The Future of Investing is Dead? His $3B Is Quietly Making Moves

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For decades, the 60/40 portfolio—a simple mix of 60% stocks and 40% bonds—was the undisputed king of investment strategy. It was a reliable engine for wealth creation during an era of falling interest rates and cheap capital.

That era is over.

Today, we face a new reality: persistent structural inflation, crushing US debt levels, and historically dangerous market valuations. The strategy that got generations of investors here will not get them there.

Jeff Sarti is here to expose why this once-sacred strategy is now a liability and to reveal the quiet, radical shifts the smart money is making right now. Learn what replaces the 60/40, how to protect your wealth from currency debasement, and why liquidity is your greatest enemy.

This is an essential discussion for anyone serious about financial planning, risk management, and building a truly resilient investment portfolio.

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[THE GUEST]:Jeff Sarti is Morton Wealth’s Chief Executive Officer

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• 9:28 [Ad] Living the Dream with Curveball
• 10:12 (Cont.) The Future of Investing is Dead? His $3B Is Quietly Making Moves

Transcript

Jeff Sarti  

What is the biggest enemy of long term sound investing? It's your emotions. And the challenge with liquidity is it gives you a false sense of control, and actually gives your emotions heightened sense of control at just the wrong time. So if the markets are flying high and your greed kicks in, what do you do? You double down, right? You speculate at the wrong time and that's the challenge with liquidity.

Ryan Miller  

My name is Ryan Miller, and for the past 15 years, I've helped hundreds of people to raise millions of dollars for their funds and for their startups. If you're serious about raising money, launching your business or taking your life to the next level, this show will give you the answers so that you too can enjoy your pursuit of Making Billions. Let's get into it.

Ryan Miller  

The 60/40 portfolio worked in an era of falling rates and cheap capital, but that era is over. My next guest, Jeff Sarti, manages $3 billion in assets, and he's about to reveal what's replacing it, how smart investors are adapting, and why the next decade will reward those who think differently stick around, because by the end of this conversation, you'll know exactly how the smartest $3 billion investors are quietly making specific moves behind the scenes to win when everyone else is playing defense. All this and more coming right now. Here we go. Jeff, welcome to the show, man.

Jeff Sarti  

Thanks, Ryan, great to be here. Just glad I met you a month or two ago. By the way, just think you have a killer podcast, super interesting guests, so super excited.

Ryan Miller  

Yeah, it's great to have you, man. So let's jump right into it. Why do you say that the 60/40 portfolio is dead?

Jeff Sarti  

Listen, I as a starting point, I love you started with that question. And while maybe it's not quite dead, I do think it's maybe on its last legs. And there's a few reasons for that, starting with kind of the expression, what got you here won't get you there. We've been so lucky for literally, the last generation, four years, where we've been in a declining interest rate environment, really, starting from the early 80s through about call it 2022, when interest rates were still at 0% and so it's just been so easy, in all honesty, to make money in a 60/40 portfolio. Obviously, lower interest rates help stocks, lower interest rates help bonds too, right? Because you not only get income, but you get capital appreciation along the way. So truly, it's been easy, relatively easy over the last 40 years, you could have been a monkey throwing a dart to dartboard, and you would have made money with a 60/40 approach. We in Morton Wealth and I personally strongly believe that the next 40 years won't look like the last 40 years, and I'm sure we'll dive into that. But the punchline of that is, inflation changes everything, and we're just going to be in a different interest rate regime. That's the first piece. The second piece that'll hit on are just valuations. Long story short, on that is we like to buy things that are cheap and be underweight things that are expensive, and our stocks cheap or expensive. And based on any metric you look at, they're expensive. I mean, they just are. You look at price of sales, price to cash flow, you name it. By some metrics were as expensive, or even more expensive than, you know, the 1999, 2000 .com which was my market. So it's an expensive market that's on the stock side now on the bond side. If you asked me that question, call it three, four years ago, when interest rates were zero, the answer was, man, bonds are insanely expensive, right, I mean traditional bonds trading at low, single digit interest rates, avoid them like plague now interest rates have come up a little bit, so maybe not quite as dire of a story with bonds, but still, interest rates, in the grand scheme of things, are really low. And so I don't think bonds are that attractive of an asset class, either, you got to be really choosy. And then the last point I'll get on is just really around diversification. And it's interesting because you did one of your recent podcasts. I think it was your last one. Think it was your last one, a gentleman, I think was with SynthEquity, right that? 

Ryan Miller  

Yeah. Larry, yeah. 

Jeff Sarti  

Really interesting, interesting group, I think they're doing creative things about his modern portfolio theory, dead or broken, and a lot of the themes around diversification. Listen academia from the 1950s, 1960s, William Sharpe, Harry Markowitz, really good work. All of it was really around correlations, but a lot of that is really limited, because when you think about correlations, basically the data of correlations, you're looking at historical returns. But the problem with most of historical returns is 80 to 90% of returns are in upward, moving markets, and so that data doesn't really matter, because the purpose of diversification is around risk management. It's about protecting on the downside, and if most markets are upward moving, who really cares about the correlation data, ie if there's low correlation between different stocks. Financials, technology stocks, healthcare stocks, international stocks, you name it, what really matters is the 10 or 15% of the time when the market's down, and most crucially, the 5% of the time where you have market crashes in those times correlations, without getting too technical, but they go to one, right? All stocks, it just doesn't matter what sector you're in, they all behave the same. So you think you have an otherwise diversified portfolio, because all of academia says, oh, all stocks behave differently, and as long as you're exposed to different sectors, just not the case in downside markets, in market corrections. So we are really looking to find different asset classes that will truly march should be your own drummer and not not be correlated with stocks and bonds. 

