$5,000 Gold, AI Bubble? & How to Invest Now | Brett Rentmeester Ask Me Anything
Summary
Gold Outlook: Gold is currently priced at $3,842, up 45% this year, with expectations it could reach $5,000 within the next 12 months as individuals, central banks, and institutions increase their interest.
Investment Strategy: Brett Rentmeester emphasizes the importance of maintaining a consistent investment thesis, considering macroeconomic changes, and adjusting position sizes based on portfolio impact.
Market Conditions: Despite the Fed cutting rates, Rentmeester advises caution, suggesting diversification and dollar-cost averaging as prudent strategies in a high market environment.
Sector Opportunities: Undervalued sectors include energy, particularly energy drillers and natural gas, and select real estate opportunities in multifamily housing in Sunbelt states.
AI and Tech Valuation: While AI and tech stocks are at high valuations, Rentmeester sees potential in investing in private markets and energy infrastructure as indirect beneficiaries of the AI boom.
Portfolio Management: Rentmeester discusses moving beyond the traditional 60/40 stock-bond portfolio, incorporating private investments and hard assets like gold and silver to hedge against inflation and market volatility.
Currency Concerns: The discussion touches on the potential for a "crackup boom" scenario where asset prices rise due to declining currency purchasing power, emphasizing the importance of protecting real purchasing power.
Alternative Strategies: Windrock Wealth Management employs alternative strategies such as private lending to achieve higher yields, demonstrating flexibility in adapting to different market environments.
Transcript
Gold as of today is $3,842 when I last looked. Up 45% this year. People are waking up, both individuals, central banks, institutions. So the race to 5,000, you know, that could happen in the next 12 months. Hi everyone, welcome back to Wealth. I'm Mario, the channel's producer, and today we're doing something a little different, an AMA, ask me anything with Brett Rentmester, founding and managing director of Windrock Wealth Management. Hi Brett, it's great to have you today. Thanks for joining me. See you, Mario. But before we dive in, if you'd like Brett and his team at Winrock to review your portfolios and apply some of the same thinking he'll share today, you can sign up for a free portfolio review at wealthing.comfree and select Windrock Wealth Management in form. And if you've got a question for Brett as well, drop it in the comments below. He'll be jumping in to answer as many as he can. So today we'll be covering everything from how to invest safely in today's market to whether gold could hit $5,000 and even whether we are living through an Austrian economic bracket. So stick with us. There's a lot ground to cover. So Brett, are you ready? I'm ready. All right, let's go for it. So the first question is very interesting. It's definitely interesting as an investor myself. It's something that has happened to me and I'm sure a lot of people have has had this experience at Cloud Richardson asks, "One of his stocks is down 35%. How do you decide when to sell versus when to double down?" What do you think, Brett? Yeah, I I mean I think the simple answer is normally you get into invest an investment with a certain thesis in mind. So a lot of times when we get into investments, we try to stage it in maybe two purchases. So, we make the first purchase, we wait a little bit, we look for another opportunity, and if if it's down, we view it as an opportunity. But that's only if the thesis is still consistent with why we're owning it. So, I think that's the first piece of it. Is the fundamental reason you're buying it still the same story or did something change? The second part of it could be the macroeconomic environments changed and all of a sudden something popped up that wasn't, you know, formerly there. That has to be certainly considered. And I think the last is just position size percent. You know, are we talking about, you know, a quarter 025% of your portfolio or a 5% position? You might treat those slightly differently, right? But but again, I think the main thing is is the fundamental story of why you're in the investment unchanged. If the answer's yes, you continue to be a buyer. If the answer is no, you're probably a seller. Yeah, it makes per perfect sense, right? As long as your thesis is intact, why not more? market is going to give you more upside in the end if you're buying at cheaper prices. But one question, how far are you willing the market to tell you that you're wrong until you just stop buying and realize, okay, there's something crazy going on here and I understand it. Well, it's a good point. I don't think there's a magic number. I mean, we have invested historically in a couple very volatile areas and used this methodology that includes like cannabis stocks, things that they could fall 50%. It includes things like cryptocurrency, which despite how well they're doing, they could fall 50%. So, I think it's more about the thesis and how well thought out it is. But yes, I guess if you're an individual investor just buying an individual stock and something loses a quarter of its value, it's probably a good moment to reflect on whether the story is really continuing on or whether you've missed something. I should add, Mario, um this shouldn't be construed as investment advice. We're just here kind of making general uh commentary and that really investors do need to talk to a registered investment advisor and we'd be happy to talk to them as well, but if they've got somebody else, these are just general uh kind of 101 pointers to think about. Absolutely. This is just forformational purposes and not trading or investing advice. Thank you for adding that, Brett. Um, I was just going to reflect on what you were saying. You know, it's like that old adage, if you have a stock and it goes down 50%. Well, all of a sudden you need 100%. Yeah. Back, right? So, um, let's go back. Let sorry, let's go to the next question. And this comes from Ja Massie 0405. And he asks, "With the Fed now starting to cut rates, I'm thinking about putting $20,000 into stocks for retirement. What's the safe way to approach that? That's a interesting and hard question I would say considering how high markets are. What do you think? Well, my first reaction is I don't think the Fed cutting rates alone is the green light to just start investing and taking risk, right? oftentimes the Fed's cutting on weakness in you know I I don't know if that's necessarily the case here just yet the the cutting on weakness but I don't think a simple measure like that should be the catalyst for hey I'm going all in or I'm not that kind of mindset um you know I think overall it sounds like a company retirement plan something like that I think this has to be a longer term thesis and I guess the two just fundamental truths of long-term investing especially in a company plan where there's limited diversified choices probably are diversify and consider dollar cost averaging. Meaning you don't have to put every dollar in today. You can wade into it over time if there's caution. And I think you were alluding to you know we're at a very tricky juncture. There are some very fantastic technological breakthroughs happening right now which of course range from AI but also include robotics and drones and a lot of exciting things we could think about but we also have to acknowledge you know the debt levels in the world and the high valuations of US stocks based on historical measures. So um I think there's a little extra caution even though I think there's still very real opportunity ahead. So with that in mind, diversifying plus considering dollar cost averaging is probably the right approach for some people. Throughout September, we're shining the spotlight on gold with a lineup of expert conversations, sharp market analysis, and practical investment guidance. To dive deeper, make sure to grab our complimentary gold investing report using the link in the description below. and Wealthy together with SCP Resource Finance will be hosting a global silver conference this October in Toronto. Eric Sprat will be delivering the keynote and it promises to be a landmark gathering for silver investors. You can find out more in the details in the description below. Yeah, makes sense. Do you have different advice whether a person that comes to you with this question is 40 years old my age or is 65 70 which is just basically getting into retirement right yeah I think so I think the more risk adverse you are could be because of age it could be because of risk tolerance you know number of factors the more you're apt to want to diversify and take it slow and dollar cost average and not make a timing mistake Right. Everybody's fear is, hey, I'm putting a lot of money to work and it's the peak in 1987 right before Black Monday when things, you know, crashed 25%. I think that's kind of the fear and what you're trying to um get away from. But as a general practice, even dollar cost averaging for more risky investors is fine. It doesn't mean you have to stretch it out purchases out over a year. You might stretch it over over two weeks. Um, so I think it can be tailored to someone's risk tolerance. And all else equal, I think you're right. the younger you are, the longer the time horizon or even the more money you have in some regards, right? If it's if this is money you don't really need or it's long-term money versus, hey, I may need this in two years to buy a house. I mean, those are different kind of considerations that investors have