Boys & Girls Clubs of Greater Conejo Valley building Dedication honoring Rocky & Lon Morton

Rocky & Lon_Boys & Girls Club building Dedication_large
Recognized for their support of the Boys & Girls Clubs of Greater Conejo Valley and for their many contributions to the community, Rocky & Lon Morton were honored at a Building Dedication of the Rocky & Lon Morton Boys & Girls Club last month.
The Dedication was open to local businesses, organizations and individuals who had an interest in honoring Rocky & Lon Morton. Event highlights included building tours and dedications followed by a luncheon.
Lon Morton has been a board member for over 10 years, and has served as the Sponsorship Chair each year at the annual ‘Stand up for Kids’ Gala Dinner & Auction. He was a past recipient of the distinguished Cal Johnston Service Award and has been elected to serve as incoming Board Chairman for 2016. Rocky Morton has been involved as a community leader since 1998 serving on the Malibu Search and Rescue team for over 25 years. Her activities and leadership has resulted in helping to make the community a safer and better place to live and raise children.

Investment Update Q4, 2015


In our Q4 Investment Newsletter, we take a look at the following stories.

  • IRS Zeros In On Dirty Dozen Tax Scams In 2015
  • 401K – Take Early Withdrawals Penalty-Free
  • Federal Reserve Holds Interest Rates Steady For Now
  • Bigger Retirement Plan Benefits For Elders
  • Here’s What You Can’t Do In An IRA

Read More in our Q4 Investment Newsletter

Jeffrey Sarti Featured in Forbes article on How to Invest Your Money In Q4

September’s stock market sell off either created tremendous opportunities to put money to work at lower prices or alerted active investors to position their portfolios defensively for a deeper correction. To find out how you should invest your money in the fourth quarter,  I assembled a panel of Barron’s-ranked financial advisors to share their best mutual fund or exchange-traded fund picks. This elite group is hailed as the top 1% in their field. Barron’s evaluates financial advisors based on their assets under management, annual revenues, years of experience, client retention, charitable contributions and regulatory records.

5. Tocqueville Gold Fund (TGLDX)

by Jeffrey Sarti

The recent bout of stock market volatility across the globe was just the excuse the Federal Reserve needed to refrain from raising interest rates.  However, we believe the collective “wisdom” to agonize over a meager quarter-point hike is typical of the short-term mindset of the investing public.

Read the full article

Market Overview August 2015

“In the world of investing, being correct about something isn’t at all synonymous with being proved correct right away.” – Howard Marks, Oaktree Capital

The global equity markets have been in full retreat since China devalued its currency (CNY) relative to the U.S. dollar (USD) on August 11th. Since then, more than $5 trillion has been erased from the value of global equities on fears that the slowdown in the Chinese economy is worse than expected. As a result, there is now widespread belief that the U.S. Federal Reserve (Fed) will not be in a position to raise interest rates in its September meeting as had been expected. The table below summarizes the year-to-date performance of the S&P 500 (U.S. large company stocks), MSCI EAFE (developed international stocks) and MSCI EM (emerging market stocks) indices. While the equity market drawdowns have been more dramatic in the emerging markets, the S&P 500 Index has also entered a correction phase – defined as a decline of over 10% – since reaching an all-time high in mid-July.

YTD Financial 08.2015

As is evident from the graph below, the S&P 500 Index (green) has enjoyed a relatively calm climb with little to no volatility since late 2011. The Volatility Index (white) measures the 30-day volatility of the market. It is often referred to as the “Fear Index”. A low level of this index is a sign of too much optimism in the equity markets. The psychology has now changed dramatically, as the current selloff has raised many concerns with respect to currency wars, global growth, valuations of the equity markets, and whether the global central banks – stuck on ZIRP (Zero Interest Rate Policy) for almost 7 years – have any ammunition left to battle a global economic slowdown.

Source: Bloomberg

While U.S. markets have somewhat stabilized this morning, our concern going forward is that the poor underlying fundamentals could finally derail this resilient bull market. We have been articulating the risks associated with the global monetary policies for some time now and have reduced our equity exposure in recent years in response to escalating valuations. Just in July, we published a position paper detailing our thought process with respect to expensive global markets and the rationale behind including an allocation to gold as a hedge against depreciating paper currencies. We encourage you to read this paper and have included a link to our website below.

If you would like to discuss this paper, the financial markets, or your portfolio in more detail, please don’t hesitate to contact us.

