KATHY JONES: I'm Kathy Jones.

LIZ ANN SONDERS: And I'm Liz Ann Sonders.

KATHY: And this is On Investing, an original podcast from Charles Schwab. Each week, we analyze what's happening in the markets and discuss how it might affect your investments.

LIZ ANN: Well, hi, Kathy. So this week, I wanted to ask you how bond investors are adjusting to this new rate environment we're in. I know we've seen yet again in your world some volatility, the kind of volatility maybe we're more used to in the equity market, but not these days, both in yields and movement in credit spread. So what are your thoughts on what's going on in your bond world?

KATHY: Yeah, we've had this kind of round trip down in yields, up in yields, down in yields, up in yields, particularly as you go a little further out the yield curve. And a lot of it's just been driven by the shifting expectations about what the Fed's going to do and how the economy is performing. We went through a period when the economy looked pretty soft, the employment numbers were soft, we had all this messaging from the Fed that they're going to be cutting rates. They did cut by 50 basis points, so yields came down, and then now they've been drifting back up because the economy looks a little healthier than it did before. It's called into question just how much the Fed will ease between now and the end of the year. And then we had like falling oil prices, which have helped pull down bond yields again. So lot of churning around and some steepening of the yield curve with long-term rates edging up versus short-term rates.

But it's really just been a lot of noise and a lot of sideways movement. Now, credit spreads are more interesting in some ways because they're tight and still tightening. And when you have good earnings season like we've had, corporate profits hitting all-time highs again, it really helps the credit markets, and companies can borrow at very, very low rates both in the investment-grade area and in the high-yield area. So it's been quite a remarkable cycle as we've talked about so many times, but just the last six months have been remarkable because things have been going through various, you know, this churning and expectations shifting a lot. And yet those credit spreads just keep coming in and coming in. 

So Liz Ann, I know you and Kevin just published an article on the bull market and I know that's going to be popular. We'll link to it in the show notes, but I'm guessing equity investors are still feeling pretty good? Things are going well?

LIZ ANN: Yeah, so we did publish it. It was a lot of data that has been in various reports over the years, but obviously updated. And it's in part due to the two-year anniversary that we hit on October 12th of the S&P 500® low. So we felt it was a good time to just assess the bull market and do some comps relative to past bull markets. So we looked at prior two-year bull markets and what tends to happen in the third year, and there's some decent news based on history of a continuation. That said, you do tend to get a little bit of a pickup in volatility as measured by things like drawdowns and a lower average return. But it varies. We also took a look at bull markets historically and the bear markets that preceded them, which ones were accompanied by recession or not, and what the implications were for a bull market that starts around a recession tied to the bear market and those without. 

So there's some interesting data in there. We even looked a little bit into rate cycles and points in the past where the Fed, absent a bear market, absent a recession, has launched an easing cycle with a 50-basis-point cut. So there's two instances in the past that occurred, 1967, which actually was a one-and-done. It wasn't the start of an actual cycle. It was one and done. And we go into the reasons behind that. And then 1984 as well, which also doesn't have a lot of direct comps to the current environment. So as with any analysis like this, we often point out that, yes, it's maybe instructive to look at history, but it doesn't represent anything resembling a perfect roadmap for what's going to happen this time. But hopefully people find it of interest.

On to our current episode, Kathy, the focus is going to be on the fixed income markets and credit research. So I'm glad you teed that up in our earlier comments. So tell us about our guest today.

KATHY: Yeah, it was a really, really fun conversation with Carol Spain. She's a managing director and head of credit research for Schwab Asset Management. She leads a team of credit research analysts, and they support Schwab's fixed income products, including money market funds, mutual funds, separately managed accounts, and ETFs. Carol was previously responsible for leading a municipal research team supporting the bond funds and separately managed accounts for Schwab Asset Management.

