October 2024
Here are some key takeaways from their discussion:
- Grant Williams, our keynote speaker and author of Things That Make You Go Hmmm…, highlighted his thoughts on the election, the polarization in the U.S., concerns over rising debt levels, interest rate policies, and gold as a source of value against currency debasement.
- Jeff and Chris also touch on Sasan Faiz’s panel with Gus Araya from Cordillera, “New Trends in Investing.” They talked about niche investments like agricultural lending, whiskey aging, and boat marina investments, outside of traditional stocks and bonds.
- "How Different Generations Think About Money" with Beau Wirick, Stacey McKinnon and Priscilla Brehm explored how different generations view money and form financial habits, with millennials facing affordability issues and baby boomers finding it hard to relate to digital currency trends.
- Another session led by Mikey Taylor, Brian Farwell and Chris, explored California’s housing shortage. The state only builds around 100,000 to 150,000 new housing units a year, far below what is needed to meet the demand.
- Jeff and Chris also highlight the discussion "Liquidity: Blessing or Curse?" with Meghan and Chris, where they talked about illiquidity in portfolios, which can help investors avoid emotional decisions and foster a long-term ownership mindset.
- One of the most popular sessions was “Estate and Tax Law Changes Coming Down the Pipeline” led by Brian Standing, Scott Gilmore and Stacey McKinnon. They discussed how the Tax Cuts and Jobs Act is set to expire in 2025, reducing the estate tax exemption limit. The speakers highlighted the importance of considering tax-efficient strategies and staying aware of estate taxes as laws begin to sunset and inflation grows.
We plan to release recordings of the sessions on our YouTube channel in the coming months. Please keep an eye out for these videos if you were not able to attend or would like to re-watch the conversations.
Watch previous episodes here:
Ep. 107 What's Behind the Fed's Interest Rate Cut?
Ep. 106 Medicare 2025: Key Changes & Insights
Hello, everyone, and thank you for joining us for another episode of THE FINANCIAL COMMUTE. I'm your host, Chris Galeski, joined by CEO Jeff Sarti. Jeff, thank you for joining us.
Good to be here.
We had an incredible event last week, our annual investor symposium. Really fun. And for a lot of people that maybe live out of town or weren't able to attend. Maybe something came up.... we did record the sessions. We are going to make them available to our clients and others within the next month or so as we get them added.
But really an incredible event. We wanted to spend a few minutes today talking about some of the key highlights. So let's start with our keynote speaker. You and Grant Williams, talked about a lot of different things, but let's start about with some key takeaways from a great way.
Yeah. First of all, as a starting point, it was an incredible event. Truth is, I'm still sort of buzzing over the weekend. Couldn't stop thinking about it. Was just just great. Great content, great speakers. Audience loved it. It was really wonderful.
Grant Williams yeah, we started with him. It was Grant and I and in a discussion- it was sort of a fireside chat to kick off the day, and we decided to lean in and talk about the election, which is always a tricky one, but I think was a really engaging conversation where we talked about a lot of things.
One of the main themes was just the elephant in the room, the polarization we're facing as a country. And a lot of it around just acknowledging the echo chamber we're all in because we all look at different news sources. But the problem is, a lot of these channels, whether it's MSNBC on the left or Fox News on the right, they're really opinion channels more than news channels.
And so it was really an interesting just a conversation around the lack of objectivity out there in the media. And, again, the toxicity and polarized environment that we currently face.
It was also interesting how he talked a lot about, you know, how social media, the algorithms are designed in a way to send you content that's going to keep you on their platform longer? And so they're they tend to be feeding you with information that you want to hear or know. And it's very difficult to kind of reach out from that and get a different view or a better understanding because of the algorithms themselves.
It was interesting how they talked about that, how you guys talked about that. Now, after the keynote, Grant gave a big presentation talking about one of the biggest issues that we face, not only here in the US, but globally, about the amount of debt that countries have and the interest costs associated with that. What are some other things that Grant mentioned that you think that our listeners should know?
