September 2024
Here are some key takeaways from their conversation:
- Grant Williams, author of Things That Make You Go Hmmm… and co-founder of Real Vision, will be the keynote speaker at our upcoming Investor Symposium. If you haven’t watched our special 100th episode with Grant yet, check it out here.
- Grant Williams and Jeff both see gold as a reliable store of value in uncertain times.
- In a media environment that often encourages short-term speculation, it is more important than ever to maintain a long-term investment mindset.
- Our upcoming Investor Symposium will be held on Thursday, October 17 at the Westlake Village Inn. Topics will include the political environment, how to replace income in retirement, California housing market predictions, upcoming estate and tax law changes set to take effect next year, investment strategies, and more.
- Learn more and RSVP for the Investor Symposium here.
Watch previous episodes here:
Ep. 100 Grant Williams on Investing vs. Speculating During Uncertain Times
Ep. 99 Real Estate FAQ: Investing in a Challenging Market
Hello, everyone, and thank you for joining us for another episode of THE FINANCIAL COMMUTE. I'm your host, Chris Galeski, joined by CEO of Morton Wealth, Jeff. Jeff, thank you for joining us.
Last week we had our first real guest speaker I would say in terms of like, real superpower. Grant Williams joined us for our 100th episode. Yeah. Now, you've been following Grant for a long time. It's been instrumental in sort of how you view the world, decisions that you helped make, your philosophy around investing. Talk to us a little bit about how you first got introduced to Grant and why he's been so instrumental in your growth in knowledge around what we do.
As a starting point? So exciting that you got to interview Grant. And I think we'll talk about the investor symposium near the end of this podcast. But he's going to be, our keynote speaker at the event, too. So just super excited about all of that. And your conversation, by the way, was awesome. You hit on so many really fascinating topics and, you know, he is a great conversationalist.
Easy to talk to and extremely knowledgeable, but like thought-provoking more than anything, which, you know, in the world that we live in today, where it's just a snippet of headlines and now all of a sudden, you know everything. He's like, whoa, whoa, whoa, hang on a second. Have you thought about it from the other angle and how that might benefit or hurt the decisions that you make, whether it's investing, politics, or just different things that are going on in the world- very thoughtful guy.
Yeah. So to your original question, I came across Grant, I think it was in a 2008, 2009 time frame. I think it was just on the blog. I was trying to remember exactly how I was introduced to him, but it was through a blog where it was one of his first releases of his newsletter, his new newsletter is called Things and Make You Go and just a fascinating newsletter.
We talked on a lot of different topics, and then he built a podcast along the way too. He was a co-founder of Real Vision. For those that are familiar with that, financial channel. And just over the years he has just been a tremendous influence for me, for others within the firm.
I mean, having him as a keynote speaker at our symposium, I think is going to help a lot because, you know, he talked about a couple of things in the podcast, which we'll touch on. But one of them is this podcast that he does with a friend. It's called The End Game. Yep. And he jokes by saying, you know, there really is no end game.
This is going to continue to live on and evolve and change. But how it all plays out with the inflation worries, the huge amount of debts across the globe between the governments, just the political transition that we're seeing at the end of the day, a lot of the decisions and the things that we're living through started back in the 90s with Japan.
And he phrases it and you phrase it as there is no free lunch. So this whole theory around money printing, keeping interest rates low to try to stimulate growth, bailing out, you know, companies beyond belief because you're too big to fail. Eventually you're going to pay the price. We just don't know when.
There's a cost to these policies, right? It feels like, for much of the last decade or two, there hasn't been a cost to all of the money printing ever increasing debt level, 0% interest rates, not just here in the US, but around the globe. And it feels like there's been a free lunch to some degree, because the economy keeps ticking along.
And outside of 2022, we really have had markets that have moved upwards as opposed to volatility along the way. But we've been raising these concerns for really several years that ultimately there would be a cost to these policies. They can manifest themselves in a lot of ways, but one of our biggest areas of concern was ultimately would lead to inflation.
And that is exactly what's happened, really starting in the late 2021, 2022 timeframe. And it's still playing out. We're still figuring out what that end game, and I'm putting an end game in quotes, ultimately looks like. But we're in the midst of that change. And look, we got to be prepared for what the end result of those things will be.
And when you talk about inflation, there's kind of two sides that Grant was pointing out that like, it's not only the inflation that we feel when we go to the grocery store, we stay at a hotel or go to a restaurant, right? Our ability for our dollars to go as far as they used to in terms of purchasing goods and services, just isn't there now.
But because of the decades, across the globe, mainly starting in Japan of printing money and forcing interest rates down to zero, we lived in that world from 2008 - 2009 to call it 2022, where interest rates are at zero. This forced an inflation of asset prices for us. So you not only have real estate, but stocks that have inflated a ton in value because there's almost nowhere for this money to go.
