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hi welcome to another episode of ngw a podcast series industry connected today we're speaking with Gerry Coletti who's an investment broker and portfolio manager with the Morgan Stanley group Gerry first got started in the business in 1980 so he brings a wealth of knowledge experience and expertise to the discussion but today's topic is really gonna be geared towards the novice or the intermediate investor he's gonna focus on the market volatility thoughts and ideas on how to plan for retirement as well as how to do your proper due diligence and selecting a financial adviser to work with so I hope you find this information helpful and you can apply to your everyday real world situation okay well welcome today I'm a guest speaker is Gerry Coletti he's a first vice president with Morgan Stanley group looks like Gerry started in the industry back in 1980 with the Salomon Brothers and since 1992 he's been with Morgan Stanley investment group and within the wealth management division at Morgan Stanley so before we get started I do have a disclosure statement that I need to read for everyone and I'm going to post it here on the screen so the Morgan Stanley disclosure statement the views expressed herein are those of Gerry Colletti and do not necessarily reflect the views of Morgan Stanley Wealth Management or its affiliates all opinions are subject to change without notice neither the information provided nor any opinion expressed constitutes a solicitation for the purpose or purchase or sale of any security past performance is no guarantee of future results the investments disgust me might be appropriate for all investors Morgan Stanley Smith Barney LLC recommends that investors independently evaluate particular investments encourages investors to seek the advice of a financial adviser the appropriateness of a particular investment will depend upon an investor's individual circumstances and objectives alright Jerry are you good to go yes I am Terry how you doing today good how about you I'm good that disclosure statement very interesting because I had talked to our comply people and I said look I'm gonna be in a podcast is it ok ok guys they said sure it's fine I ain't fine and and then like ten minutes later I get this email that bits glow Jia has to be read though me or either it may or standed and with the Ferb I dunno yeah good well I'm glad you took time out of your busy day I know the markets just open so we won't spend too much time I know you get back but you know with the craziness of the markets right now and the reason I wanted to ask you come on to share some thoughts what's your take on you know one day the markets up next day it's down it's just a roller coaster and so what's going on what are the investors are what's Wall Street looking for well you know I'm looking at I'm looking at my screen right now the Dow's up four hundred and thirty points right based on the skill he had information this morning that that they that one of their products may have a solution so that's for the virus you know my opinion about about what's happening now and it's unfair for the average investor unfortunately cuz it's really hard to keep pace with with something like this this is this is unique it's a little different than 2008 and and and and and it's moving very rapidly I mean the market I mean we the market but now hit a high at 29,000 back in February went down as low as 18,000 and change in March you know marched 20 something and now here we are back up so it's moving real fast too fast to the average person to deal with what we're dealing with here now is just it's really we just patiently have to wait for this virus and this vaccine I think the markets a little ahead of itself right now I mean I would expect to see action like this if it was announced this morning that we do in fact have a vaccine but we don't yet and the only reason the new cases are dropping throughout the country is the social distancing we're not sure what's going happen once once the various states reopen but clearly there are parts of the economy that are going to be affected significantly regardless of whether or not the vaccine happened soon or later yeah I mean restaurant industry gambling airlines hotels movie theaters sporting events it's going to take a long time to these industries to recuperate and and and and and it reflected and the company's earnings yeah so I think we're a little ahead of them okay so you know talking about that these businesses would be effective sway that the federal stimulus package and how do you see that playing in right now you know potentially helping some businesses stabilizing some things possibly I don't know and then long-term with all this money and inflation I you know how does that play out you think well you know if you compare you go back to 2008 that wasn't too long ago and that was just a nightmare right and the Fed learned quite a bit I mean we went through several quantitative easing programs the event happened in 2008 it really wasn't until 2011 that the markets started to kick in and start to repair itself so what's interesting this time around is the Federal Reserve I think is taking everything they learned in 2008 and they apply it they applied it to this situation they did it very quickly they jumped on this situation they performed admirably whenever there was a breakdown in the market they fixed it they covered it we have we have a form of QE happening now we have also other programs in place so we the Fed was ahead but even though it happened quickly and they had to act quickly I think they were prepared to do that and they did that so I was okay with that so how will this influx of money set the market long term well you know what hi before we afford this happen before this has been happened I always you know I was just starting to breathe a sigh of relief since 2008 just recently to be honest with you yeah and and and what I mean by that was I started to see finally legitimate wage game you know I'm on a subway it's crowded I'm on a train it's crowded I'm in traffic it's crowded a big vacations are hard the book it was nice to start to see that and it took a decade to see it now the other side of the coin though is is is is it covers with a course that comes with a price this this monetary and fiscal stimulus we see right now is going to affect us down the road how far down the road I can't tell but you know our nationally we we started this off at 23 trillion and national debt it's now at 27 trillion yeah the last time I read data the US Treasury collects about three point five trillion our government spends four point five trillion okay I mean you roll forward to let's