And before joining Schwab, when we first got to know her, she held several positions at Standard & Poor's global ratings. Most recently, she was lead analyst for U.S. state ratings, where she developed ratings criteria, ensured quality of analysis and written communications, and published reports on various topics related to the municipal bond market.

She's an active member of the National Federation of Municipal Analysts, previously serving as president of the Board of Directors of Chicago Municipal Analyst Society, and is a member of the external advisory panel of the Government Finance Research Center. 

Carol, thanks so much for being here. I'm really looking forward to this conversation. Since you're a colleague and an expert in your field, I think this is going to be fun.

CAROL: It's great to be here, Kathy. I've enjoyed our past conversations about credit conditions, and I'm excited to be speaking to you again on the podcast this time.

KATHY: I think we can really nerd out on this topic. So should be fun for everybody. I know prior to coming to Schwab in your current role, you were an analyst at Standard & Poor's. But I'd like to know, how did you get into this field? I mean, most people don't grow up and say, "Oh, I think I'm going to be a credit analyst when I get out of school!" So how did you get into this field, and tell a little bit about your pathway to where you are today?

CAROL: I started out my career in finance as a municipal credit analyst, which I think is even more rare for someone to dream of someday going into that role. I do have a bit of a non-traditional background. I had previously worked in government. I had had a political science background. And I went to graduate school to get a master's of public policy. I was really interested in "How do we create jobs and economic development?"

In one of the first weeks at school, someone had said to me, "Money is what makes things happen." So I took that to heart and started taking a few finance courses while I could. Then in the summer of 2009, which we all know was a crazy environment following the financial crisis, or really in the midst of it, I was doing an internship in Stockholm, Sweden. But I happened to be asked to do an analysis of Baltic and Nordic bank exposure and did a presentation to the Chicago Federal Reserve Bank on what I had found. They offered me an internship when I came back, but I was thinking, "I'm really still attached to those policy goals." So I ended up getting a job at S&P, where I was a municipal credit analyst where I could use those finance skills as well as tie that into my knowledge of government.

KATHY: Yeah, that makes sense. So you did sort of grow up thinking you'd want to be a muni bond analyst, roundabout way, I guess.

CAROL: I guess you could say that. 

KATHY: OK, well, let's jump into it and just kind of go through some things that I think would help our listeners and interesting for me to know about. But first, tell us a little bit about what your team does. You have a team of analysts. Tell us what you do and maybe describe kind of what is a day in the life of a credit analyst like.

CAROL: So to get to the core of what we do, my team consists of fundamental credit analysts. And we support our active strategies for both taxable and tax exempt here at Schwab. And our goal is really to do a bottom-up, issuer-level credit analysis and look at where we could find relative value opportunities for our portfolio managers.

So we start that with looking at an independent credit rating. So we do our own analysis separate of the rating agencies. And what that is is where we assess a corporate or government entity's ability to repay its debt. So that can consist of looking at a bond's legal features, assessing an issuer's historical performance, or tying in what's going on with the broader economic conditions.

We will provide an initial review or view of a rating prior to a security being purchased. And then once we've purchased it, we're going to assign that rating to be surveilled over time. So that's where we're monitoring whether or not financial disclosures or news events happen that could change our opinion of the rating. And really, Kathy, a day can really vary for an analyst. So some are quick-paced, where we have to respond to an opportunity that a portfolio manager sees either in the primary market or secondary market and turn around with a quick credit opinion or something happens in the news. It could be a company announces a strike or an acquisition, or even recently, we responded to hurricanes Helene and Milton on our municipal credit team, where we took a look at all of our credits that had exposure to the hurricane and determined quickly whether or not we think there could have been a rating impact. 

On maybe a slower day, we're working on developing ideas for maybe it's a new credit that we want to select for a fund where we're going to do a deep dive or spending time on annual surveillance of credits and any sort of information that we've uncovered and do a full rating review.

