May 2025
Tune in if you’re interested in the following:
• Preserving and growing your wealth
• How we evaluate new opportunities
• Diversifying your portfolio beyond stocks and bonds
• Market trends and the broader financial landscape
• How we conduct due diligence and assess risk
Watch previous episodes here:
Ep. 137 Long-Term Care Insurance: Keep, Cancel or Replace?
Ep. 136 RMDs Explained: How, When & Why They Matter
Hello, everyone, and thank you for joining us for another episode of THE FINANCIAL COMMUTE. Our chief investment officer, Meghan Pinchuk, is joining me today because all people want to talk about right now are investments.
The best topic. So they have good taste.
Yeah. So we're here to talk about one of your favorite things and something that you sort of oversee here at the organization, which is new investment ideas. So I'm just curious how many investments do you look at in a given month, year, day, week? What does that look like?
So, right now in particular we're seeing a lot of new investments. And so we get them in a few different ways. One is I'm just constantly inundated. So emails, calls, different things of people sending us you know, here's a deck. Look at this new exciting thing. This is the best. You know, this is the best.
No, this is the best. They're all fighting over it. So that's that's fairly constant. So you peruse dozens and dozens of, you know, quick text a quick assessment of like, is this interesting? Do I want to spend more time on these follow up calls? The team probably takes on average maybe 4 or 5 calls a week with something new to this.
A quick intro is interesting. And then, you know, the deep dives when you're like, okay, this is good. Let's get the rest of the team involved. You know, it's obviously... it keeps whittling down.
So you have probably 100 to 200 new investment ideas. You sort of have intro calls in a given year.
And then you narrow it down. And how many do you do further due diligence on or approve in a given year?
Or in the past? I would have said, especially in the alternative space, just a couple of years, because we're focused now on a vehicle where we're trying to get more capital deployed and in private credit, that number has gone up significantly. So we've actually done diligence and approved quite a few things in the past couple of months. But normally it's just a couple of years.
And now, just the nature of having this vehicle that makes it easier to access as well as, I think a larger opportunity set with what's going on in the world is has increased that number considerably.
I can only imagine. I mean, I know that just someone who reads the headlines, partly because I enjoy this part of the job, but also, you know, clients come to us as well. The term alternative has become a very hot word this last year, although we've been dealing with alternatives for several decades. And so because a lot of firms know that we do invest in alternatives, they tend to come to you directly saying, oh, I know Morton might be interested.
We definitely get a lot of proactive reach out because people know we're very active in the space. But I agree, I think the word alternative has been somewhat cannibalized, and it really means everything other than stocks and bonds. But it's become a lot more things that are more pseudo stocks, pseudo bonds than that. That counts because it's not, you know, it's not the exact thing.
It's adjacent. So therefore it counts. And so there's a lot of junk out there and you got to weed through it. But some of our best ideas actually come from other groups like us. There aren't that many. There aren't that many, either independent advisors or even big pensions or things that are very focused on niche alternatives, but the ones that are great for idea sharing.
So when it comes from one of those groups or even very specific marketers who I know know what I like, that's when you take those calls.
I know what it's like sort of being outside these walls, because I worked in other parts of the industry, whether it be Morgan Stanley, fidelity and, you know, not trying to pick on them, but they typically just invest in stocks, bonds, mutual funds have very little to to no alternatives. Every once in a while, they might have a little bit of exposure to gold.
And they would call that an alternate.
Usually. But in times of volatility like we've seen this year, sometimes those advisors, those firms say, oh, if you want less volatility, you want more safety, you should consider an annuity. And that to me it just it puts a bad feeling in my stomach.
Look, I think if that's your only... if your options are stocks and bonds and you're worried about a world where even interest rates are going up. So your bonds aren't your safe money, I get it. Annuities in some ways could be an attractive option. I think we're we are fortunate in that we have a lot of options where the focus of it is targeting stable income.
So theoretically what that annuities supposed to do. And so it feels a lot better from the standpoint that, you know, we're in it. We can get out of it if need be. So it's not something where there's penalties and big costs necessarily to sell. And then it's also again you're going to have a consistent income stream and you're going to hopefully keep your principal at the end of it.
So it's not something where buy annuities. If you're taking an income stream, you're giving up access to to that money. So I think it can be a lot more flexible looking at it from that standpoint. But I get it again, if you don't have other options, but you I mean, you have clients who ask you that. What do you think about annuities?
I mean, look, I think that, you know, dealing with an insurance company, you're transferring risk. You're either transferring the risk of loss of income or you're transferring the risk of loss of value. And, you know, hopefully people are doing their research to understand the true risks that they're taking on by going into a lifetime contract that relates to guaranteed income stream or protection of value, and hopefully exploring other alternative options or things that they can leverage to accomplish kind of both of those and not give up the flexibility to change your mind down the road.
Yeah, I think again, there's times where if you can get a lower cost option, sometimes there's tax benefits. What one of my pet peeves is I don't like to see annuities in IRA accounts because in theory there's a tax benefit to an annuity. And so now you put in an IRA that already has a tax benefit and it's negating that piece of it.
