Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Welcome to Marin Talks Your Money, the Personal finance edition
Speaker 2: of Marin Talks Money, where we talk about the best
Speaker 2: strategies for making the most of your money. I'm Maren
Speaker 2: Zum said Webb, and this week I am welcoming back
Speaker 2: to the show Bloomberg Personal Finance and investing reporter Suzanne Willie. Welcome, Suzann.
Speaker 3: Great to be here.
Speaker 2: Wow, it's a difficult time to think about what to
Speaker 2: invest in, isn't it. So it's lucky that we have
Speaker 2: your go tos. I mean, we're sitting here on we
Speaker 2: and there's been a wonderful run in markets, and now
Speaker 2: this seems like a little bit of an AI wabble
Speaker 2: going on, and there's more and more talk about is
Speaker 2: it a bubble? Will there be a crash? What will happen?
Speaker 2: What do I invest in if I can't invest in AI?
Speaker 2: Because AI is the only thing in the world to
Speaker 2: invest in, et cetera.
Speaker 3: Exactly exactly. And goal yeah, gorblingbling.
Speaker 2: But hanging in there, hanging in there around four thousand gold. Yeah,
Speaker 2: everything's going to be fine with gold surely. Anyway, you
Speaker 2: have been out there interviewing again, asking people who really
Speaker 2: work every day in the markets what they are investing
Speaker 2: in or what they would invest in, and also crucially,
Speaker 2: what they do if we just gave him a million
Speaker 2: bugs and told them they could do whatever they wanted
Speaker 2: with it. That's the most interesting bit of all this,
Speaker 2: I think. I mean, you know, we're instead of on't
Speaker 2: we and what they think about metals and all that
Speaker 2: kind of thing, But what we're really interested in is
Speaker 2: what they do with a million bugs.
Speaker 3: Exactly right.
Speaker 2: Let's talk about your first interviewe alexandri So Tavatsi, who
Speaker 2: is from pict A Wealth Management, and he is a
Speaker 2: man after my own heart because for him, the future
Speaker 2: is metaled.
Speaker 3: Right, Yes, yeah, he is really focused on a structural
Speaker 3: ball market in raw materials. I mean, his his line.
Speaker 3: You know, the infrastructure of the future is being built
Speaker 3: today and it's metal intensive, so you know, we're seeing
Speaker 3: record demand for materials like copper and lithium materials. They
Speaker 3: sort of give you access to the physical backbone of
Speaker 3: tomorrow's economy. He likes asset heavy companies in the space,
Speaker 3: so companies that have like significant physical assets like smelters, refineries,
Speaker 3: land in real estate. You know, in part this is
Speaker 3: because they provide an inflation hedge as commodity prices rise.
Speaker 3: So he would deploy the one million into three buckets.
Speaker 3: He'd put about half in a diversified group of global
Speaker 3: mining companies with exposure to copper, aluminum, nickel, and rare earths.
Speaker 3: And that's because he calls them the building blocks for
Speaker 3: grid upgrades, for electric vehicles and battery storage. And then
Speaker 3: he'd put about thirty percent to direct commodity ETFs, again
Speaker 3: copper aluminum and an array of battery components. Further, he
Speaker 3: likes their inflationary status and they provide a good sort
Speaker 3: of or direct play on metal prices. For the final
Speaker 3: twenty percent, he went just target public companies that are
Speaker 3: sort of the picks and shovels needed to build energy infrastructure.
Speaker 3: Grid connections, power inverters, storage systems, all of these sort
Speaker 3: of basic building blocks of the infrastructure that we're going
Speaker 3: to you know, no doubt be needing well out into
Speaker 3: the future.
Speaker 2: Yeah, I mean, this is so interesting. It's something that
Speaker 2: we talk about on the podcast a lot. We talk
Speaker 2: about will there be a commodity supercycle? We talk about
Speaker 2: inflation and how you had you against inflation, and in particular,
Speaker 2: over the last year or so, we've been talking about
Speaker 2: the price of AI companies. So if you buy a
Speaker 2: company that are directly involved in the AI revolution, it's
Speaker 2: going to be extremely expensive on every single valuation measure.