This is a theme that he and I share. And this is something that more than, well, we've talked about for years, mainly around interest rate policy and debt levels just going massively higher with each passing year. And one of the big concerns even around this election is that, yes, the two parties on the surface are very different with regards to a lot of specific policies.
That being said, a very strong area, powerful area of agreement is that they both want to spend, and all projections, whether again, Harris presidency or a Trump presidency, are that deficits will continue to expand. And again, this is something we've talked about for a number of years. This that's concerning for us. Debasement of the dollar. We think a lot of these debt levels are unsustainable.
So as a result, we have to be a little bit more resilient in terms of how we think about portfolios, really diversify even further than we would have a decade or so ago. He spent a lot of time talking about gold as an alternative currency, and a really a store of value against the the basement of a dollar.
I thought he did a great job in the storytelling around that. So again, it was it was nice because obviously we we share a lot of those views.
And that some of the last highlights that I found really interesting is that, you know, because of the issues that we face today and, you know, inflation and asset price increase, you know, he said, more than anything right now, people need to look at investing from a protection viewpoint. And, and really challenging themselves to make changes, to focus on protection as opposed to, you know, you could have owned anything in the last 15 years, and likely it did did fairly well.
But by changing that and then understanding how your mindset, whether you're a speculator or an investor, plays into it, a speculator typically has a shorter term mindset, reacting to things. An investor has a longer term mindset. And we talk a lot, a lot about that as well. It was it was amazing to have them. There was a lot of buzz around new trends in investing and our private lending panel.
Yeah. Talk to us a little bit about those two key takeaways. Yeah.
The new trends in in investing. That was with, Suzanne Phase, our managing director of research, and the firm Cordillera, that does some really interesting strategies outside of the stocks and bonds, niche investments and things like agricultural lending, boat marine investing, whiskey, aging, things of that nature. And then Megan Pinchuk had a couple of great panels, one with our real estate partners.
But then what you alluded to also another session with three of our private lending partners, one in the food space, another one an asset base lender, and then a third one in the healthcare space. And the theme with all of these sessions, again, it goes back to your comments around Grant Williams and building resilient portfolios. It's looking for those needles in a haystack, right?
Looking for those opportunities that, again, are going to behave differently than stocks and bonds. If we hit uncertainty or a rough patch in the economy, knock on wood, these really will march to the beat of their own drummer, generate cash flow, consistent cash flow along the way too. So it was great for to have these managers on stage and for our clients to see them face to face, because it's one thing for us to talk about these managers and how passionate we are, but to see these, these wonderful managers face to face, I mean, it's just I think it heightens the level of conviction because they're really impressive groups, really impressive.
And there's people making decisions behind, you know, people's money. And so it's always nice to see the person behind them build a relationship and understand that we are really a partnership with our private lenders and our different investment managers. I mean, they're just an extension of who we are.
Absolutely. And we really, really is a partnership. So beyond that, I know there was a lot of different like financial planning related topics. Well, what were some of the ones that you found really interesting?
You know, one with Priscilla and Bella was Stacy was monitoring. It was how different generations think about money and obviously different generations think about money because of, you know, potentially large events that have occurred during their lifetimes, whether it was the Great Depression, wars, inflation in the 70s, the dotcom bubble, the financial crisis that we had 15 years ago, and it was pretty cool to see Beau kind of kind of coming at it from a millennial side of things where, you know, money is just a number on a screen and it doesn't feel real.
I mean, you can get physical cash, but no one really uses it. And then Priscilla, even bringing out little pieces of gold.
She was the she was playing the baby boomer, the.
Baby boomer generation bringing out different pieces of gold. And, you know, she brought out a one ounce gold bar. And I think she said that she bought it, you know, around $200 an ounce. Well today that gold bar is around $2,700 an ounce. And she even has a hard time quantifying that. This gold bar that she's had with her for a long time is worth that amount of money today.
