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The rally that we're seeing in the big bank stocks really up as a whole. If you look at the KBW Bank Index, JP Morgan, Goldman, City, Wells, the KBW Bank index is up about four percent.
All the names have been higher in the index.
City and Wells up more than six percent, Goldman up around five percent, JP Morgan a gate of nearly two percent. Tim, we have definitely seen this group just outperforming here, all right, as somebody who has certainly been all over the stories.
Bloomberg News Finance reporter Cat Toorty. She joins us here in the studio. First Upcat, as Carol mentioned that group of bank stocks absolutely rallying today, many of the names outperforming the broader equity trade. Even that we're seeing as markets are higher across the board as a whole, a very strong quarter for the banks.
Absolutely.
I would say that this is their second most profitable year, twenty twenty four, and that's compared to twenty twenty one, which is the most profitable. So we're ending on a high note. And what's also interesting is the commentary around the year ahead. There's just so much positive momentum that the executives.
Were referencing on the earnings calls today.
So not only is it a look back and kind of a nice bow on twenty twenty four, but it's.
A lot of full steam ahead.
We're expecting more deals, We're expecting a lot more volatility in the markets, and if twenty twenty five can look, it's going to be tough. But twenty twenty four was certainly a positive end.
Was there any common narratives, I mean, every bank is a little bit different, right in terms of exposure and so on and so forth. Was it volatility and trading like, was there any kind of common themes that you could kind of string across all of them.
So with trading the volatility, it has to do with both the rate cuts, so there's a lot of repositioning. There was a lot of repositioning also around the US election, So those two things really benefited the fourth quarter.
The last three months of the year.
Then when you look at investment banking, deals are coming back in a more meaningful way. But this is compared to a pretty muted twenty twenty three, So I wouldn't say that this is every the floodgates have opened and we've seen a significant when you compare it to let's say twenty twenty one or twenty twenty two, when there really was a peak in deal activity. But there is momentum, and that was the common narrative across the board.
Okay, one more momentum and then we're going to get into the particulars of some of the banks, because we got quite a few results earlier today. Kat momentum is it as a result of optimism over regulatory changes? What's the momentum, what's the optimism coming from?
I would say that was the phrase that is repeated the most this morning, was that there's an expected easing of regulatory burdens that these bank executives have been complaining.
About for years.
For example, so the capital rules, the capital requirements that they were anticipating having to put aside more money to abide by those capital rules. Now the expectation is those rules will not be as stringent.
And yet they've done okay, if not okay.
And they've always said that they are in an okay position. That was, there was never a question of whether or not they were going to be able to abide by higher capital rules. It's just that when you have the higher capital rules, there's less that they can do, there's less wiggle rules.
They've done well, and they've.
Done quite well, really well, but they haven't also faced You know, these capital rules are meant to be in the times of highest stress. So I wouldn't say there were times of stress. You had the regional banking crisis. We've had a lot of geopolitical tensions, so there's been a lot of volatility, and the banks have held up. But I don't think that we've reached let's say the highest point of stress that these stress tests are are. Really they're prepared preparing these banks for.
Okay, but remind everyone why those capital requirements are in place. I mean, like you said, during times of stress, they need to make sure that these banks remain operable.
We're waiting for all the emails to come and say, well, remember when we bailed them out exactly.
No, this is after the financial crisis two thousand and eight, two thousand and nine. This is the These have been the rebuilding years. But what's been interesting it's this is way past rebuilding. Now we're in the full on growth stage and you're seeing that. I mean, JP Morgan passed their fifty billion annual profit.
That's huge.
Yeah, and so they're in a different those capital requirements.
Even with those capital requirements, but again, the capital requirements that they were complaining about were the next phase, so.
It was going to be even higher.
Now they've been able to handle their capital requirements that they currently have, the question was will they get worse? And now the expectation, going back to this theme of regulatory burdens, is that they don't expect those capital requirements to be as high as they originally were proposed.
Before you go, because I feel like we should mention City. That's a twenty billion dollars buy back, which is I feel like they're still going through a transformation, right, and what do we need to know about City?
They are They lowered one of their profit, their expected profits that they have been guiding to.
So I know that in tangible common equity, right, tangible common equity.
The profitability. But I would say that their performance today was it was positive.
I three.