Ryan Miller  

That's brilliant. So, so then, in this particular environment, I'm curious, from your perspective, how has that affected what the FED can do now or can't not do now? How, how do you think the FED should readjust their strategy, given the new realities of this market.

Jeff Sarti  

So, man, you're gonna get me on my soapbox. We have been very critical of the FED for quite some time, really, in all honesty, going back to the 08 crisis, where, of course, because of the 08 crisis, they had to reduce interest rates and stimulate the economy. But they did it to such a degree, not only with lowering interest rates to zero, but money printing galore. QE1, QE2, QE3, you name it. Where we stick, we stuck with those policies well after we believe we needed to stick with those emergency measures. So it's really in their DNA that, of course, everyone debates, Oh, are they gonna raise rates lower rates with each passing year? But at their core, it's in their DNA to be dovish and be accommodative, really, no matter what the administration, no matter whether it was Bernanke, Yellen, now Powell, and so they want to even though at times they say they're being disciplined. But when push comes to shove, they want to stimulate, they want to support the economy. They want to avoid pain or recessions at all costs and that's going to be their default. The problem is going forward and again, inflation changes, everything that was an easier policy to apply in previous years. But how much room do they have to lower interest rates going forward? I think that's going to be very challenging. Now that you have inflationary structural pressures, you have debt pressures, you name it. If they lower interest rates too much on the short end of the curve, can they lose control of the long end of the curve? Can they lose control of inflation? Can you have currency issues, those are all questions and concerns that we have.

Ryan Miller  

Brilliant you know, you talk about the short and long end and for our listeners, the way I've always thought about it is, if you have a big rope and you're on one end, and you just start whipping it, and it creates those waves. Well, you have control on the side that the short part of the curve, but that energy will flow through and start flicking the back end quite violently sometimes, you got to be careful of how hard you shake that rope with the interest rates of up and down, because it's going to trickle out. And I think what you're saying is we're starting to feel a lot of that whipping on the long end, which was we're now living in what used to be the long end, and now we're feeling that is that, is that right? 

Jeff Sarti 

Exactly it's over. So really, going back for the last 10-15, years, they've been able to control mainly the whole curve, by predominantly controlling the short end of the curve. The risk is going forward, will that same what were those same rules apply? And starting last year, there was some noise around this, right? They lowered interest rates last fall in 2024 but what happened to the long end of the curve? The tenure spiked right, and that caught them somewhat by surprise. So that is the concern, right, they of course, have control over the short end, but will, if they lower the short end too much, will that actually have a counter effect on the long end? Will they lose control of the bond market, in essence, that's the concern. That's our concern and at some point, we don't think there's a free lunch, right? At a certain point, the bond market will wake up and say, You know what FED you got to pay me a higher interest rate if you're going to continue to be so stimulatory in nature, and long term rates might stay elevated.

Ryan Miller  

So then, if 60/40 is obsolete or near obsolete, what replaces it?

Jeff Sarti  

It's a good question. So a lot of things replace it and we're not saying you shouldn't be in stocks and bonds at all. We allocate for our clients, and we're going to be allocated across lots of different asset classes, stocks and bonds included. But again, they're just going to be smaller pieces of the pie for the reasons I alluded to with your previous question. So there's going to be lots of other asset classes that will again, behave differently, everything from commodities, a lot based on just what we just discussed. We're really passionate about gold, and I'm sure we'll talk more about that. We've been in gold and precious metals for going on over a decade. Real Estate is an asset class, real estate is a wonderful asset class. There's some challenges in the current environment as rates have arisen, but still, there's so many different types of real estate, from apartment buildings to healthcare properties to hotels, you name it. Also within real estate, you can be in different parts of the capital structure. You could be an equity investor, high risk, high return, or you could be more conservative on the debt end side of things. And then lastly, with debt, we are very, very active in private credit. Private credit is a huge asset class with lots of different opportunities. And I will say, because I'm sure some listeners are saying, oh, man, you hear a lot in private credit in the news, lot of money chasing private credit. Covenant underwriting standards have weakened, that is true. That is something we're very aware of. That being said, private credit some very big, very big opportunity where there are niche pockets that we think are still very resilient, very unloved, or at the very least unnoticed uncrowded, where we think we can make a real nice return in a very risk controlled or resilient way.

Ryan Miller  

Brilliant. So with, with, would you say the the private credit excitement around that is coming from the anticipation of higher for longer interest rates?

Jeff Sarti  

I think that's a part of it. I think without a doubt, in broadly speaking, investors have just made more in private credit than in traditional bonds. So there's been that spread in general. Also, a lot of private credit is floating right in nature. So there have been some benefits to that, I would say, though, the real reason why it's just exploded in nature is the name brand firms, the big names out there. They're chasing a hot asset class, and they're throwing a lot of money at it because investors want it. So I might sound like I'm talking out of both sides of my mouth, because on the one hand, I think way too much money is going into that space, and it's become very crowded. And again, I really believe there's been, there will be, there already has been a deterioration in the underwriting standards within private credit. But the flip side is, again, it's such a huge opportunity that in niche areas, some that are a little bit harder to understand, at least on the surface, much less crowded and we think we could still generate a lot of alpha there.