So again, there's times where it can be useful for planning. I think we have tools that we like better in this environment to get stable income. And so for now at least that's been more of the focus. But we've looked at and even done pieces of annuities in the past. So there's time and place for it.
I've seen some where actually the insurance companies are like giving it away and the terms are really advantageous and the costs are really, you know, and then it's moments and it goes away because they realize they mispriced it. And basically we're giving the house away.
So kind of like long term care contracts.
Exactly. There's windows where it's like wow, this makes this cheap. This makes so much sense. And then it goes away. And that's okay.
Of all the things that you look at in a given, you know, month, week or throughout the year, are there any investments that you think are sort of overhyped?
So this might be kind of controversial, but I'm going to say that one of the reasons for it is obviously it's huge. It's a big it's a big deal. But I think it's more about the I, the spend that may or may not happen from I you've already seen it to a large degree. It's more about the future.
Right. Because that's why all these stocks are priced to the moon is because we're thinking, okay, the investment in AI is just going to continue with this huge pace. But you have this instance right where we're working on all this amazing AI technology. China comes out with deep-seated. I think it was called, and they spent something like 6 million.
6 million was in the headlines, although I'm not sure who I believe.
Sometimes right when numbers come from China, who does take them with a bit of a grain of salt. But I think that the, the idea that you are planning on it, it's billions and billions of dollars of investment and that potentially there's quicker, easier ways to do some of the same things it it just brings into question this, like this blanket assumption that like, of course we're going to spend at this level.
That doesn't mean AI is not going to be a big part of the future. It's just a question of like, how great is that investment? I think it's going to depend on what's the company, what's the price of that company, because you can have a great company and it's it's a bad price and then it doesn't make a good investment.
So not that again it won't continue. And there will be big winners by the way. And as we typically see with these things, there will be losers as well. So it's a tough one to just be like anything in AI you know. And that's going to take off because that is how it's been played out. And pricing I don't know the that continues forever.
I guess it is a little frustrating because it's very similar to the late 90s in the dotcom bubble, where anything that had a website, the.com name had these extreme valuations. And so you're kind of saying that AI in some form is is similar to that. But I mean, there's no looking back. I don't know what's happening.
It's a thing. And I don't want to offend you because I know you love AI very deeply. You know, at night under your pillow, you think, right?
I just like technology. I'm fascinated by the use cases that we all use technology today. I mean, when I was growing up, we had the Encyclopedia Britannica. I probably read maybe 20 pages before I ever fell asleep. But today in my cell phone, I've got an entire encyclopedia.
Do you still remember how to read? Barely. Okay, just keep that in mind. I just I get it, and again, it's going to be a big deal. I will say I'm not the best. The technology. And I do remember watching Terminator, so I just, you know, I know it's too late. So it is what it is at this point.
So AI technology's potentially overhyped and are overvalued from a price standpoint.
Yeah a lot of it's price related. But yes that's that's my fear. That doesn't mean there aren't opportunities. It just means the idea of like broad anything. And I, I don't subscribe to.
So then what's overlooked?
So it might not be overlooked by us or our clients because they're experiencing it. But I think gold is tremendously overlooked. And one of the the evidence of that is someone the fact that you've had a tremendous year for gold, it's it's performed extremely well. And in addition, even the gold mining stocks, which can be very volatile, have done even better.
And you're still not seeing net inflows. It is very natural, normal investor behavior for something does well, more money pours into it. It's just sort of a hated asset class. And I think a lot of people don't understand it. And I get that actually gold is in an investment is very confusing. What's the price? There's no yield. Lots of valid pushback and reasons we really think of it as an alternative currency.
It's like they can print dollars. Most of your assets are in dollars. Here's an alternative. They can't print. And so that and that's by the way that's why gold's doing so well this year. It's not because it intrinsically is worth more. It's just because the dollar is going down. So it's really a hedge against that. And so again almost 100% of people's net worth is in the US dollar.
The idea of having some percentage there's a hedge in gold makes tremendous sense. But the broad market does not agree with me.
So if you like gold, then if these prices you probably like gold miners then too, because gold miners is sort of a leveraged play on gold. And I think Jeff shared something earlier this week that it cost the gold miner, what, $1,400 to dig an ounce of gold out of the ground while gold's trading at 3300 an ounce.
So that's a huge profit margin.
These companies are going to be tremendously profitable of some period. They are companies, though. So the issue becomes now it's a business and is the business well run. And in the past, I think people are a bit traumatized. I actually don't blame people for not going and piling into the gold mining stocks, because in the past these were really badly run like, these were crappy businesses.
And I used to watch the show on National Geographic. And there was the whole gold mining thing in Alaska.
I'm not saying they were bad at gold mining. The business part didn't work, you know, overleveraged. You know, we're extending and pouring a bunch of money into there. There were there was some major mismanagement in the past, and I think a lot of them have become a lot more fiscally responsible. But, you know, again, is the market going to give credit for that?