I think the stats were three of their four or five business lines were records or higher than expected. And so I think that when there's this question of can Jane Fraser turn around this bank into a growth stage, that that's still very much an open question. But we didn't see, for example, the shares react in a super negative way to that profit metric being brought down.
They're up seven percent of this second performer in the KBW Bank Index.
It is gonna be one of your gainers today.
It is the whole group.
Okay, when you can't choose one, you choose them all. Cap before we let you go, give us one highlight from Goldman and one from Wells.
Uh Goldman, I would say it's it was like the the Trump Parade. It was a very raw raw here we go. We're expecting twenty twenty five to be our year. And that was a lot of what Solomon said JP Morgan was a lot about their strength and trading and continuing. But there were some questions too about leadership under Diamond and what happens next that was.
Five more years.
I don't think it's going to be five more years, and he's he's basically he has been saying that, and that was reiterated on today's call. There will be a transition. It's just a matter of what happens. Is that transition a year, two three, it's definitely not five, but definitely there's still the question.
It was some of the news this week in terms of the suite over JP Morgan, great rundown, great overview. Cat Dougherty, she's finance reporter at Bloomberg News. Be sure to check out all of her stuff at Bloomberg Dot. Comment on the Bloomberg All right.
Well stick in with a bank earnings. I want to bring in Cheryl Paid, senior portfolio manager angel Oakcapital Advisors. They've got eighteen point seven billion dollars in assets under management. Cheryl is portfolio manager and the Dynamic Financial Strategies Income Team Trust. It's a closed in fund that invests Carol in debts issued by finance firm.
She joins us this afternoon from Atlanta.
All right, Cheryl, so pick up the baton from Cat Dougherty, who just laid out kind of that great overview on the big banks today, and it seems like they are firing on pretty much all cylinders. Anything in the results that really stood out for you and that you think should be maybe a catalyst for a buy or sell or hold or whatever in today's environment.
Yeah, no, I think I agree with a lot of what Kat said. You know, we're pretty bold up on banks here as well. I think twenty twenty five is setting up to be one of the best opportunities that we seen in recent years, and there's a lot of things that are that are going right. I think we saw that with earnings this morning, not just strong beats across the board, but also better guidance as expected. But where that really plays in, I think is if you've
got margin expansion starting to happen. We do expect lone growth will tick up over the year. Credit is holding in well, and valuations are still cheap. We've given up a lot of the games we saw that came out of the new administration in November, and so I think that reset, coupled with the CPI numbers this morning, really sets the stage nicely for not just earnings growth, but multiple expansion over the coming year.
I know it's hard to pick your favorite child, but if you were to take the companies that reported today, including Wells, Fargo, JP Morgan, Goldman, Sachs, and City, Which one would you say was the was the standout of the group?
I think City is really what we're doing as the best positioned relative to expectations, and so we sort of think about it, you know, two different lenses. Number one, you know, what did they report, what did they.
Beat on guidance?
Moving up? I think the buy back authorization is a big part of the outperformance today. If we look at City sitting on roughly seventeen billion of excess capital, it's highly accretive for them to be buying back below book value in this environment, so that I think, you know, given where their valuation is, drives the biggest change at the margin in terms of you know, outperformance relative analysts expectations and the new guidance. I think there's probably the
most upside to estimates to come out of Wells. We think there's probably about seven percent upside coming, you know, based on results today and forward guidance, but sort of two to seven percent upside you know, across the board sets up. I think pretty nicely.
What about JP Morgan, right, I feel like, you know, when they report they're the kickoff to so much, and they are I think it's safe to say the closely or most closely watched bank across the United States and certainly on Wall Street.
Anything from them.
That gives you kind of broader clues about not just their business, but also what's going on in the overall economy. And and you know, I am curious if you have any thoughts about succession for them as well.
Yeah, No, I think Number one Capital Markets. I think that's one of our key themes that we're looking at for the next year. We think there'll be a strong rebound. I think that was very clearly seen today, especially at JP Morgan Expenses. We've been looking for some moderation there as inflation comes down, you know, over the course of the year. I think there's a read through on credit
card that we saw at JP Morgan. We saw acceleration and debit card and credit card spending charge offs or holding in well, a little bit of an uptick and guidance, but nothing more than normal as a that we would expect. And then on commercial real estate, you know, I think it was nice that that was not really a theme today. Again points to I think that the credit environment is getting better with rates coming down. But I think that's a good read through for a lot of the you know,
super regional regional space as well. So we always look to JP Morgan as sort of the bell weather and the read through that we see to sort of the broader group there. In terms of succession planning, I think, you know, I don't think it's a next year or this year problem.