say four or five years down the road we're going to be thirty trillion and yet the course the servicing that debt the interest is going to it's going to take fifty percent of what we earned to service the debt alone so we have and this is something that bothered me has bothered me for a long time I mean we we got out of these jams in a different way natural organic growth but through through monetary and fiscal stimulus so down the road some time we've got to address these these these issues now going into this we had what what people termed the everything bubble well the everything bubble basically got pricked by the the coronavirus yeah and and now we are going to create maybe something even bigger than everything bubble so so it's going to be interesting down the road see what happens but if this visit is a danger there for investors and people that are retiring retiring in the next couple of years you have to be very careful so so what what recommendations would you have for someone I guess put them into buckets someone who's just new and to you know maybe maybe they're younger getting into the market or starting their retirement and then the individuals who are within a few years or within a decade of every tiring how do you look at this situation for those to do well you know those young people that were still wanted you know funny old Millennials right with the criticism of them was they didn't want to take on any debt they saw their parents take on debt you know so the parents participate in the stock market and got beat up a little bit but but but if you've got a long term horizon you clearly going to invest in companies in the United States preferably the strongest companies we had you have to basically believe that technology is going to move this country forward in a big way yeah a very powerful way I mean it's just the technical technological revolution we're experiencing it's just just amazing so things are going to be better long term clearly now if you are later on in your years and and and and you've got to call it quits and and you can't you know you're no longer getting 1099 income w2 income look you're living off of a pension hopefully Social Security and you're living off of the return your invested assets your savings will get you and you got to be very careful in the market right now because in 2008 those people that had a five year retirement they were going out in five years they got hurt it hurt him badly right you take this situation I mean going into this morning the market was down fifteen percent so they're going to be hurt to those people that were calling a quick coupling race so hopefully they were positioned to offset that well it's this this take the sort of the not so secured situation individuals who don't have pensions may be all they have have right now currently as their own retirement account of 401 K and their their five years out ten years out what what if I have to give to them well yeah you know what clearly my in pretty much Wall Street it talks to clients every day about this I mean I talk to my clients about this every day and and and a lot of the times it goes through one ear and out the other unfortunately but but well you have to you you want to get as close to a crystal ball as possible into your financial future and right now there are two is the tools available on Wall Street that will will will will tell you what you're gonna look like financially ten years from now 20 years from now can't tell you what you're going to look like cosmetically but I'm going to tell you what you're gonna look like financially and everybody needs to understand you if you're going to retire in five years what is your income add it up pension Social Security and the earnings on on on on your investment now that doesn't always guarantee success okay you go back in time you got people in retirement communities in Arizona in Florida that's at with a financial planner and they said okay here's your pension this is what it's going to give you here's your Social Security and that that's fifty thousand hundred thousand two hundred thousand you have saved it's gonna earn you seven percent well guess what due to certain situations that occurred in 2008 people aren't getting seven percent on bonds anymore yeah and safe money so you're talking about a portion of their savings and a portion of that equation now disrupted and messing and and and and and and people's incomes aren't what it is that they anticipated to be so you can have situations like that going forward but you got to do the best you can to see what you look like and shoot down the road so so I mean the obvious one people investing in stocks but what what are some other vehicles that maybe you've seen they're overlooked it aren't as well known or commonly spoke spoken about in the media or just amongst ins of individuals well you know yeah if you compare investing to what it was years ago there's so much more opportunity to invest in markets right now all right so you got individual stocks individual bonds you have exchange-traded funds which are basically portfolios of stocks of bonds that trade like a stock on the stock exchanges you have in those exchange-traded funds that basically you can get them benched or fantasy you can get them benched in sectors and industries there's right now now when you look at the market today yes I see airline stocks up now Li stocks got crushed over the last month okay yeah all right so you have a choice isn't investing you can buy an airline a particular airline United Airlines American Airlines Southwest Airlines or you can buy an ETF that owns all the airlines so so what's nice about what's happening in the markets today it's just - through - through financial engineering there is so much more to invest in that an individual can can manage their portfolio in a very sophisticated way it's just not buying a fund holding on to it for 10 years keeping your fingers crossed you can actively trade in a market and you can actively try to figure out what industries are going to do better than others over time so so III so again individual Sox ETF regular mutual funds things like that people can use okay now I guess as people approach a little bit more towards Azir in your opinion I guess a way to I guess diversify your investment if you make a recommendation and how much you should maintain being liquid versus and conservative versus riskier stocks assuming that you know someone's ten years out and who knows what the next ten years old another pandemic in another market and when we had stuff happen at 2001 obviously with the World Trade Center then again 2008 here we are 2020 with the pandemic so it's almost look in five 10 15 years out