Halal Money Matters

Halal Money Matters Podcast

Episode 33 - Perspectives on Crisis and Opportunity with Scott Klimo

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Monem Salam: 
Welcome to Halal Money Matters, sponsored by Saturna Capital. I'm Monem Salam. And today we have an exciting episode. As everybody knows, the elections are soon and fast approaching us in the US. And in fact, there's been actually elections going on all around the world. What I thought we'd do in today's podcast is speak to our chief investment officer, Scott Klimo, and get his take on what he thinks usually happens in election cycle years and talk about historically in the election years, how the markets have done and what are some signs to look for when you're thinking about what the markets might do. So without further ado, let's begin.

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Monem Salam: 
So thank you very much, Scott, for joining us today. I'm really excited to be able to talk about this topic. And the reason is because, you know, one of the things that we find is that when you talk about crisis and investing during this time of crisis, one thing to figure out is, well, what does a crisis look like? What does it really mean? And then we have crises throughout. And then what does that really look like when we're talking about the markets. So really excited to have you on to really discuss this and deep dive a little bit further.

Scott Klimo:
Well, thanks very much Monem. I'm happy to be here and I hope we'll have something of interest that will be useful for your listeners.

Monem Salam: 
I think the first thing we should really kind of define what we mean by crisis, because there are obviously events going on in the world, specifically with countries, with companies and those type of things. So do you have a good definition of what you would define as a crisis?

Scott Klimo:
Well, it is a word that's bandied about quite a bit. Every little bit of disruption is a crisis. We had the global financial crisis. We obviously have the Middle Eastern crisis that's going on now. So there are crises happening pretty much everywhere and every day, it seems. But it needs to be something that's significantly disruptive to the investment environment, the investment landscape, something that has a major effect on, be it interest rates or defaults or stock prices or some sort of economic activity, it needs to really move the needle rather than just being something that's kind of a headline news that you're going to see at the at 6 p.m. on NBC. And so I guess shorthand, that's kind of how I would define it. And that can obviously run the gamut of anything from the most recently experienced pandemic, to, as I mentioned, a global financial crisis. So a major disruption within financial markets and within the banking system. So it can be a variety of different things that may ultimately constitute the crisis.

Monem Salam: 
We don't actually talk about crises and say that it's when the market goes down, then we look back and say it's a crisis. We can actually just define it as some significant major event that could have potential impacts on the market.

Scott Klimo:
Sure.

Monem Salam: 
Okay.

Scott Klimo:
And I think that, you know, as long as we're talking about the word and, and I have a pretty extensive background in Asia. And so a little bit of etymological trivia is that the Chinese word for crisis is Wéijī. And it's interesting that that word is kind of a portmanteau of the words for danger, which is Wéixiǎn and opportunity, which is Jīhuì, way, so Wéijī. And so, you know, they define a crisis as something that has both danger, but also there could be opportunities that may come up as well. And I think that's pretty relevant from the perspective of an investor, because there's a crisis is what falls under our earlier definition of a crisis is something that's going to disrupt the markets. And so that is going to create opportunities. It may be just through getting into the market at an attractive point, or it may be for some change in leadership of sectors from what we've seen previously, that, if you're ahead of that, you could benefit from it quite well.

Monem Salam: 
And I think over the years, if you look back, I think that you can pretty much safely say that every crisis that we've had has been that opportunity. When you're living through the moment of the crisis, you might think of it as danger. But if you step back and look at it from a larger picture, it looks like a huge opportunity that you might kick yourself and say, you know, I should have done this or I should have done that.

Scott Klimo:
Yeah, I think that's largely true. There are times, for example, if you look at the dot-com crash in the early 2000s, that was a significant sell off as stocks had become just stratospherically and unjustifiably valued. You know, you may recall at that time, Cisco was the largest company in the world. I think that a market cap around $450 billion, something in that neighborhood. So things have certainly changed in that regard. But, you know, after that you did see some various sector outperformance. Pharmaceuticals, for example, did quite well in the wake of the dot-com crash. But the market as a whole was pretty modest performance for a number of years. So, you know, there can be times when a crisis really does sort of reset everything and take some time to pull out, I mean, obviously there is the Great Depression, for example. But, you know, I certainly don't see anything in our horizon of that scope that we need to worry about in today's conversation.