Sasan Faiz
Co-Chief Investment Officer

The Case for Gold in an Uncertain World

gold barIn this position paper, we will discuss our rationale for instituting a position in gold across our clients’ portfolios. There are many opposing viewpoints about owning gold in a diversified portfolio. We will look to address these countering points of view and explore how the current macro landscape makes the rationale for owning gold more compelling than it has been for quite some time. Specifically, we will discuss:

  • Opportunity cost of owning gold – Investors often shun gold in favor of assets with a positive expected return, namely stocks and bonds. However, stocks are trading near all-time high valuations and yields on traditional bonds are anemic, making alternative investment opportunities such as gold more attractive on a relative basis.
  • Traditional diversification is broken – Historically, stocks and bonds have behaved differently from one another and have therefore acted as efficient diversifiers when combined in a portfolio. However, in recent years, the data has shown that stocks and bonds have become more highly correlated with one another. Gold, on the other hand, has displayed a low correlation to both stocks and bonds over extended periods of time.
  • Gold as a store of value – Gold is the one global currency that cannot be created out of thin air in this age of undisciplined money printing. All currencies are susceptible to debasement by central banks looking to stimulate their debt-ridden economies through easy monetary policies. Unlike most paper currencies, gold has maintained its value over long time periods.

We understand that this positioning may not be popular as traditional assets continue their march upward with the support of central banks. However, with the expensive nature of traditional stocks and bonds, coupled with the heightened risks of currency debasement and possible inflation, we believe that a modest allocation to gold can act as a meaningful hedge over time.

Read the full position paper here

A Hybrid Approach to Active vs. Passive Investing

Active-vs-Passive-Investing-Image-largeThe investing world has changed dramatically since the credit crisis. Technological advances have continued to reduce trading costs in the equity markets and global central banks have embarked on and sustained zero-interest-rate policies. According to Merrill Lynch, 83% of the world’s equity markets are currently supported by countries with such policies. From a historic perspective, the current low level of global interest rates, both real and nominal, is only parallel to the depression era of the 1930s. These conditions have resulted in a global stock market that is driven by broad economic announcements as opposed to company fundamentals. The evidence of this trend can be seen in the high correlations amongst sectors and stocks as they react as a group to economic news such as employment or inflation statistics.

Read more

Jeffrey Sarti Featured In Financial Advisor Magazine – Alternatives: A Way To Lock In Historic Market Gains?



In the summer of 1982, Duran Duran was atop the music charts, Leonid Brezhnev was still calling the shots in the Soviet Union, and the United States was just coming out of a decade-long economic slump. Back then, the S&P 500 stood at 105.

Fast forward to 2015, and that market index has surged nearly 2,000%. A multi-decade plunge in interest rates has led to stellar returns for bond investors as well. Despite some notable bumps in the road in 2000 and 2008, the bond and stock markets have delivered remarkable long-term returns, enabling many baby boomers to build powerful retirement nest eggs.

Yet few expect the stock and bond markets to deliver such robust returns in the years ahead, and for many the question is whether the remarkably long bull market in stocks and bonds will end with a whimper or a bang.

At this point, a quick history lesson about stocks and bonds is helpful. From the 1960s through the end of the 1970s, “stocks and bonds were negatively correlated,” notes Jeff Sarti, co-president of Morton Capital Management. Since the early 1980s, however, these two asset classes have often moved in lockstep. They have both benefited from falling inflation, rising corporate productivity and, more recently, a fire hose of liquidity from the Federal Reserve.

A changing Fed stance regarding liquidity may have an equally deleterious effect on both asset classes. “We’re very concerned about central bank policy. … We’ve had a free lunch thus far,” says Sarti, adding that if stocks lose ground, “bonds are unlikely to be the diversifier they once were.”

Read More

Jeffrey Sarti Featured in Financial Advisor Magazine – When Researching Alternative Products, Look For ‘Red Flags,’ Experts Say



The allure of alternative investments — potential gains that are uncorrelated with stock and bond price movements — is not without risks that investors need to be aware of, a panel of experts told advisors during a breakout session at the 6th Annual Inside Alternatives Conference in Denver.

The event, sponsored by Financial Advisor and Private Wealth magazines July 13-14, drew over 600 financial industry professionals.

Jeffrey Sarti, co-president of Morton Capital, a Calabasas, Calif.-based RIA firm, told the audience that he looks for smaller and niche investment opportunities in real estate to create true diversification and cash flow “in this stupidly low interest rate environment.”