to think about. And clearly, you know, if it's money you might need or you're more riskadverse or you're concerned about the market levels, then that you should see a caution, you know, flashing yellow sign. It doesn't mean don't invest. It just means invest methodically and with a little more care. Yeah, I love it. I can't agree with you more. That's well put. So now um for the third question, Dave Stone wants to know, are there any areas Okay, this is going to be interesting in today's market that are undervalued and attractive. Yeah. Um you know, it's hard because it's kind of like uh the tide has rift lifted all boats here to some degree. Now clearly technology stocks have led the way. The US equity market has led the world. You know you've got all these kind of themes. I guess if we just stick with the US and broad observations, you can look at the various sectors of the S&P 500 and say, you know, what's near what's done well and what's near its, you know, all-time historical high valuations and what's lagged. And there's kind of three sectors that have lagged. Healthcare, energy, real estate. That's of the last year or two, you know, re recent history. You know, healthc care is kind of a mixed bag. It's something that might become attractive to us in the future, but we're not really seeking opportunities right now in part because the system's a mess. The whole cost structure, the whole medical system, it seems ripe for disruption and AI getting in and and quite honestly, I think a lot of faith has been lost in the big pharma companies and other things. So, we're sitting back a little bit there, even though there's probably some stocks and some areas within that that, you know, might be attractive. Um, energy is interesting. You know, we really weren't energy investors per se until COVID when energy, remember, you might remember this when oil actually went negative. We invested. Yeah. It should never happen, right? It's one of those things, but we were energy investors from that around that point onward. And um those positions have done great. But I think today the value in energy is I think thinking through this story of reinvesting in America and AI. And if if we're going to win as a country, we're going to need to support AI. We're going to need to bring investment dollars to America. And we've got to do that with cheap and abundant energy. And we're looking for areas in energy that have a tailwind behind them, but from a price perspective have not performed well. And that's always a hard thing to invest in. Um, we do that a lot, but for an average investor, it's very difficult to get in something that's had lousy three-year return. So, two areas considering, uh, we're we're actually in energy drillers. So, drilling companies that are exploring and drilling and and getting, you know, oil, natural gas out of the ground. It's been a very depressed area in part because the last administration had really clamped down on it. And second, um, natural gas. It's clean, it's abundant, and probably going to be one of the key areas to fuel, you know, the growth in the energy sector to support the future of AI in America. So, um, I think there are opportunities, but they're select. And the last is real estate. Now, talk about commercial real estate broadly that excludes single family homes that people own. I think have some caution there. seems like prices are, you know, people are locked in their homes because rates are low. Um, but prices in a lot of these markets just seem like, uh, they've gotten way ahead of themselves. U, not saying there's a massive correction to come. Just I think there's a little caution there. Commercial real estate, we're still concerned about office buildings because the data is showing, you know, huge vacancy still. We're still concerned about a lot of the big cities. Um, where are we finding opportunity? We're finding opportunity in niche hotel projects. We're finding opportunity generally speaking in what I'd call multifamily or apartments and sunb belt states. Um there was a little overbuilding in that sector, but I think when you look at the data, people are still moving to areas where there's job growth, where taxes are lower, and where there's literally sunshine sunshine instead of winter. And um these are generally freedom kind of states that people are seeking out. And even though they they got a little bit of a boom postcoid that maybe went a little too fast at the time, um, a lot of the data is showing that since we had that banking crisis that was quickly swept under the rug in 2023 with Silicon Valley Bank and others, a lot of the regional banks pulled back on lending and as a result, less lending went to real estate development and with a lag, you know, the project that doesn't get funding three years ago is coming on market now. So starting next year, we think the dynamics change in a lot of these key markets and there's a lack of supply again, which is favorable for people that own or are developing the right kind of rental real estate. So I think those are three areas. You know, fourth that we've spoken about is the whole cannabis sector. Um people have to be careful there. It's highly volatile. Um, but there's some catalysts in particular in the Trump administration talking about recategorizing it and um, and uh, you know, it's it's an area to at least educate yourself on. Thanks, Brad. Super interesting. I can encourage viewers more to go and watch the interviews that Maggie Lake did with your partner Chris Casey on cannabis and gas itself. The gas interview was released last week and it's short, sweet, and very informative. So um I know that private investments is a keen key space for you guys when you when you're thinking about uh commercial real estate, multif family uh homes and all all this real estate that is in the sunb belt areas that has potential tailwinds as you were telling us. Is this something where investors really have to talk to someone like you or they can find it in the public markets? Yeah. I mean, the particular case I'm describing, what we've done in this area considered build to rent where you're building these communities that are kind of like walled gated neighborhoods, but they're cassita style one to threebedroom homes that are rented out like apartments. Those kind of opportunities are very hard for individuals to find directly. It's not impossible, but generally people find most of these private investments through an advisor who's doing due diligence and and has a network. Again, not to say someone can't themselves find some of these opportunities, but I I think it's a different opportunity set than say buying real estate investment trusts and just publicly traded big real estate companies where you're probably going to get on average more of an emphasis on big cities and office etc. Right? And that's where I would say uh Windrock your firm has has an edge. Right? So I want to remind viewers that they can go to wealth.comfree and and get a free portfolio review with Brett and his team. So let's continue. Brett, this is an area of much interest I think for everybody and it's a question from Alex Woo and he says with AI hype pushing tech stocks higher but that levels also soaring is this rally sustainable or are we looking at a bubble? I feel like things are very bubbleicious indeed. What do you think? Yeah, I mean listen, if you just look at aggregate data and we already were talking about it. Um the valuation of the US stock market on a number of indices is at record highs. Uh price to sales ratio is a good one. It's higher than it was during the tech bubble, right? That's generally not a good omen. Um the top 10 companies in the S&P represent 38% of the index. So a lot of the performance is being driven by the top 10. That kind of concentration is generally not good long-term for investor returns. So let's acknowledge that those are pushing historical norms. Now let's talk about a little bit of the positives for a moment. Um it probably means you not you're not getting in at a great valuation point, right? You've missed the easy money. However, um the AI companies in general are meeting earnings and what seemed like very expensive price earnings ratios a couple years ago for you know some of the big tech companies have been supported by uh their performance as as far as their actual earnings. So a lot of people will compare this to the 1999 tech bubble peak and there are some similarities. These valuation things are something to take seriously. However, in that period, you had a lot of dotcom companies with no real end demand. It was kind of a bridge to nowhere. Right now, I think on the AI stuff, you've got real consumer demand and almost every industry will be touched by this, right? Also, in 1999, because of Y2K concerns, they were tightening interest rates, so pulling liquidity out of the market. Right now, we're on an easing cycle. So that is to say, you know, there might more legs to this uh than meet the eye, but I think caution's warranted. The way we've approached it is we are an AI, but we're not chasing the big winners. We've positioned ourselves to get into things that are good relative values. Um I can't name names per se, but there's one we really like that focuses on kind of the future of robotics. So we've we've done some of that. Um and on the other end of the spectrum in the private markets if people have access to venture capital or startup money a lot of the startups are focused on disruptive AI or agentic AI these agents that are going out and actually solving real world problems in different area domain areas and I think you know those will get gobbled up by