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MC Stories – 4 days, 450 miles in a 4-wheeler

How often do we get the chance to really get away from it all and unplug? With the stresses of modern-day life—raising two children, my wife, Jen, and I working full-time—I was looking forward to a “guys trip.” Now, mind you, this was not with my friends but rather an L.A.-based group called Wilderness Collective, which runs UTV and motorbike trips in the western United States. I had been thinking about doing one of their adventures for the past two years but the timing never seemed to work out. However, in early August, I decided that it was time to get out and make it happen.

I was fortunate to be able to spend four days over Labor Day weekend traveling from St. George, Utah, through the Northern Arizona desert to the North Rim of the Grand Canyon in my own UTV four-wheeler. I traveled in a caravan of 14 guests, accompanied by four guides, a cook and a photographer.

 

In reflecting upon my adventure, I was able to take away a few key points that can apply to my role as a wealth advisor.

1. Communication is key. Imagine being alone in the desert for seven hours without a way to communicate with your guide. This is what happened to me on that Saturday. How, you ask? For the prior two days, we were using a “flagging” system where, if the lead guide came to a fork in the road, he would pull over and have the next driver stay and direct traffic in the proper direction. Given the speed at which we were driving (oftentimes 60–70 mph), the distance between vehicles (sometimes hundreds of yards due to the dust or other factors) and the length of our entire caravan, it wasn’t uncommon for the total distance from beginning to end to be 5–10 miles long. Additionally, we had a large truck hauling our food, camping supplies and extra gasoline, among other things, that was oftentimes 20–30 minutes behind. The truck was always the “sweeper,” meaning anyone who acted as a flagger was to remain in position until the truck got to you and that was the signal to move out.

We left camp early on Saturday morning, and after a few miles of winding turns in the pine forest, we reached a fork in the road and the guide positioned me as the flagger. Over the course of the next 15–20 minutes, I performed my duty as four-wheelers passed me, pointing them in the direction ahead along the dirt road. Another 10–15 minutes passed and I began to wonder, Where is the truck? Eventually, it became clear to me that they had left me.

Later, I found out our lead guide had instructed another guide to act as a sweeper instead of the truck. The new sweeper waived as he went by, assuming this was enough for me to follow him. I was still thinking about what the lead guide had said on the first day, which was DO NOT LEAVE YOUR POSITION UNTIL THE SWEEPER RELIEVES YOU. When changes occur, it’s critical that all parties know what the change is.

As you know, we work in teams at Morton Capital to ensure the highest level of client service. To this end, each advisory team meets weekly to thoroughly address all client matters. These recurring weekly meetings are supplemented by morning huddles (brief meetings) throughout the week to address the most pertinent issues of the day so we all know when changes occur.

We are also passionate about proactive communication with your other trusted advisors, like your CPA, insurance advisor and estate attorney.

During the pandemic, we enhanced our communications with our clients even further, all with the purpose of staying connected so you knew we were on top of your finances. Our outreach included robust video content and webinars that covered everything from the economy to investor behavior. Additionally, we created articles and content for social media via platforms like LinkedIn, Facebook and Instagram.

2. Don’t make a bad situation worse. It was about 12:00 or 1:00 pm—the sun was directly overhead and the desert was cooking. I’d been alone for probably two hours and I was getting antsy. I thought to myself, Ok, I can catch up to them. I had a general sense of the direction they were going, and it was just me, so I could go faster than the caravan.I took off down the mountain covered in pine trees, screaming around corners and straightaways for about 10 miles. I hit a T-junction and saw the vast terrain of open desert in front of me. I could see for about 100 miles to my left, 100 miles to my right and 100 miles in front of me—truly like something out of a movie. My caravan was nowhere in sight, so I’d be speculating by picking a direction to try and find them.

Oftentimes, when things don’t go our way, we can feel like we have to “do something.” In this case, I had to evaluate the risks of staying put (playing defense) versus going on the offensive. I decided the smart thing to do was to go back to my original position where I had shade and water and wait it out. I knew the terrain better and it was my best chance of the guide knowing where I was. Also, given that we had experienced four flat tires up until that point and my rig was not outfitted with a spare tire or the necessary tools, it seemed too risky for me to wander off into the desert alone with limited water. In the case of my adventure, access to shade and water were my most basic needs and the most important drivers of my decision.