Ryan Miller  

All right, so you're you guys are looking at Gold, real estate are quite good, so it sounds like an inflation play. So real assets, plus some private credit, so some diversification going on there. So in your perspective, what does real diversification look like in 2026, and beyond?

Jeff Sarti  

Yeah, that's a good question. So going back again, thinking about the stock, the 60/40 portfolio in stocks and bonds, when push comes to shove, they are really influenced by two main factors, one, which we talked about, interest rates, right? Declining interest rates great for all assets, including stocks and bonds. And the second factor that they benefit from, generally and most asset classes benefit from, this is a stronger economy. So you want a calm or declining interest rate environment and a growing economy all well and good, right? And traditional assets should benefit from those two things. The challenge is, if the economy hits a stumbling block and or interest rates continue to be volatile or move up from here, what other asset classes will be resilient in the face of those? So that's those are the types of things like, if we can find asset classes that will do fine or even well, excel in rising interest rates and will do fine or even well in a tougher economic environment, that's like the Holy Grail for us. So ideally, we're finding lots of those type of niche assets and adding those pieces of the pie to the portfolio. 

Jeff Sarti  

Another way to kind of think about it is, it's somewhat counterintuitive, but I'd say we're actually risk seeking as opposed to risk avoiding. So what I mean by that is, when most investors are seeking new investments, they're return seeking. So they'll find an investment and they'll say, oh, that meets my return target, I'll allocate to that investment. That's all well and good. We do some of that too. But the problem is, are you adding another piece of the pie that looks just like all the other pieces of the pie in your portfolio. Now you're doubling up on things that are correlated, you're not diversifying. So what we do is a very different approach. We're actually risk seeking, meaning we're looking for different risks, idiosyncratic risks that'll just be different than what I mentioned, tied to the economy or tied in interest rates. And if we can find things that are truly non correlated, that are again going to be idiosyncratic in nature, it's not that we're avoiding risk. It's just a very different risk, that's where real diversification comes into play, and those are the things that we're targeting going forward.

Ryan Miller  

 I love it. And, you know, speaking of that diversification, I've long been banging the war drum here a little bit on alternative assets. It's a lot about what my show is about and honestly, Jeff, I think that we are about to see and whether I'm right or wrong, I'm right or wrong. I'm not giving investment advice, just my thoughts. I think we're about to see the golden age of alternative assets, right and here's why, why I think is the private market, I think is near efficient. So you're buying into the efficient market hypothesis, or some version of that. And if that's true, and if I'm right, that makes it very challenging to add alpha in the long run to anyone's portfolio. 

Jeff Sarti  

You're talking about the public markets specifically. 

Ryan Miller  

The public markets exactly, so the public markets are near efficient. Thank you for that. 

Jeff Sarti  

Yeah. 

Ryan Miller  

And so therefore, I think the we're about to enter the golden age of alternative assets and alts is going to be huge. But, and here's why, is because, in order to get alpha you, one of the ways is to say, I know something you don't. Now, sometimes that's highly illegal in public markets, called insider trading. You can't do that, but let's say you're buying raw land, right? You're a raw land investor, and you know something about this area, and you have a team that grew up there, and they understand whatever, right, all legal, all ethical, but because of the inefficiencies, if you can get some asymmetric information now you're able to do that, and that often happens in alternative assets, not every time, but a lot of the time. And so I think where we're going to see a lot of alpha, the potential of it is more in the alternative private investment space, and a lot of that traditional public market, Wall Street capital, we're going to start to see it go into more private funds and RIAs and all these different areas of these allocators, like yourself, with 3 billion in assets, now we're able to start exploiting some of the alternative asset market. You have any thoughts on that?

Jeff Sarti  

Yeah, listen, I love that, you're speaking our language. I think we again, we're going to invest in the public markets. But one of the challenges to your point is, man, there's, it's really hard to add at alpha. It's really the information is out there. So you know, literally millions of participants trading the same stock, trading, Apple, Nvidia, who really, truly has an edge, very different than the private markets. I mean, and the more niche you go, I'll give you even a simple example. We do a lot in the healthcare space. So we invest, make loans to companies participating in healthcare royalties. So if you think about like Shark Tank or royalty stream, where you own the piece of the sales of a pharmaceutical drug, it's a very specialized space where you only add a handful of players, because it takes a real expertise to understand that space, understand the patent protections, understand the FDA approval process, you name it. That's a very niche space, inefficient. But because that, it's just not crowded, it's not crowded. So if you can gain an expertise in that, you can really generate what we believe to be a good amount of alpha, alpha, different than just buying stock XYZ, which you know, everyone in your neighbor is buying just like you are. So yeah, couldn't agree more that inefficiency is a huge aspect of why we continue to be so excited about alternatives.

Ryan Miller  

Yes, it's the only time we'll get excited over the word inefficient. So normally it drives me crazy, yeah, but when, when you can generate some outsized returns for yourself, or if you're an asset manager doing those, we'll take it. So, you know, okay, so if, if we are, it sounds like we're aligned on that. So with alternatives, which alternative asset class deserves a permanent spot then on everyone's portfolio, just in your opinion?