KATHY: Yeah, I didn't think about the Milton impact, but I would assume it might be both municipal and corporate bonds that could have been affected. I get the impression it wasn't fortunately too huge an event for most of the credits, but it could have been, right? Something that affected, say, a company that maybe got washed out in some area or, of course, a municipality that really took a big hit. So one of those things you don't think about when you think about credit ratings.

CAROL: Yes, and we're actually already seeing some impact on the utility sector where, you know, if that infrastructure is damaged, it's difficult to receive revenues.

KATHY: Right, right, a water district with no water because the pumps aren't working could definitely be a problem. Interesting. So you brought up interactions with the portfolio managers. So you're doing the credit research. Is it kind of a two-way street where you find something and you take it to them and you say, "Hey, what do you think of this?" Or is it more that they're kind of pushing things back at you and say, "We need your opinion on this particular bond issue that might be coming out."

CAROL: It can go both ways. So we might be familiar with an issuer, and say they're coming to market. We think this is a great opportunity because we're already familiar with it. Or we may know about a credit that has improving conditions, and we might point that out to the portfolio managers. Otherwise, a lot of the time they're looking at what's available. So that would be what's trading in the primary or secondary markets and what might meet their performance goals because while we're looking at things from a credit-risk perspective, they're looking at what matches duration or liquidity needs. So it's really a two-way conversation.

KATHY: Yeah. And is it the case that you kind of leave things like the duration decision to the portfolio manager and you just focus on the credit analysis?

CAROL: For our team, yes, we are looking at credit risk and what that means, whereas the portfolio managers are making those duration bets.

KATHY: Same with valuation, I would guess, then, too. They're looking at where it's trading in the market and whether that appeals to them while you're really sticking to the credit side.

CAROL: I would say they kind of go hand-in-hand while the portfolio managers are really making that final risk-reward decision. And oftentimes they're the ones who are trading bonds and may see that opportunity. We're also looking at spreads throughout the day, particularly for our corporate team where that information is more available and identifying opportunities. I think credit fundamentals and valuations are really connected, and you can't really talk about valuation without understanding credit fundamentals. Recently, though, with tight spreads and those relative-value opportunities aren't there except for maybe specific issuers.

KATHY: Yeah, I was going to mention that because one of the things we've, on our team, talked about for I guess two years now has been how tight those credit spreads are, especially in the corporate bond market, even really lower credit-quality bonds trading at near historically low yields relative to Treasuries. And I know even in the investment grade, we're approaching those very low levels. What do you think drives it and what do you think might change it?

CAROL: So recently, I think the narrowing spreads are really reflecting confidence in the soft-landing narrative and the economic resilience we're seeing. And we're still seeing a strong labor market, strong GDP growth. And with the Fed rate cuts, we're seeing a supportive environment for credit in a still resilient economy. But on top of that, I do think that we've seen a gradual improvement in corporate credit quality since the pandemic recovery. 

So during the pandemic, corporate entities were conservatively managing their balance sheets because of conditions, and some of them had actually benefited from higher prices during the time. And then heading into the previously rate-hiking cycle, companies were concerned about whether or not we'd have a hard landing. So again, they were managing their balance sheets more conservatively, but really the economy has proven to be resilient and beating expectations. So that's resulted in stronger corporate profits. And while we have seen corporate entities issue more debt, particularly this has been a strong year for issuance, those leverage ratios are still improving.

KATHY: Yeah, I think that's been reflected in the migration upward in credit ratings as well, right? Haven't we seen some improvement there in the overall quality on the investment-grade side?

CAROL: That's right. We had seen BBB credits as a share of the overall investment-grade credit index increasing over time. But again, really a trend since the pandemic recovery began is that we're seeing an increase in the share of A-rated credits and a slight downtick—I mean, it's slight—in BBB-rated credit, but that does show improvement.

For the last three years, we've seen the rating agency upgrade-to-downgrade ratio be positive. And for the past three consecutive quarters, we've seen significant upgrade-to-downgrade ratios.