Markets and investments don’t always go as planned. Our natural inclination might be to sell when asset prices fall. While it might feel good in the moment to “do something,” more often than not, these knee-jerk reactions work against us in the long run.

Focusing on risk management ahead of time and properly evaluating both the upside and downside of a given action or investment is critical. Additionally, focusing on the basics when things get complicated can help. This is why we are so passionate about cash flow in our investments. At the end of the day, we can’t control the price a buyer will give us for an investment but if we focus on the basics of cash flow, that is a universal sign of health and stability in any environment.

3. Always have a backup plan or safety net. At the beginning of our trip, our guide had given us a small black pouch and in it was a device with an SOS button. It was only to be used in extreme emergencies. If you hit the SOS button, it would activate local first responders and they would send in the helicopter to find you. Knowing I had that in my tool chest should I need it gave me the comfort to sit tight.Ultimately, I waited it out and one of the guides returned around 5:00 pm. We raced through the desert for the next few hours as the sun set, trying to cover as much ground as possible before night fell. By around 10:00 pm, we made it to camp just in time for roasted herb chicken with a side of fresh dill potato salad. I sat around the campfire with the guys as they teased me for getting “lost.” It was all in good fun.

As we have added financial planning as a core element of our services. When developing our clients’ cash flow plan, we stress-test the plan for a variety of factors like down markets, long-term healthcare events and lower returns to ensure we have a backup plan in place so you are in the best position possible to adapt to most any circumstance.

Knowing ahead of time that your financial plan can withstand these difficult situations helps to calm the natural anxiety you experience when confronted with a situation beyond your direct control.

How often does someone get to spend the night 50 feet from the edge of the Grand Canyon? Or gaze up at the Milky Way galaxy with no light pollution and see the night sky with an unblemished view? Or watch the sun come up over the North Rim? Life is short. We are a culture of information overload, flooded with constant information on a daily basis about politics, our economy, the civil unrest our nation is currently experiencing, the pandemic, etc. Having four days away from emails, text messages and phone calls was really good for my soul and allowed me to be grateful for the career I have, the clients I serve and the talented people I am blessed to work with on a daily basis, all contributing to our mission of helping our clients get the most life out of their wealth. It also made me eager to get back to Jen and the kids and, yes, to take a shower 🙂

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.

Staying Connected During COVID-19 – Webinar #4

Senior Vice President and Wealth Advisor, Joe Seetoo, and Wealth Advisor, Priscilla Brehm, this webinar addressed the following client questions surrounding the latest developments of COVID-19 and its impact on the market:

  • Why is the Federal Reserve buying bonds as part of the newest stimulus package? Emotions often drive decision-making.
  • What behavioral biases should I look out for when making financial decisions?
  • I’ve been told to invest for the long term. What does that mean?
  • What does that mean? How should I invest differently for the short term vs. the long term?

To register for access to these online events and/or submit any questions you would like our Wealth Advisors to answer for you please email us at questions@mortoncapital.com

https://vimeo.com/mortoncapital/stayingconnectedwebinar04142020

We look forward to you joining us on future webinars!

Mid Quarter Newsletter – December 2019

No Profits? No Problem!

In the venture capital industry, a “unicorn” refers to a technology startup company that has reached a private valuation of $1 billion. While few and far between in the past, these types of companies are commonplace in today’s market, and, more surprisingly still, most are actually losing money.  Uber, Lyft and Peloton are a few high-profile examples of recent initial public offerings (IPOs) that are not profitable. Of late, the public markets have not been kind to these investments, as they are all trading well below their peak prices (see table below).

The most outrageous example has been the debacle associated with the collapse of the IPO plans for WeWork. A few short months ago, the office rental company was expected to offer shares to the public at a total business valuation of $47 billion. However, in the third quarter, WeWork reported a net loss of $1.25 billion despite having revenue for that same quarter of $934 million! When investors balked at these sky-high valuations, the company was forced to withdraw its IPO, which also led to the downfall of its charismatic founder, Adam Neumann.