Jeff Sarti  

Yeah, permanent, it's a good question, because if question, because, of course, we're going to shift in and out of different asset classes depending on opportunities. So those ebb and flow, I will say, from a more permanent point of view. A couple things come to mind. One is something we've already hit at, hit on a gold, gold we believe deserves a permanent allocation in client portfolios. And as a starting point, I might sound like a gold bug with that comment. I'm not. I really root for the day where I don't believe portfolios need that hedge or insurance policy, and I hope that will come, but until our government, monetary policy, fiscal policy, you name it, becomes more disciplined in its approach, and I don't see that coming anytime soon. I think portfolios have no choice but to protect themselves against the debasement of currencies. So I think again, most investors have their line share, if not all of their assets exposed to the US dollar to us, it's just an insurance policy. It's a protection in the portfolio against the continued debasement. So that would be the first one that comes to mind. Yeah, we've had a core position in gold for quite some time, and despite the run up, don't get me wrong, the run up makes me a little nervous. Feels like there's a little bit of froth in gold price but from a long term point of view, our thesis has not changed, because, again, the world hasn't changed. That's the first thing that comes to mind. 

Jeff Sarti  

And then the second thing, which, which I already did hint on, it's a broad bucket, but it is private credit. Again, just like for us, it's just like having bonds in your portfolio. All it is. It's your previous question, you have public bonds, you have private bonds. Should bonds be a part of a core part of a portfolio? The answer is, of course, they should be. You know, maybe, maybe, maybe a super young investor could be 100% in stocks, etc. But most investors need some sort of more consistency, income ballast, resiliency to their portfolio. That's where more of the fixed income part of the portfolio comes into play. And from our point of view, we just think you could find so much in the way of better opportunities in the private credit space, illiquid private credit space, as compared to the public markets. So for us, private credit is a very meaningful part of all of our client portfolios, and we don't see that going away anytime soon, at least for us.

Ryan Miller  

Okay, so it sounds like what you said. Really, if we go back to first principles, it sounds like a lot of this. And you correct me if I'm wrong. Sounds like a lot of this really ties into addressing the concerns around inflation and lever and make positioning your client, which is literally your job positioning your clients, to address the realities of the market. So if inflation is going to be a persistent issue and no longer transitory, but now feels structural, systemic, transitory, the favorite FED word. How do you invest when inflation is now starting to feel a little systemic and it's part of the scaffolding of the economy for quite some time? 

Jeff Sarti  

Yeah. And as a starting point, even getting some context around that question, I think it's important as an investor to make a decision around that, is it transitory, or is it structural, obviously, for most it's starting to feel more structural. Feel more structural. For us, we have a strong conviction, and we've felt this way for a really long time, that it would be structural going forward. And so that is the starting of our thesis and I think it's for every investor, it's important to look in the mirror and really make a decision around which side of the fence you are with regards to inflation. And the real reason for that, more than anything else. It comes down to our debt levels. I mean, they're just utterly, utterly out of control, where our yearly deficits now are at 2 trillion a year, monumental number that's about 6 or 7% of GDP. So just on a percentage basis of GDP, from a structural point of view, that's the highest levels in our history, outside of wartime or nasty recessions. So what happens if we go into a recession? Is that going to go from 6 or 7% of GDP to pick a number 10% of GDP? I mean, we, we cannot support ourselves without continually printing money and issuing more debt, 37 trillion total in terms of our debt on our balance sheet. If you bring that down to the individual taxpayer, individual household, each household share is over 300,000 and by the way, the average taxpayer in America household makes about 80,000 so the average taxpayer makes about 80,000 a year, but owes over 300,000 a debt. And one last point on this. Sorry to be too technical on these numbers, but that doesn't even include social security medicare, which is kind of off balance sheet, the unfunded commitments, unfunded liabilities, by even the most conservative estimates, most extreme I hear, are like 200 trillion. But let's say the most conservative estimates of what that unfunded liability is 75 trillion, in essence. Now you're tripling the number, going from 37 trillion, you had 75 trillion. That means the average household owes roughly a trillion. Excuse me, a million dollars in debt. I mean these numbers, we are bankrupt. There's really we believe the mass it's a little bit too late. We don't think growth can really solve this. If we fix this, maybe 5, 6, 7, years ago, maybe. We don't think higher taxation can really solve this. Yes, they're going to try it, but how much theoretically will that slow the economy and even backfire? 

Jeff Sarti  

So we believe the path of least resistance, and they're already doing it, is inflation. It's continued money printing, continued a basement of currency. Because when you have a debt problem, what is the easiest way to fix that debt problem? It's paying that debt in the future with cheaper dollars. That's it. Tried and True societies throughout history have done this over and over again. And so we think that is, again, the path of least resistance going forward. And so because of that, again, that comes to gold, we think this is one of the reasons we think, in the last year or two, gold has really finally perked up. The world is finally starting to talk about this, no one ever talked about debt levels. Now you're starting to see this in the news. People at least starting to talk about it. But even furthermore, it's just, I think if there's a psychological shift among the investment populists at large towards concerns around this, I think more are going to be focused on real assets, as opposed to financial assets. 1970s are a great case study this right where inflation was out of control. People really started getting concerned about the purchasing power of their dollar like they had never been before. And so what happened, they completely avoided stocks. They couldn't care less about making bets on the future. That's what, in essence, investments in stocks are and what do they want? They wanted investments in the tangible, in the here and now, in the present, stuff that they can grab. And so real assets, gold and other real assets, really shined in the 1970s as compared to financial assets. It's just, it's just a mindset shift, we're not there yet. But our thought is that that shift is potentially starting to happen. And if that really continues, we think there could be a shift from stocks and other more speculative assets into more real assets and gold.