Speaker 2: So true, the companies that allow the AI company to
Speaker 2: even begin to exist, the companies that produce the metals
Speaker 2: and the products that allow the grid to be upgraded
Speaker 2: and data system data centers to exist, etc. You can
Speaker 2: buy those for all there's nothing, So it makes so
Speaker 2: little sense. So this strategy, to me, it seems incredibly sensible.
Speaker 2: You want to be invested in the future, but you
Speaker 2: don't want to pay a pee of seventy times to
Speaker 2: be invested in the future. You'd rather pay a pe
Speaker 2: of ten to fifteen times even less than some of
Speaker 2: these cases, to be exposed to the building blocks behind
Speaker 2: that technological revolution.
Speaker 3: Absolutely, I think it's a really sort of solid argument.
Speaker 3: And with AI today getting in where the prices are,
Speaker 3: it just seems kind of insane to me.
Speaker 2: Yeah. Now, Alexandra, he also as as I Alexandra, he
Speaker 2: has in his mind AI across the board, I'd say,
Speaker 2: because when you asked him what he'd do with a
Speaker 2: million dollars outside this more conventional investment approach. He immediately
Speaker 2: shifted to worrying about the disruption to any work or
Speaker 2: careers that his children might have in future, and the
Speaker 2: need to give them some kind of cushion.
Speaker 1: Right.
Speaker 3: Yeah, that's a great point he did, you know. He
Speaker 3: talked about how young men and women today entry the
Speaker 3: labor for us, are confronting these massive challenges of technological change,
Speaker 3: you know, geopolitical order being reshaped. So he would give
Speaker 3: the one million to his kids and sort of free
Speaker 3: them up to focus, he said, on the opportunities of today,
Speaker 3: rather than the uncertainties of tomorrow, to sort of free
Speaker 3: them from worries related to potential work disruptions. So it
Speaker 3: was it was a really interesting way to spend the money,
Speaker 3: given what his main entry was about.
Speaker 2: Yeah, it's interesting, isn't it, giving your kids a gift
Speaker 2: of freedom.
Speaker 3: I would take that.
Speaker 2: Yeah, although for another podcast, of course, giving your children
Speaker 2: too much money can hamper them horribly. You have to
Speaker 2: find this sweet spot, don't you, between taking away a
Speaker 2: good bit of the pain, but also leaving them in
Speaker 2: need enough to drive them to self fulfillment. We all know,
Speaker 2: the miserable trust fund kid.
Speaker 3: Yeah, and if they have the sort of money all
Speaker 3: their lives and they don't encounter sort of any sort
Speaker 3: of difficulties, you know, how did they develop resilience?
Speaker 2: Well, resilience and self fulfillment. That's what we all need anyway,
Speaker 2: Not for this podcast is that. That's a different one.
Speaker 2: In fact, we should do a different one. We should
Speaker 2: do a podcast on inheriting wealth.
Speaker 3: That would be great.
Speaker 2: Not just on how much is been going to be inherited?
Speaker 2: Can we talk about that all the time, but the
Speaker 2: emotional and productivity sound of inheriting wealth. Okay, stand by
Speaker 2: for that one, listeners. But let's move on to fat.
Speaker 2: Let's stick with luxury. Then you spoke to Chloe Duanchi,
Speaker 2: head of macro and investment strategy at the Rockefeller Global
Speaker 2: Family off as well about they know what they're doing,
Speaker 2: and she was all about luxury real estate.
Speaker 3: Yes, she was saying that there's a lot of interesting
Speaker 3: opportunities unfolding in some of the more niche thematic corners
Speaker 3: of luxury real estate development, such as premium student housing
Speaker 3: at state universities in the US and in really high resorts.
Speaker 3: Because as we know, while the average US consumer, the
Speaker 3: low income consumers under pressure, and we're starting of seeing
Speaker 3: cracks show up and the financial pictures there the market
Speaker 3: looks very different at the top of the income spectrum.