Again.
I don't think we go out as five years, is it two years, is it three years? I think there are you know, the three potential CEO candidates that have been highlighted numerous places, but could there be other ones? I think that was alluded to on the call this morning, so you know, probably still some work to be done there, but I think they typically do a great job of handling that, and you know, I think we'll get more clarity as we go potentially through this year, but maybe more of twenty six.
Yeah, that's definitely the question that's going to be asked, I think quite a bit over the next stuff few quarters. At this point, Hey, we only have about a minute left, but you mentioned JP Morgan's read through with on the credit side and on the consumer side, we get Bank of America tomorrow. Help us look forward to what we could see from Bank of America and what we could expect.
Yeah, I think what we've seen and what we're sort of looking for here again the commentary around where credit goes and particularly areas like credit card and auto finance. I think what we've seen obviously with rates coming down, that puts the consumer in a better position, and spending seems to be holding in quite well. So I would look for similar type trends in that acceleration of spending
to hit velocity of credit card, but also guidance. We're not looking for significant shift upwards on credit card delinquencies or charge offs. I think it'll be a little bit more of the same as what we expec You're instant twenty four, maybe towards the higher end of the range on the front half of the year, and then improving as we move through twenty twenty five.
All right, great stuff, so appreciated, Cheryl Page. She's senior portfolio manager at angel Oak Capital Advisors. That bank group continuing to rally Today.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five these during this listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
I got to say there was a Stuart tim and I it was kind of on our radar yesterday. It was by Bloomberg opinion columnist Alison Schrager, and she wrote in a recent column that private equity does not belong in your four oh one k, noting that the risk involved in private assets and the lack of liquidity and transparency means they are safe for more transparent ways for the vast majority of investors to invest in.
Tim Well next guest in the alternative alternative investment space and is here to make the case for including them in your portfolio, with focus on private real estate and state debt. Let's get to Tony david Ou, Senior Alternatives Investment Strategies at Franklin Templeton Institute. It's the research arm of one of the world's largest asset managers, Franklin Templeton, about one point five trillion dollars in assets under management.
Tony joins us here in the Bloomberg Business Week Studio. Tony, good to see you, Welcome back to New York. The base case for having alternatives in your portfolio. Why do you think it belongs.
Yeah, I would just say broadly, private markets, private equity, private credit, private real estate have historically delivered access, return, higher income, diversification, all the attributes that you would want to have in a diversified portfolio.
But at a price. And that price is a lack of liquidity. Lack of liquidity absolutely.
And a lack of transparency and.
A lack of transparency. But you know, in the long run, I think you're handsomely rewarded for it, So why would you exclude it? And if you think of the largest defined benefit planned, you see large allocations to those investments because they see the best opportunities in the private market. So again, I think it's kind of a we're looking view to think about should they have a place in
four one K plans and target date funds? And I'd argue they should, But I think to your point, we want to make sure that people understand the risk associated with them. We want to make sure they understand that these are long term investments. But I think a small portion of your portfolio allocated to private markets absolutely makes sense.
Is it akin to what if you say a small portion like give us an idea. You know, we all know the traditional sixty forty in terms of the equity bond mix or our fixed income mixed.
So what would you say, How small a portion.
Would you say that people should allocate? Yeah, it's certainly and you're saying for everybody, every retail investor could do this.
No, I think we should definitely slow down on that. I think the reality is what we want to do is we want to make sure that people make better informed decisions about allocating to things that they're unfamiliar with private markets in particular, and then determine what is the appropriate amount of investment that can afford to be illiquid. We're invested for the long run, and I think depending on the individual, it might be a five percent allocation.
It might be for high net worth or alterra high in it worth families. It could be thirty percent. But it's really understanding the role that it plays, understanding some of the structural trade offs. They are long term in nature, they're illiquid, and we should think of them as illoquid investments. But I think if we can get individual investors and advisors comfortable with it, they absolutely have a role in cline portfolios, but.
Stick with a credit investor, so people of a certain net worth, if you will correct.
I think they're generally available to credit investors. Some are available below that threshold. I think the discussion of four o one K plans is taking a bit farther, and I think that is one of the challenges I think for the regulators. They want to get comfortable that individual investors, who may make these decisions on their own, are making it in an inform way, and I'm all for that. I think that's the right way to think about it.
