"Staying the Course" by DoubleLine Capital, Channel 11; Episode 3.
Staying the Course With Bel Air Investment Advisors’ Todd Morgan DoubleLine’s Ken Shinoda and Steven Wald welcome Todd Morgan to Channel 11 News to discuss the uncertainty in today’s market with the November election looming, the hunt for return, educating the next wealthy generations and what millennial employees miss by working from home, among other topics. Mr. Morgan is chairman and a founding member of Bel Air Investment Advisers. He began his investment career in 1970 and is regularly sourced for expert commentary by the Associated Press, Bloomberg Business Week, Forbes, The New York Times, The Wall Street Journal and CNBC. Mr. Shinoda observes that there is a lot of uncertainty in the economy with the November election just around the corner and asks Mr. Morgan if he approaches handling his clients’ money differently than five, 10 or 20 years ago. Mr. Morgan responds, “Yes and no,” and then clarifies that across his career the history of the stock market’s trajectory is to the right and north. So while COVID-19 and election present a unique situation, Mr. Morgan says he refers to the September-October period as “hurricane season” because it traditionally delivers a good-sized market correction. “We did a chart at one time that shows 84 reasons why you should not invest in the stock market starting in 1935,” he says. “The Great Depression, bombing of Pearl Harbor, World War II, Korean War, assassination of a president. There’s something every year why you should not invest in the stock market.” Mr. Morgan notes, “The key is to buy quality and stay invested long term. $1 million invested in the S&P 500 at the beginning of 1935 would be worth over $7.7 billion at the end of 2019.” Mr. Shinoda raises the topics of SPACs (special purpose acquisition companies) and compares their current popularity to that of the creation of investment companies in the 1920s. “It was basically money being raised not knowing what they would buy,” he says. “And people were lining up to buy these things just as they did the SPACs. … Needless to say, it didn’t really end well.” “It makes me a little bit uneasy that people are putting money into SPACs without even knowing where the money is going or what they’re investing in,” Mr. Morgan says. “It’s an illustration of so much money around looking for a place to go to invest in people hungry for returns.” He adds that he is not “wild about fads” and prefers buying great companies and great bonds at reasonable returns. Messrs. Shinoda and Morgan discuss the prospects of higher taxes after the November election and that leads to Mr. Morgan talking about what a Democratic victory could mean for Bel Air’s clients. Right now, estates can pass on over $11 million without taxes to the next generation, and there’s speculation that number could fall to $3 million. “We believe that there’s $68 trillion of moneys and assets that will be transferred to the next generation in the next 20 or 30 years,” Mr. Morgan says. “It’s unprecedented, and what we’re focusing on right now is educating that next generation.” Mr. Wald brings up JP Morgan Chase Chairman-CEO Jamie Dimon saying that working from home could be bad for junior employees. Mr. Morgan agrees with Dimon on the value of in-office interaction for newer workers. “I think our young people here miss the opportunity of mentoring and being in the office and the camaraderie of sharing ideas and tackling problems together on an immediate time issue,” he says. Despite the current situation, Mr. Morgan is grateful to work in the wealth management business and notes, “It’s fun being in the service of others and doing a good job.”