Ryan Miller  

Man. So so we've got more from transitory to something a little more systemic and structural. So that's on one side now, a lot of the times, the other part of this, and I'd love to get your take, is liquidity. 

Ryan Miller  

Hey, thanks for listening to Making Billions. If you liked this episode, could you do me a huge favor and go leave a review? This helps us to get the podcast to more ears, to help people raise capital, learn fund management strategies and serve our mission to help fund managers and deal syndicators to gain greater hope and focus as they build their empire. All right, let's get back to the show. 

Ryan Miller  

So my question for you is, is liquidity the enemy of long term wealth, or is it supportive, what's your position?

Jeff Sarti  

Yes, it's, I like how you phrase that. Maybe it's a little bit of a leading question, because we think liquidity has some real costs to it, especially our shared view and somewhat passion around private markets. We obviously embrace illiquidity. But backing up a little bit, just to try and be objective about this, listen, I understand the benefits of liquidity. If you had two investments and they're equal in all aspects, let's say same return profile, same risk profile, but one was more liquid than the other. Of course, you would gravitate towards a more liquid one. You have more control, more flexibility to buy and sell, all well and good. That being said, despite those benefits, we actually think the potential costs, risks associated liquidity outweigh those benefits. 

Jeff Sarti  

And what I mean by that is, what is the biggest enemy of long term sound investing? It's your emotions, right? We all know fear and greed. It's like classic investing 101. And the challenge with liquidity is it gives you a false sense of control, and actually gives your emotions heightened sense of control at just the wrong time. So if the markets are flying high and your greed kicks in, what do you do? You double down, right, you speculate at the wrong time. Flip side is when markets cracked, and things become cheap. What do most investors do? We all know, again, it's fear, fear is induced and they sell. And this isn't academia, right, we all know the average investor underperforms just a standard buy and hold, do nothing investor and that's that is the challenge with liquidity. Again, it gives your emotions power at just the wrong time. Very different than illiquidity. When you have an illiquid investment, you're not even distracted by the ability to sell, right? You really, truly, it changes your mindset. You just naturally have a much more long term discipline mindset. And if you think about investing in anything, let's say you invest in your own business, for those business owners out there. When you invest in maybe a piece of real estate, the last thing that you're thinking about is, oh, man, when am I going to sell that? Of course, maybe once a year. You'll look at a price and evaluate, does it make sense or not? But generally speaking, all you're thinking about is trying to add value to that investment and build wealth over time. Different than what's a liquid, let's say stock where, for instance, our whole industry caters to this. Everything's about a price target, which I hate. So you buy a stock at 30 and it has a price target of 40. The problem when you have a price target is now, immediately, you're no longer an owner, you're a renter. That's your mindset. You're thinking about, when do I sell every day? Oh, well, look at that price target. You're always thinking about selling. That's not sound investing. That's not, that's not sound investing principles. Sound investment principles. You're not distracted by price targets. Short Term noise, short term trends, you're trying to build wealth over the long run. So we really think illiquidity really promotes more of a long term and discipline mindset, as opposed to liquidity, which really reinforces more of a speculative mindset.

Ryan Miller  

You know and it comes back to a word that's thrown around in our industry, is liquidity, liquidity premium. And they charge a premium, but based on what you're saying, I think one of the better ones would then be a value premium. And if we can get back to that, that's at the core of a good capitalist environment, is to say premium just means I really want that, right? That's a very horrible definition of it, but says a lot of people want it, so some we got to start charging premium. What if that was value instead of liquidity? What if we actually pay to print, maybe we do, and it's baked in. We can go back to the fish in our markets hypothesis, we can get back to that. So a lot of this isn't really just may the best man win. It's more of who's the last man standing. So in finance, we have a lot of that. And so when we're the last man standing, and no big surprise, there is the one who creates value. And so if we can get back to actually producing value, rather than valuing liquidity. And I'm not saying there's anything wrong with it, I'm just saying it could go wrong it with a lot of people overly obsessed with it. And so I think what you're saying is, yeah, sure, liquidity, obviously we need some kind of mechanism to return capital. However, with that, there can be a lot of issues baked in. Man, so I love that any, anything else you can add to that?

Jeff Sarti  

Just even your comment about obsession, I mean, people are obsessed with liquidity. And again, ultimately, it's a false sense of control and it's a real crutch. So yes, of course, some of your portfolio should be liquid, and you need some flexibility. But ultimately, most, most individuals, you don't need the lion's share of your portfolio to be liquid. Nothing close to it. Again, you're just like, if you're a business owner, your business owner, your business isn't liquid. You're building your business over time, so this obsession with liquid liquidity, I think it's a distraction.