But really, money is a tool that we can use to kind of get the most enjoyment and experiences out of life. And it's and it's, it is a number on, you know, a screen, you know, but but typically, you know, people don't transact it in it the way that they used to. I mean, I rarely carry around cash and use it unless I want to tip somebody.
But the other day I had to sell some charger tickets and somebody Venmo me. Yeah, it was an electronic transaction. I, I found their comments and, and that discussion really interesting.
Real real quick on that. I had a couple clients. Baby. Junior baby. Excuse me, baby boomer clients come back to me after that session and they said there were some moments for them where they said, I can really now better relate to my daughter, my millennial who my millennial daughter who I always think is spending too much and and not saving.
I think they were able to relate to those type of personalities a little bit better. Beau hit on something really interesting related to millennials. The angst that millennials feel, he said. Really? And this is true. Millennials are the first generation that have less wealth than their baby boomer parents. On an inflation adjusted basis. That that causes some ex unaffordability is an issue, right?
Housing costs, etc.. So there's a lot of reasons why millennials like to go out and spend money on concert tickets, because at a certain point they have angst around, again, affordability coming out of the 2008 crisis, the job market, all of those things. So I think it was a real interesting conversation between the two, where, again, the baby boomer parents at least can be a little bit more empathetic to the situation so that millennial kids are facing.
I love the fact that we can bridge the gap between a parent and child and better understanding Maddie. I mean, you and I talked about inflation one time, and if inflation is really running, meaning every day that goes by your dollars can purchase less and less goods and services, you're going to be quicker to spend it. Yeah. And I think that that's what some younger generations are feeling.
On the note of inflation and sort of the California housing market, I was on a panel with Mikey Taylor and Brian Farwell and really the the biggest key takeaway from that panel as to why California real estate and housing has defied the laws of gravity. Meaning typically when interest rates go up, home prices will go down because of the affordability aspect.
But there is a huge lack of supply and the number of available units here in California, Mikki Taylor said. Something to the tune of California has a 2 to 3 million unit shortage of housing today. Yeah. And we typically on average create 100,000 to 150,000 new units per year.
This is not enough.
That's not enough. I mean, we are 15 to 20 years behind the curve from having the available number of units. And so that alone is likely to keep prices very resilient or potentially go up. You know, and the biggest problems behind that is obviously cost. It's expensive to buy land and develop these days, but also the regulation that's associated with it.
It might take up to five years to get a 500 unit multifamily, apartment building, you know, from, from start to completion. And so we're likely to be in a lack of supply for a long time. Unless something unforeseen happens.
That goes back to the even the conversation we had on the boomer versus millennials, that what the millennials continue to face. It's affordability. It's a real issue. Yeah. And there's no really good solve now that we see. No there is one I missed one on the state law changes coming. Estate and tax law changes. Did you see that one?
I did not, but I talked with, Brian standing on our team and Scott Gilmore, the CPA that, sort of oversaw that panel around the estate and tax law changes. And obviously we're in an election year. Yeah. So taxes are coming up in conversation. But the main reason why is because the Tax Cuts and Jobs Act now, that was put into place in 2017, that is going to sunset in December of 2025.
So starting on January 1st, 2026, from a tax code perspective, we are going to be living like we did in in making decisions based off those rules prior to the Tax Cuts and Jobs Act. And the biggest takeaway there is that the estate tax limit, which is currently estimated by the end of 2025 to be around 14 million per person or 28 million per couple.
Any assets over that limit are subject to a state taxes that is looking to be cut in half starting in January of 2026. And so if your estate is at or near that 14 to $28 million level, there are some very creative strategies that you can look to deploy in order to, protect your money from estate taxes in the future, but also be able to have access to it for, for, for your life today.
And if people are looking to have a conversation with that, please reach out to your Morton Wealth advisor. We're going to engage in the conversation with Brian Standing and see if some of these strategies make sense for you.