Monem Salam: 
Yeah, I think there's two ways to look at this now for people. And the one is from an investor perspective, which is somebody who is outside of the markets and looking at and saying, look, I have this amount of cash and do I put it in, you know, X investment, Y investment, or Z investment. And the other way to look at it is from your perspective which is a chief investment officer. And so I think what I'd like to do is kind of break that down a little bit and talk about it separately. And I think it'll be very educational for investors. So let's start with you as a chief investment officer, right? When you're thinking about the markets or looking at the world in particular, we're very US-focused, we're in the US. How do you look at the difference between danger and opportunity when it comes to crises?

Scott Klimo:
Well, I think that one of the things, as both a CIO and also as a portfolio manager for mutual funds is that we have a responsibility to our fund owners to be invested. If you buy one of our funds, presumably you want to have exposure to the investment philosophy, the investment approach that that fund exemplifies. And so I don't really feel that it's my position to be tactical in terms of, oh, I should be raising a lot of cash right now because I think the markets are going down. The investor who buys the fund, he or she is perfectly able to make that determination about how much exposure they have and how much cash they want to have. Not me. So I may have views on it. I don't really think I serve our investor base by doing that. And so we have to remain fully invested. This is one of the big differences between, say, what we are doing managing a fund and the individual is, I'm not in any way, shape or form timing markets and trying to pick entry points and exit points. I will, during a period of disruption, look for certain opportunities in terms of individual stocks. I have a list of stocks that I would love to buy at lower prices than they are today. And you may say, well, Scott, if some sort of crisis or some sort of disruption occurs, then everything is going to be lower. And to an extent that's true. But there are also varying degrees of defensiveness among various sectors. And we have pretty good defensive exposure in our funds. And so it's entirely possible that if we do encounter that sort of disruption, the defensive stocks that we hold will provide some, let's call it ballast, for the portfolio that offers some beneficial effects during the disruption period. But as we start nearing the point where I'm like, okay, I think we're getting over this and one can see a path for how we move forward from here, then that's a great time to look at that list of stocks that you have of things that you've really wanted to own in the cheaper price, based on the anticipation that they could perform significantly better as we climb out of whatever hole has been dug for us.

Monem Salam: 
I mean, obviously you're acting as a portfolio manager and then the CIO, but also you're a human being. And so going through the idea of the crisis, when you're right in the midst of it, how do you make yourself do the things you need to do, and not just be deer in the headlights, oh my god, I don't know what's going to happen? You've been through a lot of these cycles. You've been through the Asian financial crisis. You probably were living there at the time. The dot-com, you mentioned, GFC, the Great Financial Crisis. You were there doing that, the COVID. What did you do to be able to prevent yourself from being that deer in the headlights?

Scott Klimo:
Well, I'm not sure that I always did, but, you know, hopefully we learn from experience. And so you're right. I, you know, have been through a few and I mean, you really need to check the behavioral impulses, which are exactly what you're talking about. And, you know, the time of maximum despair is the time when a lot of people are getting out, and it's exactly the time you should be getting in, and trying to recognize that is absolutely a challenge. But I think that one of the things that I've learned over time is despite all these crises that we've had, we've always recovered. We've always come out of it. The stock market performance has continued to provide something in the neighborhood of 9% annualized nominal return going back to the 1920s, and I think that's even kicked up a little bit over the last 30 years or so. So despite all of these disruptions, everything that's happened, we're still getting a 9% return year in and year out. The pandemic, I mean, talk about disruption. That was undoubtedly the biggest one, I think of all. And look what we've seen in terms of stock market performance since then. So I think what's really important is confidence in the expectation, I was going to say the knowledge, but that might not quite be accurate since no one can see the future, but in the expectation that this too will end and then we'll come out the other side and things will be back on track. And if it turns out that they're not, then, well, whatever decisions you've made probably aren't going to be that important anyway.

