Interest rates have reached levels not seen since in well over a decade. How should investors navigate this new world of higher rates? Are they here to stay? To help unpack what this seismic shift means we sat down with Jim Jackson. Jim is currently the co-chief investment officer and senior portfolio manager of Victory Income Investors, which was formerly known as USAA Investments . We had Jim on because he is among the most qualified people in the world to discuss this with. We were able to get his thoughts on so many important conversations we are having with clients. Before entering the investment business, Jim served in the United States Marine Corps. He holds a degree in economics from the United States Naval Academy, an MBA from the University of Michigan, and is also a CFA® charter holder.
In this conversation Jim and first I discuss his career path and how he was the first person in his family to attend college. He tells the story of how his interest in a career in finance started on an aircraft carrier, and the role curiosity and luck have played along the way. He also gives advice to those seeking to make a change in their career that aligns with their personal interests.
While we do go “into the weeds” of fixed income investing at times, this conversation is not just for people interested in the complexities of bond math or monetary policy. First, Jim explains what “fixed income” actually means and the role it should play in your portfolio. From there we take a broad historical view of interest rates and discuss how the last 40 years of declining interest rates have influenced people’s decision-making, and how the magnitude of the Federal Reserve’s interest rate hikes caught people off guard. We also discuss the current narratives playing out in markets today and look ahead to potential risks and opportunities.
Admittedly this is a longer episode, but there was so much I wanted to ask him. We hit on everything from the difference between a bond and a stock, to the risks of holding too much cash in a portfolio today. We also discuss how to think about growing concerns over US Government debt levels, why negative news can make it hard to stay focused on the long-term, and the one question anyone with a portfolio should be asking themselves today.
Jim also shares his team’s investment philosophy and explains why they spend very little time trying to make predictions about the economy or the direction of interest rates. Instead, their focus is on continual improvement of their process and focusing only on the things they can control. Interestingly this even extends to how Jim spends his personal time, where he avoids watching financial news on television all together. Our entire team learned a lot from this conversation, and I think you will too. It was an honor to have Jim as a guest. Thanks again to him for sitting down with us, and we hope you enjoy this episode.
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