Ryan Miller  

Yeah, couldn't agree more, buddy. So you've coined this phrase. I don't know if it's from you or whatever, but I absolutely love it. It's called a healthy skeptic. So how does a healthy skeptic spot a fragile investment narrative?

Jeff Sarti  

Yeah, that phrase. It's intentional. So I do. I write a periodic newsletter called the Healthy skeptic, and it really is a mindset that we embrace at our firm and that our clients embrace as well. And I'll break it down. I'll start, I'll talk about skeptic, and I'll talk then about the healthy overlay to what I think makes a healthy skeptic, but starting just with the nature of being skeptical. And we are skeptical, and our clients share this as well, what does that? I think it means we're curious. We're always questioning right? We don't take the status quo at face value. We don't just chase trends like most do, and again, we question things. We question the environment. We question the sustainability of our debt levels, our imbalances. We question valuations. We don't think hope is a strategy, we question these things right. Now, the risk, though, of such high degree of questioning and skepticism is that can veer into doom and gloom land. To some degree, overly skeptical people can be driven by fear, because they are questioning so many things. And theoretically, they're very smart, right? And they're, they have all this data, they all of a sudden develop what crystal ball where they then think they then think they know the timing of when that correction is going to happen, and you have to short the market, and they're going to time it perfectly. We reject that latter aspect of being a skeptic. We do reject the crystal ball. Instead, we have what I'd say is a healthy overlay to being skeptical. So what does that mean to be healthy in general? I think it means to be more future oriented, to be optimistic, to feel that even though there are challenges, eyes wide open, but we can overcome them. We can figure out solutions to them. So that's one aspect of being the healthy overlay. 

Jeff Sarti  

The second aspect is, if you think about like a healthy lifestyle, like your diet or workout regimen, what does that entail? Right? It takes discipline. It takes hard work. It take no shortcuts, right? Very different than many investors. They want shortcuts, right, they want silver bullets. They want quick wins with a healthy approach to investing again, there are no shortcuts. You have hard work. You got to be disciplined in that approach. So it's kind of combining that skepticism with that healthy overlay. And one last point, just back on the crystal ball thing, another aspect I think that's really important, from a healthy mindset point of view, we acknowledge, and this is very humbling in a lot of ways, but we acknowledge we have no crystal ball. We just don't. We don't even pretend to. And I'm sure you're in the industry too you probably get the question all the time when someone finds out what you do is like, oh, what's gonna happen in the market next year? And I know our answer, and all of our all of our advisors here at more than wells answer, the answer is we have absolutely no idea. And I know that's weird for maybe the recipient on the other end of that question here from a financial advisor, but it's just true, we have no crystal ball, and so as a result of that approach towards uncertainty, we just take a very different approach on how we strategically handle our investment portfolio, construct portfolios. Because instead of trying to have a crystal ball, we embrace uncertainty and diversify accordingly. 

Ryan Miller  

Brilliant so they always want to pick your brain. I get all those emails on LinkedIn, yeah, can I pick your brain? And speaking of mindset from your perspective, what mindset would separate consistent wealth builders from those performance chasers that you mentioned before?

Jeff Sarti  

I'll keep on this uncertainty theme, because this is a really a big focus and passion of ours. A lot of this is is inspired by Daniel Kahneman, great behavioral psychologist, Nobel Prize winner is made a book Thinking, Fast and Slow. Great read for those that are interested in this topic. But he talks a lot about behavioral biases that really get in the way of discipline, long term investing principles. And so there's one around uncertainty and the mindset of how most react when faced with uncertainty. And he's as a starting point, listen if the stakes are low, uncertainty is fun, right? Let's say you're watching a sporting event, you don't want to know how the day ends. That's part of the fun, right? Now, that being said, when the stakes are high, and I'm now talking about your net worth, your nest egg. Uncertainty can be very unsettling and result in fear and a result in a search to outsmart that certainty uncertainty and exert control. And one of our frustrations, really, in all honesty, are that I think our industry cap, preys on to some degree, is we in our industry, we all flex our muscles right? And we are the experts and I'm doing experts in air quotes that we have predictive, predictive power. We have forecasting power, right? We're ending near the end of 2025 we're going to see every big bank with their forecast for what the market's going to do in 2026 and all of that is the purpose of that is to give the end investor, I think, what is a false sense, but a sense of control in a world that is otherwise truly we believe uncertain. 

Jeff Sarti  

We take a very different approach. We again, going back to my comment on the crystal ball. We we embrace uncertainty. We acknowledge that we don't have that crystal ball. We ignore forecasting, and instead of being distracted by trying to out predict the market with each twist and turn, we think that's misplaced energy. Instead, what do we do? We spend our time and our research team focusing on spotting unique opportunities, spotting those diversified opportunities to build a stronger portfolio. One last point on this, because of one of my recent letters on the healthy skeptic, I did an analogy around how we think about uncertainty. In many ways. I think the investment landscape, it's like the ocean, you know, the waves, they're unpredictable. Sometimes they're big, sometimes they're small, and everything in between. It's the way most investors approach that uncertainty. Again, it's from a sense of control to surfing analogies. They want to hone their surfing skills, right, so they'll spend their time honing their surfing skills, figuring out the perfect way to catch the right wave. That's like catching the right stock, how to get off that wave at the right time. That's like selling the stock at the right time, or, let's say a storm's coming in, the waves are too big. What do they do? You go to the shore, you sell out completely, and you go to cash. So everything's like this timing game of timing when to get on or off of the wave. Instead, what do we do, we throw out the surfboard, or maybe we say, oh, you can have your surfboard for your little play trading account. But our goal is to be in the ocean at all times and compound returns. So we our goal is to build a bigger boat. We don't want to be on a surfboard. We want to be on a bigger boat with a resilient hull and safety systems that no matter what the size and shape and unpredictability of the waves, we're going to be fine. So if the waves are calm, we'll be fine, we'll be along for the ride. But more importantly, if and when unpredictability uncertainty rears its ugly head, we're going to be fine too. So that's our goal. It's really to lean into that uncertainty and again, to build portfolios that are going to be fine no matter what the outlook of the storm is.