bigger competitors. So I don't think we're near the end of the AI story. I think we're closer to the beginning, but that doesn't mean we can't have some big correction at some point where people say, you know, this just went too far, too fast. I think that valuation risk is very real. So, people have to go in understanding, you know, the balancing act here of investing. So, I I don't think it's ignoring the space and saying it's going to crash, but I also don't think it's just going all in assuming, you know, it'll be straight up. I I think there's there's a little caution. And for us, that's meant in practice being in these names. But when they have huge run-ups, we will be aggressive profit takers. It takes them off the table. I mean, that is one way to kind of keep your allocation within a boundary you're comfortable with, right? It's it's the way wise way of managing this very hot market. Yeah, absolutely. Yeah. Chris Casey, your partner, he was talking about why gas in such an interesting opportunity because of the enormous demand that AI, he also talks about crypto and EV, but all of this is tech, right? Has has to do with gas. So again, super interesting interview and I'll put the thumbnail in the link below so people can watch it. Is there any tech part of the tech sector that you think is more resilient or is the smart play to what I alluded just now instead of going to the the gold mines uh buying the shovel makers so to speak like in in this situation with gas and AI well listen I I think I think the main theme is AI and I think it's very real and the question is how do you express that I think the more resil billion safer plays are private markets where you're getting it early. So if you overpay for a startup, they value it at 60 million and maybe should have only been 40 million. If it succeeds, that's not really going to matter in the long run. Whereas if you chase one of the market leaders at all-time high valuations, the largest companies in the world, um, you know, there's a safety net kind of feeling with that, but nobody's ever really gotten rich doing that, right? So I think that's that. And I also think maybe the the pick or shovel analogy is more about energy. All the data is showing to build out AI, we need to double or more kind of the energy output of the US. Well, how do you do that? Utilities are a sector that may benefit. Natural gas, oil, things that America is abundant in. That is a backdoor play to this boom that um yeah, I think there's opportunity in. So for us again it's like selective AI companies, public companies paired with startup venture capital style players in the space that are actually solving real world problems. That's a key to it. And then in the middle is this whole energy infrastructure piece of the equation. So again not advice but from our perspective that's how we're sizing it up at the moment. Now, if some of the market leaders correct by 50% or something, we may be buying them. But for right now, we're a little cautious just chasing things that are at all-time highs that have been uh, you know, clear winners over the last year or two. Right. Right. That makes a lot of sense. Thank you, Brad. Um, let's go to this question from Mike Shaw. He is asking something on portfolio management in today's macro environment. So he says, "Inflation is still above target. The Fed, as we just alluded, just said, started cutting rates after a long tightening cycle. How are you adjusting portfolios compared to the old 6040 model?" And uh for beers that don't know, that 60% stock, 40% bonds, uh it tended to do very well for many decades. Yeah. The bread and butter for uh investment managers, right? Yeah. Listen, I mean, we've been Let Let me just start that by saying a lot of performance is driven by financial conditions. And so, you go back to the early 80s, interest rates were close to 20%. We've been in a downward all rate rates have come down. They went to basically zero in the US and negative rates in Europe, right? And so, that's propped everything up. So, it was a beautiful period to just own stocks and bonds and things that responded to that. But now we're in a different environment. Now, we're turning that corner. And even though we're in a little bit of an easing cycle, I don't think anybody's expecting rates to go back to zero. So, um, in that kind of environment where there's debt and and still budgets despite all the work being done that are not sustainable that are deficits, you know, I think you have to pepper in some private investments that have a chance to outperform inflation. We can talk more about that as well as hard assets. So in a year like this hard assets have given a great benefit. I mean you've got gold up 45% silver's up I think around 62% today. Got Bitcoin and Ethereum up in the 20 to 30% range. You know volatile but so those are the kind of things that might be the answer to what else can I do outside of just traditional stocks and bonds. Right. So it it sounds like and going back a little bit also to your last answer on the other question energy for example is is cheap. So you're you're getting safety there but also you have these like barable portfolio strategies where you have private markets and venture capital. So it allows for potentially outperformance but also safety uh of principle. I think that's the right way to look at it like when we take risk we do take risk. Venture capital is a high-risisk area. Um there's a number of things we do. Cannabis investing is a high-risisk area, but it's a calculated risk and like you described it like a barbell, like a weightlifter, weights on both sides. You have some bets that are high risk and you acknowledge it. But offsetting that, you've got gold and silver, you've got farmland perhaps, you've got, you know, things that kind of can weather a storm, earn you money, but if things go really bad in the world, they're probably going to be beneficiaries. So, we like that pairing as opposed to, hey, we're going to diversify and just own a little bit of everything. Sometimes, especially a market like this, we like to have a couple outliers over here. I put cryptocurrency in that, too. High risk, but high reward. And on the other side, have some really stodgy things, which can even include short-term treasuries that if things don't go well, you've got a, you know, you've got a a layer of safety and and something to fall back on. Well said. Well said. I really like it. Okay. Um, let's go to the next question. Brett. So, speaking of gold at Novar Novars, I'm sorry, butching his name. Novars77, he asks, "When do you think we'll see gold at $5,000?" You know, this question would have sounded crazy, right? Two or three years ago, but 4,000 is around the corner. And we've had guests on welding that thinks gold is going to go to 20,000. What do you think, Brad? When do you think we'll hit five? If we will. Yeah. Well, listen, let's acknowledge that timing is always a very tough thing to tell. I think it's on a trajectory to get there. I don't think the run is over. Although, anytime something runs, stocks, bonds, or gold, do not be shocked if they have a period of pullback or consolidation, right? That that could definitely happen. I mean, gold as of today is $3,842 when I last looked, up 45% this year. So, the move to 5,000 is about another 30% move. Now, I believe gold is making a little bit of a catch-up play to the amount of money that's been printed in the system that it had been lagging it for a long time. People are waking up, both individuals, central banks, institutions. So, the race to 5,000, you know, that could happen in the next 12 months. Um, but it might not be a straight line. Um, we don't do projections like endpoint specific projections, but we think we're in an era where governments will continue to have to print money to meet obligations. As long as that's true, gold, silver, tangible hard assets of limited supply are likely to continue to go up. And especially gold and silver because they're unique in that there's nobody else's liability. Right? If I want a bond, there's a counterparty I have to rely on, whether the US government or a big corporation. Gold and silver is just, you know, a physical asset. I'm not relying on promise to pay from anybody else. So, if the promise to ba pay part of the equation comes into doubt in the world, I think more and more money will will flow to gold and silver. So, I don't know if I exactly answered that, but I think we're on the path to that those kind of levels and beyond. want to share with viewers. You you had a great interview with Maggie Lake on gold and uh you went deeper on your insights uh on it and why it should be a part of your portfolio. So, please catch that. I will link it as well below in the description. That was uh super interesting, Brett. So, now this is a question that uh I I am dying to ask you because as you probably remember, I'm a fan of the Austrian School of Economics of Austrian School of Economics. So like you guys, so interesting username on file is asking, could the all-time high in stocks really just reflect the all-time low in currency purchasing power? Is the Austrian school's crack of boom playing out? Yeah, I think it's a great question and something everybody should be educated on conceptually. Uh, I mean, normally the idea as as I describe it of a crackup boom is a point where people start dumping a currency because they see where it's headed and they'll put worthless paper, those dollars in anything else. So, you can get this explosive move in asset prices because everybody's trying to get out of the paper, right? You've had that, we've talked in some different