Yeah. And the amount of debt that corporations and governments have taken on that caused an inflated price of assets. And so when you look at it from that perspective, inflation is two things. It's, you know, our purchasing power but also the high rise in valuations. And right now there is very little that's justifying the prices at which things are out, whether it's technology stocks or certain real estate assets.
And he's very concerned about people keeping their foot on the gas and not becoming defensive.
Yeah. You hit on a key element here of in essence, asset price inflation, which is really what we've seen over the last decade or so. And that's very dangerous. The reason so much of the reason of why assets in general, from stocks to real estate to home prices have gone up in value, is all of this money printing and the debt in the system and all that really is, is financial engineering.
It's not actually increasing the productivity of the nation. Right. Or GDP growth is really stagnating and call it the one and a half to 2% range. That would be real growth, right, if these policies resulted in 3 or 4% GDP growth. But that was not the case. Again, we're sort of limping along in terms of slow growth, yet asset prices have gone up.
That makes us cautious to Grant's point of view, this is not a time to put our foot on the gas. These elevated valuations. I think in our last podcast we talked about top tech stocks.
We did. Yeah a price to earnings ratio on stocks being at or near all time highs. Right. But you mentioned sort of slow economic growth in terms of, you know, all of the policies that were put into place. You know, then all of a sudden there's a supply shortage and there's a lot of demand for supply.
And then you've got real inflation there as well.
Yeah, there's a lot of moving parts inflation that it's going to take a while for them. Listen inflation has come down. It's still elevated. Even though inflation has comes down prices are continuing to still increase. They're just increasing at a slower rate. So this is just going to take time still to work through the system.
The one asset class that he did mention that he likes in this time of sort of uncertainty, higher inflation, lack of affordability, the fact that there might be a slowdown in the consumer, which would then, you know, see itself through corporation and their earnings is he really likes gold as a protection. I think it goes back to that story that you told to the team.
100 years ago, an ounce of gold was like $200 an ounce. It would buy a really nice Italian suit. Right? Today it's at $2,500 an ounce. It's a really nice Italian suit.
Definition of a store of value. Right. And listen, I've been again. I've been following Grant Williams for 15 years. And it was around that time, you know, in that 2009 timeframe where I really started thinking through stores of value in the book based on currency. And he was a big reason why, I shifted a lot of my thinking around gold as a hard asset, a store of value in alternative currency to the dollar, which can be printed.
So yeah, yeah, he's been he's been a big influence on that.
He wrote an article inside, you know, Things That Make You Go Hmmm... that talked about the difference between being a speculator and an investor here. We strongly believe that you have to have the right strategy and the right mindset in order to become a better investor and make better decisions for yourselves and your family members in your legacy.
Talk a little bit about, you know, the challenges between a speculator and an investor and recognizing who you really are.
Yeah. It's really so important to really, truly understand, to your point, who you are when you look in the mirror. And most, of course, think of themselves as investors. But often in reality, we're really speculators that are a quarter chasing a price over a short period of time.
The fear of missing out causes us to want to speculate.
And one of the real challenges and really true frustrations around this topic is that the cards are really stacked against us. And what I mean by that, I'm really talking about the media. When you look at the media, everything we watch related, the markets, everything is so short term in nature. Right? You turn on CNBC, it's what's the best performing stock in the day or, you know, the Wall Street Journal, the best performing sector.
What the next trend is going to be over the next month or quarter. It's again, all such short term thinking, which reinforces speculative behavior at the expense of really true, long term sound patient investing. And so it's a theme that we're always trying to battle against and educate our clients around. But it is an uphill battle because, again, the cards are set against us with regards to the media at large.
I mean, even just last week, there was a headline that said Nvidia has become the most important stock in the world. Yeah. And the reason why they're saying that is because if, you know, they disappoint in earnings, their valuation of a company like Nvidia is going to go down and it's going to bring the market down with them.
Just like the magnificent 7 or 8 has helped sort of raise stock prices earlier this year in 2024.
Yeah, I mean, The Magnificent Seven in particular is like a magnet to your point, where it seems like everything is correlated to that magnificent seven or magnet where the market will go up with those seven stocks- if they hit a bumpy patch... 2022 was a great example where those high flying tech stocks took a hit. And what happened to the rest of the market?
Everything went down with it. So yeah, the strong correlation between stocks right now is also concerning.
Now we're not going to speculate or bring out a crystal ball. I wish we had one. It would be amazing. But I'm really excited for our largest and most popular event amongst our clients and our network, which is our symposium coming up next month on October 17th. Really excited for this, not only because are we going to be able to highlight some of the great managers that we have, the different planning topics, but Grant Williams is going to be a keynote speaker.