When you say, you know, alternatives are a huge umbrella. We could talk private credit, we could talk real estate, we could talk venture capital, private equity. How are you thinking about which of those or others belonging portfolio?
Is so broadly the way we think about alternative investments. We think of private markets, private equity, private credit, private real state infrastructure. Those are private markets. We think they make sense. Alternatives could also include things like hedge fund strategies,
but we don't view alternatives that catch all for everything. Again, maybe just taking a little bit of a step back, you know, my role is really focused on educating advisors and underlying investors about the merits of these strategies, so
we don't say just buy it blindly. We want to make sure they understand what the underlying investment is designed to do, how it works in client portfolios, with the historical data has shown us, and then ultimately, if we think about adding it, what should we expect to achieve by adding it to our portfolio. I would say the biggest interest in the market today is around private markets,
and that's where we spend most of our time. I think those are relatively new to the advisor community and to the individual investor community.
So when investors okay, so all right, we just kind of did the umbrella private markets. Is there a certain aspect of it that you think it's a really opportune time for certain investors to be looking at within the private market space?
We do. We do from an investment perspective. Looking forward, we think the most attractive opportunities are private equity, secondaries, real estate broadly recognizing there's some challenges in the office sector, and then real estate debt kind of a different way of playing the real estate space, being a lender of choice rather than owning the underlying asset. We think those three investments look really attractive on a going forward basis.
Why secondaries are a direct beneficiary of some of the concern that has happened with so much money going into the private equity space. Secondary managers provide liquidity and diversification. They actually help the institutions provide that liquidity. The underlying investor benefits from the fact that you shorten the J curve the way that assets are invested over time.
But isn't it also speaking to private equity having a hard time kind of cashing out right, you know, returning money to investors. So the secondary market certainly helps out, but I do wonder does it help prop up some valuations that maybe shouldn't be propped up.
Well, the reality is secondaries are typically available at a discount, So you think about that concern in the private equity market with so much money going in there. Secondary managers are able to step in negotiate favorable pricing, your buying assets at a discount, right, and then the underlying investor ultimately benefits because they get a really prized asset that is matured a litle bit, they get it at a discount. It's in a diversified portfolio. So I'm not making a
single bet. I'm actually diversifying my holdings across the GPS, the vintage geography and partnership.
Yeah.
Yeah, So we think it's a really smart way for individual investors to get exposure to the private equity space.
Carol brings up a really good point, and it's the idea that maybe there aren't enough buyers for everything that's owned by private equity out there. That's a criticism that's come up over the last couple of years, especially as rates have been high. Companies haven't gone public as quickly as people thought they would. Who is out there to buy some of these private equity owned companies get that return for the investors.
Yeah.
So, I think one of the things you're referring to is we have seen a slow down of exits, right, so we're not seeing MNA activity and we're not seeing the level of IPOs and we think part of that has been driven by the environment. I think if you think about the environment we're in now, we actually think that we'll start to see an acceleration of MMEA activity. I think we've started to see it year to date.
We think the current administration or the future administration will be more pro business friendly, little lighter on regulation, which would be more conducive for M and A activity picking up. We think IPOs. We think some of these companies will come to the profit public markets. But I think the other reality is that we have to kind of take a step back and think about, which is that a
lot of these private companies will remain private. They're remaining private longer now because they have an abundance of capital. They don't need to come to the public markets. That got capital, and a lot of them like the freedom of actually executing a long term strategy as opposed to being behold into quarterly earnings.
Is that okay with their private equity owners? I think so, because you're not getting that big return. Yes, you might be getting some cash flows, but you're not getting that big exit.
I think you're not maybe getting that immediate exit. But I think what you're getting is when that company is ready to go to the public markets that are much mature state of time and they're getting that return on investment.
Tony twenty seconds left.
Though, with that abundance of capital that's out there that allows companies to stay private longer, though, do we end up seeing maybe potentially a propping up once again of a company that maybe continues to need money and that might ultimately not ever pay off. So propping up maybe something that shouldn't.
Be Yeah, I'm not sure we say it that way. We think those companies are going to flourish in the private markets. We think a lot of them will stay private. We think a lot of those companies will come to the public markets when it makes sense for them. But again, having the freedom to execute a long term strategy which really unlocks value, I think that's important.