Given the run-up in technology stocks in the past several years, it’s obvious that many startups are positioning themselves as tech companies to command these excessive valuations. Most of these companies, however, are not true technology companies. They all use technology to run their businesses, but WeWork is basically a real estate leasing company. Founders, early investors and investment banks have bought into these “story stocks,” resulting in excessively high pricing for these IPOs. Perhaps rationality is coming back to the market as evidenced by the recent poor stock performance of some of these name brands, along with the withdrawal or deferral of other planned IPOs such as with Airbnb. When markets eventually calm down, we’ll inevitably return to a time when profits actually matter more than stories.

How Will Impeachment Affect the Markets?

As we send out this article, it seems highly probable that President Trump will become the third president in U.S. history to be impeached. However, it’s important to note that impeachment does not necessarily mean removal from office. Our seventeenth president, Andrew Johnson, and our forty-second, Bill Clinton, the two previous presidents to be impeached, were not removed from office (Johnson narrowly avoided conviction in the Senate by 1 vote!). As an aside, Richard Nixon actually resigned from office before being formally impeached.

So how is impeachment different from removing a U.S. president from office? Impeachment in the U.S. is the process by which the House of Representatives files charges against a government official, and in any ensuing trial, the Senate would determine whether to convict and remove that official from office. While only a simple majority vote is required by the House of Representatives to initiate impeachment, a two-thirds vote is required in the Senate to convict the president. Based on party lines, the House is likely to vote for impeachment. However, assuming all Democrats in the Senate voted in favor of conviction, 20 Republicans would still have to cross party lines and vote for a conviction for the president to be removed from office.

How this relates to the market

Given the relatively limited information, it’s hard to draw a strong conclusion about how impeachment will impact the markets. The market was up decently during Clinton’s impeachment and down a fair amount around Nixon’s impeachment hearings. However, the economic forces at the time may have had a much larger impact than the impeachment proceedings themselves. More specifically, the Clinton impeachment happened during the tech boom of the late ’90s while Nixon’s hearings paralleled the OPEC oil embargo and runaway inflation of the early ’70s.

Assuming everything follows party lines, it’s likely that President Trump will be impeached but not convicted and removed from office. Since the probability of this outcome is really high, the market has essentially already priced it in at this stage, meaning this outcome will likely be a nonevent for stocks. On the other hand, if there were to be a surprise conviction in the Senate, then we would expect heightened volatility.

Welcome Austin and Milan

Austin Overholt
Private Investments Administrator

Austin Overholt joined the Private Investments Team at Morton Capital in May 2019, and is integral to the team’s alternative investment coordination and information management. He is a Marine Corps Veteran and, prior to transitioning into the financial services industry, was the Associate Director of the OC Learning Center in Westlake Village. Austin earned his Bachelor of Arts degree in communications with an emphasis in business from California State University, Channel Islands, and his master’s from Pepperdine University. Austin lives in Camarillo with his wife, Megan, and their two children and enjoys being outdoors, off-roading, and barbecuing.

Milan Pfeisinger
Research Analyst

Milan Pfeisinger joined Morton Capital in June 2019. He is a research analyst and works closely with the investment team. Milan previously worked as a cost analyst at Warner Bros. Entertainment. He is originally from Austria and moved to the United States to attend college. He graduated from California State University, Northridge, with a Bachelor of Arts degree in economics and a minor in finance. Milan recently passed the Level II exam of the CFA® program. Besides work, he enjoys taking long strolls with his pug, Zorro.

Financial Bites Lunch Series

Our Financial Bites lunch series has been a great success! If you haven’t joined us for any of the previous sessions, we encourage you to attend any of the remaining lunches in the new year.

Our next session, on life insurance and long-term care, on Friday, January 24, touches on the “when and when not to” rules on buying life and long-term care insurance policies.

You can RSVP to any of these events by visiting mortoncapital.com/financialbites.