Monem Salam: 
So that's very true. A lot of times I often end up telling investors, you know, when they worry about the doomsday scenario, I tell them, look, if we really have that doomsday, then probably the last thing you're going to be worry about is what's happening with your portfolio in the market. You have bigger problems to be able to kind of fend off your neighbors or, you know, people down the street from you with everything else that's going on. So that's one side you appreciate that part of it. And then now let's look at it from an investor perspective and what they should be doing when these crises are taking place. What's your advice to investors as far as how do they kind of hold on, or maybe they have to change their portfolio?

Scott Klimo:
Well, you know it, to be honest, it's the same. I mean, if you're just an individual investor, you don't have the responsibility that I may have in managing other people's money. Regardless, I still believe it is the best path for you to maximize your returns over time. There have been a number of significant studies that have shown that individual investors performed much worse than the overall market during the global financial crisis, because I'm generalizing significantly here, but because when we got to that time of maximum despair, which was like early May of 2009 and there's like, I can't take it anymore, and I'm getting out, and then the market all of a sudden turns around, and by the time they get back in, it's well above where it was when they got out. And so their returns were diminished. Harking back to the same thought about there's going to be another side. This is going to turn around, this is going to get back on track. And just thinking about that, the odds that you're going to be able to add value by timing exits and entry are probably pretty slim. I mean, I'm sure everybody's got stories. Oh, he bought at the bottom or sold at the top or whatever it may be. But by and large, you're going to be better off just riding it off.

Monem Salam: 
And those are exceptions rather than the rule. People always talk about their winners, and they're never talk about how much money they lose.

Scott Klimo:
So simply the advice is simply stay invested.

Monem Salam: 
Yes, stay invested, but you might do some shifting around in your portfolio that you're managing. As you mentioned, there were some price points you wanted to hit for certain investments, and they hit them during that crisis, you reallocate. For an investor, I mean, when you talk about buy and hold, that usually speaks in terms of zero sum game, which is either you're in or you're out. And really the nuance of that is, should an investor be, you know, looking at it from either you're in or you're out, or should they be looking at reallocating their portfolio in a time of crisis?

Scott Klimo:
I think that there can be some opportunities to do that if you're someone who is paying very close attention to the markets, not as a journeyman or as a tourist, but if you really are paying attention, if you have any aspirations of doing that on the individual stock basis, if you're someone who invests in funds, you can certainly adjust your portfolio from more defensive positions to more aggressive positions. If you think you're nearing the bottom, let's say the market you know, was down 20% and you're kind of focused in value and income and these sorts of things, well, that might be a good time to start thinking about taking a little greater exposure into more aggressive, growth oriented strategies. Fixed income is obviously another part of it. You know, let's say your sukuk portfolio has been performing pretty well because oil has been hanging in there, and interest rates have been declining as a result of a big slowdown in the economy. Well, eventually that's going to turn around and rates are going to go back up and the value of your sukuk is going to decline as that rate environment changes into a more buoyant economic environment. So absolutely, there are changes that investors can make to try to take advantage of being wholly invested, but certainly making some changes…

Monem Salam: 
Some reallocation changes and some depending on their situation. And for obvious reasons, you know, when I was living in Malaysia, whenever they talked about, the people should be investing or when you go to Europe or other parts of the world, when they should be investing, they always use the example of the US rather than their own country, because the data is available in the US. So when you're thinking about this idea of crisis and investing doing that, do you find that globally it's all the same? You know, one might be better than another. Would you give the same advice if you were living in Asia like you were decades ago?