And when will they give credit for that? It's going to be hard to ignore. I think some of these profits are going to come out of these companies. So we'll see if that becomes, you know, more popular or mainstream. But it's an interesting concept too, for the upside of gold, because even if you get even pensions more broadly, if everyone decides they need to have an experts, even small, right, a few percent gold allocation, that's going to put a lot of buying pressure, you know, pushing the price upward.
Theoretically, again, I'm not holding it for any of these reasons. Like, oh, the price it's three that the price target should be 4000. That's not I think that's really tough to do with any level of accuracy, especially short term. It's just because I don't want all my assets in the dollar.
That's a good point. I mean, as a chief investment officer, I would love for you to have a crystal ball. Oh my gosh. Amazing.
Just for the record, I would I would like to send you guys ideas occasionally from my yacht.
I would like a big boat too, but I don't see you or I ever retiring anytime soon. However, as it relates to investment in the world that you that you live in, are there any investments that you see out there that people, it's either difficult for them or they cannot access on their own, but they can access here.
I think a lot of stuff. So a lot of the more niche alternative investments, it's really people really should not do it on their own. And I actually have clients who like to try to look at it, but because similar even to the gold mining site, it's a business. And so when we're assessing the risk of some of those investments, it's not just is the investment good.
It's also, it's a small business. Is it being run properly or are there the proper third party controls and oversight in place like this is this is a big deal because you can have the best investment in the world. But if you do not package it properly, secure it, it does not matter. And so I think that really any of these things that are a little more niche and off the run, if you want to go into those kinds of investments, you you really need a professional to come in and assess and say, even just again, forget the investment operationally.
Does this check all the boxes? Are you are you safeguarding your assets properly? This is that applies to these kinds of private credit, real estate. Any of these private assets where it's a private loan. So it's not something that's publicly traded. There's not easily available public information on it. I think that really applies.
So you care a lot about the management team, the strategy itself, the structure that it's in, the fees that are associated with it.
I care about all of that. And then I care of that. Someone else is watching all that to make sure they're actually doing what they say they're going to do. Like, I have a lot of skills. Trust is not a super high on the list of my skills. So it's a lot about you try to meet people, you try to find people you think are good people who are going to do the right thing in difficult times, and then you get a bunch of people to watch them and verify and make sure that all the cash is staying where it's supposed to be, and all the boxes are getting chastised.
He's crossed.
How much do you care that they have their own money invested alongside with it?
I care a lot. The amount of money actually matters less to me than that. It's meaningful for their net worth because sometimes you get smaller managers, maybe, who don't have as sizable of my personal net worth. And so they're putting in half 1 million or $1 million. So you think, well, that's not that big a deal to all that.
But for them, that's like their entire investable they have that in their house kind of thing. And they've they had experience somewhere else and they built up whatever. But this is really their nest egg to a large degree. And then the other pieces to are they reinvesting a lot of managers will take their performance portion of their fees.
And if they can, if they don't need it to support the business, they'll put it back into the fund and just keep reinvesting it and letting it grow. And so I like to see that as well, because it feels like now they're they're doubling down right every time they get paid. Basically they're doubling now.
So I have a fun story that, clients won't really know about. But about six years ago, I went to an alternative investment conference in downtown L.A. and I walked in and man, my name tag it said Chris Gillespie, Morton Wealth. And this guy grabbed me. He was a private lending manager, and he said, I was just in your office yesterday.
Megan beat me up so bad. She just berated me on fees and structure and I was so blown. And he was so blown away by your knowledge and your experience and that. And even though you said no to his investment, two weeks later, he sent his best friend to us to become a client.
I do remember that story. He was a really nice guy. I'm pretty sure he deserved it. Related to the fees and the structure inside. But, look, I mean, hopefully people appreciate that. Again. We're we're in this to look out for their best interest. We don't get paid more for one investment versus another investment.
So our entire 100% of our motivation is just picking the best in the best possible investment for clients. And that's it.
Meghan. It's been a lot of fun talking about investments. Our philosophy kind of what's out there in the day, what's out there, that people can access and kind of, sort of under the hood of what you guys look at and make decisions.
Don't be too jealous. We'll consider... we'll interview for the investment team if you're really interested.
Information and references to specific investments presented herein are for illustrative purposes only and subject to change without notice. It is not intended as investment advice and should not be construed as an offer or solicitation with respect to the purchase of any security or asset class. Investment opportunities described may only be available to eligible clients and involve a higher degree of risk. Each investment opportunity is unique, and it is not known whether the same or similar type of opportunity will be available. Morton makes no representations as to the actual composition or performance of any security. All investments involve risk, including the loss of principal. Past performance is no guarantee of future results. There is no guarantee that the investment objective will be achieved. Morton Wealth makes no representation that the strategies described are suitable or appropriate for any person, and should not be assumed that Morton will make investment recommendations in the future that are consistent with the views expressed herein. You should consult with your financial advisor to thoroughly review all information before implementing any transactions and/or strategies concerning your finances