Speaker 3: We had that statistic out of Moodies about how much
Speaker 3: of consumer spending. I think it was about fifty percent
Speaker 3: of all consumer spending in the second quarter was done
Speaker 3: by the top ten percent of US earners, and that
Speaker 3: is huge. So that is an area where spending by
Speaker 3: affluent households, it's far more stable against across cycles, she
Speaker 3: was saying, and that resilience is what people will pay
Speaker 3: a premium on, which makes a lot of sense to me.
Speaker 3: She thinks that part of the story to her real
Speaker 3: estate development idea is the supply vacuum that we saw
Speaker 3: created by a number of years of limited new construction,
Speaker 3: when new builds virtually froze during twenty twenty two and
Speaker 3: twenty twenty four. So she's playing this sort of collision
Speaker 3: between scarce new supply coupled with sort of steady if
Speaker 3: not improving demand and student housing. You know, she says
Speaker 3: that at first, I thought she was going to say, oh,
Speaker 3: premium student housing. I thought she was going to say
Speaker 3: like I don't know Harvard or Yeah or some of
Speaker 3: the really elite opportunities. But she was still saying, like,
Speaker 3: very good flagship state schools with big sports teams have
Speaker 3: seen risily enrollment and a lot of growth, but the
Speaker 3: supply of student housing hasn't kept pace, even as rents
Speaker 3: have popped up quite nicely. And it's not an imbalance.
Speaker 3: It's likely to go away soon because to be a
Speaker 3: player in this space in student housing, you have to
Speaker 3: have a lot of history with that area. You have
Speaker 3: to sort of know the local politics, you have to
Speaker 3: know what the local entitlements are. You really have to
Speaker 3: sort of it's a very specialized niche. So you can't
Speaker 3: sort of easily parachute in.
Speaker 2: It's interesting them and it's not for everyone. I mean,
Speaker 2: how do you invest in that? In student housing in
Speaker 2: the US. You don't want to go out and buy
Speaker 2: a student student house if you haven't got a student
Speaker 2: at that universities, So you need to find some kind
Speaker 2: of fund or a collective vical for that.
Speaker 3: You need to find a private fund or basically you
Speaker 3: need to work with somebody like you know, like Rockefeller,
Speaker 3: you know, a high end you know, private wealth office
Speaker 3: that will have access to some of these players.
Speaker 2: And the other thing that she talked about was experience
Speaker 2: is as the new STATA symbol. We don't want stuff anymore.
Speaker 2: We want experiences that we can put all over our
Speaker 2: social media and effectively get a longer term return from right.
Speaker 2: And therefore the idea is that you should maybe have
Speaker 2: a look at some way of investing in luxury resorts
Speaker 2: and the developers that create those luxury results. Again, that's
Speaker 2: not for everyone, is the no.
Speaker 3: But I mean it is an area where as you'd imagine,
Speaker 3: you know, the imboulnce between supply and demand is very big,
Speaker 3: and you know, it's very difficult to create one of
Speaker 3: these new luxury resorts. They want to be in amazing
Speaker 3: locations that often have sort of you know, environmental concerns,
Speaker 3: and so it's an area where there's going to be
Speaker 3: no supply lot for sure. And you know, like she said,
Speaker 3: you have to partner with an uber specialized operator. And
Speaker 3: some asset managers will take external capital into private credit
Speaker 3: or private equity, but you know, specialized players that have
Speaker 3: for prietary capital will sometimes take outside money. But it's
Speaker 3: not really something that you and I are going to
Speaker 3: go racing into I don't think.
Speaker 2: Your third one. You go through a lot of these
Speaker 2: people's who said, this must be an awful lot of
Speaker 2: telephone calls. That's so interesting. This is Ron Sanchez. He's
Speaker 2: with Vaduciary Trust Co. Internationally. He's the chief investment officer
Speaker 2: and he he starts out in your conversation saying exactly
Speaker 2: the right thing, which is there isn't actually know he's wrong.