All right, Good, leave there, Tony, Thank you so much interesting stuff, Tony David Douo over at Franklin Templeton Institute.
This is the Bloomberg Business Week podcast, live each weekday starting at two pm Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.
President Biden tonight, Carol will likely make this part of his farewell address. He'll probably mention it. He'll also likely take a victory lap when it comes to the economy.
Yeah, and probably a good reason. Remember the jobs report that we just got on the economy. Some news to
in the world of AI. New York will be the first state to require notifications by businesses of AI related job losses under an executive action that Governor Hokel Kathy Hochel announced last night in her State of the State address, the governor touting the potential economic benefits from the technology while resisting efforts by state lawmakers to impose restrictions aimed at preventing possible abuses.
I'm thinking our next guest might have some thoughts on.
All of this.
Yeah.
Dan Shapiro is COO of LinkedIn. He joins us from Sunnyvale, California. Dan, you over at LinkedIn have got a new report about how AI has changed in the way that we work. We're going to talk about that in just a minute, but before we get there, at LinkedIn, you've got a great view on the economy, specifically on the job market. Who's hiring, who's not hiring?
What are you seeing? How would you characterize it?
Well, we're coming off of a roller coaster of a labor mark over the last few years. You know, right out after COVID you saw one of the tightest labor markets that any of us can remember, and as interest rates rose that led to deceleration. We're now in a much more stable place, but it is by no means as tight and competitive as it was just a few
years ago. So I think by historical standards, the labor market is healthy in the jobs market, but you know, it is very much a reset from the environment that we felt, you know, just back in twenty twenty two.
Any interesting nuances in terms of today's jobs market that you show that shows just some changes and maybe some lasting changes starting to happen.
Sure. Well. One of the facts that I think is most interesting is if you look at the jobs today in the US, twenty percent of the roles are with titles that didn't exist in the year two thousand and So it's just a reminder of how fluid the labor market can be, particularly when you're talking about new technology. Some of the roles are related to AI, security, sustainability,
and so things are always changing. What's unique about the environment we're in right now is that if you look forward, the idea is that AI is going to change how just about every job gets done. You know, in the past, when we've had new technologies, they'll change some roles. But whether you're a marketer, you're in finance, you're a salesperson, you're a lawyer, AI is in some way is going to change how you do your work on a day
to day basis. So one one to think about it is, you know, although you know your title may not change, for sure your job is going to change.
How is your job going to change? That's what I'm still trying to figure out.
I can't use, I can't use.
We have really some really cool we've been doing doing AI at Bloomberg for years.
We have been really cool.
Absolutely AI features on the Bloomberg terminal. But and I'm using those to the extent that like, I'm get to read news really quickly with the help of Bloomberg automation.
But my day to day work hasn't changed.
But still very early. And I think what most companies are facing this year is the shift from an environment of piloting new technologies to rolling them out at scale. That's really what twenty twenty five is going to be about, is scaling the adoption of AI in different roles. But I'll give you a few examples. You know, one of the products that we built at LinkedIn helps recruiters use
AI to write automated personalized messages to candidates. You know, it takes a lot of time to write a personalized message, but it makes a big difference to whether people reply or not. And because AI understands a bit about the candidate and the job that they're hiring for, AI generated
messages get forty percent higher response rates. And so that's a very specific, tangible example where recruiters days are now using AI to change how they do what they've done for a long period of time, which is communicate with candidates, and ultimately what they're able to do as a result of that is spend more time with candidates that really
allow them to build human to human connection. So I think it's an example of where the tactics of how jobs get done change, even if the job overall has not changed.
How do you think it's going to change what kids study in school and college in particular.
I think it's going to change a lot.
I think that AI makes it much easier in the way that the Internet dead did, but maybe in a much larger way to access information and to synthesize information. So I think schools are going to work through a period of time where teaching kids how to use AI to be more effective in their studies and how to do that in the way where people are still learning skills is going to be a big topic of conversation.
You know. One of the ways that employers are talking about this is how do I really know what someone knows in an interview process? You know, if they can go to a tool and generate a resume that looks perfect, that may or may not be the clearest signal anymore to whether they can do the job. So how do I assess them in a more in person way where I can see the difference between what the AI contributed and what the person contributed.
I'm seriously conned I think that. Well, go ahead, I.
Was to say, I think ultimately the most interesting job question of twenty twenty five will continue to be tell me an example of how you used AI to do your job. Because employers want professionals that are comfortable with AI. They see it as one of the important change management efforts they're gonna have to go through, and so comfort with AI is a very critical skill.