This past September, Wealth Advisors Joe Seetoo and Celia Meagher presented on budgeting.

Watch the video below and learn everything from what savings/spending strategies you should use to the importance of maintaining a good credit score.

The Six Way Investors Differ

Carl Richards, a CERTIFIED FINANCIAL PLANNER™, author and New York Times columnist, wrote an article comparing the good and the bad behavioral differences of investors. To read the article in full, please click on the below link.

Read Article >

Welcome to the World, Baby Harlowe!

We’re thrilled to announce the newest baby to join the MC family. Associate Wealth Advisor Sarah Ellis and her husband, Justin, welcomed their third baby girl, Harlowe Liv, on November 7. Congratulations to their beautiful family!

Financial Bites – Budgeting Session Video and Update

The second event in our new Financial Bites lunch series, Budgeting, went off without a hitch. In this session, our advisors honed in on the keys to a successful budget and how to get your financial footing. Thank you to all our attendees as well as our phenomenal wealth advisors, Joe Seetoo and Celia Meagher, who presented.

Our goal is to make this information clear and accessible to everyone. This session focuses on the importance of checking your financial pulse – everything from what savings/spending strategies you should use to the importance of maintaining a good credit score.

Click on the above image or visit this link to watch our budgeting session: https://vimeo.com/mortoncapital/fbbudgeting

We hope you find this video valuable. Please feel free to share this link with family and friends and on your social media channels. Any feedback you have would be extremely valuable to our team, including any recommendations of topics you would like us to present on in the future. Financial Bites is a complimentary series and our upcoming sessions are filling up fast, so we encourage you to RSVP soon. Click on the link below to view all sessions and RSVP today!

https://mortoncapital.com/financialbites

We hope to see you soon and thank you for your continued support of Morton Capital.

The MC Team

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.

Joe Seetoo (Podcast) – The Realities of Selling your Business in a Zero Interest Rate Environment

Joe Seetoo is a Partner and Vice President with Morton Capital Management – a Registered Investment Advisor managing about $1.6 bn in assets under management as of June 30, 2016. As a Certified Financial Planner and Chartered Financial Analyst, Mr. Seetoo has 17 years of experience in developing investment strategies for affluent business owners and high net worth families.
Questions Answered:
1. Why is it important for business owners to do financial planning prior to selling their business?
2. Your firm has a niche in identifying alternative investment strategies – why is that?
3. How can business owners (or any investor) generate sufficient income in Zero interest rate environment after they
sell their businesses?

Disclosures:
Morton Capital Management ($1.6 billion in assets under management (“AUM”) as of June 30, 2016) is registered with the SEC under the Investment Advisers Act of 1940. SEC registration should not be interpreted to mean that Morton Capital or its personnel has been sponsored, recommended or approved, or that Morton Capital’s or its personnel’s abilities or qualifications have been passed upon, by the United States or any agency or office thereof.

The alternative investment opportunities discussed may only be available to eligible clients and involve a high degree of risk. Opportunities for withdrawal/redemption and transferability of interests/shares will be limited, so investors may not have access to capital when it is needed. Additionally, the fees and expenses charged on these investments may be higher than those of other investments.

Barron’s rankings are based on data provided by individual advisors and their firms. The ranking reflects the volume of assets overseen by the advisors and their teams, revenues generated for the firms and the quality of the advisors’ practices. Only firms that submit information are considered.

Past results are no guarantee of future results. Inherent in all investments is the possibility of a loss.

Vice President, Joe Seetoo, Interviewed in About Money – Should You Own Alternative Investments in Retirement?

About-Money---Alternative-Investments-Large

By Dana Anspach, Money Over 55 Expert
Updated March 16, 2016.

Alternative investments can offer higher yields to retirees, but they aren’t for everyone. To present both the pros and cons I reached out to Joe Seetoo, Vice President, Morton Capital Management.

Morton Capital, a registered investment advisor in California, specializes in bringing hand-picked alternative investments to their high net worth clients. They receive no compensation from the underlying investments which puts them in the perfect position to offer an objective opinion and do the research and due diligence that needs to be done before venturing into the alternative asset class world.

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