you can end up 30 years with multiples of what you retired with. It depends, of course, on the investing experience during your retirement period. But the chance of crashing out, of running out of money was never all that high once you got into these balance-type portfolios.

Yeah, I showed the kids that part of the review. They were quite excited about that with the prospects of the wonderful estate we might be leaving behind. But that's another issue that we have to deal with as parents. So, Dan, before we go on, so the paper is great. You can get the paper if you go to RBC Global Asset Management at rbcgam.com, and the paper is there in Insights. If not, you can talk to any RBC advisor, and they can help you find it. And I'd really encourage you, it's not a long read. It's very straightforward. There's lots of nice graphs in it and charts that you can play with. So you can go as deep as you want as always, or you can just gloss over and get the basic gist of the paper. But before I let you go, what are your thoughts about where we are in the global economy right now? When I'm out with investors, they're nervous about things that are going on. They certainly look south of the border, and they're concerned about some of the things that are happening there and just the tone and manner of leadership there. And as Canadians, of course, we felt a little bit of that directly since inauguration day. What are your thoughts about where we are in the global economy and where we might be in the next 12 to 24 months and beyond that?

I would say that those fears that you just talked about, maybe disappointment, I would share all that as Canadian and also as an investor. But we just came from a series of meetings where we're looking at our tactical asset next. Six months ago, and I think Dave McKay captured this well, talking about moving to more principles-based system towards more power politics. The world is changing. As part of that, it was massive, the pathways towards bad outcomes had really opened up all the way from tariffs, long-standing trade relationships, stranded assets, where there had been major capital investments made that suddenly were made in the wrong place because of the stroke of a pen, of what first of all was the concentration of power, all these types of things and say, well, the world is, as an investor, there's just a lot more chance of bad things happening now than there has been in the past. I have to take risk off the table. And of course, we did have that serious correction during the spring. Interestingly, at the end of that correction, we got very strong technical signals that the worst is behind. And we, fortunately, responded well to that. We were well positioned for that because, remarkably, what the stock market has gone through an historic recovery since the spring. One isn't sure what's going to happen tomorrow, the next day or the next month, but what the stock market is saying is that we're going to make it through. There's going to be corporate profits there. Inflation isn't the problem, at least at the level that one had expected. We always have to remember that the market knows more than all of us. And the market's message is actually quite benign right now. Now, valuations are a different concern. It was thought early in my group, little peach trees don't grow to heaven. But there will be checkbacks based on this has just gone too far. You're paying too much for a dollar of earnings. But we think that those checkbacks will be more in the sense of correction rather than end of bull market. Our outlook is still constructive. Recognizing higher valuations means higher proof points or hurdles that have to be cleared in order to keep stocks going. The pace of appreciation of stocks, one can't expect this to continue, but there seems to be a lesser chance of recession. While growth should slow over the next year, we absorb some of these big changes. I don't think as Canadians, we're going to enjoy reading all the news, but the Canadian stock market has actually been one of the world leaders since that last correction ended. It's not a benign view, that's for sure. It's on balance, modestly constructive. We need to watch valuations very carefully, especially in the United States. But then look outside the United States. In countries, including Canada, they haven't led for many, many years, and they seem to be getting their chance. The window is opening for it.

Yeah, which is fantastic, as a Canadian investor. My favorite story around the market, seeing things that we don't, is in the midst of COVID, which again is in recent memories. And of course, in late February, as we're just starting to understand in some form what COVID is going to represent as a part of our life, how it's maybe the most significant event in most of our lives up to this point. And the market starts to drop from an all-time high. It drops 35% in a month. And on March 23rd, 2020, is the bottom of that drop. And again, if you go back and you think of where we were with respect to COVID on March 23rd, 2020, we had just shut down the global economy 10 days before. So it's not like we had any epiphany that we were ultimately going to get a vaccine or that we were ultimately going to get to a point of where immunity or the virus would weaken to the point where we could live and survive with it. But the market shot up at that exact point. And again, think back to where you were on March 23rd, 2020, and where we were in our understanding. We were still wiping boxes down that were being delivered to the house. Double-washing the vegetables. And yet the market saw through that and started this massive appreciation because it said, just as you said around the situation we're in right now, markets went, you know what? we're going to be all right. We're going to get through this. Maybe we're not exactly sure how. And we don't know what the bumps along the way are going to be. And there were some bumps along the way, but we're going to get through this. Everything's going to be fine. I think you're exactly right. We got to think about this situation as well, the same way, because over time, as just a human race, we figure things out pretty well.

I know you want to close this off, but there's one, I think, important point that relates to this, as a result of all the volatility that appears, an absolute mountain of cash is set. It's $7 trillion in the United States. If there's fuel to keep this bull market alive, one doesn't have to wonder. Usually, half of that will come in through the bull market. It's three and a half trillion dollars sitting on the sidelines. Another half a trillion dollars sitting in Canada, 250 billion. All these numbers, they're extraordinary. The problem for investors is, sure, that could be fuel for future stock price appreciation down the road. That's also money that didn't earn anything during this long period. We looked at this risk aversion that is so common to investors, and I guess to some extent, it's a critical part of investing, is that if you had looked at when short rates went above bond yields, it was two, two and a half years ago, at that point said, I'm just going to own bills, I'm not even being paid to own bonds. And certainly, stocks are a bad thing to own until the end of 2024. So for that roughly two-year period, you would have clipped something between 3 and 5% because bills peaked at 5%, rates peaked around 5%, not a bad return, certainly on cash relative to what we've earned in the last 20 years. Just stock in that period, it compounded at 12.8% a year, so you’re down 780 basis points a year, at least. I think that when we think of this paper, we try to push yourself out of the short term and into the long term. I was not saying you take the 7 trillions and you throw it at the market today. But you got to come up with a plan that you can comfortably leg yourself into a more reasonable cash position. Because what you're protecting yourself against, whether it's March the 20th with COVID, whether it's the spring of 1973, the nifty 50, what you're protecting yourself in will pass, which you will for sure miss out on the long term determinants of the equity market.

Well, can't think of a better way to finish things off. By the way, Dan, I never want to cut you short because you always have something to say. And the cash thing was another thing I was talking about with investors last night, and it is so important. Still, despite the incredible run that we've seen in stocks, there's still so much money that's sitting on the sidelines. And what frustrates me, and again, why we do this, Dan, why I do what I do. You're actually managing the money. I have to go and talk about it to try and inform investors to say, you don't want to miss this. You've got to be involved in this. And again, this paper helps so much for people to see and understand what you're giving up and the risk you're taking that you don't think you're taking. And that's why I wanted to get you on today. And Dan, I know how busy you are, but thank you so much for your time today. I have the privilege, as I always say whenever I’m asked, what’s it like to work with Dan? I go, what I love working with Dan over the years is I get to spend time with him and I just listen. Just like the listeners are getting today, and I just learn. It just helps you pull everything together. You have such an amazing way of pulling everything together with all your experience and success. We all benefited from that today because you gave us your time. So Dan, thanks. Give my best to Brenda and safe travels.

Thank you, everybody. Enjoy your holidays. Thanks for your time. See you.