Speaker 2: He says there aren't quick chief investment ideas or opportunities
Speaker 2: today give her. In the third year of the double
Speaker 2: digit pricing increases to the S and B five hundred,
Speaker 2: Ron Ron look abroad. It's not compulsory to covers in
Speaker 2: the US. Other options are available. You could look at
Speaker 2: the UK, where you know we're pretty key. Try emerging markets.
Speaker 2: There's all kinds of opportunities out there. Other alternatives are available.
Speaker 3: I think there was a little home bias there.
Speaker 2: Looking inside, Ron does find something that opportunities are narrow,
Speaker 2: that's leg but they exist in healthcare.
Speaker 3: He focuses on healthcare. He you know, like like you
Speaker 3: and like many people, is you know, concerned about the
Speaker 3: S and P and the level at which it's trading.
Speaker 3: And so he's you know, looking for more looking sort
Speaker 3: of digging deeper to find more active opportunities in the
Speaker 3: investment space. And I mean his point is that for
Speaker 3: a lot of reasons, you know, regulatory issues, drug person concerns,
Speaker 3: healthcare has struggled. And so he thinks it's trading at
Speaker 3: an attractive it's trading at an attractive multiple, it's trading
Speaker 3: at a discount to the broad market that is much
Speaker 3: more than it has been in recent history. And he
Speaker 3: also thinks, so from a risk management standpoint, maybe being
Speaker 3: in healthcare isn't a bad idea compared to you know,
Speaker 3: being in say Nvidia and Microsoft and such a concentrated
Speaker 3: bed on tech in the SMP. He notes, you know,
Speaker 3: Navidia and Microsoft combined to make up nearly fifty percent
Speaker 3: of the index, but the entire healthcare sector is nine
Speaker 3: percent of the index.
Speaker 2: That is a really interesting stat isn't it.
Speaker 3: Yes, and so, and he also notes that it's one
Speaker 3: of the most diversified sectors in the SMP, with everything
Speaker 3: from drug companies to biotech to equipment makers and so on.
Speaker 3: And I thought, you know, the really good point was, yes,
Speaker 3: they're in near term challenges for sure, but the demand
Speaker 3: for healthcare services and drugs is not going away. Well,
Speaker 3: in the long run, it's not going to go away.
Speaker 3: You know, I have aging populations here and many of
Speaker 3: the major countries around the world, so demand is only
Speaker 3: going to become greater. So he feels like there's some
Speaker 3: growth opportunities in healthcare. But also it's a bit of
Speaker 3: a defensive play.
Speaker 2: Fair enough, fair enough, and quite interesting. You know, if
Speaker 2: you're looking for looking for any kind of value inside
Speaker 2: the US, that's probably an interesting place to look. But interestingly,
Speaker 2: when it comes to us saying to him, what would
Speaker 2: you do with a million dollars outside conventional investment? Again,
Speaker 2: he's giving it the kid too.
Speaker 3: I know, I know he he thinks. You know, he
Speaker 3: said home ownership is the first step towards financial security,
Speaker 3: and so he would you know, he's talked about it
Speaker 3: with his kids, and starter homes are increasingly out of reach,
Speaker 3: so he would try to help close family members.
Speaker 2: I mean, it's so interesting, Suzanne. I'm sure that we're
Speaker 2: not allowed to talk about your nice contact like this,
Speaker 2: but pretty I'm guessing this man has already had an
Speaker 2: opportunity to give money to his children.
Speaker 4: Yeah, I don't I don't know so, I mean, I'm
Speaker 4: always surprised when people, when people who you think it
Speaker 4: probably already made these plans, probably already have something in
Speaker 4: place for their children, exactly, give them a million bucks
Speaker 4: and they give the kids more.
Speaker 2: What about the holidays. I know, last time we spoke,
Speaker 2: everyone was going on holiday with a million dollars.
Speaker 3: I know, I have to say it was it was.
Speaker 3: It was more fun last time, you know, we were
Speaker 3: talking about we were fantasizing about where we would go
Speaker 3: in the Greek riviera.