KATHY: So Carol, just to set the stage for listeners that may not be quite as familiar with credit ratings, can you just tell us, you know, what are the ratings for investment grade and what's a cutoff then below that for what we call high yield or below investment grade or otherwise known as junk bonds?

CAROL: So the highest credit rating that an issuer can have is AAA. So this means that there's a very low probability of default. Then we see issuers in the AA category, or single A category, and you can add a plus or minus to those to provide additional gradation that are still very strong credits. Then we look at BBB, which again can range from BBB- to BBB+, which are weaker than the A-rated credits, but these are still investment-grade credits with still a low probability of default. Once we get below BBB-, then we're looking at the high-yield or junk-bond status, which can range from BB to C, which is a credit that's about to default, to D to a bond that's defaulted.

KATHY: What percentage of the investment-grade universe would you say are like AAA? I think there's only two bonds now rated AAA versus a pretty hefty percentage that are BBB and single A.

CAROL: Microsoft is AAA. As of now, BBB accounts for 48% of the Bloomberg U.S. Corporate Bond Index, whereas back in 2021, it was at a high of 52%. And A-rated bonds have increased from 41 % of the index to 45%. So again, this is a modest increase in credit quality, but it is a reversal in a trend that we had been seeing prior to the pandemic recovery.

KATHY: Liz Ann and I have talked endlessly on this podcast and in private just about what an unusual cycle this has been. I don't even know how you define the cycle other than being a pandemic-driven cycle. But one of the very unusual and surprising things has been the improvement in corporate fundamentals of such magnitude in the midst of Fed tightening and global slowdown and very low consumer confidence. I mean, there's been a lot of stuff that's happened that you would think would have had a negative impact and that those corporate fundamentals seem to just continue to improve. Corporate profits, I think in the last quarter, hit an all-time high. So it has been counter to, I think, widespread expectations at the beginning of this cycle that it would be a great cycle for corporate credit.

CAROL: And I think what we're seeing is the strong recovery in the labor market as well as an increase in real wages that's driving consumer spending. We'll talk about consumer fatigue or looking for more value. However, consumers are still spending. And that, I think, is really what's supporting corporate profits at this time.

KATHY: Yeah, I would agree. We always talk about people have jobs. When they have jobs, they spend money. And when consumers spend money, the economy grows. And it just has been surprisingly strong. And the trend has continued for quite some time. So it sounds like you're pretty positive on the credit side. Anything you cover that or areas you cover that you might be particularly worried about or stand out as where there might be potential in a sector that's something that concerns you?

CAROL: Well, we've talked about consumer discretionary and just consumers pulling back. For example, Starbucks has reported that there's slower traffic in its stores, or there was so much spending on home improvements during the pandemic that now we're seeing slower sales at Lowe's or Home Depot, for example. So that's one area where we're watching. But really generally, we're seeing broad improvement across the sector, and it's really issuer-specific where we have concerns.

KATHY: So specifically, what are the factors? I know you talked about leverage ratios and the trend in corporate profits, but when you're a credit analyst, and you're looking at the whole universe of corporate bonds, say, let's just stick to corporate versus municipal because that's a whole other topic, but in the corporate bond world as a credit analyst, what specifically, like what are the factors, the fundamental factors that really drive your analysis?

CAROL: So some of the factors that we look at include revenue trends or EBITDA, which is earnings before interest, taxes, depreciation, and amortization. We're looking at gross and net margins, liquidity, free cash flow, and as I mentioned earlier, various leverage ratios. And then we're also looking at things like an issuer's size, diversification, and the operating environment. And then perhaps even more importantly than some of these quantitative measures, we're taking a look at management and whether or not we believe in their ability to execute on their business plans.

KATHY: So it's very similar to the equity strategist sort of approach, except it sounds like much more quantitatively driven. In other words, you have to make sure that they can pay. They're bondholders, whereas in the equity world, things can go on for a while, even when the cash flow isn't great.