interviews. You had that in Wymer, Germany after World War I. You had that in Zimbabwe. You've seen it in Argentina and Venezuela. the stock markets have soared. At the same time, currencies falling, right? Um, are we there yet? Probably not because the US dollar, despite weakness, is just kind of like struggling along, right? It's not as if everybody, you know, is trying to get out of dollars as quickly as possible as they might be in Venezuela. However, I think we can draw some insights this century. And in fact, if you go back to the year 2000, beginning of this century, and you go through uh a couple days ago in the stock market, the S&P 500 in nominal terms without factoring in inflation is up something like um a little over seven times your money. Sounds great. But if you inflation adjust it and you say, well, if I apply inflation, how much is that really worth today? Because my dollars don't go as far. It's a lot less. It's something like 3.8 times your money. Still okay, but not quite as much. What if you what if you divide it instead of by the CPI, which a lot of people don't believe is is accurate, and instead you divide by gold and you say in gold purchasing power terms, what has the S&P 500 done? And it's lost about half of its value since 2000. It's at about 0.55x what you put in. So if you want to look at it that way, yeah, it's a race to the bottom in fiat currencies. It doesn't mean we're at an imminent point of collapse in these, but I think smart people know that they will keep printing money until the money is worth less and less and less. And it's why, you know, the house in the 70s that was 50,000 is now 500,000. All all the pricing we see is because the money keeps multiplying. So, you know, I do think that is what we'd want to watch for. And if you really see signs of a loss of confidence in the money itself, then I think you set the stage for for what this is referring to, a crackup boom, where all of a sudden people race out of paper and into anything else, literally anything else that has or might sustain its value. I remember in that interview about gold that you did with Maggie Lake putting on screen a trillion dollar bank note from the Bank of Zimbabwe. 100 trillion 100 trillion. It makes no sense, right? Um, but I think what you're alluding to also is that there's not necessarily an immediate crash to everything, but it's a ongoing thing. You know, it's been happening for for a long time since 2000 and it's just eroding people's purchasing power. And more to the point, we're all noticing it, but despite it not being reported in things like gold, right, you'll see the S&P 500 not being worth what it's worth nominally in US dollars. And that it's breathtaking, frankly, and it's and it's scary. It is. And there's skeptics that say, listen, the market, like I just said with gold, it's it's not really up relative to gold, right? So you're you're actually losing in the long run relative to something that you believe is stable purchasing power which you know gold has been over the centuries. So it's a real dilemma for investors and it doesn't mean you shouldn't own any stocks. It's just an acknowledgment that it's denominated in paper and if stock market's going up but the paper value is going down. You've got to think about what that means and how you counter that over time because really what people want to do is protect their purchasing power, right? And back to the countries I was describing, whether Venezuela or Zimbabwe, their stock markets boom. They didn't have stock market crashes during these hyperinflations. They went straight up, but they didn't go up enough to retain purchasing power. So even though maybe a stock market was up tens of thousands of percent or some ridiculous numbers, the currency basically went to zero. So, um, you know, it can be very misleading, you know, to look at some of that data, but I think the the key takeaway is purchasing power, right? You want to make sure you're earning money and whatever that dollar amount in your portfolio is 10 years from now, it actually buys you more than what you have today. If it's a bigger number, but it buys you less, that doesn't do you any good. Yeah, absolutely. There's a huge difference between nominal returns and real returns. And you know hearing you what's scary to me is that if the returns that the stock market gives you and the stock market it's supposedly the reflection of the wealth creation in the country to a significant degree then you know where are we heading right and maybe again it's in reference an illusion to what this bureau is asking well perhaps not as much wealth is being created because of all this uh all this influence of the government on the price of money on the fiscal deficit etc etc to what is actually a productive investment of of capital. I don't know if that makes sense. It does and I think uh you know listen I had a client that was a consultant a company years ago and used to say you can't shrink your way to greatness meaning you can cost cut but eventually you need to grow and I'd say the same thing for governments you can't print yourself to greatness you know it's it's you've actually got to have organic growth you've got to create value if you're just relying on the printing presses ultimately I don't care what the if your piece of paper says you have a million dollars with a hundred trillion dollar note it's just a paper you know instrument that's not going to be worth anything. So again, I don't think we're there yet, but but it clearly is on our mind about what is an endgame to this. How do we get out of, you know, this predicament? Um, and it's something to think about. Now, you know, there are scenarios to to get out of this that we can talk about. Um, they're not easy, but uh uh we can talk about a little further if you'd like. I'd be super interested. Yeah, of course. We can also leave it for an evergreen uh in a different interview, but you want to give us a a little a short take on Well, listen, this is more hypothetical than anything, right? The the hypothetical answer would be there's 38 trillion of debt roughly in the US. Of course, there's tons of um obligations that go well beyond that if you if you look at unfunded things that don't go into that number. But if you just take that number at its core, you could say, well, I don't know if the government could secretly accumulate enough gold and then let it massively revalue, what would gold have to revalue to? And in the math I did, back of the envelope is maybe 142,000 an ounce gold wipes away all debt. Now, that people would say, well, that's a ridiculous number. And it is, but you know, that's a path a government could take. or maybe Bitcoin, you know, maybe it's a slow and steady accumulation of Bitcoin or some other asset in stealth and once they have adequate reserves of it, you let you know, you let the world know you have it and thing goes to the moon and all of a sudden you've got an asset to pay off most if not all of your liabilities. Now, that might be a pipe dream. This is a little hypothetical, but the point is the assets on the balance sheet matter as much as the liabilities and we've got to think that way going forward. I agree. I can't agree with you more. There's also huge assets on the the amount of land that the federal government owns. That would wipe out um the debt as well if I'm not mistaken. All right, Brett, let's uh get to the final question. Okay. And uh Jonath Ferguson asks ask sorry uh Windrock has warned that the traditional stock and bone portfolio so what we were talking about may fail in today's environment. How does your investing philosophy turn into portfolio strategies you know actual executable portfolio strategies and can you share an example where this protected a client's wealth is that something you can share with us Brett? I I could share some highle thoughts. Sure. It really depends, Mario, on the market environment we're in. I'll give you an example, and it goes back to coming out of COVID when we're at 0% interest rates. A lot of advisors in the industry kept recommending bonds because they say, "Well, pricing's efficient, and you still need stability, and they'd have portfolios of bonds yielding almost zero." To us, that didn't make any sense. Why would I lend somebody money to get paid back basically nothing but my principal and take risk? So in that time period we did a lot of private lending and we continued to do that. Again this is a private market opportunity but a lot of the opportunities we had would have yields going in 8 to 12% kind of ranges and we avoided in large part traditional bonds. So for a number of years when bonds actually had negative returns we had you know opportunities in private markets and private lending to do something different. and you know you have to have access to those things. But that would be an example of how you can think a little bit differently in a you know particular market environment and not feel beholden to oh well everybody thinks I need bonds no matter what the price is right I mean imagine in Europe if someone told you yeah buy these bonds you have to pay the person you're lending money to that's what it was I mean it's absurd and yet it happened right so I think thinking outside the box and just applying some good old common sense and logic is is how we sometimes find opport opportunities and they're not always that easy, but that is an example of, you know, a time period and something we did that was different than most. So, you're able and willing to go outside traditional markets and, you know, find an edge there and you have that flexibility not only in your mindset, the firm's mindset, but also the way you structure things for clients makes perfect sense. All right, that was super interesting. So, that's it for today. Brett, thank you so much for being here with me. It was tremendously insightful and I hope we can do this again. Okay, great chatting, Mario. And to everyone watching, if you found this helpful, give the video a like. Please share with others. And remember, if you liked for Brett and his team at Winrock to review your own portfolio, you can sign up for a free portfolio review at wealth.comfree. Once again, that's wealth.comfree. Thank you again for joining us and we'll see you next time here on Wealth. If you're looking for a simple, secure way to invest in physical gold and silver, check out Hard Assets Alliance at hardassetsalliance.com. [Music]
