Newsletter Index:
1. Building out Harbour Service Capabilities
2. Geopolitics
3. Summer investing conferences
4. Investing
5. Webinars
6. Matt’s Big-Hearted Moment
7. Fun stuff
8. Callout-Testimonials
Happy Labor Day Weekend!
Hello all! It’s been a few months since my last full newsletter. Given all that has transpired, I’ve placed an index and titles in this newsletter if you want to skip around. I'll keep the next one shorter, but I hope you find this information helpful and informative!
Building out Harbour Service Capabilities
Hopefully, you’ve found our new scheduling process easier! So far, we’ve heard very positive feedback.
Due to the possible expiration of the Tax Cuts and Jobs Act, significant tax changes may occur at the end of 2025. We’re closely monitoring the situation and will proactively keep you informed about any changes that may impact you. To navigate these potential changes, our financial planning software (GPM) includes a robust estate planning module that allows us to model estate taxes and explore strategies to mitigate them. If estate taxes become relevant to your situation, you can expect to see more of this module in our planning.
We'll soon be launching a new service called Everplans. We've had this in mind for a while, and it’s designed to securely store important documents, as well as capture and share photos, messages, and other meaningful moments with your family. A separate service that I found recently in Charleston dealing with digital conversions (like VHS tapes) is Heirloom.cloud. I recently brought some family videos to them for cloud uploading, and you can easily share selected videos with family members who can make comments. Our family has really enjoyed it.
Our broker-dealer, M, is offering a new cancer screening service for clients over 50 who have life insurance policies through our partnership. If you're interested, feel free to reach out to us or request the screening here . If you don’t have a policy with our partnership, no worries—the service is also available to the public, and you can order one independently here.
Lastly, we’re currently updating our website. Moving away from the standardized Raymond James template so we can more easily post updates, blog, and share events that you might find interesting.
Geopolitics
One assassination attempt, one successful assassination (within Iran by Israel), an incumbent President abandoning re-election hopes after a (really bad) debate less than 4 months before an election, and a party quickly re-selecting a candidate before its nomination convention. Is your head spinning yet? For sure, mine has been. The last 2 months were one of the most epic news rollercoasters of my lifetime. Or has it been? Not to downplay the importance of all we’ve seen, but I did a little historical research. Here are several other chaotic 30 day periods within just my lifetime similarly epic: November 1979—Iranian hostage crisis, assassination of South Korea’s President, Russian invasion of Afghanistan; September/October 2008—the seeming endless epic bankruptcies as the financial world seemed to fall apart; March 2011—Fukushima disaster, NATO overthrows Gaddafi in Libya and Syria’s civil war begins against Al-Assad; Sept-October 2001—9/11, US invasion of Afghanistan, Anthrax attack. Then you add Brexit… COVID…. Wait, you mean the news is frequently this epic? Yep. And we made it through all of these things.
Are we steamrolling towards something horrible? Certainly yes. And certainly no. We are always hurling towards a disaster that may or may not happen. I won’t begin to try and predict what will happen next nor will I tell you not to be concerned. To state the obvious, I do believe we will see more periods of disruption before we return to a period of relative calm. Each of these events in my lifetime changed history and I believe last month did as well. But I also believe today is far different than the others for one reason: never before have we had so many sources of information bombarding our brains. It’s not just the news itself, it’s the endless sources trying to tell us how to think about the news. The ‘news’ machines are far more accessible and pervasive than ever before. Were you riveted on various forms of social media to get the news ‘first’ on what will happen next? Is Trump OK? Will Biden step down? Who will replace Biden? Will Iran counterattack? I confess to doing some of that. But we must have the ability to turn it off. To maintain ourselves. To think by ourselves. To maintain agency over our thoughts, especially so we can be present for those important to us. Sometimes it’s just better to hear only the news and ignore those telling us how to think, they usually have an agenda that serves them and not us. And happily, as of now, Iran still has not responded to the assassination on their soil. We could be hurling towards an election that ends in relative calm as it did in 2022 when we were similarly warned about existential threats. Regardless, since I have little control over world events, I’d rather focus on taking care of my people, which very much includes you. I believe that is my greatest contribution to ‘what is happening’ and trying to figure out what if any impact these events will have on markets.
Summer investing conferences
Just like last year, I attended the Strategic Investment Conference (hosted by John Mauldin) and Epsilon Connect (hosted by Ben Hunt). The theme of former was “Into the Storm” and the theme of the latter was “Remaining Human in the Age of AI”. Needless to say, we discussed many scary and even dystopian themes.
At SIC, two of the speakers recently published books: The Fourth Turning is Here, Neil Howe; The Storm Before the Calm, George Friedman. Ben Hunt has a related thesis titled “The Great Ravine”. With respect to these truly brilliant thinkers, I also noted that Friedman wrote a book in ’91 titled The Coming War with Japan and Howe wrote a book in ’89 titled On Borrowed Time. The theme was how to invest through an upcoming era of disruption, chaos and uncertainty. Speakers included bulls and bears from all over the world.