CAROL: That's right. And there is a lot of overlap with what an equity analyst might look at. But what I think is interesting is the equity markets will look at growth potential for a company, whereas we're really focused on their ability to repay their bonds. So while earnings may appear weaker in a given quarter or consecutive quarters, if we think a credit is still strong, it has a strong balance sheet, that may not come across as a credit weakness.

KATHY: Right, yeah, I always think back in my days of working next door to the equity analyst, I always felt like we were focused on balance sheets, and they were focused on the income statement, and it was hard to bridge the gap sometimes. We didn't always see eye to eye on things, because that was during the financial crisis. So things were very different than they are today.

So how do you balance the macro data with the issuer-specific? So in other words, for example, maybe a great company, but they're in a really challenged macro environment. How do you balance that when you think about what the appropriate rating might be for that credit?

CAROL: It's very important because the macro conditions, whether that be economic conditions or a technology disruption, can trickle down into future revenue performance or performance generally for corporate issuers. So our analysis is incorporating historical data, including past audits, quarterly disclosures, but we also take a forward-looking view. And that's where understanding "Where is the economy headed? What's the business environment like?" can help us understand what that revenue picture may look like going forward. And what we could develop as a team would be a potential stress scenario. Do we think that if perhaps, let's say the rise of streaming services versus cable, what impact could that have on this particular issuer over time? Where would we expect the rating to go going forward?

KATHY: Yeah, that's a great example because that's kind of those long-term structural things that had a big impact on some companies, and I assume on their ratings as well, as opposed to, say, you know, some other businesses where individual companies come and go but the business kind of chugs along at a steady pace. Can you think of some other big sort of macro structural things that are coming up? I'm thinking about the rise of EVs versus gasoline, internal- combustion-engine cars. There's an acronym for it, internal combustion engines—I guess they're calling it ICE—versus the EV market. Can you think of other examples of things like that are happening at a macro-versus-micro level?

CAROL: That's a good example, Kathy, and I think EVs have been particularly interesting because we do think that that's likely the direction where the auto industry is heading, but we're also seeing slowing EV sales right now. And so what we're looking at is, is there a strategy for EV sales going forward? But also, where's the emphasis placed so that a company can still be profitable maybe before we see an uptick that's expected in EV sales? So some other examples where we've had in-depth conversations where things forward-looking, maybe a little bit less obvious, would be discussing the rise of gen AI. Or even recently as a team, we talked about Ozempic and other weight loss drugs, and, you know, what could that mean for different industries, and where could we see opportunities?

KATHY: Right, yeah, yeah, everything in the headlines then. So no wonder you enjoy being a credit analyst. You sort of get to dabble in all these equity-type topics, but you get to do the bond math at the same time, which sounds like a great combination.

CAROL: It sure is, and I'll add to that. The credit analysts are known for being more risk averse, and I think I'm really talented at worrying. So if you combine my economic interests with my propensity to worry, it's a great combination.

KATHY: Yes. Yes, yes, us fixed income folks do see the glass half empty rather than half full. So yes, always worried about what could go wrong rather than the opportunities ahead. But speaking of that, are you feeling pretty confident about the opportunities in terms of what you're seeing in the credit market? It sounds like you're pretty positive about the direction things are going. You're not looking for some sort of surprise around the corner or deterioration that would cause people who are invested in, say, investment-grade corporate bonds, things that they might need to keep an eye on.

CAROL: Yes, I am still pretty positive despite, as I said, my propensity to worry. And that's really because I see a still-strong economic backdrop. So while we might have pockets of weakness overall, I think there's a lot of evidence to support that soft-landing narrative. And it would take a pretty significant downturn in my view to significantly impact credit.

We had spoken earlier just to the improvement in credit quality for corporate bonds over the last few years. And given their strong balance sheets and strong credit going into a potential cycle, I think that that allows them to have runway to respond to changing economic conditions. And therefore, I'm not anticipating a significant spread widening or rating impact over the next few years. 