$5,000 Gold, AI Bubble? & How to Invest Now | Brett Rentmeester Ask Me Anything
Summary
Transcript
Gold as of today is $3,842 when I last looked. Up 45% this year. People are waking up, both individuals, central banks, institutions. So the race to 5,000, you know, that could happen in the next 12 months. Hi everyone, welcome back to Wealth. I'm Mario, the channel's producer, and today we're doing something a little different, an AMA, ask me anything with Brett Rentmester, founding and managing director of Windrock Wealth Management. Hi Brett, it's great to have you today. Thanks for joining me. See you, Mario. But before we dive in, if you'd like Brett and his team at Winrock to review your portfolios and apply some of the same thinking he'll share today, you can sign up for a free portfolio review at wealthing.comfree and select Windrock Wealth Management in form. And if you've got a question for Brett as well, drop it in the comments below. He'll be jumping in to answer as many as he can. So today we'll be covering everything from how to invest safely in today's market to whether gold could hit $5,000 and even whether we are living through an Austrian economic bracket. So stick with us. There's a lot ground to cover. So Brett, are you ready? I'm ready. All right, let's go for it. So the first question is very interesting. It's definitely interesting as an investor myself. It's something that has happened to me and I'm sure a lot of people have has had this experience at Cloud Richardson asks, "One of his stocks is down 35%. How do you decide when to sell versus when to double down?" What do you think, Brett? Yeah, I I mean I think the simple answer is normally you get into invest an investment with a certain thesis in mind. So a lot of times when we get into investments, we try to stage it in maybe two purchases. So, we make the first purchase, we wait a little bit, we look for another opportunity, and if if it's down, we view it as an opportunity. But that's only if the thesis is still consistent with why we're owning it. So, I think that's the first piece of it. Is the fundamental reason you're buying it still the same story or did something change? The second part of it could be the macroeconomic environments changed and all of a sudden something popped up that wasn't, you know, formerly there. That has to be certainly considered. And I think the last is just position size percent. You know, are we talking about, you know, a quarter 025% of your portfolio or a 5% position? You might treat those slightly differently, right? But but again, I think the main thing is is the fundamental story of why you're in the investment unchanged. If the answer's yes, you continue to be a buyer. If the answer is no, you're probably a seller. Yeah, it makes per perfect sense, right? As long as your thesis is intact, why not more? market is going to give you more upside in the end if you're buying at cheaper prices. But one question, how far are you willing the market to tell you that you're wrong until you just stop buying and realize, okay, there's something crazy going on here and I understand it. Well, it's a good point. I don't think there's a magic number. I mean, we have invested historically in a couple very volatile areas and used this methodology that includes like cannabis stocks, things that they could fall 50%. It includes things like cryptocurrency, which despite how well they're doing, they could fall 50%. So, I think it's more about the thesis and how well thought out it is. But yes, I guess if you're an individual investor just buying an individual stock and something loses a quarter of its value, it's probably a good moment to reflect on whether the story is really continuing on or whether you've missed something. I should add, Mario, um this shouldn't be construed as investment advice. We're just here kind of making general uh commentary and that really investors do need to talk to a registered investment advisor and we'd be happy to talk to them as well, but if they've got somebody else, these are just general uh kind of 101 pointers to think about. Absolutely. This is just forformational purposes and not trading or investing advice. Thank you for adding that, Brett. Um, I was just going to reflect on what you were saying. You know, it's like that old adage, if you have a stock and it goes down 50%. Well, all of a sudden you need 100%. Yeah. Back, right? So, um, let's go back. Let sorry, let's go to the next question. And this comes from Ja Massie 0405. And he asks, "With the Fed now starting to cut rates, I'm thinking about putting $20,000 into stocks for retirement. What's the safe way to approach that? That's a interesting and hard question I would say considering how high markets are. What do you think? Well, my first reaction is I don't think the Fed cutting rates alone is the green light to just start investing and taking risk, right? oftentimes the Fed's cutting on weakness in you know I I don't know if that's necessarily the case here just yet the the cutting on weakness but I don't think a simple measure like that should be the catalyst for hey I'm going all in or I'm not that kind of mindset um you know I think overall it sounds like a company retirement plan something like that I think this has to be a longer term thesis and I guess the two just fundamental truths of long-term investing especially in a company plan where there's limited diversified choices probably are diversify and consider dollar cost averaging. Meaning you don't have to put every dollar in today. You can wade into it over time if there's caution. And I think you were alluding to you know we're at a very tricky juncture. There are some very fantastic technological breakthroughs happening right now which of course range from AI but also include robotics and drones and a lot of exciting things we could think about but we also have to acknowledge you know the debt levels in the world and the high valuations of US stocks based on historical measures. So um I think there's a little extra caution even though I think there's still very real opportunity ahead. So with that in mind, diversifying plus considering dollar cost averaging is probably the right approach for some people. Throughout September, we're shining the spotlight on gold with a lineup of expert conversations, sharp market analysis, and practical investment guidance. To dive deeper, make sure to grab our complimentary gold investing report using the link in the description below. and Wealthy together with SCP Resource Finance will be hosting a global silver conference this October in Toronto. Eric Sprat will be delivering the keynote and it promises to be a landmark gathering for silver investors. You can find out more in the details in the description below. Yeah, makes sense. Do you have different advice whether a person that comes to you with this question is 40 years old my age or is 65 70 which is just basically getting into retirement right yeah I think so I think the more risk adverse you are could be because of age it could be because of risk tolerance you know number of factors the more you're apt to want to diversify and take it slow and dollar cost average and not make a timing mistake Right. Everybody's fear is, hey, I'm putting a lot of money to work and it's the peak in 1987 right before Black Monday when things, you know, crashed 25%. I think that's kind of the fear and what you're trying to um get away from. But as a general practice, even dollar cost averaging for more risky investors is fine. It doesn't mean you have to stretch it out purchases out over a year. You might stretch it over over two weeks. Um, so I think it can be tailored to someone's risk tolerance. And all else equal, I think you're right. the younger you are, the longer the time horizon or even the more money you have in some regards, right? If it's if this is money you don't really need or it's long-term money versus, hey, I may need this in two years to buy a house. I mean, those are different kind of considerations that investors have to think about. And clearly, you know, if it's money you might need or you're more riskadverse or you're concerned about the market levels, then that you should see a caution, you know, flashing yellow sign. It doesn't mean don't invest. It just means invest methodically and with a little more care. Yeah, I love it. I can't agree with you more. That's well put. So now um for the third question, Dave Stone wants to know, are there any areas Okay, this is going to be interesting in today's market that are undervalued and attractive. Yeah. Um you know, it's hard because it's kind of like uh the tide has rift lifted all boats here to some degree. Now clearly technology stocks have led the way. The US equity market has led the world. You know you've got all these kind of themes. I guess if we just stick