Scott Klimo:
Well, perhaps not about being invested in Asia. You know, overseas investors can invest in the US nearly as easily as we can. You know, would I give that advice about the People's Republic of China today, probably not, because of the various variety of governance and demographic issues, not to mention the whole property market, which is more or less imploding right now on the residential side. So I probably wouldn't give that advice because it's difficult to kind of see through to when that all normalizes.

Monem Salam: 
So when the property bubble does bursting and let's supposing you kind of akin that to the dot-com bubble bursting as well. And we talked about this as a crisis and an opportunity to be able to hold on and invest for the long term. So what makes the bubble in China different than the bubble that was here in the internet?

Scott Klimo:
Well, the dot-com was a collection of stocks, many of which had modest earnings at best, that became hyper inflated in terms of their valuation as a result of a dot-com craze. Some might argue, kind of like we're seeing with AI right now, although I would argue that the applications of AI are significantly greater than the applications of internet delivery of pet food, but the big difference there is versus, you know, kind of seeing these high flying start up, how many eyeballs do you have dot-com companies back at the turn of the century, we have a property investment boom that's been going on for decades that has resulted in upwards of 5 million empty units across China, and there's been huge amounts of capital that's been thrown into nonproductive assets and what are turning into stranded assets. At the same time, you have huge swathes, well, let's just say big, huge is probably too large a word when a country has a population as large as China. But big swathes of people who have put down money, who have paid deposits, who have been paying monthly installments for apartments or condominiums that are never going to be completed because the developers don't have the money to do so. You know, there's a big difference between a couple of highly inflated dot-com stocks and the amount of exposure that you have to property in China. And so that's why, you know, the United States didn't really get involved in bailing out dot-com companies. But China is now making announcements about ways that they're going to try to bail out the property companies. So far, however, I think it's insufficient. So I'm not saying they're never going to get out. I'm just saying that when you combine that with the fact that you have, after a number of decades of two term presidents in China and, you know, handing over power peacefully after two terms, and now we have a three term president who seems to be probably will go for a fourth term, and maybe he's just going to be a president for life. That's never a good development. And then on top of that, you have a country whose working age population is already declining. You know, everybody thinks about China as being this vast, huge populous country, which it is, but it's also old. Its demographics are not good. And so I think all of those things combined just make it a lot more difficult to say, when do we get to the other side as far as investing in China is concerned.

Monem Salam: 
It is mostly then, from that perspective, a US centric view about buy and hold. In other parts of the world, you have to be much more discerning about what that really means.

Scott Klimo:
Yeah, I mean, look at Japan. I mean, people don't really realize it, but over the last ten years, Japan has been a pretty good market. It's been a very attractive market. But for the 20 years prior to that, it was horrible. I mean, from the 39,000 that it reached in 1989 until it bottomed sometime around the GFC. You just did not want to be there. It was just constant eroding of value. So that's an example where you don't have the same sort of situation. Europe, I think is probably a little bit between the two, not as dynamic as the United States, has demographic problems, but they're not as bad as Japan. And so they're kind of in between the two of them.

Monem Salam: 
The demographic problem that you're talking about, with the aging population, but one of the key things is that in the US we might have the same issue, but we have an immigration policy. When you look at Japan, they don't have one. And they are very, very restrictive when it comes to who they allow in and who gets citizenship and those type of things, which kind of compounds a problem, where in the US the border is a little bit more open than there are in other parts of the world.

Scott Klimo:
Yeah, Japan's actually becoming a little bit more liberalized in that regard. But small steps. But even the native born population in the United States were far, far better off than Japan is. You know, it's nice for the Japanese that they have about the longest life expectancies in the world, but it's also just kind of another anchor, if you will, on the economic performance.

Monem Salam: 
How would you define like, for example, when he talks about, you know, eirhter dot-com or even the housing bubble that we had in the 2000s, you know, one crisis when everybody thinks of a crisis as a negative, markets go down because there's some exogenous event that happens. But could you actually look at it from the other perspective as well, which is bubbles can be considered crises as well, because of the fact that eventually something's going to have to break, you know, when that bubble happens. So would you put a crisis or bubbles in the category of crises as well?