I mean, we do have potential concerns on the horizon. We have a war in the Middle East. We have an upcoming election. But so far, the market reaction to these events has been pretty muted. Not anticipating, given that our expectation would be most-likely-scenario split government, this is unlikely to be a significant spread event looking at past history, which I know you've commented on in the past, Kathy. I think it would really take something big like a policy misstep or something significant like a supply-chain disruption again to really move credit at this point.

KATHY: That's great to hear. Yeah, we're pretty much, on our team, kind of in the same camp right now. I think the biggest concern we have is just valuations. You know, when we look at how tight the spreads are, finding the right opportunity gets more and more challenging. But that's a good problem to have versus, you know, having things go wrong and having to deal with that. You know, I really appreciate you coming on the podcast today and giving us the rundown on what it's like to be a credit analyst and what the current environment is like. Anything you'd like the listeners to take away from this that we haven't talked about?

CAROL: I would just say that the benefit of having an active management team or having a team of credit analysts is that, while this is a pretty benign or positive credit environment, like we just said, but the advantage of having a team of analysts is that we are able to spot those economic disruptions or specific events for an issuer that allows our funds to be able to avoid downgrades, defaults, or head off potential need to realize losses for our investors. So there is value and a lot that a credit research team can provide.

KATHY: Yes, you have a team of professional worriers at your beck and call. I think that's the best thing about not having to do your own bond homework is you have somebody else doing the worrying for you and keeping an eye on things. Well, this has been great. Really appreciate your time. Thank you so much. And I'm sure we'll have you back on again.

CAROL: It was fun. Thanks, Kathy.

LIZ ANN: Well, Kathy, this is the point in the episode where we usually look ahead to the indicators, the data dump that we analyze for the coming week. But in addition to listing out the weekly schedule of data, I wanted to ask if you could highlight what's most important, what you think really matters to the market and our listeners, maybe some of the sort of inside scoop of what we're focusing on in the coming week.

KATHY: Yeah, I think for the bond market at this stage of the game, what really matters is employment and inflation. So we'll get some updated inflation numbers, the PCE, core PCE, which … that's the measure that the Fed uses when it's benchmarking its inflation prospects and expectations. But there are many other inflation readings, CPI, which is more well known to most listeners.

It has been drifting lower on a year-over-year basis. Inflation's really been coming down. We recently saw a pretty good drop in energy prices and some other basic commodity prices, largely due to some of the global weakness in both Europe and in China. So that's been helping inflation at the wholesale level, but getting it to fall at the retail level really is going to depend on, to a large extent, seeing if we can get the rental index down in those inflation readings. So that's going to be really important. And of course, then the employment numbers a couple of weeks out from the next jobs data. But we get the weekly jobless claims, always scrutinized, this time around with the hurricanes. It may be very tough to get clean data. So I'm afraid, I'd love your opinion on this, but I'm afraid we may have to wait until the end of the year to actually know what's going on in the labor market.

LIZ ANN: I totally agree, and it's not just the weekly claims data, but any metric associated with the labor market is probably going to be skewed by virtue of the weather. And it ties into some other data that we'll be getting in the next week, which is more of these regional Fed surveys. And they're important because it gives you a little bit of a local flavor of the health of the economy. And there are a lot of sub-components in these regional Fed surveys, including leading indicators like new orders. There's prices-paid components, which is a way to gauge the trajectory of inflation. And maybe most importantly, you've got employment components. So we already got, as you and I are taping this, the Empire, which is the New York area. And that had been an outlier on the positive end of the spectrum.

Yet, in this most recent reading, actually deteriorated quite a bit. So we'll have to see the ones that are coming out in the next week, which include Philadelphia, Richmond, Chicago, and Kansas City, whether they corroborate or refute the weakness seen in Empire. But again, I think it's those employment components that are worth watching. And those are considered a version of PMIs, purchasing managers indexes, they're survey-based. But we also get S&P Global's version of the PMIs, maybe not quite as widely watched as the ISM version, but there also can be some tidbits in there including, as I mentioned, employment components and inflation components. And then I think at the end of the week we get the University of Michigan data, which is everything from consumer sentiment, and I often point out that there are two monthly consumer confidence/sentiment readings that come out. Conference Board puts one out that is called consumer confidence, and then University of Michigan puts out their consumer sentiment. 