with the US and broad observations, you can look at the various sectors of the S&P 500 and say, you know, what's near what's done well and what's near its, you know, all-time historical high valuations and what's lagged. And there's kind of three sectors that have lagged. Healthcare, energy, real estate. That's of the last year or two, you know, re recent history. You know, healthc care is kind of a mixed bag. It's something that might become attractive to us in the future, but we're not really seeking opportunities right now in part because the system's a mess. The whole cost structure, the whole medical system, it seems ripe for disruption and AI getting in and and quite honestly, I think a lot of faith has been lost in the big pharma companies and other things. So, we're sitting back a little bit there, even though there's probably some stocks and some areas within that that, you know, might be attractive. Um, energy is interesting. You know, we really weren't energy investors per se until COVID when energy, remember, you might remember this when oil actually went negative. We invested. Yeah. It should never happen, right? It's one of those things, but we were energy investors from that around that point onward. And um those positions have done great. But I think today the value in energy is I think thinking through this story of reinvesting in America and AI. And if if we're going to win as a country, we're going to need to support AI. We're going to need to bring investment dollars to America. And we've got to do that with cheap and abundant energy. And we're looking for areas in energy that have a tailwind behind them, but from a price perspective have not performed well. And that's always a hard thing to invest in. Um, we do that a lot, but for an average investor, it's very difficult to get in something that's had lousy three-year return. So, two areas considering, uh, we're we're actually in energy drillers. So, drilling companies that are exploring and drilling and and getting, you know, oil, natural gas out of the ground. It's been a very depressed area in part because the last administration had really clamped down on it. And second, um, natural gas. It's clean, it's abundant, and probably going to be one of the key areas to fuel, you know, the growth in the energy sector to support the future of AI in America. So, um, I think there are opportunities, but they're select. And the last is real estate. Now, talk about commercial real estate broadly that excludes single family homes that people own. I think have some caution there. seems like prices are, you know, people are locked in their homes because rates are low. Um, but prices in a lot of these markets just seem like, uh, they've gotten way ahead of themselves. U, not saying there's a massive correction to come. Just I think there's a little caution there. Commercial real estate, we're still concerned about office buildings because the data is showing, you know, huge vacancy still. We're still concerned about a lot of the big cities. Um, where are we finding opportunity? We're finding opportunity in niche hotel projects. We're finding opportunity generally speaking in what I'd call multifamily or apartments and sunb belt states. Um there was a little overbuilding in that sector, but I think when you look at the data, people are still moving to areas where there's job growth, where taxes are lower, and where there's literally sunshine sunshine instead of winter. And um these are generally freedom kind of states that people are seeking out. And even though they they got a little bit of a boom postcoid that maybe went a little too fast at the time, um, a lot of the data is showing that since we had that banking crisis that was quickly swept under the rug in 2023 with Silicon Valley Bank and others, a lot of the regional banks pulled back on lending and as a result, less lending went to real estate development and with a lag, you know, the project that doesn't get funding three years ago is coming on market now. So starting next year, we think the dynamics change in a lot of these key markets and there's a lack of supply again, which is favorable for people that own or are developing the right kind of rental real estate. So I think those are three areas. You know, fourth that we've spoken about is the whole cannabis sector. Um people have to be careful there. It's highly volatile. Um, but there's some catalysts in particular in the Trump administration talking about recategorizing it and um, and uh, you know, it's it's an area to at least educate yourself on. Thanks, Brad. Super interesting. I can encourage viewers more to go and watch the interviews that Maggie Lake did with your partner Chris Casey on cannabis and gas itself. The gas interview was released last week and it's short, sweet, and very informative. So um I know that private investments is a keen key space for you guys when you when you're thinking about uh commercial real estate, multif family uh homes and all all this real estate that is in the sunb belt areas that has potential tailwinds as you were telling us. Is this something where investors really have to talk to someone like you or they can find it in the public markets? Yeah. I mean, the particular case I'm describing, what we've done in this area considered build to rent where you're building these communities that are kind of like walled gated neighborhoods, but they're cassita style one to threebedroom homes that are rented out like apartments. Those kind of opportunities are very hard for individuals to find directly. It's not impossible, but generally people find most of these private investments through an advisor who's doing due diligence and and has a network. Again, not to say someone can't themselves find some of these opportunities, but I I think it's a different opportunity set than say buying real estate investment trusts and just publicly traded big real estate companies where you're probably going to get on average more of an emphasis on big cities and office etc. Right? And that's where I would say uh Windrock your firm has has an edge. Right? So I want to remind viewers that they can go to wealth.comfree and and get a free portfolio review with Brett and his team. So let's continue. Brett, this is an area of much interest I think for everybody and it's a question from Alex Woo and he says with AI hype pushing tech stocks higher but that levels also soaring is this rally sustainable or are we looking at a bubble? I feel like things are very bubbleicious indeed. What do you think? Yeah, I mean listen, if you just look at aggregate data and we already were talking about it. Um the valuation of the US stock market on a number of indices is at record highs. Uh price to sales ratio is a good one. It's higher than it was during the tech bubble, right? That's generally not a good omen. Um the top 10 companies in the S&P represent 38% of the index. So a lot of the performance is being driven by the top 10. That kind of concentration is generally not good long-term for investor returns. So let's acknowledge that those are pushing historical norms. Now let's talk about a little bit of the positives for a moment. Um it probably means you not you're not getting in at a great valuation point, right? You've missed the easy money. However, um the AI companies in general are meeting earnings and what seemed like very expensive price earnings ratios a couple years ago for you know some of the big tech companies have been supported by uh their performance as as far as their actual earnings. So a lot of people will compare this to the 1999 tech bubble peak and there are some similarities. These valuation things are something to take seriously. However, in that period, you had a lot of dotcom companies with no real end demand. It was kind of a bridge to nowhere. Right now, I think on the AI stuff, you've got real consumer demand and almost every industry will be touched by this, right? Also, in 1999, because of Y2K concerns, they were tightening interest rates, so pulling liquidity out of the market. Right now, we're on an easing cycle. So that is to say, you know, there might more legs to this uh than meet the eye, but I think caution's warranted. The way we've approached it is we are an AI, but we're not chasing the big winners. We've positioned ourselves to get into things that are good relative values. Um I can't name names per se, but there's one we really like that focuses on kind of the future of robotics. So we've we've done some of that. Um and on the other end of the spectrum in the private markets if people have access to venture capital or startup money a lot of the startups are focused on disruptive AI or agentic AI these agents that are going out and actually solving real world problems in different area domain areas and I think you know those will get gobbled up by bigger competitors. So I don't think we're near the end of the AI story. I think we're closer to the beginning, but that doesn't mean we can't have some big correction at some point where people say, you know, this just went too far, too fast. I think that valuation risk is very real. So, people have to go in understanding, you know, the balancing act here of investing. So, I I don't think it's ignoring the space and saying it's going to crash, but I also don't think it's just going all in assuming, you know, it'll be straight up. I I think there's there's a little caution. And for us, that's meant in practice being in these names. But when they have huge run-ups, we will be aggressive profit takers. It takes them off the table. I mean, that is one way to kind of keep your allocation within a boundary