My favorite speakers included Louis Gave, Pippa Malmgren, Lacy Hunt, Frank Lutz, Ben Hunt, and a new speaker Britt Harris. Politics were discussed at length—and in retrospect with both Biden and RFK now out of the race, very little was correct! You would be happy to hear that no speaker thought we were heading towards a civil war. Unrest perhaps and plenty more polarized bickering, but not a war.
Geopolitics was certainly more troubling. We’ve seen destabilization across the globe and unfortunately West and East are further aligning themselves against each other. What has been ‘cold war in hot places-hot war in cold places’ has evolved into some hot wars in hot places, notably Ukraine and Gaza. No speaker saw a near term end to the global troubles, though we are not yet in a full scale ‘cold war’ as we saw in the 80’s, at least with China. Cyber attacks continue on the rise. It seems I receive a phishing attempt at least weekly and a notice from another company that had a security breach monthly. It shouldn’t come as any surprise that my takeaway was the continued importance of our ‘hurricane in the Atlantic, be prepared’ theme. While I know many have free services, if you haven’t signed up for any credit or identity theft monitoring, reminder that you get a 20% discount through this link! www.eversafe.com/rj18. No, we don’t receive any compensation off this service, but we have found it may help with protecting yourself against cyber criminals.
From an investment standpoint, this year saw more bears as we are definitely seeing an economic slowdown. We have all time high office vacancies and the consumer has stretched credit card spending as delinquencies are rising. On other side, we’re seeing a global manufacturing rebound as GDP in US remains strong—which would argue against a severe slowdown. My take continues to be (aligned especially with Gave and B Hunt) that inflation has not been tamed and we are likely to continue an inflationary expansion.
With much doom/gloom and talk about recession or war, my favorite line of the conference came from legendary investor Britt Harris: “bears sound smart, bulls live in big houses.” Britt was very bullish and it was fun watching him take on the bears in an animated roundtable.
The Epsilon Connect conference had less on investing this year and more of a deep dive on maintaining yourself, your ability to think critically, and your sanity as we are bombarded by endless narratives, including some generated by AI. A sub-theme was taking care of your people and each other—hence my comments repeating this sentiment from the previous section. They formed a nonprofit that has a partnership with Vanderbilt that has the only database of every single TV news program from the past 50 years. They have been studying the narratives using AI tools to identify trends to help find ways to help the public counteract active propaganda-polarization. Additionally, they unveiled an investing service called Radiant that helps to identify investing trends based on AI analysis of narrative trends. Yes, we are subscribers, and we’ve found it so far to be a very useful tool—especially on the direction of interest rates.
I have rarely found such an intelligent and eclectic mix of caring people. We had business owners, hedge fund managers, physics professors, high level government workers, a touring musician, AI designers and a few financial advisors such as myself. With all these brilliant logical thinkers, the most striking part of conference was the right brain thoughts and concerns from predominantly left-brain thinkers. Being human means understanding our higher purpose and leaning into what it means to be human and love: ourselves, each other, humanity. We discussed ways to control AI to help maintain objectivity, to have it aid in discovery of new ideas, and to use it as tool to improve our lives both personally and professionally. I thought the final keynote talk was fantastic. It certainly navigates through many philosophical concepts, but ends with some interesting and practical way to continue to ‘remember your own name’ through all the noise. It prompted me to start journaling, which takes just a few mins each day. Worth the hour if you have the time here. Ben also suggested that if attendees want to organize a conference, he would visit. I have done so as you’ll see below!
Investing
I’ve mentioned the indirect impact of geopolitics on markets compared to financial news having a far greater impact. The last 2 months is a perfect example. During the news cycles of early July, markets rallied even with the epic events affecting the US election. Then the markets saw a reversal. Not because of politics, but because there were a series of soft economic numbers. Unemployment rose, job openings dropped. Then the Bank of Japan (BOJ) decided to raise rates and spur a huge selling spree of those utilizing the carry trade. Markets quickly dropped around 10% and the VIX (widely considered the market “fear gauge”) skyrocketed to levels not seen since March of 2020 when it became apparent COVID was an epidemic. We even saw a brutal 1000+ point decline. Since then? BOJ said they’d not do that again when markets are unstable. There were some more positive economic numbers on GDP (gross domestic product) and ISM (Institute for Supply Management)-services. The Fed indicated rate cuts were likely on their way, then confirmed it in his Jackson Hole speech this morning. And here we are less than a month later back where we started with the market continuing to rally on Fed comments. And so the quick 10% intra-year drawdown that we see almost every year has faded into memory.
Many have asked sectors and positioning based upon the election and Raymond James has printed some excellent pieces on the topic. Here is the latest and we are likely to shift positioning when the winner becomes more obvious. I do believe the market is likely to continue its rally from the Fed easing, even as the economy is clearly slowing.
