MC Stories – A 22-Year Love Affair with Alternatives

I met Lon Morton, the eponymous founder of Morton Capital Management, in 1984 when our family business was looking for a pension administration company. My father and I then started investing with Morton Capital in 1987, just three weeks before something called Black Monday, when the markets dropped about 50%. I remember calling Lon and asking, “What do we do now?” He said, “We do nothing.  Unfortunately, these things can happen, no one is able to predict it, but we are going to stay the course as markets tend to work themselves out.” With hindsight being 20-20, it was good advice as the markets did work themselves out and we had solid returns for the next few years.

I sold my company in 1996 and left in 1998, telling Lon that I was intended to retire at the ripe old age of 40. He firmly told me that I was NOT going to retire and that I was going to work with him at Morton Capital. We had worked together investing for many years, and he wanted to tap my experience in managing a company. Little did I know how wonderful a relationship and lifetime adventure it would turn out to be.

As luck would have it, I started investing my final company sale payout in the second half of 1998 and was met by a significant downturn in stocks. Disappointed, I came home to my wife and said, “I will never let the stock market be the sole dictator of our financial future.”  Thus, my love affair with alternative investments began.

With some effort, we survived the three years of the Y2K market crash and lived through the great financial crisis of 2008. Now we are faced with probably the biggest health and financial crisis in our lifetime: pandemic. With most of the world shut down, it will take all our combined resolve to overcome and beat the virus and get back to our normal lives. Having lived through a number of these disruptions in the markets, I firmly believe that our resolve and perseverance on the health side, and our asset allocation decisions on the financial side, will win the day!

Much of this is made possible by the incredibly hard work and dedication of the entire Morton Capital team. Being the senior partner, it is gratifying to see all our younger teammates working so hard and sensing the responsibility of service to our clients and making sure that they are okay. I have been fortunate to work with many good teams in the past, but there is no doubt that the current team at Morton Capital is outstanding. It makes me proud to be part of that diligence and compassion. I am even prouder of Morton Capital’s recent Give Back initiative: a community outreach to offer free consultations, advice, and guidance to help our community in this time of need. If you know of a friend or loved one in need of some direction, please see our Facebook or LinkedIn page for more information or just click here: Community Give Back Video

Before 2020, and after 22 years at Morton Capital, I figured I had mostly seen it all in the financial markets.  Leave it to a pandemic to prove me wrong!  But, the one thing that remains constant for me is my love affair with alternative investments and how they help round out my investments and exposure to a world where there are never any guarantees what will be coming next.

MC Stories – The Value of Diversifying, as Learned on a Farm

You may have heard about diversifying later in life when you started to manage your investments. I learned the value of diversifying much earlier, on the farm.

I grew up on a family-run farm in Iowa where we worked hard and played hard, together as a team.

On the farm, I learned that there is a natural cycle to things, and you can’t fight Mother Nature. If it’s winter and there’s a snowstorm raging around outside — that is a very good time to stay sheltered inside where you can be snug and warm and maybe enjoy popcorn and games with the family. It’s a very bad time to try to plant crops or expect anything to grow. But during those stormy winter days when our crops could not produce, my family figured out another means to survive. We took care of our milk-producing livestock and our hens who laid eggs – both of which gave us a nice source of income through the winter months. Then, no matter how long and cold the winter might seem, and no matter how dead those barren trees looked outside we knew we would be provided for until the harvest came. And as long as those trees had good roots, there would be a new cycle of growth.

When you apply these lessons to investing, you realize that it’s important to have diversified assets with some investments providing steady income and others providing longer-term, larger growth. And, all assets have a natural cycle. So, like Mother Nature, you can’t fight the cycles but you can be grateful for the growth cycle and patient during the “winter” as you wait for that next cycle of renewal.

MC Stories – A New Way of Working

Many of us experienced feelings of uncertainty and excitement when the stay-at-home order was first announced. Uncertainty from not knowing how long it would last or if we would be able to work in the same way. Excitement for the conveniences of working from home. No commute, more time with family, and comfortable apparel have been a few silver linings in the midst of a pandemic. But as time passes, we are all starting to realize that our new normal may be vastly different than the life we knew a few months ago. While working remotely has its benefits, it can also be isolating, result in longer work hours, be less intellectually satisfying, cause mediocre collaboration, and result in fatigue that could hinder innovation. To combat these negatives, we must find a way to proactively discover what it means for us to thrive in this new normal. Below are a few tips I have learned along the way to help you re-energize your workday:

Pick a few locations

Remember those days at the office where you had meetings in conference rooms, sat at your desk, visited someone in the breakroom, or went out to lunch? Mobility is just as important at home. Pick at least three locations (ideally one can be outside) and rotate between them throughout the day. If you don’t have a mobile laptop, then answer emails on your phone for 30 minutes while you sit outside.

Get the right equipment

Remote work probably won’t ever go away – it may be wise to budget a laptop purchase in the near future, start planning for an at-home office or get yourself a laptop stand so that you are not bent over in an uncomfortable position all day. If your eyes hurt from too much zooming, invest in computer glasses to decrease fatigue and strain. Do what you need to do to set yourself up for success.

Overmanage your calendar

Don’t let email or your calendar control you – control it. Spend 15 minutes every morning reviewing your calendar for the next three days and plug-in time for emails (3x/day for 30 minutes…otherwise close outlook/turn email off), schedule projects (this includes emails that take longer than 5 minutes to respond to) and block creativity/innovation time. Re-evaluate every day whether the goals you set are achievable and if something needs to be rescheduled or delayed, just ask (in advance, not at the deadline).