Are you used to.
I'm just gonna say, yeah, I was, like I got to make dinner tonight, Like what am I going to do?
You know what? Then we were not doing really good lunch at work. So that's how I use it to make my job.
In a you know, interview, it might not go over so well.
I not go over so well.
Hey I do the interviewing here. Okay, I know, hey Dan, before we let you go. This school thing really freaks me out as the parent of young kids. I mean, you could go to one of these llms and type in just the last thirty seconds we have type in, you know, like turn paper prompt. How do you control for that?
I do think that the way that schools give homework, the way that they assessed competence, it's really going to have to change, both in terms of being able to understand what people really know, but also how to teach our students how to use AI to do things more effectively. Like in a job market, we're knowing how to use AI as one of the core skills. We need an education system that embraces AI while understanding of how it changes how perhaps you really understand skills.
Yeah, it's like not the same of you know, Okay, all of a sudden, you have a calculator, you know, how to do like the algebra two trig test.
Like, I don't think it's the same as having that.
No, it's totally in your test. It's so much more. Yeah, I'm more concerned about homework than tests. Yeah, there's like you can't have a phone during tests.
Right, yeah, a phone?
Yeah, I don't think so. I don't know, like I know the answer that TBD.
Dan Shapiro, thank you so much. Coo over at LinkedIn.
Mac.
I'll bet you let me drive.
Oh no, no, no, no, this is not a tin jug honey.
Please, I'll do the driving gravels.
Let's wait, I want to drive.
It's a good question.
This is the drive to the clothes.
Plunk for me.
Effeck Well b Don on Bloomberg Radio.
All right, everybody, we've got just about eighteen minutes left in today's trading session, and we definitely have a rally underway, just rolling over the best levels of the session, but nonetheless up about two percent, as you heard from Charlie Bill Maloney, up about two percent on the S and P five hundred, one point seven percent higher on the Dow Jones Industrial average, and you're looking at the Nasdaq one hundred, really outperforming a gain of two point four percent,
but most names, tim if I look at the Big Cap Index, are higher in today's session.
Hey, we got Rick Pitcaren with us, chief investment officer of the Pitcairen Family Office. The family office is more than one hundred years old. It traces its roots back to John Pitcare and the co founder of what today is called PPG Industries. It's the twenty seven billion dollar market cab maker of paints, coatings and specialty materials. The firm Pitcare Family Office that is, has nine billion in assets under management. We got Rick back with us here
in the Bloomberg Interactive Brokers studio. It's been almost two years since we've seen you. Welcome back.
How are you great? How are you guys? We're to be here. We're doing pretty well.
Hey, I went through all that history, but there's a lot more history, can you. You know, the family assets are still a big part of the Pitcare and Family Office, but the growth that you've seen outside of the actual family has been pretty big. Give us some context on where you are today. What's part of the family assets, what's outside the family? Who are the other families involved in the family office.
That sort of thing.
Well, the vast majority of what we do is with other families. You know, our family's been the core family, and we still have a meaningful amount of that nine billion dollars that we serve, but we serve one hundred families. We serve twenty seven single family offices. And really what we're trying to do is just bring, you know, the multi generational perspective that we have how to make that wealth lest how to actually have a family that stays
cohesives and moves that money across the generations. And in today's world, as you know, decisions get quicker and quicker, and everything goes faster and faster. I think people are really resonating with that idea of how to step back and give it some thought and do it in a little different way.
You know, I feel like the roots of your company, whether it was the glass market, whether it was manufacturing, whether it was chemicals, whether it was sugar, you know, some of the kind of those basic core industries, if you will. When you look at the investment in environment today, where you know, certainly financial investment investments have gotten so much more sophisticated. We talk about AI technology and so much more what's interesting to you guys, Where do you see the opportunities.
Well, we've always seen the opportunity and equity and growth, and it couldn't be a more exciting time for markets right now. There's obviously a lot of pitfalls out there, but I'll tell you, even when you look back to my great grandfather, you know, and you say, well, it was just sort of glass in these industrial materials. They were really the private equity guys.
At the day.
