Mike Collins: Let's drill down into the equity side of things for just a moment here. And we get a ton of questions, as I'm sure the audience does as well, about the role of international in a broader asset allocation. So could you just set a little bit of context. We like developed, right?. We see some interest there. How do we feel about international compared to the U.S. right now?
Joe Davis: And, again, I think for context, at least I think from an efficient portfolio, it doesn't mean it's the recommended portfolio, but an efficient portfolio starts close to the market capitalization and then you say, "Okay, and why is that?" It's just because it's just volatility reduction even though markets are correlated, Mike, right. You do it for really return diversification. So even if markets were perfectly correlated, I could make the same argument why you would have some international exposure. It's return diversification even if correlations are one or close to it, and then that's where valuation matters.
I mean the vast majority, not all, but the vast majority of the U.S.'s outperformance over the past decade, which has been wonderful, it's been absolutely wonderful. My portfolio’s benefited, of course. Others on the call may have. But the primary driver has been multiple expansion. So if one would believe that that outperformance is going to continue, one is effectively making the argument that valuation expansion occurs again, which would then push us beyond 1929, 1999 sort of dynamics. It's certainly possible, but, because in our projections we control for the interest rate and the real discount rate, which has moved, is some justification.
So that's effectively what has gone on with the benefit of hindsight now, and that's part of the rationale why you have modest expectations of international outperformance going forward. It is not a reflection of currency dynamics. It is not a view of relative economic growth fundamentals. There's a modest dividend yield difference between the two markets, which is a modest tailwind for overseas, Europe and Asia, but it's primarily the valuation disconnect when you control for other forces that says, "There should be some modest normalization." But that's why these aren't market timing tools. These are helpful on strategic bases, like five, ten years, but on a one-year basis, they really don't help you in terms of look around corners. But they do suggest that there are vulnerabilities when markets really extend beyond fundamentals. And that was certainly the case of the U.S. markets going into the year.