you're comfortable with, right? It's it's the way wise way of managing this very hot market. Yeah, absolutely. Yeah. Chris Casey, your partner, he was talking about why gas in such an interesting opportunity because of the enormous demand that AI, he also talks about crypto and EV, but all of this is tech, right? Has has to do with gas. So again, super interesting interview and I'll put the thumbnail in the link below so people can watch it. Is there any tech part of the tech sector that you think is more resilient or is the smart play to what I alluded just now instead of going to the the gold mines uh buying the shovel makers so to speak like in in this situation with gas and AI well listen I I think I think the main theme is AI and I think it's very real and the question is how do you express that I think the more resil billion safer plays are private markets where you're getting it early. So if you overpay for a startup, they value it at 60 million and maybe should have only been 40 million. If it succeeds, that's not really going to matter in the long run. Whereas if you chase one of the market leaders at all-time high valuations, the largest companies in the world, um, you know, there's a safety net kind of feeling with that, but nobody's ever really gotten rich doing that, right? So I think that's that. And I also think maybe the the pick or shovel analogy is more about energy. All the data is showing to build out AI, we need to double or more kind of the energy output of the US. Well, how do you do that? Utilities are a sector that may benefit. Natural gas, oil, things that America is abundant in. That is a backdoor play to this boom that um yeah, I think there's opportunity in. So for us again it's like selective AI companies, public companies paired with startup venture capital style players in the space that are actually solving real world problems. That's a key to it. And then in the middle is this whole energy infrastructure piece of the equation. So again not advice but from our perspective that's how we're sizing it up at the moment. Now, if some of the market leaders correct by 50% or something, we may be buying them. But for right now, we're a little cautious just chasing things that are at all-time highs that have been uh, you know, clear winners over the last year or two. Right. Right. That makes a lot of sense. Thank you, Brad. Um, let's go to this question from Mike Shaw. He is asking something on portfolio management in today's macro environment. So he says, "Inflation is still above target. The Fed, as we just alluded, just said, started cutting rates after a long tightening cycle. How are you adjusting portfolios compared to the old 6040 model?" And uh for beers that don't know, that 60% stock, 40% bonds, uh it tended to do very well for many decades. Yeah. The bread and butter for uh investment managers, right? Yeah. Listen, I mean, we've been Let Let me just start that by saying a lot of performance is driven by financial conditions. And so, you go back to the early 80s, interest rates were close to 20%. We've been in a downward all rate rates have come down. They went to basically zero in the US and negative rates in Europe, right? And so, that's propped everything up. So, it was a beautiful period to just own stocks and bonds and things that responded to that. But now we're in a different environment. Now, we're turning that corner. And even though we're in a little bit of an easing cycle, I don't think anybody's expecting rates to go back to zero. So, um, in that kind of environment where there's debt and and still budgets despite all the work being done that are not sustainable that are deficits, you know, I think you have to pepper in some private investments that have a chance to outperform inflation. We can talk more about that as well as hard assets. So in a year like this hard assets have given a great benefit. I mean you've got gold up 45% silver's up I think around 62% today. Got Bitcoin and Ethereum up in the 20 to 30% range. You know volatile but so those are the kind of things that might be the answer to what else can I do outside of just traditional stocks and bonds. Right. So it it sounds like and going back a little bit also to your last answer on the other question energy for example is is cheap. So you're you're getting safety there but also you have these like barable portfolio strategies where you have private markets and venture capital. So it allows for potentially outperformance but also safety uh of principle. I think that's the right way to look at it like when we take risk we do take risk. Venture capital is a high-risisk area. Um there's a number of things we do. Cannabis investing is a high-risisk area, but it's a calculated risk and like you described it like a barbell, like a weightlifter, weights on both sides. You have some bets that are high risk and you acknowledge it. But offsetting that, you've got gold and silver, you've got farmland perhaps, you've got, you know, things that kind of can weather a storm, earn you money, but if things go really bad in the world, they're probably going to be beneficiaries. So, we like that pairing as opposed to, hey, we're going to diversify and just own a little bit of everything. Sometimes, especially a market like this, we like to have a couple outliers over here. I put cryptocurrency in that, too. High risk, but high reward. And on the other side, have some really stodgy things, which can even include short-term treasuries that if things don't go well, you've got a, you know, you've got a a layer of safety and and something to fall back on. Well said. Well said. I really like it. Okay. Um, let's go to the next question. Brett. So, speaking of gold at Novar Novars, I'm sorry, butching his name. Novars77, he asks, "When do you think we'll see gold at $5,000?" You know, this question would have sounded crazy, right? Two or three years ago, but 4,000 is around the corner. And we've had guests on welding that thinks gold is going to go to 20,000. What do you think, Brad? When do you think we'll hit five? If we will. Yeah. Well, listen, let's acknowledge that timing is always a very tough thing to tell. I think it's on a trajectory to get there. I don't think the run is over. Although, anytime something runs, stocks, bonds, or gold, do not be shocked if they have a period of pullback or consolidation, right? That that could definitely happen. I mean, gold as of today is $3,842 when I last looked, up 45% this year. So, the move to 5,000 is about another 30% move. Now, I believe gold is making a little bit of a catch-up play to the amount of money that's been printed in the system that it had been lagging it for a long time. People are waking up, both individuals, central banks, institutions. So, the race to 5,000, you know, that could happen in the next 12 months. Um, but it might not be a straight line. Um, we don't do projections like endpoint specific projections, but we think we're in an era where governments will continue to have to print money to meet obligations. As long as that's true, gold, silver, tangible hard assets of limited supply are likely to continue to go up. And especially gold and silver because they're unique in that there's nobody else's liability. Right? If I want a bond, there's a counterparty I have to rely on, whether the US government or a big corporation. Gold and silver is just, you know, a physical asset. I'm not relying on promise to pay from anybody else. So, if the promise to ba pay part of the equation comes into doubt in the world, I think more and more money will will flow to gold and silver. So, I don't know if I exactly answered that, but I think we're on the path to that those kind of levels and beyond. want to share with viewers. You you had a great interview with Maggie Lake on gold and uh you went deeper on your insights uh on it and why it should be a part of your portfolio. So, please catch that. I will link it as well below in the description. That was uh super interesting, Brett. So, now this is a question that uh I I am dying to ask you because as you probably remember, I'm a fan of the Austrian School of Economics of Austrian School of Economics. So like you guys, so interesting username on file is asking, could the all-time high in stocks really just reflect the all-time low in currency purchasing power? Is the Austrian school's crack of boom playing out? Yeah, I think it's a great question and something everybody should be educated on conceptually. Uh, I mean, normally the idea as as I describe it of a crackup boom is a point where people start dumping a currency because they see where it's headed and they'll put worthless paper, those dollars in anything else. So, you can get this explosive move in asset prices because everybody's trying to get out of the paper, right? You've had that, we've talked in some different interviews. You had that in Wymer, Germany after World War I. You had that in Zimbabwe. You've seen it in Argentina and Venezuela. the stock markets have soared. At the same time, currencies falling, right? Um, are we there yet? Probably not because the US dollar, despite weakness, is just kind of like struggling along, right? It's not as if everybody, you know, is trying to get out of dollars as quickly as possible as they might be in Venezuela. However, I think we can draw some insights this century. And in fact, if you go back to the year 2000, beginning of this century, and you go through uh a couple days ago in the stock market, the S&P 500 in nominal terms without factoring in inflation is up something like um a little over seven times your money. Sounds great. But if you inflation adjust it and you say, well, if I apply inflation, how much is that really worth today? Because my dollars don't go as far. It's a lot less. It's something like 3.8 times your money. Still okay, but not quite as much. What if you what if you divide it instead of by the CPI, which a lot of people don't believe is is accurate, and instead you divide by gold and you say in gold purchasing power terms, what has the S&P 500 done? And it's lost about half of its value since 2000. It's at about 0.55x what you put in. So if you want to look at it that way, yeah, it's a race to the bottom in fiat currencies. It doesn't mean we're at an imminent point of collapse in these, but I think smart people know that they will keep printing money until the money is worth less and less and less. And it's why, you know, the house in the 70s that was 50,000 is now 500,000. All all the pricing we see is because the money keeps multiplying. So, you know, I do think that is what we'd want to watch for. And if you really see signs of a loss of confidence in the money itself, then I think you set the stage for for what this is referring to, a crackup boom, where all of a sudden people race out of paper and into anything else, literally anything else that has or might sustain its value. I remember in that interview about gold that you did with Maggie Lake putting on screen a trillion dollar bank note from the Bank of Zimbabwe. 