Yeah, a lot of really important potential planning strategies in the coming year to 15 months, without a doubt. Yeah.
And then, you know, just to kind of ended up on on what happened with the symposium. We talked a little bit about illiquidity or liquidity in one of our conversations with you, me and Megan. Is liquidity a blessing or a curse? Why don't you summarize that one?
Yeah. Typically. Well, as a firm as you know, we really embrace illiquidity. I mean, so many of our investment strategies, as we alluded to, the private lending, the real estate we feel helped to build resilient portfolios with cash flow. But what we don't often talk about is the flip side of the coin of liquidity. Because all things being equal, of course, liquidity is a wonderful thing.
If you had two investments and they were equal in all ways except that let's say one was less liquid than the other, of course, you would choose the more liquid investment. That being said, potentially the benefits of liquidity are not all they're cracked up to be. So what I mean by that is if you think about, let's say, a pure stock portfolio, wonderful, again, that you can buy or sell it at a moment's notice, but the ability to literally at a click of a button, buy or sell your net worth, especially when your emotions are high.
You know, greed and fear that really drive investment decisions. In many ways, we think that really reinforces bad investor behavior. The flip side of at least having a component of your portfolio that's more illiquid in nature, where you don't see the price swings on a daily basis, you're not distracted by a really an arbitrary price on your computer.
It really reinforces more of an ownership mindset. You mentioned Williams, keynote investor, speculator, more of an investor mindset as opposed to a speculative mindset. And so again, one of the reasons, beyond just the investments themselves, that we're so and passionate about embracing illiquidity in a portfolio, it's actually around mindset too, because it reinforces, again, more of a long term discipline mindset as opposed to chasing a stock price up and down.
Well, and look as a as a firm and an organization, we we definitely lean into illiquid investments. One of the main reasons why is kind of from a financial planning standpoint is we believe a lot. And something called the bucket approach. Yeah, right. You've got one bucket that's your emergency fund and your short term need. So if you've got a large expense or an emergency fund, lightning bolt hits your house and you need access to money, that's where that money goes next.
We've got to solve for the income. You need to be able to live your life because people make decisions on spending based around their income, right. So that next bucket is we need to fill that up with enough assets and enough the right investments to generate the consistent income that someone needs. Now. Then what's left over is money that can be set up for long term growth.
And so if people kind of take embrace that bucket approach, they they would be surprised to see how much more illiquid they can actually be versus, you know, just having stocks and bonds.
I like how you broke it down into three buckets. You know, the readily accessible cash sort of that intermediate bucket that ideally is generating income. And then whatever is left over is the growth component of your portfolio. Typically that's that third piece of the stool, if you will, is the stock piece. Most people think of stocks as liquid.
Oh, that's something I can access to fund my lifestyle. No stock should be viewed as more of a long term, illiquid component of your portfolio. That's really set up for growth.
Jeff, thank you so much for coming in, kind of giving our guests a highlight of what they saw last week or what they potentially missed out and we'll see what the coming content in the future.
Disclosure: The information presented herein is for educational purposes only and isnot intended to constitute financial advice. The views and opinions expressedby the speakers are as of the date of the recording and are subject to change.These views are not intended as a recommendation and should not be relied on asfinancial, tax or legal advice. It should not be assumed that Morton will makerecommendations in the future that are consistent with the views expressedherein. The private investment opportunities discussed are available toeligible clients and can only be made after the client’s careful review andcompletion of the applicable Offering Documents. Each investment opportunity isunique, and it is not known whether the same or similar type of opportunitywill be available in the future. Morton makes no representations as to theactual composition or performance of any asset class. Past performance is noguarantee of future results. You are encouraged to seek tax and/or financialadvice from your financial advisor and/or tax professional to thoroughly reviewall information before implementing any transactions and/or strategiesconcerning your finances