And one would think that they would track closely, but there is, I think, an important difference in the types of questions that are asking in the survey, such that consumer confidence, put out by Conference Board, tends to track a little bit more closely with what's going on in the labor market, where consumer sentiment tends to track a bit more closely with what's going on in inflation.

So that's why there, at times, have been big divergences, like in 2022, when inflation was going through the roof, but the labor market was still fairly healthy. You saw a big spread between those. So that's one thing I'm keeping an eye on within that data as well.

KATHY: Those surveys are always interesting. I find them somewhat useful, but perhaps less useful than I used to find them, just because there's some very large discrepancies that have been showing up lately, and really hard to tell how to use them in the sense that we'll have low consumer confidence, but consumer spending is very healthy. 

LIZ ANN: You mean what they do and what they say aren't always the same thing?

KATHY: Yeah, yeah, they're really not moving together these days. So I do look at them, but I also wonder, you know, what am I looking at here? What exactly is driving this?

LIZ ANN: Well, you know, I'm glad you brought up discrepancies, too, and some of the problems with some of this data. Another thing that's worth mentioning is a lot of this soft data, as they call it, survey-based data, whether it's PMI-type data like ISM or the JOLTS survey or even the Establishment Survey that generates payrolls out of the Bureau of Labor Statistics, the response rates have come down quite dramatically. So it is a little bit of a caveat, grain of salt, whatever term you want to use when looking at this data. And that's really a phenomenon over the last 5 to 10 years, where you've just seen this big drop in the response rate to many of these surveys. I have yet to see a sort of a concrete reason for that, but it is what it is. And I think we need to be mindful of the response rates to many of these surveys being way down.

KATHY: One reason response rates have been so low was. during COVID. the whole process sort of broke down because companies weren't responding because we weren't there. There was no one there to do it. But when it comes to individuals, it seems to be just sort of a mind-your-own-business kind of situation where people just don't want to answer any questions anymore, or they don't trust. 

LIZ ANN: Well, maybe it's a landline problem too. Wonder whether some of the …

KATHY: Well, indeed, yes. Very few of us have those anymore.

LIZ ANN: Great episode. That's it for us this week. Thanks to all of our listeners for tuning in again. As always, you can keep up with us in real time on social media, but also of course on Schwab.com. There's a Learn tab. So everything that we write or videos that we do, that will all be on Schwab.com. In fact, it's on the public side of Schwab.com. So you don't even have to be a client. You don't have to have a login. So check it out there. And of course, on social media, I'm @LizAnnSonders on X and LinkedIn, and my standard weekly public service announcement: I am not active on Facebook or Instagram or WhatsApp or any other social-media platform, with the exception of X and LinkedIn. So if you see me on there, it's not me; it's an imposter.

KATHY: And I'm @KathyJones—that's Kathy with a K—on X and LinkedIn. And I, too, have had my share of imposters. It seems to be a trend in the last week or two that people want to add letters or change letters in my name and then ask people about how their stock portfolios are doing, which is ironic since I don't follow the stock market. That's Liz Ann's job.

LIZ ANN: That was me. I just got tired of answering market-related questions. So I came up with a new handle for you. Sorry, my bad.

KATHY: Thanks. OK, well, we're going to report you right after this podcast. But if you have enjoyed the show, we'd really be grateful if you'd leave us a review on Apple Podcasts, a rating on Spotify, or feedback wherever you listen. You can also follow us for free in your favorite podcasting app. And next week, my colleague Collin Martin will join us. So stay tuned for that.

For important disclosures, see the show notes or schwab.com/OnInvesting.