Ryan Miller  

Yes, it reminds me of a book from my friend John Jennings, who runs Archbridge Financial. He wrote a book literally called The Uncertainty Solution, I got to set you two guys up a very similar philosophy. So I love that man. So a lot of the time we're talking about the market and economics and your strategies around managing the big waves, the little waves, any waves you're just saying. How do we do that if we don't know what waves are going to come in or when they're going to come in, we need to build a vehicle or a boat in order to manage that one that is acceptable and built for that exact type of Tidewater. So with that said, what's one strategy that you would say ultra wealthy families are using that most investors are ignoring?

Jeff Sarti  

The main one that truly comes to mind and listen, it's not that creative, that being said, it's a game changer for especially ultra wealthy individuals, is real estate. Real Estate is really a very powerful asset class. And listen, real estate, to some degree, has been challenged in recent years, rising interest rates, real estate got too expensive a few years ago. But again, generally speaking, it's really from a long term wealth creation point of view, it's really a unique asset class, because there's not many asset classes that straddle the fence between both growth and income. Most asset classes, you're picking one or the other, but with real estate, historically speaking, you have an asset that appreciates in price over time, coupled with, if structured the right way, it could be a real nice income generator as well. So it's really unique from that point of view. It's an inflation hedge, something we're concerned about, generally speaking, over the long run, it will protect against inflation. And then, generally speaking, of course, tax laws always change. But generally speaking, there's a lot in the way of tax efficiency, too, tax advantages with real estate, tremendous depreciation advantages associated with it and you know, it's a real asset. It's something you can grab and touch and feel something tangible. So it's a unique asset class that has a lot of those characteristics. So that'd be my answer. I think on the wealthy families, I know they tend to have a real passion and meaningful real estate portfolio. 

Ryan Miller  

I love that man. So real estate again, they always say investing everybody goes for these sexy things that are wild and crazy, and you know, we're gonna build, I think Elon said we should build quantum data centers and Moon craters. And okay, sure, there's market for that, but for the for the rest of us that don't have alien level intelligence, myself included, real estate would be one of those great players. Couldn't agree more, it hits all the areas in one asset class. I think that's a really great perspective on the market man. So with that said, I'm curious, from your perspective, where are you seeing the best asymmetric risk to reward opportunities in, say, 2026, and beyond?

Jeff Sarti  

Yeah, asymmetry, it is always something we're thinking of right limiting downside and trying to maximize upside are, generally speaking, when we think about asymmetry, our focus is more about as much as possible, resiliency and avoiding downside, really principled protection and making a nice, solid return on the upside. So that's more our approach. And private credit is a great example where it's structured right? Ideally, the collateral is assets backing the loan, as opposed to cash flow. Then knock on wood, you can really structure thing where you have asymmetry, where you have very limited downside, but attractive alpha from a fixed income point of view, on the upside. Now that being said, for truly more exponential, asymmetric returns, one big area of focus for us in our portfolio is we talk about gold, we also have had, for quite some time, an allocation to precious metal and specifically gold mining stocks, an unloved sector in the market. No one is wanting to own them for a very long time now, that being said, they've had a real nice run year to date. I mean, almost have doubled, really. You know, the broad index, like GDX, has is up over 100% in the last year. 

Jeff Sarti  

So some of my question, oh, man, that runs been huge is, is, is there still more upside from a long term point of view? The truth is, that's just playing catch up. It's been gold mining stocks in particular, have been such a laggard as gold has gone up with each passing year, they've really been poor performers. And they happen to be one of the few sectors in the market. When you think about different stock sectors that are just absolutely printing money, their margins are absolutely through the roof. They're expanding like crazy. So we say on a most price to earnings, price to cash flow, basis, basis, they're trading still very cheaply. In many ways, even with this run up, you're just not seeing the average investor is just not buying gold mining stocks. The average institution is not buying gold mining stocks. So if that ever catches on, we think there's still potential, real, meaningful upside with with gold mining stocks in particular, and then some would tie to that again, back on the previous discussion around real assets, we think there could be a real shift towards real assets, commodities in general, think energy. I continue to be puzzled by oil in particular, how oil, with all of this inflation over the years, is still at around 60 bucks a barrel. That catches me by surprise. I think there's maybe an asymmetric opportunity there with that, and natural gas, and one last point around energy. This is more from a long term point of view, and we're just kind of getting up to speed on this trade potential investment. It's around nuclear. Nuclear is, I think, again, it's a longer term play, but I think it's ultimately, I think it's an inevitability. The world is embracing nuclear. You look at China, China is massively investing in nuclear. If our competitor on the world stage is investing in something that degree, tremendous power within nuclear energy, it also is clean. I get it all the regulatory concerns, etc. But that being said, I think at a certain point we'll have no choice, and I think there could be tremendous upside to the nuclear play as well.