Invest in yourself

We can’t give our best to others if we don’t give to ourselves. What makes you feel recovered – exercise? Netflix binge? cooking? chatting with your kids? Whatever your ‘thing’ is that makes you happy, do it daily. Just because you get the conveniences of working from home does not mean you should spend all of your time working. Plug time into your calendar to invest in yourself.

Find time to connect with others

The time will come when we will reenter the workplace, and as long as it is safe for you to do so, embrace the ability to be around people again. As humans, we energize one another through non-verbal communication, something that has been lacking over the past few months. Take advantage of any opportunity to connect with someone, even if you need to stay 6 feet apart. Laugh a little and prioritize conversations that are personal and authentic.

Remember that as humans, we are naturally inclined to be together. While technology has given us the benefit of digital communication, it is also important that we do not lose sight of the benefits of human connection.

MC Stories – What Brain Behavior Teaches us About Investing

What brain behavior teaches us about investing

In the early 2000s, I was walking into a Wells Fargo Bank on San Vicente in Brentwood, CA, when 2 young men briskly walked past us with heavy sweatshirts, dark sunglasses and hats on – it was the middle of summer. I immediately remember thinking that’s odd and got a sinking feeling in my stomach as I entered the branch. I didn’t see anyone until my eyes looked down at the floor and everyone was face down. The bank had just been robbed! I had missed it by only 30 seconds. Thoughts circled my mind and I began to wonder how each person reacted; did they panic? Or play it cool, assuming it would all be over in a matter of minutes? What would I have done in that situation?

I believe the biology of our brain can help explain how we react when we are shocked, worried, scared or panicking. Our brain has three separate parts: the Brain Stem, the Limbic Brain and the Neo-Cortex. The Brain Stem is largely responsible for automatic functions like body temperature, breathing, heartrate, etc. We will call this the lizard brain. The Limbic brain (animal brain) is the seat of our emotions and contains the Amygdala which is responsible for our Fight or Flight response. The Neo-cortex is our “logical” brain and allows us to solve complicated math problems, put a man on the moon and use language.

Over the course of thousands of years, our brain biology has not changed much. In times of heightened emotional angst (i.e. during the COVID-19 pandemic), it’s easy for our fight or flight survival mechanisms to kick in. Our brains are not able to distinguish between a perceived social threat and a physical threat. When the animal and lizard brain are activated, they literally hi-jack the logical brain (neo-cortex) of its ability to think by robbing or redirecting blood flow away from the neo-cortex so that the body can leverage its survival mechanisms.
This can also explain why some intelligent people make emotional mistakes with their money. Of course, no one does this intentionally. I would contend that they get robbed or hijacked. Not by a stranger but by their own brain. The idea of lack of resources (i.e. less money) strikes at the notion of survival on some primitive level and can easily trigger a strong emotional response – almost involuntarily. Would you trust your neighbor’s pet dog or lizard to make financial decisions for you? Probably not. But, invariably that is what we do when we making financial decisions in a heightened emotional state.

What is the prescription to avoid making this critical error:
1. Awareness – recognize your animal/retile brain has taken control (internal dialogue you are having is 1 clue).
2. Acceptance – its ok to feel strong emotions. Don’t try to control them immediately, just accept that you are irritated about the current set of circumstances.
3. Find a Release Valve for the emotion. Remember that Emotion is Energy in Motion. Don’t trap it. Release it by practicing deep breathing, exercise, or take a walk.
4. Talk about what you are feeling and see if you can put words to it – you are moving back into the higher brain by articulating what you feel by engaging the Neo-cortex. Talk to your spouse, friends or your Morton Capital Advisor.
5. Time – Give yourself the gift of time (a minimum of 24 hours or perhaps several days) before making a decision.

So, the next time your amygdala shows up to rob you, you’ll know just how to handle the situation.

Senior Vice President, Joe Seetoo, recognized as a finalist in the 2018 Trusted Advisors Awards by San Fernando Valley Business Journal.

Congratulations to Senior Vice President Joe Seetoo, on his becoming a finalist for the San Fernando Valley Business Journal’s Trusted Advisors Awards. This annual event honors attorneys, accountants, business bankers, insurance professionals and wealth managers in the greater San Fernando Valley region for their commitment to high quality client service and overall excellence.

At the award ceremony, hosted on August 9thpublisher Charles Crumpley commented “This event helps to recognize the importance of the relationships they have developed with their clients as they guide them through this complex business environment,” Crumpley said in his opening remarks. “Everyone understands that in these industries, professionals have to help their clients comply with rules and regulations. But it is those rare individuals who do that but also combine market knowledge with superior service to help their clients thrive and achieve. And many of them go way above and make significant contributions to our community.”

We are incredibly proud of Joe and his relentless pursuit of excellence in both client service, and as a leader within our team. In 2017 Joe was also awarded the Wealth Management – Trail Blazer Award by the San Fernando Valley Business Journal.

Read more here

Disclosures:

San Fernando Valley Business Journal (“SFVBJ”) Trusted Advisors is an independent listing produced annually by the SFVBJ. The award is based on data provided by individual advisors and their firms. Only advisors who submitted information are included for consideration, and investment returns are not a component of the rankings. The award is based upon a recipient’s application and not upon any qualitative and quantitative criteria relating specifically to one’s position as an investment advisor. As such, the award is not representative of any one client’s experience. This award does not evaluate the quality of services provided to clients and is not indicative of the investment advisor’s future performance. Neither the RIA firms nor their employees pay a fee to the SFVBJ in exchange for inclusion in the Trusted Advisors awards.