Many have also asked what we believe are the biggest risks to the market with the potential for: a wider war in the middle east, China initiating action against Taiwan, disruption in the US election, excessive valuations in tech and a wider war in Europe. All of these issues have us concerned and we constantly reiterate the ‘be prepared for a hurricane’ mantra for you and your family regardless of where you live. Be very wary of suspicious emails and be sure to have a credit monitoring service. Prepare for worst, hope for best. If you wonder how we take extra steps to protect you and your information (with the help of Raymond James and M Financial), please don’t hesitate to ask.
But regarding markets, right now our biggest concern doesn’t involve those issues but instead has to do with an under-the-radar problem lurking in private credit. To summarize, I’m sure everyone knows about the ‘work from home’ secular trend post pandemic, which has left millions of office spaces empty. You don’t even have to visit NYC, I see huge buildings on Daniel Island nearly vacant. You’ve probably read about high-rise buildings in large cities such as Chicago or NYC selling for a fraction of their purchase prices. Who takes these losses? After 2009, laws were enacted to place significant limits on banks’ ability to finance and collateralize debt, most especially lower quality debt. Where did it go? Mostly private credit. Which collateralized this debt into CLOs (collateralized loan obligations) using the same technique used to distribute high risk mortgages through system prior to 2008. Now many of the holders are wealthy institutions, high net worth family offices, private equity firms and others that wouldn’t break the system if they take losses. But we’ve seen signs that some of this private credit finding its way back into the system through smaller insurance companies owned by private equity firms, some pensions and indirectly through banks loans to private equity firms. Needless to say, we are avoiding investing in areas where this could become a problem. We don’t see signs right now that it is affecting financial markets and certainly the Fed is far more poised to react to a crisis than it was in 2008, but we are watching closely.
Regardless, your team and I have been through 2008. You may know, back in 1993, I landed an airplane after an engine failure with a passenger resulting in no damage or injuries. We know how to remain calm through a crisis, if and when a crisis comes (which possibly may not happen for quite some time), and see ‘what is really happening’ behind all the noise. The ones who are most hurt are always the ones that lose their resolve and discipline. We will not.
Webinars
In case you missed it, here is a link to the behavioral finance webinar we did back in June. We thought it went well and has useful information about some of the ‘mental illusions’ we see regarding finance.
We also hosted a webinar with a VP of Advanced Planning from M Financial (Robert Finnegan, JD, LLM) on the Supreme Court ruling Connelly vs US. Brief summary is that buy-sell agreements for businesses with multiple owners now need to be reconsidered or significant estate taxes could result.
Matt’s Big-Hearted Moment
Well, I wrote a book on the tax tools for the big-hearted so I may as well just lean into this concept! In late June, I was encouraged by a friend to visit Mother Emanuel on its 9th anniversary memorial service of the 9 lost in 2015. Another group suggested I write about the experience, here it is. I hope you find the message of grace and gratitude uplifting. I personally believe grace and gratitude are the key ingredients for getting through life while remaining happy—and the key ingredients for dealing effectively with any crisis.
I had alluded to hosting an event in Charleston. Yep, I’m going to bring a small group from Epsilon Theory including several of the founders on a fun weekend tour of Charleston! One of their themes to combat polarization has been ‘make, protect and teach’. My new friend Matt Ziegler put it best in this fantastic post on X. So, that will be the theme: make—visiting the International African American Museum, protect—visiting the Medal of Honor Museum on Yorktown, and teach—visiting the Charleston Library Society. Since most are financial types, I’m sure we’ll talk some about markets too.
We’ve been sponsors/supporters of the Medal of Honor Museum & the Center for Leadership for several years, including acting as a screener for Civilian Medal of Honor awards awarded by living Medal of Honor Recipients. Talk about inspiration! Well, they and Epsilon Theory have encouraged me to start a YouTube Channel interviewing people who have performed heroic or charitable acts. It will be called Beauty vs The Beast and I plan on posting about 1 video a month.
Happily, I have a bunch of people helping to reduce my role by identifying great stories, interviewing to bring out interesting moments, then working with editors to help curate hopefully an interesting and inspirational series of videos. Will launch 10/5.
Fun stuff
Mark your calendar for our popular Wine and Chocolate Event on 12/4!
Martha has passed ALL of her exams to become an advisor after less than a year! She even helped with some computer programing to help us determine minimums for our investment models!
Chris’s son Alex is ranked NUMBER 6 in the COUNTRY in Javelin!! His daughter Lilly started her second year at Carolina!
Callout-Testimonials
We mentioned the website earlier. The regulatory environment in financial services has always been difficult to allow posting testimonials or performance information, but a recent SEC clarification makes us want to consider including them on website. If you’d like to share a testimonial, especially if we helped you through a business succession transition or meaningful planning that helped those important to you, please let us know.