100 trillion 100 trillion. It makes no sense, right? Um, but I think what you're alluding to also is that there's not necessarily an immediate crash to everything, but it's a ongoing thing. You know, it's been happening for for a long time since 2000 and it's just eroding people's purchasing power. And more to the point, we're all noticing it, but despite it not being reported in things like gold, right, you'll see the S&P 500 not being worth what it's worth nominally in US dollars. And that it's breathtaking, frankly, and it's and it's scary. It is. And there's skeptics that say, listen, the market, like I just said with gold, it's it's not really up relative to gold, right? So you're you're actually losing in the long run relative to something that you believe is stable purchasing power which you know gold has been over the centuries. So it's a real dilemma for investors and it doesn't mean you shouldn't own any stocks. It's just an acknowledgment that it's denominated in paper and if stock market's going up but the paper value is going down. You've got to think about what that means and how you counter that over time because really what people want to do is protect their purchasing power, right? And back to the countries I was describing, whether Venezuela or Zimbabwe, their stock markets boom. They didn't have stock market crashes during these hyperinflations. They went straight up, but they didn't go up enough to retain purchasing power. So even though maybe a stock market was up tens of thousands of percent or some ridiculous numbers, the currency basically went to zero. So, um, you know, it can be very misleading, you know, to look at some of that data, but I think the the key takeaway is purchasing power, right? You want to make sure you're earning money and whatever that dollar amount in your portfolio is 10 years from now, it actually buys you more than what you have today. If it's a bigger number, but it buys you less, that doesn't do you any good. Yeah, absolutely. There's a huge difference between nominal returns and real returns. And you know hearing you what's scary to me is that if the returns that the stock market gives you and the stock market it's supposedly the reflection of the wealth creation in the country to a significant degree then you know where are we heading right and maybe again it's in reference an illusion to what this bureau is asking well perhaps not as much wealth is being created because of all this uh all this influence of the government on the price of money on the fiscal deficit etc etc to what is actually a productive investment of of capital. I don't know if that makes sense. It does and I think uh you know listen I had a client that was a consultant a company years ago and used to say you can't shrink your way to greatness meaning you can cost cut but eventually you need to grow and I'd say the same thing for governments you can't print yourself to greatness you know it's it's you've actually got to have organic growth you've got to create value if you're just relying on the printing presses ultimately I don't care what the if your piece of paper says you have a million dollars with a hundred trillion dollar note it's just a paper you know instrument that's not going to be worth anything. So again, I don't think we're there yet, but but it clearly is on our mind about what is an endgame to this. How do we get out of, you know, this predicament? Um, and it's something to think about. Now, you know, there are scenarios to to get out of this that we can talk about. Um, they're not easy, but uh uh we can talk about a little further if you'd like. I'd be super interested. Yeah, of course. We can also leave it for an evergreen uh in a different interview, but you want to give us a a little a short take on Well, listen, this is more hypothetical than anything, right? The the hypothetical answer would be there's 38 trillion of debt roughly in the US. Of course, there's tons of um obligations that go well beyond that if you if you look at unfunded things that don't go into that number. But if you just take that number at its core, you could say, well, I don't know if the government could secretly accumulate enough gold and then let it massively revalue, what would gold have to revalue to? And in the math I did, back of the envelope is maybe 142,000 an ounce gold wipes away all debt. Now, that people would say, well, that's a ridiculous number. And it is, but you know, that's a path a government could take. or maybe Bitcoin, you know, maybe it's a slow and steady accumulation of Bitcoin or some other asset in stealth and once they have adequate reserves of it, you let you know, you let the world know you have it and thing goes to the moon and all of a sudden you've got an asset to pay off most if not all of your liabilities. Now, that might be a pipe dream. This is a little hypothetical, but the point is the assets on the balance sheet matter as much as the liabilities and we've got to think that way going forward. I agree. I can't agree with you more. There's also huge assets on the the amount of land that the federal government owns. That would wipe out um the debt as well if I'm not mistaken. All right, Brett, let's uh get to the final question. Okay. And uh Jonath Ferguson asks ask sorry uh Windrock has warned that the traditional stock and bone portfolio so what we were talking about may fail in today's environment. How does your investing philosophy turn into portfolio strategies you know actual executable portfolio strategies and can you share an example where this protected a client's wealth is that something you can share with us Brett? I I could share some highle thoughts. Sure. It really depends, Mario, on the market environment we're in. I'll give you an example, and it goes back to coming out of COVID when we're at 0% interest rates. A lot of advisors in the industry kept recommending bonds because they say, "Well, pricing's efficient, and you still need stability, and they'd have portfolios of bonds yielding almost zero." To us, that didn't make any sense. Why would I lend somebody money to get paid back basically nothing but my principal and take risk? So in that time period we did a lot of private lending and we continued to do that. Again this is a private market opportunity but a lot of the opportunities we had would have yields going in 8 to 12% kind of ranges and we avoided in large part traditional bonds. So for a number of years when bonds actually had negative returns we had you know opportunities in private markets and private lending to do something different. and you know you have to have access to those things. But that would be an example of how you can think a little bit differently in a you know particular market environment and not feel beholden to oh well everybody thinks I need bonds no matter what the price is right I mean imagine in Europe if someone told you yeah buy these bonds you have to pay the person you're lending money to that's what it was I mean it's absurd and yet it happened right so I think thinking outside the box and just applying some good old common sense and logic is is how we sometimes find opport opportunities and they're not always that easy, but that is an example of, you know, a time period and something we did that was different than most. So, you're able and willing to go outside traditional markets and, you know, find an edge there and you have that flexibility not only in your mindset, the firm's mindset, but also the way you structure things for clients makes perfect sense. All right, that was super interesting. So, that's it for today. Brett, thank you so much for being here with me. It was tremendously insightful and I hope we can do this again. Okay, great chatting, Mario. And to everyone watching, if you found this helpful, give the video a like. Please share with others. And remember, if you liked for Brett and his team at Winrock to review your own portfolio, you can sign up for a free portfolio review at wealth.comfree. Once again, that's wealth.comfree. Thank you again for joining us and we'll see you next time here on Wealth. If you're looking for a simple, secure way to invest in physical gold and silver, check out Hard Assets Alliance at hardassetsalliance.com. [Music]