Speaker 1: Yeah, I mean, I wonder if this, if all these
Speaker 1: people saying that they give them money to their children,
Speaker 1: it suggests you know, when previously, even a few months ago,
Speaker 1: and we were talking, we say to people, you want
Speaker 1: a million bucks, what do you can't do it?
Speaker 2: They'll be like, well, who, I'm going on holiday. And
Speaker 2: now you're saying the same thing to them, and thinking
Speaker 2: like then they're saying, oh, things are difficult, things are tight.
Speaker 2: It's a gary out there and giving it the kids.
Speaker 2: Is this giving us some kind of anecdotal sense of
Speaker 2: a shift in the way people are feeling in the US.
Speaker 3: It's interesting. I think it probably is. I mean, there's
Speaker 3: this sentiment shift and there's just you know, so much
Speaker 3: uncertain tea, and we've got the shutdown, you know, the
Speaker 3: government shutdown grinding on. I think it's sort of a
Speaker 3: lot is very unsettled, and I think it's just as
Speaker 3: time goes on. It's been people have felt deeply unsettled
Speaker 3: for a long period of time. And I think it's
Speaker 3: even you know, seeping into the minds of people who
Speaker 3: probably would not be particularly concerned about their own financial picture,
Speaker 3: but it just makes everyone feel sort of vulnerable to change,
Speaker 3: to some sort of like worrying about some sort of
Speaker 3: like negative change. And so I think sort of that
Speaker 3: the maybe it's the lens at which people are viewing
Speaker 3: the world is just a bit darker now, and they're
Speaker 3: feeling more you.
Speaker 2: Know, protective and about the kids.
Speaker 3: Yes, worried about the opportunities. I mean, you know, you
Speaker 3: see AI taking a lot of taking a fair amount
Speaker 3: of you know, entry level jobs, and I think that
Speaker 3: is sort of a very leads to a very fundamental
Speaker 3: uneasy about what your kids' opportunities are going to be
Speaker 3: like going forward.
Speaker 2: Definitely right, But we do have we have one participant
Speaker 2: here who had a slightly different view on how to
Speaker 2: spend his million dollars. I think, you know, we'll be
Speaker 2: keener on him. We'll come to a million dollars in
Speaker 2: a minute. But this one is Nick Frillinghausen, co Chief
Speaker 2: Investment Officer of Equities at the Chiltern Trust, and he
Speaker 2: has a slightly different idea a game we're own property here,
Speaker 2: but kind of the opposite to luxury property.
Speaker 3: Right, yes, I mean his you're right, it's another real
Speaker 3: estate idea. And he says it's a patient idea. It's
Speaker 3: not an idea expects to take off immediately, but over
Speaker 3: the next three years. He thinks home repair and the
Speaker 3: home repair and remodeling space will be interesting. He has
Speaker 3: exposure to the leading companies in this area, the sort
Speaker 3: of what we call in the US the big category
Speaker 3: category killer companies, as well as in the paintent codings industry.
Speaker 3: And his feeling is that we've been in a housing
Speaker 3: of session for years with affordability at all time lows,
Speaker 3: and we probably have a shortage right now, like three
Speaker 3: to five to four million homes in this country. Existing
Speaker 3: home turnover is only about four million homes a year,
Speaker 3: which is a thirty year low. Typically it would be
Speaker 3: more like five million or six million, or a peak
Speaker 3: I think it was even seven million. You know, a
Speaker 3: lot of people are, as we know, locked into their
Speaker 3: homes because they have these low mortgage rates. But he
Speaker 3: thinks that if mortgage rates go about one hundred or
Speaker 3: one hundred and fifty basis points lower, that we're likely to
Speaker 3: see a big unlock in terms of pent up demand.