Scott Klimo:
It's a little bit difficult because it's always, you know, bubbles are always talked about in the moment, but they're never really confirmed until after they've popped. And so you don't know until it's past. But another way to look at your question about the benefits or the opportunities of crises is, you know, there's a concept of creative destruction. And I'd say one of the reasons that Japan kind of struggled along for as long as it did is they weren't really willing to accept that idea of creative destruction. And so I'm sure people are familiar with the term zombie banks, which originated in Japan, and companies who would just keep, you know, the banks were just kind of like dole out a little bit of money, a lifeline to keep these companies alive so they could continue kind of servicing their debts. So the banks didn't have to write them off, which would crush their capital ratios and put them in trouble. And so you just had this, you know, they weren't really willing to bite the bullet from a financial perspective, whereas the United States, I mean, we do that all the time. It's like, okay, you're bust. Silicon Valley bank, you have an asset liability mismatch. Sorry. You're gone. We're more than happy to do that to shareholders, generally speaking. And so that can be something that maybe you want to call it a crisis, but it actually does result in an overall improvement and strengthening of the economic landscape.

Monem Salam: 
Let's kind of define what zombie bank means just for our listeners. I guess what you're talking about is, for example, if a company is struggling and they're unable to pay the loan that I gave them, for example, as a bank, what I do is I give them more money so that they can go a little bit longer in the hopes that they would be able to pay back not only the original loan, but the extra loan that I gave them.

Scott Klimo:
Accurate? Yes, exactly, except they're not really thinking about whether or not their original loan is going to get paid back. They're thinking about, I don't have to write off this debt as bad, which has an effect on my own capital ratios.

Monem Salam: 
Okay. In opposition to that, let's suppose in the US, as you were talking about, people are more than willing to say, you know what, we're going to declare bankruptcy. Let's wipe the slate clean and start over again.

Scott Klimo:
Yeah. And the regulator is unlikely to look favorably upon the types of strategies that were often adopted. And just the competitiveness of the US economy is unlikely to allow a company that's in that kind of financial strait to continue to be able to meet payroll, to persist. You know, the business is just going to grind to a halt.

Monem Salam: 
Yeah, yeah. The second part of this was also going to be talking about markets and elections and the likes. And so we are coming up on an election. In fact, if you look at 2024, if I'm not mistaken, majority of the democracies around the world, there's some type of election going on, whether it be, you know, India is going through the largest democracy, UK's will go through it this year. The US is coming up on one. There's a lot of democracies are happening. Is there anything particular investors should be looking out for during an election cycle?

Scott Klimo:
Well, I think the primary thing to look out for is changes in economic policy or changes in trade policy or currency policy. I mean, in India it's pretty clear cut who's going to win. In the UK, it's pretty clear cut who's going to win. Labor is going to win because the Tories have been there too long, and in all honesty, they haven't done a very good job from an economic perspective. But you know, what sort of changes or opportunities is that going to bring to the service in the UK? I think it's pretty limited because Labor's ability to maneuver is pretty limited because of the financial position of the United Kingdom. Here in the United States, one could quite easily argue that our financial position is also somewhat limited, given the amount of debt that's been incurred since the pandemic, both as rescue packages during the pandemic and then recovery packages subsequent to it, such as the Inflation Reduction Act or the Infrastructure Act. However, that doesn't really seem to matter to politicians once they're in power. So when you're in opposition, no, it's a huge issue. When you're in power, it's like, oh, I got to help my constituents. And I think that there is a significant difference in approach between the Democrats and the Republicans on that. And if the Democrats happen to be able to hang on and continue in government, then we're probably going to see some additional spending and then perhaps more of what we might call an industrial policy in the United States, such as we're seeing with regard to semiconductors, which historically has been something the United States has avoided. If Republicans win, I mean, I think that becomes much less likely. And then we start looking at tax policy and the potential for tax cuts going forward. Today, the Republicans will complain about Democratic spending. I mean, if that happens, the Democrats will complain about Republican tax policies. Either one has the same effect on the deficit. You know, it makes it go up. So pick your poison. But there are also some other issues that I think are very relevant from an investment perspective and, and how you might want to allocate geographically. President Biden has proven himself to be pretty amenable to tariffs, but nothing like what former President Trump has said that he will do if he's back in office by slapping tariffs on everything. And so you need to be cognizant of that if you're investing internationally about the potential, you know, if a company has significant reliance on the United States market, that could be problematic. I'm curious about some of the currency. The United States dollar has been pretty strong, and generally speaking, there have been good reasons for that. But if you look at it from a purchasing power parity perspective, the Japanese yen is incredibly undervalued. And so is that something that perhaps they could look at and try to take action somewhat similar to, as we saw in the 1980s with the Plaza Accords. So there are certainly policy differences that can have an effect on one's investment outlook and what would be ideal investment positioning. But unfortunately, we're not going to know until the first Tuesday in November.