Sarti said he tends to concentrate on funds with $50 million to $150 million in assets. The advantages of this focus are more targeted opportunities and less competition. The disadvantages are increased operational and business risks that are inherent in investing with smaller organizations. “We have to ensure that these smaller funds have appropriate levels of oversight,” he said.

Read more

Financial Advisor Magazine names Meghan Pinchuk as one of their 10 young advisors to watch.

FA_May2015_Megan-Pinchuk-10Meghan Pinchuk has known former pro baseball pitcher/financial advisory founder Lon Morton since she was 12 years old. He managed money for her grandfather and later hired Pinchuk’s father at his firm Morton Capital Management as COO in the 1990s. “He recruited me rather young,” she says. A great student without a clear direction (she started as an English major at UCLA), Pinchuk was encouraged by Morton to intern for him in college and see if she liked finance. She passed her CFP test while she was still an undergrad, graduated summa cum laude and hit the ground running, later on getting her CFA mark.

Nine years out of college, Pinchuk is now co-president of the firm, which has 700 to 800 client relationships (the average client size is $1.5 million to $2 million and the firm has almost $1.5 billion under management). Her rise came swiftly after Morton bought his firm back from a bank in 2013 and Pinchuk found herself promoted. Though Lon Morton is still CEO and has veto power, he has let Pinchuk and co-president Jeff Sarti drive strategy at the newly liberated firm, she says.


Read more

FT 300 Top Registered Investment Advisers

FA_May2015_Megan-Pinchuk-10NEW YORK, June 18, 2015 – The Financial Times (FT) today released the Financial Times Top 300 Independent Registered Investment Advisers (RIA) of 2015. The ranking of top U.S. RIAs was developed in collaboration with Ignites Research, a subsidiary of the FT that provides business intelligence on the investment management industry.

The average FT 300 firm has been in existence for 23 years and manages $2.6 billion in assets.

They hail from 34 states and Washington, D.C. FT 300 advisers represent many wealth managers; high net worth individuals ($1 million to $10 million to invest) account for 36% of the assets managed and ultra-high net worth clients (more than $10 million) account for another 27% of assets managed.

This was the second annual FT 300 ranking, and it illustrated the maturing of the RIA industry. “The FT 300 research revealed a trend towards larger and more corporate RIA firms, said Loren Fox, Director of Ignites Research and head of the FT 300 ranking. “While in 2014, 89 percent of the FT 300 firms worked in teams, in 2015 94 percent of the FT 300 advisors work in teams. The growth of the team-based approach also means larger staffs, as the average FT 300 firm had 20 staffers this year, up from 14 staffers last year.”

This year, Betterment LLC became the first pure robo-adviser to earn a spot in the FT 300 — marking the arrival of the “robo-adviser.” The use of computerized interfaces and algorithms to create portfolios for investors has already spawned several robo organizations and attracted billions of dollars in assets. Industry observers wonder; however, if robo-advisers will put many RIAs out of business or will expand the reach of traditional RIA firms.

Ignites Research created the methodology and ranked the advisers. Advisory practices reporting $300 or more in assets under management were allowed to apply. The FT then scored candidate firms on six criteria: assets under management (AUM), AUM growth rate, years in existence, advanced industry credentials, online accessibility and compliance records.

“The competition, as always was fierce,” added Fox. “Dozens of high quality advisers just barely missed the list this year, edged out by peers with slightly better profiles. Sometime the difference was a few more years of experience or a slightly more impressive growth rate. Because AUM and AUM growth together comprise a large segment of our internal scoring, there can be a considerable turnover in the list from one year to the next. Only half of the firms that made the FT 300 in 2014 also made the list in 2015.”

Among the investments used by FT 300 advisers, 35% of the assets they advise are in long-term mutual funds, followed by individual stocks and bonds (30%), ETFs (11%) and SMAs (8%).

Roughly 98% of FT 300 advisers have advanced industry designations, such as the Certified Financial Planner (CFP), Chartered Financial Analysts (CFA) and Chartered Financial Consultants (ChFCs). These credentials are important as advisers need to differentiate themselves from the competition and the growing use of robo-advisers.

The FT 300 is one in a series of rankings that the Financial Times has developed in partnership with Ignites Research providing a snapshot of the very best advisers across the U.S. The series includes: FT 401 (retirement plan advisers who service DC plans), FT 400 (financial advisers from traditional broker-dealer firms), and FT 100 (female advisers from brokerages, private banks and RIAs).