Speaker 3: Because every time, he says, you see the tenure treasury
Speaker 3: flirt with around four percent, you see an uptick in
Speaker 3: mortgage refinancings and first time home buyer applications. So he
Speaker 3: thinks these businesses are really good values and that when
Speaker 3: we've kind of cycles like this and we've seen mortgage
Speaker 3: rates fall, these companies have sort of a coiled spring
Speaker 3: kind of dynamic going on in terms of the margins
Speaker 3: they can earn. So these are you know, these are
Speaker 3: not like sexy companies, but they're companies that are embedded
Speaker 3: in our daily lives. You know, you paint your house,
Speaker 3: you know, you fix up your deck, you do all
Speaker 3: of these things. And he feels like a lot of
Speaker 3: people aren't focused on this area. He blames it mainly
Speaker 3: on because so many money is so much money is
Speaker 3: flowing into the same ten to twelve names, you know,
Speaker 3: tech names in the S and P. Five hundred. He
Speaker 3: thinks that if interest rates go lower, these stocks will
Speaker 3: do well, and also it'll lead to, as many people think,
Speaker 3: a broadening out of what actually works in the stock market.
Speaker 2: Did you mention any stock name produces on when he
Speaker 2: talked about this.
Speaker 3: He doesn't mention stock names just as a matter of policy.
Speaker 3: But I can speculate about what I would imagine they are.
Speaker 3: I mean, my guess would be when he talks about
Speaker 3: dominant companies and paints and coding, it makes me think
Speaker 3: of Sherwin Williams. That's a very big name here. And
Speaker 3: then when I think of the sort of what we
Speaker 3: call sort of category killer big home remodel of repair companies,
Speaker 3: I think of the likes of Home Depot and Lows.
Speaker 3: So those would be my essens, but they are not
Speaker 3: names that he gave me.
Speaker 2: Okay, interesting, right onwards. I don't know why you and
Speaker 2: I are going on holiday with Nick and his million dollars.
Speaker 3: Well, I really loved his idea. Well, I love the
Speaker 3: idea of giving money to kids. His idea again, he's
Speaker 3: really into experiences and he would take his family ten
Speaker 3: to twelve members of his family, particularly his parents who
Speaker 3: are in their mid eighties, on one of those around
Speaker 3: the world high end private jet journeys where you just
Speaker 3: jet around in your own private jet, and he would
Speaker 3: go to all these bucket list destinations that you would
Speaker 3: like to go to, but the tiquol a lifetime to achieve,
Speaker 3: you know. So he'd go to anchor Wat and Machu
Speaker 3: Pichu and Nepal and India, and he'd go to Uganda
Speaker 3: to see the mountain gorillas and to Japan, which anyway,
Speaker 3: I love this idea.
Speaker 2: Thirty to thirty five days, Nick, come on, yes, I mean, Matt,
Speaker 2: you Pitchiba. The time you finished queuing for tickets, you're
Speaker 2: two days.
Speaker 3: In Well, Marrion, you know, we only gave him a
Speaker 3: million bucks. So he actually priced this out and he
Speaker 3: figured it would take him about thirty to thirty five days,
Speaker 3: and he factored the number of people, so you know,
Speaker 3: he could only take thirty or thirty five days for
Speaker 3: only allowing him to splurt with a million bucks.
Speaker 2: I tell you what, thirty five days on a private
Speaker 2: jet with your family, maybe maybe it's enough.
Speaker 3: Oh that's a really good point, Maren.
Speaker 2: That's enough.
Speaker 3: I think I might pay to break up that.
Speaker 2: We will go for five days each. I think it
Speaker 2: would be absolutely wonderful.
Speaker 3: Oh, I love this idea.
Speaker 2: I entered in the jet a falcon. I go the
Speaker 2: do detail, detail, details, details, wonderful. Okay, so there you go, metals, healthcare,
Speaker 2: lots of property, give the money to your kids, and
Speaker 2: I gay self a private jet. And that's what you
Speaker 2: do with a million dollars these days. Then, thank you
Speaker 2: very much. Indeed, thanks Miren, thanks for listening to this
Speaker 2: week's Maren Talk to Your Money. If you like us show, rate, review,
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Speaker 2: was produced by Someersadi and Roses, and questions and comments
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Speaker 2: Our show email is Merrior Money at Bloomberg dot net