Monem Salam: 
Yeah, I remember back in 2016, so many of our investors, or shareholders, I should say. Trump had just won, they were like, they panicked, they sold. And basically we had a really, really strong rally in the markets, which they lost out on. You know, generally speaking, I guess the same thing holds whether it's Democrat or Republican, that the ideas about business innovation and business growth and markets are going to continue to grow.

Scott Klimo:
Yeah. I mean, you know, we can point to specific presidents in that wasn't exactly true for but that might have been just the luck of the draw. I mean, George Bush came into office during the dot-com, and he finished it with the global financial crisis. So it's not really his... He had one of the lines, it was not up and to the right it was more down and to the right.

Monem Salam: 
Yeah. That's true. I'm not asking you to take out your crystal ball, but let's take it out and let's see what we can see. Where do you see crises coming up in the future? What are some glaring things that might be something that we have to think about. Like from my perspective, you know, the US debt is something that could potentially lead to a crisis. It's so ballooning, it's just still getting so big. There has to be some type of an end to whatever's happening, especially now the, you know, the interest payments are larger than the actual debt itself. So, you know, those type of things that are happening. What do you see now if you had that crystal ball in front of you?

Scott Klimo:
I mean, debt is certainly something that warrants consideration. And not only is the number quite large, but also if we look at it as a percentage of GDP, it's as large as it's ever been. I think it was something over 120% last year. I'm not exactly sure how high it got in World War Two, but we're certainly at a peacetime all time high. You know, there are a variety of ways that you can get yourself out of a debt problem like that. And one is you can invade other countries and steal their resources. Some might argue that that was part of the reason for the Iraq activity 20 years ago, but I don't have a position on that. I mean, you can grow your way out of the problem. And I mentioned World War Two when post-World War Two when surprisingly, US debt was quite high, but then it embarked upon an extended period of solid GDP growth and low inflation. And so you grow your way out of it. One is that you can default. And we see that time and time again. Argentina, Greece, Russia during the long term capital management crisis, back in the late 90s. So we've seen that. Another one that we come across quite often is hyper inflate. So to whatever extent Turkey may have been engaging in its monetary policy, in its high inflation rate, whether that was something to do with addressing debt, I don't really know. But hyperinflation is another issue. And then you can do what I think is most likely in the United States, which is you inflate at a rate that delivers negative real interest rates over an extended period, and then you have to adopt certain policies to ensure that that can hold over a period of time. For example, you cannot have free FX convertibility and you probably have to engage in some sort of financial repression. And by financial repression, I mean there are a number of policies that the Federal Reserve could take to require banks to hold reserves and not get paid interest on them. Currently, they get paid interest. There's no law that says the Federal Reserve has to pay them interest. So it wouldn't be entirely surprising to me if we saw some sort of actions in that regard. I'm not talking about this year, next year, or, you know, even this decade. But unless we start to get a handle on the way that debt is progressing, especially given the fact that Social Security is estimated to be solvent through, 100% solvent, you know, being able to pay everything through 2036. The United States will start to be moving towards its own demographic challenges. And so these problems, I think in the current political environment, regardless of which party is in power, nobody has determined that there's sufficient concern that they need to address these. And so they're just kind of kicking the can down the road. And you can't do that indefinitely. So I think those sorts of financial repression things are possible if we talk about after, say, another decade or so.