He was running with Rockefeller, he was running with Carnegie. They were young, they got an immense amount of weals by taking market share, not unlike these tech entrepreneurs we
see today. And so it's sort of been to me just a promise of the recycle of this idea of building capital and taking ideas and what we do in America the best which is innovation, you know, And we're in the middle of a great innative phase right now, which is really cool, and we're trying to bring the best of that to our clients.
So how do you put the money to work and make sure that you're taking advantage of that.
Well, we we're a manager manager, so we don't pick stocks ourselves. We find the best managers in the world
to do that. And so what we're really trying to do is find a mix of these managers and styles and strategies so that if you have this large family enterprise across these generations, that you take advantage of this credibble market that we've had for the last two years, maybe three, depending on what this year does, but do it in a way to where you have some guide, guardrails and protection so that you sort of get away from those impulses to jump away from a scary market.
Because the one thing that's consistent about our client base is they all pay taxes at a very high rate. And if you don't bring taxes into that investment discussion, you're making a big mistake. So that says to us, be strategic. You know, have some things in the portfolio that are there for a rainy day, but make sure that the foundation is growth oriented. All right.
So these are big broad macro you know, theme themes and ideas that you're talking about, can you drill down? I am really curious about So when you've got, you know, a high net worth family who comes and wants to put the money to work for a longer term and or thinking about, you know, preserving what they've got and growing that but you know at a maybe certain level of risk, but they don't want to lose even you know, their initial amount of money that they're bringing to you.
Where do you put it though? Like is it?
I mean the AI theme that we talk about is that opportunities absolutely.
I mean you would have large cap growth managers on both the public side and then you have private capital man I mean every asset class that you hear people come in here and talk about and saying that we're doing this in wealth management. Usually our clients would have some sector of that, some chunk. Now, most of our clients they don't. It's rare that they show up with two hundred million dollars in a bucket and say, here, manage my money.
How do they show up? Then they would show up with an.
Operating business or perhaps an existing structure where they had a bunch of private investments. And so our job is going to be to see where their risk is, where their exposure is, how to round that out in a way that they're prepared for whatever environments are going to come.
What are the other services that you offer apart from finding managers to deploy capital too. I mean, are you helping with the nitty gritty of estate planning those sorts of things.
One hundred percent. I mean we we've started back in the day handling every aspect for the pitcair And family, and so our DNA is to be very comprehensive. As we've evolved. Many times we'll just take a slice of that. A family'll come to us and say we really need to support our next gen households and we need investments in the next will come along and say they need something else. But I was working with a family last
week in Florida. They need everything they need household support, bill pay, insurance.
Investments, prenuptial agreements for the kids who are getting well.
We wouldn't write them, but we'd advise on them.
Okay, those sorts of things.
What would you say about in a environment where we talked about case shape recovery. Some people a part of the US society are doing really, really well, and we talk about wealth creation for those that are wealthy. It has just taken off even more over the last couple of years, but not everybody is seeing that kind of wealth. Those gaps are never good for society. So I mean, how do you think about wealth creation kind of reaching more of Americans.
We believe that really families and family businesses do more for employment and do more throughout the spectrum of the American society. And not only that, you know, we really work hard on the philanthropic side for our businesses. So we have a lot of families who are really committed to different philipthropic missions and whether we're running the foundations or advising them on how to structure their assets so that they can fulfill that goal. You know, this is
family by family decision. We can't decide for the families how they want to pursue that. But there's very few families that don't have some desires along those lines.
Well, how do they like, what are the how would you generalize the type of support that they like to give, Like, what are the themes that sort of bind them together?
So maybe they have a foundation that that that they want to know how long that foundation can last. We want to support these two entities and would like to support a third, but we want to know the ramifications behind that. You know, maybe that foundation has been run by a large bank or another institution. Is that the
right place to have it do. We want to diversify, so we're going to do all that, and then we're also going to do a lot of the actual block and the tackling if they need that administration around that foundation as well.
Rick just got about twenty seconds left here. You guys have managed money for a long time through bear markets, bullmarkets. Any signs out there that things are getting a little rich and a little worrisome.
Just quickly, Well, yeah, valuations are high. I don't think in the third year of a bull market is always a tough market. And you've got to realize that. You know our debt situation. We're spending seven percent of GDP with a full employment and look at this stock market today.
Yeah, there's a little disconnection.
So we have AI on the other side. So yes, stay diverse and win.
Rick, thank you so much.
Rick Pitcaren, He's chief investment officer the pit Karen Family Offices.
Joining us right here in studio.
This is Blombo.
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