What are you and Grant looking to talk a little bit more about?
You know, we're going to hit on a number of topics. So we're going to be feeding off some of the topics you, the two of you discussed in the podcast. We're going to talk about the political environment. It'll just be a few weeks prior to the election. And he's so thoughtful around polarization that we're all seeing and right versus left, etc. I think we're going to have some discussion around politics.
We're going to talk about geopolitics. That's obviously a very concerning issue currently. And then we're going to continue to feed on, topics around mindset, like you said, being a speculator versus an investor, long term thinking vs. short term thinking, and really dive into a lot of other topics around investing stocks for bonds, real estate, private lending, etc..
And we're going to have a few different stages. We're going to have an investment stage, we're going to have a planning stage, and then we're going to have a main stage area where we talk about a number of different things. One of the ones that I wanted to highlight is that you and Meghan are going to talk around illiquidity and challenging the status quo, as it's human nature to want to have liquidity or access to our money. But we sometimes can be better off by going into investments that we can't just click sell with a click of a button, and the nature of illiquidity and how it helps us have a longer term mindset.
This goes back to what we were just talking about being a speculator versus an investor. One of the pitfalls or problems about stocks, and then being literally liquid at a click of a button is it reinforces that short term behavior, right? The ability to buy and sell a stock at the click of a button does just that. It reinforces that type of behavior that, oh, what's the price?
And if I could sell it at this price at again, the ease of a click of a button on my smartphone, not even on my computer. It reinforces short term thinking versus one of the benefits of many of our illiquid investments is you're not even given the option to even look at the price of something, right? When we make a loan, let's say on a piece of real estate, we don't... you're not looking at a price on a screen, right? So that type of illiquidity, counterintuitively, actually reinforces thoughtful sound long term investing principles.
Even though the internet and everything that we're doing is sort of pulling us back into the short term. Even think about your home, the fact that Zillow or Redfin can properly value your home without even knowing what you've done to it inside, just based off of hypothetical comps in the area. I mean, what is something really worth the price that somebody is willing to pay for it?
And that number on the website might be right or wrong. What are some other topics that you're excited to talk about? And to share with the audience as it relates to this symposium coming up in October.
Another one, we're going to have a lot of themes around replacing income in retirement. I think really in essence, it'll be two separate, sessions tied to this theme. One will be led by Joe Seetoo, and I think Kevin Rex- three of our advisors, at Morton Wealth here again talking about how investors who are approaching clients, excuse me, who are approaching retirement, should think about constructing a portfolio of income, income-producing assets to help replace maybe their lost income from their occupation or business.
And then a second related panel will be Meghan Pinchuk our CIO talking to some of our various private lending managers who do just that. Right. They help our clients generate income through these investments. Some are asset-based lenders, one of our lenders in the food space, and another lender that, lends to companies in the health care sector.
So really excited about those topics.
Yeah, I do know, after 16 years of helping give financial advice to people, they tend to make decisions on how they spend money based off the income they have coming in. Yeah. So the second that income dries up, they stop buying cars, going on vacation, paying for kids and grandkids, a college education. I mean, being able to replace income brings that comfort in that peace of mind and towards, in terms of having a successful retirement.
So I'm so glad that we're going to spend some time talking about that. There's a couple other interesting topics that we're going to touch on. One of them is the estate and tax law changes that are here to sunset, call it, you know, December of 2025. These are real changes that people need to be prepared to talk about and to potentially make some changes.
Yeah, I mean, an incredibly important issue. And we won't get into the complexities. I actually think you had a podcast recently with Brian standing on this a month or two ago, but something depending on what happens with that sunset provision. I mean, it's something we're going to really have to focus on. The other one is cybersecurity.
You know, cybersecurity is so scary. I mean, you hear these headlines out there that right now somebody can basically duplicate your voice. Yeah. And so that means that somebody could copy my voice. I'm not sure that you'd want to do that. And you could call a friend or family member or an institution that uses voice verification, pretend you're me and transact business on behalf.
That's just really scary. And I think this world is only going to get more complex and more dangerous. So having a resource come in, I think we're going to have combined with digital privacy and protection, come in, to talk to our clients about ways that they can protect themselves online and with their devices. So that way they're not subject or fall prey to some of these scams that are out there.
Yeah. Yeah. It's a scary world. It's a very sophisticated world. And so having an expert like Carmine on that topic will be hugely informational.
Jeff, thank you so much for joining us today. Again. Our symposium is on October 17th. It's going to be jam packed with a lot of great topics that will help you be more informed to make better decisions, but also find ways to make decisions around estate planning, cybersecurity, investing, replacing income, and other financial planning topics. So thank you so much, Jeff.
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