Monem Salam: 
There is something that probably never would be done, that you didn't mention, because probably it's very difficult to do, is raise taxes.

Scott Klimo:
Well, that's exactly that would be a you're right. That would be a potential approach. I mean, we have seen Democratic administrations raise taxes. But that's a tough one.

Monem Salam: 
Yeah. Yeah. Okay. I mean, I think we're pretty much wrapping up here. But any final thoughts before we can kind of close off, some words of wisdom from our chief investment officer at Saturna.

Scott Klimo:
Yeah. I mean, I guess I would just hark back to the point we were making earlier about the longer term strategy is certainly consider you can change allocations across your portfolio in terms of tilting it to be more defensive or more aggressive, but really just try to stay engaged because you're unlikely to add value by being tactical. You know, unless the past 100 years of history that we've seen in the United States, despite the Great Depression, World War Two, Korea, Vietnam, Iraq, Global Financial Crisis, pandemic, that still you got 9% annualized over that period, unless you think that that's come to an end and the world is going to be different for the next hundred years, that would argue to be the best possible strategy.

Monem Salam: 
The most pleasant reactions that I see from people is when they basically have invested their money, let's say 5 or 10 years ago, you know, they forgot about the money for whatever reason, like not literally forget, but they just haven't checked their account. And then they look at it after, let's say, 5 or 10 years, like, wow, okay, that's much bigger than I thought it was. And it's a good feeling. Right? And the reason why they were able to do it was most likely because they didn't watch it either daily or monthly or whatever it was. It just kind of set it and forget it.

Scott Klimo:
And something else, I'm sorry, I'm just going to tack on because it's something that just occurred to me is that, you know, people often think about all I'm risk averse, I'm getting out of the market. I just want to be in cash. I want to have my cash here. It's like, well look at the inflation environment that we've had over the past couple of years. Look at what's happened in the United States since the Federal Reserve was established in 1913, and a dollar in 1913 is worth about a penny today. I think Warren Buffett actually said the riskiest possible asset you can hold is cash, because its value is constantly being eroded by inflation. Even today, it's over 3%. And that adds up. Just like stock market returns that over time, 3% adds up over time. And so cash is not the safe asset that people often think it is.

Monem Salam: 
Yeah, that's really good advice. Well, thank you very much for your time. I really appreciate you joining us on Halal Money Matters. And hopefully we'll have you again.

Scott Klimo:
Yeah, it was my pleasure. Good to be here. Thank you.

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Monem Salam: 
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Disclosures read by narrator:
The thoughts and opinions expressed on Halal Money Matters do not necessarily reflect the views of Saturna Capital, Amana Mutual Funds, or their affiliates. This podcast is prepared based on information Saturna Capital deems reliable; however, Saturna Capital does not warrant the accuracy or completeness of the information. We do not provide tax, accounting, or legal advice to our clients, and all investors are advised to consult with their tax, accounting, or legal advisers regarding any potential investment. Investors should not assume that investments in the securities and/or sectors described were or will be profitable. Investors should consult with a financial adviser prior to making an investment decision. The views and information discussed in this commentary are at a specific point in time, are subject to change, and may not reflect the views of the firm as a whole. All material presented in this publication, unless specifically indicated otherwise, is under copyright to Saturna. No part of this publication may be altered in any way, copied, or distributed without the prior express written permission of Saturna Capital.