Ryan Miller  

Perfect Man. We just had a discussion with Michelle Urben, they were talking about nuclear recycling and a lot of things that they're doing, and they feel very strongly about it. And I remember the first time that you and I met, we spoke about nuclear and some of the projects and one of my first love was energy. And you know, often we think of the Homer Simpson, the large plumes that everyone has, and you know, some of the chernobyls and the different meltdown places in Japan. And the thing that I think gets lost just for regular in the market, not people in the industry, but the thing that gets lost is that is really old technology, like that's 50-60, year old technology, the technology that's available now and the efficiencies that are available now is just orders of magnitude above what it used to be 50-60, years ago. So I think a lot of the time, even though it hasn't caught on, and this might be a branding problem more than a utility problem is, I think as we start to explore that, and it starts to catch on, and we really start to say, hey, there's something here. The technology is great. The carbon footprint, which is a big catchphrase in investing in the environment, that's I think a lot of people are going to start to start to come around. So I couldn't agree more, I think there is a lot of untapped potential in nuclear energy and in the time with AI and everybody seems like building a data center, at least in the mice circles, and there's nothing wrong with that, but a lot of data centers are not getting approved. Why? It's not because we don't need them. It's because we don't have enough power in the grid to feed it. So unless we get our power problem figured out. It's going to trickle into every other industry and we know this. We know power unlocks it's the one thing that unlocks everything. That might be a little dramatic, but when we look at third world countries, and when you introduce access to abundant energy, GDP massively rises that and funding women, those two things, when you see those like we know that. We do these studies that when you implement that, but particularly around energy, when we start improving the access to energy, GDP rises. So it's not like, yes, we got to figure out the debt and the government's gonna fight and shut down Congress and reopen, sure, yeah, that's thing. That's reality. We all got to deal with it. Okay, however, private market it's not just up to the government, private markets can work with governments and we can really start to bring these new energy technologies to life. Anything else you can add to that?

Jeff Sarti  

Listen, just hammering home your points, you raised so many good points. Our system is just antiquated, so antiquated. I mean, so many ways we're second world and third world. In terms of our grid, we have to update our technology, without a doubt. And to your point, Data Center is a great example, the capacity to constraint is power and so what are the solutions? I think it's an inevitability, again, that I think nuclear. Again, it takes a long time to build a plant. So this is more of a long term play. And again, to your point, it's a branding problem, regulations, etc. There is a lot of complications with it. I do acknowledge that, but I just, I think, I think it's in our future.

Ryan Miller  

Yeah, it's got to be for sure. So as we round third base, my final question for you, what's the coming disruption smart money is quietly preparing for right now?

Jeff Sarti  

I guess, I guess you're calling me part of the smart money.

Ryan Miller  

I am. You definitely are brother.

Jeff Sarti  

Listen our main theme. I mean, what I hit on, but I can't, I can't hammer on this point hard enough. I think the most important issue that our generation faces, our debt levels, period. End of story. I think they're utterly being ignored, and we will have no choice but to figure it out and or figure out the consequences. And listen when I say this, of course, that's going to sound concerning, and I am concerned. But this isn't doom and gloom. Doesn't mean that the world's going to end. It just means that we have our eyes wide open to this debt situation, and policies are going to have to be focused on it. And again, we think the path of least resistance is continued money printing, other ways to inflate our way out of the debt. You could be critical of that or not. That's a separate discussion, but we strongly believe it doesn't matter. That is the path of least resistance. So that is what we are prepared for, and that is what we're positioning portfolios for. So that's really one of our main areas of focus.

Ryan Miller  

Absolutely brilliant. So prepare for the implications of higher debt levels, higher inflation and positioning that. So that's the those are the quiet moves to put a dramatic spin on it, of where the smart money is doing, and they're preparing for that right now. So before we wrap things up, is there anything else you'd like our fans to know? Anything at all ways to contact you or your firm or anything?

Jeff Sarti  

Oh, no, listen, I appreciate this. First of all, this is a fun conversation, I really enjoyed it. Yeah, just easy to find us, we have a we have a real robust website. It's mortonwealth.com, ton of information. We have, you know, even a weekly podcast called, The Financial Commute. A ton, my white papers on there, my healthy skeptics, a lot. We spent a lot of time. We care a lot about education. So I think our website's a lot of information. You can find me on LinkedIn, Jeff Sarti  there, I'm on Twitter at Sarti, S A, R T, I Jeff. So pretty easy to find in any of those places.

Ryan Miller  

Awesome. So as we wrap things up, just look into positioning against inflation. That's number one. The other one is to really look into power generation. We talked about that, pay attention to some of the economic variables, like inflation, interest rates, private credit, gold and real estate. You do these things, and you too will be well on your way in your pursuit of Making Billions.

Ryan Miller  

Wow, what a show, I hope you enjoyed this episode as much as I did. Now, if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes. Plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better. And make sure to come back for our next episode, where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends, stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.