from retirement how should they in general terms look at risk versus conservative investments well let let's exclude situations like this a virus okay alright because that's just it's that's just a different situation and it's almost like an act of God type of situation yes but cool but going forward you know interest rates in this country I remember my cousin calling me up back in 1980 he was celebrating here just poor to purchase this house I said Tommy that's great what was your what's your mortgage rate it was 17% okay yeah now now now think about what's happened over the years and and interest rates in this country have moved lower and lower and lower to where we are right now with the 10-year Treasury bond I think this warning was at 0.5 9% now so so the investment in fixed income or bonds isn't what it used to be years ago because because because it is an inverse relationship when interest rates go low the bonds move up in value when the interest rates move higher the bonds go lower in value so when you see interest rates this low in this country and really it was first quarter like think 2018 where the federal reserve I think was 2018 and 2019 I get confused now but but the Federal Reserve wanted to move interest rates or what they would term normalize interest rates so they were looking at a 10-year Treasury somewhere above 3% that's what they considered normalizing rates and they tried their best to move it higher and the market punished them because inched higher the interest rates it slows down economic growth now so so if 3% is a normalized ten-year or what the what the Federal Reserve wanted it to be and we are now at point five nine percent obviously there's dislocation and the marketplace going on right now so I don't know if bonds of the place to be where it used to be the place to be went as you as you came closer to retirement I use cash now as a way of controlling volatility in a portfolio nothing wrong with that now cash and a money market fund you're not getting much of a return but you're not losing money either so it's it's even though the vehicles that exist today make investing a lot you become more of a sophisticated investor the situation we're dealing with right now is so complex that that that that part of it makes it difficult so so I have nothing I'm no problems with people using cash as a way of controlling volatility and and that's unfortunate but that's just the way it has to be right now well good so as we wrap up I this is one question maybe for those out there who you know looking to maybe dip their toes in or maybe they're not happy with what's going on you know your background on your your bio here you you can salt off fiduciaries and trustee accounts I know you manage part of the portfolio for our association you do corporate retirement plans and endowments and founda ions but for someone who's looking for questions asked their current you know financial adviser or maybe they don't have one and they're they're looking for one and they reach out to someone local referred one what are some good questions would what's their due-diligence to find an investment advisor well I think what I think what you always have to tell financial advisor right upfront is is what you believe your investment time horizon is okay so the minute you walk into that office you say look you know I I'm gonna retire in five years I'm gonna retire in ten years I'm gonna retire in two years that's important all right we have to understand that okay because then we we we would structure portfolios for the individual consistent with with with those time time horizons so you have to be right upfront yep yes the basically tell the advisor what your risk tolerance level is and what your time horizon is and but how do you know that the credibility the how how do you select the right financial advisor well well not all like any industry okay not all financial biases are created equal you know there is a way that you can look up a financial advisor on the system and see if there have been any complaints criticisms that were that were logged in about that particular individual okay I am proud to say that being in the business as long as I have been in the business yeah I I don't have one bad blemish or mark on my record on my license so you can check their individual light and so the suit I knew their due diligence you see look upon the system what what is there a website or what you see yeah this is a website I think broker check I think there's several websites you can speak to the individuals so let's say if an advisor approaches you from one particular firm you could call the office manager the person who's running that office that individuals in and you can ask them for some information about that particular individual so there's ways of doing it and I would recommend to people to do it because again like I said not every not every financial adviser is created equal each one comes with different tools experiences backgrounds I work right now as a member of my team I have a tourney on my team all right Boston College educated white now I will tell you he's new to the industry and he's by no stretch the imagination and investment expert at this time he will be eventually right so good just so this ways of looking into it okay well good wait as we wrap up is there anything else did you feel like we didn't just discuss that you want to share well I I just I just want to reiterate again this the situation we're dealing with right now it's far from over I think everybody has to really sit back don't get too caught up in the market gyrations I mean we are in I mean we are in right now a bear market rally technically is what the name it is it is and and it's during a bear market rally where infinite the markets kind of start separating themselves from reality the reality is the virus we don't have a vaccine yet the reality is we don't know what what the environment is going to look like a month from now or two months from them so just be very careful long term there will be a vaccine long term the world will get back to normal so again getting talking about the investment horizon if you if you're and if you've got a ways to go before you you're going to retire yeah I don't think you have too much to be concerned with right now besides the the monumental debt that this country has the world has things like that that'll that are gonna have to be addressed later on it's good good why Jerry I appreciate it get information for everyone to absorb and I appreciate your time today calling in and wish you the best I already thanked Terry thank you for having me thoroughly enjoyed it great and what will speak so thank you thank you have a good day you too bye-bye